HomeMy WebLinkAbout2013CAFRCity of Seward, Alaska
Comprehensive Annual Financial Report
For the Year Ended December 31, 2013
Prepared by City of Seward Finance Department
The report accompanying these financier staternents was issued by
BIDO USA, ILLP, a Maware Ifirnited liabihty partnership and the U.S. member of
BIDO International Limited, a UK company Ifirnited by guarantee.
Comprehensive Annual Financial Report
of the
City of Seward, Alaska
For the Fiscal Year Ended
December 31, 2013
Jean Bardarson
MAYOR
Jim Hunt
CITY MANAGER
Prepared by the Finance Department
Kristin M. Erchinger, CGFM, MPA
FINANCE DIRECTOR
City of Seward, Alaska
Contents
Exhibit Pa e
INTRODUCTORY SECTION
Table of Contents I-V
Letter of Transmittal VI-Xii
Certificate of Achievement for Excellence in Financial Reporting X111
List of Principal Officials X1V
Seward Citizens - Organizational Chart XV
FINANCIAL SECTION
Independent Auditor's Report 1-4
Management's Discussion and Analysis 5-17
Basic Financial Statements
Government-wide Financial Statements:
Statement of Net Position A-1 20
Statement of Activities A-2 21
Fund Financial Statements:
Governmental Funds:
Balance Sheet B-1 22
Reconciliation of Governmental Funds
Balance Sheet to Statement of Net Position B-2 23
Statement of Revenues, Expenditures and Changes in
Fund Balances B-3 24
Reconciliation of Change in Fund Balances of
Governmental Funds to Statement of Activities B-4 25
Statement of Revenues, Expenditures and Change in Fund
Balance - Budget and Actual - General Fund B-5 26
Proprietary Funds:
Statement of Net Position C-1 27
Statement of Revenues, Expenses and Changes
in Net Position C-2 28
Statement of Cash Flows C-3 29-30
Statement of Fiduciary Net Position D-1 31
Notes to Basic Financial Statements 32-57
City of Seward, Alaska
Contents
Exhibit Pa e
FINANCIAL SECTION, continued
Supplementary Information
Combining and Individual Fund Financial Statements and Schedules:
Nonmajor Governmental Funds:
Combining Balance Sheet E-1 60
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances (Deficit) E-2 61
Nonmajor Enterprise Funds:
Combining Statement of Net Position F-1 62
Combining Statement of Revenues, Expenses and
Changes in Net Position F-2 63
Combining Statement of Cash Flows F-3 64-65
Internal Service Funds:
Nonmajor Governmental Funds:
Combining Statement of Net Position G-1 66
Combining Statement of Revenues, Expenses and
Change in Net Position G-2 67
Combining Statement of Cash Flows G-3 68
General Fund:
Balance Sheet H-1 70-71
Schedule of Revenues, Expenditures and
Changes in Fund Balance - Budget and Actual H-2 72-78
Nonmajor Special Revenue Funds:
Combining Balance Sheet 1-1 80
Combining Statement of Revenues, Expenditures and
Change in Fund Balances (Deficit) 1-2 81
Nonmajor Capital Project Funds:
Combining Balance Sheet J-1 83
Combining Statement of Revenues, Expenditures and
Change in Fund Balances (Deficits) J-2 84
Enterprise Funds:
Electric:
Statement of Net Position K-1 86-87
Statement of Revenues, Expenses and Change in Net Position K-2 88
Statement of Cash Flows K-3 89
Statement of Operating Expenses K-4 90
Statement of Composition of Net Position K-5 91
Statement of Electric Capital Projects K-6 92
City of Seward, Alaska
Contents
Exhibit Pa e
FINANCIAL SECTION, continued
Statement of Revenues, Expenses and Change in Net Position
Supplementary Information, continued
98
Combining and Individual Fund Financial Statements and Schedules, continued:
K-13
Enterprise Funds, continued:
Statement of Composition of Net Position
Water:
100
Statement of Net Position K-7 93
Statement of Revenues, Expenses and Change in Net Position K-8 94
Statement of Cash Flows K-9 95
Statement of Composition of Net Position K-10 96
Wastewater:
Statement of Net Position K -11 97
Statement of Revenues, Expenses and Change in Net Position K-12 98
Statement of Cash Flows K-13 99
Statement of Composition of Net Position K-14 100
Harbor:
Statement of Net Position K-15 102-103
Statement of Revenues, Expenses and Change in Net Position K-16 104
Statement of Cash Flows K-17 105
Statement of Composition of Net Position K-18 106
Schedule of Harbor Capital Projects K-19 107
Seward Marine Industrial Center:
Statement of Net Position K-20 108
Statement of Revenues, Expenses and Change in Net Position K-21 109
Statement of Cash Flows K-22 110
Statement of Composition of Net Position K-23 ill
Parking:
Statement of Net Position K-24 112
Statement of Revenues, Expenses and Change in Net Position K-25 113
Statement of Cash Flows K-26 114
Statement of Composition of Net Position K-27 115
Healthcare Facilities:
Statement of Net Position K-28 116
Statement of Revenues, Expenses and Change in Net Position K-29 117
Statement of Cash Flows K-30 118
Internal Service Funds:
Motor Pool:
Statement of Net Position L-1 120
Statement of Revenues, Expenses and Change in Net Position L-2 121
Statement of Cash Flows L-3 122
Statement of Composition of Net Position L-4 123
City of Seward, Alaska
Contents
Exhibit Pa e
FINANCIAL SECTION, continued
Supplementary Information, continued
Combining and Individual Fund Financial Statements and Schedules, continued:
Internal Service Funds, continued:
Compensated Annual Leave:
Statement of Net Position L-5 124
Statement of Revenues, Expenses and Change in Net Position L-6 125
Statement of Cash Flows L-7 126
Teen Council Agency Fund
Statement of Changes in Assets and Liabilities M-1 127
Capital Assets:
Schedule of Governmental Capital Assets N-1 128
Schedule of Changes in Governmental Capital Assets N-2 129
Schedule of Governmental Capital Assets by Function and Activity N-3 130
Schedule of Changes in Governmental Capital Assets by Function
and Activity N-4 131
Schedule of State Financial Assistance 0-1 132
Notes to the Schedule of State Financial Assistance 0-2 133
U17
City of Seward, Alaska
Contents
SINGLE AUDIT SECTION
Single Audit Reports
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 161 -162
Independent Auditor's Report on Compliance for Each Major
State Program and Report on Internal Control Over Compliance
as Required by the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits 163 -165
Schedule of Findings and Questioned Costs 166 -168
Summary Schedule of Prior Audit Findings 169
Corrective Action Plan 170
0
Exhibit Pa e
STATISTICAL SECTION
Net Position by Component 1 136
Changes in Net Position 2 137 -138
Fund Balances of Governmental Funds 3 139
Changes in Fund Balances of Governmental Funds 4 140
General Fund Revenues by Source 5 141
General Fund Tax Revenues by Source 6 142
Property Tax Rates 7 143
Property Tax Levies and Collections 8 144
Assessed and Estimated Actual Value of Taxable Property 9 145
Principal Property Taxpayers 10 146
Principal Taxable Sales by Line of Business 11 147
Ratios of Outstanding Debt by Type 12 148
Ratio of General Obligation Bonded Debt to Assessed Value
and General Obligation Bonded Debt per Capita 13 149
Computation of Direct and Overlapping Bonded Debt 14 150
Legal Debt Margin 15 151
Revenue Bond Coverage - Electric Enterprise Fund 16 152
Revenue Bond Coverage - Harbor Enterprise Fund 17 153
Demographic and Economic Statistics 18 154
Principal Employers 19 155
Full -Time Equivalent Employees by Fund 20 156
Operating Indicators by Function 21 157
Capital Asset Statistics By Function 22 158
Property Value, Construction, and Bank Deposits 23 159
Miscellaneous Statistics 24 160
SINGLE AUDIT SECTION
Single Audit Reports
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 161 -162
Independent Auditor's Report on Compliance for Each Major
State Program and Report on Internal Control Over Compliance
as Required by the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits 163 -165
Schedule of Findings and Questioned Costs 166 -168
Summary Schedule of Prior Audit Findings 169
Corrective Action Plan 170
0
June 18,, 2014
Honorable Members of the Seward City Council
Citizens of the city • Seward.-
0TheCityofSeward (City) Comprehensive Annual Financial Report (CAFR) for the year ended
December 31, 2013 is hereby submitted in accordance with Alaska Statutes 29.35.120 and the Seward City
Code. This report satisfies the requirement that the City issues an annual report • its financial position and
activities, and that the report is audited by an independent firm of certified public accountants.
The CAFR is presented in three sections; Introduction, Financial, and Statistical, as follows:
The Introduction Section is unaudited and includes this letter of transmittal, a Certificate of Achievement
for Excellence in Financial Reporting for the City of Seward's 2012 CAFR, an organization chart, and a list
of principal officials.
The Financial Section includes the auditor's report, Management's Discussion and Analysis (MD&A), the
financial statements; which include government-wide financial statements and fund, financial statements
w ith comparative bud etary information, notes to the financial statements, and combining and individual19
statements and schedules, as applicable, arranged according to ftind type.
6
The Statistical Section is unaudited and includes a broad range of information 'Including historical trends
over a ten-year period, demographic informationi and other non-financl'al information.
ItAs, a recipient of federal grant funds, the City is required to undergo an audit in accordance with the
provisions of the U.S., Office of Management and Budget's (OMB) Circular A-133, Audits of States, Local
Governments, and Non-Profit Organizations and associated Compliance Supplement. A schedule of
expenditures of federal awards, the 'Independent auditor's report on internal controls and compliance with
U
applicable laws and regulations, and a schedule of findings and questions costs (if any) are prepared as part
of the audit in accordance with OMB Circular A -133.
As a recipient of state grant funds, the City is also required to undergo an audit in accordance with the
provisions of Alaska State Regulation 2 AAC 45.010 and audit Guide and Compliance Supplement for State
Single Audits. A state financial assistance schedule, the independent auditor's reports on internal controls
and compliance with applicable laws and regulations, and a schedule of findings and questioned costs (if
any) are prepared as part of the audit in accordance with the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits.
The independent audit of the financial statements of the City was part of a broader, federally mandated
Single Audit" designed to meet the special needs of federal and state granting agencies. The standards
governing Single Audit engagements require the auditor to report not only on the fair presentation of the
financial statements, but also on internal controls and compliance with certain legal requirements, with
special emphasis on internal controls and legal requirements involving the administration of federal and
state awards. These findings are presented in the Single Audit Section of this report.
Generally accepted accounting principles require management to provide a narrative introduction, overview,
and analysis to accompany the basic financial statements, in the form of a Management's Discussion and
Analysis. This letter of transmittal is designed to complement the MD &A and should be read in conjunction
with it. The City's MD &A can be found immediately following the report of the independent auditors.
Profile of the City of Seward
The City was incorporated on June 1, 1912, and became a first class City under Alaska Statute's home rule
provisions (AS 29.04.01.0) upon adoption of the City Charter by a referendum vote on January 5, 1960. The
community is located on the eastern side of the Kenai Peninsula in Southcentral Alaska, 125 highway miles
south of Anchorage. "ear -round access is available by road, rail, water and two small- aircraft runways.
The City has an area of 22 square miles and a population of 2,487. The form of government established by
the Charter is the Council - Manager plan. The Council exercises legislative power and determines all
matters of policy for the City. The Council is composed of a Mayor and six council members who are
elected at -large on a non - partisan basis. Council members and the Mayor each serve a term of two years.
The City Manager is the administrative head of the City government, is appointed by the Council, and is
responsible to the Council for the proper handling of all City affairs. The City Clerk is also appointed by the
Council. The Clerk's primary responsibilities involve the safekeeping of public records and the
administration of City elections. The City Attorney is appointed by the Council. All other officers and
employees of the City are appointed by the City Manager. .Appointments to the following positions are
made by the City Manager with approval of the Council: Manager of Electric Utility; Chief of Police;
Finance Director; and Fire Chief.
The City is empowered to levy a property tax on both real and personal property located with its boundaries.
The property tax is an ad valorem tax. Funding for the General .Fund, by order of significance, is provided
by sales tax, payments in lieu of tax assessed to enterprise funds, intergovernmental revenues, property tax,
recreation and camping fees, hotel /motel tax,, land rent and leases, and other revenues. The City provides
the following services to its citizens: police, motor vehicle testing and licensing, jail, animal control,
building inspection, fire, public works, community development, librarylrnuseum, parks and recreation,
electric, water, wastewater, port and harbor, library, healthcare (primary care clinic, hospital, emergency
room, long - term care facility), road maintenance, parking, and general administrative services.
VII
Budgetary Control
The City's budget serves as the foundation for financial planning and control. The City Council adopts a
biennial budget which represents a two -year period of time. Adjustments to the budget are made throughout
the year, as authorized by the City Council. In the second year of the biennial budget, an interim review is
conducted and modifications may be recommended to the City Council. All departments submit budget
requests to the City Manager on or before September 1 every odd - numbered year. The City Manager
utilizes these requests to formulate a proposed budget and submits the proposed budget to the City Council
at the first regular meeting in October. The Council holds public hearings on the proposed budget and
generally adopts the budget at the last meeting in November. The City Manager is authorized to make
transfers between departments and line items within a Fund for amounts up to $50,000. Council action is
required for transfers between funds, for all single - item purchases exceeding $50,000 (and all purchases of
new motor vehicles regardless of cost), and for all new appropriations. Budget -to- actual comparisons are
provided in this report for the General Fund.
Factors Affecting Financial Condition
Economy
Seward's economy has shown a strong recovery from the economic slowdown of 2009. The Borough
unemployment rate is at its lowest level in more than 25 years at 7.5 %, which has fallen from a 10%
recessionary rate in 2010. Borough -wide, per capita personal income has risen nearly 12% since 2012.
Taxable sales activity in Seward has surpassed pre - recessionary levels by 19.3% (taxable sales increased
from $90.8 Million in 2009 to $108.3 Million in 2013). There is growing interest in expansion of marine
transportation, ship repair, and related business activity, and the City has been awarded $20 Million in
funding to expand the Seward Marine Industrial Center to enclose the SMIC basin and accommodate larger
marine vessels. This project is generating significant interest from commercial fishing fleets and other large
marine vessel operators with interest in new commercial harbor facilities. The Alaska Railroad has also
announced future plans to expand dock facilities in Seward, demonstrating a positive and growing economic
climate for transportation and freight handling.
Seward experienced a five percent (5 %) increase in the number of businesses licensed to operate within the
City in 2013, expanding from 594 in 2012 to 622 in 2013. The downtown corridor has seen at least four
new businesses open in the past year (two restaurants, one health food store and a sporting goods store),
helping to rejuvenate a primary retail area that had seen reduced business activity in recent years, and
reflecting optimism toward improved economic conditions for local businesses. Increased economic activity
has resulted in increased City tax revenues, with sales tax revenues increasing 27.8% from 2009 to 2013
3.6 million in 2009 to $4.+6 million in 2013), property tax revenues increasing 30.1% ($975,687 in 2009 to
1,276,898 in 2013), and hotel/motel tax revenues increasing 43.1% ($285,313 in 2049 to $408,256 in
2013). while the business outlook appears positive, local businesses continue to be impacted by the
fluctuating cost of utilities and heating fuel, and some local businesses are forced to close in the winter to
avoid higher winter operating costs. Seward continues to benefit from a strong tourism industry, but
expanded fisheries processing, marine transportation, marine repair and related industries are injecting a
desired degree of diversity in Seward's economic base.
In comparison with other communities in the Kenai Peninsula Borough, Seward's growth has outpaced for
three straight years. In 2011, Seward's taxable sales grew by 6.84% followed by Honer (5.57 %) and :Kenai
5.05 %). In 2012, Seward's taxable sales grew by 4.47% followed by Soidotna (3.55 %) and Kenai (2.19%).
In 2013, Seward's taxable sales grew by 6.38% followed by Homer (3.99 %) and Soldotna (2.37 %).
The City's top ten property taxpayers have become more diverse over the past fear years, but still lean
toward an over - dependence on tourism-related businesses and the visitor industry. The top -ten taxpayers
represent various industries including tourism, seafood processing, grocery, hotel/motel, marine,
communications, petroleum products, and ship repair, and account for approximately 19''v of all taxable
property in the community. With the bulk of these entities being visitor-related, the City is vulnerable to
changes that affect the tourism industry, since sales tax and property tax are two of the City's top revenue
sources, and combined, account for 51 % of all General Fund revenue. Seward's top ten sales tax lines of
business show that the bulk of sales taxes are generated from retail sales (39.3% of all sales) followed by
guiding water (17.7%), restaurants /bars (11.3%), hotel /motel (10.6 %), public administration (6.4 %),
wholesale trade (4.9 %), and others.
State Statutes were recently amended to eliminate the reporting of employment figures for individual
employers. As such, the City does not have precise data regarding the size of its largest employers, but
Seward maintains a significant government presence, with more than half of the top ten employers being
government or non - profit entities, including the state -owned prison and vocational technical center, the City,
the Borough school district, and three non - profits. Providence Seward Medical and Care Center (the
hospital and long -terns -care facility) and Alaska Sealife Center are City -owned facilities run on the City's
behalf by non - profit organizations, and they round out the list of top employers. The largest private sector
employers include Safeway, CHU Alaska tourism, the Breeze Inn, and Fay's waterfront.
Long Term financial planning
The City of Seward prepares a biennial (two- -year) budget at the end of every odd year, for the upcoming two
years. In the off-budget year, more attention is given to longer -term financial planning initiatives, such as
the 2012 effort to improve the Capital Improvement Plan by more accurately identifying the costs of
replacing deteriorating capital infrastructure in the enterprise funds. This follows the 2011 rate reviews of
the City's Harbor, Electric, Water and wastewater enterprise funds, and development of five -year plans for
each enterprise fund, listing the critical risk (likely to fail in the next five years), high risk (likely to fail
within the next 5 -10 years), and moderate risk (continuously increasing cost to operate and maintain)
infrastructure needs, and potential funding strategies to meet those needs. To address the replacement of
infrastructure, enterprise funds have reviewed rates each year and, combined with automatic tariff increases
mirroring the rise in the consumer price index, the City is making important progress in the area of
enterprise fund financial improvement.
The focus on long - -term financial planning has resulted in a number of tangible financial improvements in
the short- -term. Specifically, General Fund reserves have been increased to the highest level in more than a
decade (representing 5.8 months' worth of expenditures and transfers -out); the mater Enterprise Fund has
been repaid $1.97 Million loaned to the long -term care facility to finance bond reserves; all State revenue
sharing funds are used for one - time, nonrecurring capital needs; major capital infrastructure improvements
are being addressed in the Harbor (replacement of D- Float), mater (construction of new water storage tank),
Electric (near completion of the electric utility warehouse and backup generator project), and wastewater
Lowell Point sewage lagoon aerator and sludge removal efforts) Funds, with additional major capital
improvements planned.
A future phase of long -term financial planning will focus on strengthening the City's financial condition by
identifying areas of structural weakness in the City's financial health. This will enable the Council to
develop a proactive plan to meet the challenges that might threaten the City's strong financial condition, and
provide sufficient time for course correction.
Financial Condition
The City has struggled for many years to bring its general Fund unassigned fand balance to a level that
meets its own policy band of between three and six months' reserves. The City's unassigned fund balance
rose in 2013 by $1,121,404, to $5,948,459, representing 5.8 months' reserves. This is up from 4.6 months'
at the end of 2012, at $4,827,055, and represents the highest level of General Fund reserves in more than
two decades. The increase in reserves is largely due to $2.0 million in one -time EXXON Valdez oil spill
settlement payments in 2009 and 2010, as well as a transfer of old hospital PER.S liabilities ($1,312,,335) out
of the General Fund in 2012, and into the new Healthcare Facilities :enterprise Fund. This brings the City's
reserve levels in the General Fund to within the high -range of the desired band of between three to sip.
In
months' expenditures and transfers -out (the policy band is between $3.1 million and $6.2 million based on
2013 A.ctuals) and provides the City with flexibility to meet unexpected needs and emergencies. There
remains however, significant unmet need for capital repair and replacement funding to address local roads
and sidewalks, erosion issues, replacement of the City Shop and parks and recreation warehouse, as well as
cost sharing required to repay the Army Corps of Engineers loan for dredging, to match grants and address
building and infrastructure deferred maintenance, etc. In addition, the City's reserve levels are needed to
mitigate potential health system financial shortfalls, support for the local primary care Community Health
Center, Alaska Sealife Center funding uncertainty, enterprise fund critical needs, unforeseen emergencies
and natural disasters and other similar risks. Any of these risks can have a significant adverse impact on the
City's financial condition, enhancing the need for a healthy level of unassigned reserves. Tremendous
progress has been made in this area, however.
Over more than five consecutive years, municipalities in Alaska have received State financial assistance in
the form of revenue sharing and pension contribution rate relief. This funding has mitigated the need to
reduce services or increase local property taxes, and has enabled the City to rebuild its General Fund
reserves. while the strength of Seward's retail sales enabled the City to absorb State funding reductions in
years when revenue sharing was reduced, restoration of revenue sharing and State grant funding have
provided the City's only identified source of revenue to fund general government infrastructure replacement
and capital needs. The City's continued dependence on grant funding for major repairs and replacement of
infrastructure assets is not sustainable in the long- terra. Further, any change in the State's current policy of
funding retirement system rates above 22% could have a materially adverse financial impact on the City.
For example, if the City was required to pay the full actuarially required contribution rate of 35.84% to the
pension plan in 2013 rather than only 22 %, the additional cost to the City would have been $689,220. This
is the additional amount that the State of Alaska paid to the defined benefits pension plan on the City's
behalf for all of the City's funds, and is the equivalent of a 0.6% increase in the City's sales tax rate, or an
approximately 1.7 mill property tax increase.
The City's enterprise funds continue to refine the assessment of capital infrastructure condition and to
implement the most critical and high -risk repair and replacement projects as funding allows. This has been
accomplished through incremental rate increases over the past few years, as well as successful grant - writing
efforts. Failure to routinely pass along cost increases in the past however, has placed some Funds in the
position of having insufficient .resources to meet capital needs. This is particularly true in the wastewater
Fund, although the Harbor and water Funds have received significant grant funding to accomplish major
infrastructure upgrades. with reductions in state and federal grant opportunities, it will be more difficult for
enterprise funds to mitigate risks to their financial condition, so continued diligence and focus on financial
condition will be a priority.
Major Projects
The City has a number of major capital projects in the works, including: 1) completion of the electric
warehouse construction project, and the relocation of backup generators into the new buildings; 2) $20
million in grant funds for expanding the breakwater at Seward Marine Industrial Center (SMIC) with the
goal of home - porting the Coastal villages Region Fund fishing fleet in Alaska and promoting expansion of
transportation and shipping opportunities through Seward's port; 3 ) installation of new automated pay
stations on the campground; 4) renovation of harbor restroorns; 5) construction of a new restroom on the
waterfront utilizing private donations; 6) construction of a new water storage tank and refurbishment of two
existing tanks; 7 repairs to the Lowell Point and SMIC sewage lagoons; 8) replacement of the 250 -Ton
travelift; replacement of a number of floats in the Small Boat Harbor; and numerous other capital
initiatives.
Cash Management Policies and Practices
The investment and collateralization of City funds is governed by Section 5.15 of the Seward City Code.
The ordinance clearly identifies safety as the primary concern in the selection and management of the City's
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investments. The Seward City Code authorizes investment in obligations of the U.S. Treasury, its agencies
and instrumentalities, repurchase agreements, fully collateralized certificates of deposit, high rated
commercial paper, bankers' acceptances, and the Alaska Municipal League Investment Pool. The City
combines all cash into a Central Treasury, facilitating the investment of combined funds to maximize
investment earnings. Earnings on these investments are allocated monthly to participating funds based on
ending cash balances. The City Code places limitations on maturity of investments and investment
guidelines are contained in an investment policy established by the finance director and approved by the city
manager.
Risk Management
The City is a member of the Alaska Municipal League Joint Insurance Association (RA), a government
insurance pool established by the Alaska Municipal League. The JIA provides the City's insurance
coverage for property, general liability, public officials and employees' liability, law enforcement
professional liability, and workers' compensation. The City also maintains special marine insurance
coverage and boiler and machinery insurance coverage with other insurance companies. This specialized
insurance is placed through JIA. The JIA provides loss control services and conducts periodic inspections to
ensure safe operations. The City maintains a safety committee charged with reviewing and recommending
safety policies and procedures for all departments. The City Council designates a portion of the General
Fund reserves to meet potential insurance - related losses, and to support higher deductibles to minimize
insurance premiums.
Pension and other Post-employment Benefits
The City provides pension benefits for all eligible employees through the State of Alaska Public Employees
Retirement System (PERS). This system consists of four defined benefit (DB) Tiers and one defined
contribution (DC) Tier. The City has no obligations in connection with employee benefits offered through
these plans beyond its annual required payments to the plans. The City has always paid its annual required
contribution rates on time. The City anticipates near -term annual contribution rates to be capped at 22% of
covered payroll for both the DB and DC Plans, based on State statutes requiring the State of Alaska to cover
costs in excess of 22 %. The transition from a single- agent, multiple- employer plan, to a cost - sharing plan as
of July 1, 2008, provides a single rate for all participating PER.S employers, eliminating the previous
methodology of assessing each employer its own rate. The City of Seward now shares in the pooled liability
of the PER.S plan. The legislature's cap on local government contribution rates brings stability to Seward's
retirement rates, mitigating the need for significant annual rate increases, although it is important to note that
a future State legislature can eliminate the State subsidy above 22 %. In 1998, taxpayers contributed
194,666 toward General Fund retirement contributions, and in 2013 the amount was $734,145. This
amount was in addition to $591,105 paid by the State on behalf of the General Fund, for a total General
Fund PER.S cost of $1,325,250 in 2013. The State of Alaska paid a total of $689,220 toward City of
Seward's PER.S liability in 2013, with $591,105 associated with the General Fund and the remainder
allocated among enterprise funds.
Financial Reporting Award
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a
Certificate of Achievement for Excellence in .Financial Reporting to the City of Seward for its
comprehensive annual :financial report (CAFR) for the year ended December 31, 2012. This is the 19th
consecutive year that the City of Seward has received this prestigious award. In order to be awarded a
Certificate of Achievement, a government must publish an easily readable and efficiently organized
comprehensive annual financial report. This report must satisfy both generally accepted accounting
principles and applicable legal requirements. .A Certificate of Achievement is valid for a period of one year
only. We believe that our current comprehensive annual financial report continues to meet the Certificate of
Achievement requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate.
A .4
Acknowledgments
We would like to take this opportunity to thank the members of the Seward City Council for their proactive
efforts to protect and enhance the physical and financial assets of the City and for setting Seward on a path
of positive and sustainable economic growth. Thanks are also due to the dedicated staff of the finance
department for preparation of this comprehensive annual financial report.
No
Kristin gErchiner, FI nance Direc orAY
City of Seward, Alaska
GFOA Certificate
Government Finance Officers Association,
LoffI
I I M
VI mt_-W
Forits Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2012
Executive Dlrector/CEO
LV411
City of Seward, Alaska
List of Principal Officials
The City of Seward is a home-rule city with a council-manager form of
government. Legislative powers of the City of Seward are vested in a
council consisting of a mayor and six council members. The mayor and
each council member are elected from the city at large. The term of office
is two years. The appointed officers of the city include the city manager,
city clerk, and the city attorney. The city council generally meets on the
second and fourth Mondays of each month in the City Council Chambers
located in the City Hall Building at 410 Adams Street in Seward, Alaska.
L74
COUNCIL MEMBERS
Term Expires
Jean Bardarson Mayor 2015
Marianna Keil Vice Mayor 2014
David Squires Council Member 2015
Ristine Casagranda Council Member 2014
Christy Terry Council Member 2015
Date Butts Council Member 2014
Iris Darting Council Member 2014
ADMINISTRATION
James Hunt City Manager
Kristin Erchinger Finance Director
John Foutz Manager of Electric Utility
W. C. Casey Public Works Director
Mack Funk Harbormaster
Tom Clemons Chief of Police
Eddie Athey Fire Chief
Karin Sturdy Parks Et Recreation Director
Patty Linville Library Director
CITY CLERK
Johanna Kinney City Clerk
ATTORNEY
Eric Wohlforth City Attorney, Wohlforth, Brecht Et Cartledge
The City of Seward is a home-rule city with a council-manager form of
government. Legislative powers of the City of Seward are vested in a
council consisting of a mayor and six council members. The mayor and
each council member are elected from the city at large. The term of office
is two years. The appointed officers of the city include the city manager,
city clerk, and the city attorney. The city council generally meets on the
second and fourth Mondays of each month in the City Council Chambers
located in the City Hall Building at 410 Adams Street in Seward, Alaska.
L74
City of Seward, Alaska
Organizational Chart
Boards Et
City Clerk City Manager City Attorney
ommissions L
Public Works Harbor Et SMIC Electric Utility Public Safety
Fine' Building Police, Jail,
Inspection U U Animal Control
ED
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Tet: 907-278--8878 3601 C Street, SLJite 600BDo
Fax: 907-278--5779 Anchorage, AK 99503
www.bdo.com
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward, Alaska
Report on the Financial Statements
We have audited the accompanying financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information of City of
Seward, Alaska, as of and for the year ended December 31, 2013, and the related notes to the
financial statements, which collectively comprise City of Seward'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 did
not audit the operating account of the Providence Seward Medical and Care Center (PSMCC) which
represents 6% and 100% respectively, of the assets and revenues of the PSMCC Enterprise Fund, and
1% and 49% respectively, of the assets, and revenues of the business-type activities. Those
financial statement components were audited by other auditors whose report has been furnished to
us, and our opinion, insofar as it relates to the amounts included for the operating account of the
Providence Seward Medical and Care Center is based solely on the report of the other auditors. 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. The financial statements of the
operating account of the PSMCC were not audited in accordance with Government Auditing
Standards.
BDO USA, LIP, a IDe awaire Urnited hability partnership, is the U.S. rnernbeir of IBDO Vnter nation a Limited, a UK company Hmited by guarantee, and forms pairt of the
inteirnationa IBDO network of independent rnernbeir firms.
BDO is the brand narne for the BDO network and for each of the BDO Member Firms.
1
An audit involves performing procedures to obtain audit evidence about the amounts and
disclosures in the financial statements. The procedures selected depend on the auditor's
judgment, including the assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk assessments, the auditor
considers internal control relevant to the entity's preparation and fair presentation of the
financial statements in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
entity's internal control. Accordingly, we express no such opinion. An audit also includes
evaluating the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluating the overall presentation of the
financial statements.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a
basis for our audit opinions.
Opinions
In our opinion, based on our audit and the report of other auditors, the financial statements
referred to above present fairly, in all material respects, the respective financial position of the
governmental activities, the business-type activities, each major fund, and the aggregate
remaining fund information of City of Seward, Alaska as of December 31, 2013, and the respective
changes in financial position and, where applicable, cash flows thereof and the respective
budgetary comparison for the General Fund 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 on pages 5-16 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.
Supplementary and Other Information
Our audit for the year ended December 31, 2013 was conducted for the purpose of forming
opinions on the financial statements that collectively comprise City of Seward's basic financial
statements. The accompanying Schedule of State Financial Assistance, the combining and
individual fund financial statements and schedules, and the introductory and statistical sections
are presented for purposes of additional analysis and are not a required part of the basic financial
statements. The Schedule of State Financial Assistance is required by the State of Alaska Audit
Guide and Compliance Supplement for State Single Audits.
The accompanying Schedule of State Financial Assistance and the combining and individual fund
financial statements and schedules are the responsibility of management and were derived from
and relate directly to the underlying accounting and other records used to prepare the basic
financial statements. Such information has been subjected to the auditing procedures applied in
the audit of the basic financial statements for the year ended December 31, 2013 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 accompanying
supplementary information is fairly stated, in all material respects, in relation to the basic
financial statements as a whole for the year ended December 31, 2013.
City of Seward's basic financial statements for the year ended December 31, 2012 (not presented
herein) were audited by other auditors whose report thereon dated June 12, 2013, expressed
unmodified opinions on the respective financial statements of the governmental activities, the
business-type activities, each major fund, and the aggregate remaining fund information. The
report of the other auditors dated June 12, 2013, stated that the individual fund financial
statements and schedules for the year ended December 31, 2012 were subjected to the auditing
procedures applied in the audit of the 2012 basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare those basic financial statements or to those basic
financial statements themselves, and other additional procedures in accordance with auditing
standards generally accepted in the United States of America and, in their opinion, were fairly
stated in all material respects in relation to the basic financial statements as a whole for the year
ended December 31, 2012.
The introductory and statistical sections have not been subjected to the auditing procedures
applied in the audit of the basic financial statements, and accordingly, we do not express an
opinion or provide any assurance on them.
3
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated June
18, 2014 on our consideration of City of Seward'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 the 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 Seward's internal control over financial reporting and compliance.
j *
A
Anchorage, Alaska
June 18, 2014
4
CITY OF SEWARD
Management's Discussion and Analysis
December 31, 2013
As management for the City of Seward, we hereby offer readers of the City's Comprehensive Annual
Financial Report this narrative overview and analysis of the financial activities of the City of Seward for
the fiscal year ended December 31, 2013. In addition to this discussion and analysis, readers are
encouraged to read our letter of transmittal found on pages VI-XII of this report, which provides
additional summary information.
FINANCIAL HIGHLIGHTS
The assets of the City of Seward exceed liabilities by $157,810,991 at December 31, 2013. Of
this amount, $131,308,847 represents net investment in capital assets, $5,466,882 is restricted
for capital purposes and the remainder of $21,035,262 represents unrestricted net position.
Unrestricted net position does not necessarily reflect a surplus of resources, as a portion of net
position is designated for capital grants, capital replacement, or for other purposes as determined
by the City Council.
Excluding business-type activities, the assets of the primary government exceeded liabilities by
7019091457. Of this amount, $10,143,752 in unrestricted net position is legally unreserved and
available to meet the government's ongoing financial obligations, although the Council has
earmarked a portion of these funds for specific purposes.
The City's total net position increased by $5,719,070. Governmental activities increased by
821,257 and business-type activities increased by $4,897,813. The bulk of the increase in
business-type activity net position is due to the following enterprise funds: healthcare facilities
2,260,250); Electric ($795,437); Harbor ($832,106); and SMIC ($763,346).
The City's governmental funds reported combined ending fund balances of $9,567,645,
representing an increase of $1,251,210 compared to the prior year. While $9,060,116 of the
fund balance is legally available for spending, only $5,948,459 has not already been earmarked
for specific purposes (unassigned fund balance). This reflects an increase in available
unassigned fund balance of $1,134,284 resulting primarily from an excess of revenues over
expenditures in the General Fund, of $929,762 before transfers.
The total debt of governmental activities decreased by ($237,582) or (5.7%) due to retirement of
capital lease payments for a fire truck and payments on two loaders, plus a reduction in the value
of accrued leave of ($39,404), due to employee retirements. The total debt of business-type
activities decreased by ($2,424,074) or (5.8%) as a result of routine bond and loan payments, as
well as payoff of hospital bonds and a Lowell Point Sewage lagoon loan through DEC.
OVERVIEW OF THE FINANCIAL STATEMENTS
This Management Discussion and Analysis serves to introduce readers to the City of Seward's basic
financial statements, which includes the government-wide financial statements, the individual fund
statements, and notes to the financial statements. In addition to the basic financial statements, this
report also contains other required supplementary information. The basic financial statements include
two types of statements reflecting different views of the City's financial activities:
1. Government-wide financial statements summarize the City's overall financial condition and
contain both short-term and long-term information. This information is intended to present a
broader view of the City as a whole in a manner similar to private-sector business.
2. Fund financial statements focus on specific areas of City operations and provide more detail
than the government-wide statements.
5
CITY OF SEWARD
Management's Discussion and Analysis, continued
Government-wide Financial Statements
The government-wide financial statements are intended to provide a comprehensive look at all financial
activities of the City and are presented on the accrual basis of accounting, in a manner similar to a
business enterprise.
The Statement of Net Position presents information on all of the City's assets less liabilities, resulting
in net position. The purpose of this statement is to present the overall financial position of the City.
Over time, increases or decreases in net position may demonstrate whether the City's financial position
is improving or deteriorating. There are other non-financial factors, such as the condition of public
facilities the timely investment in roads and infrastructure, and the level of maintenance funding that
should be considered in evaluating the City's overall financial condition.
The Statement of Activities demonstrates how the City's net position changed as a result of the current
year's activities. This statement is prepared on the accrual basis of accounting which is comparable to
private-sector businesses. Revenues and expenses are reported when the underlying event giving rise to
the change occurs, regardless of the timing of the related cash flows. Therefore, revenues and expenses
are reported in this statement for some items that will result in cash flows in future fiscal periods.
Both of the government-wide financial statements distinguish functions of the City of Seward 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 Seward include general
government, public safety, public works, parks and recreation, library/museum, and the Alaska Sealife
Center. The business-type activities of the City include healthcare facilities, harbor, marine industrial
center, electric, water, wastewater, and parking. The government-wide financial statements can be
found on pages 20-21 of this report.
Fund Financial Statements
A fund is a grouping of related accounts used to maintain control over resources that have been
segregated for specific activities or purposes. The City of Seward, like other state and local
governments, uses fund accounting to ensure and demonstrate compliance with legal requirements. The
funds of the City of Seward are divided into three categories: governmental funds, proprietary funds,
and fiduciary funds, each of which is further described below.
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 which provide a broad overview and include short-term and long-term information, the
governmental funds' 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 is useful in evaluating a government's near-term financing requirements.
However, 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.
Such a comparison enables the reader to better understand the long-term impact of a government's near-
term financing decisions. The Governmental Funds Balance Sheet and the Governmental Funds
Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to
facilitate the comparison between governmental funds and governmental activities.
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CITY OF SEWARD
Management's Discussion and Analysis, continued
The City of Seward maintains fourteen (14) individual governmental funds. The General Fund is the
only Major Governmental Fund presented as a distinct column on the Governmental Funds Balance
Sheet and in the Governmental Fund Statement of Revenues, Expenditures, and Changes in Fund
Balances, with the other thirteen governmental funds aggregated and shown in the Non-major Funds
column on these same two statements. Individual fund information for the non-major governmental
funds is provided in the form of combining statements elsewhere in this report.
The City of Seward adopts an annual budget for the General Fund. A budgetary comparison statement
can be found on page 26 to demonstrate compliance with the annual budget, and a list of budgetary
highlights can be found later in this document. The basic governmental fund financial statements can be
found on pages 22-26 of this report.
Proprietary Funds
The City of Seward maintains two types of proprietary funds; enterprise funds and internal service
funds. Enterprise funds are used to report the same functions identified as business-type activities in the
government-wide financial statements. The City uses enterprise funds to account for healthcare
facilities (Providence Seward Medical & Care Center), harbor, Seward Marine Industrial Center, electric
utility, water utility, wastewater utility, and parking operations. Information for each of these funds is
presented in the individual fund statements found on pages 88-120 of this report.
Internal service funds are used to accumulate and allocate costs internally among the various functions
of the City. The City of Seward utilizes two internal service funds to account for its motor pool
equipment replacement program and compensated annual leave resources. The equipment replacement
program benefits both the governmental and business-type functions. As a result, its activities have
been allocated among both the governmental and business-type activities in the government-wide
financial statements. Accrued leave that is earned in the governmental funds is accounted for in the
Compensated Annual Leave Internal Service Fund. Individual fund data for the internal service funds
can be found on pages 120-126 of this report.
Fiduciary Funds
Fiduciary funds account for resources held by the City in a trustee capacity, for the benefit of parties
outside of the government. Fiduciary funds are not reflected in the government-wide financial
statements because the resources of those funds are not available to support programs of the City. The
accounting used for fiduciary funds is similar to that of governmental funds. The City utilizes a single
fiduciary fund, the Teen Council Agency Fund, and data for that fund can be found on page 127 of this
report.
Notes to the Basic Financial Statements
The notes provide additional information essential to a complete understanding of the data provided in
the government-wide and fund financial statements. The notes can be found on pages 32-57 of this
report.
Other Information
In addition to the basic financial statements and accompanying notes, this report presents certain
required supplementary information on the public employee's retirement system on pages 51-55 of this
report.
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CITY OF SEWARD
Management's Discussion and Analysis, continued
GOVERNMENT -WIDE FINANCIAL ANALYSIS
Statement of Net Position
Over time, net position may serve as a useful indicator of a government's financial position. At
December 31, 2013, the City's assets exceeded liabilities by $157,810,991. A significant portion of the
City's net position (83 %) reflects its investment in capital assets, less any outstanding debt used to
acquire those assets. Capital assets are not liquid and are not available for future spending. Since the
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 following table provides a summary of the City's net position:
Table 1
Statement of Net Position
As of December 31, 2013 and 2012
Total net position $ 70,909,457 70,088,200 86,901,534 82,003,721 157,810,991 152,091,921
At the end of 2013, the City of Seward is able to report positive balances in all three categories of net
position, for the government as a whole, as well as for its separate governmental and business -type
activities.
Governmental Business -Type
Activities Activities Total
2013 2012 2013 2012 2013 2012
Current and other assets $ 1118921415 11,0191886 271435,780 231912,830 39,328,195 341932,716
Capital assets 649489,145 65,3011763 1061526,738 1071676,470 171,015,883 172,978,233
Total assets &
deferred outflows 76,381,560 76,321,649 133,962,518 131,589,300 210,344,078 207,910,949
Long -term liabilities
outstanding 411641720 4,4131129 391588,491 421265,550 431753,211 461678,679
Other liabilities 1,3079383 1,820,320 71472,493 7,320,029 8,7791876 9,140,349
Total liabilities 5,472,103 6,2331449 471060,984 49,585,579 52,533,087 55,8191028
Net position:
Net investment in capital
assets, 6017391625 61,3921678 7015691222 6519091668 131,308,847 1271302,346
Restricted 261080 261080 51440,802 51150,114 51466,882 5,176,194
Unrestricted 10,143,752 8,669,442 10,891,510 10,943,939 21,035,262 19,613,381
Total net position $ 70,909,457 70,088,200 86,901,534 82,003,721 157,810,991 152,091,921
At the end of 2013, the City of Seward is able to report positive balances in all three categories of net
position, for the government as a whole, as well as for its separate governmental and business -type
activities.
CITY OF SEWARD
Management's Discussion and Analysis, continued
Statement of Activities
The City's total revenues and expenses for governmental and business -type activities are reflected in the
following table.
Table 2
Change in Net Position
For the Years Ended December 31, 2013 and 2012
I
Governmental Business -Type
Activities Activities Total
2013 2012 2013 2012 2013 2012
Revenues:
Program revenues:
Charges for services 1,813,742 1,649,326 39,1021440 35,9101,422 40,9161182 371559,748
Operating grants /
contributions 110021434 110371711 1701531 154,295 1,172,965 1,192,006
Capital grants /
contributions 231034 31442,599 4,125,258 117321343 411481292 51174,942
General revenues:
Sales taxes 41583,057 41189,330 41583,057 41189,330
Property taxes 112611276 11025,266 11261,276 11025,266
Payments in lieu of tax 811670 761160 811670 761160
Other 1,9571725 11750,767 481,380 552,441 2,4391105 2,3031208
Total revenues 10,722,938 13,171,159 43,879,609 38,349,501 54,602,547 51,520,660
Expenses:
General government 2,199,711 1,981,876 21199,711 1,981,876
Public safety 3,510,922 3,3601091 3,510,922 3,3601091
Public works 1,851,321 2,4101794 1,8511321 2,4101794
Parks & Rec/ Library 1,827,952 1,766,647 11827,952 11766,647
Unallocated interest 2081840 2061778 2081840 2061778
Alaska Sealife Center 8481940 9651206 848,940 965,206
Electric 1015901994 91935,695 101590,994 9,9351695
Water 110871747 11246,997 110871747 11246,997
Wastewater 11015,474 1,013,492 110151474 1,013,492
Harbor 318371952 412431734 3,8371952 412431734
SMIC 8991343 9281458 8991343 9281458
Healthcare Facilities 20,8581042 21,856,797 201858,042 21,856,797
Parking 146,239 237,522 146,239 237,522
Total expenses 10,4471686 101691,392 38,435,791 391462,695 481883,477 50,1541087
Increase (decrease) in net
assets before transfers 275,252 214791767 51443,818 11113,194) 517191070 11366,573
Transfers 546,005 1,9701983 5461005) 1,970,983)
Change in net position 8211257 41450,750 41897,813 31084,177) 517191070 11366,573
Beginning net position 701088,200 65,6371450 82,003,721 85,087,898 1521091,921 150,725,348
Ending net position 70,909,457 70,088,200 86,901,534 82,003,721 157,810,991 152,091,921
I
CITY OF SEWARD
Management's Discussion and Analysis, continued
Governmental Activities
Governmental and business -type activities both increased the City of Seward's net position.
Governmental activities increased net position by $821,257. The following items are of particular note:
Overall revenues for governmental activities were down by ($2,448,221), or approximately
18.6 %) compared with the prior year.
Overall expenditures were down by ($6,764,055) or (36.4 %). The decrease was entirely due to
capital outlay which was down by ($6,909,456) due to prior year spending on the new
library /museum.
Capital and operating grants brought in $1.0 million -- approximately $3.5 million lower than
the prior year — due to completion of construction of the new library /museum.
Governmental funds experienced net transfers -in of $546,005 in 2013 versus net transfers -in of
1,970,983 in 2012. Much of the difference is attributed to the prior year's transfer of
outstanding hospital- related debt for pension liability and a debt service collateral loan out of the
General Fund to the newly established Healthcare Facilities Enterprise Fund.
The City does not generate sufficient tax revenues to cover depreciation on general government
assets. To replace capital assets in the future, the City will need to rely on external financing
sources such as grants, or incurring debt to finance construction.
The following graph reflects the revenues and expenses associated with each of the general
government's primary programs:
Business -Type Activities
Business -type activities increased the net position of the City by $4,897,813, including adjustments for
Motor Pool Internal Service Fund activities. As is the case with governmental activities, a substantial
portion (81%) of the $70.6 million in net position is invested in capital assets. The increase in net
position is comprised of the following:
Net position increased in all enterprise funds except the Wastewater Enterprise Fund, as follows:
Electric Enterprise Fund by $795,437; Harbor Enterprise Fund by $832,106; Seward Marine
Industrial Center Fund by $763,346; Healthcare Facilities Enterprise Fund by $2,260,250; Water
Enterprise Fund by $132,745; and Parking Enterprise Fund by $136,552. The Wastewater
Enterprise Fund net position decreased by ($114,462).
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CITY OF SEWARD
Management's Discussion and Analysis, continued
Allocations of the Motor Pool Internal Service Fund to the business-type activities increased net
position by $91,839.
The Electric Enterprise Fund experienced earnings from operations of $750,177, a decrease of
909,037) from the prior year. Operating revenues were lower by ($184,203) or (1.7%) and
operating costs were up by $724,834 or 7.6%. The operating performance was impacted by a
net increase of $178,556 in salaries and benefits and $505,555 in services and supplies. Salary
and benefit costs rose only $77,753 (5.2%), with the remaining comparative increase due to
billing out less personnel costs to customers, while performing more work on in-house projects
such as construction of the new warehouse. Contracted services were higher by $220,000 due to
underground boring, Ft. Raymond sidewalk and site preparation, exhaust system installation,
relocation of the KPB bike trail, and transformer repairs. Material costs were up by $85,000 due
to the previous year having more materials billed out to customers than purchased. The utility
restored a contribution to the motor pool of $175,000 which had been halted in 2012 to shore up
cash reserves in the Fund to address critical infrastructure needs.
The Electric Enterprise Fund (excluding associated capital projects) experienced an increase in
cash during the year of $423,774, from a prior cash balance of $1,896,567 to a balance of
2,320,341. Including related capital projects, the ending electric utility-related cash balance is
4,156,155 with $2,340,471 of those funds restricted by bond covenants and grant agreements.
The restoration of cash in the enterprise fund is the result of targeted efforts to scale back
spending and raise rates to address significant critical-risk and high-risk infrastructure needs of
the Fund. It also results in no contribution to the depreciation reserve fund for the future
replacement of capital assets, which is not consistent with the City's budget policy of setting
aside 100% of annual depreciation costs for replacement of capital assets. To address these
concerns, rate increases were approved as follows: 5% in 2011, 10% in 2012 and 5% in 2013.
Rates are slated to increase 2.6% in 2014 and another 2.6% in 2015.
The net increase in Seward Marine Industrial Center (SMIC) net position of $763,346 results
from an operating loss of ($507,389), which includes depreciation expense of $601,831, and
capital grant contributions of $1,197,395. The cash balance in the SMIC fund is $230,105, not
including capital and will be used to offset future cash infusion requirements from the General
Fund.
The net increase in Water Enterprise Fund net position of $132,745 is due to higher operating
revenue by $130,601 (11.4%), and lower operating expenses of $154,404 (12.7%). The water
utility ends the year with $2,750,638 in cash (excluding water-related capital projects)
representing a significant increase of $1,793,159 (187.2%) from 2012, reflecting the repayment
of a loan the Water Enterprise Fund had given to establish a reserve fund for healthcare facility
bonds. Including related capital projects, the ending Water utility cash balance is $2,902,730.
The net increase in Harbor Enterprise Fund net position of $832,106 is entirely due to capital
grant contributions of $1,293,192 and $343,265 in State of Alaska Commercial Passenger
Vessel Tax proceeds. The enterprise fund experienced a loss from operations of ($343,560), and
is not able to fund replacement of existing assets due to the need to spend cash on servicing debt
704,374 in 2013). The Harbor Enterprise Fund (excluding capital projects) ended the year
with a cash balance of $1,850,945 (down $291,350 from 2012). Including capital project funds,
the ending harbor cash balance is $4,023,796 with $1,673,436 restricted by bond and capital
project covenants.
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CITY OF SEWARD
Management's Discussion and Analysis, continued
The net increase in net position of the Healthcare Facilities Enterprise Fund of $2,260,250 is due
to earnings from operations of $2,403,360, and transfers from the City's sales tax of $1,136,104.
Most of the surplus comes from a legal settlement with the State of Alaska related to cost
reimbursements associated with the long-term care facility. The settlement results in
approximately $6.1 million in receipts to the facility between 2013 and 2014. The financial
stability of the Healthcare Facilities Fund will depend in large part, on the census of the long-
term care facility in the future, as census is the primary driver of patient service revenue. These
revenues are pledged to repay the $27 million in revenue bonds issued to construct the Seward
Mountain Haven long-term care facility. The balance on those bonds at year-end is $24.86
million
Other non-major enterprise funds experienced the following: 1) increase in Parking Enterprise
Fund net position of $136,552 and an increase in cash of $153,983 with parking revenues higher
than the prior year by $18,805 (6.4%). The acquisition of automated pay stations drove
personnel cost savings of approximately $18,700 (20.9%); and 2) a net decrease in Wastewater
Enterprise Fund net position of ($114,462) and increase in cash of $87,898 to $693,880 (for the
wastewater utility only, excluding related capital projects).
FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS
Governmental Funds
The City of Seward's governmental funds focus on near-term inflows, outflows, and balances of
spendable resources. As such, you will not find long-term capital assets or long-term debt displayed
on the governmental funds' individual fund financial statements. This focus on near-term inflows
and outflows assesses whether the City is generating sufficient revenues in the current year to pay
current-year obligations. However, it does not indicate whether there are sufficient funds available
to cover long-term operations. The level of unassigned fund balance is an important indicator of the
amount of net resources available for spending at the end of the year.
At the end of the year, the City of Seward's governmental funds reported combined ending fund
balances of $9,567,645. Of this amount: $481,449 is nonspendable (inventory, prepaid items);
26,080 is restricted by private donor restrictions requiring its use for construction of the
library/museum; $2,126,418 has been committed by the City Council for working capital, hospital
line of credit, and insurance reserves; $985,239 has been assigned by the administration for payment
of grant-related projects; and $5,948,459 is unassigned, and legally available for spending. These
new classifications of fund balance promulgated in GASB Statement No. 54, reflect efforts to create
a hierarchy of fund balance to enable the reader of the financial statements to understand the extent
to which fund balance reserves are available for spending. The hierarchy reports, in order, the least
spendable to the most spendable fund balance; first are resources which are not available for
spending (nonspendable), then resources which are restricted by legislation or external agencies
restricted), next resources which the City Council has committed to spend for a specific purpose by
way of enabling legislation, and then resources which have been assigned for a specific use but
don't meet the definition of restricted or committed, and finally, the unassigned fund balance which
remains available for spending.
Fund balances in the governmental funds increased by $1,251,210, representing a net increase in the
General Fund of $1,265,724 and a combined net decrease in other governmental funds of $14,514.
12
CITY OF SEWARD
Management's Discussion and Analysis, continued
The overall net increase in fund balance is due to the following:
General Fund
General Fund revenues were $929,762 higher than expenditures, and after subtracting net transfers
of $335,962, fund balance increased by $1,265,724. General Fund revenues came in $1,017,403
9.8%) higher than in 2012, and expenditures came in $353,558 or 3.5% higher.
The General Fund's fund balance must be able to meet unforeseen needs and emergencies, as well
as future spending needs. The City's fund balance policy is to maintain unassigned fund balance
equal to between three and six months' expenditures and routine transfers-out to other funds. The
General Fund unassigned fund balance at the end of 2013 is $5,948,459, equal to approximately 5.8
months' reserves, up from 4.6 months' at the end of 2012. The recent increase in fund balance is
due, primarily to the transfer of the hospital PERS liability and debt service collateral loan from the
General Fund to the Healthcare Facilities Enterprise Fund, as well as more than $2.0 million in
Exxon Valdez oil spill settlement proceeds in 2009 and 2010. In the City's case, an adequate level
of fund balance is between $3.1 million and $6.2 million (based on 2013 actuals), which results in
the General Fund currently being on the high end of the desired level of unassigned fund balance.
There is a marked improvement in this metric of financial stability over the past few years.
Special Revenue Funds
Special revenue fund projects experienced a net decrease in fund balance of ($117,112) to $20,989,
with all projects maintaining a positive fund balance, and with the largest project being the Natural
Disasters project with a fund balance of $11,031.
Non-Major Capital Project Funds
All capital projects combined experienced a net increase in fund balance of $102,598 to $869,562,
as follows: the Capital Acquisition Fund ($833,675); Kawabe Park project ($8,524);
Library/Museum ($26,080); and Fire Department Equipment Fund ($1,283).
Proprietary Funds
The City of Seward maintains two types of proprietary funds; enterprise funds and internal service
funds. The City's seven enterprise funds (healthcare facilities, harbor, electric, water, wastewater,
parking, and marine industrial center) report the same functions presented as business-type activities in
the government-wide financial statements, but the individual fund statements are presented in more
detail. Enterprise funds reported total net position of $85.2 million, with $70.6 million invested in
capital assets net of related debt, leaving unrestricted net position of approximately $9.2 million, and
restricted net position of $5.4 million. Of the unrestricted net position, $6.54 million is in restricted cash
bond reserve funds, bond proceeds, etc.) not available for appropriation, and current liabilities total
9.1 million. More specific factors influencing the net position of the enterprise funds are addressed
above in the discussion of the City's business-type activities.
The City maintains two internal service funds; the motor pool and the compensated annual leave fund.
The Motor Pool Internal Service Fund accumulates cash for the replacement of the City's vehicles and
heavy equipment fleet. Departments contribute to the motor pool to purchase vehicles and annually pay
into the motor pool to forward-fund replacement of vehicles. This funding mechanism spreads the costs
of the vehicles over the life of the vehicle in each program's annual budget, rather than to incur costs as
one-time expenses in the year of the vehicle/equipment purchase. The balance of unrestricted cash in
the motor pool at year-end is $1,267,851, reflecting an increase of $178,071. The Motor Pool maintains
an outstanding loan due from the Healthcare Facilities Enterprise Fund in the amount of $912,204
related to the payoff of prior hospital PERS liabilities. This loan was carried on the books of the
13
CITY OF SEWARD
Management's Discussion and Analysis, continued
General Fund until 2012 when it was transferred to the books of the Healthcare Facilities Fund. The
Harbor Enterprise Fund owes the Motor Pool Fund $78,837 related to a loan for purchase of a 50-Ton
boatlift, which matures in 2016. The Compensated Annual Leave Fund accumulates cash reserves to
pay annual leave cash-outs for governmental funds. The balance of cash in this fund at the end of 2013
is $415,200.
General Fund Budgetary Highlights
There were a number of modifications to the budget during the year, as described below:
Overall, projected revenues were upward adjusted $1,404,221 related primarily to State
payments on behalf of the City for PERS ($591,105), increased jail contract amount
189,998), increased sales tax revenue ($296,566), raw fish tax ($200,000), new
campground dump station fee ($20,000), project management fees ($30,000), mid-cycle
additional revenue projections ($73,552), and various general government grants
31000).
Expenditures were increased by $993,787 during the year. Since the City's two-year
budget is formulated two years in advance, more budget amendments are needed to
account for unanticipated modifications in the second year of the cycle. Budget amends
included the following: $591,105 related to the State payments on behalf of the City for
public employee's retirement system costs; $11,283 increase audit costs; $2,000
contribution to the sister city program to assist exchange students with travel costs;
37,420 contribution to the mural society for construction of a mural in our sister city,
Obihiro, Japan; $2,000 in added travel for planning and zoning; $23,983 for increased
utility costs; $17,000 for increased refuse disposal costs; $20,776 for increased workers'
compensation insurance; $12,800 for heating fuel; $17,888 for general liability
insurance; $57,388 for health insurance; $10,000 increased contributions to the Senior
Center; $20,000 to host the Obihiro delegation; $22,000 to restore police department
overtime; $5,000 for travel related to software implementation; $20,000 due to delayed
retirement; $25,000 for Lowell Creek tunnel study; $5,562 for contract wage increase;
16,500 to restore credit card fees absorbed by the City; $8,160 for Alaska Shield grant
costs; $7,031 for radio grant costs; $10,280 library grants (internet and historic photo
collection); and $50,611 for library cleaning services.
Transfers to other funds increased by a total of $95,370 due to the anticipated increase in
sales tax revenue, one-quarter of which is allocated to the Healthcare Facilities Fund,
accounting for $94,087 of the increased transfers-out, and $1,283 in matching funds for
a fire equipment grant.
There was no change from the original transfers-in to the General Fund of $2,012,324, to
the final transfers-in balance. The bulk of transfers-in to the General Fund come from
enterprise fund payments -in- lieu -of -tax ($1,269,998) which reflect 8% of operating
revenues in the enterprise fund. Other transfers-in include land lease revenues
233,232), reimbursement for lobbying costs ($64,390), repayment of a hospital
pension loan ($134,704), ambulance contribution from CPV tax proceeds ($10,000) and
an electric line permit fee of $300,000.
14
CITY OF SEWARD
Management's Discussion and Analysis, continued
On a budgetary basis, General Fund revenues came in $409,872 or 3.7% higher than budget primarily
due to tax revenues exceeding budget by $369,622 and building permits higher by $56,940. There was
an insurance recovery of $120,768 related to loss control incentive program with the City's insurance
carrier. Investment earnings came in lower than budget by $85,641 due to the sustained low interest rate
environment. General Fund expenditures were under budget by $491,681. Most of this variance was
due to $374,502 in debt service savings, where the Healthcare Facilities Fund began paying for the
hospital pension liability (rather than the General Fund), and the initial payment on the new
library /museum bond was delayed until 2014. The remaining expenditure budget variance of $117,179
was due, in part, to salary savings related to vacancy factor in the police, jail and fire departments, as
well as replacement of retired employees with lower -cost new hires.
General Fund Actual Highlights
General Fund revenues exceeded expenditures by $929,762, and after transfers between funds were
accounted for, there was a net increase in fund balance of $1,265,724.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2013, the City had $171,015,883 invested in capital assets net of accumulated
depreciation, representing an overall decrease of ($1,962,350) from the previous year.
Table 3
City of Seward Capital Assets
in thousands, net of depreciation)
Additional information regarding the City of Seward's capital assets can be found in Footnote 4 on
pages 41-43.
Long -term Debt
As of December 31, 2013, the City had total debt outstanding of $43,048,587. Of this amount, $3,48
million represents outstanding general obligation bonds backed by the full faith and credit of the City for
construction of the library /museum. An additional $36.9 million represents: revenue bonds backed by
operating revenues from the harbor enterprise fund ($6.06 million), electric enterprise fund ($6.03
million), and long -term care facility ($24.8 million). The remaining debt represents an outstanding
capital equipment lease on loaders, water and wastewater loans, and compensated absences.
15
Governmental Business -Type
Activities Activities Total
2013 2012 2013 2012 2013 2012
Land and improvements 5,432 51432 171484 171484 221916 221916
Buildings 471275 371020 251116 261553 721391 631573
Improvements other
than buildings 71266 11676 531031 561736 601297 581412
Machinery and equipment 41348 41340 51565 61149 91913 101489
Construction in progress 168 16,834 5,331 754 5,499 17,588
Total net capital assets 64,489 65,302 106,527 1071676 1711016 172,978
Additional information regarding the City of Seward's capital assets can be found in Footnote 4 on
pages 41-43.
Long -term Debt
As of December 31, 2013, the City had total debt outstanding of $43,048,587. Of this amount, $3,48
million represents outstanding general obligation bonds backed by the full faith and credit of the City for
construction of the library /museum. An additional $36.9 million represents: revenue bonds backed by
operating revenues from the harbor enterprise fund ($6.06 million), electric enterprise fund ($6.03
million), and long -term care facility ($24.8 million). The remaining debt represents an outstanding
capital equipment lease on loaders, water and wastewater loans, and compensated absences.
15
CITY OF SEWARD
Management's Discussion and Analysis, continued
Table 4
City of Seward Outstanding Debt
in thousands)
Further detail regarding the City's long -term outstanding debt can be found on pages 45 -50.
Economic Factors and Next Year's Budget and Rates
The City is entering the first year of its Biennial Budget for the period January 1, 2014 through
December 31, 2015. The budget was prepared with an eye toward maintaining current service levels,
but with a few improvements such as limited repairs to sidewalks and roads, new automated pay stations
in the campgrounds, an additional teen Rec Room program in the old museum space, conversion of the
old library into City office space, replacement of D -float in the harbor, construction of a new electric
warehouse, new water storage tank, and other program and infrastructure improvements. The budget
anticipates a leveling off of the growth rate associated with the economic rebound, primarily in order to
preserve a level of conservatism in the budget, combined with as the fact that the budget was prepared in
advance of receipt of third quarter financial activity data, which was much better than anticipated.
The General Fund's primary source of revenue, sales tax, is budgeted to decrease by 5.2% or
approximately $237,000 from 2013 actuals. This is due to the higher- than - expected rise in taxable sales
during 2013, where Seward's taxable sales exceeded growth rates for all communities in the Kenai
Peninsula Borough. The recent increase in economic activity makes it very likely the City will exceed
this target. Bed tax revenues were budgeted to decrease by 5.7% from 2013 actuals to $385,000. These
projections were made prior to availability of data for the busiest quarter of the City's year, and were
based on the lagging recovery of bed tax revenues compared with other taxable sales. Since 2013 hotel
activity rebounded better than expected, 2014 targets should be met.
On the General Fund cost side, expenditures were budgeted 1.9% (or $199,298) lower than 2013
actuals. This is despite additional costs associated with new debt service on the library /museum,
operating costs associated with the old museum and old library spaces, new janitorial services at the
library, a 3% cost -of- living increase for employees, the addition of 1.5 FTEs in the animal control
function, a new half -time MIS position, and a new public works project manager position. The General
Fund budget is balanced with utilization of $36,333 of reserves, but reserve levels are at their highest
level in more than a decade.
16
Governmental Business -Type
Activities Activities Total
2013 2012 2013 2012 2013 2012
General obligation bonds 3,480 31480 0 710 31480 41190
Revenue bonds 361945 381475 361945 381475
Capital leases 31 229 31 229
Loans 11968 21155 11968 21155
Compensated absences 415 455 208 206 623 661
Total outstanding debt 3,926 4,164 39,122 41,546 431049 45,710
Further detail regarding the City's long -term outstanding debt can be found on pages 45 -50.
Economic Factors and Next Year's Budget and Rates
The City is entering the first year of its Biennial Budget for the period January 1, 2014 through
December 31, 2015. The budget was prepared with an eye toward maintaining current service levels,
but with a few improvements such as limited repairs to sidewalks and roads, new automated pay stations
in the campgrounds, an additional teen Rec Room program in the old museum space, conversion of the
old library into City office space, replacement of D -float in the harbor, construction of a new electric
warehouse, new water storage tank, and other program and infrastructure improvements. The budget
anticipates a leveling off of the growth rate associated with the economic rebound, primarily in order to
preserve a level of conservatism in the budget, combined with as the fact that the budget was prepared in
advance of receipt of third quarter financial activity data, which was much better than anticipated.
The General Fund's primary source of revenue, sales tax, is budgeted to decrease by 5.2% or
approximately $237,000 from 2013 actuals. This is due to the higher- than - expected rise in taxable sales
during 2013, where Seward's taxable sales exceeded growth rates for all communities in the Kenai
Peninsula Borough. The recent increase in economic activity makes it very likely the City will exceed
this target. Bed tax revenues were budgeted to decrease by 5.7% from 2013 actuals to $385,000. These
projections were made prior to availability of data for the busiest quarter of the City's year, and were
based on the lagging recovery of bed tax revenues compared with other taxable sales. Since 2013 hotel
activity rebounded better than expected, 2014 targets should be met.
On the General Fund cost side, expenditures were budgeted 1.9% (or $199,298) lower than 2013
actuals. This is despite additional costs associated with new debt service on the library /museum,
operating costs associated with the old museum and old library spaces, new janitorial services at the
library, a 3% cost -of- living increase for employees, the addition of 1.5 FTEs in the animal control
function, a new half -time MIS position, and a new public works project manager position. The General
Fund budget is balanced with utilization of $36,333 of reserves, but reserve levels are at their highest
level in more than a decade.
16
CITY OF SEWARD
Management's Discussion and Analysis, continued
There are no proposed changes to tax rates in 2014 with the mill rate remaining at 3.12 mills, the City
sales tax rate remaining at 4 %, and the hotel /motel bed tax rate remaining at 4 %. The harbor tariff
includes a 2.6% rate increase in 2014, equal to the consumer price index for Anchorage averaged over
the five previous full years. The Harbor capital renewal and replacement fee and a portion of raw fish
tax proceeds will contribute $217,469 toward replacement of aging harbor infrastructure. The electric
tariff rates will increase by 2.6% in 2014 to address significant capital infrastructure needs, including
completion of the warehouse construction. The Electric Fund will contribute $452,117 toward
replacement of aging infrastructure, a considerable improvement over recent years in which little
funding was available for capital needs. The water tariff will increase rates 2.6% in 2014 and the
department will construct a new water storage tank with grant funds, to mitigate summer water storage
capacity concerns. The Water Fund will contribute $900,000 toward replacement of aging
infrastructure. The wastewater tariff will increase rates 5.2% in 2014 and those rate increases are
necessary solely to keep the Fund from falling behind financially. These rate levels do not address
critical or high -risk wastewater capital infrastructure needs, but the Wastewater Fund will contribute
57,867 toward replacement of aging infrastructure. In the future, enterprise fund tariffs are expected to
provide annual incremental rate increases equal at least to the CPI, enabling them to keep pace with the
increased cost of goods and services, preventing further erosion of financial stability of those Funds.
Requests for Information
The City of Seward's financial statements and the accompanying information are designed to present
users (citizens, taxpayers, elected officials, customers, investors, and creditors) with a general overview
of the City's finances, and to demonstrate accountability to taxpayers and ratepayers. Questions
concerning information in this report, or requests for additional information, can be addressed to the
City of Seward, Attn: Finance Director, P.O. Box 167, Seward, Alaska 99664.
17
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18
Basic Financial Statements - Overview
These financial statements provide a summary overview of the financial position and results of
operations of all funds of the City, aggregated at the government-wide and the major fund level.
The following statements are included in this section:
Statement of Net Position
Statement of Activities
Governmental Funds - Balance Sheet
Reconciliation of Governmental Funds Balance Sheet to Statement of Net Position
Governmental Funds - Statement of Revenues, Expenditures and Change in Fund Balances
Reconciliation of the Changes in Fund Balances of Governmental Funds to Statement of
Activities
General Fund - Statement of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual
Proprietary Funds - Statement of Net Position
Proprietary Funds - Statement of Revenues, Expenses and Change in Net Position
Proprietary Funds - Statement of Cash Flows
Statement of Fiduciary Net Position
Notes to Basic Financial Statements
19
Exhibit A-1
City of Seward, Alaska
Statement of Net Position
Governmental Business-type
December 31, 2013 Activities Activities Total
Assets
5,472,103 47,060,984 52,533,087
Cash and investments 10,177,890 13,378,749 23,556,639
Receivables, net of allowance for doubtful accounts:
2,360,000 2,360,000
Taxes 556,080 556,080
Accounts 108,547 3,411,659 3,520,206
Assessments, due within one year 13,472 13,472
Grants, shared revenues, and loans 11171,834 1,893,580 3,065,414
Accrued interest 73,785 3,284 77,069
Other 215,579 215,579
Prepaid items 472,738 472,738
Inventories 8,711 923,852 932,563
Restricted cash and investments 6,541,637 6,541,637
Other assets 306,650 306,650
Assessments, due after one year
109,956
8,733 8,733
Internal balances 677,170) 677,170
Capital assets not being depreciated 5,600,561 22,814,369 28,414,930
Capital assets being depreciated, net of depreciation 58,888,584 83,712,369 142,600,953
Total Assets $ 76,381,560 $ 133,901,103 $ 210,282,663
Deferred Outflows of Resources
Unamortized deferred toss on refunding - 61,415 61,415
Total Assets and Deferred Outflows of Resources $ 76,381,560 $ 133,962,518 $ 210,344,078
Liabilities
5,472,103 47,060,984 52,533,087
Accounts payable 387,329 1,577,118 1,964,447
Payable to Providence Health and Services - Washington 2,360,000 2,360,000
Due to contractual agencies 406,000 406,000
Accrued payroll and related liabilities 144,957 1,108,127 1 ,253,084
Accrued interest 53,230 437,878 491,108
Other accrued liabilities 223,589 223,589
Funds held in trust 60,700 60,700
Customer deposits 1,233,169 1,233,169
Unearned revenue 437,578 101,201 538,779
Other liabilities 249,000 249,000
Noncurrent liabilities:
Due within one year:
Annual leave 109,956 49,943 159,899
Notes payable 128,667 128,667
Bonds payable 85,000 1,610,000 1,695,000
Capital [ease obligations 31,320 31,320
Due in more than one year:
Annual leave 305,244 158,436 463,680
Notes payable 1,840,021 1,840,021
Bonds payable, including bond premium 3,633,200 35,801,424 39,434,624
Total Liabilities 5,472,103 47,060,984 52,533,087
Net Position
Net investment in capital assets 60,739,625 70,569,222 131,308,847
Restricted for capital projects, bond retirement, Et commercial passenger vessel tax 26,080 5,440,802 5,466,882
Unrestricted 10,143,752 10,891,510 21,035,262
Total Net Position 70,909,457 86,901,534 157,810,991
Total Liabilities and Net Position 76,381,560 133,962,518 210,344,078
See accompanying notes to basic financial statements.
20
Exhibit A-2
City of Seward, Alaska
Statement of Activities
Year Ended December 31., 2013
FX
Net (Expense) Revenue and
Program Revenues Changes in Net Position
Fees,
Fines Et Operating Capital Business-
Charges for Grants Et Grants Et Governmental type
Functions: Expenses Services Contributions Contributions Activities Activities Total
Governmental Activities
General government 27199)711 202,893 $ 585,497 1,411,321) 1,411,321)
Public safety 3,510,922 897,319 23,034 2,590,569) 2,590,569)
Public works 1,851,321 30,565 162,828 1,657,928) 1,657,928)
Parks and recreation 1,338,404 653,054 9)772 675,578) 675,578)
Library 489,548 29)911 244,337 215,300) 215,300)
Sea Life Center 848,940 - 848,940) 848,940)
Unallocated interest 208,840 - 208,840) 208,840)
Total Governmental
Activities 10,447,686 1,813,742 1,002,434 23,034 7,608,476) 7,608,476)
Business-type Activities
Electric 10,590,994 11,040,608 39,084 1,380,430 1,869,128 1,869,128
Water 1,087,747 1)280,710 21)963 24)485 239,411 239,411
Wastewater 1,015,474 960,591 21)717 33,1 66) 33,1 66)
Harbor 3,837,952 3,235,923 83,767 1)293y192 774,930 774,930
SMIC 899,343 391, 954 1)197y395 690, 006 690, 006
Healthcare Facilities 20,858,042 21,880,406 4,000 229)756 1,256,120 1y256,120
Parking 146,239 312)248 166y009 166y009
Total Business-type
Activities 38,435,791 39)102)440 170,531 4,125,258 4,962,438 4,962,438
Total Primary
Government 48,883,477 $ 40,916,182 $ 1)172)965 4,148,292 7y608,476) 4,962,438 $ 2y646y038)
General Revenues
Taxes:
Sales taxes 4,583y057 4,583,057
Property taxes 1)261Y276 1y2617276
Other taxes 408,256 408,256
Payment in lieu of taxes 81,670 81,670
Grants and entitlements not
restricted to a specific purpose 1)491y511 343,265 1y834,776
Investment income 57, 958 138,115 196, 073
Transfers 546,005 546,005)
Total General Revenues and Transfers 8,429,733 64y625) 8,365,108
Change in Net Position 821)257 4,897,813 5,719,070
Net Position, beginning 70,088,200 82y003,721 152Y091Y921
Net Position, ending 70,909,457 86,901,534 $ 157,810,991
See accompanying notes to basic financial statements.
FX
Exhibit B -1
City of Seward, Alaska
Governmental Funds
Balance Sheet
M
Major Funds Total
Nonmajor Governmental
December 31, 2013 General Funds Funds
Assets
Cash and investments 773727250 171227589 874947839
Receivables, net of allowance for doubtful accounts:
Taxes 5567080 5567080
Accounts 1087547 1087547
Grants and shared revenues 12,125 171597709 171717834
Accrued interest 21,558 21,558
Prepaid items 4727738 4727738
Inventory 87711 81711
Due from other funds 9997502 9997502
Total Assets 91551,511 272827298 11, 833, 809
Liabilities
Accounts payable 2467574 1407755 3877329
Accrued payroll and related liabilities 1447957 1447957
Accrued liabilities 2237589 2237589
Funds held in trust 60,700 60,700
Due to other funds 9997502 9997502
Unearned revenue 1867088 2517490 4377578
Total Liabilities 8617908 11391,747 272537655
Deferred Inflows of Resources
Delinquent property taxes 12,509 12,509
Total Liabilities and Deferred Inflows of Resources 8747417 11391,747 272667164
Fund Balances
Nonspendable:
Inventory 87711 81711
Prepaid items 4727738 4727738
Restricted for library and museum 267080 26,080
Committed:
Working capital 175007000 175007000
Insurance 1267418 1267418
Hospital line of credit 5007000 5007000
Assigned:
Parks and recreation 27520 2Y520
General government 77438 71438
Public works 11,031 11,031
Capital projects 8437482 8437482
Insurance 1207768 1207768
Unassigned (deficit) 579487459 579487459
Total Fund Balances 876777094 890,551 975677645
Total Liabilities and Deferred Inflows, and Fund Balances 91551,511 272827298 11,833,809
See accompanying notes to basic financial statements.
M
City of Seward, Alaska
Reconciliation of Governmental Funds Balance Sheet
to Statement of Net Position
December 3~,20~3
Total fund balances for governmental funds
Total net position reported for governmental activities inthe
Statement of Net Position is different because:
Capital assets used in governmental activities are not
financial resources and therefore are not reported
in the funds. These assets, net of accumulated
depreciation consist of:
Land
Construction in progress
Buildings
Improvements other than buildings
Machinery and equipment
Accumulated depreciation
Total capital assets
Other long-term assets are not available to pay for current
period expenditures and therefore are deferred in the funds.
An internal service fund is used by the City to charge the cost
of vehicles and heavy equipment to individual funds. The
net position of the internal service fund attributable to
governmental activities is included in the governmental
column on the Statement of Net Position.
Net position related to governmental activities
Less amount reported with capital assets
Plus amount reported with long-term liabilities
Long-term liabilities, including bonds payable, the related
accrued interest and accrued leave are not due and
payable in the current period and are therefore not
reported as fund liabilities. These liabilities consist of:
General obligation bonds payable
Accrued interest on bonds
Capital leases payable
Accrued leave
Unamortized bond premium
Total long term liabilities
Total Net Position of Governmental Activities
Governmental
Internal
Service
514327289
188'272
89'9777179
21'9717828
814107883 51948'824
43,8487321) 315717607)
82 112 128 21377,017
21988'508
213777017)
Internal
Governmental Service
314807000) $ -
53'133) (97)
31'32O)
415'200)
91567,645
64'489'145
12'5O9
1'058'1O8
317717333) $ (412 171950)
70,909,457
See accompanying notes unbasic financial statements.
Exhibit B -3
City of Seward, Alaska
Governmental Funds
Statement of Revenues, Expenditures and Change in Fund Balances
24
Total
Major Fund Govern -
Nonmajor mental
Year Ended December 31, 2013 General Funds Funds
Revenues
Taxes 61351,525 61351,525
Licenses and permits 204,926 204,926
Intergovernmental 21095,358 996,436 31091,794
Charges for services 21614,684 21614,684
Fines and bails 91530 91530
Investment income 51359 51359
Other 167,360 91772 177,132
Total Revenues 11, 448, 742 11006,208 12, 454, 950
Expenditures
Current:
General government 21754,865 680,018 31434,883
Public safety 31280,724 31280,724
Public works 11670,069 162,828 11832,897
Parks and recreation 112811425 91772 1,291,197
Library 535,747 535,747
Debt service:
Retirement benefits 836,750 836,750
Interest and other costs 159,400 159,400
Capital outlay:
General government 129,182 1291182
Public safety 13,015 13,015
Library 235,950 235,950
Total Expenditures 10, 518, 980 1, 230, 765 11, 749, 745
Excess of Revenues over
under) Expenditures 929,762 224,557) 705,205
Other Financing Sources (Uses)
Transfers in 21165,076 224,144 21389,220
Transfers out 11829,114) 14,101) 11843,215)
Net Other Financing Sources (Uses) 335,962 210,043 546,005
Net Change in Fund Balances 11265,724 14,514) 1,251,210
Fund Balances, beginning 71411,370 905,065 813161435
Fund Balances, ending 81677,094 890,551 91567,645
See accompanying notes to basic financial statements.
24
City of Seward, Alaska
Reconciliation of the Changes in Fund Balances of Governmental Funds
to Statement of Activities
Year Ended December 31, 2013
Net change in fund balances - total governmental funds
The change in net position reported for governmental activities in the
Statement of Activities is different because:
Governmental funds report capital outlays as expenditures. However
on the Statement of Activities, depreciation expense is recognized to
allocate the cost of these items over their estimated useful lives.
This is the amount by which depreciation and loss on asset disposals
of $1,962,224 exceeded capital outlays of $1,383,376.
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. This
is the decrease in other long-term assets.
Issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of the
long-term debt consumes financial resources in governmental funds.
In addition, interest on long-term debt is not recognized under the
modified accrual basis of accounting until due, rather than as it accrues.
This adjustment combines the net change in these balances:
Amortization of bond premium
Amortization of deferred loss on refunding
An internal service fund is used by management to charge the cost of
vehicles and heavy equipment to individual funds. A portion of the
net revenue of these activities is reported with governmental activities.
Change in Net Position of Governmental Activities
M
10,827
49.440)
Pvhikit P.-A
1,251,210
5787848)
177266)
387613)
204.774
821,257
See accompanying notes to basic financial statements.
Exhibit B -5
City of Seward, Alaska
General Fund
Statement of Revenues, Expenditures
and Change in Fund Balance - Budget and Actual
Original Final
Year Ended December 31, 2013 Budget Budget Actual Variance
Revenues
Taxes 516457337 5,9817903 61351,525 369,622
Licenses and permits 1627675 1627675 204,926 42,251
Intergovernmental 1,1197652 2,1647182 2,095,358 68,824)
Charges for services 25757785 25817660 21614,684 33,024
Fines and bails 127000 12,000 9,530 21470)
Investment income 917000 91,000 5,359 85,641)
Other 287200 45,450 167,360 121,910
Total Revenues 916347649 11, 038, 870 11, 448, 742 409, 872
Expenditures
Current:
General government 216547091 2,8767017 2,754,865 121,152
Public safety 3,1547739 3,3487599 3,280,724 67,875
Public works 15267577577 1, 597, 374 11670,069 72,695)
Parks and recreation 1,1907625 1,2787892 1,281,425 21533)
Library 4507194 5397127 535,747 3,380
Debt service:
Principal payments 2617592 2617592 261592
Retirement benefits 5507758 8807762 836,750 44,012
Interest and other costs 2287298 2287298 159,400 68,898
Total Expenditures 107016,874 11,0107661 105187980 491,681
Excess of Revenues over
under) Expenditures 3827225) 28,209 929,762 901553
Other Financing Sources (Uses)
Transfers in 2,0127324 2,0127324 2,165,076 152,752
Transfers out 17630,099) 117257469) 118297114) 103,645)
Net Other Financing Sources (Uses) 3827225 2867855 335,962 49007
Net Change in Fund Balances
Fund Balances, beginning
Fund Balances, ending
315,064 1,265,724 $ 950,660
7,411, 370
81677,094
See accompanying notes to basic financial statements.
26
27
Exhibit C -1
City of Seward, Alaska
Proprietary Funds
Statement of Net Position
Enterprise Funds
Major Funds Total Internal
Healthcare Nonmajor Enterprise Service
December 31, 2013 Electric Harbor SMIC Facilities Funds Funds Funds
Assets
Current Assets
Cash and investments 1,815,684 4,023,796 107,176 3,217,111 4,214,982 13,378,749 1,683,051
Receivables:
Accounts 859,921 154,189 34,985 2,917,000 238,673 4,204,768
Accrued interest 3,284 3,284 52,227
Assessments 2,117 4,286 7,069 13,472
Interfund loans 18,576 18,576 75,571
Grants and loans 683,326 932,089 265,852 12,313 1,893,580
Other receivables 45,379 150,000 20,200 215,579
Less allowance for doubtful accounts 38,696) 24,672) 719,000) 10,741) 793,109)
Inventory 873,504 50,348 923,852
Total Current Assets 4,259,811 5,092,972 408,013 5,565,111 4,532,844 19,858,751 1,810,849
Noncurrent Assets
Restricted cash and investments 2,340,471 1,673,436 1,973,360 554,370 6,541,637
Assessments receivable, net of current portion 3,055 2,144 3,534 8,733
Other assets 306,650 306,650
Interfund loans, net of current portion 315,747 315,747 915,470
Property, plant and equipment:
Total capital assets not being depreciated 1,556,965 7,181,237 13,496,192 579,975 22,814,369
Total capital assets being depreciated 56,926,139 31,083,552 41,132,868 37,636,541 21,592,937 188,372,037 5,948,624
Less accumulated depreciation 35,414,696) 13,738,260) 28,785,839) 13,902,811) 12,818,062) 104,659,668) 3,571,607)
Total Noncurrent Assets 25,727,681 26,202,109 25,843,221 26,013,740 9,912,754 113,699,505 3,292,487
Total Assets 29,987,492 31,295,081 26,251,234 31,578,851 14,445,598 133,558,256 5,103,336
Deferred Outflows
Unamortized deferred loss on refunding 9,808 51,607 61,415
Total Assets and Deferred Outflows 29,997,300 31,346,688 26,251,234 31,578,851 14,445,598 133,619,671 5,103,336
Liabilities
Current Liabilities
Accounts payable 559,525 600,846 78,358 320,439 17,950 1,577,118
Payable to Providence Health and Services - Washington 2,360,000 2,360,000
Due to contractual agencies 406,000 406,000
Accrued payroll and related liabilities 39,538 21,309 579 1,036,000 10,701 1,108,127
Accruedinterest 25,036 26,304 364,295 22,243 437,878 97
Current portion:
Accrued annual leave 22,829 17,594 9,520 49,943 109,956
Bonds payable 380,000 445,000 785,000 1,610,000
Notes payable 128,667 128,667
Capital lease obligations 31,320
Interfund loans 24,885 69,262 94,147
Customer deposits 234,853 998,316 1,233,169
Unearned revenue 34,188 47,013 20,000 101,201
Total Current Liabilities 1,261,781 2,168,442 125,950 5,360,996 189,081 9,106,250 141,373
Noncurrent Liabilities, net of current portion
Accrued annual leave 70,113 54,398 33,925 158,436 305,244
Bonds payable 5,645,000 5,615,000 24,075,000 35,335,000
Unamortized bond premium 41,785 87,594 337,045 466,424
Notes payable 1,840,021 1,840,021
Other liabilities 249,000 249,000
Interfund loans 53,952 1,177,265 1,231,217
Total Noncurrent Liabilities 5,756,898 5,810,944 25,838,310 1,873,946 39,280,098 305,244
Total Liabilities 7,018,679 7,979,386 125,950 31,199,306 2,063,027 48,386,348 446,617
Net Position
Net investment in capital assets 17,689,342 19,140,452 25,843,221 510,045 7,386,162 70,569,222 2,345,697
Restricted for bond retirement 677,911 709,910 1,973,360 3,361,181
Restricted for commercial passenger vessel tax 2,079,621 2,079,621
Unrestricted (deficit) 4,611,368 1,437,319 282,063 2,103,860) 4,996,409 9,223,299 2,311,022
Total Net Position 22,978,621 23,367,302 26,125,284 379,545 12,382,571 85,233,323 4,656,719
Total Liabilities and Net Position 29,997,300 31,346,688 26,251,234 31,578,851 14,445,598 5,103,336
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,668,211
Net position of business -type activities 86,901,534
See accompanying notes to basic financial statements.
27
Exhibit C-2
City of Seward, Alaska
Proprietary Funds
Statement of Revenues, Expenses and Change in Net Positions
28
Enterprise Funds
Major Funds Total Internal
Healthcare Nonmajor Enterprise Service
Year Ended December 31, 2013 Electric Harbor SMIC Facilities Funds Funds Funds
Operating Revenues
Charges for services 11,040,308 3,235,923 391,954 21,880,406 2,553,549 39,102,140
Vehicle rental and interfund
charges 1,060,302
Total Operating Revenues 11,040,308 3,235,923 391,954 21,880,406 2,553,549 39,102,140 1,060,302
Operating Expenses
Salaries and employee benefits 1,435,145 1,000,555 90,734 11,851,000 636,510 15,013,944 385,937
Services and supplies 6,237,221 746,769 105,148 4,082,315 648,043 11,819,496 13,705
Administration 859,630 439,882 101,630 11251,035 437,486 3,089,663
Depreciation 1,758,135 1,392,277 601,831 21292,696 504,299 6,549,238 413,535
Total Operating Expenses 10Y290Y131 3,579,483 899,343 19,477,046 21226,338 36,472,341 813,177
Earnings (Loss) from Operations 750,177 343,560) 507,389) 21403,360 327,211 2,629,799 247,125
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 39y084 83,767 43,680 166,531
Investment income 98,863 30,898 201 2,730 5,423 138,115 52,599
Interest expense 303Y453) 279,387) 1,337,533) 30,720) 1,951,093) 4,231)
Commercial passenger vessel tax 343,265 343,265
Gain (toss) on disposal of capital assets 300 43,463) 43,163) 1,120
Grant revenue 4,000 4,000
Other expenses 60Y733) 60,733)
Net Nonoperating Revenues (Expenses) 225y939) 178,543 201 1,374,266) 18,383 1,403,078) 49,488
Earnings (Loss) before Contributions
and Transfers 524,238 165,017) 507,188) 1,029,094 345,594 1,226,721 296,613
Capital contributions 1y380Y430 11293,192 11197,395 244,338 24,485 4,139,840
Contributions to CHC 14,582) 14,582)
Transfers in 110, 784 320,000 164,461 11136,104 1, 731,349
Transfers out 1,220,015) 616,069) 91,322) 134,704) 215,244) 2,277,354)
Change in Net Position 795,437 832,106 763,346 21260,250 154,835 4,805,974 296,613
Net Position, beginning 22,183,184 22,535,196 25,361,938 1,880,705) 12,227,736 4,360,106
Net Position, ending 22Y978y621 23,367,302 26,125,284 379,545 12,382,571 4,656,719
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 91,839
Change in net position of business-type activities 4,897,813
See accompanying notes to basic financial statements.
28
Exhibit C-3
City of Seward, Alaska
Proprietary Funds
Statement of Cash Flows
29
Enterprise Funds
Major Funds Total Internal
Healthcare Nonmajor Enterprise Service
Year Ended December 31, 2013 Electric Harbor SMIC Facilities Funds Funds Funds
Cash Flows from Operating Activities
Receipts from customers and users 11,346,872 3,335,705 417,352 22,666,406 2,489,668 40,256,003
Payments to suppliers 6,091,747) 298,361) 43,811) 5,035,526) 736,151) 12,205,596)
Payments to employees 1,388,444) 903,575) 90,314) 11,846,000) 599,081) 14,827,414) 666,243)
Payments for interfund services used 859,630) 439,882) 101,630) 1,251,035) 437,486) 3,089,663)
Receipts from interfund charges 1,060,302
Net cash flows from operating activities 3,007,051 1,693,887 181,597 4,533,845 716,950 10,133,330 394,059
Cash Flows from Noncapital Financing Activities
Transfers in 110,784 320,000 164,461 1,136,104 1,731,349
Transfers out 1,220,015) 616,069) 91,322) 134,704) 215,244) 2,277,354)
Net cash flows from noncapital financing activities 1,109,231) 296,069) 73,139 1,001,400 215,244) 546,005)
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 360,000) 420,000) 1,460,000) 186,476) 2,426,476) 198,178)
Interest payments on long-term debt 308,210) 284,374) 1,372,946) 32,324) 1,997,854) 6,738)
Acquisition of property, plant and
equipment 1,527,797) 2,262,544) 1,257,842) 332,194) 62,592) 5,442,969) 179,765)
Proceeds from sale of capital assets 300 300 1,120
Capital contributions received 702,673 423,211 965,578 233,756 27,326 2,352,544
Interfund loan payments 23,588) 2,039,167) 2,062,755)
Commercial passenger vessel tax receipts 686,530 686,530
Decrease in due to contracted agencies 214,000 214,000
Net cash flows from capital and related
financing activities 1,493,034) 1,880,765) 292,264) 4,756,551) 254,066) 8,676,680) 383,561)
Cash Flows from Investing Activities
Investment income received 98,863 27,614 201 2,730 5,423 134,831 56,424
Interfund loan receipts 17,650 1,973,360 1,991,010 71,745
Net cash flows from investing activities 116,513 27,614 201 2,730 1,978,783 2,125,841 128,169
Net Increase (Decrease) in Cash
and Investments 521,299 455,333) 37,327) 781,424 2,226,423 3,036,486 138,667
Cash and Investments, beginning 3,634,856 6,152,565 144,503 4,409,047 2,542,929 16,883,900 1,544,384
Cash and Investments, ending 4,156,155 5,697,232 107,176 5,190,471 4,769,352 19,920,386 1,683,051
Reconciliation of Cash and Investment
to Satement of Net Position
Current assets 1,815,684 4,023,796 107,176 3,217,111 4,214,982 13,378,749 1,683,051
Restricted assets 2,340,471 1,673,436 1,973,360 554,370 6,541,637
4,156,155 5,697,232 107,176 5,190,471 4,769,352 19,920,386 1,683,051
See accompanying notes to basic financial statements.
29
Year Ended December 31, 2013
Exhibit C-3, continued
City of Seward, Alaska
Proprietary Funds
Statement of Cash Flows, continued
Major Funds
Electric Harbor
Enterprise Funds
Total
Healthcare Nonmajor Enterprise
SMIC Facilities Funds Funds
Internal
Service
Funds
Reconciliation of Earnings (Loss) from Operations
to Net Cash from (for) Operating Activities
Earnings (toss) from operations $ 750,177 $ (343,560) $ (507,389) $ 2,403,360 $ 327,211 $ 2,629,799 $ 247,125
Adjustments to reconcile earnings (toss)
Depreciation 11758,135 1,392,277
Other nonoperating expenses 60,733)
Noncash expense - PERS on- behalf 39,084 83,767
Increase (decrease) in allowance for
doubtful accounts 10,305) 4,344
Increase) decrease in assets:
23,000 2,445)
Receivables 296,070 66,844
Inventory 57,043
Other assets
Increase (decrease) in liabilities:
62,057
Accounts payable 149,164 448,408
Other payabtes
Accrued payroll and related tiabitit 7,814 3,399
Accrued annual leave 197) 9,814
Customer deposits 43,725 26,533
Unearned revenue 22,926) 63,815
601,831 21292,696 504,299 6,549,238 413,535
60,733)
43,680 166,531
23,000 2,445) 5,906
18,706 539,000 61,436) 859,184
5,014 62,057
175,350 175,350 7,895
61,337 136,439 93,122) 702,226 235,092)
1,029,000) 1,029,000)
420 5,000 964 17,597
7,215) 2,402 39,404)
17,192
6,692 12,000) 35,581
Net Cash from Operating Activities $ 3,007,051 $ 1,693,887 $ 181,597 $ 4,533,845 $ 716,950 $ 10,133,330 $ 394,059
See accompanying notes to basic financial statements.
30
rvkikif- r1-1
City of Seward, Alaska
Fiduciary Fund
Statement of Fiduciary Net Position
See accompanying notes to basic financial statements.
31
Teen Council
December 31, 2013 Agency Fund
Assets
Cash and investments 51)364
Other assets 150
Total Assets 51514
Liabilities
Accounts payable 7,241
Other accrued liabilities 60
Due to Teen Council 44)213
Total Liabilities 51514
See accompanying notes to basic financial statements.
31
City of Seward, Alaska
Notes to Basic Financial Statements
December 31., 2013
1. Summary of Significant Accounting Policies
Reporting Entity
The City of Seward, Alaska (the City) was incorporated June 1, 1912 as a home-rule city and operates
under a Council-Manager form of government. The City provides the full range of municipal services
as provided for by Alaska Statute. This includes police and fire protection, electric, water and
wastewater services, library, parks and recreation, public improvements, planning and zoning, port
and harbor, hospital and long-term care, and general administrative services.
The accompanying financial statements present the City of Seward. In 2011 the City adopted the
provisions of GAS13 Statement number 61, The Financial Reporting Entity: Ombnibus. In connection
therewith, the City reviewed its legal and contractual arrangements with the Providence Seward
Medical Center which was previously reported as a discreetly presented component unit, and
determined that, for financial reporting purposes in accordance with generally accepted accounting
principles, this activity is appropriately recorded as an enterprise fund of the City. In 2013, the City
entered into a contractual agreement with a non-profit organization as co-signees to a federally
funded health clinic program. The non-profit organization is legally separate and does not meet the
criteria under GAS13 61 for inclusion as a component unit. However, all activities associated with the
clinic are reported in the Healthcare Facilities Enterprise Fund.
The hospital and long-term care facilities (the PSMCC) are owned by the City of Seward. The
facilities are managed by Providence Health Et Services - Washington, a nonprofit corporation (the
Corporation), under a management and operating agreement. Under the operating agreement, the
Corporation is responsible for day to day management of the hospital and long-term care facilities in
exchange for a management fee. All financial risks and rewards from the operations of the hospital
and long-term care facilities accrue to the City. The City is responsible for debt obligations,
including payment of revenue bonds through revenues generated at the PSMCC. The City pays for all
capital costs of the healthcare facilities and is legally obligated to finance potential deficits.
Government-Wide and Fund Financial Statements
The accounting policies of the City conform to accounting principles generally accepted in the United
States of America as applicable to governments. The following is a summary of the more significant
policies:
The government-wide financial statements (i.e., the statement of net position and the statement of
activities) report information on all of the nonfiduciary activities of the primary government. In
general, the effect of interfund activity has been removed from these statements to minimize the
double-counting of internal activities. Governmental activities, which normally are supported by
taxes and intergovernmental revenues, are reported separately from business-type activities, which
rely primarily on fees and charges to external parties.
The statement of activities demonstrates the degree to which the direct expenses of a given function
or segment are offset by program revenues. Direct expenses are those that are clearly identifiable
with a specific function or segment. Program revenues include 1) fees, fines and 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,
investment income and other items not property included among program revenues are reported
instead as general revenues.
32
City of Seward, Alaska
Notes to Basic Financial Statements
Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary
funds, even though the latter are excluded from the government-wide financial statements. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements.
Measurement Focus, Basis of Accounting and Financial Statement Presentation
The government-wide and proprietary fund financial statements are reported using the economic
resources measurement focus and the accrual basis of accounting. Revenues are recorded when
earned and expenses are recorded when a liability is incurred, regardless of the timing of the related
cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants
and similar items are recognized as revenue as soon as all eligibility requirements imposed by the
provider have been met. The Fiduciary Fund also uses the accrual basis of accounting.
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 all revenues, except reimbursement grants, to be
available if they are collected within 60 days after year end. Reimbursement grants are considered
available if they are collected within one year 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 are recorded only to
the extent they have matured.
Property taxes, sales taxes, charges for services, 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 susceptible to accrual as revenue in the current period. Most other
revenue items are considered to be measurable and available only when received by the government.
The City reports the following major funds based on the required quantitative criteria:
Major Governmental Funds:
The General Fund is the government's primary operating fund. It accounts for all financial
resources of the general government, except those required to be reported in another fund.
Major Proprietary Funds:
The Electric Enterprise Fund accounts for all activities related to the operation of the City's
electric utility.
The Harbor Enterprise Fund accounts for the marine-related activities of the City's harbor.
The Seward Marine Industrial Center (SMIC) Enterprise Fund accounts for marine-related services
on the east side of Resurrection Bay.
The Healthcare Facilities Enterprise Fund accounts for the healthcare facilities, local hospital
and long-term care facilities.
33
City of Seward, Alaska
Notes to Basic Financial Statements
The City also reports two Internal Service Funds which account for the activities relating to the City's
motor pool activities and compensated absences of the governmental funds. The Motor Pool Internal
Service Fund reports revenues charged to the other funds based on rental fees and capital lease
payments designed to cover the cost of the lease payments and to fund depreciation. The
Compensated Annual Leave Internal Service Fund accounts for the accrual and payment of
compensated absences of the governmental activities.
In addition, the City maintains and reports on a single fiduciary fund. This fund records cash held in a
fiduciary capacity on behalf of the local teen council.
As a general rule the effect of interfund activity has been eliminated from the government -wide
financial statements. Exceptions to this general rule are allocated administration fees and charges
between the enterprise funds and the various other funds and departments. Elimination of these
charges would distort the direct costs and program revenues reported for the various functions
concerned.
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. In addition, general revenues include all taxes,
investment income, and State of Alaska entitlement revenues.
Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating
revenues and expenses generally result from providing services and producing and delivering goods in
connection with a proprietary fund's principal ongoing operations. Operating expenses for the
proprietary funds include the costs of sales and services, administrative expenses and depreciation on
capital assets. All revenues and expenses not meeting this definition are reported as nonoperating
revenues and expenses.
Central Treasury
A central treasury is used to account for the City's cash and investments to maximize investment
income. Investments are stated at fair value. Investment income is allocated among the funds
based on their respective cash balances.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the proprietary funds consider all cash and
investments to be cash and cash equivalents. The central treasury, which holds cash and
investments, is used essentially as a cash management pool by each fund.
Inventory
Inventories are valued at cost in governmental funds and at the lower of cost or market in the
proprietary funds. Cost is determined by the first -in, first -out method. The cost is recorded as an
expenditure or expense at the time individual inventory items are consumed (consumption
method).
34
City of Seward, Alaska
Notes to Basic Financial Statements
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded
as prepaid items in both government-wide and fund financial statements. Cost is recorded as an
expenditure or expense as the prepayment is applied (consumption method).
Receivables and Payables
Activity between funds that are representative of [ending/ borrowing arrangements outstanding at the
end of the year are referred to as either "due to / from other funds" (i.e., the current portion of
interfund loans) or "advances to / from other funds" (i.e., the noncurrent portion of interfund loans).
All other outstanding balances between funds are reported as "due to / from other funds." Any
residual balances outstanding between the governmental activities and business-type activities are
reported in the government-wide financial statements as "internal balances."
Capital Assets
Capital assets, which include property, plant, equipment and infrastructure assets (e.g. roads and
similar items), are reported in the applicable governmental or business-type activities columns in the
government-wide financial statements. Capital assets are defined by the City as assets with an
initial, individual cost of more than $2,500 and an estimated useful life in excess of one year. Such
assets are recorded at historical cost or estimated historical cost if purchased or constructed.
Donated capital assets are recorded at estimated fair market value at the date of donation. In the
case of the initial capitalization of infrastructure assets, the City chose to include all such items,
regardless of their acquisition date.
The costs of normal maintenance and repairs that do not add to the value of the asset or materially
extend the useful life of the asset are not capitalized.
Major outlays for capital assets and improvements are capitalized as projects are constructed.
Interest incurred during the construction phase of capital assets of business-type activities is included
as part of the capitalized value of the assets constructed.
Property, plant, and equipment of the City is depreciated using the straight-line method over the
following estimated useful lives:
Assets Years
Buildings and improvements
Infrastructure
System infrastructure
Machinery and equipment
Accrued Annual Leave
20-40 years
50 years
20-50 years
3-8 years
The City allows employees to accumulate earned but unused vacation and sick leave benefits. All
accrued leave is accrued when incurred in the government -wide, proprietary fund, and governmental
fund financial statements. Accrued leave that is earned in the governmental funds is accounted for
in the Compensated Annual Leave Internal Service Fund.
35
City of Seward, Alaska
Notes to Basic Financial Statements
Long-term Debt
In the government-wide and the proprietary fund financial statements, long-term debt and other
long-term obligations are reported as liabilities in the applicable governmental activities, business-
type activities, or proprietary fund type statement of net position. Bond premiums and discounts,
are deferred and amortized over the life of the bonds using the straight-line method.
Fund Balances
In the fund financial statements, governmental funds report aggregate amounts for five
classifications of fund balances based on the constraints imposed on the use of these resources.
The nonspendable fund balance classification includes amounts that cannot be spent because they
are either (a) not in spendable form—prepaid items or inventories; or (b) legally or contractually
required to be maintained intact.
The spendable portion of the fund balances comprises the remaining four classifications:
restricted, committed, assigned, and unassigned.
Restricted fund balance - This classification reflects the constraints imposed on resources either
a) externally by creditors, grantors, contributors, or laws or regulations of other governments; or
b) imposed by law through constitutional provisions or enabling legislation.
Committed fund balance - These amounts can only be used for specific purposes pursuant to
constraints imposed by formal resolutions of the City Council—the government's highest level of
decision making authority. Those committed amounts cannot be used for any other purpose unless
the City Council removes the specified use, also through resolution. This classification also
includes contractual obligations to the extent that existing resources in the fund have been
specifically committed for use in satisfying those contractual requirements.
Assigned fund balance - This classification reflects the amounts constrained by the City's "intent"
to be used for specific purposes, but are neither restricted nor committed. City Resolution 2009-
131 delegates authority to assign fund balance to the City Manager and the Finance Director.
Assigned fund balances, by default, include all remaining amounts (except negative balances) that
are reported in governmental funds, other than the General Fund, that are not classified as
nonspendable and are neither restricted nor committed.
Unassigned fund balance - This fund balance is the residual classification for the General Fund. It
is also used to report negative fund balances in other governmental funds.
When both restricted and unrestricted resources are available for use, it is the City's policy to use
externally restricted resources first, then unrestricted resources—committed, assigned, and
unassigned—in order as needed.
Encumbrances
Encumbrance accounting, under which purchase orders, contracts and other commitments for
expenditures are recorded in order to reserve that portion of the applicable appropriation, is
employed as an extension of formal budgetary integration in the General Fund during the year.
However, it is the City's policy to stop issuing purchase orders in early December. As a result, there
are no outstanding encumbrances at December 31, 2013. Outstanding purchase orders, if any, at
December 31, are cancelled and new ones are issued in the subsequent year.
36
City of Seward, Alaska
Notes to Basic Financial Statements
Unearned Grant Revenue
Amounts received from grantor agencies, which are restricted as to use and have not been expended
for the intended use, are shown as unearned revenue.
Grant and Other Intergovernmental Revenues
In applying the measurable and available concepts to grants and intergovernmental revenues, the
legal and contractual requirements of the numerous individual programs are used as guidance. There
are, however, essentially two types of these revenues. In one, monies must be expended on the
specific purpose or project before any amounts are considered "earned"; therefore, revenues are
recognized based upon expenditures recorded. In the other, monies are virtually unrestricted as to
purpose of expenditure and are usually revocable only for failure to comply with prescribed
compliance requirements. These resources are reflected as revenues at the time of receipt or earlier
if the measurable and available criteria are met.
Pension Plan
With the exception of certain Electric Fund employees, substantially all other employees of the City
participate in the Public Employees' Retirement System (PERS) administered by the State of Alaska.
Certain electric employees participate in the International Brotherhood of Electric Workers (IBEW)
Plan.
Property Taxes
Property taxes are liens on the assessed value of taxable property as of January 1. Pursuant to Alaska
Statutes, the City establishes the milt rate and tax levy on or before June 15. The City is located
within the Kenai Peninsula Borough, which acts as the City's agent in the billing and collection of
property taxes. Tax bills for one-half of the taxes are mailed prior to July 1 and are payable on
August 15; tax bills for the second-half of the taxes are mailed by October 1 and are payable on
November 15. City property tax revenues are recognized in the fiscal year in which they are
collectible and available (collected within sixty days after year-end) to finance expenditures of the
fiscal year.
At December 31, the delinquent real and personal property taxes not currently available are
reflected as deferred inflows of the General Fund.
2. Stewardship, Compliance, and Accountability
Budgetary Information
An operating budget is adopted each fiscal year for the General Fund on the same modified
accrual basis used to reflect actual revenues and expenditures. Appropriations for this fund lapse
at year-end to the extent that they have not been expended. Budgetary control is exercised at the
department level. The City Manager is authorized to transfer budget amounts between
departments within a fund or between line items within departments, but City Council approval is
required to transfer budget amounts between funds.
37
City of Seward, Alaska
Notes to Basic Financial Statements
Allocation of Sales Tax Revenues
When the City transferred the operations of the Hospital to Providence Seward Medical and Care
Center on July 1, 1996, the City agreed to allocate 1% of the sales tax for the benefit of the
Hospital. During construction, the allocated sales tax was used to offset losses and transition
costs. Subsequent to completion of the construction, the allocated sales tax has been used to
fund the debt service on the Hospital general obligation bonds. Upon maturity of hospital bonds,
sales tax revenues will be used to fund healthcare capital and operating costs, and debt service on
long-term care facility bonds, if necessary. All sales tax revenue is recorded in the General Fund.
The allocated portion is then transferred to the Healthcare Facilities Enterprise fund for debt
service.
3. Cash and Investments
The City of Seward maintains a central treasury that is available for use by all funds. Each fund's
portion of the central treasury is displayed on the balance sheet as "cash and investments" or in
the case of "negative cash," is included in "due to other funds."
Investments
City statutes authorize the City to invest in obligations of the U.S. Treasury and U.S. agencies,
bankers' acceptances, repurchase agreements, commercial paper issued by corporations or
businesses and having the highest rating of a nationally- recognized rating service and maturing
within nine months, certificates of deposit insured by federal depository insurance or secured by
eligible collateral held by a third party in the City's name, and investments through the Alaska
Municipal League Investment Pool (AMLIP). The City's investment policy does not specify a
maximum investment maturity, but the City generally invests funds for less than three years from
the date of purchase. The City has complied with its investment policy throughout the year. The
City's investments are recorded at fair value.
The AMLIP is an external investment pool which is rated AAAm for credit risk purposes. Alaska
Statute 37.23 establishes regulatory oversight of the Pool. The law sets forth numerous
requirements regarding authorized investments and reporting. On a monthly basis the
investments in the Pool are reviewed for fair value by an independent pricing service. The values
of investments in the AML Pool are approximately equal to fair value.
Reconciliation of Deposit and Investment Balances
The following is a reconciliation of the City's deposit and investment balances to the financial
statements as of December 31, 2013:
Fiduciary Fund
Government-Wide Statement of
Statement of Net Fiduciary
Position Net Position Totals
Cash and investments $ 23,556,639 $ 51,364 23,608,003
Restricted cash and investments 61541,637 - 61541,637
30,098,276 $ 51,364 30,149,640
38
City of Seward, Alaska
Notes to Basic Financial Statements
Restricted Cash and Investments
The City maintains bond redemption and reserve accounts as required by bond covenants. The
balances at December 31, 2013 are as follows:
Healthcare Facilities Fund 11973,360
Electric Fund 677,911
Harbor Fund 709,910
31361,181
The City also includes in restricted cash and investments amounts that have been designated for
capital projects. The total amount of restricted cash and investments that has been designated
for capital projects follows:
Harbor Fund 963,526
Electric Fund 11662,560
Water Fund 442,255
Wastewater Fund 112,115
31180,456
Custodial Risk
The fair value of the City's investments at year-end is shown below. GASB Statement 3, as
amended by GASB Statement 40, establishes categories as an indication of the level of custodial
risk involved in the investments. All of the City's remaining investments are in the category of
least risk and include investments that are insured or registered in the City's name, or securities
that are held by the City or its agent in the City's name. All of the United States treasury bills,
treasury notes, and United States agency securities are held in custodial accounts in the U.S. Bank
and Bank of New York Trust Departments and are recorded in the City's name, in accordance with
safekeeping agreements. U.S. Bank and Bank of New York are not counter parties to security
transactions.
Interest Rate Risk
The fair value of the City's fixed-income investments fluctuate in response to changes in market
interest rates. Increases in prevailing interest rates generally translate into decreases in fair
value of those investments. Fair values of interest rate-sensitive instruments may be affected by
the creditworthiness of the issuer, prepayment options, relative values of alternative investments,
the liquidity of the instrument, and other general market conditions. The City manages interest
rate risk by allocating specific percentages of the portfolio over specified time periods, and
generally holds investments for less than five years, which minimizes the sensitivity of fair value
to changes in market interest rates. The City has no formal policy relating to a specific deposit or
interest rate risk.
39
City of Seward, Alaska
Notes to Basic Financial Statements
Investment types and their maturities at December 31, 2013 are as follows:
Investment Maturities (in Years)
Less than 1
Investment Fair Value year 1 to 5 years Over 5 years
Certificates of deposit 71812,390 31460,200 $ 41352,190 $
U.S. government agencies 836,700 836,700 -
U . S. treasury SLGS 247,300 247,300
U.S. Government Bonds 3)431,540 31431,540 -
Repurchase agreements 10,207,344 10,207,344 - -
Total Subject To Interest Rate Risk 22,535,274 13,667,544 $ 81620,430 $ 247,300
Pooled investments 41089,401
Money market account 31227,799
Total investments 29,852,474
Bank deposits 297)166
Total Cash And Investments 30,149,640
Option Risk
Option risk is the risk that an investment's counterparty may exercise a right embedded in the
investment - an embedded option. The City invests in securities issued by U.S. government
agencies that contain call provisions. The exercise of the call option by the counterparty occurs
during times of declining interest rates; therefore the City is exposed to the risk of having to
reinvest at a lower interest rate. In the table above, securities are categorized according to the
final maturity, regardless of call option dates. If call options were exercised at the next possible
call date, many of the callable securities would mature in less than one year.
Concentration Risk
The City's investment policy places no limit on the amount that can be invested in any one issuer.
Approximately 11 % of the total portfolio is invested in securities issued by federal agencies and
approximately 10% is held with the Federal Home Loan Bank.
Credit Risk
Generally, credit risk is the risk that an issuer of an investment will not fulfill its obligation to the
holder of the investment. This is measured by the assignment of a rating by a nationally
recognized statistical rating organization. The investments in U.S. government agencies include
Federal Home Loan Bank and U.S. Treasuries. All of the U.S. government agencies investments
are rated AAA by Standard and Poors.
The City's investment policy specifies the types of investments that can be purchased, in order to
limit credit risk. The City may invest in obligations of the United States government, its agencies
and instrumentalities; insured or collateralized certificates of deposit; savings accounts;
collateralized repurchase agreements; commercial paper maturing within nine months issued by
corporations having the highest rating of a national rating agency; bankers' acceptances; and the
State investment pool. Credit risk is mitigated by limiting the eligible investment options.
40
City of Seward, Alaska
Notes to Basic Financial Statements
4. Capital Assets
Capital asset activity for the year ended December 31, 2013 was as follows:
Balance Balance
January 1, Additions and Deletions and December 31,
2013 Reclassifications Reclassifications 2013
Governmental Activities
Capital assets not being depreciated:
Land and land improvements 51432,289 $ 51432,289
Construction in progress 16,833,898 713,959 17,379,585 168,272
Total assets not being depreciated 22)266,187 713,959 17,379,585 51600,561
Capital assets being depreciated:
Buildings 58,381,690 11,616,824 21,335 69,977,179
Improvements other than buildings 16,167,267 51804,559 21,971,826
Machinery and equipment 13,724,838 807,384 172, 715 14,359,507
Total assets being depreciated 88,273,795 18,228,767 194,050 106,308,512
Less accumulated depreciation for:
Buildings 21,361,743 11361,729 211274 2217021198
Improvements other than buildings 141491)403 214,823 141706,226
Machinery and equipment 91385,073 799,146 172, 715 10,011,504
Total accumulated depreciation 45,238,219 21375,698 193,989 471419,928
Total capital assets being depreciated,
net 43,035,576 15,853,069 61 58,888,584_
Governmental Activity Capital Assets,
net 65,301,763 $ 16,567,028 17,379,646 $ 64,489,145
The ending balances include $5,948,624 and $3,571,607 of equipment cost and accumulated
depreciation, respectively, related to the Motor Pool Internal Service Fund.
41
City of Seward, Alaska
Notes to Basic Financial Statements
42
Balance Balance
January 1, Additions and Deletions and December 31,
2013 Reclassifications Reclassifications 2013
Business type Activities
Capital assets not being depreciated:
Land and land improvements 171483,769 17)483,769
Construction in progress 754)263 41891,329 314,992 513301600_
Total assets not being depreciated 18,238,0132 41891,329 314,992 22,814,369
Capital assets being depreciated:
Buildings 38,021,487 84,500 38,105,987
Improvements other than buildings 133,017,867 476,552 133,494,419
Machinery and equipment 16,779,113 328,517 335,999 16,771,631
Total assets being depreciated 1871818,467 889,569 335,999 188,372,037
Less accumulated depreciation for:
Buildings 111468,103 11521,436 12,989,539
Improvements other than buildings 76,282,291 4)1801692 80,462,983
Machinery and equipment 10,629,635 847,110 269,599 11,207,146
Total accumulated depreciation 98,380,029 61549,238 269,599 104,659,668
Total capital assets being
depreciated, net 89,438,438 51659,669) 66,400 83,712,369
Business Type Capital Assets, net 107,676,470 768,340) 381,392 106,526,738
Depreciation Internal
Excluding Internal Service Fund Total
Service Fund Allocation Depreciation
Governmental Activities
General government 214,205 116,614 330,819
Public safety 169,419 107,068 276,487
Public works 99,865 174,505 274,370
Parks and recreation 69,025 15,348 84,373
Library 426 426
Sea Life Center 1)4091223 1)4091223
Total Governmental Activities 11962,163 413,535 21375,698
42
City of Seward, Alaska
Notes to Basic Financial Statements
43
Depreciation
Excluding
Internal
Service Fund
Business-type Activities
Electric 11758,135
Water 216,025
Wastewater 264,306
Harbor 11392,277
SMIC 601,831
Parking 23,968
Healthcare facilities 2)292)696
Total Business-Type Activities 61549,238
5. Interfund Receivables, Payables and Transfers
A schedule of interfund balances and transfers as of and for the year ended December 31, 2013,
follows. Interfund balances typically result from short-term operating or capital advances.
Transfers typically result from capital matching, operating subsidies, and payment in lieu of taxes.
Due From Other Funds
Due to the General Fund from Nonmajor governmental funds 999,502
Transfers
From General Fund to:
SMIC Enterprise Fund 38, 082
Harbor Enterprise Fund 320)000
Electric Enterprise Fund 110, 784
Healthcare Facilities Enterprise Fund 11136,104
Nonmajor governmental funds 224)144
Total transfers from General Fund 11829)114
From Harbor Enterprise Fund to:
General Fund 489,690
SMIC Enterprise Fund 126, 379
Total transfers from Harbor Enterprise Fund 616,069
43
City of Seward, Alaska
Notes to Basic Financial Statements
Transfers, continued
From nonmajor governmental funds to General Fund $ 141101
From Parking Enterprise Fund to General Fund 24,980
From Electric Enterprise Fund to General Fund 11220,015
From SMIC Enterprise Fund to General Fund 91,322
From Water Enterprise Fund to General Fund 107,937
From Wastewater Enterprise Fund to General Fund 82,327
From Healthcare Facilities Enterprise Fund to General Fund 1341704
Total Transfers To Other Funds $ 4,120, 569
The City has three outstanding interfund loans. In 2006, the Motor Pool Fund and the Electric
Fund issued interfund loans in the total amount of $1,708,125 to the Healthcare Facilities
Enterprise Fund for the purpose of paying the Seward General Hospital PERS unfunded liability.
Repayment is scheduled over twenty years bearing interest at 5.25 %. Also in 2006, the Motor Pool
Fund loaned $220,258 to the Harbor Enterprise fund for the purpose of purchasing a 50 -ton Boat Lift.
The loan is for ten years and bears interest at 5.5% per year. In 2009, the Water Fund loaned
1,973,260 to the General Fund to be used as a debt service collateral account. Because the cash is
restricted for debt service and is held in a bank account for that purpose, all interest earnings on the
account accrues to the Water Fund and interest is not charged to the General Fund. In addition,
there is no scheduled payback for the funds until they are released from debt service requirements.
In 2012, the outstanding balance on the Seward General Hospital PERS liability ($1,312,334) and the
debt service collateral loan ($1,973,360) were transferred and assigned to the Healthcare Facilities
Enterprise Fund from the General Fund.
Amounts outstanding at December 31, 2013 were follows:
Payable from the Healthcare Facilities Enterprise Fund to:
Motor Pool Internal Service Fund $ 912,204
Electric Enterprise Fund 334, 323
Total payable from the Healthcare Facilities Enterprise Fund 11246,527
Payable from the Harbor Enterprise Fund to Motor Pool Internal Service Fund 78,837
Total Interfund Loans Payable $ 11325,364
44
City of Seward, Alaska
Notes to Basic Financial Statements
6. Long Term Debt
The following is a summary of long-term debt transactions of the City for the year ended December
311 2013:
Balance at Due
Balance at December 31, Within
January 1, 2013 Additions Retirements 2013 One Year
Governmental Activities
General obligation bonds -
3,480,000 2012 General
Obligation bonds, due in
annual installments of
85,000 to $240,000, plus
interest at 4.0% to 5.0%
through September 1, 2036 31480,000 $
Capital leases:
Fire truck capital [ease
obligation, due in annual
installments of $110,177,
including interest at 3.295%
through May 13, 2013 106,662
Loaders capital lease
obligation, due in monthly
installments of $7,895,
including interest at 3.97%
through April 21, 2014 122,836
Accrued leave 454,604
31480,000 $ 85,000
106, 662 - -
91,516 31,320 31,320
727,554 7661958 415,200 109,956
Total Governmental Activities
Long-Term Liabilities $ 4,164,102 $ 727,554 $ 965,136 31926,520 $ 226,276
Plus unamortized bond
premium 238,200
4,164,720
Liquidation of the accrued annual leave is made by the Compensated Annual Leave Internal
Service Fund. All other debt service payments above are made by the General Fund or Motor Pool
Internal Service Fund directly or from the General Fund.
45
City of Seward, Alaska
Notes to Basic Financial Statements
Balance at Due
Balance at December 31, Within
January 1 2013 Additions Retirements 2013 One Year
Business-type Activities
GeneraiobhQaiiombonds -
5'15O'OOOZOO4refunding
hospital bonds' due in final
annual installment of
710'000' plus interest at
3.5%on April 1'ZO13 710'000
Revenue bonds:
8'000'000 2008 Electric
revenue bonds, due inannual
installments of $120'000 to
375'000' plus interest at
4.O%io8.O0 through June 1'
2038 51805'000
Z7'OOO'OOOZOO8 Series One
tong term care facility bonds,
due in annual installments of
785'OOOLo$1'875'OOO'plus
interest at 4.0% to 5.10
through April 1'2O33 25'810'000
4'500'000 2008 harbor
revenue bonds, due inannual
installments of $200'000 to
330'000' plus interest at
4.0% to 5.O0 through June 1'
2028 31580'000
1'985'OOOZOO7refunding
harbor revenue bonds, due in
annual installments of
175'OOOLo$235'OOO'plus
interest at 4.0% to 5.00
through June 1'ZO21 11780'000
Z'29O'OOOZOO5refunding
electric revenue bonds, due
in annual installments of
28O'OOOLo$275'OOO'plus
interest at 4.0% to 5.00
through June 1'ZO15 780'000
46
710'000
115'000 51490'000 120'000
750'000 24'880'000 785'000
190'000 31370'000 ZOO'OOO
185'000 11815'000 175'000
2451000 535,000 260,000
City of Seward, Alaska
Notes to Basic Financial Statements
Balance at Due
Balance at December 31, Within
January 1 2013 Additions Retirements 2013 One Year
Business-type Activities
Revenue bonds, continued:
S1'5OO'OOO2OO5harbor
revenue bonds, due inannual
installments of$85'OOO to
110'000' plus interest aL
4.O0io5.O0 through June 1'
2025 11140'000 85'000 11075'000 70'000
Notes payable:
28'231 sewer note payable
io State ofAlaska
Department ofEnvironmental
Conservation, due infinal
installment of$1'333' plus
interest at 1.5% on July 15'
2014 21885 11332 11333 11333
S901'851 sewer note payable
io State ofAlaska
Department ofEnvironmental
Conservation, due inannual
installments of$8O'584'
including interest aL 1.5%
through November 5'2O13 59'892 59'892
2'85Z'849 water note
payable io State ofAlaska
Department ofEnvironmental
Conservation, due inannual
installments of$158'844'
including interest aL 1.5%
through October 1'ZO29 21092'807 125'452 11987'355 127'334
Accrued leave 205 ,977 175,806 173,404 208,379 49,943
Total Business type Activities
Long-TermLong-Term Liabilities 41,546,141 175,806 21599,880 39'122'087 11788,610
Plus unamorLizedbond
premium 466,424
39 588491
City of Seward, Alaska
Notes to Basic Financial Statements
Annual debt service requirements to maturity on the bonds, notes and capital leases follow:
General Obligation Bonds Governmental Activities
Year Ending December 31, Principal Interest Total
2014 85,000 159,400 $ 2441400
2015 90,000 155,150 2451150
2016 95,000 151,550 2461550
2017 100,000 146,800 246,800
2018 105,000 141,800 246,800
2019 -2023 605,000 629,650 1)234,650
2024 -2028 755,000 477,450 1,232,450
2029 -2033 955,000 280,500 1,235, 500
2034 -2036 690,000 59,500 7491500
31480,000 21201,800 $ 51681,750
Revenue Bonds Business type Activities
Year ending December 31, Principal Interest Total
2014 11610,000 1,7151438 $ 31325,438
2015 11685,000 11638,207 31323,207
2016 11475,000 11562,482 31037,482
2017 11550,000 1,495,709 31045,709
2018 11610,000 1)429,592 31039,592
2019 -2023 81640,000 61053,623 14,693,623
2024 -2028 8)860,000 41011,616 12, 871, 616
2029 -2033 9)825,000 1)749,769 11, 574,769
2034 -2038 1)690,000 231,001 119211001_
36, 945, 000 19, 887, 437 $ 56, 832, 437
Notes Payable Business type Activities
Year ending December 31, Principal Interest Total
2014 128,667 29,530 $ 158,197
2015 129,244 27,600 156,844
2016 1311182 25,662 156,844
2017 133,150 23,694 156,844
2018 135,146 21,697 156,843
2019 -2023 706,760 77, 460 784, 220
2024 -2027 604,539 22,839 627,378_
11968,688 228,482 $ 21197,170
48
City of Seward, Alaska
Notes to Basic Financial Statements
Capital Leases Governmental Activities
Year ending December 31, Principal Interest Total
2014 31,320 $ 260 $ 311580
7. Revenue Bond Requirements
Certain covenants of the revenue bonds require establishment of bond redemption and reserve
accounts. The balances are reflected as restricted cash and investments at December 31, 2013 as
follows:
Long-term care facility bond reserves 11973,360
Electric bond reserves 677,911
Harbor bond reserves 709,910
The Electric and Harbor revenue bonds also require that rates be maintained at a level that will
produce net revenues after certain adjustments, equal to 1.3 and 1.2, respectively, times the
amount required each year to pay the principal and interest. The City met these revenue
requirements for both bonds in 2013. The bond coverage calculations are as follows:
Electric Revenue Bonds
Total revenues, excluding grants 111139,471
Total operating expenses, excluding depreciation (81531,996)
Available for debt service 21607,475
Debt service payments:
Principal 360,000
Interest 308,210
Total Debt Service Payments 688,210
Debt Coverage 3.90
49
City of Seward, Alaska
Notes to Basic Financial Statements
Harbor Revenue Bonds
Total revenues, excluding grants 31266,821
Total operating expenses, excluding depreciation 2,187,206)
Available For Debt Service 11079,615
Debt service payments:
Principal 420,000
Interest 284,374
Total Debt Service Payments 704,374
Debt Coverage 1.53
8. Capital Leases
The City has entered into lease agreements as lessee for financing the acquisition of fire
equipment and public works loaders. These lease agreements qualify as capital leases for
accounting purposes (title transfers at the end of the lease term) and therefore, have been
recorded at the present value of the future minimum lease payments. The following is a summary
of the assets acquired with the capital leases that have an outstanding balance as of December 31,
2013:
Internal
Service Fund
Machinery and equipment 430,125
Less accumulated depreciation 172,050)
Carrying Value 258,075
The following is a schedule of future minimum lease payments under the capital leases and the
present value of the net minimum lease payments at December 31, 2013:
Internal
Year Ending December 31, Service Fund
2014 31,580
Less interest portion 260)
Present value of future minimum lease payments 31,320
Less current portion 31,320)
Long-Term Portion
50
City of Seward, Alaska
Notes to Basic Financial Statements
9. Fund Balance
Fund balances, reported for the major funds and the nonmajor funds in the aggregate on the
governmental funds balance sheet are subject to the following constraints:
10. Defined Benefit Pension Plan
The City participates in the Public Employees' Retirement System (PERS). PERS is a cost- sharing
multiple employer plan which covers eligible State and local government employees, other than
teachers. The Plan was established and is administered by the State of Alaska Department of
Administration to provide pension, postemployment healthcare, death, and disability benefits.
Benefit and contribution provisions are established by State law and may be amended only by the
State Legislature.
51
General Nonmajor
Fund Funds Totals
Nonspendable:
Inventory 8,711 $ 8,711
Prepaid items 472,738 472,738
Total nonspendabte 481,449 481,449
Restricted for library and museum 26,080 26,080
Committed:
Working capital 11500,000 11500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Total committed 21126,418 2112 61418
Assigned:
Park and recreation 21520 21520
General government 7,438 7,438
Public works 11,031 11,031
Insurance 120,768 120,768
Capital projects 843,482 843,482
Total assigned 120,768 864,471 985,239
Unassigned 51948,459 51948,459
Total Fund Balances 81677,094 $ 890,551 $ 91567,645
10. Defined Benefit Pension Plan
The City participates in the Public Employees' Retirement System (PERS). PERS is a cost- sharing
multiple employer plan which covers eligible State and local government employees, other than
teachers. The Plan was established and is administered by the State of Alaska Department of
Administration to provide pension, postemployment healthcare, death, and disability benefits.
Benefit and contribution provisions are established by State law and may be amended only by the
State Legislature.
51
City of Seward, Alaska
Notes to Basic Financial Statements
The Plan is included in a comprehensive annual financial report that includes financial statements
and other required supplemental information. The report is available at the following address:
Department of Administration
Division of Retirement and Benefits
P.O. Box 110203
Juneau, Alaska 99811-0203
Conversion to Cost Sharing
In April 2008, the Alaska Legislature passed legislation which converted the existing Public
Employees Retirement System (PERS) from an agent-multiple employer plan to a cost-sharing plan
with an effective date of July 1, 2008. Under the cost-sharing arrangement, the State of Alaska
Division of Retirement and Benefits no longer tracks individual employer assets and liabilities.
Rather, all plan costs and past service liabilities are shared among all participating employers.
That same year, the State of Alaska passed additional legislation which statutorily capped the
employer contribution, established a state funded "on-behalf" contribution, and required that
employer contributions be calculated against all PERS eligible wages, including wages attributable
to the defined contribution plan described later in these footnotes.
Employee Contribution Rates
Regular employees are required to contribute 6.75% of their annual covered salary (2.97% for
pension and 3.78% for healthcare). Police and firefighters are required to contribute 7.5% of their
annual covered salary (3.29% for pension and 4.21% for healthcare).
Employer and Other Contribution Rates
There are three contribution rates associated with the pension and healthcare contributions and
related liabilities:
Contractual Rate: This is the required funding rate for participating employers. The contractual
rate is statutorily capped at a uniform 22% of eligible wages, subject to a wage floor, and other
termination events. This 22% rate includes all PERS participating wages, including those wages
attributable to employees in the defined contribution plan.
ARM Board Adopted Rate: This is the rate formally adopted by the Alaska Retirement
Management (ARM) Board. This rate is actuarially determined to calculate annual funding
requirements of the Plan, without regard to the statutory rate cap. There are no constraints or
restrictions on the actuarial cost method or other assumptions used in this valuation, other than
those established and agreed to by the ARM Board.
Current legislation provides that the State of Alaska will contribute the difference between the
ARM Board adopted rate and the contractual (statutory) rate. These additional contributions are
recognized by each employer as an on-behalf payment and are reflected within the financial
statements.
52
City of Seward, Alaska
Notes to Basic Financial Statements
GASB 43 Rate: This is the rate used to determine the long-term pension and healthcare liability
for plan accounting purposes in accordance with generally accepted accounting principles as
established by GASB. Certain actuarial methods and assumptions for this rate calculation are
mandated by GASB. For FY13, the rate uses an 8.00% pension discount rate and a 6.88%
healthcare discount rate. Additionally, the GASB 43 rate disregards all future Medicare Part D
payments.
The GASB 43 rate differs significantly from the ARM board adopted rate as a direct result of
differences in the actuarial valuation methodology and assumptions.
Contribution rates for the six months ended June 30, 2012 were determined as part of the June
30, 2009 actuarial valuation. Rates for the six months ended December 31, 2013 (State fiscal year
2013) were determined in the June 30, 2011 valuation.
Annual Pension and Postemployment Healthcare Cost
The City is required to contribute 22% of covered payroll, subject to a wage floor. In addition, the
State of Alaska contributed approximately 13.84% and 13.68% of covered payroll to the Plan for
each six month period noted above, respectively. In accordance with the provisions of GASB
Statement Number 24, the City has recorded the State on-behalf payment in the amount of
689,220 as revenue and expense/ expenditures in these financial statements. However, because
the City is not statutorily obligated for these payments, this amount is excluded from pension and
OPEB cost as described here.
Employer ARM Board
Total
Contractual Adopted GASB 43
State FY1 3 January to June Rate Rate Rate
Pension 9.67% 15.75% 24.95%
Postemployment healthcare 12.33% 20.09% 39.93%
Total Contribution Rate 22.00% 35.84% 64.88%
2012
Employer ARM Board
923,575 923,575
Contractual Adopted GASB 43
State FY14 July to December Rate Rate Rate
Pension 10.64% 18.38% 24.95%
Postemployment healthcare 11.36% 17.30% 39.93%
Total Contribution Rate 22.00% 35.68% 64.88%
Annual Pension and Postemployment Healthcare Cost
The City is required to contribute 22% of covered payroll, subject to a wage floor. In addition, the
State of Alaska contributed approximately 13.84% and 13.68% of covered payroll to the Plan for
each six month period noted above, respectively. In accordance with the provisions of GASB
Statement Number 24, the City has recorded the State on-behalf payment in the amount of
689,220 as revenue and expense/ expenditures in these financial statements. However, because
the City is not statutorily obligated for these payments, this amount is excluded from pension and
OPEB cost as described here.
53
Total
Year Ended Annual Annual OPEB Benefit Cost City of TBC
December 31, Pension Cost Cost TBC) Contributions Contributed
2013 460,434 433,439 893,873 893,873 1100%
2012 405,911 517,664 923,575 923,575 1100%
2011 338,913 610,905 949,818 949,818 1100%
53
City of Seward, Alaska
Notes to Basic Financial Statements
11. Defined Contribution Pension Plan
Employees hired after July 1, 2006 participate in PERS Tier IV, a defined contribution plan. The Plan
is administered by the State of Alaska, Department of Administration, and benefit and contribution
provisions are established by State law and may be amended only by the State Legislature. The
Alaska Retirement Management Board may also amend contribution requirements. Included in the
Plan are individual pension accounts, retiree medical insurance plan and a separate Health
Reimbursement Arrangement account that will help retired members pay medical premiums and
other eligible medical expenses not covered by the medical plan.
Employee Contribution Rates
Employees are required to contribute 8.0% of their annual covered salary. This amount goes directly
to the individual's account.
Employer Contribution Rates
The City is required to contribute the following amounts based on covered salary:
In addition, the employer must contribute to the Health Reimbursement Arrangement. AS 39.30.370
establishes this contribution amount as "three percent of the average annual employee compensation
of all employees of all employers in the plan". As of July 1, 2013, for actual remittance, this
amount is calculated as a flat rate for each full time or part-time employee per pay period and
approximates $1,897 per year for each full-time employee, and $1.22 per hour for part-time
employees.
Finally, the total employer contribution must equal 22% of covered payroll. After subtracting the
defined contribution (DC) rates and the HRA contribution, any residual amount of the 22% will be
deposited into the defined benefit (DB) plan. Known as the DBUL payment, this amount is intended
to mitigate against the declining payroll base that resulted from the creation of the DC plan.
54
Others Tier Police/Fire
January to June IV Tier IV
Individual account 5.00% 5.00%
Retiree medical plan 0.48 0.48
Occupational death and disability benefits 0.14 0.99
Total Contribution Rate 5.62% 6.62%
July to December
Individual account 5.00% 5.00%
Retiree medical plan 0.48 0.48
Occupational death and disability benefits 0.20 1.14
Total Contribution Rate 5.68% 6.62%
In addition, the employer must contribute to the Health Reimbursement Arrangement. AS 39.30.370
establishes this contribution amount as "three percent of the average annual employee compensation
of all employees of all employers in the plan". As of July 1, 2013, for actual remittance, this
amount is calculated as a flat rate for each full time or part-time employee per pay period and
approximates $1,897 per year for each full-time employee, and $1.22 per hour for part-time
employees.
Finally, the total employer contribution must equal 22% of covered payroll. After subtracting the
defined contribution (DC) rates and the HRA contribution, any residual amount of the 22% will be
deposited into the defined benefit (DB) plan. Known as the DBUL payment, this amount is intended
to mitigate against the declining payroll base that resulted from the creation of the DC plan.
54
City of Seward, Alaska
Notes to Basic Financial Statements
Employees are immediately vested in their own contributions and vest 25% per year in employer
contributions. The City and employee contributions to PERS including the HRA contribution for the
year ended December 31, 2013 were $150,043 and $122,716, respectively.
12. International Brotherhood of Electrical Workers
Certain Electric Fund employees are members of the International Brotherhood of Electrical
Workers, which maintains its own defined contribution pension plan. There are two separate
negotiated contracts for temporary and permanent employees. The City's contribution rate for
temporary employees is $11.50 per compensable hour per the terms of a negotiated agreement
expiring December 31, 2013. The City's contribution rate for permanent employees is $1,000 per
employee per month per the terms of a negotiated agreement expiring June 30, 2016. The total
City contribution for the year ended December 31, 2013 was $88,389. Employees are not required
to contribute.
13. Deferred Compensation Plan
The City offers its employees a voluntary deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The Plan, available to all employees, permits them to defer a
portion of their salary until future years. The deferred compensation is not available to
employees until termination, retirement, death, or unforeseeable emergency. The provisions of
the Plan require that all assets and income of the Plan be held in trust for the exclusive benefit of
participants and their beneficiaries.
14. Risk Management
The City faces a considerable number of risks of loss, including (a) damage to and loss of property
and contents, (b) employee torts, (c) professional liability; i.e., errors and omissions, (d)
environmental damage, (e) workers' compensation; i.e., employee injuries, and (f) medical
insurance costs of employees.
The City is a member of the Alaska Municipal League Joint Insurance Association (JIA), a
governmental insurance pool established by the Alaska Municipal League. The JIA provides the
City coverage for property, including building and contents, automobiles, mobile equipment, data
processing equipment and boiler and machinery; casualty, including general liability, public
officials and employees liability, law enforcement professional liability, auto liability and
employee benefit liability; workers' compensation, including employers liability; and commercial
blanket bond. The City maintains supplemental marine insurance and firefighters group accident
coverage with insurance companies placed through JIA. The City has no coverage for potential
losses from environmental damages.
The JIA is a public entity risk pool organized to share risks among its members. The Association's
bylaws provide for the assessment of supplemental contributions from members in the event that
losses and expenses for any coverage year exceed the annual contributions and income earned on
such contributions for the year. Such supplemental contributions shall be based on each
member's deposit contribution in comparison to the aggregate deposit contributions of all
members. The Association made no supplemental assessments during the year ended December
311 2013.
55
City of Seward, Alaska
Notes to Basic Financial Statements
The JIA provides loss control services and conducts periodic inspections to ensure safe operations.
The City has utilized an established safety committee to review and recommend safety policies
and procedures for all departments. The City Council has committed a portion of the General
Fund balance to meet potential losses not covered by insurance and insurance deductibles.
The City also participates in the Alaska Public Utilities Insurance Trust, which provides insurance
coverage for employee health benefits. The Plan is a public entity risk pool in which risks are
shared among the members. Stop loss insurance limits participants' liability for individual and
aggregate claims.
There was no significant reduction in the City's major categories of risk insurance coverage from
the prior year, and the amount of settlements for the past three fiscal years did not materially
exceed the City's insurance coverage.
15. Commitments and Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by
grantor agencies, principally the state and federal government. Any disallowed claims, including
any amount already collected, could become a liability of the applicable funds.
The City of Seward is the owner of the Alaska Sealife Center ("Center"), which is operated on the
City's behalf by the Seward Association for the Advancement of Marine Science ("SAAMS"). The
City is obligated to abide by provisions of the Cooperative Agreement ("Agreement") between the
City and the State of Alaska Department of Fish and Game, which served as a significant funding
source for the construction of the Center. The City has passed most of its obligations for
operating the Center on to SAAMS through a management and operating agreement ("Operating
Agreement"), but the City ultimately remains responsible to ensure that provisions of the
Agreement with the State are met. The Operating Agreement requires, in part, that SAAMS
maintain sufficient termination fund reserves to enable the City to operate the facility for up to
one full year in the event SAAMS is unable to meet its obligations under the Operating Agreement.
The estimated costs of operating the Center for a full year are not easily measured based on
imprecise definitions of the requirements, but could approach $3 million per year. The Operating
Agreement does not require SAAMS to maintain that level of reserves, and to the extent their
termination fund reserve levels are inadequate, the City would be expected to cover any shortfall.
The City does not currently have adequate reserves in its General Fund to cover this potential
shortfall.
Various other claims and lawsuits against the city are pending, but are either covered by insurance
or are the type which are normal and reasonable in view of the City's operations. City
management believes the total amount of the liability, if any, which may arise from such claims
and lawsuits beyond that which is covered by insurance would not have a material effect on the
City's financial condition or its ability to carry on its activities as now conducted.
56
City of Seward, Alaska
Notes to Basic Financial Statements
16. Litigation Settlement
In 2013, the City entered into a settlement agreement with State of Alaska to resolve a rate claim
for outstanding Medicaid billings. Under the terms of the agreement, the State will pay the City
6.1 million to settle claims for a four year period. In 2013 the City received approximately $3.7
million which is recorded as revenue in the Healthcare Facilities Fund. The remaining balance will
be recovered through future charges on subsequent years' services.
17. New Accounting Pronouncements
The Governmental Accounting Standards Board has passed several new accounting standards with
upcoming implementation dates. Management has not fully evaluated the potential effects of
these statements, but believes that GASB Statement 68 will result in the biggest reporting change.
Actual impacts have not yet been determined:
GASB 67 - Financial Reporting for Pension Plans - Effective for year-end December 31, 2014 -
This statement contains changes in 'financial reporting by state and local governmental pension
plans.
GASB 68 - Accounting and Financial Reporting for Pensions - Effective for year-end December
311 2015 - This statement changes the reporting and disclosure requirements for governments
that participate in pension plans. This statement reflects the participating employer side
reporting in connection with the Plan reporting at GASB 67.
GASB 69 - Government Combinations and Disposals of Government Operations -Effective for
year-end December 31, 2014 - This statement contains certain disclosures to be made about
government combinations and disposals of government operations to enable financial
statement users to evaluate the nature and effects of these transactions.
GASB 70 - Accounting and Financial Reporting for Nonexchange Financial Guarantees -
Effective for year-end December 31, 2014 - This statement contains reporting requirements
when a government financially guarantees the obligations of another government, non-profit,
or private entity without receiving equal value in exchange.
GASB 71 - Pension Transition for Contributions Made Subsequent to the Measurement Date -
Effective for year-end December 31, 2015 - This statement is a companion to GASB Statement
68 and clarifies treatment of contributions made by a contributing entity to a defined benefit
pension plan after the measurement date of the government's beginning net pension liability.
57
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58
Supplementary Information
59
Exhibit E-1
City of Seward, Alaska
Nonmajor Governmental Funds
Combining Balance Sheet
60
Special Capital
December 31, 2013 Revenue Projects Total
Assets
Cash and investments 10,636 1Y111)953 1022589
Grants receivable 1)060Y810 98, 899 1Y159)709
Total Assets 1,071,446 1,210,852 2y282)298
Liabilities
Accounts payable 31)879 108)876 140)755
Unearned revenue 19)076 232)414 251)490
Due to other funds 999,502 999,502
Total Liabilities 1)050Y457 341)290 1y391)747
Fund Balances
Restricted for library and museum 26,080 26,080
Assigned:
Parks and recreation 2520 2Y520
General government 7)438 7,438
Public works 11)031 11)031
Capital projects 843)482 843)482
Total Fund Balances 20)989 869,562 890,551
Total Liabilities and Fund Balances 1,071,446 1,210,852 2y282)298
60
Exhibit E -2
City of Seward, Alaska
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances
61
Special Capital
Year Ended December 31, 2013 Revenue Projects Total
Revenues
Intergovernmental 7377452 258,984 996,436
Local grants 9,772 9,772
Total Revenues 747Y224 2 58, 984 1, 006, 208
Expenditures
Current:
General government 680,018 680,018
Public works 162,828 162,828
Parks and recreation 9,772 9,772
Capital outlay:
Library 235,950 235,950
General government 129,182 129,182
Public safety 13,015 13,015
Total Expenditures 852,618 378,147 1,230,765
Excess of Revenues over
under) Expenditures 105y394) 119)163) 224) 557)
Other Financing Sources (Uses)
Transfers in 2,383 221,761 224,144
Transfers out 14)101) 14)101)
Net Other Financing Sources (Uses) 11)718) 221,761 210,043
Net Change in Fund Balances 117,112) 102598 14) 514)
Fund Balances, beginning 138,101 766,964 905,065
Fund Balances, ending 20,989 869562 890551
61
Exhibit F -1
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Net Position
December 31, 2013 Water Wastewater Parking Total
Assets
Current Assets
Cash and investments 21902,730 693,880 618,372 4,2141982
Receivables:
Accounts 150,261 88,412 238,673
Assessments 71069 71069
Grants and loans 12,313 12,313
Other 200 20,000 20,200
Less allowance for doubtful accounts 61762) 31979) 10,741)
Inventory 50,348 50,348
Total Current Assets 31116,159 798,313 618,372 41532,844
Noncurrent Assets
Restricted cash and investments 4421255 1121115 554,370
Assessments receivable, net of current portion 31534 31534
Property, plant and equipment, net of
accumulated depreciation 41747,932 41494,835 112,083 91354,850
Total Noncurrent Assets 51193,721 41606,950 112,083 91912,754
Total Assets 81309,880 51405,263 730,455 141445,598
Liabilities
Current Liabilities
Accounts payable 31584 31254 111112 17,950
Accrued payroll and related liabilities 51311 51316 74 10,701
Accrued interest 221234 9 22,243
Current portion:
Accrued annual leave 41722 41798 91520
Notes payable 127,334 11333 128,667
Total Current Liabilities 163,185 141710 111186 189,081
Noncurrent Liabilities, net of current portion
Accrued annual leave 16,533 17,392 33,925
Notes payable 11840,021 11840,021
Total Noncurrent Liabilities 11856,554 17,392 11873,946
Total Liabilities 21019,739 321102 111186 21063,027
Net Position
Net investment in capital assets 21780,577 41493,502 112,083 71386,162
Unrestricted 3, 509, 564 879,659 607086 41996,409
Total Net Position 61290,141 51373,161 719,269 12,382,571
Total Liabilities and Net Position 81309,880 51405,263 730,455 141445,598
62
Exhibit F -2
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Revenues, Expenses and Change in Net Position
Year Ended December 31, 2013 Water Wastewater Parking Total
Operating Revenues - charges for services 1,2807710 9607591 312,248 2,553,549
Operating Expenses
Salaries and employee benefits 286,287 279,352 70,871 636,510
Services and supplies 302,606 315,267 30,170 648,043
Administration 254,302 157,250 25,934 437,486
Depreciation 216,025 264,306 23,968 504,299
Total Operating Expenses 1,059,220 1,016,175 150,943 2,226,338
Earnings (Loss) from Operations 221,490 55)584) 161,305 327,211
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 21,963 21,717 43,680
Investment income 2,718 2,478 227 5,423
Interest expense 29,974) 746) 30)720)
Net Nonoperating Revenues (Expenses) 5,293) 23,449 227 18,383
Earnings (Loss) before Contributions
and Transfers 216,197 32)135) 161532 345594
Capital contributions 24,485 24,485
Transfers out 107,937) 82)327) 24)980) 215)244)
Change in Net Position 132Y745 114,462) 136, 552 154, 835
Net Position, beginning 6)157y396 5)487y623 582, 717 12, 227, 736
Net Position, ending 6,290,141 5,373,161 719,269 12,382,571
63
Exhibit F -3
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Cash Flows
Year Ended December 31, 2013 Water Wastewater Parking Total
Cash Flows from Operating Activities
Receipts from customers and users 11211,545 965,875 312,248 2,4891668
Payments to suppliers 394,469) 315,624) 26,058) 736,151)
Payments to employees 264,817) 263,298) 70,966) 599,081)
Payments for interfund services used 254,302) 157,250) 25,934) 437,486)
Net cash flows from operating activities 297,957 229,703 189,290 716,950
Cash Flows from Noncapital Financing Activities -
Transfers out 107,937) 82,327) 24,980) 215,244)
Cash Flows from Capital and Related Financing Activities
Principal payments on long -term debt 125,452) 61,024) 186,476)
Interest payments on long -term debt 31,392) 932) 32,324)
Acquisition of property, plant and equipment 52,038) 10,554) 62,592)
Capital contributions received 27,326 27,326
Net cash flows from capital and
related financing activities 181,556) 61,956) 10,554) 254,066)
Cash Flows from Investing Activities
Investment income received 21718 21478 227 51423
Interfund loan receipts 11973,360 11973,360
Net cash flows from investing activities 11976,078 21478 227 11978,783
Net Increase in Cash and Investments 11984,542 87,898 153,983 2,2261423
Cash and Investments, beginning 11360,443 718,097 464,389 21542,929
Cash and Investments, ending 31344,985 805,995 618,372 4,7691352
Reconciliation of Cash and Investment
to Satement of Net Assets
Current assets 21902,730 693,880 618,372 4, 214, 982
Restricted assets 4421255 1121115 554,370
31344,985 805,995 618,372 4, 769, 3 52
64
City of Seward, Alaska
Nonmm jorErterprise Funds
Statement of Cash Flows, continued
Year Ended December 3Y'20Y3
Reconciliation of Earnings (Loss) from Operations to Net
Cash from Operating Activities
Earnings (los) from operations
Adjustments to reconcile earnings (ima) from operations
to net cash flows from operating activities:
Depreciation
Noncashexpense - pERSon-behaif
Increase (decrease)in allowance for doubtful accounts
Increase) decrease in assets:
Accounts receivable
Other receivable
Inventory
Increase (decrease) in liabilities:
Accounts payable
Accrued payroll and related liabilities
Accrued annual leave
Net [ash from Operating Activities
65
Exhibit F-3, continued
Water Wastewater Parking Total
221'490 $ (55'584) $ 161'3O5 $327Y211
218'025 284'308 23'988 504'299
21'983 21'717 43'680
21342) 103) 21445)
68'823) 21309 64'514)
31078 31078
51014 51014
98'877) 357) 41112 (93'122)
295 784 95) 984
Exhibit G -1
City of Seward, Alaska
Internal Service Funds
Combining Statement of Net Position
66
Compensated
Motor Annual
December 31, 2013 Pool Leave Total
Assets
Current Assets
Cash and investments 1, 267, 851 4157200 176837051
Receivables:
Accrued interest 52,227 527227
Interfund loans 75,571 757571
Total Current Assets 1, 395, 649 4157200 178107849
Noncurrent Assets
Interfund loans, net of current portion 915,470 9157470
Property, plant and equipment:
Equipment and vehicles 5,948,624 579487624
Less accumulated depreciation 3)571,607) 375717607)
Net property, plant and equipment in service 2,377,017 273777017
Total Noncurrent Assets 3,292,487 372927487
Total Assets 4, 688,136 4157200 5,103, 336
Liabilities
Current Liabilities
Accrued interest 97 97
Current portion:
Accrued annual leave 1097956 1097956
Capital lease obligations 31, 320 317320
Total Current Liabilities 31,417 1097956 1417373
Noncurrent Liabilities, net of current portion
Accrued annual leave 3057244 3057244
Total Liabilities 31,417 4157200 4467617
Net Position
Net investment in capital assets 2,345,697 273457697
Unrestricted 21311,022 21311,022
Total Net Position 4,656,719 476567719
Total Liabilities and Net Position 4,688,136 4157200 571037336
66
Exhibit G-2
City of Seward, Alaska
Internal Service Funds
Combining Statement of Revenues, Expenses and Change in Net Position
67
Compensated
Motor Annual
Year Ended December 31, 2013 Pool Leave Total
Operating Revenues
Vehicle rental and interfund charges 674,365 385)937 1Y060)302
Operating Expenses
Salaries and benefits 385)937 385)937
Suppliese and maintenance 13)705 13)705
Depreciation 413Y535 413,
Total Operating Expenses 427,240 385)937 813)177
Earnings (Loss) from Operations 247,125 247)125
Nonoperating Revenues (Expenses)
Gain on disposal of capital assets 1,120 1,120
Investment income 52599 52599
Interest expense 4)231) 4y231)
Net Nonoperating Revenues (Expenses) 49)488 49)488
Change in Net Position 296y613 296, 613
Net Position, beginning 4, 360,106 4, 360,106
Net Position,, ending 4)656y719 4y656)719
67
Exhibit G-3
City of Seward, Alaska
Internal Service Funds
Combining Statement of Cash Flows
Compensated
Motor Annual
Year Ended December 3/,2O/3 Pool Leave Total
Cash Flows from Operating Activities
Receipts from vehicle rentals and interfundcharges 874'385 3857937 170807302
Payments uzemployees 240'902) 4257341) 8887243)
Net cash flows from operating activities 433'483 397404) 3947059
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 198'178) 1987178)
Interest payments on long-term debt 81738) 87738)
Acquisition of equipment and vehicles 179'785) 1797785)
Proceeds from sale of capital assets 1'120 17120
Net cash flows from capital and
related financing activities 383'581) 3837581)
Cash Flows from Investing Activities
nterfund loan receipts 71'745 717745
Investment income received 58'424 587424
Net cash flows from investing activities 128'189 1287189
Net Increase (Decrease) in Cash and Investments 178'071 397404) 1387887
Cash and | t t beginning 11089,780 454804 1 544 384
Cash and | t t di 1)267,851 4157200 176837051
Reconciliation mf Earnings from Operations to Net
Cash from (for) Operating Activities
Earnings from operations 247'125 2477125
Adjustments toreconcile earnings from operations
to net cash flows from operating activities:
Depreciation 413'535 4137535
Decrease in assets - prepaid expenses 71895 77895
Decrease) in liabilities:
Accounts payable 235'092) 2357092)
Accrued annual leave 397404) 397404)
Net [ash from (for) Operating Activities 433'483 397404) 3947059
General Fund
The General Fund is established to account for the revenues and expenditures necessary to carry
out basic governmental activities of the City such as fire and police protection, public works,
recreation, planning, administrative services, etc. Appropriations are made from the General
Fund annually.
Revenue is recorded by source, i.e., taxes, charges for services, intergovernmental. Expenditures
are recorded first by function then by activity and object of expenditures.
69
Exhibit H -1
City of Seward, Alaska
General Fund
Balance Sheet
December 31, 2013 2012
Assets
Cash and investments 7,372,250 6,070,681
Receivables
Taxes:
Personal property 14592 22536
Less allowance for doubtful accounts 322) 883)
Net personal property 14,270 21,653
Motor vehicle 4,646 7,006
Hotel /motel room 16,451 17,831
Real property 12,693 15,982
Sales 508,020 469595
Net taxes 556,080 532,067
Accounts 108547 80,277
Grants and shared revenues 12,125 239,938
Accrued interest 21558 10, 900
Total Receivables 698,310 863,182
Prepaid items 472,738 448522
Inventory 8,711 9,375
Due from other funds 999502 896,995
Total Assets 9551511 8,288,755
m
Exhibit H-1 , continued
City of Seward, Alaska
General Fund
Balance Sheet., continued
December 3/, 2013 2012
Liabilities
Accounts payable S 2487574 3787417
Accrued payroll and related liabilities 1447957 1227838
Accrued liabilities 2237589 1987331
Funds held intrust 807700 817139
Unearned revenue 1887088 917087
Total Liabilities 8817908 8477810
Deferred Inflows
Delinquent property taxes 127509 297775
Total Liabilities and Deferred Inflows 8747417 8777385
Fund Balance
Nonspendabio
Inventory 87711 91375
Prepaid items 4727738 4487522
Committed:
Working capital 175007000 175007000
Insurance 1287418 1287418
Hospital line ofcredit 5007000 5007000
AasiQned- Insurance 1207788
Unassigned 579487459 478277055
Total Fund Balance 878777094 774117370
Tota|LiabiMties' Deferred Inflows, and Fund Balance 91551'511 872887755
ff
Exhibit H -2
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and
Change in Fund Balance - Budget and Actual
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Revenues
Taxes:
Sales 45447632 45837057 38,425 4Y189)330
Property 1,0107871 1,2767898 266,027 1,013,580
Hotel /motel room 3507000 4087256 58,256 380,210
Payments in lieu of taxes 757000 81,670 61670 76,160
Penalty and interest 1,400 1,644 244 1,856
Total taxes 5,9817903 6,3517525 369,622 51661,136
Licenses and permits:
Building permits 407000 96,940 56,940 48,866
Taxi permits 1, 000 1070 170 740
Department of Motor Vehicles commissions 967000 85034 10)866) 85,378
Animal control licenses 775 360 415) 480
Business licenses 207500 18, 900 1, 600) 21, 720
Miscellaneous 4,400 2,422 11978) 1,930
Total licenses and permits 1627675 2047926 42,251 159014
Intergovernmental:
Jail contract 7457470 6057735 139) 735) 567, 395
Dispatch contracts 987180 99,620 1,440 99040
Raw fish tax 5207000 4807290 39)710) 519,689
Shared fisheries and landing tax 22076 22076 13,889
Liquor tax 167000 21,650 51650 17000
Library grants 197481 8,387 11)094) 8,498
Revenue sharing 2207000 3237939 103,939 228,000
PERS relief 5227688 5227688 472,217
Other grants 227363 10, 873 11)490) 27544
Total intergovernmental 20647182 2,0957358 68)824) 1,953,472
RN
Exhibit H -2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Revenues, continued:
Charges for services:
Administrative 11757,885 11767,345 91460 11776,800
Rents and leases 140,325 153,886 13,561 133,425
Copying charges 14,000 81545 51455) 91107
Work orders 21200 11943 257) 21835
Recreation 641,450 653,054 11,604 609,342
Library 25,800 29,911 41111 91208
Total charges for services 21581,660 21614,684 33,024 21540,717
Fines and bails 12,000 91530 21470) 81386
Investment income 91,000 51359 85,641) 56,690
Other:
Sale of land, equipment and gravel 10,250 31781 61469) 20,212
Refuse contract 15,400 24,841 91441 13,674
Insurance recovery 120,768 120,768
Other 19,800 17,970 11830) 17,938
Total other 45,450 167,360 121,910 51,824_
Total Revenues 11, 038, 870 11, 448, 742 409,872 10, 431, 339
Expenditures
General government:
Mayor and council:
Salaries 36,595 51,733 15,138) 48,160
Employee benefits 14,232 19,584 51352) 20,750
Audit 77,283 74,670 21613 81,114
Legal 125,000 71,107 53,893 89,317
Purchased services 31400 21479 921 21960
Supplies and maintenance 12,500 71890 41610 12,273
Legislative representation 157,000 162,457 51457) 161,980
General and administrative 89,600 70,103 19,497 63,533
Total mayor and council 515,610 460,023 55,587 480,087
73
Exhibit H-2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues., Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Expenditures, continued:
General government, continued:
City manager:
Salaries 229,014 227,014 21000 203,773
Employee benefits 126,632 134,962 81330) 128,400
Purchased services 37,626 50,173 12,547) 7,857
Supplies and maintenance 10,700 8,073 2,627 4,832
General and administrative 33,500 36,014 21514) 49,318
Total city manager 437,472 456,236 18,764) 394,180
City clerk:
Salaries 141,021 133,809 7,212 130,207
Employee benefits 97,286 99,868 21582) 99,108
Purchased services 23,500 7,441 16,059 7,944
Supplies and maintenance 22 22) 769
General and administrative 18,650 14,249 4,401 16,649
Total city clerk 280,457 255,389 25,068 254,677
Management information systems:
Salaries 137,904 127,926 9,978 126,174
Employee benefits 78,697 80,478 11781) 80,851
Purchased services 9,400 2,579 6,821 2,744
Supplies and maintenance 32,300 33,583 11283) 40,538
General and administrative 13,000 8,642 4,358 4,814
Capital outlay 3)894 31894)
Total management information
systems 271,301 257,102 14,199 255,121
Finance:
Salaries 377,838 371,078 6,760 364,538
Employee benefits 240,529 240,520 9 247,114
Purchased services 25,000 17,130 7,870 9,255
Supplies and maintenance 53,000 77,315 24,315) 39,634
General and administrative 20,900 29,741 81841) 22,526
Capital outlay 7,799
Total finance 717,267 735,784 18,517) 690,866_
74
Exhibit H-2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues., Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Expenditures, continued:
General government, continued:
Community development:
Salaries 136,213 112,325 23,888 113,694
Employee benefits 77,556 70,650 6,906 76,781
Purchased services 47,584 16,286 31,298 19,588
Supplies and maintenance 7,700 4,435 3,265 5,376
General and administrative 8,000 10,839 21839) 12,559
Total community development 277,053 214,535 62,518 227,998
General services:
Purchased services 19,627 21,866 21239) 16,972
Supplies and maintenance 21,110 15,579 51531 25,994
General and administrative 43,700 83,351 39,651) 33,627
Total general services 84,437 120,796 36,359) 76,593_
Contributions to organizations:
Senior Citizens 60,000 60,000 50,000
Chamber of Commerce 170)000 170,000 164,198
Boys and Girls Club 25,000 25,000 25,000
Other 37,420 37,420 33,000
Total contributions to organizations 292,420 255,000 37,420 272,198_
Total general government 21876,017 21754,865 121,152 21651,720
Public safety:
Police:
Salaries 11009,878 950,401 59,477 918,536
Employee benefits 661,675 655,830 5,845 666,411
Purchased services 99,544 117,821 18,277) 119,995
Supplies and maintenance 56,500 57,272 772) 51,657
General and administrative 64,000 58,033 5,967 48,701
Total police 11891,597 11839,357 52,240 1 18051300_
W
Exhibit H-2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues., Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Expenditures, continued:
Public safety, continued:
Jail:
Salaries 285,671 272,084 13,587 267,619
Employee benefits 209,979 210,561 582) 202,124
Purchased services 52,721 56,848 41127) 47,601
Supplies and maintenance 13,000 8,717 4,283 8,892
General and administrative 106,207 104,000 2,207 100,838
Total jail 667,578 652,210 15,368 627,074_
Animal control:
Purchased services 62,822 64,782 1, 960) 64,142
Supplies and maintenance 5,500 265 5,235
General and administrative 106 106)
Total animal control 68,322 65,153 3,169 64,142_
Fi re:
Salaries 174,220 157,734 16,486 171,215
Employee benefits 112,210 116,831 41621) 125,752
Purchased services 163,332 218,078 54,746) 226,140
Supplies and maintenance 40,550 37,956 2,594 30,706
General and administrative 16,200 18,927 21727) 13,745
Total fire 506,512 549,526 43,014) 567,558_
Volunteer training:
Employee benefits 6,700 6,700
Purchased services 5,800 1,096 4,704 2,272
Supplies and maintenance 17,000 14,738 2,262 29,139
General and administrative 27,000 25,132 1,868 28,803
Total volunteer training 56,500 40,966 15,534 60,214
Emergency preparedness:
Purchased services 1,676 1,826 150) 3,048
Supplies and maintenance 9,281 476 8,805 1,661
General and administrative 12,160 1,622 10,538 755
Total emergency preparedness 23,117 3,924 19,193 5,464 _
76
Exhibit H-2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues., Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Expenditures, continued:
Public safety, continued:
Building inspector:
Salaries 68,415 64,337 4,078 63,953
Employee benefits 42,827 42,054 773 44,218
Purchased services 11,531 81987 21544 9,175
Supplies and maintenance 5,500 8,226 21726) 8,144
General and administrative 6,700 5,984 716 5,066
Total building inspector 134,973 129,588 5,385 130,556_
Total public safety 31348,599 31280,724 67,875 3,260,308
Public works:
Roads and streets:
Salaries 201,418 201,731 313) 267,421
Employee benefits 139,634 118,877 20,757 168,868
Purchased services 293,806 375,431 81,625) 353,051
Supplies and maintenance 236,600 264,035 27,435) 263,252
General and administrative 10,705 3,633 7,072 13,414
Total roads and streets 882,163 963,707 81,544) 1,066,006
City shop:
Salaries 138,335 147,870 91535) 146,739
Employee benefits 94,612 110,815 16,203) 108,234
Purchased services 84,710 70,601 14,109 73,077
Supplies and maintenance 61,680 47,481 14,199 42,608
General and administrative 13,320 9,147 4,173 8,056
Total city shop 392,657 385,914 61743 3781714_
Municipal building:
Salaries 81,903 66,977 14,926 78,169
Employee benefits 71,655 65,593 6,062 69,687
Purchased services 124,686 132,849 81163) 134,785
Supplies and maintenance 42,775 23,744 19,031 31,178
General and administrative 1,535 900 635 662
Capital outlay 30)385 30,385) 6,435
Total municipal building 322,554 320,448 2,106 320,916
Total public works 11597,374 11670,069 72,695) 11765,636
M&
Exhibit H -2, continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Change in Fund Balance -
Budget and Actual, continued
Year Ended December 31, 2013 2012
Budget Actual Variance Actual
Expenditures, continued:
Parks and recreation:
Salaries 574,422 578,686 41264) 542,071
Employee benefits 307,912 289,751 18,161 301,793
Purchased services 260,508 243,697 16,811 244,995
Supplies and maintenance 100,410 130,597 30,187) 82,821
General and administrative 30,640 25,345 51295 19,872
Capital outlay 51000 13,349 8, 349) 67,500
Total parks and recreation 11278,892 11281,425 21533) 11259,052
Library:
Salaries 198,930 179,354 19,576 184,663
Employee benefits 132,741 125,052 71689 131,468
Purchased services 77,740 93,000 15,260) 43,451
Supplies and maintenance 97,064 95,663 11401 32,509
General and administrative 32,652 42,678 10,026) 27,120
Total library 539,127 535,747 31380 4191211
Debt service:
Principal payments 261,592 261,592
Retirement benefits 880,762 836,750 44,012 656,294
Interest and other costs 228,298 159,400 68,898 1531201
Total debt service 11370,652 996,150 374,502 809,495
Total Expenditures 11,010,661 10,518,980 491,681 10,165,422
Excess of Revenues over Expenditures 28,209 929,762 901,553 265,917
Other Financing Sources (Uses)
Transfers in 21012,324 2,165, 076 152,752 31378,612
Transfers out 11725,469) 11829,114) 103,645) 21267,584)
Net Other Financing Sources (Uses) 286,855 335,962 49,107 11111,028
Net Change in Fund Balance
Fund Balances, beginning
Fund Balances, ending
315,064 1, 265, 724 $ 950, 660 11376,945
78
81677,094 71411,370
Special Revenue Funds
Special Revenue Funds are used to account for expenditures associated with dedicated or restricted
revenue sources.
Litter Control (ALPAR) - To account for the cost of a City-administered litter control program.
The program employs local youth and is financed by grants from the non-profit Alaskans for Litter
Prevention and Recycling and the Kenai Peninsula Borough.
Two Lakes Park - To account for acquisition of land, survey and development of the park area,
including site preparation, picnic tables, and other improvements.
Miscellaneous Pass-Through Grants - To account for grants that are passed through to other
agencies.
Historical Records Preservation - To account for the costs of preserving the City's historical
records. Funding is provided by a State grant and the City.
Cruise Ship Transportation Grant - To account for a transportation grant to assist cruise ship
passengers.
Natural Disasters - To account for the costs associated with flooding and other natural events.
Fish Ditch Restoration - The purpose of this fund is to account for grant proceeds used to
restore a failed fish passage/ drainage system. The project will involve the removal and
disposal of failed culverts, and the design and construction of an open drainage fish ditch
passage. The new passage will consist of excavation and placing of rip-rap for bank
stabilization, landscaping of upland vehicle turnarounds, and signage.
Library - This Fund includes the Alaska Statehood grant project, which celebrates Seward as the
Home of Alaska's Flag. A Statehood symposium hosts historic presentations on the Alaskan
Statehood experience, a one-act play centers on Alaska's flag, and the Seward Murat Society
designs and completes a mural interpreting Alaska's flag and its unique history. In addition, this
Fund contains a grant to provide public access to Seward's historical photographic records for
properties on the Seward Register of Historic Places, and other historic sites. A website is
designed to provide easy public access to this information.
79
Exhibit 1-1
City of Seward, Alaska
Nonmajor Special Revenue Funds
Combining Balance Sheet
80
Parks and Recreation General Government Public Works
Two Historical Cruise Ship
Litter Lakes Records Transportation Natural
December 31, 2013 Control Park Preservation Grant Disasters Total
Assets
Cash and investments 678 2,520 7,438 10,636
Grants receivable 495,850 564,960 11060,810
Total Assets 678 21520 495,850 71438 564,960 11071,446
Liabilities
Accounts payable 31,879 31,879
Unearned revenue 678 18,398 19,076
Due to other funds 495,850 503,652 999,502
Total Liabilities 678 495,850 553,929 11050,457
Fund Balances
Assigned:
Parks and recreation 21520 21520
General government 7,438 7,438
Public works 11,031 11,031
Total Fund Balances 2,520 7,438 11,031 20,989
Total Liabilities and Fund Balances 678 2,520 495,850 7,438 564,960 11071,446
80
Exhibit 1-2
City of Seward, Alaska
Nonmajor Special Revenue Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances (Deficit)
81
Parks and Recreation General Government Public Works Library
Two Miscellaneous Historical Cruise Ship Fish
Litter Lakes Pass Through Records Transportation Natural Ditch
Year Ended December 31, 2013 Control Park Grants Preservation Grant Disasters Restoration Library Total
Revenues
Intergovernmental 574,624 162,828 737,452
Local grants 4,322 5,450 9,772
Total Revenues 4,322 5,450 574,624 162,828 747,224
Expenditures
Salaries and employee benefits 2,929 11,802 14,731
Contracted services 108 5,450 574,624 105,394 122,996 808,572
Supplies 270 14,707 14,977
General and administrative 64 823 887
Miscellaneous 951 12,500 13,451
Total Expenditures 4,322 5,450 574,624 105,394 162,828 852,618
Excess of Revenues over
under) Expenditures 105,394) 105,394)
Other Financing Sources (Uses)
transfers in 2,383 2,383
transfers out 2,663) 11,438) 14,101)
Net Other Financing Sources (Uses) 2,663) 2,383 11,438) 11,718)
Net Change in Fund Balances 2,663) 105,394) 2,383 11,438) 117,112)
Fund Balances (Deficit), beginning 2,520 2,663 112,832 11,031 2,383) 11,438 138,101
Fund Balances, ending 2,520 7,438 11,031 20,989
81
Capital Project Funds
Capital Project Funds are established to account for the resources expended to acquire or construct
assets of a relatively permanent nature.
Fire Department Equipment - To account for the costs of purchasing a fire department
breathing air compressor to refill fire air packs.
Flood Mitigation - To account for all activities related to the construction of the Japanese
Creek levee project.
4th and Adams - To account for the costs of building a town square park to include a public
restroom facility, bus pullout, covered waiting area, and green space, servicing to revitalize the
downtown area.
Capital Acquisition - To account for purchase of equipment not financed by the Motor Pool Fund
and capital improvements and projects of at least $20,000.
Library/ Museum - To account for all activities related to the design and construction of the
new library and museum.
82
Exhibit J-1
City of Seward, Alaska
Nonmajor Capital Project Funds
Combining Balance Sheet
83
Public Safety General Government Library
Fire
Department 4th and Capital Library/
December 31, 2013 Equipment Adams Acquisition Museum Total
Assets
Cash and investments 1)283 81524 849,224 252,922 1,111,953
Grants receivable 98,899 98,899
Total Assets 1, 283 81524 849,224 351,821 172107852
Liabilities
Account payable 15, 549 937327 1087876
Unearned revenue 232,414 232,414
Total Liabilities 15)549 325,741 341,290
Fund Balances
Restricted for library and museum 26,080 26,080
Assigned - capital projects 1)283 8)524 833)675 843,482
Total Fund Balances 1)283 8)524 833)675 26,080 869,562
Total Liabilities and Fund Balances 1)283 8,524 849,224 351,821 1,210,852
83
Exhibit J-2
City of Seward, Alaska
Nonmajor Capital Project Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances (Deficits)
84
Public Safety General Government Library
Fire
Department Flood 4th and Capital Library/
Year Ended December 31, 2013 Equipment Mitigation Adams Acquisition Museum Total
Revenues - intergovernmental 23,034 235,950 258,984
Expenditures
Contracted services 11,919 212,401 224,320
Supplies and maintenance 20,484 20,484
Capital outlay 129,182 2,815 131,997
Other services and charges 1,096 250 11346
Total Expenditures 13,015 129,182 235,950 378,147
Excess of Revenues over
under) Expenditures 10,019 129,182) 1197163)
Other Financing Sources (Uses)
Transfers in 1,761 220,000 221,761
Net Change in Fund Balances 1,761 10,019 90,818 102,598
Fund Balances (Deficits)., beginning 478) 10,019) 8,524 742,857 26,080 766,964
Fund Balances, ending 1,283 8,524 833,675 26,080 869,562
84
Enterprise Funds
Enterprise Funds are established to account for the financing of self-supporting activities of
governmental units, which render services to the general public on a user-charge basis. Enterprise
Funds are maintained on the accrual basis of accounting.
Electric - To account for the provision of electrical service to the residents of the City and
other areas within the electric service area.
Water - To account for the provision of water services to the residents of the City.
Wastewater - To account for the provision of sewer services to the residents of the City.
Harbor - To account for the provision of harbor and marine services to the public within the
Small Boat Harbor basin.
Seward Marine Industrial Center (SMIC) - To account for the provision of marine-related
services to the public on the east side of Resurrection Bay.
Parking - To account for the provision of public parking services.
Healthcare Facilities - To account for the provision of services provided by Seward Community
Health Center, Providence Seward Medical and Care Center (PSMCC) and long-term care
facilities.
85
Exhibit K -1
City of Seward, Alaska
Electric Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 11815,684 11896,567
Receivables:
Accounts 859,921 11088,920
Assessments 2,117 11897
Interfund loan 18,576 17,650
Grant 683,326
Other 45,379 112,450
Less allowance for doubtful accounts 38,696) 49,001)
Net receivables 11570,623 1,171, 916
Inventory 873,504 930,547
Total Current Assets 4,2591811 31999,030
Restricted Cash and Investments
Bond retirement 677,911 677,911
Capital projects 11662,560 11060,378
Total Restricted Cash and Investments 21340,471 1,7381289
Assessments Receivable, net of current portion 31055 81844
Interfund Loan, net of current portion 315,747 334,323
Property, Plant and Equipment
Land and land rights 230,951 230,951
Buildings 9,474, 575 91456,075
Improvements other than buildings 39,987,789 39,847,679
Equipment 7,4631775 7,4201602
Total property, plant and equipment in service 571157,090 56,955,307
Less accumulated depreciation 35,414,696) 33,656,561)
Net property, plant and equipment in service 211742,394 23,298,746
Construction in progress 11326,014
Total Property, Plant and Equipment 23,068,408 23,298,746
Total Assets 29, 987, 492 29, 379, 232
Deferred Outflows
Unamortized deferred loss on refunding 91808 14,713
Total Assets and Deferred Outflows 29,997,300 29,393,945
86
Exhibit K-1, continued
City of Seward, Alaska
Electric Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Liabilities
Current Liabilities
Accounts payable
Accrued payroll and related liabilities
Accrued interest
Current portion:
Accrued annual leave
Bonds payable
Customer deposits
Unearned revenue
5597525 410, 361
39538 31, 724
25)036 26)332
22, 829 21, 972
3807000 360)000
234,853 191)128
22, 926
Total Current Liabilities 1,261,781 1Y064)443
Noncurrent Liabilities, net of current portion
Accrued annual leave 70)113 71)167
Bonds payable 5)645Y000 6y025)000
Unamortized bond premium 41)785 50)151
Total Noncurrent Liabilities 5)756y898 6y146)318
Total Liabilities 7Y018y679 7Y210)761
Net Position
Net investment in capital assets 17)689y342 17)556)219
Restricted for bond retirement 677,911 677)911
Unrestricted 4)611y368 3y949)054
Total Net Position 22)978y621 22,183,184
Total Liabilities and Net Position 29)997Y300 29)393)945
M
Exhibit K -2
City of Seward, Alaska
Electric Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Residential 3,181,813 3,344,416
Small general service 1,818,346 1,868,892
Large general service 4534Y714714 4, 581,176
Industrial 1,029,934 948,750
Harbor power 321,825 288,839
Street and yard lights 71,020 68,648
Miscellaneous 82,656 123,790
Total Operating Revenues 11,040,308 11,224511
Operating Expenses
Power 5,288,384 5,267,436
Distribution 362,946 121,994
Administration and general 2,880,666 2,454,668
Depreciation 1,758,135 1,721,199
Total Operating Expenses 10,290,131 9,565,297
Earnings (Loss) from Operations 750,177 1,659,214
Nonoperating Revenues (Expenses)
Gain on disposal of capital assets 300
Intergovernmental - PERS on- behalf 39,084 37,451
Investment income 98, 863 119536
Interest expense 303)453) 319)192)
Other expenses 60)733) 51)206)
Net Nonoperating Revenues (Expenses) 225)939) 213)411)
Earnings Before Contributions and Transfers 524,238 1,445,803
Capital contributions 1,380,430 141,677
Transfers in 110,784 150,834
Transfers out 1)220,015) 1,234)951)
Change in Net Position 795,437 503,363
Net Position, beginning 22,183,184 21, 679, 821
Net Position, ending 22,978,621 22,183,184
Exhibit K-3
City of Seward, Alaska
Electric Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 11,346,872 11,028,065
Payments to suppliers 6,091,747) 5,914,948)
Payments to employees 1,388,444) 1,208,988)
Payments for interfund services used 859,630) 855,843)
Net cash flows from operating activities 3,007,051 3,048,286
Cash Flows from Noncapital Financing Activities
Transfers in 110,784 110,784
Transfers out 1,220,015) 1,234,951)
Net cash flows from noncapital financing activities 1,109,231) 1,124,167)
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 360,000) 345,000)
Interest payments on long-term debt 308,210) 323,987)
Acquisition of property, plant and equipment 1,527,797) 288,967)
Proceeds from sale of capital assets 300
Capital contributions received 702,673 142,106
Transfers in 40,050
Net cash flows from capital and related financing activities 1,493,034) 775,798)
Cash Flows from Investing Activities
Investment income received 98,863 119,536
Interfund loan receipts 17,650 16,769
Net cash flows from investing activities 116,513 136,305
Net Increase in Cash and Investments 521,299 1,284,626
Cash and Investments, beginning 3,634,856 2,350,230
Cash and Investments, ending 4,156,155 3,634,856
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 1,815,684 1,896,567
Restricted assets 2,340,471 1,738,289
4,156,155 3,634,856
Reconciliation of Earnings (Loss) from Operations to Net
Cash from Operating Activities
Earnings from operations 750,177 1,659,214
Adjustments to reconcile earnings from operations to net
cash flows from operating activities:
Depreciation 1,758,135 1,721,199
Other nonoperating expenses 60,733) 51,206)
Noncash expense - PERS on-behalf 39,084 37,451
Increase (decrease) in allowance for doubtful accounts 10,305) 7,373
Increase) decrease in assets:
Receivables 296,070 205,376)
Inventory 57,043 66,533)
Increase (decrease) in liabilities:
Accounts payable 149,164 65,543)
Accrued payroll and related liabilities 7,814 845)
Accrued annual leave 197) 10,995
Customer deposits 43,725 27,357
Unearned revenue 22,926) 25,800)
Net Cash from Operating Activities 3,007,051 3,048,286
89
Exhibit K-4
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Operating Expenses
Year Ended December 31, 2013 2012
Power
Salaries and employee benefits 186,037 162)356
Purchased services 198, 358 121518
Power for resale 4)817Y413 4,946,497
Supplies, maintenance and other 86,576 37)065
Total Power 5)288y384 5y267)436
Distribution
Salaries and employee benefits 246,925 231)844
Salary credits - work orders 103,216) 176,230)
Purchased services 211)412 176,164
Supplies and maintenance 124)641 12)829
Supply credits - work orders 117,416) 123,319)
Administration and general 600 706
Total Distribution 362)946 121)994
Administration and General
Salaries and employee benefits 1)105Y399 1,038,619
Purchased services 365)317 161)289
Supplies and maintenance 238,929 229)780
Administrative fee 859)030 855)137
Other 311, 991 169, 843
Total Administration and General 2)880y666 2,454,668
Depreciation 1)758Y135 1Y721)199
Total Operating Expenses 10)290Y131 9Y565)297
a
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions $ 29,6807492 $ 28,300,062
Related accumulated amortization (18,9567833) (18,0097821)
City - generated equity and transfers from other funds 12,2547962 11,892,943
Total Net Position $ 22,9787621 $ 22,183,184
91
rvkikif V-A
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Electric Capital Projects
M
Customer
Year Ended December 31, 2013 Projects
Funding Sources
State grants 1 Y314)275
Electric customers 66)155
Electric fund 147)368_
Total Funding Sources 1Y527)798
Capital Outlay 1,527,798
M
Exhibit K-7
City of Seward, Alaska
Water Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 2,902,730 11117,071
Receivables:
Accounts 150,261 78,003
Assessments 7,069 7,069
Grants and loans 12,313 8,085
Other 200 5,635
Less allowance for doubtful accounts 6,762) 9,104)
Net receivables 163,081 89,688
Inventory 50,348 55.362
Total Current Assets 3,116,159 1,262,121
Restricted Cash and Investments - capital projects 442,255 243,372
Assessments Receivable, net of current portion 3,534 10,603
Interfund Loan, net of current portion 1,973,360
Property, Plant and Equipment
Land and [and rights 2,507 2,507
Buildings 11287,853 11287,853
Improvements other than buildings 6,203,911 6,203,911
Equipment 1,308,670 1,281,116
Total property, plant and equipment in service 8,802,941 8,775,387
Less accumulated depreciation 4,521,466) 4,305,441)
Net property, plant and equipment in service 4,281,475 41469,946
Construction in progress 466,457 441,973
Total Property, Plant and Equipment 41747,932 4,911,919
Total Assets 8,309,880 8,401,375
Liabilities
Current Liabilities
Accounts payable 3,584 100,461
Accrued payroll and related liabilities 5,311 5,016
Accrued interest 22,234 23.652
Current portion:
Accrued annual leave 4,722 4,584
Notes payable 127,334 125,452
Total Current Liabilities 163,185 259,165
Noncurrent Liabilities, net of current portion
Accrued annual leave 16,533 17,459
Notes payable 1,840,021 1,967,355
Total Noncurrent Liabilities 1,856,554 1,984,814
Total Liabilities 2,019,739 21243,979
Net Position
Net investment in capital assets 21780,577 2,819,112
Unrestricted 3,509,564 3,338,284
Total Net Position 6,290,141 6,157,396
Total Liabilities and Net Position 8,309,880 8,401,375
93
Exhibit K -8
City of Seward, Alaska
Water Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Residential 424,640 408,768
Small general service 119516 116, 573
Large general service 201,869 197564
Industrial 260,903 230,872
Seward Marine Industrial Center 55,439 54,210
Ship water sales 77,216 65,243
Miscellaneous 141,127 76,879
Total Operating Revenues 1,280,710 1,150,109
Operating Expenses
Salaries and benefits 286,287 295574
Purchased services 231,271 289504
Supplies and maintenance 65,896 53594
Administration and general 254,302 243,326
Other 5,439 110,447
Depreciation 216,025 221,179
Total Operating Expenses 1,059,220 1,213,624
Earnings (Loss) from Operations 221,490 63,515)
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 21,963 21,984
Investment income 2,718 10,951
Interest expense 29,974) 33,908)
Net Nonoperating Revenues (Expenses) 5,293) 973)
Earnings (Loss) Before Contributions and Transfers 216,197 64,488)
Capital contributions 24,485 20,070
Transfers out 107, 937) 137,539)
Change in Net Position 132, 745 181, 957)
Net Position, beginning 6,157,396 6,339,353
Net Position, ending 6,290,141 6,157,396
94
Exhibit K-9
City of Seward, Alaska
Water Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 11211,545 1,157,177
Payments to suppliers 3947469) 3587685)
Payments to employees 2647817) 2707075)
Payments for interfund services used 2547302) 2437326)
Net cash flows from operating activities 297,957 285,091
Cash Flows from Noncapital Financing Activities
Transfers out 1077937) 1377539)
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 1257452) 5607042)
Interest payments on long-term debt 317392) 1647449)
Acquisition of property, plant and equipment 527038) 237970)
Capital contributions received 27,326 21,295
Net cash flows from capital and related financing activities 1817556) 7277166)
Cash Flows from Investing Activities
Investment income received 2,718 10,951
Interfund loan receipts 1,973,360
Net cash flows from investing activities 1,976,078 10,951
Net Increase in Cash and Investments 1,984,542 5687663)
Cash and Investments., beginning 1,360,443 1,929,106
Cash and Investments., ending 3,344,985 1,360,443
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 21902,730 171177071
Restricted assets 442,255 243,372
373447985 173607443
Reconciliation of Earnings (Loss) from Operations to Net
Cash from (for) Operating Activities
Earnings (loss) from operations 221,490 637515)
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation 216,025 221,179
Noncash expense - PERS on-behalf 21,963 21,984
Increase (decrease) in allowance for doubtful accounts 27342) 5,524
Increase) decrease in assets:
Accounts receivable 667823) 1,544
Inventory 5,014 3,722
Increase (decrease) in liabilities:
Accounts payable 967877) 91,138
Accrued payroll and related liabilities 295 397
Accrued annual leave 788) 3,118
Net Cash from Operating Activities 297,957 285,091
95
City of Seward, Alaska
Water Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions $ 3581 Y193 $ 3y556)708
Related accumulated amortization (1)913y724) (1y887)004)
Contributions from other funds 498)756 498)756
City-generated equity 4)123Y916 3y988)936
Total Net Position $ 6)290y141 $ 6,157, 396
96
Exhibit K -11
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 693,880 605,982
Receivables:
Accounts 88,412 90,721
Other 20,000 23,078
Less allowance for doubtful accounts 31979) 4,082)
Net receivables 104,433 109,717
Total Current Assets 798,313 715,699
Restricted Cash and Investments - capital projects 112,115 112,115
Property, Plant and Equipment
Land and land rights 111,011 111,011
Buildings 2,4181398 2,4181398
Improvements other than buildings 8,9521968 8,9521968
Equipment 757,237 757,237
Total property, plant and equipment in service 12,2391614 12,239,614
Less accumulated depreciation 71744,779) 71480,473)
Net Property, Plant and Equipment in Service 4,4941835 4,759,141
Total Assets 5,4051263 5,5861955
Liabilities
Current Liabilities
Accounts payable 3,254 3,611
Accrued payroll and related liabilities 5,316 4,552
Accrued interest 9 195
Current portion:
Accrued annual leave 4,798 4,606
Notes payable 1,333 61,025
Total Current Liabilities 14,710 73,989
Noncurrent Liabilities, net of current portion
Accrued annual leave 17,392 24,011
Notes payable 1,332
Total Noncurrent Liabilities 17,392 25,343
Total Liabilities 32,102 99,332
Net Position
Net investment in capital assets 4,4931502 4,6961784
Unrestricted 879, 659 790Y839
Total Net Position 5,3731161 5,4871623
Total Liabilities and Net Position 5,4051263 5,5861955
97
Exhibit K -12
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Residential 536,399 515,836
Small general service 153,961 156,450
Large general service 235,097 222,200
Seward Marine Industrial Center 32,273 29,120
Miscellaneous 2,861 5,908
Total Operating Revenues 960591 929514
Operating Expenses
Salaries and benefits 279,352 277,664
Purchased services 285563 235,974
Supplies and maintenance 25,603 48,936
Administration and general 157,250 146,101
Other 4001 12,427
Depreciation 264, 306 291073
Total Operating Expenses 1,016,175 1,012,275
Earnings (Loss) from Operations 55,584) 82,761)
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 21,717 20,810
Investment income 2,478 7,066
Interest expense 746) 1,752)
Net Nonoperating Revenues (Expenses) 23,449 26,124
Loss Before Transfers 32,135) 56,637)
Transfers out 82,327) 79,841)
Change in Net Position 114,462) 136,478)
Net Position, beginning 5,4871623 5,624,101
Net Position, ending 5,373,161 5,4871623
Exhibit K -13
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 965,875 913,738
Payments to suppliers 315,624) 317,285)
Payments to employees 263,298) 249,139)
Payments for interfund services used 157,250) 146,101)
Net cash flows from operating activities 229,703 201,213
Cash Flows from Noncapital Financing Activities
Transfers out 82,327) 79,841)
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 61,024) 60,133)
Interest payments on long-term debt 932) 11848)
Acquisition of property, plant and equipment 40,722)
Net cash flows from capital and related financing activities 61,956) 102,703)
Cash Flows from Investing Activities
Investment income received 2,478 7,066
Net Increase in Cash and Investments 87,898 25,735
Cash and Investments., beginning 718,097 692,362
Cash and Investments., ending 805,995 718,097
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 693,880 605,982
Restricted assets 112,115 112,115
805,995 718,097
Reconciliation of Earnings (Loss) from Operations to Net
Cash from Operating Activities
Loss from operations 55,584) 82,761)
Adjustments to reconcile loss from operations
to net cash flows from operating activities:
Depreciation 264,306 291,173
Noncash expense - PERS on-behalf 21,717 20,810
Increase (decrease) in allowance for doubtful accounts 103) 598
Increase) decrease in assets:
Accounts receivable 2,309 13,296)
Other receivable 3,078 31078)
Increase (decrease) in liabilities:
Accounts payable 357) 19,948)
Accrued payroll and related liabilities 764 146)
Accrued annual leave 61427) 7,861
Net Cash from Operating Activities 229,703 201,213
Olt,
City of Seward, Alaska
Wastewater Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions $ 10)4057799 $ 10)405)799
Related accumulated amortization (7)226y634) (7y037)640)
Contributions from other funds 161,550 161,550
City-generated equity 2)032y446 1y957)914
Total Net Position $ 5)373Y161 $ 5Y487)623
100
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101
Exhibit K -15
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 4,023,796 3,769,029
Receivables:
Accounts 154,189 221,033
Grants 932,089 57,822
Commercial passenger vessel tax 343,265
Interest 3,284
Assessments 4,286 4,286
Less allowance for doubtful accounts 24)672) 29)016)
Net receivables 1,069,176 597, 390
Total Current Assets 5,092,972 4,366,419
Restricted Cash and Investments
Bond retirement 709, 910 709, 910
Capital projects 963526 1,673,626
Total Restricted Cash and Investments 1,673,436 2,383536
Assessments Receivable, net of current portion 2,144 6,430
Property, Plant and Equipment
Land and land rights 5,117,479 5,117,479
Buildings 610069 610069
Improvements other than buildings 28, 880, 385 28, 596, 393
Equipment 1592,998 1,582,444
Total property, plant and equipment in service 36,201,031 35,906,485
Less accumulated depreciation 13)738,260) 12)345,984)
Net property, plant and equipment in service 22,462,771 23560501
Construction in progress 2,063,758 95,761
Total Property, Plant and Equipment 24,526,529 23,656,262
Total Assets 31,295,081 30,412,647
Deferred Outflows
Unamortized deferred loss on refunding 51,607 58,058
Total Assets and Deferred Outflows 31,346,688 30,470,705
M
Exhibit K-15, continued
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Net Position., continued
December 31, 2013 2012
Liabilities
2)168y442 1y653)662
Current Liabilities
Accounts payable 600)846 152)438
Accrued payroll and related liabilities 21)309 17)910
Accrued interest 26, 304 29, 366
Current portion:
87,594 95)970
Accrued annual leave 17,594 15)138
Bonds payable 445)000 420)000
Interfund loan 24)885 23,588
Unearned revenue 998, 316 934501
Customer deposits 34)188 60)721
Total Current Liabilities 2)168y442 1y653)662
Noncurrent Liabilities, net of current portion
Accrued annual leave 54)398 47)040
Bonds payable 5)615y000 6y060)000
Interfund loan 53)952 78)837
Unamortized bond premium 87,594 95)970
Total Noncurrent Liabilities 5)810Y944 6y281)847
Total Liabilities 7)979y386 7,935,509
Net Position
Net investment in capital assets 19)140Y452 17)848)260
Restricted for bond retirement 709)910 709)910
Restricted for commercial passenger vessel tax 2)079y621 1y788)933
Unrestricted 1)437Y319 2Y188)093
Total Net Position 23)367Y302 22535096
Total Liabilities and Net Position 31)346y688 30)470)705
103
Exhibit K -16
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Moorage 11581,547 11572,263
Wharfage 66,540 43,783
Boat lift fees 107,198 90,711
Power sales 431,219 461,123
Rentals and leases 341,625 356,210
Passenger transit fees 611,065 551,103
Miscellaneous 96,729 94,551
Total Operating Revenues 31235,923 31169,744
Operating Expenses
Salaries and employee benefits 1,000, 555 11005,103
Purchased services 308,231 533,108
Power for resale 271,895 243,731
Supplies and maintenance 166,643 61,472
Administration and general 439,882 327,766
Depreciation 11392,277 11081,063
Total Operating Expenses 31579,483 31252,243
Earnings (Loss) from Operations 343,560) 82,499)
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 83,767 73,050
Investment income 30,898 59,211
Commercial passenger vessel tax 343,265 343,265
Interest expense 279,387) 299,765)
Dredging 699,332)
Net Nonoperating Revenues (Expenses) 178,543 523, 571)
Loss Before Contributions and Transfers 165,017) 606,070)
Capital contributions 1,2931192 11324,067
Transfers in 320,000 320,000
Transfers out 616,069) 599,274)
Change in Net Position 832,106 438,723
Net Position, beginning 22,535,196 22,096,473
Net Position, ending 23, 367, 302 22, 535,196
104
Exhibit K-17
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 31335,705 31045,369
Payments to suppliers 298,361) 11902,296)
Payments to employees 903,575) 929,233)
Payments for interfund services used 439,882) 327,766)
Net cash flows from operating activities 11693,887 113,926)
Cash Flows from Noncapital Financing Activities
Transfers in 320,000 320,000
Transfers out 616,069) 599,274)
Net cash flows from noncapitat financing activities 296,069) 279,274)
Cash Flows from Capital and Related Financing Activities
Principal payments on tong-term debt 420,000) 400,000)
Interest payments on tong-term debt 284,374) 304,553)
Acquisition of property, plant and equipment 21262,544) 11616,685)
Capita[ contributions received 423,211 11760,085
Interfund loan payment 23,588) 22,357)
Commercial passenger vessel tax receipts 686,530 1,411,435
Net cash flows from capita[ and related financing activities 11880,765) 827,925
Cash Flows from Investing Activities
Investment income received 27,614 59,211
Net Increase in Cash and Investments 455,333) 493,936
Cash and Investments., beginning 61152,565 51658,629
Cash and Investments, ending 51697,232 61152,565
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 41023,796 31769,029
Restricted assets 11673,436 21383,536
51697,232 61152,565
Reconciliation of Loss from Operations to Net
Cash from (for) Operating Activities
Loss from operations 343,560) 82,499)
Adjustments to reconcile toss from operations to net cash
flows from operating activities:
Depreciation 11392,277 11081,063
Noncash expense - PERS on- behalf 83,767 73,050
Nonoperating expenses 699,332)
Increase (decrease) in allowance for doubtful accounts 41344) 9,916
Increase) decrease in assets - receivables 66,844 80,975)
Increase (decrease) in liabilities:
Accounts payable 448,408 364,653)
Accrued payroll and related liabilities 3,399 31947)
Accrued annual leave 9,814 6,767
Customer deposits 26,533) 5,691
Unearned revenue 63,815 59,007)
Net Cash from (for) Operating Activities 11693,887 113,926)
105
City of Seward, Alaska
Harbor Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions $ 24,6387740 $ 23,345,548
Related accumulated amortization (816747497) (71833,432)
Contributions from other funds 5,9977742 51677,742
City - generated equity 1,405, 317 1, 345, 338
Total Net Position $ 23, 367, 302 $ 22, 535,196
106
Exhibit K -19
City of Seward, Alaska
Harbor Enterprise Fund
Schedule of Harbor Capital Projects
107
Cruise Ship Harbor
Boardwalk Harbor Restroom D Float
Year Ended December 31, 2013 Extension Expansion Improvements Replacement
Funding Sources
State grants 8,271 2127646 110,360 920,224
Federal grants 41,690
Harbor Fund 36,345 1,201 894521
Total Funding Sources 8,271 2487991 111561 1,856,435
Capital Outlay - contracted services 8,271 2487991 111561 1,856,435
107
Exhibit K -20
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash 107,176 144503
Account receivable 34,985 53,691
Grant receivable 265,852 34,035
Total Current Assets 408,013 232,229
Property, Plant and Equipment
Land and land rights 12,0217821 12,021,821
Buildings 280,287 280,287
Improvements other than buildings 26, 798,104 26, 798,104
Equipment 908,789 908,789
Docks and floats 13,145, 688 13,145, 688
Total property, plant and equipment in service 53,1547689 53,154,689
Less accumulated depreciation 28)7857839) 28)1847008)
Net property, plant and equipment in service 24,3687850 24,970,681
Construction in progress 1,4747371 216,529
Total Property, Plant and Equipment 25,8437221 25,187,210
Total Assets 26,2517234 25,419,439
Liabilities
Current Liabilities
Accounts payable 78,358 17,021
Accrued payroll and related liabilities 579 159
Unearned revenue 47,013 40,321
Total Current Liabilities 125,950 57501
Net Position
Net investment in capital assets 25,8437221 25,187,210
Unrestricted 282,063 174,728
Total Net Position 26,1257284 25,361,938
Total Liabilities and Net Position 26,2517234 25,419,439
108
Exhibit K -21
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Moorage 995 2Y589
Wharfage 10,975 13,347
Boat lift fees 105,453 102,873
Storage 91,128 121,943
Rentals and leases 144,005 136,586
Power sales 36,892 31,957
Miscellaneous 2Y506 5,442
Total Operating Revenues 391,954 414,737
Operating Expenses
Salaries and employee benefits 90,734 74,278
Purchased services 66,404 104, 352
Supplies and maintenance 38,744 51,408
Administration and general 101,630 96,589
Depreciation 601,831 601,831
Total Operating Expenses 899,343 928,458
Loss from Operations 507,389) 513)721)
Nonoperating Revenues - investment income 201 944
Loss before Contributions and Transfers 507,188) 512)777)
Capital contributions 1,197,395 216,529
Transfers in 164,461 123,187
Transfers out 91)322) 89)964)
Change in Net Position 763,346 263)025)
Net Position, beginning 25,361,938 25,624,963
Net Position, ending 26,125,284 25,361,938
109
Exhibit K-22
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 417)352 585)070
Payments to suppliers 43)811) 249)043)
Payments to employees 90)314) 74)119)
Payments for interfund services used 1017630) 96)589)
Net cash flows from operating activities 181597 165, 319
Cash Flows from Noncapital Financing Activities
Transfers in 164)461 123)187
Transfers out 91)322) 89)964)
Net cash flows from noncapital financing activities 73)139 33)223
Cash Flows from Capital and Related Financing Activities
Decrease in due to other funds 20)949)
Acquisition of property, plant, and equipment 1)2577842) 216)528)
Capital contributions received 965,578 182)494
Net cash flows from capital and related financing activities 2927264) 54)983)
Cash Flows from Investing Activities
Investment income received 201 944
Net Increase (Decrease) in Cash and Investments 37)327) 144,503
Cash and Investments, beginning 144,503
Cash and Investments, ending 107)176 144,503
Reconciliation of Loss from Operations to Net
Cash from Operating Activities
Loss from operations 5077389) 513)721)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 601)831 601)831
Increase) decrease in assets - accounts receivable 18)706 173)076
Increase (decrease) in liabilities:
Accounts payable 61)337 93)283)
Accrued payroll and related liabilities 420 159
Unearned revenue 6,692 21743)
Net Cash from Operating Activities 181597 165, 319
110
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions $ 37)1397338 $ 35)725)414
Related accumulated amortization (25)7147005) (25,231,475)
Contributions from other funds 17)1227393 17)023)864
City-generated deficit (2)4227442) (2y155)865)
Total Net Position $ 26)125y284 $ 25)361)938
111
Exhibit K-24
City of Seward, Alaska
Parking Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 618, 372 464, 389
Property, Plant and Equipment
Improvements other than buildings 513540 513540
Equipment 150)360 139)806
Total property, plant and equipment in service 663)900 653)346
Less accumulated depreciation 551)817) 527)849)
Net Property, Plant and Equipment in Service 112)083 125)497
Total Assets 730)455 589)886
Liabilities
Current Liabilities
Accounts payable 11)112 7Y000
Accrued payroll and related liabilities 74 169
Total Current Liabilities 11)186 7,169
Net Position
Net investment in capital assets 112)083 125)497
Unrestricted 607,186 457, 220
Total Net Position 719)269 582)717
Total Liabilities and Net Position 730)455 589)886
112
Exhibit K -25
City of Seward, Alaska
Parking Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues - parking fees 312,248 293,443
Operating Expenses
Salaries and employee benefits 70,871 89586
Supplies and maintenance 12550 15586
Purchased services 41620 66,571
Rents and leases 13,000 13,000
Administration and general 25,934 30550
Depreciation 23,968 23,968
Total Operating Expenses 150,943 239,261
Earnings from Operations 161,305 54,182
Nonoperating Revenues - investment income 227 3,033
Earnings before Transfers 161532 57,215
Transfers out 24)980) 23)475)
Change in Net Position 136,552 33,740
Net Position, beginning 582, 717 548, 977
Net Position, ending 719,269 582,717
113
Exhibit K-26
City of Seward, Alaska
Parking Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 312)248 293)443
Payments to suppliers 26)058) 97)488)
Payments to employees 70)966) 89)417)
Payments for interfund services used 25)934) 30)550)
Net cash flows from operating activities 189, 290 75, 988
Cash Flows from Noncapital Financing Activities
Transfers out 24)980) 23)475)
Cash Flows from Capital and Related Financing Activities
Acquisition of property, plant and equipment 10)554)
Cash Flows from Investing Activities
Investment income received 227 3Y033
Net Increase in Cash and Investments 153)983 55,546
Cash and Investments, beginning 464)389 408)843
Cash and Investments, ending 618)372 464)389
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 161,305 54)182
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 23)968 23)968
Increase (decrease) in liabilities:
Accounts payable 4,112 2y331)
Accrued payroll and related liabilities 95) 169
Net Cash from Operating Activities 189)290 75)988
114
Exhibit K-27
City of Seward, Alaska
Parking Enterprise Fund
Schedule of Composition of Net Position
December 31, 2013 2012
Grants and other external contributions 425)893 425)893
Related accumulated amortization 425)893) 425)893)
Contributions from other funds 7,650 7,650
City-generated equity 711)619 575)067
Total Net Position 719)269 582)717
115
Exhibit K-28
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 3,217,111 2,435,687
Receivables:
Accounts 2Y917'000 3,456,000
Other 150Y000 386y000
Less allowance for doubtful accounts 719,000) 696,000)
Net receivables 2,348,000 3,146,000
Total Current Assets 5y565,1 11 5,581,687
Restricted Cash and Investments - bond retirement 1,973,360 1,973,360
Other Assets 306y650 246, 000
Property, Plant and Equipment
Buildings 24y034,704 23,968,704
Improvements other than buildings 9Y012,035 8,959,585
Equipment 4,589,802 4,689,119
Total property, plant and equipment in service 37,636,541 37y6l 7,408
Less accumulated depreciation 13Y902y811) 11y879Y713)
Net Property, Plant and Equipment in Service 23,733,730 25,737,695
Total Assets 31y578,851 33,538,742
Liabilities
Current Liabilities
Accounts payable 320,439 184,000
Accrued payroll and related liabilities 1y036,000 1,031,000
Accrued interest 364,295 383,465
Current portion:
Bonds payable 785y000 1,460,000
Interfund loan payable 69,262 65,807
Unearned revenue 20Y000 32,000
Payable to Providence Health and Services - Washington 2,360,000 3Y41 8,000
Due to contractual agencies 406y000 192,000
Total Current Liabilities 5,360,996 6,766,272
Noncurrent Liabilities, net of current portion
Bonds payable 24Y075,000 24,860,000
Interfund loan payable 1,177,265 3,219,887
Other liabilities 249,000 220Y000
Unamortized bond premium 337Y045 353,288
Total Noncurrent Liabilities 25,838,310 28,653,175
Total Liabilities 31099,306 35,419,447
Net Position
Net investment in capital assets 510Y045 1y037,767
Restricted for bond retirement 1,973,360 1,973,360
Unrestricted (deficit) 2Y103y860) 4y891y832)
Total Net Position 379y545 1y880Y705)
Total Liabilities and Net Position 31y578,851 33,538,742
116
Exhibit K -29
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues
Net patient service revenues 20,9487000 18,106,000
Miscellaneous 932,406 622, 364
Total Operating Revenues 21,8807406 18,728,364
Operating Expenses
Salaries and employee benefits 11,8517000 11,959,000
Purchased services 3,014,007 2,762,000
Supplies and maintenance 1,068,308 1,044,000
Administration and general 1,251,035 735,000
Depreciation 2,292,696 4,012579
Total Operating Expenses 19,477,046 20512579
Earnings (Loss) from Operations 2,403,360 1,784)215)
Nonoperating Revenues (Expenses)
Investment income 2,730 8,435
Interest expense 1)337,533) 1,348)255)
Nonoperating grant 4,000 1,000
Gain (loss) on disposal of capital assets 43)463) 4,037
Net Nonoperating Revenues (Expenses) 1)374,266) 1,334)783)
Earnings (Loss) before Contributions and Transfers 1,029,094 3,118)998)
Capital contributions 244,338 30,000
Contributions to Seward Community Health Center 14)582)
Transfers in 1,136,104 1,053,063
Transfers out 134)704) 1,453)023)
Change in Net Position 2,260,250 3,488)958)
Net Position, beginning 1)880,705) 1,608,253
Net Position, ending 379545 1, 880) 705 )
117
Exhibit K -30
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from customers and users 22,666,406 18,976,364
Payments to suppliers 5,035,526) 4,021,680)
Payments to employees 11,846,000) 11,828,000)
Payments for interfund services used 1,251,035)
Net cash flows from operating activities 4,533,845 3,126,684
Cash Flows from Noncapital Financing Activities
Transfers in 1,136,104 1,053,063
Transfers out 134,704) 1,453,023)
Net cash flows from noncapital financing activities 1,001,400 399,960)
Cash Flows from Capital and Related Financing Activities
Principal payments on long -term debt 1,460,000) 1,565,000)
Acquisition of property, plant, and equipment 332,194) 43,687)
Issuance of interfund loans 3,348,219
Principal payments on interfund loans 2,039,167) 62,525)
Capital contributions received 233,756 31,000
Interest payments on long -term debt 1,372,946) 1,308,736)
Increase (decrease) in due to contractual agencies 214,000 169,000)
Net cash flows from capital and related financing activities 4,756,551) 230,271
Cash Flows from Investing Activities
Investment income received 2,730 81435
Net Increase in Cash and Investments 781,424 2,965,430
Cash and Investments, beginning 4,409,047 1,443,617
Cash and Investments, ending 5,190,471 4,409,047
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 3,217,111 2,435,687
Restricted assets 1,973,360 1,973,360
5,190,471 4,409,047
Reconciliation of Earnings (Loss) from Operations to Net
Cash from Operating Activities
Earnings (loss) from operations 2,403,360 1,784,215)
Adjustments to reconcile earnings (loss) from operations to net cash
flows from operating activities:
Depreciation 2,292,696 4,012,579
Increase (decrease) in allowance for doubtful accounts 23,000 566,000)
Increase) decrease in assets:
Accounts receivable 539,000 804,000
Other assets 175,350 213,680)
Increase (decrease) in liabilities:
Accounts payable 136,439 42,000)
Other payables 1,029,000) 775,000
Accrued payroll and related liabilities 5,000 131,000
Unearned revenue 12,000) 10,000
Net Cash from Operating Activities 4,533,845 3,126,684
118
Internal Service Fund
Motor Pool - The Motor Pool Internal Service Fund accounts for payments from departments for
the use of vehicles, in order to accumulate cash to forward -fund replacement of vehicles. This
funding mechanism spreads the cost of the vehicles over the expected life of the vehicle in each
program's annual budget, rather than to show the cost of vehicles as a one -time expenditure to
each fund in the year of purchase.
Compensated Annual Leave - The Compensated Annual Leave Internal Service Fund was created in
2005 for the purpose of accumulating cash reserves to pay annual leave cash -outs for
governmental funds.
119
Exhibit L -1
City of Seward, Alaska
Motor Pool Internal Service Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets
Cash and investments 1,267,851 1,089,780
Receivables:
Accrued interest 52, 227 56, 052
Interfund loans 75571 71,745
Prepaid expenses 7,895
Total Current Assets 1,395,649 1,225,472
Interfund Loans, net of current portion 915,470 991,041
Property, Plant and Equipment
Equipment and vehicles 5,948,624 5,388,091
Less accumulated depreciation 3,571)607) 3,183)072)
Net property, plant and equipment in service 2,377,017 2,205,019
Construction in progress 405,768
Total Property, Plant and Equipment 2,377,017 2,610,787
Total Assets 4,688,136 4,827,300
Liabilities
Current Liabilities
Accounts payable 235,092
Accrued interest 97 2, 604
Current portion of capital lease obligations 31, 320 198078
Total Current Liabilities 31,417 435,874
Noncurrent Liabilities
Capital lease obligations, net of current portion 31,320
Total Liabilities 31,417 467094
Net Position
Net investment in capital assets 2, 345, 697 2, 381, 289
Unrestricted 2,311,022 1,978,817
Total Net Position 4,656,719 4,360,106
Total Liabilities and Net Position 4,688,136 4,827,300
120
Exhibit L-2
City of Seward, Alaska
Motor Pool Internal Service Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues - vehicle rental 674)365 508)999
Operating Expenses
Depreciation 413535 425597
Supplies and maintenance 13)705
Total Operating Expenses 427)240 425,597
Earnings from Operations 247)125 83)402
Nonoperating Revenues (Expenses)
Gain on disposal of capital assets 1,120 1 Y522
Investment income 52599 62Y910
Interest expense 4y231) 16)831)
Net Nonoperating Revenues (Expenses) 49)488 47)601
Change in Net Position 296)613 131,003
Net Position, beginning 4y360)106 4y229)103
Net Position,, ending 4y656)719 4y360)106
121
Exhibit L-3
City of Seward, Alaska
Motor Pool Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from vehicle rentals and other charges 674)365 508)999
Payments to suppliers 240)902)
Net cash flows from operating activities 433)463 508)999
Cash Flows from Capital and Related Financing Activities
Principal payments on long-term debt 198)178) 191)219)
Interest payments on long-term debt 6y738) 19)204)
Acquisition of equipment and vehicles 179)765) 231)753)
Proceeds from sale of capital assets 1,120 1 Y522
Net cash flows from capital and
related financing activities 383)561) 440)654)
Cash Flows from Investing Activities
Interfund loan receipts 71)745 68,113
Investment income received 56)424 66,542
Net cash flows from investing activities 128,169 134)655
Net Increase in Cash and Investments 178)071 203)000
Cash and Investments, beginning 1Y089)780 886)780
Cash and Investments, ending 1,267,851 1Y089)780
1
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 247,125 83)402
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation 413535 425597
Decrease in assets - prepaid expenses 7,895
Decrease in liabilities - account payable 235)092)
Net Cash from Operating Activities 433)463 508)999
Noncash Capital and Related Financing Activities
Purchase of equipment included in accounts payable 235)092)
122
Exhibit L-4
City of Seward, Alaska
Motor Pool Internal Service Fund
Schedule of Composition of Net Position
Year Ended December 31, 2013 2012
Grants and other external contributions $ 97)289 $ 97)289
Related accumulated amortization (97)289) (97)289)
Contributions from other funds 832)324 832)324
City-generated equity 3y824)395 3y527)782
Total Net Position $ 4y656)719 $ 4y360)106
123
Exhibit L-5
City of Seward, Alaska
Compensated Annual Leave Internal Service Fund
Statement of Net Position
December 31, 2013 2012
Assets
Current Assets - cash and investments 415)200 454)604
Liabilities
Current Liabilities - accrued annual leave 109)956 115,547
Noncurrent Liabilities, net of current portion - accrued annual leave 305)244 339)057_
Total Liabilities 415)200 454)604
124
Exhibit L-6
City of Seward, Alaska
Compensated Annual Leave Internal Service Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2013 2012
Operating Revenues - interfund charges $ 385)937 $ 364)902
Operating Expenses - salaries and employee benefits 385)937 364)902
Change in Net Position - -
Net Position, beginning
Net Position,, ending $ $
125
Exhibit L-7
City of Seward, Alaska
Compensated Annual Leave Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2013 2012
Cash Flows from Operating Activities
Receipts from interfund charges 385)937 364)902
Payments to employees 425)341) 335)941)
Net cash flows from operating activities 39)404) 28)961
Cash and Investments, beginning 454)604 425)643
Cash and Investments, ending 415,200 454)604
Reconciliation of Earnings from Operations to Net
Cash from (for) Operating Activities
Earnings from operations
Adjustments to reconcile earnings from operations
to net cash flows from operating activities - increase
decrease) in accrued annual leave 39)404) 28)961
Net Cash from (for) Operating Activities (39,404) 28)961
126
Exhibit M-1
City of Seward, Alaska
Teen Council Agency Fund
Statement of Changes in Assets and Liabilities
127
Balance at Balance at
January 1, December 31,
Year Ended December 31, 2013 2013 Additions Deletions 2013
Assets
Cash and investments 54Y719 29557 32, 912 51, 364
Other assets 150 150
Total Assets 54Y869 29557 32, 912 51514
Liabilities
Accounts payable 1)418 5)823 7,241
Other accrued liabilities 60 60
Due to Teen Council 53,451 23)674 32)912 44)213
Total Liabilities 54Y869 29557 32, 912 51514
127
Exhibit N -1
City of Seward, Alaska
Schedule of Governmental Capital Assets
December 31, 2013 2012
Capital Assets
Land and land improvements $ 5,432,289 $ 5,432,289
Buildings 69,977,179 58,381,690
Improvements other than buildings 21,971,826 16,167,267
Equipment 8,410,883 8,336,747
Construction in progress 168,272 16,428,130
Total Capital Assets $ 105,960,449 $ 104,746,123
Excludes Internal Service Fund assets.
128
Exhibit N -2
City of Seward, Alaska
Schedule of Changes in Governmental Capital Assets
Year Ended December 31, 2013
Balance at
January 1,
2013
Additions/
Reclass
Deletions/
Reclass
Balance at
December 31,
2013
Land and land improvements 5,432,289 5,432,289
Buildings 58, 381, 690 12)322Y155 726, 666 69, 977,179
Improvements other than buildings 16,167,267 5,817,359 12,800 21,971,826
Equipment 8,336,747 221,851 147,715 8,410,883
Construction in progress 16,428,130 713,959 16,973,817 168,272
104, 746,123 19, 075, 324 17, 860, 998 105, 960, 449
129
Exhibit N-3
City of Seward, Alaska
Schedule of Governmental Capital Assets by Function and Activity
December 31, 2013
130
Land and Improve-
Land ments
Improve- Other than
Function and Activity ments Buildings Buildings Equipment Total
General Government
City Council/Mayor 44,554 44,554
City manager 495,092 495,092
City clerk 33,910 33,910
Finance 97,115 97,115
Community development 5,232 7,142 12,374
Municipal building 31168,450 29,091 54,169 31251,710
Alaska SeaLife Center 491925,266 31252,868 41589,563 57Y7671697
General services 11479,080 81005,937 53,025 91538,042
Community and Senior Center 21524,330 21524,330
Non - departmental 51432,289 68,868 51501,157
Total General Government 51432,289 571171Y226 111287,896 51374,570 79,265,981
Public Safety
Police 11682,105 11682,105
Jail 9,408 9,408
Animal control 156,720 156,720
Fire 11167Y714 46,746 802,555 21017,015
Building inspection 2,600 2,600
Seward Volunteer Ambulance Corp 12,210 12,210
Total Public Safety 11324,434 46,746 21508,878 31880,058
Public Works
Streets 254,567 91063,947 256,374 91574,888
Engineering 3,621 3,621
City shop 785,766 65,466 851,232
Total Public Works 11040,333 91063,947 325,461 10,429,741
Parks and recreation 744,071 11573,237 139,305 2,456,613
Library 91697,115 62,669 91759,784
Total Capital Assets
Allocated to Functions 51432,289 69,977,179 21,971,826 81410,883 105,792,177
Construction in progress 168,272
Total Capital Assets 105,960,449
130
Exhibit N-4
City of Seward, Alaska
Schedule of Changes in Governmental Capital Assets by Function and Activity
Year Ended December 31, 2013
131
Capital Capital
Assets at Assets at
January 1, Additions/ Deletions/ December 31,
Function and Activity 2013 Reclass Reclass 2013
General Government
City Council/Mayor 44,554 44,554
City manager 491,198 3)894 495)092
City clerk 37,988 4Y078 33)910
Finance 97,115 97)115
Community development 12,374 12)374
Municipal building 2521 Y010 730,700 3y251)710
Alaska Sealife Center 56,799,505 1)028y979 60)787 57)767)697
General services 9)538Y042 9y538)042
Community and Senior Center 1)473y935 1)050Y395 2y524)330
Non - departmental 5501057 5501057
Total General Government 76516Y878 2)813Y968 64, 865 79)265)981
Public Safety
Police 1)682y105 1y682)105
Jail 9)408 9,408
Animal control 156,720 156)720
Fire 2)007Y893 91)972 82)850 2,01 7,015
Building inspection 2)600 2y600
Seward Volunteer Ambulance Corp 12,210 12)210
Total Public Safety 3)870Y936 91)972 82)850 3y880)058
Public Works
Streets 3)835y253 5)739y635 9y574)888
Engineering 3)621 3,621
City shop 851,232 851)232
Total Public Works 4)690y106 5)739y635 10)429)741
Parks and recreation 2)437y938 18)675 2y456)613
Library 802,135 9,697,1 15 739)466 9y759)784
Construction in progress 16y428y130 713,959 16)973y817 168)272
104, 746,123 19)075y324 17)860Y998 105)960Y449
131
Exhibit 0-1
City of Seward, Alaska
Schedule of State Financial Assistance
Year Ended December 31., 2013
Grant Title
Grant
Number
Total
Grant
Award
January 1,
2013
Receivable
Unearned) Adjustments
State
Share of
Expendi-
tu res
State
Receipts
December 31,
2013
Receivable
Unearned)
Department of Commerce, Community
and Economic Development
Road/Levee Construction 09-DC-527 1,750,000 4,828 23,035 27,863
Security and Fire Protection for
Commercial Passenger Vessels 11 -DC -640 2,000,000 9,936 212,646 222,582
Community Library 11 -DC -374 4,700,000 64,899 165,867 131,866 98,900
Construction of New Water Storage Tank 12-RR-030 1,992,000 8,085 24,485 20,256 12,314
CDQ Fishing Fleet Relocation Study 12-DC-427 400,000 76,626 1,924 74,702
Cruise Ship Boardwalk Extension Grant 12-DM-236 25,000 8,271) 8,271
Harbor Restroorn Renovations 12-DC-615 130,000 110,360 110,360
Marine Industrial Center Expansion 13-GO-014 10,000,000 483,931 328,300 155,631
D Float Replacement Seward Small Boat Harbor 1411 20,000 9,578 10,422 20,000
State Revenue Sharing - 2012 N/A 228)000 228,000 228,000
State Revenue Sharing - 2013 N/A 323,939 323,939 323,939
Shared Fishery Taxes N/A 22,176 22,176 22,176
Total Department of Commerce, Community
and Economic Development 317,055 1,461,758 1,306,906 471,907
Department of Military and Veteran Affairs
Dairy Hill Drainage Upgrade 1865.0003 87,496 15,209 5,888 21,097
December 09 Storm Surge AK-10-230 441,181 18,398) 18,398)
Oct 2006 Southern Alaska Storm/Flood FEMA-AK-DR1669 182,124 59,905 50,810 9,095
November 2011 Windstorm FEMA-4054-DR-AK 16,793 6,339 6,302 37
September 2012 Flood FEMA-4094-DR-AK 100,489 100,489 5,443 3,201 102,731
Oct 2013 Flood/Storm FEMA-4191 -DR-AK 29,376 29,376 29,376
Total Department of Military and Veteran Affairs 103,639 59,905 40,707 81,410 122,841
Department of Revenue
Fish Taxes N/A 480,290 480,290 480,290
Liquor Licenses N/A 21,650 21,650 21,650
Commercial Passenger Vessel Tax 2010 (Note 2) N/A 374,293 17,984) 17,984
Commercial Passenger Vessel Tax 2011 (Note 2) N/A 324,865 324,865) 34,594 290,271)
Commercial Passenger Vessel Tax 2012 N/A 343,265 343,265 343,265)
Passed through Kenai Peninsula Borough
Commercial Passenger Vessel Tax 2011 N/A 1,086,570 1,086,570) 1,086,570)
Commercial Passenger Vessel Tax 2012 N/A 343,265 343,265 343,265)
Total Department of Revenue 1,429,419) 554,518 1,188,470 2,063,371)
Department of Natural Resources
Jesse Lee Home Rehabilitation Project, Phase 11 PT-2007-1 1,000,000 176,532 574,624 255,306 495,850
Department of Administration
PERS Relief N/A 689,220 689,220 689,220
Department of Transportation and Public Facilities
Seward Small Boat Harbor D-Float Replacement 13-HG-009 1,180,000 909,802 113,725 796,077
Department of Environmental Conservation
Vessel Wash-Down and Wastewater
Recycling Facility 76913 710,381 34,037 636,838 635,354 35,521
Department of Education and Early Development
Public Library Assistance PLA-14-770-68 6,600 3,963 6,600 2,637)
Alaska Energy Authority
Seward Power Plant Intergration 7910011 3,960,000 1,314,275 630,949 683,326
Total State Financial Assistance 798,156) 59,905 6,185,705 4,907,940 539,514
Major program
132
City of Seward, Alaska
Notes to the Schedule of State Financial Assistance
Year Ended December 31, 2013
1. Basis of Presentation
The accompanying Schedule of State Financial Assistance includes the grant activity of City of Seward
and is presented on the modified accrual basis of accounting. The information in the schedule is
presented in accordance with the requirements of the State of Alaska Audit Guide and Compliance
Supplement for State Single Audits.
2. Commercial Passenger Vessel Tax
Amounts shown as cash receipts for commercial passenger vessel taxes have been recorded as
revenue in the Harbor Fund on an accrual basis. Any unspent portion of these funds, shown on the
state schedule as "unearned" is reported as restricted net position in the fund financial statements.
At December 31, 2013, the unspent receipted portion of the funding is $976,801. In the fund financial
statements, the total amount restricted for commercial passenger vessel tax at December 31, 2013
was $2,079,62 1.
133
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134
City of Seward, Alaska
Statistical Section
This part of the City of Seward's comprehensive annual financial report presents detailed information as a
context for understanding what the information in the financial statements, note disclosures, and required
supplementary information says about the City's overall financial health.
Contents Page
Financial Trends
These schedules contain trend information to help the reader understand how the City's
financial performance and well-being have changed over time.
Table 1 Net Position by Component 136
Table 2 Changes in Net Position 137
Table 3 Fund Balances of Governmental Funds 139
Table 4 Changes in Fund Balances of Governmental Funds 140
Table 5 General Fund Revenues by Source 141
Table 6 General Fund Tax Revenues by Source 142
Revenue Capacity
These schedules contain information to help the reader assess the City's most significant local
revenue sources, sales and property tax.
Table 7 Property Tax Rates 143
Table 8 Property Tax Levies and Collections 144
Table 9 Assessed and Estimated Actual Value of Taxable Property 145
Table 10 Principal Property Taxpayers 146
Table 11 Principal Taxable Sales by Line of Business 147
Debt Capacity
These schedules present information to help the reader assess the affordability of the City's
current level of outstanding debt and the City's ability to issue additional debt
Table 12 Ratios of Outstanding Debt by Type 148
Table 13 Ratio of General Obligation Bonded Debt to Assessed Value and General Obligation
Bonded Debt per Capita 149
Table 14 Computation of Direct and Overlapping Bonded Debt 150
Table 15 Legal Debt Margin 151
Table 16 Revenue Bond Coverage - Electric Enterprise Fund 152
Table 17 Revenue Bond Coverage - Harbor Enterprise Fund 153
Demographic and Economic Information
These schedules offer demographic and economic indicators to help the reader understand the
environment within which the City's financial activities take place.
Table 18 Demographic and Economic Statistics 154
Table 19 Principal Employers 155
Table 20 Full-Time Equivalent Employees by Fund 156
Table 21 Operating Indicators by Function 157
Table 22 Capita[ Asset Statistics by Function 158
Table 23 Property Value, Construction, and Bank Deposits 159
Table 24 Miscellaneous Statistics 160
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Table 2
City of Seward, Alaska
Changes in Net Position
Last Ten Fiscal Years
accrual basis of accounting)
Healthcare facilities is a new enterprise fund in 2011 previously reported as governmental fund and discreetly presented component unit.
See Statement of Activities (Exhibit A -2) of CAFR, p. 21.
ME
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Expenses
Governmental activities:
General government 1,731,427 1,770,306 2,158,969 1,161,765 2,501,443 1,451,682 800,716 2,031,590 1,981,876 2,199,711
Public safety 2,299,873 2,383,911 2,440,488 2,980,785 2,934,607 3,029,935 3,168,421 3,140,921 3,360,091 3,510,922
Public works 1,265,153 1,383,178 1,704,296 2,650,977 1,310,474 1,456,468 1,991,925 1,988,748 2,410,794 1,851,321
Parks and recreation 1,046,681 1,099,556 1,075,945 981,222 1,236,411 1,247,366 1,462,365 1,395,705 1,320,447 1,338,404
Library 358,364 367,077 378,487 384,835 398,108 478,385 437,082 466,300 446,200 489,548
Healthcare facilities 440,997 468,703 924,795 535,226 412,797 3,910,190 2,804,000
Sealife Center 1,804,367 1,028,302 1,578,315 1,672,365 1,736,147 1,294,636 731,528 51,939 965,206 848,940
Unallocated interest 371,982 432,438 347,367 306,989 116,906 236,982 1,505,248 173,993 206,778 208,840
Total governmental activities expenses 9,318,844 8,933,471 10,608,662 10,674,164 10,646,893 13,105,644 12,901,285 9,249,196 10,691,392 10,447,686
Business -type activities:
Electric 6,419,925 6,863,724 9,195,187 8,029,054 8,626,745 10,363,820 8,569,240 10,493,512 9,935,695 10,590,994
Water 687,542 760,363 813,245 859,799 1,194,311 1,066,860 1,093,419 1,230,833 1,246,997 1,087,747
Wastewater 706,332 705,508 693,096 747,484 901,759 916,909 1,078,318 1,044,654 1,013,492 1,015,474
Harbor 2,282,991 2,402,810 2,648,290 2,457,216 3,006,069 3,934,866 5,947,066 3,676,190 4,243,734 3,837,952
Seward Marine Industrial Center 1,591,311 1,521,930 1,278,774 1,076,730 1,149,453 990,466 926,290 1,081,862 928,458 899,343
Healthcare facilities 20,416,615 21,856,797 20,858,042
Parking 95,209 112,013 117,150 129,623 119,723 118,309 157,229 205,407 237,522 146,239
Total business -type activities expenses 11,783,310 12,366,348 14,745,742 13,299,906 14,998,060 17,391,230 17,771,562 38,149,073 39,462,695 38,435,791
Total Primary Government Expenses 21,102,154 21,299,819 25,354,404 23,974,070 25,644,953 30,496,874 30,672,847 47,398,269 50,154,087 48,883,477
Program Revenues
Governmental activities:
Charges for services:
General government 276,173 61,798 106,589 400,074 196,240 223,545 201,335 190,795 184,410 202,893
Public safety 737,338 687,763 761,316 706,575 669,988 744,939 682,906 740,204 809,645 897,319
Public works 116,742 219,843 239,984 111,756 116,833 84,849 168,196 40,910 36,721 30,565
Parks and recreation 548,283 565,168 529,289 592,063 627,038 622,067 608,361 620,943 609,342 653,054
Library 8,218 8,601 8,677 7,736 12,800 14,799 13,794 9,953 9,208 29,911
Healthcare facilities 2,569,886
Operating grants and contributions 112,945 157,809 148,785 680,176 84,144 542,354 620,310 1,128,278 1,037,711 1,002,434
Capital grants and contributions 1,053,026 880,372 2,124,245 1,459,744 999,171 2,860,172 1,709,977 3,573,497 3,442,599 23,034
Total governmental activities program revenues: 2,852,725 2,581,354 3,918,885 3,958,124 2,706,214 5,092,725 6,574,765 6,304,580 6,129,636 2,839,210
Business -type activities:
Electric 6,943,720 7,381,178 7,979,436 8,428,106 8,565,180 9,060,636 8,842,150 10,309,524 11,224,511 11,040,608
Water 769,970 1,019,832 1,008,765 996,633 998,541 972,713 1,034,888 1,069,732 1,150,109 1,280,710
Wastewater 702,770 791,988 811,546 800,168 801,095 796,454 851,416 864,740 929,514 960,591
Harbor 1,818,674 1,943,424 2,499,065 2,751,916 2,776,676 2,596,924 2,803,828 2,968,021 3,169,744 3,235,923
Seward Marine Industrial Center 318,009 324,828 286,640 290,221 304,517 263,775 296,139 413,454 414,737 391,954
Healthcare facilities 16,838,000 18,728,364 21,880,406
Parking 167,101 177,098 175,792 182,133 240,339 162,120 192,046 268,105 293,443 312,248
Operating grants and contributions 1,260,476 65,247 159,595 445,228 2,674,610 401,734 154,295 170,531
Capital grants and contributions 722,130 3,149,335 928,554 2,578,739 2,769,005 2,354,601 1,988,430 2,291,919 1,732,343 4,125,258
Total business -type activities program revenues 11,442,374 14,787,683 14,950,274 16,093,163 16,614,948 16,652,451 18,683,507 35,425,229 37,797,060 43,398,229
Total Primary Government Revenues 14,295,099 17,369,037 18,869,159 20,051,287 19,321,162 21,745,176 25,258,272 41,729,809 43,926,696 46,237,439
Net
Governmental activities 6,466,119) 6,352,117) 6,689,777) 6,716,040) 7,940,679) 8,012,919) 6,326,520) 2,944,616) 4,561,756) 7,608,476)
Business -type activities 340,936) 2,421,335 204,532 2,793,257 1,616,888 738,779) 911,945 2,723,844) 1,665,635) 4,962,438
Total Primary Government Net Expense 6,807,055) 3,930,782) 6,485,245) 3,922,783) 6,323,791) 8,751,698) 5,414,575) 5,668,460) 6,227,391) 2,646,038)
Healthcare facilities is a new enterprise fund in 2011 previously reported as governmental fund and discreetly presented component unit.
See Statement of Activities (Exhibit A -2) of CAFR, p. 21.
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Table 6
City of Seward, Alaska
General Fund Tax Revenues by Source
Last Ten Fiscal Years
Fiscal Payments -in- Hotel /Motel Tax
Year Property Tax Sales Tax (1) Lieu -of -Tax 2) Other (3) Total
2004 745,901 3,123, 314 89,926 2391660 21863 4, 201, 664
2005 787,503 31411,283 96,614 284,656 11804 41581,860
2006 847,875 31518,435 771714 3101570 1, 479 4)756,073
2007 873,513 41068,600 76,609 343,162 11381 51363,265
2008 953,957 411371758 80,126 362,004 1,236 51535,081
2009 975,687 31585,304 84,922 285,313 11329 41932,555
2010 954,687 3, 742, 751 75,317 328,396 11003 51102,154
2011 11001,020 4,147, 010 78,574 334,824 11821 51563,249
2012 11013,580 4,189, 330 76,160 380,210 11856 51661,136
2013 11276,898 41583,057 81,670 408,256 11644 61351,525
1) Sales tax rate has been 4% since July 1, 2003 and one - quarter (1 /4) of all sales tax revenue is transferred out of the
General Fund to the Healthcare Facilities Enterprise Fund to pay healthcare - related debt, capital, and operating costs.
2) The hotel /motel tax rate is 4 %.
3) Represents tax - related penalties and interest.
142
Table 7
City of Seward, Alaska
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
Per $1,000 of Assessed Value)
143
KPCC Flood
Fiscal Year City Borough (1) 2) Service (3) Total
2004 3.12 6.50 0.10 0.50 10.22
2005 3.12 6.50 0.10 0.50 10.22
2006 3.12 6.50 0.10 0.50 10.22
2007 3.12 5.50 0.00 0.50 9.12
2008 3.12 4.50 0.00 0.50 8.12
2009 3.12 4.50 0.00 0.50 8.12
2010 3.12 4.50 0.00 0.50 8.12
2011 3.12 4.50 0.00 0.50 8.12
2012 3.12 4.50 0.00 0.50 8.12
2013 3.12 4.50 0.00 0.50 8.12
1) Includes Kenai Peninsula Borough only.
2) Kenai Peninsula Community College.
3) Seward/Bear Creek Flood Service Area created effective 2004.
Source: "Alaska Taxable, 2013"
143
City of Seward, Alaska
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected in the Fiscal Year of
the Levy
Collections in
Fiscal Total Tax Levy Percentage of Subsequent
Year for Fiscal Year Amount Levy Years
2004 694Y784 676,746 97.404% $
2005 762Y207 744,646 97.696%
2006 818,043 817,364 99.917%
2007 847,411 816,305 96.329%
2008 919y341 903,535 98.281
2009 948y693 937,198 98.788%
2010 966y821 944, 796 97.722%
2011 966,657 945,194 97.780%
2012 979y589 944,950 96.464%
2013 1, 237, 645 1, 212, 490 97.967%
Table 8
Total Collections to Date
Percentage of
Amount Levy
18,038 694Y784 100.000%
17,561 762Y207 100.000%
652 818, 016 99.997%
31,079 847,384 99.997%
15,779 919Y314 99.997%
11, 468 948Y666 99.997%
21,950 966y746 99.992%
20,830 966,024 99.935%
31,427 976,377 99.672%
1,212,490 97.967%
Source: Kenai Peninsula Borough
Note: This table has been updated to exclude previously reported penalties and interest.
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Table 11
City of Seward, Alaska
Principal Taxable Sales by Line of Business
December 31, 2013
Type of Business
FYI 3 Taxable
Sales (1)
Percent of
Total Taxable
Sales (2)
FY04
Taxable
Sales
Percent of
Total Taxable
Sales
Retail Trade 451177,719 39.3% 29,823,649 37.4%
Guiding Water 201377,253 17.7% 13,366,158 16.8%
Restaurant/Bar 121976,943 11.3% 8,105,743 10.2%
Hotel /Motel /Bed Et Breakfast 12)173,596 10.6% 9,177,743 11.5%
Public Administration 71398,715 6.4% 5,4661886 6.9%
Wholesale Trade 51669,531 4.9% 4,6521967 5.8%
Information 2)7151261 2.4% 2,6781902 3.4%
Rental Residential Property 21009,867 1.7% 1,279,696 1.6%
Services 11610,206 1.4% 1 ,2491975 1.6%
Rental Commercial Property 903,383 0.8% 0.0%
Manufacturing 0.0% 1,272,985 1.6%
Other 41033,282 3.5% 2,6921504 3.4%
1151045,756 100% 79,767,208 100%
1) Taxable sales for 2013 are $115,045,756. Source: Kenai Peninsula Borough, Finance Dept, Sales Tax Division
2) Total sales tax collected in 2013 is $4,217,144. Source: Kenai Peninsula Borough Finance Department.
Note: Information regarding the ten principal revenue payers, and the amount collected from each, is not available. The Kenai
Peninsula Borough collects sales tax on behalf of the City of Seward as required by State law. The Borough does not disclose
sates tax data by individual business, even to the cities within the Borough. Rather than to provide information on the ten
principal revenue payers, we are providing information on taxable sates by Line of Business.
147
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Amounts expressed in thousands.
2013 Assessed Value includes one -time oil property originally assessed at $283,337,326, downward adjusted on appeal to $78,000,000.
Beginning in 2011, Healthcare Facilities became Business -Type Activities but were previously classified as Governmental Activities; per
GASB Statement No. 61. Hospital debt classified as Governmental through 2010, then as Business -Type in 2011 and 2012. Matured 2013.
1) Alaska Department of Commerce, Community &t Economic Development
2) From Table 9 (expressed in thousands)
3) Amount does not include revenue bonds.
Source: Kenai Peninsula Borough and State of Alaska, "Alaska Taxable 2013"
149
City of Seward, Alaska
Ratio of General Bonded Debt to Assessed Value and
General Bonded Debt per Capita
Last Ten Fiscal Years
Table 13
General Bonded Debt # ^
Ratio of General
Fiscal Assessed Bonded Debt to General Bonded
Year Population (1) Value (2) # Governmental Business -Type Total Assessed Value Debt per Capita
2004 2745 223,202 71070 665 77735 3.47% 21818
2005 2540 247,173 61349 521 67870 2.78% 21705
2006 2606 263,529 51576 374 57950 2.26% 21283
2007 2627 278,153 41738 222 47960 1.78% 11888
2008 2661 292,802 41016 169 47185 1.43% 11573
2009 2609 301,784 31246 114 37360 1.11% 11288
2010 2693 311,277 21426 59 27485 0.80% 923
2011 2733 304,944 31480 17550 57030 1.65% 11840
2012 2754 314,828 31480 710 47190 1.33% 11521
2013 2487 396,613 31480 - 37480 0.88% 11399
Amounts expressed in thousands.
2013 Assessed Value includes one -time oil property originally assessed at $283,337,326, downward adjusted on appeal to $78,000,000.
Beginning in 2011, Healthcare Facilities became Business -Type Activities but were previously classified as Governmental Activities; per
GASB Statement No. 61. Hospital debt classified as Governmental through 2010, then as Business -Type in 2011 and 2012. Matured 2013.
1) Alaska Department of Commerce, Community &t Economic Development
2) From Table 9 (expressed in thousands)
3) Amount does not include revenue bonds.
Source: Kenai Peninsula Borough and State of Alaska, "Alaska Taxable 2013"
149
City of Seward, Alaska
Computation of Direct and Overlapping Bonded Debt
December 31, 2013
Jurisdiction
Direct:
City of Seward
Overlapping:
Kenai Peninsula Borough (KPB)
Table 14
Net General Amount
Obligation Percentage Applicable to
Bonded Debt Applicable to City of
Outstanding Seward Seward
375117320 (11 ) 100% 31511,320
47,910,000 (2) 6.3% (3) 31018,106
51,421,320 61529,426
1) Excluding general obligation bonds reported in the Enterprise Funds. Includes governmental activities' general
obligation bonds, revenue bonds, and capital leases.
2) Source: KPB finance department. Total $49,784,000 less Central Emergency Services unrelated to Seward.
3) Based on ratio of City of Seward assessed value (real and personal property = $396,612,665)
to total assessed value of the Kenai Peninsula Borough ($6,295,906,850)
Source: "2013 Alaska Taxable" p. 41, State of Alaska, and KPB main and supplemental tax rolls.
Note: Excludes State assessed values which are exempt from taxation at City and Borough level.
W11
Table 15
City of Seward, Alaska
Legal Debt Margin
December 31, 2013
No debt limit mandated by law.
151
Table 16
City of Seward, Alaska
Revenue Bond Coverage
Electric Enterprise Fund
Last Ten Fiscal Years
Debt Service Requirements (3)
00
Net Revenue
Fiscal Gross Operating Available for
Year Revenues (1) Expenses (2) Debt Service Principal Interest Total Coverage (4)
2004 $ 71003,400 51065,958 11937,442 1557000 1377184 2927184 6.63
2005 71542,541 51539,190 21003,351 1657000 1297181 2947181 6.81
2006 81246,477 71855,990 390,487 2107000 87,500 2977500 1.31
2007 81709,107 61651,455 21057,652 1957000 80,938 2757938 7.46
2008 81920,730 61396,886 21523,844 2057000 1757825 3807825 6.63
2009 91173,257 81589,154 584,103 3057000 3677023 6727023 0.87
2010 81903,337 61854,897 21048,440 3157000 3537586 668, 586 3.06
2011 10, 410, 908 81620,529 11790,379 3307000 3397298 6697298 2.68
2012 11, 344, 047 71844,098 31499,949 3457000 3237987 6687987 5.23
2013 11,139, 471 81531,996 21607,475 3607000 3087210 6687210 3.90
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.30 times the amount of the total annual
debt service requirement.
00
Table 17
City of Seward, Alaska
Revenue Bond Coverage
Harbor Enterprise Fund
Last Ten Fiscal Years
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.20 times the
amount of the total annual debt service requirement.
Operating Expenses were restated in 2012 for 2011.
Note: 2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds were issued in 2005 in the amount of $1.5 million for
float construction and in 2006 in the amount of $4.5 million for expansion of the south harbor.
153
Debt Service Requirements (3)
Net Revenue
Fiscal Gross Revenues Operating Available for
Year 1) Expenses (2) Debt Service Principal Interest Total Coverage (4)
2004 11864,318 1,149, 701 714,617 95,000 148,618 243,618 2.93
2005 21002,229 11310,211 692,018 105,000 150,542 255,542 2.71
2006 21752,802 11388,971 11363,831 110,000 293,848 403,848 3.38
2007 21905,013 11472,842 114321171 310,000 376,504 686,504 2.09
2008 21896,828 11506,685 11390,143 325,000 3741203 699,203 1.99
2009 21632,937 11903,985 728,952 340,000 356,540 696,540 1.05
2010 21850,942 11784,887 11066,055 360,000 337,990 697,990 1.53
2011 31017,003 21040,903 976,100 385,000 318,459 703,459 1.39
2012 31228,955 211711180 11057,775 400,000 299,765 699,765 1.51
2013 31266,821 2,187, 206 11079,615 420,000 284,374 704,374 1.53
1) Total revenues, including interest, exclusive of grants.
2) Total operating expenses exclusive of depreciation and payments in lieu of taxes.
3) Includes principal and interest of revenue bonds only.
4) Revenue bond agreements require Net Revenue Available for Debt Service be at least 1.20 times the
amount of the total annual debt service requirement.
Operating Expenses were restated in 2012 for 2011.
Note: 2000 Harbor Enterprise Fund revenue bonds refunded in 2007. Bonds were issued in 2005 in the amount of $1.5 million for
float construction and in 2006 in the amount of $4.5 million for expansion of the south harbor.
153
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City of Seward, Alaska
Principal Employers - Current and Nine Years Ago
Name
Tnhhm 10
2013 * 2004
Rank Rank
State of Alaska (excludes University of Alaska) 1
City of Seward 4
Providence Seward Medical Et Care Center
Kenai Peninsula Borough School District 6
Safeway, Inc. 9
Alaska SeaLife Center 2
Ciri Alaska Tourism Corp 5
Seaview Community Services
Breeze Inn Motel
Rays Waterfront Bar Et GriR
Icicle Seafoods 7
United States Government 3
Ocean Beauty Seafoods 8
Seward Ships Drydock 10
Source: Alaska Department of Labor and Workforce Development, Research and Analysis
Beginning in 2012, the State of Alaska by statute, is no longer allowed to provide data relative
to the number of employees working for an employer. Nor can it rank employers according
to size. The City will seek alternate means to obtain similar relevant data, but none is available
at this time.
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Table 23
City of Seward, Alaska
Property Value, Construction, and Bank Deposits
Last Ten Fiscal Years
1) "Estimated Actual Value" from Table 9.
Source: Construction Data - City of Seward Building Department
Bank Deposit Data - Local Banks (First National Bank Alaska and Wells Fargo)
159
Commercial Construction Residential Construction
Fiscal Total Real Property Number of Value of Number of Value of
Year Value (1) Permits Permits Permits Permits Bank Deposits
2004 191, 098, 900 29 15, 080, 750 28 21645,400 54, 006, 361
2005 198,141, 000 21 888,820 33 11974,323 56,467, 873
2006 220, 649, 800 36 24, 332, 857 22 1, 204, 392 59, 374, 764
2007 226, 885, 700 20 22,555,446 17 589,254 59, 042, 303
2008 229, 373, 700 14 903,500 16 11928,879 60, 821, 068
2009 244, 392, 800 31 18, 694, 201 24 966,926 54, 337, 541
2010 242, 037, 200 36 41376,321 15 941, 261 57, 426, 000
2011 242, 523, 700 36 10, 468,128 27 873,920 76, 678, 691
2012 253,609,300 36 61254,641 18 717,400 821765,489
2013 248,357,800 30 14,551,644 22 927,616 75, 607,197
1) "Estimated Actual Value" from Table 9.
Source: Construction Data - City of Seward Building Department
Bank Deposit Data - Local Banks (First National Bank Alaska and Wells Fargo)
159
Table 24
City of Seward, Alaska
Miscellaneous Statistics
December 31, 2013
Date of Incorporation June 1, 1912
Class Home Rule City
Form of Government Council / Manager
Area, Square Miles 22
Miscellaneous Operational Statistics:
Library - number of volumes 32,034
Fire Department - Number of volunteers 32
Sewer System - Maximum daily capacity (gallons) 1,300,000
Water System - Maximum daily capacity (gallons) 8,8561000
Electric System:
7.5%
Miles of distribution tines 70
Miles of transmission tines 42
Harbor - Number of permanent slips 677
City Employees:
Regular Employees - Full-time equivalent 92.65
Temporary Employees - Full-time equivalent 10.85
Demographics:
School Enrollment, City of Seward (3) 576
Unemployment Rate - Borough-Wide (1) 7.5%
Population (2) 2,487
Average annual earnings (4) 45,541
Qualified Voters 1,681
Facilities and Services not included in the reporting entity:
Education:
Elementary School
Number of students enrolled 329
Number of teachers 25.00
Middle School
Number of students enrolled 75
Number of teachers 8.00
High School
Number of students enrolled 172
Number of teachers 10.00
Alaska Vocational Technical Center
Number of students served annually 1,085
Number of teachers (includes Instructional Aides) 39
Healthcare Facilities - a component unit of the reporting entity:
Providence Seward Medical Et Care Center
Number of patient beds (6) combination of inpatient care Et swing beds 6
Number of tong-term care beds 40
Number of employees:
Exempt 19
Non-Exempt (includes non-staff rotating physicians) 132
1) Kenai Peninsula Borough
2) State of Alaska, Dept of Community and Regional Affairs
3) Kenai Peninsula Borough School District
4) Kenai Peninsula Borough information extrapolated by Seward's population
160
Tet: 907-278--8878 3601 C Street, Suite 600BDo
Fax: 907-278--5779 Anchorage, AK 99503
www.bdo.com
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
Honorable Mayor and City Council
City of Seward, Alaska
We have audited, in accordance with the auditing standards generally accepted in the United
States of America and the standards applicable to financial audits contained in Government
Auditing Standards issued by the Comptroller General of the United States, the financial
statements of the governmental activities, the business-type activities, each major fund, and the
aggregate remaining fund information of City of Seward, Alaska, as of and for the year ended
December 31, 2013, and the related notes to the financial statements, which collectively comprise
City of Seward's basic financial statements and have issued our report thereon dated June 18,
2014. Our report includes a reference to other auditors who audited the operating account of the
Providence Seward Medical and Care Center, as described in our report on City of Seward's
financial statements. The operating account of Providence Seward Medical and Care Center was
not audited in accordance with Government Auditing Standards.
Internal Control Over Financial Reporting
In planning and performing our audit of the financial statements, we considered City of
Seward's internal control over financial reporting (internal control) to determine the audit
procedures that are appropriate in the circumstances for the purpose of expressing our opinions
on the financial statements, but not for the purpose of expressing an opinion on the
effectiveness of City of Seward's internal control. Accordingly, we do not express an opinion on
the effectiveness of City of Seward's internal control.
A deficiency in internal control exists when the design or operation of a control does not allow
management or employees, in the normal course of performing their assigned functions, to
prevent, or detect and correct, misstatements on a timely basis. A material weakness is a
deficiency, or combination of deficiencies, in internal control, such that there is a reasonable
possibility that a material misstatement of the entity's financial statements will not be
prevented, or detected and corrected, on a timely basis. A significant deficiency is a
deficiency, or a combination of deficiencies, in internal control that is less severe than a
material weakness, yet important enough to merit attention by those charged with governance.
Our consideration of internal control was for the limited purpose described in the first
paragraph of this section and was not designed to identify all deficiencies in internal control
that might be material weaknesses or significant deficiencies, and therefore, material
weaknesses or significant deficiencies may exist that have not been identified. Given these
limitations, during our audit we did not identify any deficiencies in internal control that we
consider to be material weaknesses. However material weaknesses may exist that have not
been identified. We did identify a certain deficiency in internal control, described in the
accompanying Schedule of Finings and Questioned Costs as item 2013-001 that we consider to
be a significant deficiency.
BDO USA, LIP, a IDe awaire Urnited hability partnership, is the U.S. rnernbeir of 13DO Vnter nation a Limited, a UK company Hmited by guarantee, and forms pairt of the
inteirnationa 13DO network of independent rnernbeir firms.
BDO is the brand narne for the BDO network and for each of the BDO Member Firms.
161
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Seward's financial statements
are free of material misstatement, we performed tests of its compliance with certain provisions
of laws, regulations, contracts, and grant agreements, noncompliance with which could have a
direct and material effect on the determination of financial statement amounts. However,
providing an opinion on compliance with those provisions was not an objective of our audit, and
accordingly, we do not express such an opinion. The results of our tests disclosed no instances
of noncompliance or other matters that are required to be reported under Government Auditing
Standards.
City of Seward's Response to Findings
City of Seward's response to the findings identified in our audit are described in the
accompanying Schedule of Findings and Questioned Costs. City of Seward's response was not
subjected to the auditing procedures applied in the audit of the financial statements and,
accordingly, we express no opinion on it.
Purpose of this Report
The purpose of this report is solely to describe the scope of our testing of internal control and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of
the entity's internal control or on compliance. This report is an integral part of an audit
performed in accordance with Government Auditing Standards in considering the entity's
internal control and compliance. Accordingly, this communication is not suitable for any other
purpose.
Anchorage, Alaska
June 18, 2014
162
JBD Q Tet: 907-278-8878 3601 C StreetuSite 600
Fax: 907-278-5779 Anchorage, AK 99503
www.bdo.com
Independent Auditor's Report on Compliance for Each Major State Program and
Report on Internal Control Over Compliance Required by the State of Alaska
Audit Guide and Compliance Supplement for State Single Audits
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance for Each Major State Program
We have audited City of Seward's compliance with the types of compliance requirements described
in the State of Alaska Audit Guide and Compliance Supplement for State Single Audits that could
have a direct and material effect on each of City of Seward's major state programs for the year
ended December 31, 2013. City of Seward's major state programs are identified in the
accompanying Schedule of State Financial Assistance.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations, contracts,
and grants applicable to its state programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of City of Seward's major
state programs based on our audit of the types of compliance requirements referred to above.
We conducted our audit of compliance in accordance with auditing standards generally
accepted in the United States of America; the standards applicable to financial audits contained
in Government Auditing Standards, issued by the Comptroller General of the United States; and
the State of Alaska Audit Guide and Compliance Supplement for State Single Audits. Those
standards and the State of Alaska Audit Guide and Compliance Supplement for State Single Audits
require that we plan and perform the audit to obtain reasonable assurance about whether
noncompliance with the types of compliance requirements referred to above that could have a
direct and material effect on a major state program occurred. An audit includes examining, on
a test basis, evidence about City of Seward's compliance with those requirements and
performing such other procedures as we considered necessary in the circumstances.
We believe that our audit provides a reasonable basis for our opinion on compliance for each
major state program. However, our audit does not provide a Legal determination of City of
Seward's compliance.
BDO USA, LIP, a IDe awaire Urnited hability partnership, is the U.S. rnernbeir of IBDO Vnter nation a Limited, a UK company Hmited by guarantee, and forms pairt of the
inteirnationa IBDO network of independent rnernbeir firms.
BDO is the brand narne for the BDO network and for each of the BDO Member Firms.
163
Opinion on Each Major State Program
In our opinion, City of Seward complied, in all material respects, with the types of compliance
requirements referred to above that could have a direct and material effect on each of its major
state programs for the year ended December 31, 2013.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is required to
be reported in accordance with the State of Alaska Audit Guide and Compliance Supplement for
State Single Audits and which is described in the accompanying Schedule of Findings and
Questioned Costs as item 2013-002. Our opinion on each major state program is not modified with
respect to these matters.
City of Seward's response to the noncompliance findings identified in our audit is described in the
accompanying Corrective Action Plan. City of Seward's response was not subjected to the auditing
procedures applied in the audit of compliance and, accordingly, we express no opinion on the
response.
Report on Internal Control Over Compliance
Management of City of Seward is responsible for establishing and maintaining effective internal
control over compliance with the types of compliance requirements referred to above. In planning
and performing our audit of compliance, we considered City of Seward's internal control over
compliance with the types of requirements that could have a direct and material effect on each
major state program to determine the auditing procedures that are appropriate in the
circumstances for the purpose of expressing an opinion on compliance for each major state
program, and to test and report on internal control over compliance in accordance with the State
of Alaska Audit Guide and Compliance Supplement for State Single Audits, but not for the purpose
of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we
do not express an opinion on the effectiveness of City of Seward's internal control over
compliance.
A deficiency in internal control over compliance exists when the design or operation of a
control over compliance does not allow management or employees, in the normal course of
performing their assigned functions, to prevent, or detect and correct, noncompliance with
a type of compliance requirement of a state program on a timely basis. A material
weakness in internal control over compliance is a deficiency, or combination of
deficiencies, in internal control over compliance, such that there is a reasonable possibility
that material noncompliance with a type of compliance requirement of a state program will
not be prevented, or detected and corrected, on a timely basis. A significant deficiency in
internal control over compliance is a deficiency, or a combination of deficiencies, in
internal control over compliance with a type of compliance requirement of a state program
that is less severe than a material weakness in internal control over compliance, yet
important enough to merit attention by those charged with governance.
164
Our consideration of internal control over compliance was for the limited purpose described
in the first paragraph of this section and was not designed to identify all deficiencies in
internal control over compliance that might be material weaknesses or significant
deficiencies and therefore, material weaknesses or significant deficiencies may exist that
were not identified. We did not identify any deficiencies in internal control that we
consider to be material weaknesses. However, we identified certain deficiencies in
internal control over compliance as described in the accompanying schedule of findings and
questioned costs as item 2013-002 that we consider to be significant deficiencies.
The City of Seward's response to the internal control over compliance finding identified in our
audit is described in the accompanying corrective action plan. The City of Seward's response
was not subjected to the auditing procedures applied in the audit of compliance and,
accordingly, we express no opinion on the response.
The purpose of this report on internal control over compliance is solely to describe the scope of
our testing of internal control over compliance and the results of that testing based on the
requirements of the State of Alaska Audit Guide and Compliance Supplement for State Single
Audits. Accordingly, this report is not suitable for any other purpose.
Anchorage, Alaska
June 18, 2014
165
City of Seward, Alaska
Schedule of Findings and Questioned Costs
Year Ended December 31, 2013
I Section I - Summary of Auditor's Results I
Financial Statements
Type of auditor's report issued:
Internal control over financial reporting:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Noncompliance material to financial statements noted?
State Financial Assistance
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Type of auditor's report issued on compliance for
major programs:
Dollar threshold used to distinguish a state major program:
Unmodified
yes X no
X yes (none reported)
yes X no
yes X no
X yes (none reported)
Unmodified
75,000
Section 11 - Financial Statement Findings Required to be Reported in Accordance with
Government Auditing Standards
Finding 2013-001 Year End Inventory Count Procedures
Significant Deficiency
Criteria Timely and accurate review of the inventory accounts and year end
physical count are important steps in the annual financial close and
reporting process. This reconciliation /review helps ensure accurate
inventory and expenditure balances which in turn helps ensure accurate
financial statements.
Condition There was a significant adjustment made to inventory during the course of
the audit, which resulted in a significant change in net income. The
adjustment was made to inventory and operating supplies.
Context We examined ten samples from the electric inventory listing and noted four
items' physical count disagreed with the actual listing at year end, two of
the four items required an adjustment.
Effect The inventory account was overstated and operating supplies was
understated.
166
City of Seward, Alaska
Schedule of Findings and Questioned Costs
Year Ended December 31, 2013
Cause The inventory count sheets were not reviewed and reconciled to the data
entered into the listing to prepare the year end adjustment based on the
count. An item purchased and included in the count was communicated
after the count to be added, so that particular item was doubled up. In
addition, an item was entered from the count sheet into the inventory
listing incorrectly, causing that item to be misstated at year end.
Recommendation We suggest that management establish controls to property reconcile and
review the data entered into the inventory listing from the actual count
sheets and ensure the data agrees before adjusting inventory at year end.
Views of Responsible
Officials and Planned
Corrective Actions: See the corrective action plan.
I Section III -State Award Findings and Questioned Costs I
Finding 2013-002 Timely Reporting
Significant Deficiency in Internal Control over Compliance
Agency Alaska Energy Authority
Program Seward Power Plant Integration
Award No. 7910011 Award Year FY1 3
Criteria The grantee is required to submit timely financial reports for Alaska Energy
Authority Grant Awards, even if there are no grant expenditures for the
period, on a monthly basis and no later than 30 days after the end of the
reporting month.
Condition The grantee did not submit the AEA reports within 30 days of month end
and the grantee was submitting quarterly financial reports instead of
monthly financial reports.
Questioned Costs None noted.
Context We examined six monthly reports or two quarters submitted by the grantee
and noted four out of the six were submitted late. The month end that
related to the quarter end was submitted on time but the first two months
of the quarter end were submitted late.
Effect Failure to submit the required reports on a timely basis to the granting
agency could lead to a decrease in state funding.
Cause The City did not maintain controls over the timely submission of complete
and accurate grant reports.
167
City of Seward, Alaska
Schedule of Findings and Questioned Costs
Year Ended December 31, 2013
Finding 2013-002 Timely Reporting, continued
Significant Deficiency in Internal Control over Compliance
Recommendation The City should perform timely reporting of grant expenditures. The
reports should be completed concurrently and agreed to expenditure
details before submitting them to the AEA.
Views of Responsible
Officials and Planned
Corrective Actions See the corrective action plan.
168
City of Seward, Alaska
Schedule of Prior Audit Findings
Year Ended December 31, 2013
I State of Alaska Award Findings and Questioned Costs I
None noted.
169
City of Seward, Alaska
Corrective Action Plan
Year Ended December 31, 2013
Person Responsible Kris Erchinger
907-224-4064
kerchinger@cityofseward. net
I Financial Statement Findings I
Finding 2013-001 Year End Inventory Count Procedures
Corrective Action Management is taking a number of steps to improve inventory control in the
electric utility. First, a new computerized inventory control program will
be purchased by the electric utility and the utility's administrative assistant
will receive training to ensure that inventory is property recorded and
tracked. Second, completion of the construction of a new electric utility
warehouse in 2014 will enable inventory items to be consolidated from
multiple current locations. The various locations currently makes it
difficult to ensure that all items are property counted at year-end. Third,
the accuracy of counts was compromised this year when consistency in
classifying inventory was different due to different employees conducting
the count compared with previous years.
Expected Completion December 31, 2014
Finding 2013-002 Timely Reporting
Corrective Action Management was not aware that grant financial reports were required to be
filed monthly, and they were filed quarterly. We were aware that grant
progress reports were required to be filed monthly, and we filed them
monthly. The granting agency did not notify staff that any grant reports
were filed late. We are now filing grant financial reports monthly. In
addition, AEA has recently amended the Grant Agreement to clarify that
financial reports are also due monthly, as previously the Grant Agreement
was only explicit as to the monthly requirement for filing progress reports.
Expected Completion June 1, 2014
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