Basic Financial Statements and Supplementary Information with Independent Auditors' Report September 30, 2017
Table of Contents September 30, 2017 Independent Auditors Report... 1-3 Management s Discussion and Analysis... 4-10 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position... 11-12 Statement of Activities...13 Fund Financial Statements Balance Sheet Governmental Funds...14 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Assets...15 Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds... 16-17 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities...18 Statement of Net Position Proprietary Funds... 19-20 Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds...21 Statement of Cash Flows Proprietary Funds... 22-23 Notes to Financial Statements... 24-48 Required Supplementary Information Budgetary Comparison Schedule General Fund...50 Budgetary Comparison Schedule Road and Street Fund...51 Budgetary Comparison Schedule Airport Fund...52
Table of Contents (continued) September 30, 2017 Budgetary Comparison Schedule Resort Tax Fund...53 Budgetary Comparison Schedule LID Fund...54 Schedule of Employer s Share of Net Pension Liability...55 Schedule of Employer Contributions...56 Other Supplementary Information Combining Balance Sheet Nonmajor Governmental Funds...58 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds...59 Schedules of Loans Payable Future Principal and Interest Requirements... 60-63 Budgetary Comparison Schedule Water Fund...64 Budgetary Comparison Schedule Sewer Fund...65 Schedule of Expenditures of Federal Awards...66 Notes to the Schedule of Expenditures of Federal Awards...67 Independent Auditors Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards... 68-69 Independent Auditors Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance... 70-71 Schedule of Findings and Questioned Costs... 72-73 Schedule of Prior Year Findings and Questioned Costs...74
INDEPENDENT AUDITORS' REPORT Honorable Mayor and City Council City of Driggs, Idaho Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of City of Driggs, Idaho, as of and for the year ended September 30, 2017, and the related notes to the financial statements, which collectively comprise the City s basic financial statements as listed in the table of contents. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 1
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 Driggs, Idaho, as of September 30, 2016, and the respective changes in financial position, and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management s discussion and analysis and budgetary comparison information and the schedule of pension liabilities and contributions listed in the table of contents be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Driggs, Idaho s basic financial statements. The combining and individual nonmajor fund financial statements and the schedules of loans payable are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, and is also not a required part of the basic financial statements. 2
The combining and individual nonmajor fund financial statements, the schedules of loans payable and the schedule of expenditures of federal awards 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, the schedules of loans payable and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated March 20, 2018, on our consideration of the City of Driggs, Idaho s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Driggs, Idaho s internal control over financial reporting and compliance. Rexburg, Idaho March 20, 2018 3
City of Driggs PO Box 48 Driggs ID 83422 Management's Discussion and Analysis As management of the City of Driggs, we offer readers of the City of Driggs financial statements this narrative overview and analysis of the financial activities of the City of Driggs for the fiscal year ended September 30, 2017. All amounts, unless otherwise indicated, are expressed in dollars. Financial Highlights The assets of the City of Driggs exceeded its liabilities at the close of the most recent fiscal year by $33,677,843(net position - total). Of this amount, $5,651,146 (unrestricted) may be used to meet the government's ongoing obligations to citizens and creditors. The government's total change in net assets from governmental and businesstype activities over the fiscal year increased by $392,783. As of the close of the current fiscal year, the City of Driggs governmental funds reported combined ending fund balances of $2,544,393, an increase of $286,630 in comparison with the prior year. Of this total amount, $1,405,099 is available for spending at the government's discretion (unassigned). At the end of the current fiscal year, select fund balances were as follows: unassigned general fund, $1,537,750; unrestricted water fund, $464,839; and unrestricted sewer fund, $3,796,808. The City implemented two Government Accounting Standards Board (GASB) statements in fiscal year (FY) 2015. Statement #68 addresses accounting and financial reporting for pensions. Statement #71, an amendment to GASB #68, requires the City to recognize a beginning deferred outflow of resources for its pension contributions, if any were made subsequent to the measurement date of the beginning net pension liability. The City participates in the State of Idaho retirement program known as PERSI. 4
Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City of Driggs basic financial statements. The City of Driggs basic financial statements comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements. The government-wide financial statements are designed to provide readers with a broad overview of the City of Driggs finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of Driggs assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net assets may serve as a useful indicator of whether the financial position of the City of Driggs is improving or deteriorating. The statement of activities presents information showing how the government's net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods. Both of the government-wide financial statements distinguish functions of the City of Driggs that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City of Driggs include general government, airport, public safety, and public works. The business-type activities of the City of Driggs include a Water and Sewer operation. The government-wide financial statements include not only the City of Driggs itself, known as the primary government, but the Water and Sewer operation. Although legally separate, water and sewer functions for all practical purposes as a department of the City of Driggs, and therefore have been included as an integral part of the primary government. The government-wide financial statements can be found as part of this report. Fund financial statements. 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 City of Driggs, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City of Driggs can be divided into two categories: governmental funds and proprietary funds. 5
Governmental funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government's near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the governmentwide financial statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City of Driggs maintains nine individual governmental funds. Information is presented separately for the five major funds: the general fund, road and street fund, airport fund, the local improvement district (LID) fund and the resort tax fund. Reports provided are the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances. Data from the other four governmental funds are combined into a single, aggregated presentation in the governmental reports. Individual fund data for each of these four non-major governmental funds are provided in the form of combining statements elsewhere in this report. The City of Driggs adopts an annual appropriated budget for its governmental funds. A budgetary comparison statement has been provided for each major governmental fund to demonstrate compliance with this budget. Proprietary funds. The City of Driggs maintains one type of proprietary fund, known as enterprise. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Driggs uses enterprise funds to account for its Water and Sewer operation. Proprietary fund statements provide the same type of information as the governmentwide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water and Sewer operation, both of which are considered to be major funds of the City of Driggs. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes to the financial statements can be found as part of this report. The combining statements referred to earlier in connection with non-major governmental funds and internal service funds are presented immediately following the required supplementary information on pensions. Combining and individual fund statements and schedules can be found as part of this report. 6
Government-wide Financial Analysis 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 Driggs, assets exceeded liabilities by $33,677,843 at the close of the most recent fiscal year. By far the largest portion of the City of Driggs net assets (79,84 %) reflects its investment in capital assets (e.g., land, buildings, machinery, and equipment) less any related debt used to acquire those assets that is still outstanding. The City of Driggs uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City of Driggs 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. City of Driggs Net Position Governmental Business-type Activities Activitites Total 2017 2016 2017 2016 2017 2016 ASSETS: Current and other assets $ 3,283,026 $ 2,588,212 $ 4,833,782 $ 4,537,957 $ 8,116,808 $ 7,126,169 Capital Assets 20,132,961 20,383,777 16,550,000 14,571,923 36,682,961 34,955,700 Deferred Outflows 32,536 103,550 25,180 89,213 57,716 192,763 TOTAL ASSETS 23,448,523 23,075,539 21,408,962 19,199,093 44,857,485 42,274,632 LIABLITIES: Current liabilities 633,192 211,465 3,261,313 540,202 3,894,505 751,667 Noncurrent liabilities 188,255 252,792 7,883,678 188,255 8,136,470 Deferred inflow 30,322 56,000 45,435 30,322 101,435 TOTAL LIABILITIES 851,769 520,257 3,261,313 8,469,315 4,113,082 8,989,572 NET ASSETS: Invested in capital assets, net of related debt 20,067,961 20,293,777 6,819,442 6,566,502 26,887,403 26,860,279 Restricted Net Assets 1,139,294 977,011 - - 1,139,294 977,011 Unrestricted Net Assets 1,389,499 1,284,494 4,261,647 4,163,276 5,651,146 5,447,770 TOTAL NET POSITION $ 22,596,754 $ 22,555,282 $ 11,081,089 $ 10,729,778 $ 33,677,843 $ 33,285,060 City of Driggs capital assets net of related debt represent resources that are subject to external restrictions on how they may be used. The remaining unrestricted net assets of $5,651,146 may be used to meet the government's ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Driggs is able to report positive balances in all three categories of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. The same situation held true for the prior fiscal year. The government activities net position increased by $41,472 during the current fiscal year. Business-type activities increased the City of Driggs net position by $351,311. 7
City of Driggs' Activity Governmetnal Business-Type Activities Activities Total 2017 2016 2017 2016 2017 2016 REVENUES Program Revenues Charges for Services General and administrative $ 131,267 $ 117,727 $ - $ - $ 131,267 $ 117,727 Airport 140,819 131,338 - - 140,819 131,338 LID assessments/interst 6,321 6,134 - - 6,321 6,134 Water - - 623,665 584,926 623,665 584,926 Sewer - - 751,403 653,260 751,403 653,260 Total Charges for Services 278,407 255,199 1,375,068 1,238,186 1,653,475 1,493,385 Operating Grants & Contributions Airport 7,196 24,810-7,196 24,810 Public works 229,178 214,704 - - 229,178 214,704 Total Operating Grants & Contributions 236,374 239,514 - - 236,374 239,514 Capital Grants & Contributions General and administrative 374,677 - - - 374,677 - Airport 310,825 971,056 - - 310,825 971,056 Water - - 149,024 301,272 149,024 301,272 Sewer - - 145,607 1,557,862 145,607 1,557,862 Total Capital Grants & Contributions 685,502 971,056 294,631 1,859,134 980,133 2,830,190 General Revenues Property taxes 435,692 423,980-435,692 423,980 Resort taxes 305,396 275,360-305,396 275,360 State and Federal funds 357,593 320,763-357,593 320,763 Gain on pension - 6,333 - - 6,333 Investment Earnings 11,091 9,469 12,784 6,542 23,875 16,011 Miscellaneous 305,964 176,389-305,964 176,389 Total General Revenues 1,415,736 1,212,294 12,784 6,542 1,428,520 1,218,836 Total revenues 2,616,019 2,678,063 1,682,483 3,103,862 4,298,502 5,781,925 EXPENSES General and Administrative 1,728,234 1,436,623 - - 1,728,234 1,436,623 Airport 677,875 691,357 - - 677,875 691,357 Public works 115,987 91,399 - - 115,987 91,399 Public safety 48,000 48,000 - - 48,000 48,000 Interest on long-term debt 4,451 5,530 - - 4,451 5,530 Water - - 567,961 985,166 567,961 985,166 Sewer - - 763,211 923,011 763,211 923,011 Total Expenses 2,574,547 2,272,909 1,331,172 1,908,177 3,905,719 4,181,086 Change in Net Position 41,472 405,154 351,311 1,195,685 392,783 1,600,839 Net Beginning Position 22,555,282 22,150,128 10,729,778 9,534,092 33,285,060 31,684,220 Net Ending Position $ 22,596,754 $ 22,555,282 $ 11,081,089 $ 10,729,777 $ 33,677,843 $ 33,285,059 Financial Analysis of the Government's Funds As noted earlier, the City of Driggs uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds. The focus of the City of Driggs governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City of Driggs financing requirements. In particular, unreserved fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. 8
As of the end of the current fiscal year, the City of Driggs governmental funds reported combined ending fund balances of $2,44,393, an increase of $236,630 in comparison with the prior year. Of this amount $1,405,099 constitutes unassigned fund balance, which is available for spending at the government's discretion. The remainder of fund balance is restricted to indicate that it is not available for new spending because it has already been committed 1) to pay debt service, 2) encumbrances, or 3) for a variety of other restricted purposes. The general fund is the chief operating fund of the City of Driggs. At the end of the current fiscal year, unrestricted fund balance of the general fund was $1,537,750 equaling the total fund balance. As a measure of the general fund's liquidity, it may be useful to compare both unreserved fund balance and total fund balance to total fund expenditures. Proprietary funds. The City of Driggs proprietary funds provide the same type of information found in the government-wide financial statements, but in more detail. General Fund Budgetary Highlights. The road fund decreased its negative fund balance over the prior year from ($251,947) in FY 2016 to ($239,528) in FY 2017. The airport fund had a positive fund balance of $339,906 as compared to $281,053 in FY 2016. The Federal Aviation Administration (FAA) paid 90 percent of the cost to purchase object free area land and to install wildlife fencing. The LID fund had a negative balance of ($56,028) due to early pay-off of loan 91522 and 91523 in 2011 and reduced payments from account holders. The fund s negative balance will decrease as additional assessment payments are received from account holders. Capital Asset and Debt Administration Capital assets. The City of Driggs investment in capital assets for its governmental and business type activities as of September 30, 2017, amounts to $36,682,961 (net of accumulated depreciation). This investment in capital assets includes land, buildings, utility system improvements, machinery and equipment, park facilities, and roads. Long-term debt. At the end of the current fiscal year, the Cty of Driggs had total long term debt outstanding of $10,058,261 which includes net pension liability of $262,703 under GASB #68. 9
Requests for Information This financial report is designed to provide a general overview of the City of Driggs finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the City of Driggs Finance Officer, P.O. Box 48, Driggs, Idaho 83422. 10
Basic Financial Statements
Statement of Net Position September 30, 2017 Primary Government Component Unit Governmental Business-type Driggs Urban Activities Activities Total Renewal Agency Assets Current Assets Cash and investments $ 2,573,287 $ 3,244,087 $ 5,817,374 $ 325,162 Receivables: Teton County--property taxes 32,228-32,228 1,386 Utility accounts - 110,107 110,107 - Internal balances 187,437 (187,437) - - Due from other government entities - 1,329,037 1,329,037 - Other receivables 490,074 337,988 828,062 1,923 Total Current Assets 3,283,026 4,833,782 8,116,808 328,471 Noncurrent Assets: Capital Assets: Nondepreciable capital assets 4,871,647 2,913,579 7,785,226 - Depreciable capital assets 25,095,477 18,440,451 43,535,928 - Accumulated depreciation (9,834,163) (4,804,030) (14,638,193) - Total Noncurrent Assets 20,132,961 16,550,000 36,682,961 - Deferred Outflow of Resources Pension 32,536 25,180 57,716 - Total Assets 23,448,523 21,408,962 44,857,485 328,471 The Accompanying Notes are an Integral Part of the Financial Statements. 11
Statement of Net Position (continued) September 30, 2017 Primary Government Component Unit Governmental Business-type Driggs Urban Activities Activities Total Renewal Agency Liabilities Current Liabilities: Accounts payable 534,318 461,427 995,745 146 Accruals and other current liabilities 73,874-73,874 - Current portion of long-term obligations 25,000 2,799,886 2,824,886 - Total Current Liabilities 633,192 3,261,313 3,894,505 146 Noncurrent Liabilities: Net pension liability 148,255 114,448 262,703 - Noncurrent portion of long-term obligations 40,000 6,930,672 6,970,672 - Total Liabilities 821,447 10,306,433 11,127,880 146 Deferred Inflows of resources Pension 27,772 21,440 49,212 - Unavailable revenues 2,550-2,550 - Total Deferred Inflows of Resources 30,322 21,440 51,762 - Total Liabilities and Deferred Outflows of Resources 851,769 10,327,873 11,179,642 146 Net Position Invested in capital assets, net of related debt 20,067,961 6,819,442 26,887,403 - Restricted: Restricted for airport operations and maintenance 339,906-339,906 - Restricted for City improvements 657,562-657,562 - Restricted for utility improvements 141,826-141,826 - Unrestricted 1,389,499 4,261,647 5,651,146 328,325 Total Net Position $ 22,596,754 $ 11,081,089 $ 33,677,843 $ 328,325 The Accompanying Notes are an Integral Part of the Financial Statements. 12
Statement of Activities For the Year Ended September 30, 2017 Net (Expense) Program Revenues Revenue and Changes in Net Assets Operating Capital Primary Government Component Unit Charges for Grants and Grants and Governmental Business-type Driggs Urban Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Renewal Agency Primary Government Governmental Activities: General and administrative $ 1,728,234 $ 131,267 $ - $ 374,677 $ (1,222,290) $ - $ (1,222,290) Airport 677,875 140,819 7,196 310,825 (219,035) - (219,035) Public works 115,987-229,178-113,191-113,191 Public safety 48,000 - - - (48,000) - (48,000) LID assessment/interest 4,451 6,321 - - 1,870-1,870 Total Governmental Activities 2,574,547 278,407 236,374 685,502 (1,374,264) - (1,374,264) Business-type activities: Water 567,961 623,665-149,024-204,728 204,728 Sewer 763,211 751,403-145,607-133,799 133,799 Total Business-type Activities 1,331,172 1,375,068-294,631-338,527 338,527 Total Primary Government $ 3,905,719 $ 1,653,475 $ 236,374 $ 980,133 (1,374,264) 338,527 (1,035,737) Component Unit: Driggs Urban Renewal Agency $ 142,228 $ - $ - $ - $ (142,228) Total Component Unit $ 142,228 $ - $ - $ - (142,228) Taxes: Property taxes levied for general purposes 435,692-435,692 198,178 Resort taxes 305,396-305,396 - State and Federal Funds 357,593-357,593 - Investment Earnings 11,091 12,784 23,875 65 Miscellaneous 305,964-305,964 - Total General Revenues and Transfers 1,415,736 12,784 1,428,520 198,243 Changes in Net Assets 41,472 351,311 392,783 56,015 Net Position - Beginning 22,555,282 10,729,778 33,285,060 272,310 Net Position - Ending $ 22,596,754 $ 11,081,089 $ 33,677,843 $ 328,325 The Accompanying Notes are an Integral Part of the Financial Statements. 13
Balance Sheet Governmental Funds September 30, 2017 Road and Other Total General Street Airport Resort Tax LID Governmental Governmental Assets Fund Fund Fund Fund Fund Funds Funds Cash and Investments $ 1,102,145 $ 9,067 $ 534,406 $ 701,209 $ - $ 226,460 $ 2,573,287 Receivables: Teton County--property taxes 32,228 - - - - - 32,228 Due from other funds 431,041 - - - - 7,144 438,185 Other receivables 250,199 20,445 5,625-111,757 102,048 490,074 Total Assets $ 1,815,613 $ 29,512 $ 540,031 $ 701,209 $ 111,757 $ 335,652 $ 3,533,774 Liabilities and Fund Balances Liabilities: Accounts payable $ 165,662 $ 128,513 $ 197,575 $ 11,647 $ - $ 30,921 $ 534,318 Accruals and other current liabilities 41,874 - - 32,000-73,874 Due to other funds 42,390 140,527 - - 67,831-250,748 Total Liabilities 249,926 269,040 197,575 43,647 67,831 30,921 858,940 Deferred Inflows of Resources Unavailable revenues 27,937-2,550-99,954-130,441 Fund Balances (Deficit): Restricted - - 339,906 657,562-141,826 1,139,294 Unassigned 1,537,750 (239,528) - - (56,028) 162,905 1,405,099 Total Fund Balances (Deficits) 1,537,750 (239,528) 339,906 657,562 (56,028) 304,731 2,544,393 Total Liabilities and Fund Balances $ 1,815,613 $ 29,512 $ 540,031 $ 701,209 $ 111,757 $ 335,652 $ 3,533,774 The Accompanying Notes are an Integral Part of the Financial Statements. 14
Reconciliation of the Balance Sheet of Governmental Funds To the Statement of Net Position September 30, 2017 Amounts reported for governmental activities in the statement of net position are different because: Total Fund Balance - Governmental Funds $ 2,544,393 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of assets is $27,962,115 and the accumulated depreciation is $8,762,746. 20,132,961 Certain receivables are not financial resources and are reported as deferred revenues: Property tax unearned revenue 27,937 Other unearned revenue 99,954 Pension contributions are reported in the fund financial statements in the period in which they are paid. The actuarially determined pension liability is recorded on the government-wide statements. (143,491) Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported in the funds: Long-term debt (65,000) Total Net Position - Governmental Activities $ 22,596,754 The Accompanying Notes are an Integral Part of the Financial Statements. 15
Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds For the Year Ended September 30, 2017 Road and Other Total General Street Airport Resort Tax LID Governmental Governmental Fund Fund Fund Fund Fund Funds Funds Revenues Property taxes $ 433,678 $ - $ - $ - $ - $ - $ 433,678 Fines and fees 33,364 - - - - - 33,364 Building permits 35,546 - - - - - 35,546 Rental/lease income 33,992-140,819 - - 28,365 203,176 Interest earned 5,211-1,313 4,567 - - 11,091 Miscellaneous/donations 249,275 - - - - 56,689 305,964 Resort tax - - - 305,396 - - 305,396 LID principal - - - - 15,112-15,112 LID interest/late fees - - - - 6,342-6,342 State sales tax 42,005 - - - - - 42,005 State liquor fund 89,443 - - - - - 89,443 State highway users fund - 79,169 - - - - 79,169 State revenue sharing 105,128 - - - - - 105,128 Other state revenues 121,017-7,196 - - - 128,213 County road - 150,009 - - - - 150,009 Federal revenues 374,677-310,825 - - - 685,502 Total Revenues 1,523,336 229,178 460,153 309,963 21,454 85,054 2,629,138 Expenditures General and administrative 1,058,817 160,403 44,669 90,102-69,121 1,423,112 Public works 21,344 - - - - - 21,344 Public safety 48,000 - - - - - 48,000 Interest on capital leases and other debt - - - - 4,451-4,451 Principal on capital leases and other debt - - - - 25,000-25,000 Capital improvements 251,614 182,356 356,631 - - 30,000 820,601 Total Expenditures 1,379,775 342,759 401,300 90,102 29,451 99,121 2,342,508 The Accompanying Notes are an Integral Part of the Financial Statements. 16
Statement of Revenues, Expenditures, and Changes in Fund Balances (continued) Governmental Funds For the Year Ended September 30, 2017 Road and Other Total General Street Airport Resort Tax LID Governmental Governmental Fund Fund Fund Fund Fund Funds Funds Excess (Deficiency) of Revenues Over Expenditures 143,561 (113,581) 58,853 219,861 (7,997) (14,067) 286,630 Other Financing Sources (Uses) Transfers in - 126,000 - - - - 126,000 Transfers out - - - (126,000) - - (126,000) Net Other Financing Sources (Uses) - 126,000 - (126,000) - - - Excess of Revenues and Other Sources Over (Under) Expenditures and Other Uses 143,561 12,419 58,853 93,861 (7,997) (14,067) 286,630 Fund Balance (Deficit) at Beginning of Year 1,394,189 (251,947) 281,053 563,701 (48,031) 318,797 2,257,762 Fund Balance (Deficit) at End of Year $ 1,537,750 $ (239,528) $ 339,906 $ 657,562 $ (56,028) $ 304,730 $ 2,544,392 The Accompanying Notes are an Integral Part of the Financial Statements. 17
Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Year Ended September 30, 2017 Amounts reported for governmental activities in the statement of activities are different because: Net Changes in Fund Balances - Total Governmental Funds $ 286,630 Governmental funds report capital outlays as expenditures. However, in the statement of activities, assets with an initial, individual cost of more than $5,000 are capitalized and the cost is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays are reduced by depreciation in the current period. Capital expenditures capitalized as fixed assets 820,601 Depreciation expense (1,071,417) Revenues in the Statement of Activities that do not provide current financial resources are not reported as revenues in the funds. Property taxes 2,014 Special assessments (15,133) The government funds report current pension contributions as an expediture. However, the amount recorded in the statement of activities represents the difference in the actuarially determined pension liability from the previous year to the current year. (6,223) Governmental funds report principal repayment on debt as an expenditure. However, in the statement of activities debt payments are not an expense. Principal payments on long-term liabilities 25,000 Change in Net Position of Governmental Activities $ 41,472 The Accompanying Notes are an Integral Part of the Financial Statements. 18
Statement of Net Position Proprietary Funds September 30, 2017 Business-type Activities - Enterprise Funds Water Sewer Fund Fund Total Assets Current Assets: Cash and investments $ 614,424 $ 2,629,663 $ 3,244,087 Receivables: Utility accounts (net of allowance for doubtfull accounts of $6,881 and $5,410) 62,371 47,736 110,107 Other receivables 297,073 19,460 316,533 Prepaid expenses 21,455-21,455 Due from other governmental entities - 1,329,037 1,329,037 Due from other funds 46,586 46,853 93,439 Total Current Assets 1,041,909 4,072,749 5,114,658 Noncurrent Assets: Capital Assets: Nondepreciable capital assets 2,759,674 153,905 2,913,579 Depreciable capital assets 4,524,196 13,916,255 18,440,451 Accumulated depreciation (1,975,724) (2,828,306) (4,804,030) Total Noncurrent Assets 5,308,146 11,241,854 16,550,000 Deferred Inflows - Pension 11,600 13,580 25,180 Total Assets and Deferred Inflows 6,361,655 15,328,183 21,689,838 The Accompanying Notes are an Integral Part of the Financial Statements. 19
Statement of Net Position (continued) Proprietary Funds September 30, 2017 Business-type Activities - Enterprise Funds Water Sewer Fund Fund Total Liabilities Current Liabilities: Accounts Payable 384,705 76,722 461,427 Due to other funds 141,743 139,133 280,876 Current portion of long-term obligations 2,581,058 218,828 2,799,886 Total Current Liabilities 3,107,506 434,683 3,542,189 Noncurrent Liabilities: Pension liability 52,405 62,043 114,448 Noncurrent portion of long-term obligations 736,739 6,193,933 6,930,672 Total Liabilities 3,896,650 6,690,659 10,587,309 Deferred Outflows - Pension 9,817 11,623 21,440 Total Liabilities and Deferred Outflows 3,906,467 6,702,282 10,608,749 Net Position Invested in capital assets, net of related debt 1,990,349 4,829,093 6,819,442 Unrestricted 464,839 3,796,808 4,261,647 Total Net Position $ 2,455,188 $ 8,625,901 $ 11,081,089 The Accompanying Notes are an Integral Part of the Financial Statements. 20
Statement Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For the Year Ended September 30, 2017 Business-type Activities - Enterprise Funds Water Sewer Fund Fund Totals Operating Revenues Utility services $ 569,229 $ 655,672 $ 1,224,901 One time charges 53,836 68,783 122,619 Other operating revenues 600 26,948 27,548 Total Operating Revenues 623,665 751,403 1,375,068 Operating Expenses Utility expenses 301,673 265,968 567,641 Depreciation 251,141 476,915 728,056 Total Operating Expenses 552,814 742,883 1,295,697 Operating Income 70,851 8,520 79,371 Non-Operating Revenues (Expenses): Capital grants 149,024 145,607 294,631 Interest revenue 1,701 11,083 12,784 DEQ Loan for Victor - 205,648 205,648 Passthrough loan to Victor - (205,648) (205,648) Interest expense (15,147) (20,328) (35,475) Total Non-Operating Revenues (Expenses) 135,578 136,362 271,940 Change in Net Position 206,429 144,882 351,311 Total Net Position - Beginning of Year 2,248,759 8,481,019 10,729,778 Total Net Position - End of Year $ 2,455,188 $ 8,625,901 $ 11,081,089 The Accompanying Notes are an Integral Part of the Financial Statements. 21
Statement of Cash Flows Proprietary Funds For the Year Ended September 30, 2017 Business-type Activities - Enterprise Funds Water Sewer Fund Fund Totals Cash Flows From Operating Activities Receipts from customers $ 629,930 $ 748,096 $ 1,378,026 Payments to suppliers and other vendors (169,525) (116,800) (286,325) Payments to employees (176,096) (206,686) (382,782) Net Cash Provided by Operating Activities 284,309 424,610 708,919 Cash Flows From Capital and Related Financing Activities Acquisitions of property, plant and equipment (2,706,133) - (2,706,133) Principal payments on revenue bonds (55,501) (747,146) (802,647) Loan proceeds 2,527,783-2,527,783 Interest payments on bonds and leases (15,147) (20,328) (35,475) Capital Grants 149,024 145,607 294,631 Net Cash Used by Capital and Related Financing Activities (99,974) (621,867) (721,841) Cash Flows From Investing Activities Interest Income 1,701 11,083 12,784 Net Cash Provided by Investing Activities 1,701 11,083 12,784 Net Increase in Cash and Cash Equivalents 186,036 (186,174) (138) Cash and Investments at Beginning of Year 428,388 2,815,837 3,244,225 Cash and Investments at End of Year $ 614,424 $ 2,629,663 $ 3,244,087 The Accompanying Notes are an Integral Part of the Financial Statements. 22
Statement of Cash Flows (continued) Proprietary Funds For the Year Ended September 30, 2017 Reconciliation of Operating Income to Net Cash Provided by Operating Activities Business-type Activities - Enterprise Funds Water Sewer Fund Fund Totals Operating income (loss) $ 70,851 $ 8,520 $ 79,371 Adjustments to reconcile operating income to Net cash provided by operating activities: Depreciation and amortization 251,141 476,915 728,056 Changes in Assets and Liabilities: Increase in accounts receivable 6,265 (3,307) 2,958 Increase in other receivables (297,073) (1,849) (298,922) Decrease in accounts payable 274,661 (29,812) 244,849 Increase in accruals and other payables (20,231) (20,739) (40,970) Decrease in net pension liability (1,305) (5,118) (6,423) Net Cash Provided by Operating Activities $ 284,309 $ 424,610 $ 708,919 The Accompanying Notes are an Integral Part of the Financial Statements. 23
Notes to Financial Statements September 30, 2017 1. Summary of Significant Accounting Policies The Reporting Entity The City of Driggs was incorporated in May of 1910 under the laws of the State of Idaho. The City operates under a Mayor/Council form of government and provides the following services: Planning and Zoning, Parks and Recreation, Streets, Water, Sewer, Public Works, and General Administrative Services. The financial statements of the City of Driggs, Idaho have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to local government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The more significant accounting policies of the City are described below. Basic Financial Statements Basic financial statements are presented at both the government-wide and fund financial level. Both levels of statements categorize primary activities as either governmental or business-type. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the non-fiduciary activities of the Primary Government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. 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. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions 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 instead as general revenues. 24
Notes to Financial Statements September 30, 2017 1. Summary of Significant Accounting Policies (continued) Separate financial statements are provided for governmental funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds are reported as separate columns in the fund financial statements. 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 fund 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 revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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 the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences, early retirement, arbitrage rebates, and post employment healthcare benefits, are recorded only when payment is due. Property taxes, licenses and interest associated with the current fiscal period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be accrued as revenue of the current period. All other revenue items are considered to be measurable and available only when the City receives cash. The City reports the following major governmental funds: The General Fund is the City s primary operating fund. It is used for all financial resources of the general government, except those required to be accounted for in another fund. 25
Notes to Financial Statements September 30, 2017 1. Summary of Significant Accounting Policies (continued) The Road & Street Fund accounts for the resources accumulated and payments made for street and bridge maintenance, street lighting, traffic engineering, snow removal, street sweeping and storm sewer maintenance. The Road & Street Fund resources are restricted by law to be used only to benefit city streets. The Airport Fund accounts for the operations of the Driggs Reed Memorial Airport. The Resort Tax Fund accounts for municipal sales tax collections used for improvement to roads and associated infrastructure within the City. LID Fund accounts for the collection of receivables related to special assessments and the payment of the debt relating to the special assessment. The City reports the following major enterprise funds: The Water & Sewer Funds are the funds that account for the activities provided to the residents of the City for its utilities. These utilities include water and wastewater. Component Unit Component units are organizations which are legally separated from the City, which are financially accountable to the City, or their relationship with the City is such that exclusion would cause the City s financial statements to be misleading or incomplete. Discretely presented component units are reported in a separate column to emphasize that they are legally separate from the primary government and are governed by separate boards. The City has one discretely presented component unit. A brief description of the discretely presented component unit follows: Driggs Urban Renewal Agency was organized to make improvements to infrastructure in specific areas of the City. It derives its revenues from the incremental tax increases that all taxing districts forfeit from increase in value of the land and buildings in the new construction areas. Private-sector standards of accounting and financial reporting issued prior to December 1, 1989, generally are followed in both government-wide and proprietary fund financial statements to the extent that those standards do not conflict with or contradict guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. 26
Notes to Financial Statements September 30, 2017 1. Summary of Significant Accounting Policies (continued) When both restricted and unrestricted resources are available for use, it is the government s policy to use restricted resources first, then unrestricted resources as they are needed. As a general rule the effect of interfund activity has been eliminated from the governmentwide financial statements. Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund s principle on going operations. The principle operating revenues of water and sewer services enterprise funds are charges to customers and users for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses and depreciation on capital assets. All revenue and expenses not meeting this definition are reported as nonoperating revenues and expenses. Property, Plant and Equipment Property, plant and equipment used in governmental fund type operations (those items which relate to the general activities and services of the City) are accounted for in the governmentwide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000, with an estimated useful life in excess of two years. Property, plant and equipment used in proprietary fund type operations (i.e., the water and the sewer funds) is accounted for within the proprietary funds and on the government-wide financial statements. 27