COMPREHENSIVE ANNUAL FINANCIAL REPORT Year Ended September 30, 2016 Prepared by Department of Finance
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COMPREHENSIVE ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Year Ended September 30, 2016 INTRODUCTORY SECTION Table of Contents... i City Officials... Organization Chart... Certificate of Achievement for Excellence in Financial Reporting... iv Letter of Transmittal... FINANCIAL SECTION Independent Auditor s Report... 1 Management s Discussion and Analysis... 3 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position... 16 Statement of Activities... 17 Fund Financial Statements: Balance Sheet Governmental Funds... 18 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position... 21 Statement of Revenues, Expenditures, and Changes in Fund Balances Governmental Funds... 22 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities... 24 Statement of Net Position Proprietary Funds... 26 Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds... 28 Statement of Cash Flows Proprietary Funds... 29 Statement of Fiduciary Net Position Pension Trust Funds... 31 Statement of Changes in Fiduciary Net Position Pension Trust Funds... 32 Notes to the Financial Statements... 33 Required Supplementary Information: Budgetary Comparison Schedules (GAAP Basis): General Fund... 68 Shingle Creek Regional Trail Fund... 72 Community Redevelopment Agency... 73 City Retirement Plan Schedules and Notes: General Employees Schedule of Changes in Net Pension Liability and Related Ratios... 74 City Only GE Schedule of Changes in Net Pension Liability and Related Ratios... 75 Police Officers Schedule of Changes in Net Pension Liability and Related Ratios... 76 Firefighters Schedule of Changes in Net Pension Liability and Related Ratios... 77 General Employees Schedule of Actuarially Determined Contributions... 78 Police Officers Schedule of Actuarially Determined Contributions... 79 Firefighters Schedule of Actuarially Determined Contributions... 80 Money-weighted Rate of Return... 81 City Other Postemployment Benefits Plan Schedules: Other Postemployment Benefits Plan Schedule of Funding Progress... 82 Other Postemployment Benefits Plan Schedule of Employer Contributions... 82 i
Other Supplemental Information: Budgetary Comparison Schedules (GAAP Basis): 2016 Refunding Revenue Bond Debt Service Fund... 84 2016 Revenue Bond Capital Projects Fund... 85 Nonmajor Governmental Funds: Combining Balance Sheet All Nonmajor Governmental Funds... 90 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances All Nonmajor Governmental Funds... 91 Combining Balance Sheet Nonmajor Special Revenue Funds... 92 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds... 96 Budgetary Comparison Schedules (GAAP Basis): Local Option Gas Tax... 100 Recreation Impact Fee Fund... 101 Transportation Impact Fee Fund... 102 Local Option Sales Tax... 103 Building Division... 104 Mobility Fee... 105 State Housing Initiative Program... 106 Victims of Crime Act... 107 Justice Assistance Grant... 108 Paving Assessments... 109 Charter School... 110 Neighborhood Stabilization Program... 111 Community Development Block Grant... 112 Traffic Signal Cabinet Grant... 113 W Oak Street Improvement Grant... 114 Kissimmee Pedestrian Bridge... 115 Combining Balance Sheet Nonmajor Debt Service Funds... 116 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Funds... 118 Budgetary Comparison Schedules (GAAP Basis): FmHA Bond... 120 2015A Refunding Revenue Note... 121 2015B Refunding Revenue Note... 122 2014A Refunding Revenue Note... 123 2006 Revenue Note... 124 2010A Refunding Revenue Note... 125 2010B Refunding Revenue Note... 126 2010C Refunding Revenue Note... 127 2011B Capital Refunding Note... 128 Combining Balance Sheet Nonmajor Capital Projects Funds... 129 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Capital Projects Funds... 130 Budgetary Comparison Schedules (GAAP Basis): 2014A Note Capital Project... 131 2010C Note Capital Project... 132 Lakefront Sales Tax 2009A Capital Project Fund... 133 Internal Service Funds: Combining Statement of Net Position Internal Service Funds... 134 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position Internal Service Funds... 135 Combining Statement of Cash Flows Internal Service Funds... 136 ii
STATISTICAL SECTION Schedule 1 Net Position by Component Last Ten Fiscal Years... 139 Schedule 2 Change in Net Position Last Ten Fiscal Years... 140 Schedule 3 Fund Balances, Governmental Funds Last Ten Fiscal Years... 142 Schedule 4 Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years... 143 Schedule 5 Assessed and Actual Value of Taxable Property Last Ten Fiscal Years... 144 Schedule 6 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years... 145 Schedule 7 Property Tax Levies and Collections Last Ten Fiscal Years... 146 Schedule 8 Principal Property Taxpayers Current Year and Nine Years Ago... 147 Schedule 9 Ratios of Outstanding Debt by Type Last Ten Fiscal Years... 148 Schedule 10 Direct and Overlapping Governmental Activities Debt... 149 Schedule 11 Pledged Revenue Coverage Last Ten Fiscal Years... 150 Schedule 12 Demographic and Economic Statistics Last Ten Fiscal Years... 152 Schedule 13 Principal Employers Current Year and Nine Years Ago... 153 Schedule 14 Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years... 154 Schedule 15 Operating Indicators by Function/Program Last Ten Fiscal Years... 155 Schedule 16 Capital Asset Statistics by Function/Program Last Ten Fiscal Years... 156 COMPLIANCE SECTION Independent Auditor s 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... Independent Auditor s Report on Compliance for Each Major Federal Program and Major State Project, and on Internal Control over Compliance and Report on Schedule of Expenditures of Federal Awards and State Financial Assistance Required by Uniform Guidance and Chapter 10.550, Rules of the Auditor General... Schedule of Expenditures of Federal Awards and State Financial Assistance... 158 Schedule of Findings and Questioned Costs... Independent Auditor's Management Letter... Independent Accountant s Report... Appendix A - Current Year Observations, Recommendations and Management Responses... iii
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MANAGEMENT S DISCUSSION AND ANALYSIS September 30, 2016 The City of Kissimmee, Florida s (the City ) Management s Discussion and Analysis (the MD&A ) presents an overview of the City s financial activities for the fiscal year ended September 30, 2016. Please read it in conjunction with the letter of transmittal in the introductory section, and the City s financial statements following the MD&A. Financial Highlights The assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources at the close of fiscal year 2016 by $224,676 (net position). The City s net position increased by $4,127, of which governmental activities contributed $4,094 of the increase. The fund balance for governmental funds increased by $34,034 from the prior year. The majority of this increase resulted from the City's issuance of revenue bonds for capital improvement projects that were not completed during the year. Governmental long term debt increased by $33,816 due to issuance of additional capital improvement bonds in the current year. Overview of the Financial Statements This discussion and analysis is intended to serve as an introduction to the City s basic financial statements. The City s 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. 3
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Government-wide financial statements The government-wide financial statements, which consist of the following two statements, are designed to provide readers with a broad overview of the City s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City s assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the City is improving or deteriorating. Additionally, nonfinancial factors, such as a change in the City s property tax base or the condition of City facilities and infrastructure, should be considered to assess the overall financial health of the City. The statement of activities presents information showing how the government s net position changed during fiscal year 2016. All changes in net position 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 (e.g., uncollected but earned revenue and unused vacation leave). Both of these financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues (governmental activities) from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, physical environment, transportation, economic environment, and culture/recreation. The business-type activities of the City include sanitation/solid waste services, storm water services, and the operation of an airport. The government-wide financial statements can be found immediately following the MD&A. The government-wide financial statements include not only the City itself (known as the primary government) but also legally separate entities known as component units. Component units, which are other governmental units over which the City Commission can exercise influence and/or may be obligated to provide financial subsidy, are presented within governmental activities in the government-wide financial statements, and as an individual special revenue fund in the basic and fund financial statements. The City s component unit (the Community Redevelopment Agency) is a major fund of the City and will be addressed in this MD&A. 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, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 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 government-wide 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. 4
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 The City maintains several individual governmental funds. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund, Shingle Creek Regional Trail, Community Redevelopment Agency, 2016 Revenue Note Debt Service, and 2016 Revenue Note Capital Projects, which are considered to be major funds. Data from the other governmental funds are combined into a single, aggregated presentation noted as Nonmajor Governmental Funds. Individual fund data for each of these nonmajor governmental funds is provided in the form of combining statements in the other supplemental information section of this report. The City adopts an annual appropriated budget for its general fund, capital projects funds, debt service funds, and most special revenue funds. Budgetary comparison schedules have been provided for these funds to demonstrate budgetary compliance. Proprietary Funds The City maintains two different types of proprietary funds. The enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for the fiscal activities relating to storm water, sanitation/solid waste, and airport operations. The internal service funds are an accounting device used to accumulate and allocate costs internally among the City s various functions. The City uses internal service funds to account for its risk management programs and to allocate costs from central services (such as information technology, purchasing, and warehouse, garage, building maintenance, and printing). Because these activities predominantly benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Stormwater Utility Fund, the Solid Waste Fund and the Airport Fund, which are considered to be major funds of the City, and the aggregate of the internal service funds. Fiduciary Funds Fiduciary funds are used to account for resources held for the benefit of parties outside the government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City s own programs. The accounting used for fiduciary funds is similar to proprietary funds. The City has three pension trust funds to account for the general employees pension plan, the police officers pension plan, and the firefighters pension plan. Notes to the financial statements and Other Information The notes to the financial statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. In addition to the basic financial statements and accompanying notes, required supplementary information is included which presents budgetary comparison schedules for the City s General Fund, Shingle Creek Regional Trail, and Community Redevelopment Agency; schedules of funding progress and employer contributions for the City s Other Postemployment Benefits Plan; and required pension schedules for the City s three pension plans. Required supplementary information can be found following the notes to the financial statements. The combining statements referred to earlier in connection with nonmajor governmental funds and internal service funds are presented in the other supplemental information section of this report. Combining and individual fund budgetary comparison schedules for nonmajor funds can be found after the required supplementary information. 5
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Government-wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government s financial position. In the case of the City, assets and deferred outflows exceeded liabilities and deferred inflows by $224,676 at the close of the fiscal year ended September 30, 2016. At the end of fiscal year 2016, the City is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. The largest portion of the City s net position ($204,879) reflects its net investment in capital assets (land, buildings, infrastructure and equipment less any related outstanding debt used to 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 net investment in 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. The City has restricted net position ($20,498) for construction projects, public safety programs, supplementary care, and other purposes. The remaining balance is unrestricted net position ($701). City of Kissimmee, Florida Net Position Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Current and Other Assets $ 98,132 $ 71,110 $ 6,485 $ 6,332 $ 104,617 $ 77,442 Capital Assets (Net) 210,752 208,451 43,049 43,383 253,801 251,834 Total Assets 308,884 279,561 49,534 49,715 358,418 329,276 Deferred Outflows 7,848 8,145 321 459 8,169 8,604 Current and Other Liabilities 8,842 13,321 1,380 1,192 10,222 14,513 Long-term Liabilities 127,749 90,996 3,084 3,218 130,833 94,214 Total Liabilities 136,591 104,317 4,464 4,410 141,055 108,727 Deferred Inflows 804 2,683 52 75 856 2,758 Net Position: Net Investment in Capital Assets 162,560 163,458 42,319 42,959 204,879 206,417 Restricted 20,474 16,865 24 488 20,498 17,353 Unrestricted (3,697) (5,079) 2,996 1,858 (701) (3,221) Total Net Position $ 179,337 $ 175,244 $ 45,339 $ 45,305 $ 224,676 $ 220,549 There was a net increase of $4,127 in the City s net position over fiscal year 2015. There was a net increase of $4,093 in net position reported in connection with the City s governmental activities and $34 in business-type activities. Key reasons for these changes are presented in the following pages for governmental and business-type activities. 6
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 REVENUES Program Revenues: City of Kissimmee, Florida Change in Net Position Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Charges for Services $ 32,292 $ 30,858 $ 10,360 $ 10,276 $ 42,652 $ 41,134 Operating Grants and Contributions 951 594 - - 951 594 Capital Grants and Contributions 11,361 7,040 1,007 934 12,368 7,974 General Revenues: Property Taxes 11,620 11,756 - - 11,620 11,756 Other Taxes 24,099 22,808 - - 24,099 22,808 Other 28,218 24,813 72 17 28,290 24,830 Total Revenues 108,541 97,869 11,439 11,227 119,980 109,096 EXPENSES General Government 38,386 32,649 - - 38,386 32,649 Public Safety 36,631 33,644 - - 36,631 33,644 Transportation 18,434 8,437 - - 18,434 8,437 Economic Environment 389 962 - - 389 962 Culture/Recreation 8,360 4,255 - - 8,360 4,255 Interest on Long-term Debt 3,028 1,499 - - 3,028 1,499 Stormwater - - 4,029 3,725 4,029 3,725 Airport - - 2,160 1,425 2,160 1,425 Solid Waste - - 4,436 4,288 4,436 4,288 Total Expenses 105,228 81,446 10,625 9,438 115,853 90,884 Excess Before Transfers 3,313 16,423 814 1,789 4,127 18,212 Transfers 781 651 (780) (651) 1 - Change in Net Position 4,094 17,074 34 1,138 4,128 18,212 Net Position - Beginning, Restated 175,244 158,170 45,305 44,167 220,549 202,337 Net Position - Ending $ 179,338 $ 175,244 $ 45,339 $ 45,305 $ 224,677 $ 220,549 Governmental activities Governmental activities accounted for an increase of $4,094 from the prior year net position. The largest factor in this increase is a result of additions to capital assets being greater than the current year's depreciation expense by $4,628. Capital purchases are not recorded as expenses in the statement of activities; however, the revenues needed to pay for those purchases is recorded in that statement. The difference between capital outlay and depreciation expense is reflected as an increase in net position in 2016. 7
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 The following tables and graphs show the results of governmental activities for fiscal year ended 2016. Functions/Programs Expenses and Program Revenues Governmental Activities 2016 Expenses Net Cost of Services % of Total 2015 % Change 2016 2015 % Change General Government $ 38,386 36 % $ 32,649 18 % $ (16,331) $ (10,582) 54 % Public Safety 36,631 35 % 33,644 9 % (27,900) (26,978) 3 % Physical Environment - - % - - % - - - % Transportation 18,434 18 % 8,437 118 % (6,973) (931) 649 % Economic Environment 389 0 % 962 (60) % 263 (469) (156) % Culture/Recreation 8,360 8 % 4,255 96 % (6,655) (2,495) 167 % Interest on Long-term Debt 3,028 3 % 1,499 102 % (3,028) (1,499) 102 % $ 105,228 100 % $ 81,446 $ (60,624) $ (42,954) Revenue by Source Governmental Activities Description 2016 Program Revenues % of Total 2015 % Change Charges for services $ 32,292 30 % $ 30,858 5 % Operating grants and contributions 951 1 % 594 60 % Capital grants and contributions 11,361 10 % 7,040 61 % General Revenues Property tax 11,620 11 % 11,756 (1) % Sales tax 11,885 11 % 11,106 7 % Public service tax 6,703 6 % 6,556 2 % Gas tax 2,773 3 % 2,582 7 % Other taxes 2,738 3 % 2,564 7 % State revenue sharing 2,339 2 % 2,257 4 % Unrestricted intergovernmental revenues 23,911 22 % 21,069 13 % Franchise fees 165 0 % 159 4 % Investment income 418 0 % 233 79 % Gain on sale of capital assets - - % - - % Miscellaneous 1,385 1 % 1,095 26 % Transfers 781 1 % 651 20 % $ 109,322 100 % $ 98,520 8
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 9
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Business-type activities Business-type activities increased the City s net position by $34. The stability of net position from the prior year resulted from operating strategies to provide cost effective services to City citizens during the year. Additional information on the results of individual business-type activity funds is discussed in a different section. Expenses and Program Revenues Business-type Activities Net Increase (Decrease) Expenses in Net Position 2016 2015 % Change 2016 2015 % Change Functions/Program s Stormwater $ 4,029 $ 3,725 8 % $ 777 $ 934 (17) % Airport 2,160 1,425 52 % (371) 353 (205) % Solid Waste 4,436 4,288 3 % 336 485 (31) % $ 10,625 $ 9,438 $ 742 $ 1,772 Revenues by Source Business-type Activities 2016 % of Total 2015 % Change Charges for services $ 10,360 91 % $ 10,276 1 % Capital grants and contributions 1,007 9 % 934 8 % Investment income 24 0 % 17 41 % $ 11,391 100 % $ 11,227 10
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Financial Analysis of the City s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental funds The focus of the City s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information is useful in assessing the City s financing requirements. In particular, unassigned fund balance may serve as a useful measure of a government s net resources available for spending at the end of the fiscal year. As of the end of fiscal year 2016, the City s governmental funds reported combined ending fund balances of $79,599, an increase of $34,034 in comparison with the prior year. This increase was largely the result of issuance of revenue bonds with remaining unspent funds for capital projects. Components of fund balance are now comprised of nonspendable, restricted, committed, assigned, and unassigned. The components of committed, assigned and unassigned are considered spendable unrestricted fund balance. The total spendable unrestricted fund balance of governmental funds in fiscal year 2016 was $24,343 compared to $23,094 for fiscal year 2015, an increase of $1,249 for all governmental funds. The main cause of this increase was effective budgeting for services provided primarily from general revenues sources. The City has five major governmental funds - the General Fund, Shingle Creek Regional Trail, Community Redevelopment Agency, 2016 Revenue Note Debt Service fund, and 2016 Revenue Note Capital Project fund. More detailed information regarding these major funds is provided in the following section. Major Funds - Governmental General Fund The General Fund is the chief operating fund of the City. At the end of fiscal year 2016, the spendable unrestricted fund balance (assigned for budgetary carryforward $2,188 and unassigned fund balance $23,449) of the General Fund totaled $25,637 compared to $24,013 in fiscal year 2015, an increase of $1,624. As a measure of the General Fund s liquidity, it may be useful to compare the spendable unrestricted fund balance of $25,637 to the total fund s expenditures of $58,072. This represents 44.1% of total expenditures compared to 44.1% in the prior fiscal year. Thus, the City was able to maintain its liquidity available to meet upcoming expenditures in its chief operating fund. The fund balance in the General Fund increased by $1,695 during the current fiscal year. The General Fund overall maintained the same level of spending as the prior year. Intergovernmental revenue increased from the City's share of fees from local electric and water utilities. The following graph displays the General Fund current expenditures by function (not including debt service or transfers) for fiscal years 2016 and 2015. 11
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Shingle Creek Regional Trail The Shingle Creek Regional Trail fund total fund balance decreased by $(548) from the prior year. Current year revenues were less than expenditures for capital improvement projects due to timing of the receipt of reimbursement grants from other governmental agencies. Future grant receipts should eliminate the deficit fund balance. The Community Redevelopment Agency The Community Redevelopment Agency (CRA) total fund balance increased by $290 from the prior year. There were no significant increases or decreases in revenues and expenditures from the prior year. The fund balance of $1,913 is restricted for economic development. 2016 Revenue Note Debt Service The 2016 Revenue Note Debt Service fund is a new fund to account for debt service on the 2016 Revenue Note. It had an ending fund balance of $17 that is assigned for future debt service. 2016 Revenue Note Capital Project The 2016 Revenue Note Capital Project fund is a new fund used to track the spending of the 2016 Revenue Note. It had an ending fund balance of $33,000 that is restricted for future capital improvements. Major funds - Enterprise The City s enterprise funds provide the same type of information found in the government-wide financial statements, but in more detail. The City has three major enterprise funds the Stormwater Fund, the Airport Fund, and the Solid Waste Fund. Unrestricted net position in the Stormwater Fund increased by $440, in the Airport Fund decreased by ($33), and in the Solid Waste Fund decreased by ($731) over the prior year. These mainly resulted from increased expenses in all three funds in the current year. Stormwater Fund The Stormwater Fund had an increase in net position of $239. Operating expenses were consistent with the prior year; however, charges for services increased by $78 from the prior year due to increased service. Airport Fund The Airport Fund had a decrease in net position of ($373). The Airport benefited from capital contributions for current improvements of $933. This was offset by an increase in operating expenses of $735 from the prior year. The majority of this increase was for additional depreciation expense for improvements that were completed and put into service at the end of the prior year. Solid Waste Fund The Solid Waste Fund had an increase in net position of $168 from the prior year. Operating revenues were greater than operating expenses by $337 in the current year, confirming that the City's rates are sufficient to cover operational costs of the solid waste system. 12
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 General Fund Budgetary Highlights The General Fund s original budget was amended to increase expenditures by $1,602 (not including transfers out). The changes for expenditures within functions are summarized in the table below. Adjustments were made for additional grant-funded expenditures during the course of the year. Original Budget Final Budget Change General Government $ 12,472 $ 13,648 $ 1,176 Public Safety 32,830 33,022 192 Transportation 5,479 5,590 111 Culture/Recreation 6,506 6,588 82 Non-departmental 22,234 22,275 41 $ 79,521 $ 81,123 $ 1,602 The General Fund under-spent the final budget by $23,108 during fiscal year 2016. All departments spent less than their final budget (from reduced personnel costs and delayed capital purchases) during the year while trying to provide the same levels of service to the City's citizens. The largest reduction resulted as the non-departmental budget included reserves for capital that were not spent in the current year. The general government and public safety functions experienced the greatest reductions from the final budget totals primarily in personnel costs. The changes within functions are summarized in the table presented here. Actual Expenditures Final Budget Difference General Government $ 11,788 $ 13,648 $ 1,860 Public Safety 30,706 33,022 2,316 Transportation 4,889 5,590 701 Culture/Recreation 6,039 6,588 549 Non-departmental 4,650 22,275 17,625 Transfers Out 2,082 2,139 57 $ 60,154 $ 83,262 $ 23,108 Capital Assets and Long-term Debt Capital Assets The City s capital assets for its governmental and business-type activities as of September 30, 2016 amounts to $253,801 (net of accumulated depreciation). These capital assets include land, software, parking capacity, buildings, improvements other than buildings (including leasehold improvements), equipment, vehicles, infrastructure, and construction in progress. The total increase in the City s capital assets for the current fiscal year was $1,967. Governmental activities increased capital assets by $2,301 and business-type activities decreased by ($334). 13
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 The largest increases were in improvements of $6,077 and construction in progress of $9,104, primarily attributed to the Shingle Creek Regional Trail project, Oak Street improvements, and other major transportation projects being completed and put into service. Additionally, depreciation expense increased by $11,280 from the prior year as a result of large projects that were completed this year and the end of last year. City of Kissimmee, Florida Capital Assets (Net) Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Land $ 18,609 $ 18,505 $ 401 $ 401 $ 19,010 $ 18,906 Intangibles, net 2,038 2,263 1 1 2,039 2,264 Buildings 55,074 54,866 7,070 6,268 62,144 61,134 Improvements Other than Buildings 197,007 190,930 37,094 36,661 234,101 227,591 Equipment 25,818 24,055 8,862 8,101 34,680 32,156 Construction in Progress 13,133 4,029 4,975 4,822 18,108 8,851 311,679 294,648 58,403 56,254 370,082 350,902 Less: Accumulated Depreciation (100,927) (86,197) (15,353) (12,871) (116,280) (99,068) Capital Assets, net $ 210,752 $ 208,451 $ 43,050 $ 43,383 $ 253,802 $ 251,834 Additional information on the City s capital assets, including major construction commitments, can be found in Note 5 of this report. Long-term Debt At the end of fiscal year 2016, the City had total debt outstanding of $81,665. This is an increase of $33,675 or 70.2% from the prior year, primarily due to additional debt issued during the current year for capital projects. Of the total outstanding, $81,083 is notes and bonds payable at year-end. Notes and bonds payable account for the majority of the City s overall outstanding debt. City of Kissimmee, Florida Outstanding Long-term Debt Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Revenue Notes $ 33,575 $ 46,662 $ - $ - $ 33,575 $ 46,662 Revenue Bonds 47,508 224 - - 47,508 224 Capital Lease Payable 582 963-141 582 1,104 $ 81,665 $ 47,849 $ - $ 141 $ 81,665 $ 47,990 Additional information on the City s debt, including the current year issuance and any major changes to the City s credit ratings, can be found in Note 7 of this report. 14
MANAGEMENT S DISCUSSION AND ANALYSIS, Continued September 30, 2016 Economic Factors and Next Year s Budgets and Rates The unemployment rate for the City at September 30, 2016 was 4.8%, which represents an improvement of 0.7% from the 5.5% unemployment rate from the prior year. This is consistent with the improvement seen in the previous years. Population increased slightly to 68,401 compared to 66,592 in the prior fiscal year. The ad valorem tax rate for the General Fund stayed constant at 4.6253 for the 2017 approved fiscal year budget. Requests for Information This financial report is designed to present users with a general overview of the City s finances and to demonstrate the City s accountability. If you have questions concerning any of the information provided in this report or need additional financial information, contact the City s Finance Department, 101 North Church Street, Kissimmee, Florida 34741. 15
STATEMENT OF NET POSITION September 30, 2016 Governmental Activities Business-Type Activities Total ASSETS Cash and Cash Equivalents $ 63,374 $ 5,091 $ 68,465 Restricted Cash and Investments 22,778 78 22,856 Receivables (net) 3,541 865 4,406 Due from Other Governments 5,033 451 5,484 Due from KUA 1,883-1,883 Due from TWA 1,057-1,057 Inventories 261-261 Prepaid Items 205-205 Capital Assets: Capital Assets not Being Depreciated 31,742 5,376 37,118 Capital Assets Being Amortized (Net) 2,038 1 2,039 Capital Assets Being Depreciated (Net) 176,972 37,672 214,644 Total Capital Assets 210,752 43,049 253,801 Total Assets 308,884 49,534 358,418 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows for Pensions 7,848 321 8,169 Total Deferred Outflows of Resources 7,848 321 8,169 LIABILITIES Accounts Payable 2,594 1,288 3,882 Contracts Payable 600 8 608 Accrued Liabilities 5,075-5,075 Due to Other Governments 562 6 568 Deposits 11 78 89 Long-term Liabilities: Due Within One Year 6,032 34 6,066 Due in More Than One Year 121,717 3,050 124,767 Total Liabilities 136,591 4,464 141,055 DEFERRED INFLOWS OF RESOURCES Deferred Inflows for Pensions 804 52 856 Total Deferred Inflows of Resources 804 52 856 NET POSITION Net Investment in Capital Assets 162,560 42,319 204,879 Restricted: Supplementary Care - Nonexpendable 839-839 Construction Projects 10,828-10,828 Public Safety 1,101-1,101 Charter School 2,361-2,361 Building Safety 2,098-2,098 Community Redevelopment 1,913-1,913 Airport Projects - 24 24 Other Purposes 1,334-1,334 Unrestricted (3,697) 2,996 (701) Total Net Position $ 179,337 $ 45,339 $ 224,676 The notes to the financial statements are an integral part of the financial statements. 16
STATEMENT OF ACTIVITIES For the Year Ended September 30, 2016 Program Revenues Net (Expense) Revenue and Changes in Net Position Functions/Programs Governmental Activities: Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business-type Activities General Government $ 38,386 $ 21,855 $ 200 $ - $ (16,331) $ - $ (16,331) Public Safety 36,631 8,373 358 - (27,900) - (27,900) Transportation 18,434 828-10,633 (6,973) - (6,973) Economic Environment 389-349 303 263-263 Culture/Recreation 8,360 1,236 44 425 (6,655) - (6,655) Interest on Long-term Debt 3,028 - - - (3,028) - (3,028) Total Governmental Activities 105,228 37,130 951 11,361 (55,786) - (55,786) Business-Type Activities: Stormwater 4,029 4,732-74 - 777 777 Airport 2,160 856-933 - (371) (371) Solid Waste 4,436 4,772 - - - 336 336 Total Business-Type Activities 10,625 10,360-1,007-742 742 NOT CODED - 4,838 - - - 4,838 4,838 Total Business-Type Activities 10,625 10,360-1,007-742 742 Total $ 115,853 $ 47,490 $ 951 $ 12,368 (55,786) 742 (55,044) Total General revenues: Property Tax 11,620-11,620 Sales Tax 11,885-11,885 Public Service Tax 6,703-6,703 Gas Tax 2,773-2,773 Other Taxes 2,738-2,738 State Revenue Sharing 2,339-2,339 Unrestricted Intergovernmental Revenues 23,911-23,911 Franchise Fees 165-165 Investment Income 418 24 442 Gain on Sale of Capital Assets - 48 48 Miscellaneous 1,385-1,385 CAPITAL LEASES (4,838) - (4,838) Transfers 781 (780) 1 Total General Revenues and Transfers 59,880 (708) 59,172 Change in Net Position 4,094 34 4,128 Net Position - Beginning 175,244 45,305 220,549 Net Position - Ending $ 179,338 $ 45,339 $ 224,677 The notes to the financial statements are an integral part of the financial statements. 17
BALANCE SHEET - GOVERNMENTAL FUNDS September 30, 2016 ASSETS General Shingle Creek Regional Trail Community Redevelopment Agency Cash and Cash Equivalents $ 19,599 $ - $ 2,029 Cash with Fiscal Agent - - - Restricted Cash and Investments - - - Accounts Receivable (net) 3,219 - - Special Assessments Receivable (net) 24 - - Due from KUA 1,883 - - Due from TWA 437 - - Due from Other Funds 1,801 - - Due from Other Governments 1,368 1,613 - Prepaid Items 205 - - Inventories 125 - - Total Assets $ 28,661 $ 1,613 $ 2,029 LIABILITIES, DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES Liabilties: Accounts Payable $ 784 $ 256 $ 116 Contracts Payable - - - Accrued Liabilities - - - Due to Other Funds - 1,251 - Due to Other Governments 538 - - Deposits Payable 7 - - Total Liabilities 1,329 1,507 116 Deferred Inflows of Resources: Unavailable Earned Revenues 78 1,012 - Total Deferred Inflows of Resources 78 1,012 - Fund Balances (Deficits): Nonspendable Prepaids and Inventories 330 - - Nonspendable Supplementary Care - - - Restricted for Transportation Projects - - - Restricted for Public Safety Projects 1,094 - - Restricted for Development Services - - - Restricted for Economic Development 181-1,913 Restricted for Recreation Projects - - - Restricted for Charter School - - - Restricted for Construction Projects - - - Restricted for Other Capital Improvements 12 - - Assigned for Budgetary Carryforward 2,188 - - Assigned for Debt Service - - - Unassigned (Deficits) General Fund 23,449 - - Special Revenue Funds - (906) - Total Fund Balances (Deficits) 27,254 (906) 1,913 Total Liabilities, Deferred Inflows and Fund Balances (Deficits) $ 28,661 $ 1,613 $ 2,029 The notes to the financial statements are an integral part of the financial statements. 18
2016 Revenue Note Debt Service 2016 Revenue Note Capital Projects Nonmajor Governmental Funds Total Governmental Funds $ 17 $ - $ 18,499 $ 40,144 1,650-651 2,301-33,458 2,917 36,375 - - 126 3,345 - - - 24 - - - 1,883 - - 7 444 - - - 1,801 - - 2,051 5,032 - - - 205 - - - 125 $ 1,667 $ 33,458 $ 24,251 $ 91,679 $ - $ 232 $ 614 $ 2,002-226 374 600 1,650-3,424 5,074 - - 550 1,801 - - 24 562 - - 4 11 1,650 458 4,990 10,050 - - 940 2,030 - - 940 2,030 - - - 330 - - 839 839 - - 2,787 2,787 - - 7 1,101 - - 2,098 2,098 - - 212 2,306 - - 941 941 - - 2,361 2,361-33,000 1,614 34,614 - - 7,867 7,879 - - - 2,188 17-86 103 - - - 23,449 - - (491) (1,397) 17 33,000 18,321 79,599 $ 1,667 $ 33,458 $ 24,251 $ 91,679 19
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RECONCILIATION OF THE BALANCE SHEET OF GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION as of September 30, 2016 Total fund balances of governmental funds $ 79,599 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. The cost of the assets is $263,458, the accumulated depreciation is $79,770, and the accumulated amortization is $1,352. The difference does not include the net capital assets of the internal service funds which are included below. 208,783 The internal service fund is used by management to charge the costs of risk management services to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 4,979 Long-term liabilities are not due and payable in the current period and accordingly are not reported as fund liabilities. Interest on long-term debt is not accrued in governmental funds, but rather is recognized as an expenditure when due. All liabilities-both current and long term-are reported in the statement of net position. The amount does not include the long-term liabilities of the internal service funds which are included above. Long-term liabilities at yearend consist of: Bonds payable $ 42,670 Bonds premium 4,838 Notes payable 33,575 Capital leases 582 Other postemployment benefits 3,998 Compensated absences 1,768 (87,431) Net pension liabilities are not due and payable in the current period and, therefore, are not reported in the governmental funds. (35,501) Deferred inflows and outflows of resources related to pension earnings are not recognized in the governmental funds; however, they are recorded in the statement of net position. Deferred outflows of resources 7,649 Deferred inflows of resources (772) 6,877 Amount for earned but unavailable revenues recognized as revenue of the current period 2,030 Total net position of governmental activities $ 179,337 The notes to the financial statements are an integral part of the financial statements. 21
STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended September 30, 2016 General Shingle Creek Regional Trail Community Redevelopment Agency REVENUES Taxes $ 18,524 $ - $ - Permits, Fees and Special Assessments 166 - - Intergovernmental Revenues 32,136 967 877 Charges for Services 8,501 - - Fines and Forfeitures 455 - - Investment Income 153-12 Miscellaneous Revenues 574-3 Total Revenues 60,509 967 892 EXPENDITURES Current: General Government 16,389-568 Public Safety 30,706 - - Transportation 4,889 1,515 - Economic Environment - - - Culture/Recreation 6,039 - - Capital Outlay - - - Debt Service: Principal Retirement - - - Interest and Fiscal Charges - - - Professional Fees 49-11 Total Expenditures 58,072 1,515 579 Excess (Deficiency) of Revenues Over (Under) Expenditures 2,437 (548) 313 OTHER FINANCING SOURCES and (USES) Transfers In 1,193-605 Transfers (Out) (2,082) - (628) Issuance of Notes Payable/Refunded Notes Payable - - - Notes/Bonds Premium - - - Payment to Refunded Notes Escrow Agent - - - Proceeds from Sale of Capital Assets 147 - - Total Other Financing Sources and (Uses) (742) - (23) Net Change in Fund Balances 1,695 (548) 290 Fund Balances (Deficits) - Beginning 25,559 (358) 1,623 Fund Balances (Deficits) - Ending $ 27,254 $ (906) $ 1,913 The notes to the financial statements are an integral part of the financial statements. 22
2016 Revenue Note Debt Service 2016 Revenue Note Capital Projects Nonmajor Governmental Funds Total Governmental Funds $ - $ - $ 9,874 $ 28,398 - - 3,286 3,452 - - 7,989 41,969 - - 188 8,689 - - - 455-124 101 390 - - 189 766-124 21,627 84,119 - - 5,994 22,951 - - 3,200 33,906 - - 4,399 10,803 - - 429 429 - - 1,507 7,546-4,324 2,180 6,504 450-3,382 3,832 1,202-1,044 2,246 378 - - 438 2,030 4,324 22,135 88,655 (2,030) (4,200) (508) (4,536) 1,943 37,200 10,894 51,835 (37,200) - (10,806) (50,716) 42,930 - - 42,930 4,838 - - 4,838 (10,464) - - (10,464) - - - 147 2,047 37,200 88 38,570 17 33,000 (420) 34,034 - - 18,741 45,565 $ 17 $ 33,000 $ 18,321 $ 79,599 23
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES For The Year Ended September 30, 2016 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - total governmental funds $ 34,034 Governmental funds report capital purchases as expenditures. However, in the statement of activities, the cost of those assets is depreciated and amortized over their estimated useful lives and reported as depreciation expense. This is the amount by which capital purchases ($18,083) exceeds depreciation ($6,924, which excludes the amount related to internal service funds accounted for for below) and amortization ($265). 4,628 The issuance of bonds and similar long-term debt provides current financial resources to governmental funds and thus contributes to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not affect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds, but reduces the liability in the statement of net position. Also, governmental funds report the effect of premiums, discounts, and similar items when debt is first issued, whereas these amounts are deferred and amortized in the statement of activities. The amounts of the items that make up these differences in the treatment of long-term debt and related items are: Debt issued or incurred: Proceeds from refunding revenue bonds $ (42,930) Premium on bonds (4,838) Principal repayments: Bonds 484 Payment to refunding escrow agent 10,120 Notes 2,967 Capital leases 381 (33,816) Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. These adjustments are as follows: Compensated absences 113 Other postemployment benefits (228) (115) Continued 24
RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES - Continued For The Year Ended September 30, 2016 Cash pension contributions recorded in the funds were less than the calculated pension expense on the statement of activities and therefore decreased net position. $ (2,066) Under the modified accrual basis of accounting, governmental revenues are recognized when both the measureable and available criteria have been met. Those revenues earned in the current year were not recognized since the availability criteria was not met. Under full accrual accounting, all revenues would be recognized. 1,937 In the statement of activities, only the loss on the sale/disposal of capital assets is reported. The change in net position differs from the change in fund balance by the cost of the capital assets sold/disposed or adjusted in value. (2,328) The internal service fund is used by management to charge the costs of risk management services to other funds. The net revenue of the internal service fund is reported with governmental activities. 1,819 Change in net position of governmental activities $ 4,094 The notes to the financial statements are an integral part of the financial statements. 25
ASSETS CITY OF KISSIMMEE, FLORIDA STATEMENT OF NET POSITION PROPRIETARY FUNDS September 30, 2016 Business-type Activities - Enterprise Funds Stormwater Airport Solid Waste Total Governmental Activities - Internal Service Funds Current Assets: Cash and Cash Equivalents $ 2,534 $ 701 $ 1,856 $ 5,091 $ 7,332 Restricted Cash and Cash Equivalents - 78-78 - Accounts Receivable (net) 340 95 430 865 172 Due from Other Governments 74 372 5 451 - Due from TWA - - - - 613 Inventories - - - - 136 Total Current Assets 2,948 1,246 2,291 6,485 8,253 Capital Assets: Land - 401-401 - Buildings 121 6,944 5 7,070 71 Improvements Other Than Buildings 10,686 26,303 105 37,094 3,012 Software, Net 1 - - 1 - Machinery, Equipment and Vehicles 4,053 488 4,320 8,861 2,365 Construction in Progress - 4,975-4,975 - Less: Accumulated Depreciation (4,082) (8,345) (2,926) (15,353) (3,479) Total Capital Assets 10,779 30,766 1,504 43,049 1,969 Total Noncurrent Assets 10,779 30,766 1,504 43,049 1,969 Total Assets 13,727 32,012 3,795 49,534 10,222 DEFERRED OUTFLOWS OF RESOURCES Deferred Outflows Related to Pensions 149 32 140 321 199 Total Deferred Outflows of Resources 149 32 140 321 199 26
LIABILITIES CITY OF KISSIMMEE, FLORIDA STATEMENT OF NET POSITION - Continued PROPRIETARY FUNDS September 30, 2016 Business-type Activities - Enterprise Funds Stormwater Airport Solid Waste Total Governmental Activities - Internal Service Funds Current Liabilities: Accounts Payable $ 562 $ 57 $ 669 $ 1,288 $ 593 Contracts Payable 8 - - 8 - Accrued Liabilities - 6-6 - Deposits - 78-78 - Compensated Absences Payable 20 4 10 34 25 Estimated Claims Payable - - - - 1,491 Total Current Liabilities 590 145 679 1,414 2,109 Noncurrent Liabilities: Compensated Absences Payable 80 16 42 138 99 Other Postemployment Benefits 250 48 214 512 278 Net Pension Liability 1,130 249 1,021 2,400 1,433 Estimated Claims Payable - - - - 1,491 Total Noncurrent Liabilities 1,460 313 1,277 3,050 3,301 Total Liabilities 2,050 458 1,956 4,464 5,410 DEFERRED INFLOWS OF RESOURCES Deferred Inflows Related to Pensions 24 5 23 52 32 Total Deferred Inflows of Resources 24 5 23 52 32 NET POSITION Net Investment in Capital Assets 10,287 30,694 1,338 42,319 1,956 Restricted for Airport Projects - 24-24 - Unrestricted 1,515 863 618 2,996 3,023 Total Net Position $ 11,802 $ 31,581 $ 1,956 $ 45,339 $ 4,979 The notes to the financial statements are an integral part of the financial statements. 27