Comprehensive Annual Financial Report

Transcription

1 Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2014 City of Newton, Kansas

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3 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF NEWTON, KANSAS FOR THE FISCAL YEAR ENDED DECEMBER 31, 2014 MAYOR Glen Davis VICE MAYOR Barth Hague COMMISSIONERS Leroy Koehn David Nygaard Kathy Valentine CITY MANAGER Randall K. Riggs ASSISTANT CITY MANAGER FOR BUDGET & FINANCE Lunda P Asmani Prepared by the office of the Assistant City Manager for Budget & Finance

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5 CITY OF NEWTON, KANSAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 2014 TABLE OF CONTENTS INTRODUCTORY SECTION Letters of Transmittal GFOA Certificate of Achievement Organization Chart List of Principal Officials Page i xii xiii xiv FINANCIAL SECTION Independent Auditor's Report A-1 Management Discussion and Analysis A-3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position A-12 Statement of Activities A-13 Fund Financial Statements: Balance Sheet - Governmental Funds A-15 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position A-17 Statement of Revenues, Expenditures, and Changes in Fund Balance - Governmental Funds A-18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balance of Governmental Funds to the Statement of Activities A-20 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual - General Fund A-21 Statement of Net Position - Proprietary Funds A-22 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds A-23 Statement of Cash Flows - Proprietary Funds A-24 Statement of Fiduciary Net Position - Police & Fire Pension Fund A-26 Statement of Changes in Fiduciary Net Position - Police & Fire Pension Fund A-27 Combining Statement of Net Position - Component Units A-28 Combining Statement of Activities - Component Units A-29 Notes to Financial Statements A-30 Combining and Individual Fund Statements and Schedules: Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds B-1 Combining Balance Sheet - Nonmajor Special Revenue Funds B-2 Combining Balance Sheet - Nonmajor Capital Project Funds B-4 Combining Statement of Revenues, Expenditures and Changes in Fund Balance (Deficit) - Nonmajor Governmental Funds B-6 Combining Statement of Revenues, Expenditures and Changes in Fund Balance - Nonmajor Special Revenue Funds B-7 Combining Statement of Revenues, Expenditures and Changes in Fund Balance (Deficit) - Nonmajor Capital Project Funds B-9

6 CITY OF NEWTON, KANSAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 2014 TABLE OF CONTENTS (Continued) FINANCIAL SECTION (Continued) Combining and Individual Fund Statements and Schedules (Continued): Schedule of Budgetary Accounts (Non-GAAP Basis): General Fund B-11 Special Revenue Funds: Airport Fund B-12 Library Fund B-13 Meridian Convention Center Fund B-14 Special Parks and Recreation Fund B-15 Special Alcohol Programs Fund B-16 Special Liability Fund B-17 Tourism and Convention Promotion Fund B-18 Special Highway Fund B-19 Special Law Enforcement Fund B-20 Cemetery & Mausoleum Fund B-21 Debt Service Fund: Bond and Interest Fund B-22 Enterprise Funds: Schedule of Budgetary Accounts (Non-GAAP Basis): Sewer Fund B-23 Sanitation Fund B-24 Waterworks Revenue Fund B-25 Golf Course Revenue Fund B-26 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds B-27 Combining Statement of Revenues, Expenses and Changes in Net Position - Internal Service Funds B-28 Combining Statement of Cash Flows - Internal Service Funds B-29 Schedule of Budgetary Accounts (Non-GAAP Basis): Stores and Maintenance Fund B-31 Component Unit Fund Financial Statements: Newton Public Library B-32 Newton Public Building Commission B-33 Page STATISTICAL SECTION Financial Trends: Net Position by Component - Last Ten Fiscal Years C-1 Changes in Net Position - Last Ten Fiscal Years C-3 Fund Balances, Governmental Funds - Last Ten Fiscal Years C-7 Changes in Fund Balances, Governmental Funds - Last Ten Fiscal Years C-9

7 CITY OF NEWTON, KANSAS COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended December 31, 2014 STATISTICAL SECTION (Continued) TABLE OF CONTENTS (Continued) Page Revenue Capacity: Tax Revenues by Source, Governmental Funds - Last Ten Fiscal Years C-11 Assessed Value and Estimated Actual Value of Taxable Property - Last Ten Fiscal Years C-12 Property Tax Levies and Collections - Last Ten Fiscal Years C-12 Direct and Overlapping Property Tax Rates - Last Ten Fiscal Years C-13 Principal Property Taxpayers - Current Year and Nine Years Ago C-14 Debt Capacity: Ratios of Outstanding Debt by Type - Last Ten Fiscal Years C-15 Direct and Overlapping Governmental Activities Debt - As of December 31, 2014 C-16 Legal Debt Margin Information - Last Ten Fiscal Years C-17 Pledged-Revenue Coverage - Last Ten Fiscal Years C-18 Schedule of Bonded Indebtedness by Category - As of December 31, 2014 C-19 Schedule of Industrial Revenue Bonds by Obligee - As of December 31, 2014 C-20 Demographic and Economic Information: Demographic and Economic Statistics - Last Ten Fiscal Years C-21 Principal Employers - Current and Nine Years Ago C-22 Operating Information: Full-time Equivalent City Government Employees by Function/Program - Last Ten Fiscal Years C-23 Operating Indicators by Function/Program - Last Ten Fiscal Years C-24 Capital Asset Statistics by Function/Program - Last Ten Fiscal Years C-25 City Data Report - For the Year Ending December 31, 2014 C-26

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9 Introductory Section

10 July 27, 2015 i

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12 July 27, 2015 TO THE CITIZENS OF THE CITY OF NEWTON, KANSAS HONORABLE MAYOR AND CITY COMMISSIONERS Good financial management requires that we provide full disclosure of the results of the City s fiscal activities each year, and that we obtain independent verification of the accuracy of our statements. Additionally, Kansas statutes call for an annual audit of all funds of the City by independent certified public accountants. Pursuant to these requirements, we hereby issue the comprehensive annual financial report of the City of Newton for the fiscal year ended December 31, Responsibility for both the accuracy of the data presented, and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data presented is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial position and results of the operations of the City measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain an understanding of the City s financial activity have been included. The Management Discussion and Analysis section also includes a narrative explanation, through the eye of management, on how the City has performed. The Management Discussion and Analysis begins on page A-2 of this report. The firm Knudsen Monroe & Company, LLC audited the City's financial statements. The goal of the independent audit is to provide reasonable assurance that the financial statements are free from material misstatements. The independent audit involves examining, on test basis evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, there is a reasonable basis for rendering unqualified opinions that the statements are presented in conformity with generally accepted accounting principles (GAAP) and fairly present the financial condition of the City. The Reporting Entity and Its Services All funds and entities related to the City of Newton are included in our annual financial report. The city provides a full range of services, which include emergency services (police, fire and emergency medical); environmental services (water supply and distribution, wastewater collection and treatment, and solid waste collection); public works functions (street maintenance, operation of an airport, parks, cemetery, planning, engineering, building inspection), and a variety of supportive administrative services. i

13 The Newton Public Library, although a separate legal entity, is reported as a discrete component unit. A Board, the appointees of which are approved by the City, governs the Library. The Library is not a separate taxing entity under State statutes and the City levies taxes for the Library operation, which represents a significant portion of its total revenues. The finances for the new municipal golf course and water and sewer utility are shown as enterprise funds. Profile of the City of Newton Newton, located just 30 minutes north of Wichita, the largest city in Kansas. The city was incorporated in 1872 at the western terminal of the Atchison, Topeka and Santa Fe Railway and the railhead of the Chisholm Trail, a cattle trail that ended in Abilene (current Highway K-15 follows the Chisholm Trail's route). Thus, the history of Newton has always been tied to the railroad. Newton, the Harvey County seat, offers an ideal family environment with affordable, quiet neighborhoods and an assortment of youth recreational activities. A drive through the heart of the community reveals a city with pride and vision. Historical buildings that have been adapted for modern commercial enterprises are sprinkled throughout the community. Visible signs of steady new growth are evidenced by the successful commerce taking hold in the community. Newton residents benefit from a lifestyle that values sound education, progressive health care and safe neighborhoods. Newton area residents have access to full medical, dental and rehabilitative services close to home. Harvey County enjoys the third highest physician to resident ratio in the state. Newton Medical Center, a private, not-for-profit hospital, serves the community. With about 60 physicians and almost 400 employees, the medical center is a major employer in Harvey County. The Newton school district, USD 373, serves more than 3,500 students in the Newton area. Annually, Newton High School graduates classes averaging approximately 400. The recent passage of a school bond issue supported renovating and building additions to five schools in the district. Economic Condition and Outlook Newton, with a 2010 US Census bureau population estimate of 19,132 is located in the Wichita, Kansas, Metropolitan Area, approximately 20 miles north of Wichita itself. In 2014 building permits were issued for $34.6 compared to $20.6 million in 2013, a 67% increase. The City of Newton is actively involved in economic development through its partnership with Harvey County and six other local cities. These entities fund the Harvey County Economic Development Council, Inc. to provide economic development services for the area. The mission of the organization is: ii

14 To promote the social welfare and economic development of Harvey County; recruit industrial prospects for relocation and expansion in Harvey County; and engage in other programs and projects for promotion of local economic development. Working as partners has allowed economies of scale in business development and recruitment, as well as the ability to acquire technical expertise and resources. Major Initiatives Wastewater Treatment Plant upgrades 2014 brought the implementation of one of Newton s largest public works projects in recent decades. The major upgrade project will increase wastewater capacity from 3 million gallons a day to 4.4 million gallons per day. Upon completion in 2015, the Newton plant will meet the more stringent Biological Nutrient Reduction (BNR) requirements for the discharge of nutrients like nitrogen and phosphorus. While KDHE and EPA regulations brought the project to the table, City engineers have been keenly aware that our sewer treatment equipment and infrastructure is, in many areas of the community, 75 years old. Many of the pipes and valves are in imminent danger of failure. The cost for the project is expected to be upwards of $26 million. Knowing this significant project was pending, the City saved approximately $3 million from previous rate increases to apply to the project. The average Newton residential customer uses about 600 cubic feet per month, and will see a Plant Upgrade fee of $21.99 in With the need for serious equipment and infrastructure enhancements and replacements at the Newton Wastewater Treatment Plant, the City anticipated the need to raise utility rates. Compounding the rate increase due to the plant enhancement are the environmental mandates that are driving/will drive up rates across the country. Law & Justice Facility Commission budget discussions in 2014 included the failing condition of the Newton Police Department facility. Both inadequate in space, floor plan efficiency, and with outdated mechanical, HVAC, and technology-infrastructure, concerns about the safety and efficacy of the building became paramount. A decision was made in late 2014 to make the facility a priority need, with consideration given to both a major renovation of the existing building, which was shared by the Harvey County Sheriff s Department, and the possibility of acquiring land to build a new facility. The Commission approved staff recommendation in early 2015 to acquire an existing structure and to move forward in selecting an architect to do site studies for a new, single-purpose facility with potential construction in Passenger Rail Support Passenger rail is at the heart and core of the city of Newton, Kansas. We sit on Amtrak s transcontinental Southwest Chief line, and the Newton stop registers more on/off rides than any city in Kansas. Due to the deterioration of track between Newton and Raton, New Mexico, and the accompanying reduction in passenger rail speed from 90mph to as low as 60mph in some locales, Amtrak demanded the track be repaired at State/local government expense, or risk losing passenger rail service. A coalition of western Kansas cities was formed, and Newton contributed $15,000 to support a successful application for a $12.5 million TIGER grant from USDOT. iii

15 Cost for the needed track repairs is estimated at $100 million in immediate construction, and$10 million per year for annual maintenance. Recreation Enhancements Recreation facilities and amenities were identified as high priority by participating citizens in the year comprehensive plan of the City of Newton. To that end, the existing facilities of the Newton Recreation Commission were renovated in 2014, in part with a 5-year no-interest loan from the City. Additionally, plans came together for the building of a 40,000 square foot Wichita Metro YMCA to be located on ground donated near the footprint of Newton Medical Center. The City Commission authorized the issuance of $16 million in Industrial Revenue Bonds to finance the construction of the new facility, and the Newton community generated $5 million in private donations. The new Y is anticipated to enhance job creation, add rooftops, and expand the local tax base. The community gains the benefit of the project, yet the City carries no liability or cost associated with the IRBs, even in the case of default. Ground-breaking was scheduled for late spring ABI Chemicals Builds at Newton s Municipal Airport Wichita-based ABI Group of Companies completed a 20,000-square-foot manufacturing plant and hangar at the Newton City/County Airport in The project was a $6.2 million project, with ABI Chemicals investing about $2.2 million in capital equipment and other upgrades. A package of incentives that helped land the expansion in Newton included local and state money. Citizens State Bank arranged the lease-financing model for the project. The new facility houses ABI's chemical milling capability and work on a next-generation aerospace coating process. It initially has employed around eighteen people. Additionally, the coating product has brought ABI into a new partnership with the National Institute for Aviation Research at Wichita State University Innovation Campus. Accounting System and Budgetary Control The City s accounting records for general government operations are maintained on a modified accrual basis. Revenues are recorded when available and measurable, and expenditures are recorded when the services or goods are received or when the liabilities are incurred. Accounting records for the City s utilities and other enterprises are maintained on the accrual basis. The City s basis of accounting in its various funds is explained in the notes to financial statements located in the financial section of this report In developing and altering the City s accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance against loss of assets from unauthorized use or disposition. In addition, the controls maintain reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that the cost of a control should not exceed the benefits iv

16 likely to be derived, and that evaluation of costs and benefits requires estimates and judgments by management. All internal control evaluations occur within this framework. The administration believes that the City s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. Expenditures are authorized by a budget approved by the City Commission as required by Kansas statutes. The Assistant City Manager for Budget & Finance and the City Manager continually review all significant deviations from budget authorizations. The Kansas Cash Basis and Budget Laws require cash to be on hand before expenditure is authorized, that all expenditures are budgeted, and that the budget not exceed anticipated revenues including carry-forward balances. General Obligation Bonded Debt Large capital improvement projects for the City of Newton normally require long term financing through municipal bonds. It has been City policy to divide bond issues into ten, fifteen, and twenty-year final maturities based upon the expected useful life of the financed project. This enables the life of the asset to match the term of financing. The practical application of this policy has resulted in most issues being front loaded. Therefore, annual principal and interest payments are declining over time. This allows the primary financial burden of a project to be borne in its early years rather than deferring a financial burden to future taxpayers. Table I shows the City s annual debt service requirements as of December 31, 2014 illustrating the concept noted above. To provide perspective and monitor trends in indebtedness of the City, various debt ratios are calculated. Table II shows such ratios. It is instructive to note that the growth environment generates additional debt burdens upon the City, but the debt ratios are within a reasonable range. Net bonded debt per capita at $1,453, and net bonded debt represents 24.01% of assessed value. It has been possible to finance improvements without jeopardizing these common indicators. TABLE I CITY OF NEWTON GENERAL OBLIGATION BOND DEBT SERVICE REQUIREMENTS DECEMBER 31, 2014 Year Principal Interest Total 2015 $ 2,600,000 $ 1,690,567 $ 4,290, $ 2,790,000 $ 1,603,435 $ 4,393, $ 2,930,000 $ 1,419,668 $ 4,349, $ 3,035,000 $ 1,320,108 $ 4,355, $ 3,060,000 $ 1,211,958 $ 4,271, $ 3,170,000 $ 1,105,329 $ 4,275, $ 3,285,000 $ 1,000,066 $ 4,285, $ 2,955,000 $ 889,984 $ 3,844, $ 3,055,000 $ 788,494 $ 3,843, $ 3,180,000 $ 682,834 $ 3,862,834 v

17 Year End Revenue Bonded Debt Net Direct Bonded Debt TABLE II CITY OF NEWTON SELECTED DEBT RATIOS Ratio of Net Bonded Debt to Assessed Value Ratio of Net Bonded Debt to Estimated Actual Market Value Net Bonded Debt Per Capita 2004 $ 7,314, % 0.93% $ $ 6,097, % 0.74% $ $ 11,692, % 1.34% $ $ 13,466, % 1.50% $ $ 24,792, % 2.63% $ 1, $ 26,242, % 2.75% $ 1, $ 30,229, % 3.71% $ 1, $ 28,151, % 3.36% $ 1, $ 27,441, % 3.24% $ 1, $ 27,884, % 3.27% $ 1, $ 26,437, % 3.07% $ 1,383 Revenue bonds differ from general obligation bonds in that the full taxing power of the City is not pledged to their repayment. The revenue stream of the utility for which bonds are issued secures revenue bonds. In the case of industrial revenue bonds, the City has no direct responsibility for repayment of the bonds. The city has used revenue-bonded debt for its water and wastewater utilities. A coverage ratio is required and maintained to assure investors of a sound operation. General Government Services Newton s general government services include public safety (police, fire, and emergency medical), law, administration, finance, streets, environmental, planning, engineering, building inspection, library, airport, park and cemetery. Such operations are accounted for in various funds shown in the financial report. General government revenues are comprised of a wide variety of revenue sources that protect the City from a decline in any one element of its revenue stream, as illustrated below. The largest component is taxes, which account for just over half of all revenues. Of these taxes, the predominant components are property taxes, the two-percent countywide sales tax, and motor vehicle taxes. Property tax remains the largest single revenue source. Charges for Services account for receipts individuals and businesses pay for part or all of City services received. In the General Fund, this is the second largest revenue source and accounts for 11.1% of revenues. Examples of services the City charges for include ambulance fees, administrative fees, rural fire services and rural ambulance services. Intergovernmental revenue is another significant segment and is comprised of grants and vi

18 shared revenue from the State of Kansas determined by statutory formulas. The remaining revenue comes from a varied mix of sources. Revenues remain quite stable from year to year. The largest concentration of expenditures is Capital Outlay. This is due to several ongoing projects (Street, Water and Sewer additions, and Airport improvements). Sources of revenues and expenditures are graphically illustrated in the Management Discussion and Analysis in the Financial Section. Utility Operations Ownership and operation of the Water, Wastewater, and Sanitation departments continue to comprise three essential elements of the City s service complement. Newton has been blessed with high quality supplies of groundwater from the Equus Beds aquifer, and the water requires very little treatment. Newton is the sole supplier of potable water to city residents and businesses as well as a rural water district. In addition, Newton is a partner in Public Wholesale Water Supply District No. 17 along with three other municipalities. Newton treats and distributes water from the District to these neighboring communities under separate contract with each municipality. The City is also the sole provider of residential refuse and recycling collection services. The entire water production system is modern and generally in sound condition. It was determined through testing in 1994 that treatment to prevent high levels of copper in the water was required. A total renovation was completed in 1998, resulting in a state-ofthe-art treatment plant. Newton is in the process of constructing a wholesale water supply system with three neighboring communities. Newton began treating water for the members of the wholesale district during Water rates were increased in 2009, and a series of annual incremental increases were approved for the next several years. Newton owns and operates a regional wastewater treatment plant licensed by the Kansas Department of Health and Environment. A major renovation of over $5 million was completed in A new disinfection process was completed in 1998, funded by cash reserves. Rates for wastewater service were increased in 2009 to cover inflation and repair costs, and incremental increases were enacted for the next several years. The Newton solid waste department collects refuse and recyclable materials from residential customers in the City. Commercial service was abandoned as a separate operation, although commercial customers who can be serviced in the normal residential refuse and recycling collection process can opt for City service. Refuse is delivered to the Harvey County transfer station, where it is delivered to a landfill out of the county. Recyclables are delivered to the Harvey County Recycling Center for processing. To provide an example of the current user fee level, Newton residents can receive weekly trash collection, 500 cubic feet sanitary sewer service, and use 500 cubic feet of water for a total of $ This remains competitive with other communities in Kansas. vii

19 Airport The Newton City-County Airport is a vital asset to the community. Jointly owned by the City of Newton and Harvey County, the Airport is operated by the City. The Newton City-County Airport (designated EWK) is located on approximately 800 acres two miles east of Newton, Kansas. Originally constructed as an auxiliary flight training facility for the U.S. Navy, the airport was converted to a municipal facility following World War II. Today, the facility is owned jointly by the City of Newton and Harvey County, and has a volunteer Aviation Advisory Commission that provides community input regarding the facility s operations to the two local governments. The airport provides an all weather facility with two runways that can accommodate corporate business jets, multi-engine aircraft, and single-engine aircraft. Its primary runway, Runway 17/35, is 7,003 feet long, and its secondary runway, Runway 08/26 is 3,501 feet long. The field has on-site weather reporting, and its primary runway is equipped with an ILS approach, both of which provide access to the airport during most weather conditions. The airport s primary function is to accommodate corporate/business activity. Companies such as Hawker-Beechcraft, Wells Fargo, Avcon Industries, and Hesston College use the facility daily. Other daily flying activities include pipeline inspections, flight training, and emergency medical flights. Local and State law enforcement use the airport on a weekly basis, as does the military. Other aviation activity at the airport consists of doctor transport, aerial advertising, aerial photography, and surveying. Numerous businesses operate at the airport. Avcon Industries, Midwest Aircraft, and Park Aircraft Technologies provide a variety of products and services. Hesston College provides flight instruction to student pilots. AirMD, a critical care air ambulance service, is headquartered at the airport, and has been caring for Kansans since Banking Arrangements and Cash Management For several years, the City has utilized a competitive bidding process to select banking services. First Bank of Newton was the successful bidder. Services provided include routine banking services, checking account, and investment of short-term liquid assets. Under terms of the agreement, interest on these funds is paid at a rate pegged to short-term U.S. Treasury bills. Funds not needed in the short term are invested either in local financial institutions or in the Kansas Municipal Investment Pool. The City may only invest in Treasury bills, certificates of deposits, or the Pool. The Kansas Municipal Investment Pool was created in 1992 to allow municipalities to invest funds with the Kansas State Treasurer, who subsequently invests in federal securities. The State of Kansas guarantees these funds. Prior to investing funds in the Pool, the City must offer funds to qualified local financial institutions. Rates by local institutions are compared to published rates established by the Pool. If local banks are willing to pay the same rate, funds must be invested locally. viii

20 In priority order, the basic cash management philosophy of the City is: 1. Protect investment principal. 2. Maintain liquidity. 3. Maximize interest earnings. All investments are subject to statutory requirements that all investments be 100 percent collateralized by federally guaranteed depository securities. Insurance The City of Newton carries a wide variety of coverage for its diverse risks. In 1994, the City became a charter member of the Kansas Municipal Insurance Trust (KMIT), a Worker s Compensation insurance pool. Through a continuing affiliation in 2007, KMIT provides to the City extensive risk management services, including memoranda on current issues, training materials, and seminars designed to decrease claims. In addition to substantial premium savings compared to previous policies, the City receives excellent risk prevention services. Independent Audit State statutes require an annual audit of the books of accounts, financial records, and transactions of all administrative departments of the City by independent certified public accountants selected by the City Commission. The firm of Knudsen Monroe & Company, LLC has performed the audit for fiscal years 1994 through Their opinion for the December 31, 2014 financial statements is included. Administrative Official Randall Riggs was hired as City Manager for the City of Newton effective March 1, Lunda Asmani was hired May 17 th, 2010 as Assistant City Manager for Budget & Finance. Awards The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Newton for its comprehensive annual financial report for the fiscal year ended December 31, The Certificate of Achievement is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government financial reports. In order to be awarded a Certificate of Achievement, a government unit must publish an easily readable and efficiently organized comprehensive annual financial report, whose contents conform to program standards. Such CAFR must satisfy both generally accepted accounting principles and applicable legal requirements. ix

21 A Certificate of Achievement is valid for a period of one year only. The City of Newton has received a Certificate of Achievement for the last twenty five consecutive years (fiscal years ended ). We believe our current report continues to conform to the Certificate of Achievement program requirements, and we are submitting it to GFOA. Acknowledgements Presentation of this report required the cooperation and dedicated efforts of many City personnel outside of the Office of the Assistant City Manager for Budget & Finance. I sincerely appreciate this significant support. The citizens of the City of Newton are extraordinarily well served by all members of the Office of Assistant City Manager for Budget & Finance who contributed to this annual financial report of the City s financial results in their daily work throughout the year and their individual year-end tasks. In particular, I want to applaud the efforts of Lisa Marshall, Assistant Finance Director. Her service to the City of Newton is invaluable. I express special appreciation to the City Commissioners and City Manager Randall Riggs for their unfailing support for maintaining the highest standards of professionalism in the management of the City of Newton s finances. Respectfully, Lunda Asmani Assistant City Manager for Budget & Finance x

22 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Newton Kansas For its Comprehensive Annual Financial Report for the Fiscal Year Ended December 31, 2013 Executive Director/CEO xi

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24 CITY OF NEWTON, KANSAS LIST OF PRINCIPAL OFFICIALS ELECTED CITY OFFICIALS Name Position Term of Office Glen Davis Mayor April 2011-Present Barth Hague Vice Mayor April 2015-Present Leroy Koehn Commissioner April 2013-Present David Nygaard Commissioner April 2015-Present Kathy Valentine Commissioner April 2015-Present ADMINISTRATIVE OFFICIALS Date of Appointment Name Office to Current Position Randall K. Riggs City Manager 1-Mar-2008 Tim Johnson Assistant City Manager 27-Jul-2008 Lunda P Asmani Assistant City Manager for Budget & Finance 17-May-2010 Robert D. Myers City Attorney 13-Jan-1985 Denise R. Duerksen City Clerk 2-Dec-2007 Suzanne Loomis Director of Public Works/City Engineer 6-Oct-1997 Mark Willis Fire/EMS Chief 12-Apr-2012 Eric Murphy Chief of Police 29-Mar-2015 Lisa Marshall Assistant Finance Director 17-Dec-2007 Debra Perbeck Director of Human Resources 12-Dec-2012 Ed Bonham Water Superintendent 6-Apr-2010 Burke L. Lewis Park/ Cemetery Superintendent 1-Jan-1990 Robert R. Jackson Street/Sanitation Superintendent 13-Jan-1999 Terry L. Williams Building Inspector 31-Mar-1974 Bradley D. Jantz Municipal Judge 1-Jun-1994 Marianne Eichelberger Library Director 1-Apr-1989 Chris Tuohey Golf Course General Manager 27-Mar-2006 xiii

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26 Financial Section Basic Financial Statements

27 Knudsen Monroe Old Mill Plaza 301 North Main, Suite 110 Newton, Kansas Fax INDEPENDENT AUDITOR'S REPORT City Commission City of Newton, Kansas We have audited the accompanying financial statements ofthe governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information ofthe City of Newton, Kansas as of and for the year ended December 31,2014, and the related notes to the financial statements, which collectively comprises 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. 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, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Newton, Kansas, as of December 31, 2014, the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the general fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America. A-I

28 Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis on pages A3-A 11 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 Newton, Kansas's basic financial statements. The introductory section, combining and individual nonmajor fund financial statements, individual fund budgetary comparison schedules and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and the individual fund budgetary comparison schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the 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 nonmajor fund financial statements and the individual fund budgetary comparison schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. 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. k~~/~~~~j~a'l~~ Certified Public Accountants July 27, 2015 A-2

29 MANAGEMENT DISCUSSION AND ANALYSIS As management of the City of Newton, Kansas, we offer readers of the City of Newton's financial statements this narrative overview and analysis of the financial activities of the City of Newton for the year ended December 31, We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our letter of transmittal, which can be found on pages i-xvii of this report, and the City of Newton's financial statements, which follow this section beginning on page A-12. FINANCIAL HIGHLIGHTS The assets of the City of Newton exceeded its liabilities at the close of the most recent fiscal year by $89,529,037. Of this amount $30,227,047 (unrestricted net assets) may be used to meet the government's ongoing obligations to the citizens and creditors. The City's total net position increased 5.7 % to $89.5 million and unrestricted net position decreased 3.7% to $30.2 million as a result of this year's operations. At the end of 2014, the unrestricted fund balance for the General Fund was $6,855,567 or 41.2% of General Fund expenditures net of transfers. This is compared to $6,389,945 or 41.2% of General Fund expenditures in The increase in the unrestricted fund balance is due to an increase in the unassigned fund balance. This fund balances remains within the Fund Balance Policy limits. The City of Newton's General Obligation (GO) Debt decreased $2,635,000 during 2014 to $43,655,000. This is the net impact of paying of GO Debt and not issuing new GO debt is OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Newton's comprehensive annual financial report which includes the basic financial statements. The City's basic financial statements comprise three components. 1) Government-wide financial statements - consisting of The Statement of Net Position and the Statement of Activities which provide information about the activities of the City as a whole and present a more long-term view of the City's finances. 2) Fund financial statements that 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 statement. Other included statements provide financial information about activities for which the City acts solely as a trustee or agent for the benefit of those outside of the government. This report also contains other supplementary statistical and financial information in addition to the basic financial statements themselves. Reporting the City as a Whole The government-wide financial statements (pages A-12 to A-14 of this CAFR) are designed to provide readers with a broad overview of the City of Newton's finances, in a format similar to a private-sector business. A-3

30 The Statement of Net Position and the Statement of Activities One of the most important questions asked about the City's finances is, "Is the City as a whole better off or worse off as a result of the past year's activities?" The Statement of Net Position and the Statement of Activities each 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 and liabilities using the accrual basis of accounting, which is similar to the accounting methods used by most private-sector companies. All of the current year's revenues and expenses are taken into account as they are earned or incurred, regardless of when cash is received or paid. These two statements report the City's net position and changes in them. You can think of the City's net position as the difference between assets and liabilities as one way to measure the City's financial health, or financial position. Over time, increases or decreases in the City's net position are one indicator of whether its financial health is improving or deteriorating. You will need to consider other non-financial factors, however, such as changes in the City's property tax base and the condition of the City's roads and other infrastructure, to assess the overall health of Newton. The Statement of Net Position and the Statement of Activities distinguish functions of the City of Newton that are principally supported by taxes and intergovernmental revenues (government activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (businesstype activities). The City's governmental activities include general government, public safety, highways and street, community and economic development, and parks and recreation. Property taxes, transient guest taxes, sales taxes, and franchise fees finance most of these activities. The City's business-type activities include water, sewer, sanitation, and golf course. The City of Newton has two component units, the Newton Public Library and the Newton Public Building Commission, which are both separate legal entities. Although legally separate, these "component units" are important because the City is financially accountable for them. Reporting the City's Most Significant Funds A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The fund financial statements provide detailed information about the most significant funds-not the City of Newton as a whole. Some funds are required to be established by State Law and by bond covenants. In addition, the City Commission establishes other funds to help control and manage money for particular purposes, or to demonstrate that Newton is complying with legal requirements for using certain taxes, grants, and other money. The City's three kind of funds; governmental, proprietary and fiduciary use different accounting approaches. Fund Financial Statements Governmental funds--most of the City's basic services are reported in its governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. These funds are reported using an accounting method called the modified accrual basis of accounting, which measures cash and other financial assets that can readily be converted to cash. With this method, the governmental fund statements provide a detailed short-term view of the city's general government operations and the basic services it provides. Governmental fund information helps the reader determine 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 (reported in the fund financial statements) in a reconciliation document following the fund financial statements, on pages A-17 and A-20. Proprietary funds--when the City charges for certain services it provides, these services are generally reported in proprietary funds. Proprietary funds are reported using the full accrual basis of accounting, in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The City of Newton maintains two different types of proprietary funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. We use internal service funds to report activities provided through one fund for other City programs and activities--such as the City's Stores and Maintenance and Self Insurance Funds. A-4

31 Fiduciary funds-- The City is a trustee, or fiduciary, for certain amounts held on behalf of others. The City's fiduciary activities are reports in the Statement of Fiduciary Net Position. We exclude these activities from the City's other financial statements, because the city cannot use these assets to finance its operations. The City is responsible for ensuring that the assets reported in these funds are used only for their intended purposes. THE CITY AS A WHOLE As noted earlier, net assets may serve over time as a useful indicator of a government's financial position. In the case of the City of Newton, assets exceeded liabilities by $89,529,037 at the close of 2014, the most recent fiscal year. This represents an increase of 5.7% as compared to the close of By far the largest portion of the City of Newton's net position reflects its investment in capital assets (e.g., land, buildings, infrastructure, machinery and equipment), less any related outstanding debt used to construct or acquire those assets. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. Table 1 City of Newton Condensed Statement of Net Position December 31, 2014 Governmental Business-Type Activities Activities Total Current and other assets $ 28,877,745 $ 27,393,014 $ 14,944,216 $ 15,234,324 $ 43,821,961 $ 42,627,338 Capital assets, non-depreciable 25,309,573 22,539,613 11,569,963 2,117,125 36,879,536 24,656,738 Capital assets, net of depreciation 41,155,245 43,009,136 45,481,984 46,902,111 86,637,229 89,911,247 Total Assets 95,342,563 92,941,763 71,996,163 64,253, ,338, ,195,323 Deferred Outflows of Resources 538, , , ,366 1,120,180 1,218,029 Long-term liabilities outstanding 37,602,428 39,748,821 30,012,698 25,205,394 67,615,126 64,954,215 Other liabilities 4,709,756 2,370, , ,164 5,211,941 2,864,070 Total Liabilities 42,312,184 42,119,727 30,514,883 25,698,558 72,827,067 67,818,285 Deferred Inflows of Resources 6,102,802 5,935, ,102,802 5,935,455 Net Position: Net Investment in Capital Assets 29,883,633 26,838,054 27,620,849 24,448,242 57,504,482 51,286,296 Restricted 1,362,548 1,536, , ,960 1,797,508 1,971,675 Unrestricted 16,219,976 17,093,475 14,007,071 14,308,166 30,227,047 31,401,641 Total Net Position $ 47,466,157 $ 45,468,244 $ 42,062,880 $ 39,191,368 $ 89,529,037 $ 84,659,612 An additional portion of the city s net assets represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets of $30,227,047 may be used to meet the government s ongoing obligations to citizens and creditors. The decrease in the unrestricted net assets is a result of now reporting certain business type activity assets as net investment in capital assets as opposed to unrestricted net assets. At the end of the current fiscal year, the city is able to report positive balances in all categories of net position for governmental activities. The City s combined net position from governmental and business-type increased as described previously. This increase is reflected in the Statement of Net Position through Statement of Activities, on pages A-12 and A-13 to A-14, respectively. A-5

32 Table 2 City of Newton Statement of Activities and Changes in Net Position Year Ended December 31, 2014 Revenues Governmental Business-Type Activities Activities Total Program Revenues Charges for services $ 4,312,182 $ 4,085,008 $ 16,219,100 $ 13,365,180 $ 20,531,282 $ 17,450,188 Operating grants and contributions 632, , , ,795 Capital grants and contributions 2,586,491 5,828, , ,233 3,255,598 6,718,196 General Revenues Property taxes and special assessments 7,010,541 7,896,230 7,010,541 7,896,230 Sales taxes 5,084,012 4,822,064 5,084,012 4,822,064 Franchise taxes 1,641,767 1,533,637 1,641,767 1,533,637 Other taxes 1,050, ,779 1,050, ,779 Intergovernmental, not restricted to specific programs 643, , , ,322 Interest income 7,665 8, ,682 8,912 Other 194, , , ,256 Total Revenues 23,162,729 26,791,927 16,888,224 14,254,452 40,050,953 41,046,379 Expenses General government 2,748,317 2,288,726 2,748,317 2,288,726 Public safety 9,091,977 8,646,918 9,091,977 8,646,918 Highway and streets 3,123,553 3,032,939 3,123,553 3,032,939 Culture and recreation 3,301,952 3,419,439 3,301,952 3,419,439 Airport 2,037,345 1,552,477 2,037,345 1,552,477 Public works 1,768,709 1,864,153 1,768,709 1,864,153 Interest and fiscal charges 1,455,266 1,538,070 1,455,266 1,538,070 Sewer 4,497,867 4,281,556 4,497,867 4,281,556 Sanitation 1,719,060 1,712,657 1,719,060 1,712,657 Waterworks 3,626,523 3,337,612 3,626,523 3,337,612 Golf Course 1,810,959 1,567,606 1,810,959 1,567,606 Total Expenses 23,527,119 22,342,722 11,654,409 10,899,431 35,181,528 33,242,153 Excess (Deficiency) before transfers (364,390) 4,449,205 5,233,815 3,355,021 4,869,425 7,804,226 Transfers 2,362,303 1,887,870 (2,362,303) (1,887,870) Change in Net Assets 1,997,913 6,337,075 2,871,512 1,467,151 4,869,425 7,804,226 Net Position, Beginning of the Year As previously reported 45,468,244 39,730,736 39,191,368 37,724,217 84,659,612 77,454,953 Prior Period adjustment 0 (599,567) (599,567) As restated 45,468,244 39,131,169 39,191,368 37,724,217 84,659,612 76,855,386 Net Position, End of the Year $ 47,466,157 $ 45,468,244 $ 42,062,880 $ 39,191,368 $ 89,529,037 $ 84,659,612 Governmental Activities Table 3 presents the cost of the City s four largest governmental activities general government; public safety; highway and streets, public works; and culture and recreation as well as each activity s net cost (total cost, less revenues generated by the activity). The net cost shows the financial burden that was placed on the City s taxpayers by each of these governmental functions. Table 3 Net Cost of Governmental Activities Total Cost Net Cost of Services of Services General government $ 2,748,317 $ 2,438,997 Public safety 9,091,977 6,737,651 Highway & streets and public works 4,892,262 4,738,551 Culture and recreation 3,301,952 1,401,168 Totals $ 20,034,508 $ 15,316,367 A-6

33 Property taxes increased $167,347 (2.9%) for the year 2014 as compared to This is due to a combination of increase in assessed valuation and a slight mill increase to fund replacement of 800MHz radios for emergency services. For the most part, increases in expenses closely paralleled general economic inflation and growth in the demand for services. Source of Revenue Use of money and Fines and property Forfeitures 4% 2% Charges for services 6% Other 6% Licenses and permits 1% Taxes 67% Intergov revenues 14% A-7

34 Functional Expenses Capital outlay 19% General government 10% Highways and streets 8% Culture and recreation 11% Public safety 32% Debt service 14% Airport and other 6% Business-type Activities Business-type activities increased the City s net position by $2,871,512 to $42,062,880 during Table 4 presents the cost of the City s four business-type activities--sewer, Sanitation, Water and Golf Course as well as each activity s net revenue (revenue generated by the activity less its total cost). Table 4 Net Revenue from Business-Type Activities Total Cost Net Revenue of Activity from Activity Sewer $ 4,497,867 $ 3,755,651 Sanitation 1,719, ,379 Waterworks 3,626,523 1,240,336 Golf Course 1,810,959 70,432 Totals $ 11,654,409 $ 5,233,798 In 2008 the City Commission approved a rate increase in the water and sewer with new water rates taking effect with the April 15, 2008 billing and new sewer rates taking effect with the October 15, 2008 billing. Additionally in 2010, the City Commission approved incremental increases in water and sewer rates for subsequent years. The water rate increase is due to infrastructure requirements and the sewer rate increase is being driven by both growth demands and a series of federal and state mandates. In 2014 the City began a mandated upgrade of the Wastewater Treatment Plant for estimated cost of $24 million. The City Commission adopted a plant upgrade fee in 2014 to pay for the debt service for the upgrade. The Capital Improvement Plan is approximately $37 million. The CIP is funded through a combination of City, State and Federal funds. A-8

35 FINANCIAL ANALYSIS OF THE CITY S FUNDS At December 31, 2014, the City s governmental funds reported combined fund balance of $1,590,845.The negative fund balance in the Street Capital Project and Other Governmental Funds will be discussed below. The General Fund is the major operating and taxing fund for the City of Newton. The beginning total fund balance was $6,864,190. In 2013, the ending balance was $7,325,094, a $460,904 or 6.7% increase over The increase in fund balance is due increase in the unassigned fund balance. The City s Fund Balance Policy requires the General Fund unassigned fund balance to be 15% of expenditures. The current balance is 16.7%, well within the policy limits. The Debt Service Fund reflected a decrease of $234,926. The Debt Service Fund balance at year end 2014 was $528,849. The decrease was part of a planned draw down of reserves that had built up over time. The City s Fund Balance Policy requires the Debt Service Fund unassigned fund balance to be 5% of expenditures. The current balance is 13.8%, well within the policy limits. The Street Capital Projects Fund accounts for major street projects in Newton. In 2014, the City continued with projects funded from State and Federal. The fund reflects an ending balance of ($5,863,953). The negative ending balance is the result of interfund loans from reserve funds for capital projects. In 2014 the City plans to issue approximately $6.4 million in bonds for these completed projects that would bring the Street Capital projects fund to a positive ending balance. In Other Governmental Funds, the ending fund balance is ($399,145). The negative balance is due to timing of interfund transfers and federal grant reimbursement. As discussed above, the City will issue bonds in 2014 for completed projects that will bring the fund balance to a positive ending balance. General Fund Budgetary Highlights The General Fund actual revenues exceeded budgeted revenues by $948,003 for The actual 2014 expenditures were $308,675 less than budgeted. In 2014 revenues exceeded expenditure by $629,109 growing the fund balance in the General Fund. General Fund tax revenues, actual vs. budget, reflected a positive variance of $792,196. The increase was largely due to higher than budgeted revenues for sales tax, franchise taxes and in lieu of tax revenue from the wastewater fund. Charges for services were $54,810 below budget. General Fund expenditures in 2014 were $17, 385,286 compared to $17,107,965 in This reflects a 1.6% expenditure increase. The City has made deliberate attempts to hold the line on spending. The increases are largely due to the cost of doing business and inflation. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets At the end of 2014, the City had $123,516,765 (net of depreciation) invested in a broad range of capital assets, including police and fire equipment, buildings, improvements, land, park facilities, golf course, and water and wastewater treatment facilities (see Table 5 below). This amount represents a net increase (including additions and deletions) of $8,948,780. Construction in progress increased $12,222,789 as a result for the ongoing construction and upgrade of the wastewater treatment plant. Building and Improvements decreased $1,112,265. Machinery and Equipment decreased $10,595 largely due depreciation. Additional information of the City of Newton s capital assets can be found in Note 4, of the Notes to Financial Statements, on pages A-38 to A-39. A-9

36 Table 5 City of Newton's Capital Assets (net of depreciation) Governmental Activities Business-type Activities Total Land $ 4,111,721 $ 4,111,721 $ 1,082,579 $ 1,082,579 $ 5,194,300 $ 5,194,300 Buildings and improvements 13,587,912 14,211,200 14,627,245 15,116,222 28,215,157 $ 29,327,422 Machinery and equipment 2,126,279 2,382,968 3,045,780 2,778,496 5,172,059 $ 5,161,464 General infrastructure 25,441,054 26,414,968 25,441,054 $ 26,414,968 Utility service lines 27,808,959 29,007,393 27,808,959 $ 29,007,393 Construction in progress 21,197,852 18,427,892 10,487,384 1,034,546 31,685,236 $ 19,462,438 Total capital assets $ 66,464,818 $ 65,548,749 $ 57,051,947 $ 49,019,236 $ 123,516,765 $ 114,567,985 The City s five-year Capital Improvement Plan reflects appropriations for construction, improvements to, or acquisition of an additional $37 million worth of capital assets for fiscal 2015 through Funding is budgeted to come from general obligation bonds, utility revenue bonds, state revolving fund loans and special benefit districts and other sources. The most significant projects include construction or enhancements of various streets, bridges, and traffic-ways, construction and enhancements to parks and athletic fields, airport facilities, water treatment and distribution system improvements, wastewater collection and treatment facilities and storm water drainage improvements. Debt At December 31, 2014, the City had total general obligation debt outstanding of $43,655,000 backed by the full faith and credit of the government. The remainder of the City bonded debt represents revenue bonds. The City is obligated for a Kansas Department of Transportation Revolving Loan of $280,223 which is also backed by the full faith and credit of the government. The City is obligated for $15,606,145 of state revolving fund loans secured solely by specified revenue sources. This reflects $6.4 million debt for the rehabilitation of the water treatment plant. In addition the City has a Golf Course Capital Lease obligation for $6,660,000 payable from specific revenue sources. Additional information of the City of Newton s long term debt can be found in Note 5, of the Notes to Financial Statements, on pages A-40 to A-45. ECONOMIC FACTORS AND NEXT YEAR S BUDGETS AND RATES Newton is the seat of Harvey County, within the Wichita Metropolitan Statistical Area (MSA). Wichita is one of 366 Metropolitan Statistical Areas (MSAs) in the nation. The Wichita MSA 2010 population of 624,099, ranked 84 th in the nation. In 2010 Harvey County with a population of 34,684 had a per capita personal income (PCPI) of $36,300. This PCPI ranked 49th in the state and was 93 percent of the state average, $38,977, and 91 percent of the national average, $39,937. The 2010 PCPI reflected an increase of 0.8 percent from The state change was 1.8 percent and the national change was 2.8 percent. In 2000 the PCPI of Harvey County was $25,969 and ranked 23rd in the state. The compound annual growth rate of PCPI was 3.4 percent. The compound annual growth rate for the state was 3.2 percent and for the nation was 2.8 percent. The Harvey County Civilian Labor Force was 17,837 with an unemployment rate of 5.7% The Kansas Logistics Park, located in Newton, Kansas, is ideally situated to provide manufacturers an ideal location from which to serve the wind energy industry. The goal of the park is to facilitate growth in the wind industry by providing a valuable resource in overcoming the high costs of logistics and manufacturing. The Kansas Logistics Park is located between interstates 35 and 135 and provides access to two Class 1 carriers as well as the WATCO short line railroads. The central location enables original equipment manufacturers and suppliers to minimize the burden of supplying the large components into the heart of the nation s wind resources. Tindall Corporation will construct a new precast, pre-stressed manufacturing facility at the Kansas Logistics Park, which will be dedicated to the manufacture of the company s new concrete wind tower base system. The A-10

37 150, ,000-sq.-ft., state-of-the-art facility will be the company s sixth and largest and at full capacity will have more than 400 employees. The 132-foot concrete and steel cable tower designed to increase the height of wind turbines. The prototype has been completed and unveiled during the American Wind Energy Association conference and exhibition. The Atlas CTB is more than 140 feet in height, made from staves of concrete which weigh in at 100,000 pounds. The tower contains more than 13 miles of steel cable and six miles of conduit. 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 Office of Assistant City Manager for Budget and Finance, at the City of Newton, 201 E 6 th Street, Newton, Kansas A-11

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40 CITY OF NEWTON, KANSAS STATEMENT OF NET POSITION December 31, 2014 Business Governmental Type Component Activities Activities Total Units ASSETS Cash and investments $ 6,124,665 10,483,812 16,608,477 1,444,787 Due from other funds - 1,875,345 1,875,345 - Receivables: Property taxes 6,102,802-6,102,802 - Special assessment taxes 11,890,120-11,890,120 - Sales tax 417, ,629 - Franchise taxes 181, ,220 - Accounts 378,118 1,702,138 2,080,256 - Capital lease ,078,400 Other 3,198,701-3,198,701 - Internal balances (263,010) 263, Prepaid items 470, ,430 - Inventory 135, , ,132 - Restricted assets: Cash and investments 241, , ,849 1,051,238 Other assets and deferred charges: Joint venture investment - 40,000 40,000 - Capital assets: Capital assets not being depreciated 25,309,573 11,569,963 36,879,536 - Other capital assets, net of depreciation 41,155,245 45,481,984 86,637,229 2,066,371 Total Assets 95,342,563 71,996, ,338,726 10,640,796 DEFERRED OUTFLOWS OF RESOURCES Debt refunding costs, net of amortization 538, ,600 1,120, ,600 LIABILITIES Accounts payable and accrued expenses 2,057, ,442 2,325,108 - Due to other funds 1,875,345-1,875,345 - Accrued interest expense 422, , ,900 88,208 Claims payable 23,900-23,900 - Unearned revenues 330,245 78, ,688 - Noncurrent liabilities Due within one year 2,841,202 1,559,074 4,400, ,000 Due in more than one year 34,761,226 28,453,624 63,214,850 8,093,350 Total Liabilities 42,312,184 30,514,883 72,827,067 8,821,558 DEFERRED INFLOWS OF RESOURCES Property taxes 6,102,802-6,102,802 - NET POSITION Net investment in capital assets 29,883,633 27,620,849 57,504,482 (6,979) Restricted for: Community development 378, ,210 - Cemetery perpetual care 339, ,652 - Debt service 528, , , ,030 Other purposes 115, ,837 - Unrestricted 16,219,976 14,007,071 30,227,047 1,444,787 TOTAL NET POSITION $ 47,466,157 42,062,880 89,529,037 2,400,838 The accompanying notes are an integral part of this statement A-12

41 CITY OF NEWTON, KANSAS STATEMENT OF ACTIVITIES Year Ended December 31, 2014 Program Revenues Operating Capital Charges for Grants and Grants and Functions/Programs Expenses Services Contributions Contributions Primary Government: Governmental Activities: General government $ 2,748, , Public safety 9,091,977 1,839, ,653 - Highway and streets 3,123,553 17, ,666 18,991 Culture and recreation 3,301, ,347-1,537,437 Airport 2,037,345 1,782,788-1,030,063 Public works 1,768, Interest and fiscal charges 1,455, Total Governmental Activities 23,527,119 4,312, ,319 2,586,491 Business Type Activities: Sewer 4,497,867 8,253, Sanitation 1,719,060 1,886, Waterworks 3,626,523 4,866,859 - Golf Course 1,810,959 1,212, ,107 Total Business Type Activities 11,654,409 16,219, ,107 Total Primary Government $ 35,181,528 20,531, ,319 3,255,598 Component Units: Public Library System $ 777,919 21, Public Building Commission 460, ,189 97,800 Total Component Units $ 1,238,543 21, ,189 97,800 General Revenues Taxes: Property taxes and special assessments Sales tax Franchise taxes Other Property tax payments from the City of Newton Intergovernmental, not restricted to specific programs Investment earnings Other Transfers Change in net position Net Position, Beginning of the Year Net Position, End of the Year The accompanying notes are an integral part of this statement A-13

42 Net (Expenses) Revenues and Changes in Net Assets Business Governmental Type Component Activities Activities Totals Units (2,438,997) - (2,438,997) - (6,737,651) - (6,737,651) - (2,969,842) - (2,969,842) - (1,401,168) - (1,401,168) - 775, ,506 - (1,768,709) (1,768,709) - (1,455,266) - (1,455,266) - (15,996,127) - (15,996,127) - - 3,755,651 3,755, , , ,240,336 1,240,336-70,432 70, ,233,798 5,233,798 - (15,996,127) 5,233,798 (10,762,329) (756,311) (29,635) (785,946) 7,010,541-7,010,541-5,084,012-5,084,012-1,641,767-1,641,767-1,050,347-1,050, , , , ,482 7, ,682 6, , ,311 48,995 2,362,303 (2,362,303) ,994,040 (2,362,286) 15,631, ,886 1,997,913 2,871,512 4,869, ,940 45,468,244 39,191,368 84,659,612 2,257,898 $ 47,466,157 42,062,880 89,529,037 2,400,838 A-14

43 CITY OF NEWTON, KANSAS BALANCE SHEET - GOVERNMENTAL FUNDS December 31, 2014 Street Debt Capital General Service Projects ASSETS Cash and investments $ 2,315, ,849 - Due from other funds 4,367, Receivables: Property tax 5,123, ,357 - Special assessments - 11,890,120 - Sales tax 417, Franchise tax 181, Accounts receivable 378, Other 765,111 2,000,000 - Inventory Prepaid expenditures 469, Restricted Assets: Cash Total assets $ 14,018,220 14,638,326 - LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE (DEFICITS) Liabilities Accounts payable $ 809,441-1,162,894 Due to other funds - - 4,701,059 Unearned revenue 759,876 2,000,000 - Total liabilities 1,569,317 2,000,000 5,863,953 Deferred inflows Property and special assessment taxes 5,123,809 12,109,477 - Total liabilities and deferred inflows 6,693,126 14,109,477 5,863,953 Fund Balance (deficit) Nonspendable: Prepaid items 469, Inventory Restricted for: Debt service - 528,849 - Community development Perpetual care Law enforcement Assigned to: Capital asset acquisition 4,051, Other purposes 135, Unassigned 2,669,488 - (5,863,953) Total fund balance 7,325, ,849 (5,863,953) Total liabilities, deferred inflows and fund balance $ 14,018,220 14,638,326 - The accompanying notes are an integral part of this statement A-15

44 Other Governmental Funds Total Government Funds 704,106 3,548, ,783 4,833, ,636 6,102,802-11,890, , , , ,590 3,198,701 70,083 70, , , ,889 2,675,990 31,332,536 73,602 2,045,937 2,007,547 6,708, ,350 2,994,226 2,315,499 11,748, ,636 17,992,922 3,075,135 29,741, ,430 70,083 70, , , , , , , , ,783 4,516, , ,179 (2,040,736) (5,235,201) (399,145) 1,590,845 2,675,990 31,332,536 A-16

45 CITY OF NEWTON, KANSAS RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION December 31, 2014 Total Fund Balance - Governmental Funds $ 1,590,845 Amounts reported for governmental activities in the statement of net position are different because: Special assessments are not considered available to liquidate liabilities of the current period, and are deferred in the funds. However, they are properly recognized as revenue in the entity-wide statements as soon as the related improvement has been completed. 11,890,120 Developer loans receivable are not considered available to liquidate liabilities of the current period, and are deferred in the funds. However, they have been recognized as a reduction in expenses in the entity-wide statements. 2,663,981 Capital assets used in governmental activities are not financial resources and therefore, are not reported in the funds. Cost $ 94,067,274 Accumulated depreciation (27,602,456) 66,464,818 Long-term liabilities are not due and payable in the current period and therefore, not reported as liabilities in the funds. General obligation bonds payable (35,908,447) Bond issue premiums, net (734,018) KDOT revolving loan payable (280,223) Capital leases payable (197,077) Compensated absences (482,663) Deferred GO debt refunding costs, net 538,580 Accrued interest payable on bonds (422,600) (37,486,448) Internal service funds are used by the City to charge the cost of certain activities such as employee insurance and vehicle operating costs to individual funds. The assets and liabilities of internal service funds are included in governmental activities in the statement of net position. Net position of internal service funds 3,181,192 Less property assets and long-term liabilities reported above (575,341) Less amount to business type activities (263,010) 2,342,841 Total Net Position - Governmental Funds $ 47,466,157 The accompanying notes are an integral part of this statement A-17

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47 CITY OF NEWTON, KANSAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - GOVERNMENTAL FUNDS Year ended December 31, 2014 Street Debt Capital General Service Projects Revenues: Taxes and special assessments $ 13,036,223 1,389,804 - Intergovernmental 568,543 33,900 18,991 Licenses and permits 174, Charges for services 1,454, Fines, forfeitures and penalties 592, Use of money and property 7, Other 66, ,317 - Total revenues 15,899,063 1,537,021 18,991 Expenditures: Current: General government 2,451, Public safety 8,666, Highway and streets 2,161, Culture and recreation 1,664, Airport Capital outlay 1,677, ,165 Debt service: - Principal - 2,319,928 - Interest - 1,496,978 - Fees & commissions Total expenditures 16,622,043 3,817, ,165 Excess (deficiency) of revenues Over (under) expenditures (722,980) (2,280,832) (698,174) Other financing sources (uses): Transfers in 2,351,069 2,045,906 - Transfers out (1,167,185) - - 1,183,884 2,045,906 - Net change in fund balances 460,904 (234,926) (698,174) Fund balance, beginning of the year 6,864, ,775 (5,165,779) Fund balance, end of the year $ 7,325, ,849 (5,863,953) The accompanying notes are an integral part of this statement A-18

48 Other Governmental Funds Total Government Funds 1,114,640 15,540,667 2,576,489 3,197, ,173-1,454, , , ,512 1,213,502 1,392,824 5,821,663 23,276, ,565 2,582,772 43,512 8,710,352-2,161,912 1,233,761 2,898,249 1,542,993 1,542,993 2,671,598 5,066,359-2,319,928-1,496, ,623,429 26,780, ,234 (3,503,752) 140,255 4,537,230 (1,007,742) (2,174,927) (867,487) 2,362,303 (669,253) (1,141,449) 270,108 2,732,294 (399,145) 1,590,845 A-19

49 CITY OF NEWTON, KANSAS RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Year ended December 31, 2014 Net Change in Fund Balance - Total Governmental Funds $ (1,141,449) Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report long-term receivables as deferred inflows of revenue. In the statement of activities, revenue from these receivables are recognized in the year recorded 663,981 Governmental funds report capital outlays as expenditures. However, in the statement of activities, the cost of these assets is allocated over their estimated useful lives and reported as depreciation expense. Capital outlay expenditures 3,297,650 Depreciation expense (2,310,676) In the statement of activities, gains and losses from the sale of property assets are reported net of accumulated depreciation. In the funds statements, only the proceeds from sale are reported as a revenue source. Changes in net position differ by the remaining basis of assets sold or disposed. (23,990) Long-term debt principal transactions are reflected in the governmental fund statements as expenditures and other financing sources. In the government wide statement, these transactions are reported as changes in debt on the statement of net position and have no effect on the statement of activities. Principal payments 2,336,959 Debt proceeds - contributed to golf enterprise fund asset purchases (214,107) In the statement of activities, interest is accreted on outstanding bonds, in the governmental funds an interest expenditure is reported when due. Change in accrued interest payable 36,000 Bond issue premiums and refunding costs amortized to interest expense in the current year 6,659 In the statement of activities, compensated absences are measured by the amounts earned during the year. In the governmental funds, expenditures are measured by the amount of financial resources used. The net change in compensated absences is reported on the statement of activities. (26,200) Special assessments are not considered available to liquidate liabilities of the current period, and accordingly, are deferred in the governmental funds. They are properly recognized as revenue in the statement of activities as soon as the related improvement has been completed. (754,000) Internal service funds are used by the City to charge the cost of certain activities such as employee insurance and vehicle operating costs to individual funds. The revenues and expenses of internal service funds, net of the portion allocated to business activities, are included in governmental activities in the statement of net position. 127,086 Changes in net position - Governmental Activities $ 1,997,913 The accompanying notes are an integral part of this statement A-20

50 CITY OF NEWTON, KANSAS STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - GENERAL FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 12,219,717 12,219,717 13,011, ,196 Intergovernmental 432, , , ,338 Licenses and permits 173, , , Charges for services 1,516,750 1,516,750 1,461,940 (54,810) Fines, forfeitures and penalties 530, , ,416 62,066 Use of money and property 27,800 27,800 16,731 (11,069) Other 24,075 24,075 45,121 21,046 Transfers in 2,142,142 2,142,142 2,147,555 5,413 Total revenues and other sources 17,066,184 17,066,184 18,014, ,003 Expenditures and other uses: Current: General government 3,057,268 3,057,268 2,453, ,127 Public safety 9,123,548 9,123,548 8,672, ,111 Highway and streets 2,055,080 2,055,080 2,173,483 (118,403) Parks and cemeteries 1,248,938 1,248,938 1,683,194 (434,256) Capital outlay 70,000 70, ,833 (44,833) Transfers out 2,138,919 2,138,919 2,287,990 (149,071) Total expenditures and other uses 17,693,753 17,693,753 17,385, ,675 Excess (deficiency) of revenues over (under) expenditures and other uses (627,569) (627,569) 629,109 1,256,678 Budgetary fund balance, beginning 627, ,569 1,058, ,608 Budgetary fund balance, ending $ - - 1,687,286 1,687,286 Budget-to-GAAP Reconcilation Sources/inflows of resources Actual budgetary basis revenues and other sources $ 18,014,187 Differences - budget-to-gaap Revenue included in special revenue funds for budgetary reporting 224,068 Transfers from other funds are inflows of budgetary resources but are not revenues for financial reporting purposes (2,147,555) Grant revenues reported as reimbursements for budget purposes 41,604 Accrued revenue is included in revenues for financial reporting purposes but are not inflows of budgetary resources (233,241) Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds $ 15,899,063 Uses/outflows of resources Actual budgetary basis expenditures and other uses $ 17,385,078 Differences - budget-to-gaap Expenditures included in special revenue funds for budgetary reporting 1,613,687 Transfers to other funds are outflows of budget resources but are not expenditures for financial reporting purposes (2,287,990) Grant revenues reported as reimbursements for budget purposes 41,604 Encumbrances are included in budget expenditures, but not for GAAP (135,055) Prepaid expenditures are included as expenditures for budget purposes but not for financial reporting purposes 4,719 Total expenditures as reported on the statement of revenues, expenditures, and changes in fund balances - governmental funds $ 16,622,043 The accompanying notes are an integral part of this statement A-21

51 CITY OF NEWTON, KANSAS STATEMENT OF NET POSITION - PROPRIETARY FUNDS December 31, 2014 Business-type Activities - Enterprise Funds Governmental Activities - Internal Sewer Sanitation Waterworks Golf Course Total Service Funds ASSETS Current assets Cash, including investments $ 3,353,525-6,807, ,004 10,483,812 2,576,382 Due from other funds 2,008, ,008,002 - Accounts receivable 917, , ,108 4,826 1,702,138 - Inventories ,588 71, ,951 65,098 Total current assets 6,278, ,006 7,436, ,193 14,338,903 2,641,480 Noncurrent assets Restricted cash 260, , ,960 - Joint venture investment ,000-40,000 - Capital assets Property, plant and equipment, net of accumulated depreciation 36,843, ,463 11,450,935 8,123,718 57,051, ,336 Total noncurrent assets 37,104, ,463 11,664,935 8,123,718 57,526, ,336 Total assets 43,383, ,469 19,101,914 8,522,911 71,865,810 3,223,816 DEFERRED OUTFLOWS OF RESOURCES Debt refunding costs, net of amortization , ,600 - LIABILITIES Current liabilities Due to other funds - 132, ,657 - Accounts payable 79,192 45,381 77,050 12, ,773 11,730 Compensated absences 9,782 18,462 25,425-53,669 6,994 Unreported claims payable ,900 Unearned Revenue ,443 78,443 - Current portion of long-term debt 638, , ,000 1,559,074 - Accrued interest expense 109,700-46, ,300 - Total current liabilities 836, , , ,593 2,193,916 42,624 Noncurrent liabilities State revolving fund loans payable 12,237,540-2,693,335-14,930,875 - Lease payable to Public Building Commission ,150,000 6,150,000 - General obligation bonds 5,172,324-2,200,425-7,372,749 - Total noncurrent liabilities 17,409,864-4,893,760 6,150,000 28,453,624 - Total liabilities 18,246, ,500 5,453,868 6,750,593 30,647,540 42,624 NET POSITION Net invesment in capital assets 18,795, ,463 6,146,142 2,045,318 27,620, ,336 Restricted for debt service 260, , ,960 - Unrestricted 6,080,051 27,506 7,327, ,600 13,744,061 2,598,856 Total net position $ 25,136, ,969 13,648,046 2,353,918 41,799,870 3,181,192 Net position per fund statements $ 41,799,870 Amounts reported for business-type activities in the statement of net position are different because certain internal service assets/liabilities are included with business-type activities 263,010 Net position of business-type activities $ 42,062,880 The accompanying notes are an integral part of this statement A-22

52 CITY OF NEWTON, KANSAS STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION - PROPRIETARY FUNDS Year Ended December 31, 2014 Business-type Activities - Enterprise Funds Governmental Activities - Internal Sewer Sanitation Waterworks Golf Course Total Service Funds Operating revenues: Charges for goods and services $ 8,220,495 1,861,420 4,789,547 1,144,956 16,016,418 3,579,900 Other 33,023 25,019 77,312 67, ,682 - Total operating revenues 8,253,518 1,886,439 4,866,859 1,212,284 16,219,100 3,579,900 Operating expenses: Personal services 1,532, ,979 1,556, ,332 4,659,864 2,086,589 Contractual services 1,026, ,941 1,181, ,664 3,060, ,916 Commodities 59,988 34, , , , ,516 Vehicle operating 41, ,879 56, ,954 40,155 Depreciation and amortization 1,304, , , ,714 2,261,394 46,915 Total operating expenses 3,964,988 1,719,422 3,378,537 1,638,459 10,701,406 3,538,091 Operating income 4,288, ,017 1,488,322 (426,175) 5,517,694 41,809 Non-operating revenues (expenses): Gain (loss) on disposal of property 3,650 13,079 10,442 (119,700) (92,529) - Interest income Interest expense (497,772) - (224,625) (52,800) (775,197) - Income before capital contributions and transfers 3,794, ,096 1,274,149 (598,668) 4,649,985 41,809 Capital contributions , ,107 - Transfers in 7, , ,620 Transfers out (1,468,589) (175,752) (841,582) - (2,485,923) - Change in net position 2,332,819 4, ,567 70,439 2,840, ,429 Net position, beginning of the year 22,804, ,625 13,215,479 2,283,479 38,959,701 3,022,763 Net position, end of the year $ 25,136, ,969 13,648,046 2,353,918 41,799,870 3,181,192 Increase in fund equity per funds $ 2,840,169 Some amounts reported for businesstype activities in the statement of net position are different because certain internal service expenses are included with business-type activities 31,343 Change in net position of businesstype activities $ 2,871,512 The accompanying notes are an integral part of this statement A-23

53 CITY OF NEWTON, KANSAS STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS Year Ended December 31, 2014 Governmental Business-type Activities - Enterprise Funds Activities - Internal Sewer Sanitation Waterworks Golf Course Total Service Funds Cash flows from operating activities: Cash received from customers $ 8,241,169 1,883,352 4,776,123 1,163,640 16,064,284 3,579,900 Cash payments to suppliers for goods and services (1,098,828) (612,927) (1,472,663) (648,995) (3,833,413) (1,404,284) Cash payments to employees for services (1,528,993) (927,218) (1,559,086) (648,149) (4,663,446) (207,955) Cash payments for health benefits (1,862,569) Other operating revenues 33,023-77,312 67, ,663 - Net cash provided by operating activities 5,646, ,207 1,821,686 (66,176) 7,745, ,092 Cash flows from non-capital financing activities: Transfers in 7, , ,620 Transfers out (1,468,589) (175,752) (841,582) - (2,485,923) - Due to (from) other funds (1,183,000) 132, (1,050,343) - Net cash used for non-capital financing activities (2,644,589) (43,095) (841,582) - (3,529,266) 116,620 Cash flows from capital and related financing activities: Proceeds from selling capital assets 3,650 31,860 12,167-47,677 - Payments for capital assets (9,693,394) (504,988) (21,822) - (10,220,204) - Long-term debt proceeds 6,444, ,444,148 - Long-term debt payments: Principal paid (693,598) - (488,247) - (1,181,845) - Interest and fees paid (444,872) - (225,059) - (669,931) - Net cash used for capital and related financing activites (4,384,066) (473,128) (722,961) - (5,580,155) - Cash flows from investing activities: Interest income received Net cash from investing activites Net increase (decrease) in cash (1,382,284) (173,016) 257,153 (66,169) (1,364,316) 221,712 Cash, beginning of the year 4,996, ,016 6,724, ,173 12,283,088 2,354,670 Cash, end of the year $ 3,614,485-6,981, ,004 10,918,772 2,576,382 The accompanying notes are an integral part of this statement A-24

54 CITY OF NEWTON, KANSAS STATEMENT OF CASH FLOWS (CONTINUED) - PROPRIETARY FUNDS Year Ended December 31, 2014 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Business-type Activities - Enterprise Funds Governmental Activities - Internal Sewer Sanitation Waterworks Golf Course Total Service Funds Operating income (loss) $ 4,288, ,017 1,488,322 (426,175) 5,517,694 41,809 Adjustments to reconcile operating income to net cash: Depreciation and amortization 1,304, , , ,714 2,261,394 46,915 Changes in operating assets and liabilities: Accounts receivable 20,674 (3,087) (13,424) 28,351 32,514 - Inventories - - (38,900) 10,864 (28,036) 34,628 Prepaid expenses - - 3,000-3,000 - Accounts payable and accrued expenses 32,445 (1,513) (46,480) (25,930) (41,478) (33,460) Claims payable ,200 Total adjustments 1,357, , , ,999 2,227,394 63,283 Net cash provided by (used in) operating activities $ 5,646, ,207 1,821,686 (66,176) 7,745, ,092 NONCASH FINANCING ACTIVITIES Capital assets acquired with contributed capital $ , ,107 - Long-term debt retirements though capital contributions , ,000 - $ , ,107 - The accompanying notes are an integral part of this statement A-25

55 CITY OF NEWTON, KANSAS STATEMENT OF FIDUCIARY NET POSITION - POLICE & FIRE PENSION FUND December 31, 2014 ASSETS Cash and investments $ 85,705 LIABILITIES - NET POSITION Held in trust for employee pension benefits $ 85,705 The accompanying notes are an integral part of this statement A-26

56 CITY OF NEWTON, KANSAS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION - POLICE & FIRE PENSION FUND Year Ended December 31, 2014 Additions: Employer contributions: Police $ - Fire - Investment income: Interest earned 8 Total additions 8 Deductions: Benefits paid 4,774 Total deductions 4,774 Net increase (decrease) (4,766) Net position held in trust for pension benefits Beginning of the year 90,471 End of the year $ 85,705 - The accompanying notes are an integral part of this statement A-27

57 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF NET POSITION COMPONENT UNITS December 31, 2014 Public Public Library Building System Commission Total ASSETS Cash and investments $ 1,444,787-1,444,787 Restricted assets: Cash and investments - 1,051,238 1,051,238 Other Receivables: Capital lease receivable - 6,078,400 6,078,400 Capital assets: Other capital assets, net of depreciation 64,582 2,001,789 2,066,371 Total Assets 1,509,369 9,131,427 10,640,796 DEFERRED OUTFLOWS OF RESOURCES Debt refunding costs, net of amortization - 581, ,600 LIABILITIES Accounts payable Accrued interest expense - 88,208 88,208 Noncurrent liabilities: Due within one year - 640, ,000 Due in more than one year - 8,093,350 8,093,350 Total Liabilities - 8,821,558 8,821,558 NET POSITION Net investment in capital assets 64,582 (71,561) (6,979) Restricted for: Debt service - 963, ,030 Unrestricted 1,444,787-1,444,787 Total Net Position $ 1,509, ,469 2,400,838 The accompanying notes are an integral part of this statement A-28

58 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED DECEMBER 31, 2014 Public Public Library Building System Commission Total Program expenses Personal services $ 460, ,802 Contractual services 93,706-93,706 Commodities 199,110 1, ,966 Interest and fiscal charges - 295, ,506 Depreciation 24, , ,563 Total program expenses 777, ,624 1,238,543 Program revenues Capital grants and contributions - 97,800 97,800 Operating lease payments from other governments - 333, ,189 Charges for services 21,608-21,608 Total program revenues 21, , ,597 Net program (expense) revenue (756,311) (29,635) (785,946) General Revenues Property taxes 716, ,789 Intergovernmental 70,590 85, ,482 Interest 5,469 1,151 6,620 Other 48,995-48,995 Total general revenues 841,843 87, ,886 Increase (decrease) in net position 85,532 57, ,940 Net position, beginning of the year 1,423, ,061 2,257,898 Net position, end of the year $ 1,509, ,469 2,400,838 The accompanying notes are an integral part of this statement A-29

59 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Reporting Entity - The City of Newton was originally incorporated in 1871 under the laws of the State of Kansas. The City operates under a commission-manager form of government and provides services to its citizens in the areas of public safety, public works, community planning and development, water, wastewater and sanitation utilities, recreation, cultural and social assistance and municipal facilities. Accounting principles generally accepted in the United States of America require that these financial statements present the City of Newton (the primary government) and its component units. The component units described below are included in the City's reporting entity because of their operational significance or financial relationships with the City. Discretely Presented Component Units The Newton Public Library, although a separate legal entity, is reported as a discrete component unit. The Library is governed by a Board, the appointees of which are approved by the City. The Library is not a separate taxing entity under State statutes and the City levies taxes for the Library operation, which represents a significant portion of its total revenues. The Newton Public Building Commission (NPBC) was formed under Kansas statutes during 2005 to provide debt financing for City facilities. The NPBC is a separate legal entity, governed by a Board which is appointed by the City Commission. The NPBC is included as a component unit because of the City s ability to impose its will on Commission operations. Separate financial statements of the component units are not issued. Related Organization - Newton Housing Authority is a related organization that is not included in the financial reporting entity. The Authority was created to administer public housing programs authorized by the United States Housing Act of 1937, as amended. Revenues consist of housing assistance payments from the U.S. Department of Housing and Urban Development and rent received from eligible low income tenants. Government-wide and Fund Financial Statements - The government-wide financial statements (the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the primary government and its component units. The effects of nearly all interfund activity have been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from the business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported discretely from the legally separate component unit for which the government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. A-30

60 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Measurement Focus, Basis of Accounting, and Financial Statement Presentation - The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary funds and fiduciary fund financial statements. 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 revenue in the year for which they are levied. Grants and similar items are recognized as a revenue as soon as all eligible requirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of year end. Expenditures are generally recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to changes in compensated absences, are recorded only when the payment is due. Property and sales taxes, franchise taxes, licenses and fees and investment income associated with the current fiscal period are all considered to be susceptible to accrual and have been recognized as revenue of the current year. Property taxes and special assessments receivable not due in the current year are not susceptible to accrual and are recorded as deferred revenue. All other revenue items are considered to be measurable and available when cash is received. Fund Equity - Beginning with fiscal year 2011, the City implemented Governmental Accounting Standards Board (GASB) Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Statement provides more clearly defined fund balance categories to make the nature and extent of the constraints placed on a government s fund balances more transparent. The following classifications describe the relative strength of the spending constraints: Nonspendable fund balance amounts that are not in spendable form (such as inventory) or are required to be maintained intact. Restricted fund balance amounts constrained to specific purposes by their providers (such as grantors, bondholders, and higher levels of government), through constitutional provisions, or by enabling legislation. Committed fund balance amounts that can be used only for specific purposes determined by a formal action of the City Commission. The City Commission is the highest level of decision-making authority for the City. Commitments may be established, modified, or rescinded only through ordinances approved through a majority vote by a quorum of the Commission. Assigned fund balance amounts the City intends to use for a specific purpose as directed by the City Commission. Fund balances segregated for capital asset acquisition and other special revenue fund purposes are included in assigned fund balance. Unassigned fund balance amounts that are available for any purpose. Positive amounts are reported only in the general fund. A-31

61 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) When an expenditure is incurred for purposes for which both restricted and unrestricted fund balance is available, the City considers restricted funds to have been spent first. When an expenditure is incurred for which committed, assigned, or unassigned fund balances are available, the City considers amounts to have been spent first out of committed funds, then assigned funds, and finally unassigned funds, as needed, unless the City Commission has provided otherwise in its commitment or assignment actions. The City has established a minimum fund balance policy for maintaining fund balances in governmental funds. The City strives to maintain a minimum unassigned fund balance of at least 15% of budgeted annual expenditures in the General fund. The following major governmental funds are reported: The General Fund is used to account for all financial resources except those required to be accounted for in another fund. The Debt Service Fund is used to account for the accumulation of resources for, and the payment of, interest and principal on general long-term debt, including special assessments which are general obligations of the City. Street Capital Project Fund is used to account for financial resources to be used for the acquisition or construction of major capital improvements relating to the construction of city streets through capital grant funding and issuance of general obligation debt. The following major enterprise funds are reported: The Sewer Fund accounts for the operation and maintenance of the City s sewer system, including the wastewater treatment facility and sewer infrastructure. The Sanitation Fund accounts for the operations of the City s trash collection and recycling utility. The Waterworks Fund accounts for operation of the water utility, providing an adequate, quality supply of water to the City. The Golf Course Fund accounts for the activities of the Sand Creek Station Golf Course. The course was completed and began operations as a public course during the summer of The City also reports the following additional fund types: Internal Service Funds are used to account for the financing of goods and services provided by one fund to other funds of the City on a cost reimbursement basis and to account for the City s self-insurance activities relating to employee health coverage. The Pension Trust Fund is used to account for the activities of the City s Police and Fire Pension fund which was established in 1947 to provide benefits for police and fire personnel who retired prior to the City s participation in the State of Kansas Public Employees Retirement System. This plan will end with the deaths of the few remaining beneficiaries of the plan. A-32

62 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both the government-wide and enterprise fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board (GASB). Governments have the option of following subsequent private-sector guidance for their business-type activities, subject to the same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule, the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to the rule are payments in lieu of taxes and other charges between the City s enterprise funds and various other functions of the city. Elimination of these charges would distort the direct costs and program revenues reported in these other functions. Amounts reported as program revenues include (1) charges to customers or applicants for goods, services or fees, (2) operating grants and contributions, and (3) capital grants and contributions, including contribution through special assessment financing. Internally dedicated resources and all taxes are reported as general revenues. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with the proprietary funds ongoing operations. Operating revenues of the proprietary funds are charges to customers for sales and services. Operating expenses for enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation of capital assets. All revenues and expenses not meeting these criteria are reported as non-operating revenues and expenses. Cash and Investments - State statutes authorize the City to invest in temporary notes and no-fund warrants of the City, time deposits, United States Treasury bills or notes, bonds of municipalities of the State of Kansas, repurchase agreements, and the Kansas Municipal Investment Pool. Cash resources of the individual funds are combined to form a pool of cash and temporary investments, which is managed by the Director of Finance. The pool has the general characteristics of demand deposit accounts, in that, each fund may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. Investments of the pool consist entirely of certificates of deposit and funds held in the Kansas Municipal Investment Pool. All investments are reported at their fair values which is identical to original cost. Each fund type s portion of the pool is displayed on the combined balance sheet as cash and investments. Earnings of the pool are allocated to the investing fund, unless specifically designated. Investments are stated at cost, which is the equivalent of fair value for all investments held during A-33

63 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Property Taxes Receivable - In accordance with governing State statutes, property taxes levied during the current year are a revenue source to be used to finance the budget of the ensuing year. Taxes are assessed on a calendar year basis and become a lien on the property on November 1 of each year. The County Treasurer is the tax collection agent for all taxing entities within the County. Property owners have the option of paying one-half or the full amount of the taxes levied on or before December 20 during the year levied with the balance to be paid on or before May 10 of the ensuing year. State statutes prohibit the County Treasurer from distributing taxes collected in the year levied prior to January 1 of the ensuing year. Consequently, for revenue recognition purposes, the taxes levied during the current year are not due and receivable until the ensuing year. At December 31, such taxes are a lien on the property and are recorded as taxes receivable with a corresponding amount recorded as deferred revenue on the balance sheet of the appropriate funds. It is not practicable to apportion delinquent taxes held by the County Treasurer at the end of the year and further, the amounts thereof are not material in relationship to the financial statements taken as a whole. Intergovernmental and Other Revenues - Recognized State-shared taxes represent payments received during the current fiscal period. State statutes specify distribution dates for such shared taxes and, consequently, for revenue recognition purposes, amounts collected and held by the State on behalf of the City at year-end are not due and receivable until the ensuing year. Federal and State grant aid is reported as revenue when the related reimbursable expenditures are incurred. Unrestricted aid is reported as revenue in the fiscal year the entitlement is received. Licenses, fees, fines, forfeitures, charges for services and other revenues are generally not susceptible to accrual and are recorded when received in cash. Proprietary Fund Revenues - Revenue is recorded in proprietary funds as billed to customers on a cycle basis. Residential and commercial customers are billed monthly. Within the City s utility funds, an estimated amount has been recorded for services rendered but not yet billed at the close of the year. Special Assessments - In accordance with State statutes, projects financed in part by special assessments are financed through issuance of general obligation bonds of the City and are retired from the bond and interest fund. Special assessments paid prior to the issuance of bonds are recorded as revenue in the appropriate project. Special assessments received after the issuance of bonds are recorded as revenue in the bond and interest fund. The special assessments receivable are not recorded as revenue in the fund financial statements when levied against the respective property owners as such amounts are not available as a resource to finance current year operations. Inventories - Inventories that benefit future periods are recorded as expenditures or expenses as consumed. Inventories are stated at cost, as determined by the first-in, first-out method. Restricted Assets - Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Certain assets of special revenue funds are classified as restricted assets on the balance sheet because their use is limited by applicable grant agreements. A-34

64 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets - Capital assets are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are recorded at cost or estimates of original cost and gifts at fair value at the date of the gift. The City capitalizes purchases of assets with a cost of $1,000 or more and an estimated useful life in excess of one year. The cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of an asset are not capitalized. Depreciation of property, plant and equipment is calculated using the straight-line method over the following estimated useful lives: Buildings Improvements other than buildings General infrastructure Machinery Office equipment and furniture Water treatment plant Water and sewer mains 30 to 50 years 15 to 30 years 30 to 50 years 5 to 15 years 5 to 12 years 30 years 30 to 50 years Compensated Absences - The City s policies regarding vacation and sick leave permit employees to accumulate a maximum of 10 to 18 days of vacation leave (depending on the number of years of continuous service) and a maximum accumulation of 90 days sick leave. Policies require the cancellation of accumulated sick leave on date of employment termination. The liability for accrued vacation leave of the governmental fund types is only recorded in the government-wide statements, representing the City s commitment to fund such costs from future operations. Proprietary fund types accrue vacation leave benefits in both the government-wide and fund financial statements. The liability is based on current salary costs and the vested portion of accumulated benefits. Cash Flows - For purposes of the statement of cash flows, the City considers all investments by funds in the City s cash and investment pool (including restricted assets) to be a cash equivalent. Estimates - The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect certain amounts and disclosures. Accordingly, actual results could differ from those estimates. Budgetary Principles - The City is required by State statute to adopt annual budgets for the general fund, special revenue funds, debt service fund, enterprise funds, and internal service funds (unless specifically exempted by statute) on or before August 25 for the ensuing year. Specific funds exempted from legally adopted budgetary requirements include: Special Revenue Funds Community Development Internal Service Funds Health Benefits Risk Management Controls over spending in funds which are not subject to legal budgets are maintained by the use of internal spending limits established by management. Total expenditures by a fund constitute the legal level of control. Expenditures may not exceed appropriations at this level. Management may transfer appropriations between budget lines within the same fund without approval of the governing body. A-35

65 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) State statutes permit original budgets to be increased for...previously unbudgeted increases in revenue other than ad valorem property taxes. The City must first publish a Notice of Hearing to amend the budget. Ten days after publication, a Public Hearing is held and the governing body may amend the budget at that time. Budgetary data in the financial statements represent the original budgeted amounts for all funds. Budgetary Basis of Accounting - Applicable Kansas statutes require the use of an encumbrance system as a management control technique to assist in controlling expenditures. For budgetary purposes, encumbrances of the budgeted governmental fund types, representing purchase orders, contracts and other commitments, are reported as a charge to the current year budget. All unencumbered appropriations lapse at the end of the year, except for capital project funds which are carried forward until such time as the project is completed or terminated. Encumbered appropriations at year end are carried forward. For budgetary purposes, revenues are recognized on a cash basis in budgeted governmental fund types and not on the modified accrual basis as required by generally accepted accounting principles. Accordingly, the actual data presented in the budgetary comparison statements differs from the data presented in the financial statements prepared in accordance with accounting principles generally accepted in the United States of America (GAAP). 2. DEPOSITS AND INVESTMENTS As of December 31, 2014, the City had the following investments and maturities: Maturity - Fair Less than Investment Type Value 1 Year Rating Kansas Municipal Investment Pool $ 13,896,560 13,896,560 S&P AAAf / S1+ K.S.A establishes the depositories which may be used by the Government. The statute requires banks eligible to hold the Government s funds have a main or branch bank in the county in which the Government is located, or in an adjoining county if such institution has been designated as an official depository, and the banks provide an acceptable rate of return on funds. In addition, K.S.A requires the banks to pledge securities for deposits in excess of FDIC coverage. The City has no other policies that would further limit interest rate risk. K.S.A limits the Government s investment of idle funds to time deposits, open accounts, and certificates of deposit with allowable financial institutions; U.S. government securities; temporary notes; no-fund warrants; repurchase agreements; and the Kansas Municipal Investment Pool. The City has no investment policy that would further limit its investment choices. The rating of the City s investments is noted above. Concentration of credit risk State statutes place no limit on the amount the Government may invest in any one issuer as long as the investments are adequately secured under K.S.A and As noted in the schedule above, the City s investments as of December 31, 2014, consisted entirely of amounts held by the State s municipal investment pool. A-36

66 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, DEPOSITS AND INVESTMENTS (Continued) Custodial credit risk deposits Custodial credit risk is the risk that in the event of a bank failure, the Government s deposits may not be returned to it. State statutes require the Government s deposits in financial institutions to be entirely covered by federal depository insurance or by collateral held under a joint custody receipt issued by a bank within the State of Kansas, the Federal Reserve Bank of Kansas City, or the Federal Home Loan Bank of Topeka, except during designated peak periods when required coverage is 50%. The City of Newton has not designed peak periods as defined above. All deposits were legally secured at December 31, At December 31, 2014, the City s carrying amount of deposits was $3,464,718 and the bank balances totaled $3,506,745. Of the bank balance, $600,550 was covered by federal depository insurance and $2,906,195 was collateralized with securities held by the pledging financial institutions agents in the City s name. Custodial credit risk investments For an investment, this is the risk that, in the event of the failure of the issuer or counterparty, the Government will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State statutes require investments to be adequately secured. At December 31, 2014, the Government had invested $13,896,560 in the State s municipal investment pool. The fair value of the City s position in the pool is the same as the value of the pool shares. The municipal investment pool is under the oversight of the Pooled Money Investment Board. The board is comprised of the State Treasurer and four additional members appointed by the State Governor. The board reports annually to the Kansas legislature. State pooled monies may be invested in direct obligations of, or obligations that are insured as to principal and interest, by the U.S. government or any agency thereof, with maturities up to four years. No more than ten percent of those funds may be invested in mortgage-backed securities. In addition, the State pool may invest in repurchase agreements with Kansas banks or with primary government securities dealers. Investments of Discreetly Presented Component Units 1. Newton Public Building Commission held no investments at December 31, Newton Public Library investments consist of $571,000 in collateralized bank deposits at December 31, Financial Statement Presentation Cash and investments, including cash on hand, is shown in the accompanying financial statements as follows: Primary Component Government Units Total Statement of net position Cash and investments $ 16,608,477 1,444,787 18,053,264 Restricted cash 676,849 1,051,238 1,728,087 Statement of fiduciary net position Cash and investments 85,705-85,705 $ 17,371,031 2,496,025 19,867,056 A-37

67 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, CAPITAL ASSETS Capital asset activity of the primary government for the year ended December 31, 2014, was as follows: Balance Balance January 1 Additions Retirements December 31 Governmental activities: Capital assets, not being depreciated: Land $ 4,111, ,111,721 Construction in progress 18,427,892 2,769,960-21,197,852 Total capital assets, not being depreciated 22,539,613 2,769,960-25,309,573 Capital assets, being depreciated: Buildings and structures 21,343, ,343,635 General infrastructure 36,794, ,794,811 Equipment 10,493, ,690 (401,968) 10,619,255 68,631, ,690 (401,968) 68,757,701 Less accumulated depreciation: Buildings and structures (7,132,435) (623,288) - (7,755,723) General infrastructure (10,379,843) (973,914) - (11,353,757) Equipment (8,110,565) (760,389) 377,978 (8,492,976) (25,622,843) (2,357,591) 377,978 (27,602,456) Total capital assets, being depreciated 43,009,136 (1,829,901) (23,990) 41,155,245 Total capital assets, net of depreciation $ 65,548, ,059 (23,990) 66,464,818 Business-type activities: Capital assets, not being depreciated: Land $ 1,082, ,082,579 Construction in progress 1,034,546 9,452,838-10,487,384 Total capital assets, not being depreciated 2,117,125 9,452,838-11,569,963 Capital assets, being depreciated: Buildings and improvements 19,515, ,515,603 Equipment 8,971, ,474 (730,323) 9,222,196 Utility service lines and infrastructure 50,976, ,976,387 79,463, ,474 (730,323) 79,714,186 Less accumulated depreciation: Buildings and improvements (4,399,381) (488,977) - (4,888,358) Equipment (6,192,549) (573,983) 590,116 (6,176,416) Utility service lines and infrastructure (21,968,994) (1,198,434) - (23,167,428) (32,560,924) (2,261,394) 590,116 (34,232,202) Total capital assets, being depreciated 46,902,111 (1,279,920) (140,207) 45,481,984 Total capital assets, net of depreciation $ 49,019,236 8,172,918 (140,207) 57,051,947 A-38

68 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, CAPITAL ASSETS (Continued) Capital asset activity of component units for the year ended December 31, 2014, was as follows: Balance Balance January 1 Additions Retirements December 31 Newton Public Library: Capital assets, being depreciated Equipment $ 525,082 39, ,129 Less accumulated depreciation (475,246) (24,301) - (499,547) Total capital assets, net of depreciated $ 49,836 14,746-64,582 Newton Public Building Commission: Capital assets, being depreciated: Building and structures $ 2,620, ,760-2,967,271 General infrastructure 512, ,809 3,133, ,760-3,480,080 Less accumulated depreciation (1,315,029) (163,262) - (1,478,291) Total capital assets, being depreciated $ 1,818, ,498-2,001,789 Depreciation expense was charged to functions of the primary government, as follows: Governmental activities: General government $ 162,529 Public safety 455,942 Highway and streets 977,283 Cultural and recreation 214,514 Airport 500,408 Depreciation on capital assets held by internal service funds, charged to functions based on usage 46,915 Total depreciation expense - government activities $ 2,357,591 Business-type activities: Water $ 429,168 Sewer 1,304,722 Sanitation 180,790 Golf Course 346,714 Total depreciation expense - business-type activities $ 2,261,394 Component Units: Newton Public Library $ 24,301 Newton Public Building Commission 163,262 Total depreciation expense - component units $ 187,563 A-39

69 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT The following is a summary of changes in long-term debt of the City for the year ended December 31, 2014: Payable from Governmental Actvities General KDOT Obligation Revolving Capital Compensated Bonds Loan Leases Absences Total Primary Government: Outstanding January 1, 2014 $ 38,129, , ,463 38,965,062 Additions , , ,770 Retirements (2,221,267) (98,662) (17,030) (456,463) (2,793,422) Principal outstanding 35,908, , , ,663 36,868,410 Add bond premium, net 734, ,018 Outstanding December 31, ,642, , , ,663 37,602,428 Due within one year 2,226, ,440 29, ,663 2,841,202 Due in more than one year $ 34,416, , ,175-34,761,226 Payable from Business-Type Activities General KDHE Golf Course Revenue Obligation Revolving Capital Bonds Bonds Fund Loans Lease Total Primary Government: Outstanding January 1, 2014 $ 115,000 8,160,286 9,815,108 7,115,000 25,205,394 Additions - - 6,444,149-6,444,149 Retirements (115,000) (413,733) (653,112) (455,000) (1,636,845) Outstanding December 31, ,746,553 15,606,145 6,660,000 30,012,698 Due within one year - 373, , ,000 1,559,074 Due in more than one year $ - 7,372,749 14,930,875 6,150,000 28,453,624 A-40

70 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT (Continued) General Obligation Bonds General obligation bonds are serial bonds to be retired through calendar year At December 31, 2014, the outstanding general obligation bonds consisted of the following: Interest Outstanding Original Rates 12/31/14 Amount Airport refunding $ 335, ,000 Internal improvements, 2006-A ,185,000 9,515,000 Airport improvements, 2006-B ,000 1,100,000 Internal improvements, 2007-A ,705,000 2,300,000 Internal improvements, 2008-A ,225,000 12,600,000 Internal improvements, 2008-B , ,000 Internal improvements, ,900,000 6,815,000 Internal improvements/refunding, 2010-A ,075,000 7,800,000 Taxable GO Bonds, 2010-B ,000,000 2,000,000 Internal Improvement, 2010-C ,690,000 2,935,000 GO Refunding, 2012-A ,460,000 3,570,000 Internal improvements/refunding, 2013-A ,470,000 9,595,000 $ 43,655,000 Remaining debt service requirements for general obligation bonds will be paid from the bond and interest fund with future property tax revenues, special assessment taxes, and enterprise funds. A portion of the general obligation bond principal represents special assessment debt with government commitment to pay the principal and interest if the special assessments are not paid by the applicable property owners. Annual debt service requirements to maturity for general obligation bonds are as follows: Payable from Government Act. Payable from Business Act. Principal Interest Principal Interest 2015 $ 2,226,197 1,378, , , ,398,386 1,303, , , ,523,272 1,133, , , ,613,230 1,048, , , ,618, , , , ,167,419 3,463,542 2,477,581 1,003, ,082,699 1,328,374 2,727, , ,278,588 93, ,412 51,562 $ 35,908,447 10,706,151 7,746,553 2,917,376 A-41

71 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT (Continued) Advance Refunding the City s refunding issues that have underlying refunded debt outstanding at December 31, 2014, consisted of the following: Defeased Debt Refunding Final Balance Year Description of Issues Refunded Maturing 12/31/ Internal improvements, $ 3,230, Internal improvements, 2006-A ,930,000 KDOT Revolving Loan During 2006, the City received a $1,070,150 revolving loan from the Kansas Department of Transportation (KDOT) to provide funding for certain street improvements. Terms of the loan agreement require the loan to be repaid as a general obligation of the City over a 10-year term. The loan is payable in semi-annual installments with an annual interest rate of 3.83%. Future principal payments on these loans are scheduled as follows: , , ,419 $ 280,223 Revenue Bonds - All outstanding revenue bonds in the Waterworks fund, which are secured by revenues derived from operations, were retired during the year ended December 31, Water Fund Revolving Loans Consists of four loans with the Kansas Department of Health and Environment (KDHE) to provide funding for City waterworks improvements. Terms of the individual loans are as follows: Year of Interest 12/31/14 Inception Rate Term Balance % 20 years $ 621, % 20 years 500, % 20 years 1,398, % 20 years $ 483,460 3,004,055 A-42

72 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT (Continued) Future principal payments on the Waterworks revolving loans are scheduled as follows: 2015 $ 310, , , , , , ,579 $ 3,004,055 Sewer Fund Revolving Loans Consists of three loans with KDHE to provide funding for City wastewater treatment improvements. Terms of the individual loans are as follows: Year of Interest 12/31/14 Inception Rate Term Balance % 20 years $ 522, % 20 years 5,635, % 20 years $ 6,444,148 12,602,089 Future principal payments on these loans are scheduled as follows: 2015 $ 364, , , , , ,075, ,149,551 Total for amortizing loans from prior years 6,157,941 Add 2014 borrowings for construction in progress (maximum $24,420,000) 6,444,148 $ 12,602, Sewer Revolving Loan - The City signed a loan agreement with the Kansas Department of Health & Environment on November 1, 2013, to provide a revolving loan for wastewater treatment plant improvements. The maximum borrowing authority under the terms of the agreement loan is $24,420,000. If the entire amount of the loan is borrowed during construction, the loan agreement calls for semi-annual payments of $803,680 beginning September 1, 2015, and ending March 1, At December 31, 2014, $6,444,148 had been drawn from the available loan proceeds A-43

73 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT (Continued) Golf Course Capital Lease During 2005, the City entered into an agreement with the Newton Public Building Commission (NPBC) to provide funding for the Sand Creek Station Golf Course which was completed during Under the agreement, the City will make lease payments equal to the NPBC debt incurred to acquire, improve and equip the course. An equal amount was recorded on the NPBC s financial statements when the course assets were transferred to the city, and recorded in the golf course fund. The required minimum lease payments, based on the NPBC s debt requirements, are as follows: , , , , , ,387, ,380 Total 7,522,905 Less amount representing interest (862,905) Remaining principal $ 6,660,000 Compensated Absences - Consist of unused vacation time that has accrued to employees at year-end. Sick leave benefits are not paid to employees upon termination and have not been recorded as a liability in these financial statements. The liability for accrued vacation for governmental activities is liquidated though governmental funds that have expenditures for personnel the general and airport funds. Component Unit - Newton Public Building Commission (NPBC) During 2004 and 2005, the NPBC issued a total of $10,345,000 in Revenue Bonds to finance athletic field improvements and to construct the Sand Creek Station Golf Course. At December 31, 2014, the outstanding NPBC revenue bonds consisted of the following: Interest Outstanding Original Rates 12/31/14 Amount Series % $ 1,915,000 2,685,000 Series % 1,145,000 6,685, Refunding % 5,515,000 5,915,000 Principal balance 8,575,000 Add balance of bond issue premium 158,350 $ 8,733,350 A-44

74 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, LONG-TERM DEBT (Continued) Debt service requirements to maturity for NPBC bonds are as follows: Principal Interest Total 2015 $ 640, , , , , , , , , , , , , , , ,280, ,059 4,653, ,000 7, ,380 $ 8,575,000 1,331,714 9,906,714 Advance Refunding During 2012, the NPBC issued refunding revenue bonds, series 2012 (new debt), in the principal amount of $5,915,000. Proceeds from the issue were deposited to an irrevocable escrow account with a third party trustee to effect in substance defeasance of $5,175,000 in existing series 2005 and 2005-B revenue bonds (old debt). At December 31, 2014, the NPBC s refunded debt consisted of $4, for the 2005 issue, which is scheduled to be called with proceeds from escrow on March 1, DEFINED BENEFIT PENSION PLANS Plan Description - The City participates in the Kansas Public Employees Retirement System (KPERS) and the Kansas Police and Firemen s Retirement System (KP&F). Both are cost-sharing multiple-employer defined benefit pension plans as provided by K.S.A , et seq. KPERS and KP&F provide retirement benefits, life insurance, disability income benefits, and death benefits. Kansas law establishes and amends benefit provisions. KPERS and KP&F issue a publicly available financial report that includes financial statements and required supplementary information. Those reports may be obtained by writing to KPERS (611 S. Kansas, Topeka, KS ) or by calling Funding Policy - K.S.A establishes the KPERS member-employee contribution rate at 5%-6% of covered salary. K.S.A establishes the KP&F member-employee contribution rate at 7.15% of covered salary. The employer collects and remits member-employee contributions according to the provisions of Section 414(h) of the Internal Revenue Code. State law provides that the employer contribution rates be determined annually based on the results of an annual actuarial valuation. KPERS and KP&F are funded on an actuarial reserve basis. State law sets a limitation on annual increase in the employer contribution rates. The KPERS employer rate at December 31, 2014 was 8.84%. The City s employer contributions to KPERS for the years ending December 31, 2014, 2013 and 2012 were $525,052 $503,841, and $445,030 respectively, equal to the required contributions for each year. The KP&F uniform employer rate established for fiscal year 2014 was 19.92%. Employers participating in KP&F also make contributions to amortize the liability for past service costs, if any, which is determined separately for each participating employer. The City s contributions to KP&F for the years ending December 31, 2014, 2013, and 2012 were $996,198, $838,407, and $772,158 respectively, equal to the required contributions for each year. A-45

75 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, DEFINED BENEFIT PENSION PLANS (Continued) Other Pension Plans - In addition to participating in Kansas Public Employees Retirement System, the City maintains an additional pension plan - Policemen's and Firemen's Pension. The plan, which is of the single-employer defined benefit variety, was established in 1947 to provide benefits for policemen and firemen (and surviving spouses) who retired prior to the City's participation in KP&F. Pension benefits paid during the year ended December 31, 2014, were $4,774. The plan will be phased out upon the deaths of the few remaining participants. During 1996, an actuarial computation was performed to determine the amount necessary to fund the pension benefit obligation of the plan. This amount, $140,000, was transferred to a pension trust fund from the general fund to pay future benefits. 6. DEFERRED COMPENSATION PLAN The City offers its employees a deferred compensation plan created in accordance with Internal Revenue Code Section 457. The plan, available to all City employees, permits them to defer a portion of their salary until future years. The deferred compensation is not available to employees until termination, retirement, death, or unforeseeable emergency. Assets of the plan, valued at current market prices, are held in trust for the benefit of the participants. All amounts of compensation deferred under the plan as well as earnings attributable to those amounts, are solely the property of the participant employees. Accordingly, the assets and related liabilities for the plan are not recorded in the accompanying financial statements. 7. INTERFUND TRANSFERS Interfund transfers reflect the flow of resources from one fund to another fund, generally from the fund in which resources are received to the fund where resources will be expended. The City uses transfers from business activities to provide support for general government, and to provide funding from government activities for specific capital needs. During the year ended December 31, 2014, interfund transfers totaled $4,660,850. Transfers for the year were as follows: Transfer From Nonmajor General Government Waterworks Sewer Sanitation Total Transfer To General $ - 672, , , ,428 2,351,069 Debt Service 1,117, ,186 98, ,196-2,045,906 Nonmajor Government 50,000 35,317 36,738 18, ,255 Internal service-stores ,648 46,648 23, ,620 Sewer Enterprise - 7, ,000 $ 1,167,185 1,007, ,582 1,468, ,752 4,660,850 A-46

76 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, INTERFUND RECEIVABLE/PAYABLE Interfund receivables and payables are recorded to eliminate negative cash balances in capital project and other funds prior to the issuance of permanent long-term financing. At December 31, 2014, the interfund balances consisted of the following: General Fund $ 4,367,508 - Nonmajor Governmental: Capital Improvement Fund 141,160 - Municipal Equipment Fund 324,623 - Sewer Enterprise Fund 2,008,002 - Street Capital Projects - 4,701,059 Sanitation Fund - 132,687 Nonmajor Governmental: Water Dept. Improvements - 326,770 Sewer Dept. Improvements - 477,322 Airport Improvements - 244,729 Newton Rec Center Improvements - 663,981 Other Building Projects - 294,745 $ 6,841,293 6,841, DEFICIT FUND BALANCES The following governmental and enterprise funds had a deficit fund balance at December 31, 2014: Fund Deficit Balance Street Capital Projects $ 5,863,953 Water Dept. Improvements 326,770 Sewer Dept. Improvements 477,322 Airport Capital Projects 244,729 Newton Rec Center Improvements 663,981 Other Building Projects 294,745 The deficit balance in capital project funds will be eliminated upon the issuance of bonds in succeeding years. A-47

77 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, COMMUNITY DEVELOPMENT FUND Restricted Assets - Restricted assets consist of cash and investments of $241,889 restricted for the Community Development Rehabilitation Loan program. Rehabilitation Loan Program - In 1984, the City of Newton received a Community Development Block Grant from the Department of Housing and Urban Development (HUD) for the purpose of establishing a low-income housing rehabilitation loan program. Idle program funds remain in an interest-bearing account. When loans are repaid, the proceeds may be used for additional loans; other community development projects, or remain in the fund. Rehabilitation and development loans outstanding at December 31, 2014, were $331,221. No interest is being charged on the outstanding loans. 11. COMMITMENTS AND CONTINGENCIES Litigation - The City is a defendant in various lawsuits. Although the outcomes of these lawsuits are not presently determinable, in the opinion of the City Attorney, the resolution of these matters will not have a material adverse effect on the City's financial statements. Federal Grants - In the normal course of operations, the City receives grant funds from various Federal and State agencies. The grant programs are subject to audit by agents of the granting authority, the purpose of which is to ensure compliance with conditions precedent to the granting of funds. Any liability for reimbursement that may arise as the result of these audits is not believed to be material. 12. RISK MANAGEMENT AND CLAIMS Property, Liability and Employee Life Insurance Losses under these programs are covered by commercial insurance policies, subject to deductibles in some cases. There have been no significant reductions in insurance coverage for these programs and settlement amounts have not exceeded insurance coverage for the current year or the three prior years. Workers Compensation Coverage The City is a member of the Kansas Municipal Insurance Trust Workers Compensation Pool (the Pool) for purposes of workers compensation coverage. This program is similar to commercial insurance coverage because the Pool is liable for all claims. The City contributes to the Pool at the beginning of each coverage period based on experience and payroll factors. The City records a liability for estimated additional contributions that may be incurred because of adjustments made by the Pool. The cost of this workers compensation coverage is charged to City funds based on payroll expenditures. A-48

78 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, RISK MANAGEMENT AND CLAIMS (Continued) Employee Health Care Benefits During the year ended December 31, 2014, employees of the City were covered by the City of Newton Medical Benefits Plan (the Plan). Under the Plan, the City retains a significant portion of the risk of loss for employee health benefits. Claims are paid by a third-party administrator acting on behalf of the City. The administrative contract between the City and the third-party administrator is renewable annually. Administrative fees and stop-loss premiums are included in the contractual provisions. The City is protected against catastrophic loss by stop-loss coverage carried through a commercial insurance carrier. Stop-loss coverage is in effect for individual claims exceeding $50,000 and for aggregate loss, which is based on a factor determined monthly by the insurer. The risk management activities under the Plan are recorded in the Health Benefit Risk Management Fund. Using the actuarial method, the City charges the cost of estimated benefits to funds in relation to personal services expenditures. An estimated liability is recorded for claims against the Plan that have been incurred but not yet reported at year end. The following represents the changes in the liability for unreported claims under the plan for 2014 and 2013: Liability balance, beginning $ 8,700 55,000 Health benefit claims incurred 1,877,769 1,735,893 Add premiums and fees 734, ,755 Total costs incurred 2,621,246 2,481,648 Less claims paid (1,862,569) (1,795,712) Less Premiums and fees paid (734,777) (677,236) Liability balance, ending $ 23,900 8, COMPLIANCE WITH KANSAS STATUTES AND OTHER FINANCE-RELATED LEGAL AND CONTRACTUAL PROVISIONS Cash Basis Violations The City was not in compliance with K.S.A which requires all funds to maintain unencumbered cash balances of zero or above, in the following funds: Fund Amount Meridian Convention Center $ (13,119) Sanitation (158,755) A-49

79 City of Newton, Kansas NOTES TO FINANCIAL STATEMENTS December 31, CONDUIT DEBT OBLIGATIONS From time to time, the City has issued Industrial Revenue Bonds to provide financial assistance to privatesector entities for the acquisition and construction of industrial and commercial facilities deemed to be in the public interest. The bonds are secured by the property financed and are payable solely from payments received on the underlying mortgage loans. Upon repayment of the bonds, ownership of the acquired facilities transfers to the private-sector entity served by the bond issuance. Neither the City, the State, nor any political subdivision thereof is obligated in any manner for repayment of the bonds. Accordingly, the bonds are not reported as liabilities in the accompanying financial statements. At December 31, 2014, eight City-issued Industrial Revenue bond issues were outstanding with a total balance of $10,953, JOINT VENTURE - PUBLIC WHOLESALE WATER SUPPLY DISTRICT NO. 17 Description of the Entity During 1997, the City of Newton entered into an agreement with the cities of Halstead, North Newton and Sedgwick to form the Public Wholesale Water Supply District No. 17 (the District). The purpose of the District is to secure an additional water supply for sale to member cities and other potential customers. The City of Newton has contributed $40,000 in capital to the District in exchange for a 40% share in equity. Because of the nature of the operations of the District, this investment has been recorded within the City s Waterworks enterprise fund. Separate financial statements for the District can be obtained from the District s office located at the City of Newton administration building (201 East Sixth, Newton, Kansas ). Commitments and Contingencies During 2001, the District completed construction of the water distribution system and began selling water to member cities. In order to purchase water rights and construct the water distribution system, the District obtained a low interest loan through the Kansas Rural Water Finance authority. The balance of this loan was $1,391,490 at December 31, In the event that the District terminates or otherwise fails to meet debt service requirements on this loan, the member cities are required to tender their share of the deficiency based on percentages specified in the organization agreement. 16. SUBSEQUENT EVENTS Date of Management Review Management has performed an analysis of the activities and transactions subsequent to December 31, 2014, to determine the need for any adjustments to and/or disclosures within the audited financial statements. Management has performed their analysis through July 27, 2015, which is the date at which the financial statements were available to be issued. A-50

80 Financial Section Supplemental Information

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82 CITY OF NEWTON, KANSAS COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS December 31, 2014 Special Capital Revenue Funds Project Funds Totals ASSETS Cash, including investments $ 704, ,106 Due from other funds - 465, ,783 Receivables: Taxes 759, ,636 Other 433, ,590 Inventory 70,083-70,083 Prepaid expenditures Restricted Assets: Cash 241, ,889 Total assets $ 2,210, ,783 2,675,990 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE (DEFICIT) Liabilities Accounts payable $ 73,602-73,602 Due to other funds - 2,007,547 2,007,547 Unearned revenue 234, ,350 Total liabilities 307,952 2,007,547 2,315,499 Deferred inflows Property taxes 759, ,636 Total liabilities and deferred inflows 1,067,588 2,007,547 3,075,135 Fund balance (deficit) Nonspendable: Inventory and prepaids 70,986-70,986 Restricted for: Community development 378, ,210 Perpetual care 339, ,652 Law enforcement 115, ,837 Assigned to: Capital asset acquisition - 465, ,783 Other purposes 271, ,123 Unassigned (33,189) (2,007,547) (2,040,736) Total fund balance (deficit) 1,142,619 (1,541,764) (399,145) Total liabilities, deferred inflows and fund balance $ 2,210, ,783 2,675,990 B-1

83 CITY OF NEWTON, KANSAS COMBINING BALANCE SHEET - NONMAJOR SPECIAL REVENUE FUNDS December 31, 2014 Meridian Special Special Convention Parks & Alcohol Special Airport Library Center Recreation Program Liability ASSETS Cash, including investments $ 96,596 43,306 9, ,603 Receivables: Taxes 75, , ,120 Other 82,989-19, Inventory 70, Prepaids Restricted Assets: Cash Total assets $ 325, ,025 29, ,723 LIABILITIES, DEFERRED INFLOWS AND FUND BALANCE Liabilities Accounts payable $ 43,371-22, Unearned revenue , Total liabilities 43,371-61, Deferred inflows Property taxes 75, , ,120 Total liabilities and deferred inflows 119, ,719 61, ,120 Fund balance Nonspendable: Inventory and prepaids 70, Restricted for: Community development Perpetual care Law enforcement Assigned to: Other purposes 136,214 43, ,603 Unassigned - - (33,189) Total fund balance 206,297 43,306 (32,286) ,603 Total liabilities, deferred inflows and fund balance $ 325, ,025 29, ,723 B-2

84 Tourism & Convention Special Community Special Law Cemetery & Promotion Highway Development Enforcement Mausoleum Totals 6, , , , , , , , , ,889 6, , , ,416 2,210,207 6, ,764 73, , ,350 6, , , , ,636 6, , ,764 1,067, , , , , , , , , (33,189) , , ,652 1,142,619 6, , , ,416 2,210,207 B-3

85 CITY OF NEWTON, KANSAS COMBINING BALANCE SHEET - NONMAJOR CAPITAL PROJECT FUNDS December 31, 2014 Water Dept. Sewer Dept. Other Capital Improve- Improve- Airport Newton Building Improvement ments ments projects Rec Center Projects Fund ASSETS Cash, including investments $ Due from other funds ,160 Total assets $ ,160 LIABILITIES AND FUND BALANCE (DEFICIT) Accounts payable $ Due to other funds 326, , , , ,745 - Total liabilities 326, , , , ,745 - Fund balance (deficit) Assigned to capital asset acquisition ,160 Unassigned (326,770) (477,322) (244,729) (663,981) (294,745) - Total fund balance (326,770) (477,322) (244,729) (663,981) (294,745) 141,160 Total liabilities and fund balance $ ,160 B-4

86 Municipal Equipment Fund Totals , , , , ,007,547-2,007, , ,783 - (2,007,547) 324,623 (1,541,764) 324, ,783 B-5

87 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (DEFICIT) - NONMAJOR GOVERNMENTAL FUNDS Year Ended December 31, 2014 Special Capital Revenue Funds Project Funds Totals Revenues: Taxes $ 1,114,640-1,114,640 Intergovernmental 672,970 1,903,519 2,576,489 Use of money and property 917, ,032 Other 1,197,502 16,000 1,213,502 Total revenues 3,902,144 1,919,519 5,821,663 Expenditures: Personal services 676, ,459 Contractual services 1,248,398-1,248,398 Commodities 1,026,974-1,026,974 Capital outlay - 2,671,598 2,671,598 Total expenditures 2,951,831 2,671,598 5,623,429 Revenues over (under) expenditures 950,313 (752,079) 198,234 Other financing sources (uses): Transfers in 104,938 35, ,255 Transfers out (1,007,742) - (1,007,742) Net change in fund balances 47,509 (716,762) (669,253) Fund balance (deficit), beginning of the year 1,095,110 (825,002) 270,108 Fund balance (deficit), end of the year $ 1,142,619 (1,541,764) (399,145) B-6

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89 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - NONMAJOR SPECIAL REVENUE FUNDS Year Ended December 31, 2014 Meridian Special Special Convention Parks & Alcohol Special Airport Library Center Recreation Program Liability Revenues: Taxes $ 86, ,140-22,979 22,979 30,415 Intergovernmental 80, Use of money and property 608, , Other 1,174,523-15, Total revenues 1,949, , ,849 22,979 22,979 30,415 Expenditures: Personal services 344, , Contractual services 196, , ,872-22,979 65,126 Commodities 1,002,136-21, Total expenditures 1,542, , ,993-22,979 65,126 Revenues over (under) expenditures 406,819 15,351 (170,144) 22,979 - (34,711) Other financing sources (uses): Transfers in , ,938 Transfers out (335,503) - - (22,979) - - Net change in fund balances 71,316 15,351 (120,144) ,227 Fund balance, beginning of the year 134,981 27,955 87, ,376 Fund balance, end of the year $ 206,297 43,306 (32,286) ,603 B-7

90 Tourism & Convention Special Community Special Law Cemetery & Promotion Highway Development Enforcement Mausoleum Totals 219, ,114, ,746-96, , , ,712 1,197, , , ,374 7,712 3,902,144 38, ,459 24, ,512-1,248,398 3, ,026,974 66, ,512-2,951, , , ,862 7, , ,938 (153,514) (495,746) (1,007,742) ,862 7,712 47, ,025 62, ,940 1,095, , , ,652 1,142,619 B-8

91 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE (DEFICIT) - NONMAJOR CAPITAL PROJECT FUNDS Year Ended December 31, 2014 Water Dept. Sewer Dept. Other Improve- Improve- Airport Newton Building ments ments Projects Rec Center Projects Revenues: Taxes $ Intergovernmental - - 1,030, ,456 30,000 Other Total revenues - - 1,030, ,456 30,000 Expenditures: Capital outlay: General government ,752 Public safety Streets and Highways Public works 3, Airport , Culture & recreation ,507,437 20,000 Total expenditures 3, ,687 1,507, ,752 Revenues over (under) expenditures (3,906) - 162,376 (663,981) (146,752) Other financing sources (uses): Transfers in Transfers out Net change in fund balance (3,906) - 162,376 (663,981) (146,752) Fund balance (deficit), beginning of the year (322,864) (477,322) (407,105) - (147,993) Fund balance (deficit), end of the year $ (326,770) (477,322) (244,729) (663,981) (294,745) B-9

92 Capital Municipal Improvement Equipment Fund Fund Totals ,903,519-16,000 16,000-16,000 1,919, , , , , ,527, ,816 2,671,598 - (99,816) (752,079) - 35,317 35, (64,499) (716,762) 141, ,122 (825,002) 141, ,623 (1,541,764) B-10

93 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) GENERAL FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 12,219,717 12,219,717 13,011, ,196 Intergovernmental 432, , , ,338 License and permits 173, , , Charges for services 1,516,750 1,516,750 1,461,940 (54,810) Fines, forfeitures and penalties 530, , ,416 62,066 Use of money 27,800 27,800 16,731 (11,069) Other 24,075 24,075 45,121 21,046 Transfers in 2,142,142 2,142,142 2,147,555 5,413 Total revenues and other sources 17,066,184 17,066,184 18,014, ,003 Expenditures and other uses: Current: General government 3,057,268 3,057,268 2,453, ,127 Public safety 9,123,548 9,123,548 8,672, ,111 Highway and streets 2,055,080 2,055,080 2,173,483 (118,403) Parks and cemeteries 1,248,938 1,248,938 1,683,194 (434,256) Capital outlay 70,000 70, ,833 (44,833) Transfers out 2,138,919 2,138,919 2,287,990 (149,071) Total expenditures and other uses 17,693,753 17,693,753 17,385, ,675 Excess (deficiency) of revenues over (under) expenditures and other uses (627,569) (627,569) 629,109 1,256,678 Unencumbered cash, beginning 627, ,569 1,058, ,608 Unencumbered cash, ending $ - - 1,687,286 1,687,286 B-11

94 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) AIRPORT FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 84,797 84,771 86,174 1,403 Intergovernmental 80,000 80,000 80, Use of money and property 546, , ,873 24,473 Fuel and other sales 959,000 1,209,000 1,147,896 (61,104) Other 23,000 23,000 7,392 (15,608) Total revenues and other sources 1,693,197 1,973,171 1,923,185 (49,986) Expenditures and other uses: Personal services 374, , ,485 30,134 Contractual services 185, , ,040 (19,040) Commodities 778, ,750 1,009,102 (30,352) Transfers out 369, , ,503 34,100 Total expenditures and other uses 1,707,972 1,907,972 1,893,130 14,842 Excess (deficiency) of revenues over (under) expenditures and other uses (14,775) 65,199 30,055 (35,144) Unencumbered cash, beginning 70,546 70,546 15,501 (55,045) Unencumbered cash, ending $ 55, ,745 45,556 (90,189) B-12

95 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) LIBRARY FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 716, , ,140 15,811 Expenditures and other uses: Contractual services 716, , ,789 - Excess (deficiency) of revenues over (under) expenditures and other uses (460) (460) 15,351 15,811 Unencumbered cash, beginning 8,166 1,084 27,955 26,871 Unencumbered cash, ending $ 7, ,306 42,682 B-13

96 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) MERIDIAN CONVENTION CENTER FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Meridian Center revenue $ 720, , ,796 (383,626) Transfers in ,000 50,000 Total revenues and other sources 720, , ,796 (333,626) Expenditures and other uses: Personal services 279, , ,879 (14,877) Contractual services 220, , ,921 42,310 Capital outlay 200, ,000 21, ,758 Total expenditures and other uses 699, , , ,191 Excess (deficiency) of revenues over (under) expenditures and other uses 21,189 21,189 (106,246) (127,435) Unencumbered cash, beginning 85,634 85,634 93,127 7,493 Unencumbered cash, ending $ 106, ,823 (13,119) (119,942) B-14

97 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SPECIAL PARKS AND RECREATION FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 30,000 30,000 22,979 (7,021) Expenditures and other uses: Transfers out 30,000 30,000 22,979 7,021 Excess (deficiency) of revenues over (under) expenditures and other uses Unencumbered cash, beginning Unencumbered cash, ending $ B-15

98 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SPECIAL ALCOHOL PROGRAMS FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 30,000 30,000 22,979 (7,021) Expenditures and other uses: Contractual services 30,000 30,000 22,979 7,021 Excess (deficiency) of revenues over (under) expenditures and other uses Unencumbered cash, beginning Unencumbered cash, ending $ B-16

99 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SPECIAL LIABILITY FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 25,533 25,533 30,415 4,882 Transfers in 54,938 54,938 54,938-80,471 80,471 85,353 4,882 Expenditures and other uses: Contractual services 85,250 85,250 65,126 20,124 Excess (deficiency) of revenues over (under) expenditures and other uses (4,779) (4,779) 20,227 25,006 Unencumbered cash, beginning 9,265 9,265 71,376 62,111 Unencumbered cash, ending $ 4,486 4,486 91,603 87,117 B-17

100 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) TOURISM AND CONVENTION PROMOTION FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes $ 235, , ,953 (15,047) Expenditures and other uses: Personal services 46,000 46,000 38,095 7,905 Contractual services 72,000 72,000 24,748 47,252 Commodities 2,000 2,000 3,596 (1,596) Transfers out 115, , ,514 (38,514) Total expenditures and other uses 235, , ,953 15,047 Excess (deficiency) of revenues over (under) expenditures and other uses Unencumbered cash, beginning Unencumbered cash, ending $ B-18

101 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SPECIAL HIGHWAY FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Intergovernmental $ 500, , ,746 (5,204) Expenditures and other uses: Transfers out 500, , ,746 5,204 Excess (deficiency) of revenues over (under) expenditures and other uses Unencumbered cash, beginning Unencumbered cash, ending $ B-19

102 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SPECIAL LAW ENFORCEMENT FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Forfeitures and other $ 35,000 45,000 96,374 51,374 Expenditures and other uses: Commodities and other 35,000 45,000 43,512 1,488 Excess (deficiency) of revenues over (under) expenditures and other uses ,862 52,862 Unencumbered cash, beginning 52,287 52,287 62,975 10,688 Unencumbered cash, ending $ 52,287 52, ,837 63,550 B-20

103 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) CEMETERY & MAUSOLEUM FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Sale of cemetery lots $ - - 7,712 7,712 Expenditures and other uses: Capital outlay 20,000 20,000-20,000 Excess (deficiency) of revenues over (under) expenditures and other uses (20,000) (20,000) 7,712 27,712 Unencumbered cash, beginning 279, , ,940 52,513 Unencumbered cash, ending $ 259, , ,652 80,225 B-21

104 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) BOND AND INTEREST FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Taxes and special assessments $ 1,371,191 1,371,191 1,389,804 18,613 Intergovernmental and other 287, , ,217 (140,606) Transfers in 2,578,216 2,578,216 2,810, ,381 Total revenues and other sources 4,237,230 4,237,230 4,347, ,388 Expenditures and other uses: Debt service: Principal 2,733,661 2,733,661 2,733,661 - Interest 1,847,936 1,847,936 1,847,936 - Fees and commissions Total expenditures and other uses 4,582,544 4,582,544 4,582,544 - Excess (deficiency) of revenues over (under) expenditures and other uses (345,314) (345,314) (234,926) 110,388 Unencumbered cash, beginning 345, , , ,461 Unencumbered cash, ending $ , ,849 B-22

105 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SEWER FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Service fees $ 6,260,000 8,260,000 8,253,192 (6,808) Interest (500) Other 5,000 5,000 12,920 7,920 Total revenues and other sources 6,265,500 8,265,500 8,266, Expenditures and other uses: Personal services 1,706,592 1,706,592 1,532, ,223 Contractual services 1,033,443 1,033,443 1,026,005 7,438 Commodities 118, ,475 50,043 68,432 Vehicle operating 73,000 73,000 41,905 31,095 Capital outlay 163, , ,000 Transfers out 3,712,389 5,712,389 5,763,849 (51,460) Total expenditures and other uses 6,806,899 8,806,899 8,414, ,728 Excess (deficiency) of revenues over (under) expenditures and other uses (541,399) (541,399) (148,059) 393,340 Unencumbered cash, beginning 1,890,642 1,890,642 2,059, ,862 Unencumbered cash, ending $ 1,349,243 1,349,243 1,911, ,202 B-23

106 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) SANITATION FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Refuse collection $ 1,942,338 1,942,338 1,858,333 (84,005) Other 37,400 37,400 25,019 (12,381) Total revenues and other sources 1,979,738 1,979,738 1,883,352 (96,386) Expenditures and other uses: Personal services 1,063,804 1,063, , ,825 Contractual services 394, , ,942 9,688 Commodities 16,985 16,985 15,633 1,352 Vehicle operating 232, , ,879 39,651 Transfers out 295, , , Total expenditures and other uses 2,003,546 2,003,546 1,814, ,016 Excess (deficiency) of revenues over (under) expenditures and other uses (23,808) (23,808) 68,822 92,630 Unencumbered cash, beginning 147, ,687 (227,577) (375,264) Unencumbered cash, ending $ 123, ,879 (158,755) (282,634) B-24

107 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) WATERWORKS REVENUE FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Service fees $ 5,557,050 5,557,050 4,745,237 (811,813) Interest (40) Other 108, , , Total revenues and other sources 5,665,100 5,665,100 4,853,445 (811,655) Expenditures and other uses: Personal services 1,691,440 1,691,440 1,556, ,257 Contractual services 1,335,393 1,335,393 1,178, ,264 Commodities 164, , ,358 49,642 Vehicle operating 87,500 87,500 56,171 31,329 Capital outlay 85,000 85,000 45,304 39,696 Transfers out 2,239,247 2,239,247 1,670, ,565 Total expenditures and other uses 5,602,580 5,602,580 4,620, ,753 Excess (deficiency) of revenues over (under) expenditures and other uses 62,520 62, , ,098 Unencumbered cash, beginning 2,928,833 2,928,833 2,948,262 19,429 Unencumbered cash, ending $ 2,991,353 2,991,353 3,180, ,527 B-25

108 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) GOLF COURSE REVENUE FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Golf course revenue $ 1,634,948 1,634,948 1,230,975 (403,973) Expenditures and other uses: Personal services 708, , ,332 63,653 Contractual services 493, , ,664 24,923 Commodities ,885 (166,885) Capital outlay 500, , ,000 Total expenditures and other uses 1,702,572 1,702,572 1,280, ,691 Excess (deficiency) of revenues over (under) expenditures and other uses (67,624) (67,624) (49,906) 17,718 Unencumbered cash, beginning 312, , ,566 (88,774) Unencumbered cash, ending $ 244, , ,660 (71,056) B-26

109 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF NET POSITION - INTERNAL SERVICE FUNDS December 31, 2014 Health Benefits Risk Stores and Management Maintenance Total ASSETS Current assets: Cash, including investments $ 1,988, ,399 2,576,382 Inventories - 65,098 65,098 Total current assets 1,988, ,497 2,641,480 Capital assets: Property, plant and equipment, net of accumulated depreciation - 582, ,336 Total assets 1,988,983 1,234,833 3,223,816 LIABILITIES Current liabilities: Accounts payable - 11,730 11,730 Compensated absences - 6,994 6,994 Unreported claims payable 23,900-23,900 Total current liabilities 23,900 18,724 42,624 NET POSITION Net investment in capital assets - 582, ,336 Unrestricted 1,965, ,773 2,598,856 Total net posision $ 1,965,083 1,216,109 3,181,192 B-27

110 CITY OF NEWTON, KANSAS COMBINING STATEMENT REVENUES, EXPENSES AND CHANGES IN NET POSITION - INTERNAL SERVICE FUNDS Year Ended December 31, 2014 Health Benefits Risk Stores and Management Maintenance Total Operating revenues: Rental $ - 55,000 55,000 Reimbursed expenses - 762, ,333 Health benefits charged to other funds 2,762,567-2,762,567 Total revenues 2,762, ,333 3,579,900 Operating expenses: Personal services 1,877, ,820 2,086,589 Contractual services 734,777 35, ,916 Commodities - 594, ,516 Vehicle operating - 40,155 40,155 Depreciation and amortization - 46,915 46,915 Total expenses 2,612, ,545 3,538,091 Operating income (loss) 150,021 (108,212) 41,809 Capital contributions and transfers: Transfers in - 116, ,620 Change in net position 150,021 8, ,429 Net position, beginning of the year 1,815,062 1,207,701 3,022,763 Net position, end of the year $ 1,965,083 1,216,109 3,181,192 B-28

111 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS Year Ended December 31, 2014 Health Benefits Risk Stores and Management Maintenance Total Cash flows from operating activities: Cash received from customers $ 2,762, ,333 3,579,900 Cash payments to suppliers for goods and services (743,147) (661,137) (1,404,284) Cash payments to employees for services - (207,955) (207,955) Cash payments for employee health benefits (1,862,569) - (1,862,569) Net cash provided by (used in) operating activities 156,851 (51,759) 105,092 Cash flows from non-capital financing activities: Transfers in - 116, ,620 Net increase (decrease) in cash 156,851 64, ,712 Cash, beginning of the year 1,832, ,538 2,354,670 Cash, end of the year $ 1,988, ,399 2,576,382 B-29

112 CITY OF NEWTON, KANSAS COMBINING STATEMENT OF CASH FLOWS (CONTINUED) - INTERNAL SERVICE FUNDS Year Ended December 31, 2014 RECONCILIATION OF OPERATING INCOME (LOSS) TO NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES Health Benefits Risk Stores and Management Maintenance Total Operating income (loss) $ 150,021 (108,212) 41,809 Adjustments to reconcile operating income (loss) to net cash: Depreciation and amortization - 46,915 46,915 Changes in operating assets and liabilities: Inventories - 34,628 34,628 Accounts payable and accrued expenses (8,370) (25,090) (33,460) Claims payable 15,200-15,200 Total adjustments 6,830 56,453 63,283 Net cash provided by (used in) operating activities $ 156,851 (51,759) 105,092 NONCASH INVESTING ACTIVITIES $ B-30

113 CITY OF NEWTON, KANSAS SCHEDULE OF BUDGETARY ACCOUNTS (Non-GAAP Basis) STORES AND MAINTENANCE FUND Year Ended December 31, 2014 Variance Budgeted Amounts With Final Original Final Actual Budget Revenues and other sources: Rental $ 55,000 55,000 55,000 - Fuel sales 575, , ,277 (158,723) Reimbursed expenses 382, , ,056 (36,194) Transfers in 116, , ,620 - Total revenues and other sources 1,128,870 1,128, ,953 (194,917) Expenditures and other uses: Personal services 216, , ,820 7,328 Contractual services 44,605 44,605 35,139 9,466 Commodities 747, , , ,845 Vehicle operating 53,000 53,000 40,155 12,845 Transfers out 79,000 79,000 79,000 - Total expenditures and other uses 1,140,138 1,140, , ,484 Excess (deficiency) of revenues over (under) expenditures and other uses (11,268) (11,268) 12,299 23,567 Unencumbered cash, beginning 71,869 71,869 53,540 (18,329) Unencumbered cash, ending $ 60,601 60,601 65,839 5,238 B-31

114 CITY OF NEWTON, KANSAS COMPONENT UNIT FUND FINANCIAL STATEMENTS - NEWTON PUBLIC LIBRARY BALANCE SHEET December 31, 2014 Special General Revenue Fund Funds Total Assets Cash $ 588, ,844 1,444,787 Liabilities and Fund Balance Liabilities $ Fund Balance Unreserved 588, ,844 1,444,787 $ 588, ,844 1,444,787 COMPONENT UNIT FUND FINANCIAL STATEMENTS - NEWTON PUBLIC LIBRARY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2014 Special General Revenue Fund Funds Total Revenues: Taxes $ 716, ,789 Intergovernmental 12,000 58,590 70,590 Fines and fees - 21,608 21,608 Interest - 5,469 5,469 Other - 48,995 48, , , ,451 Expenditures Personal services 417,528 43, ,802 Contractual services 79,975 13,731 93,706 Commodities 149,284 34, ,405 Capital outlay 54,752-54, ,539 91, ,665 Revenues over (under) expenditures 27,250 43,536 70,786 Fund balance, beginning 561, ,308 1,374,001 Fund balance, ending $ 588, ,844 1,444,787 B-32

115 CITY OF NEWTON, KANSAS COMPONENT UNIT FUND FINANCIAL STATEMENTS - NEWTON PUBLIC BUILDING COMMISSION BALANCE SHEET December 31, 2014 Debt Service Fund Assets Restricted assets Cash and investments $ 1,051,238 Liabilities and Fund Balance Liabilities $ - Fund balances Reserved for debt service 1,051,238 Unreserved - $ 1,051,238 COMPONENT UNIT FUND FINANCIAL STATEMENTS - NEWTON PUBLIC BUILDING COMMISSION STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE Year Ended December 31, 2014 Debt Service Funds Revenues: Lease payments - other governments $ 333,188 Property tax 85,892 Interest 1, ,232 Expenditures Debt Service Principal 575,000 Interest 265,924 Capital outlay 346,760 Other 1,856 1,189,540 Revenues over (under) expenditures (769,308) Other financing sources (uses) Contributed capital 500,000 Net change in fund balances (269,308) Fund balance, beginning 1,320,546 Fund balance, ending $ 1,051,238 B-33

116 This Page Intentionally Left Blank

117 Statistical Section

118 STATISTICAL SECTION This part of the City of Newton's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. Revenue Capacity These schedules contain information to help the reader assess the City's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Page C-1 C-11 C-15 C-21 C-24 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented GASB Statement 34 in 2003; schedules presenting government-wide information include information beginning in that year.

119 City of Newton, Kansas Net Position by Component Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Governmental Activities Invested in capital assets, net of related debt $ 17,579,719 $ 10,059,657 $ 13,714,164 $ 11,139,576 Restricted 684, , , ,132 Unrestricted 6,082,032 15,810,935 14,797,611 16,128,791 Total Governmental Activities Net Position 24,346,604 26,640,488 29,327,011 28,192,499 Business-Type Activities Invested in capital assets, net of related debt 9,329,169 14,837,258 23,722,216 22,044,201 Restricted 833, , , ,620 Unrestricted 4,088,570 4,681,419 (2,353,445) 3,597,348 Total Business-Type Activities Net Position 14,251,120 20,350,455 22,091,391 26,364,169 Primary Government Invested in capital assets, net of related debt 26,908,885 24,896,915 37,436,380 33,183,777 Restricted 1,518,234 1,601,674 1,537,856 1,646,752 Unrestricted 10,170,602 20,492,354 12,444,166 19,726,139 Total Primary Government Net Position $ 38,597,721 $ 46,990,943 $ 51,418,402 $ 54,556,668 C-1

120 Fiscal Year $ 11,370,123 $ 8,065,986 $ 17,177,822 $ 24,482,456 $ 26,838,054 $ 29,883, ,491 1,079,641 1,447,936 1,404,089 1,536,715 1,362,548 20,409,741 25,780,238 17,332,595 13,844,191 17,093,475 16,219,976 32,538,355 34,925,865 35,958,353 39,730,736 45,468,244 47,466,157 21,643,440 23,129,580 25,189,683 25,496,054 24,448,242 27,620, , , , , , ,960 4,755,132 6,921,692 11,452,854 11,793,203 14,308,166 14,007,071 27,121,192 30,773,892 37,077,497 37,724,217 39,191,368 42,062,880 33,013,563 31,195,566 42,367,505 49,978,510 51,286,296 57,504,482 1,481,111 1,802,261 1,882,896 1,839,049 1,971,675 1,797,508 25,164,873 32,701,930 28,785,449 25,637,394 31,401,641 30,227,047 $ 59,659,547 $ 65,699,757 $ 73,035,850 $ 77,454,953 $ 84,659,612 $ 89,529,037 C-2

121 City of Newton, Kansas Changes in Net Position Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Expenses Governmental Activities: General Government $ 2,090,926 $ 1,697,771 $ 1,759,931 $ 2,622,435 Public Safety 5,469,414 5,974,498 6,455,048 6,674,096 Highway and streets 1,930,104 2,051,405 2,300,653 2,358,206 Culture and recreation 1,622,314 1,655,778 1,732,824 2,727,583 Airport 1,430,605 1,336,986 1,519,394 1,717,206 Public works 4,755,849 6,227,410 1,703,283 4,707,812 Interest and fiscal charges 663, ,475 1,059,487 1,215,544 Total Governmental Activities Expenses 17,962,805 19,767,323 16,530,620 22,022,882 Business-Type Activities: Sewer 2,180,702 2,335,945 2,478,357 2,921,218 Sanitation 1,266,653 1,331,069 1,395,825 1,537,128 Waterworks 2,510,093 2,717,331 2,745,096 2,890,052 Interest and fiscal charges Golf Course - 723,851 1,546,049 1,664,799 Total Business-Type Activities Expenses 5,957,448 7,108,196 8,165,327 9,013,197 Total Primary Government Expenses $ 23,920,253 $ 26,875,519 $ 24,695,947 $ 31,036,079 Program Revenues Governmental Activities Charges for Services: General Government $ 291,913 $ 548,181 $ 329,523 $ 317,368 Public Safety 1,859,840 1,851,987 1,912,477 1,659,051 Highway and streets 10,973 6,669 10,751 17,753 Culture and recreation 47,080 53,898 50,530 48,065 Airport - - 1,354,546 1,609,259 Operating Grants and Contributions 496,251 8,340 66, ,537 Capital Grants and Contributions 1,476,369 1,470, ,490 1,159,535 Total Governmental Activities Program Revenues 4,182,426 3,939,488 4,564,171 5,200,568 Business-Type Activities: Charges for Services: Sewer 3,067,544 3,330,053 3,315,559 3,642,033 Sanitation 1,461,344 1,493,006 1,533,682 1,610,654 Waterworks 2,688,360 2,854,248 2,656,445 3,174,151 Golf Course - 515,510 1,141,304 1,260,992 Capital Grants and Contributions 72,391 6,070,858 2,746,954 4,521,609 Total Business-Type Activities Program Revenues 7,289,639 14,263,675 11,393,944 14,209,439 Total Primary Government Program Revenues $ 11,472,065 $ 18,203,163 $ 15,958,115 $ 19,410,007 C-3

122 Fiscal Year $ 3,001,203 $ 2,167,870 $ 2,276,104 $ 2,281,149 $ 2,288,726 $ 2,748,317 7,385,400 7,769,057 8,307,481 8,400,567 8,646,918 9,091,977 3,089,610 2,802,687 2,699,441 2,862,971 3,032,939 3,123,553 2,583,307 2,646,482 2,499,540 3,232,179 3,419,439 3,301,952 1,260,266 1,372,921 1,456,191 1,596,306 1,552,477 2,037,345 1,132,492 2,646,245 1,552, ,461 1,864,153 1,768,709 1,596,989 1,722,934 1,703,997 1,576,424 1,538,070 1,455,266 20,049,267 21,128,196 20,495,656 20,931,057 22,342,722 23,527,119 3,604,222 3,729,441 2,003,034 4,203,694 4,281,556 4,497,867 1,600,729 1,606,497 3,197,842 1,754,844 1,712,657 1,719,060 3,087,158 2,959,375 3,857,226 3,453,805 3,337,612 3,626, ,768,219 1,637,964 1,572,092 1,640,913 1,567,606 1,810,959 10,060,328 9,933,277 10,630,194 11,053,256 10,899,431 11,654,409 $ 30,109,595 $ 31,061,473 $ 31,125,850 $ 31,984,313 $ 33,242,153 $ 35,181,528 $ 538,560 $ 566,687 $ 363,343 $ 360,625 $ 363,047 $ 309,320 1,689,492 1,624,146 1,786,737 1,875,450 1,918,658 1,839,673 31,683 61,702 37,186 2,744 16,460 17,054 57,080 64,185 1,325, , , ,347 1,131,187 1,365, ,779 1,527,578 1,461,068 1,782, , , , , , , ,188 1,396,592 5,587,278 4,369,812 5,828,963 2,586,491 4,949,074 5,797,079 10,071,022 9,101,078 10,556,766 7,530,992 4,420,380 5,080,057 5,412,145 5,358,722 5,728,875 8,253,518 1,634,082 1,647,499 1,643,185 1,702,587 1,758,369 1,886,439 3,949,283 4,751,841 5,403,826 5,375,672 4,719,479 4,866,859 1,296,501 1,244,278 1,238,919 1,302,271 1,158,457 1,212,284 1,002,689 2,596, , , , ,107 12,302,935 15,319,728 14,363,504 13,884,252 14,254,413 16,888,207 $ 17,252,009 $ 21,116,807 $ 24,434,526 $ 22,985,330 $ 24,811,179 $ 24,419,199 C-4

123 City of Newton, Kansas Changes in Net Position Last Ten Fiscal Years (Continued) (accrual basis of accounting) Fiscal Year Net (Expense) Revenue Governmental Activities $ (13,780,379) $ (15,827,835) $ (11,966,449) $ (16,822,314) Business-Type Activities: 1,332,191 7,155,479 3,228,617 5,196,242 Total Primary Government Net Expense $ (12,448,188) $ (8,672,356) $ (8,737,832) $ (11,626,072) General revenues: Governmental Activities: Taxes Property taxes and special assessments $ 5,776,582 $ 10,564,967 $ 5,479,666 $ 7,130,473 Sales tax 1,642,834 2,122,257 4,332,495 4,750,511 Franchise taxes 1,231,400 1,230,254 1,321,358 1,425,073 Other 595, , , ,809 Fines, forfeitures and penalties Licenses and permits Lease payments from local governments Intergovernmental, not restricted to specific programs 626, , , ,693 Airport fuel sales 984, , Use of property 426, , Investment earnings 270, , , ,062 Gain (Loss) on sale of property 136,803 5,551 82,967 (316,206) Other 39, ,862 70,167 15,373 Transfers in (out) 1,286,169 1,131,277 1,586, ,014 Total governmental activities 13,017,665 18,121,719 14,652,972 15,687,802 Business-Type Activities Investment earnings 12,289 20,861 22,112 8,686 Gain (Loss) on sale of property (1,000) Other 57,084 54,272 76,310 58,864 Transfers in (out) (1,286,169) (1,131,277) (1,586,103) (990,014) Total Business-Type Activities (1,216,796) (1,056,144) (1,487,681) (923,464) Total Primary Government $ 11,800,869 $ 17,065,575 $ 13,165,291 $ 14,764,338 Change in Net Position Governmental Activities: $ (762,714) $ 2,293,884 $ 2,686,523 $ (1,134,512) Business-Type Activities 115,395 6,099,335 1,740,936 4,272,778 Total Primary Government $ (647,319) $ 8,393,219 $ 4,427,459 $ 3,138,266 C-5

124 Fiscal Year $ (15,100,193) $ (15,331,117) $ (10,424,634) $ (11,829,979) $ (11,785,956) $ (15,996,127) 2,248,778 5,386,451 3,733,310 2,830,996 3,354,982 5,233,798 $ (12,851,415) $ (9,944,666) $ (6,691,324) $ (8,998,983) $ (8,430,974) $ (10,762,329) $ 7,136,817 $ 8,494,152 $ 6,056,147 $ 6,012,857 $ 7,896,230 $ 7,010,541 4,352,846 4,368,038 4,630,105 4,766,390 4,822,064 5,084,012 1,396,197 1,456,492 1,506,960 1,409,419 1,533,637 1,641, , , , , ,779 1,050, ,108, , , , , , ,718 27,106 8,726 9,952 8,873 7,665 78,130 (12,915) (11,420) ,899 95, , , , ,311 1,576,178 1,885,605 1,407,046 2,112,029 1,887,870 2,362,303 16,422,210 17,718,627 15,269,946 16,068,245 18,123,031 17,994, (6,171) , , ,395 16, (1,576,178) (1,885,605) (1,407,046) (2,112,029) (1,887,870) (2,362,303) (1,491,755) (1,733,751) (1,242,529) (2,095,170) (1,887,831) (2,362,286) $ 14,930,455 $ 15,984,876 $ 14,027,417 $ 13,973,075 $ 16,235,200 $ 15,631,754 $ 1,322,017 $ 2,387,510 $ 4,845,312 $ 4,238,266 $ 6,337,075 $ 1,997, ,023 3,652,700 2,490, ,826 1,467,151 2,871,512 $ 2,079,040 $ 6,040,210 $ 7,336,093 $ 4,974,092 $ 7,804,226 $ 4,869,425 C-6

125 City of Newton, Kansas Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year General Fund Nonspendable Restricted Committed Assigned Unassigned Reserved $ 110,081 $ 153,710 $ 188,852 $ 109,987 Unreserved 2,910,809 4,372,388 2,727,301 2,494,977 Total General Fund $ 3,020,890 $ 4,526,098 $ 2,916,153 $ 2,604,964 All Other Governmental Funds Nonspendable Restricted Committed Assigned Unassigned Reserved 574, , , ,145 Unreserved, reported in: Special revenue funds 6,326,011 6,533,036 10,945,145 10,367,062 Debt service fund 2,699,891 2,597,347 2,202,985 1,788,070 Capital project funds (11,691,443) (7,761,288) (10,780,514) (9,771,281) Total all other governmental funds $ (2,090,769) $ 1,985,281 $ 2,994,000 $ 3,197,996 NOTE: The City implemented presenting fund balance classifications in aggregate for Year(s) 2011 and forward. C-7

126 Fiscal Year ,529 18, , , , ,503,615 1,133,753 4,116,323 4,186, ,848,524 3,329,547 2,273,622 2,669,488 $ 102,598 $ 352, ,129,318 2,085, $ 2,231,916 $ 2,437,654 $ 7,662,589 $ 4,481,344 $ 6,864,190 $ 7,325, ,044 79,067 64,971 70, ,447,936 1,404,089 1,536,715 1,362, ,934 3,586, , , (7,064,885) (9,788,112) (6,521,063) (7,904,689) 655, , ,524,832 10,275, ,402, , (5,307,944) (4,274,585) $ 6,274,965 $ 7,385,261 $ (5,439,971) $ (4,718,081) $ (4,131,896) $ (5,734,249) C-8

127 City of Newton, Kansas Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Revenues: Taxes and special assessments $ 9,569,434 $ 10,353,492 $ 12,159,447 Intergovernmental 3,026,361 2,140,243 1,503,639 Licenses and permits 161, , ,620 Charges for services 1,530,909 1,737,423 1,658,576 Fines, forfeitures and penalties 517, , ,305 Use of money and property 697, , ,619 Other 1,223,531 1,064,754 1,151,977 Total revenues 16,726,923 16,797,597 18,071,183 Expenditures: Current: General government 1,951,800 1,500,786 1,603,000 Public safety 5,385,357 5,756,083 6,195,174 Highway and streets 1,452,224 1,498,980 1,659,562 Culture and recreation 1,488,601 1,497,586 1,550,645 Airport 1,317,983 1,203,812 1,296,418 Capital outlay 10,327,096 10,811,314 7,754,843 Debt service: Principal 988,000 1,030,357 1,405,838 Interest 668, ,832 1,001,516 Fees and commissions 47 81,016 26,516 Total expenditures 23,579,639 24,022,766 22,493,512 Excess (deficiency) of revenues over (under) expenditures (6,852,716) (7,225,169) (4,422,329) Other financing sources (uses): Proceeds from general obligation bonds - 11,685,150 2,300,000 Proceeds of refunding bonds Transfers in 2,853,486 3,974,542 7,388,749 Payment to refunding bond escrow agent Transfers out (1,552,669) (2,853,265) (5,867,646) Total other financing sources (uses) 1,300,817 12,806,427 3,821,103 Net change in fund balances $ (5,551,899) $ 5,581,258 $ (601,226) Debt service as a percentage of noncapital expenditures 8.94% 8.61% 14.64% C-9

128 Fiscal Year $ 12,857,666 $ 12,666,299 $ 12,617,601 $ 13,655,762 $ 13,778,577 $ 14,429,226 $ 15,540,667 2,299,265 2,509,358 2,529,759 6,987,745 5,617,302 7,102,080 3,197, , , , , , , ,173 1,346,265 1,625,323 1,624,996 1,520,957 1,557,363 1,660,051 1,454, , , , , , , , , , , , , , ,512 1,243, ,812 1,192,747 2,242,380 1,533,700 1,371,728 1,392,824 19,223,362 19,055,368 19,213,516 25,672,119 23,836,564 26,140,298 23,276,738 1,726,718 1,892,707 1,967,920 2,053,338 2,146,861 2,167,088 2,582,772 6,627,061 7,183,946 7,307,075 7,786,992 8,007,610 8,471,230 8,710,352 1,670,574 1,901,983 1,922,956 1,808,089 1,992,332 2,170,059 2,161,912 2,545,961 2,346,361 2,410,394 2,244,375 2,856,180 3,065,122 2,898,249 1,509,439 1,034,837 1,122,594 1,137,235 1,282,929 1,260,621 1,542,993 12,551,711 6,350,984 10,806,397 11,901,665 8,533,381 6,900,796 5,066,359 1,348,743 1,476,798 1,637,825 1,908,264 1,942,355 2,165,351 2,319,928 1,094,625 1,588,698 1,494,407 1,718,438 1,573,325 1,474,474 1,496, , ,899 54,024 1,634 65,689 1, ,186,342 23,943,213 28,723,592 30,560,030 28,400,662 27,675,926 26,780,490 (9,962,980) (4,887,845) (9,510,076) (4,887,911) (4,564,098) (1,535,628) (3,503,752) 8,865,773 3,929,749 12,735, ,635, (950,000) (3,794,495) - 3,570,000 5,225,000-5,034,101 5,049,392 6,482,950 6,362,279 6,821,972 4,902,531 4,537, (3,577,286) (5,243,764) - (4,044,087) (3,461,214) (4,597,345) (4,955,203) (4,709,943) (3,014,661) (2,174,927) 9,855,787 4,567,927 10,826,110 1,407,076 2,104,743 4,504,659 2,362,303 $ (107,193) $ (319,918) $ 1,316,034 $ (3,480,835) $ (2,459,355) $ 2,969,031 $ (1,141,449) 11.02% 15.16% 13.86% 17.94% 16.86% 16.08% 16.25% C-10

129 City of Newton, Kansas Tax Revenues by Source, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Property Motor Sales Transient Payments in Special Year Tax Vehicle Tax Tax Guest Tax Lieu of Taxes Assessments Total 2005 $ 4,767, ,832 1,642, ,161 1,551, ,072 $ 9,465, $ 5,038, ,890 2,122, ,056 1,609, ,539 $ 10,278, $ 4,179, ,444 4,332, ,288 1,670, ,444 $ 12,069, $ 4,549, ,700 4,750, ,136 1,820, ,807 $ 12,759, $ 4,655, ,089 4,437, ,727 1,821, ,553 $ 12,677, $ 4,551, ,943 4,351, ,881 2,039, ,666 $ 12,617, $ 4,794, ,619 4,608, ,042 2,145,077 1,148,640 $ 13,503, $ 4,944, ,351 4,766, ,593 2,059,084 1,090,213 $ 13,724, $ 5,180, ,981 4,846, ,327 2,157,184 1,174,714 $ 14,279, $ 5,783, ,810 5,084, ,953 2,403,224 1,220,746 $ 15,427,349 Change % -5.2% 209.5% 99.7% 54.9% 91.0% 63.0% C-11

130 Assessed Value and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Assessed Estimated Value as a Fiscal Real Personal Motor Total Direct Actual Percentage of Year Property Property Vehicle Total Tax Rate Value Actual Value ,307,153 12,719,166 16,308, ,334, ,371, % ,424,497 13,110,108 17,347, ,881, ,732, % ,992,400 12,182,980 17,841, ,016, ,413, % ,909,133 11,349,333 17,761, ,020, ,152, % ,212,444 10,378,844 17,604, ,196, ,948, % ,464,702 10,067,614 16,698, ,231, ,509, % ,090,889 9,866,440 16,765, ,723, ,160, % ,430,488 9,548,769 16,685, ,664, ,031, % ,607,455 9,516,129 16,974, ,097, ,446, % ,681,175 8,459,719 17,144, ,285, ,683, % Source: Harvey County Clerk City of Newton, Kansas The assessed value of each class is calculated by varying percentages of appraised or market value. The range varies from 11.5% for residential to 33% for public utilities. n/a: Information not available. Collected within the Taxes Levied Fiscal Year Collections Total Collections to Date Fiscal for the Percentage in Subsequent Percentage Year Fiscal Year Amount of Levy Years Amount of Levy ,379,325 5,191, % 101,149 5,292, % ,719,509 5,448, % 138,972 5,587, % ,118,474 4,885, % 178,127 5,064, % ,350,300 5,153, % 174,177 5,327, % ,929,400 5,477, % 226,544 5,704, % ,777,500 5,320, % 219,146 5,539, % ,123,178 5,728, % 161,302 5,890, % ,436,611 5,949, % 112,630 6,062, % ,488,404 6,163, % 0 6,163, % ,194,203 6,850, % 0 6,850, % Source: Harvey County Clerk & City Financial's Property Tax Levies and Collections Last Ten Fiscal Years * Fiscal year refers to Budget year. Tax levy is set in November of prior year. C-12

131 City of Newton, Kansas Direct and Overlapping Property Tax Rates (Per $1,000 of assessed value) Last Ten Fiscal Years City of Newton Other Overlapping Governments Bond School Sand Creek Tax General Airport and Special District Harvey State of Watershed Grand Year Fund Fund Library Interest Liability Total No 373 County Kansas District Total Note: Tax Year is year in which tax is levied. Collections are received in the year following. Source: Harvey County Clerk C-13

132 City of Newton, Kansas Principal Property Taxpayers Current Year and Nine Years Ago Percentage Percentage of Total of Total Taxable Taxable Taxable Taxable Assessed Assessed Assessed Assessed Taxpayer Value Rank Value Value Rank Value Walmart Stores 2,155, % 2,277, % Dillon Companies 1,723, % 907, % KG&E (Western Resources) 2,011, % 1,784, % Newton Medical Center 850, % Kansas Gas Service 1,266, % 725, % Southwestern Bell 1,715, % Norcraft Company 866, % 1,809, % Burlington Northern 1,038, % 519, % Bunting Magnetics Chisholm Trail Shopping Center Newton Investors Sunflower Hospitality 638, % 471, % Cargill, Inc. 1,596, % 745, % Future Foam Standridge Color Broadway Hospitality 752, % Charles Newell 352, % Total $ 12,898, % $ 11,309, % Total Assessed Value $ 117,140,894 $ 96,190,807 Source: Harvey County Clerk C-14

133 C-15 City of Newton, Kansas Ratios of Outstanding Debt by Type Last Ten Fiscal Years General Bonded Debt Percentage Other Governmental Activities Debt General Resources Net General of Actual KDOT Special Fiscal Obligation Restricted Obligation Taxable Value Per Revolving Capital Assessment Year Bonds for Debt Service Bonds of Property a Capita bc Loan Lease Bonds ,885,341-8,885, % $ ,942, ,470,739-14,470, % $ ,794-9,130, ,841,342-15,841, % $ ,956-8,720, ,298,218-22,298, % $1, ,213-9,849, ,983,656-22,983, % $1, ,455-10,735, ,144,817-28,144, % $1, ,565-13,202, ,914, ,885 26,227, % $1, ,424-12,586, ,797, ,013 25,144, % $1, ,907-11,913, ,269, ,775 25,505, % $1, ,885-12,644, ,752, ,849 24,223, % $1, , ,077 11,890,120 Business-Type Activities Total Percentage Fiscal Bonded Capital Term Primary of Personal Per Year Debt Lease Loans Government d Income c Capita c ,251,161-3,723,503 $ 19,802, % $1, ,004,375 7,575,000 3,520,984 $ 37,676, % $2, ,742,590 7,490,000 3,310,182 $ 38,003, % $2, ,920,031 7,400,000 3,764,490 $ 50,052, % $2, ,618,245 7,310,000 9,429,921 $ 59,815, % $3, ,057,162 7,115,000 12,198,671 $ 69,372, % $3, ,152,284 6,915,000 11,057,137 $ 65,190, % $3, ,718,122 6,822,800 10,446,809 $ 62,172, % $3, ,275,286 7,115,000 9,815,108 $ 64,497, % $3, ,746,553 6,660,000 15,606,145 $ 67,132, % $3,511 Note: Details regarding the City's outstanding debt can be found in the Notes on pages A-39 - A-43 and in the Statistical Section on pages C-16 - C-21. a- See Page C-12 for taxable property value data. b- Per Capita is based on net general obligation bonds. c- See page C-22 for personal income and poplulation data. d- Includes general bonded debt, other governmental activities debt, and business-type activites debt.

134 City of Newton, Kansas Direct and Overlapping Governmental Activities Debt As of December 31, 2014 Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Unified School District No. 373 $ 42,404, % $ 32,732,412 Harvey County 4,755, % 2,053,685 47,159,990 34,786,096 Direct debt, City of Newton: * General obligation bonds 46,290, % 46,290,000 Total direct and overlapping debt $ 93,449, % $ 81,076,096 Source: Harvey Co Clerk, Notes to Financial Statements under Long-Term Debt *Direct Debt is related to General Obligation bonds & loans payable from Governmental Activites. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the city. This schedule estimates the portion of the outstanding debt of those overlapping governments.the percentage applicable is estimated by determining the portion of another governmental unit's taxable assessed value that is within the boundaries of the city and divide this by each unit's total taxable assessed value. C-16

135 C-17 City of Newton, Kansas Legal Debt Margin Information Last Ten Fiscal years Fiscal Year Debt Limit 33,700,316 35,364,562 37,204,943 39,006,115 38,158,858 38,169,334 39,516,955 39,499,303 40,097,806 40,234,483 Total net debt applicable to limit 11,040,109 20,822,653 22,187,015 22,795,441 24,840,813 29,572,662 28,151,767 27,441,332 27,884,239 26,437,566 Legal debt margin 22,660,207 14,541,909 15,017,928 16,210,674 13,318,045 8,596,672 11,365,188 12,057,971 12,213,567 13,796,917 Total net debt applicable to the limit as a percentage of debt limit 32.76% 58.88% 58.44% 65.10% 77.48% 71.24% 69.47% 69.54% 65.71% Legal Debt Margin Calculation for Fiscal Year 2014 Total assessed value $ 134,114,942 Debt limit (30% of total assessed value) $ 40,234,483 Debt applicable to limit: General obligation bonds 26,966,415 Less: Amount set aside for repayment of general obligation debt 528,849 Total net debt applicable to limit 26,437,566 Legal debt margin $ 13,796,917 Note: Per Kansas Statutes Annotated ("K.S.A") Section , "The authorized and outstanding bonded indebtedness of any city shall not exceed 30% of the assessed valuation of the city." K.S.A. Section allows for certain exceptions to calculating the legal debt limit.

136 C-18 City of Newton, Kansas Pledged-Revenue Coverage Last Ten Fiscal Years Water & Sewer Revenue Bonds KDHE Revolving Loans Special Assessment Bonds Utility Net Debt Service Debt Service Total Special Debt Service Fiscal Service Less: Available (Next Fiscal Year) (Next Fiscal Year) Revenue Assessment (Next Fiscal Year) Year Charges Expenses 1 Revenue Principal Interest Coverage 2 Principal Interest Coverage 2 Collections Principal Interest Coverage ,819,667 3,582,276 2,237, , , , , , , , ,251,476 3,925,941 2,325, , , , , , , , ,070,083 4,097,801 1,972, ,000 90, , , , , , ,883,404 4,531,964 2,351, ,000 76, , , , , , ,459,718 4,863,014 3,596, ,000 60, , , , , , ,957,831 4,533,391 5,424, ,000 43, , , , , , ,963,722 4,839,833 6,123, ,000 19, , , ,148, , , ,734,426 5,284,176 5,450, ,000 13, , , ,090, , , ,448,371 5,317,554 5,130, ,000 6, , , ,174, , , ,120,387 5,609,635 7,510, n/a 675, , ,220, , , Note: Details regarding the city's outstanding debt can be found in the notes on pages A-39 - A-44 and C-15 - C Expenses do not include depreciation. 2 - The City maintains Net Revenues in the Combined Utility in an amount which will be not less than 125% of the amount required to be paid for debt service, on bonds or Permitted Loans, by the City in the next succeeding fiscal year.

137 C-19 City of Newton, Kansas Schedule of Bonded Indebtedness by Category As of December 31, 2014 Date Interest Original Principal Principal of Final Rates Principal Outstanding Outstanding Type of Debt Issue Maturity % Amount 1/1/2014 Issued Retired Refunded 12/31/2014 General Obligation: Int Imp/Water/Sewer ,323, , , Airport Improvements , ,000-25, ,000 Int Imp/Airport/Water/Sewer ,515,000 2,520, ,000-2,185,000 Airport/Internal Improvements ,100, , , ,000 Southside Sewer Interceptor ,300,000 1,800,000-95,000-1,705,000 Int Imp/Airport/Water/Sewer ,600,000 10,710, ,000-10,225,000 Int Imp/Airport/Street , ,000-75, ,000 Int Imp/Airport/Street ,815,000 5,315, ,000-4,900,000 Int Imp/Refunding ,800,000 6,605, ,000-6,075,000 Taxable GO Bonds ,000,000 2,000, ,000,000 Improvements/Conf Center ,935,000 2,815, ,000-2,690,000 Int Imp/Water/Sewer/Refunding ,570,000 3,510,000-50,000-3,460,000 Int Imp/Water/Sewer/Refunding ,595,000 9,595, ,000-9,470,000 Total General Obligation Bonds 64,778,000 46,290,000-2,635,000-43,655,000 Revenue Bonds: Water Improvements ,240, , , Total Revenue Bonds 1,240, , , Other: Kansas Public Water Supply ,086, , , ,479 Kansas Public Water Supply ,231, ,969-80, ,581 Kansas Water Pollution Control ,207, ,634-56, ,701 Kansas DOT-Anderson Road ,070, ,885-98, ,223 Kansas Water Pollution Control ,000,000 5,932, ,344-5,635,240 Kansas Public Water Supply , ,162-24, ,460 Kansas Public Water Supply ,011,842 1,469,160-70,625-1,398,535 Kansas Public Water Supply ,444,148-6,444,148 6,444,148 Total Other 23,703,085 10,193,993 6,444, ,774-15,886,367 Total Indebtedness 89,721,085 56,598,993 6,444,148 3,501,774-59,541,367

138 City of Newton, Kansas Schedule of Industrial Revenue Bonds by Obligee * As of December 31, 2014 Original Principal Principal Obligated Entity Issue Final Principal Outstanding Outstanding or Purpose Series Date Maturity Amount 1/1/2014 Issued Retired 12/31/2014 Hehr International 1999-B 06/15/99 01/01/14 2,695, , ,000 - CPT Enterprises, Inc A 09/09/99 09/09/19 1,500, ,060-98, ,792 Mid-Cont Industries, Inc /01/00 06/15/15 300,000 50,738-33,117 17,621 Newton Healthcare Corp /01/03 10/01/18 4,800,000 2,175, ,000 1,790,000 Newton Healthcare Corp /21/08 11/15/24 11,385,000 8,615, ,000 7,985,000 JRW INVESTMENT L.L.C /08/11 12/31/21 800, ,051-62, ,959 $ 21,480,000 12,426,849-1,473,476 10,953,373 Note: * Issuance of these industrial revenue bonds is authorized by KSA et seq. KSA states in pertinent part " The principal and interest of said bonds shall be payable solely and only from the special fund herein provided for such payments, and said bonds shall not in any respect be a general obligation of such city, nor shall they be payable in any manner by taxation ". C-20

139 City of Newton, Kansas Demographic and Economic Statistics Last Ten Fiscal Years Per Capita School Personal Personal District 373 Unemployment Fiscal Population Income Income Enrollment Rate % Year (1) (2) (2) (3) (4) ,158 $547,772,386 $30,167 3, % ,229 $613,788,659 $33,671 3, % ,093 $655,943,622 $36,254 3, % ,133 $699,063,416 $38,552 3, % ,133 $755,710,908 $41,676 3, % ,133 $712,844,496 $39,312 3, % ,132 $716,378,608 $37,444 3, % ,230 $735,624,420 $38,254 3, % ,189 $782,182,018 $40,762 3, % ,120 $808,317,120 $42,276 3, % Sources: (1) Population estimates are taken from the Kansas Division of the Budget. (2) Bureau of Economic Analysis, for Harvey County, Kansas (3) School District 373 enrollment only. Private schools are not included. (4) Harvey County Economic Development Council, Inc. C-21

140 City of Newton, Kansas Principal Employers Current Year and Nine Years Ago Percentage Percentage of Total of Total Employer * Employees Rank Employment Employees Rank Employment Unified School District # % Newton Medical Center % % BNSF Railway Company % Wal-Mart % % Norcraft Industries % % Prairie View Hospital % % Dillons Stores % % City of Newton % % Asbury Park Harvey County % Bunting Magnetics % United Methodist Youthville 0.0% Friendly Acres 0.0% Northview Development Services % Kansas Christian Home 0.0% ResCare Kansas % Total 3, % 3, % Note: * "Largest Private Sector Employers" were listed prior to Source: Harvey County Economic Development Council, Inc. C-22

141 City of Newton, Kansas Full-time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years Function/Program General Government Administration Park and Cemetery Law Department Municipal Court Information Technology Historic Preservation Planner Convention Visitors Bureau Public Safety Fire/EMS Police Public Works Engineering Facility Operations Street Division Shop Services Water Wastewater Sanitation Airport Total Source: City of Newton Human Resource Department C-23

142 C-24 City of Newton, Kansas Operating Indicators by Function/Program Last Ten Fiscal Years Function/Program Fire Emergency Medical Service calls 2,606 2,617 2,955 2,899 2,703 2,683 2,796 2,828 2,923 3,095 Fire calls Fire inspections Police Total calls 25,046 26,326 26,101 27,899 39,776 39,084 39,573 42,023 40,588 33,226 Reported crimes 1,050 1,338 1,188 1,339 1,276 1, ,339 1,510 1,163 Adult arrests 1,688 2,086 2,085 2,120 2,027 1,832 1,747 1,793 2,107 1,951 Juvenile arrests Engineering Division New dwelling starts Environmental caseload ,180 1, ,004 1, ,211 Water Number of customers 7,485 7,522 7,653 7,692 7,683 7,689 7,703 7,704 7,706 7,719 Annual Consumption (thousands of cubic feet) 122, , , ,383 95, , , ,994 87, ,959 Street Miles of streets overlayed or resurfaced Square yards of streets sealed 120, , , , , , , , , ,440 Sanitation Tonnage landfilled 6,261 5,434 5,621 5,978 5,027 4,761 4,580 4,521 4,598 4,583 Tonnage recycled (Recycling began in 2001) 1,363 1,841 1,941 1,857 1,647 1,643 1,577 1,786 1,750 1,691 Source: Various city departments

143 C-25 City of Newton, Kansas Capital Asset Statistics by Function/Program Last Ten Fiscal Years Function/Program Area of City (acres) 7, , , , , , , , , , Fire/EMS Stations Firefighter/EMTs Police Stations Police officers Street Division Miles of City streets - paved Miles of City streets - blacktop Miles of City streets - gravel Miles of City streets - unimproved Street employees Water Water mains (miles) Wastewater Sanitary sewer (miles) Storm water sewer (miles) Source: Various city departments

144 CITY DATA REPORT NEWTON, KANSAS For Year Ending: 12/31/ STREETS A. Total miles of streets (center line), as of December 31, miles B. Miles of streets paved, curbed & guttered in miles C. Streets annexed in miles D. Miles of different types of street surface 1. Paved (concrete) miles 2. Blacktop (various types of bases) miles 3. Gravel / Sand 9.32 miles 4. Unimproved miles 2. STREET MAINTENANCE A. Miles of streets overlayed or resurfaced in miles B. Square Yards of streets sealed in ,440 SY 3. SANITARY SEWER A. Total miles of Sanitary Sewer, as of December 31, miles B. Miles of Sanitary Sewer constructed in miles C. Total Sanitary Sewer Manholes as of December 31, ,410 D. Sanitary Sewer Manholes constructed in STORM WATER SEWER A. Total miles of Storm Water Sewer, as of December 31, miles B. Miles of Storm Water Sewer constructed in miles 5. WATER LINES A. Total miles of Water lines, as of December 31, miles B. Miles of Water Transmission lines, as of December 31, miles C. Miles of Water Distribution lines, as of December 31, miles D. Miles of Water lines constructed in miles E. Miles of Water lines acquired in miles F. Total Fire Hydrants as of December 31, G. Fire Hydrants constructed in AREA OF CITY OF NEWTON A. Total acres, as of December 31, , acres B. Acres annexed in acres C. Acres de-annexed in acres 7. SUBDIVISIONS A. Plat or PUD 1. Asbury Park PUD 2. JS Mitchel Properties PUD 3. Interurban Addition B. New Subdivision Development (Construction) 1. Asbury Park PUD (Sewer, Water) C. New Phase of Existing Subdivision 1. Sand Creek Addition (Street) C-26

145 CITY DATA REPORT NEWTON, KANSAS For Year Ending: 12/31/ SUBDIVISIONS (cont.) D. Capital Improvement Projects 1. Hangar W & Sanitary Sewer 2. Newton Recreation Center 3. Kenny Williams Parking Lot 4. Golf Course Parking Lot & Street Extension 5. Golf Course Scoreboard 6. Fischer Field Turf Replacement 7. US 50 / K15 Ramps 8. ABI 9. Police Department Impound Lot Fence E. Miscellaneous Projects 8. BUILDING CONSTRUCTION PERMITS A. Total new single residence permits $ 3,464,565 B. Multiple dwelling units 1. Total number of dwelling units 2 $ 380,000 C. Total single and multiple dwelling units 21 $ 3,844,565 D. Total permits issued in $ 34,207, PARKS A. Total acres of Parks in City of Newton acres B. Individual Parks (Name, Area, Date acquired) Park Location Type Acreage Year Established 1. Themian 7 th & Poplar School Military Broadway & Oak Community Athletic 1 st & W. Side Sand Creek Community Lot 5 & 6, Moore Addition Community Washington Pine & Washington Road (@ Slate Creek) Community Parkview Heights NE Side 5 th & Pine, N Side Creek Linear Havens 12 th & Oak Neighborhood Park Place W. Side Sand Creek (between 5 th & Broadway) Linear Blaine East 4 th - Cemetery (both sides creek to Blaine) Linear Greenwood Cemetery Between 1 st & 5 th, Sherman & Community Rodeo Grounds West 1 st to Sand Creek (Creek to Grandview) Community Lots 1 & 3, BL. 5 Fairfield Distr. Community Caperland In Housing Addition (E. of 1-135, N. of Broadway) West 380 feet Neighborhood Ash Street 10 th & Ash Neighborhood Bi-Centennial NE Corner 14 th & Kansas Community East Centennial Area E. of Centennial Park Community West Centennial W. Side of Kansas, Sledding Hill Community Okerberg W. part Rec Center Neighborhood Mid-town Arboretum NW Corner 8 th & Main Neighborhood Depot Park SE Corner 5 th & Main Pocket Plum-Brook Plum & Brookside, N. of Cherry Hills Neighborhood Quail Creek Block 2, Quail Creek Estates 3 rd Addition Neighborhood C-27

146 CITY DATA REPORT NEWTON, KANSAS For Year Ending: 12/31/ PARKS (cont.) B. Individual Parks (Name, Area, Date acquired) (cont.) Park Location Type Acreage Year Established 21. Veazey N. of 14 Oak, side Sand Creek Pocket Sherman SE Corner 12 th & Sherman Neighborhood Roosevelt SE Corner Broadway & Magnolia Neighborhood Lincoln Park Elm & West 6 th Streets Neighborhood Springlake 110 Springlake Dr Neighborhood C. Total miles of Bike-Hike Path 6.96 miles Miles of Bike-Hike Path constructed in miles 10. ELEVATIONS AT VARIOUS POINTS A. At the south side of the Main Street entrance to the old Post Office Building, and in the stone step, a standard disk, "X ", Elevation B. In the stone base of the West wall of the Atchinson, Topeka and Santa Fe Railway Station, 17 1/2 feet north of the southwest corner of the building, and 14 inches above the Main Street sidewalk. A standard disk, stamped "Newton 1934", elevation C. Newton Municipal Airport - highest point of runway GEODETIC LOCATION A. Service Center Latitude 38 degrees 01' 53.2" Longitude 97 degrees 20' 08" B. Newton Municipal Airport Latitude 38 degrees 03' 19.2" Longitude 97 degrees 16' 38" C-28