HomeMy WebLinkAbout2014CAFRCity of Seward, Alaska
Comprehensive Annual Financial Report
For the Year Ended December 31, 2014
Prepared by City of Seward Finance Department
The report accompanying these financial statements was issued by
BDO USA, LLP, a Delaware Limited liability partnership and the U.S. member of
BDO International Limited, a UK company Limited by guarantee.
Comprehensive Annual Financial Report
of the
City of Seward, Alaska
For the Fiscal Year Ended
December 31, 2014
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 Page
INTRODUCTORY SECTION
Table of Contents I -V
Letter of Transmittal VI -X11
Certificate of Achievement for Excellence in Financial Reporting X111
List of Principal Officials XIV
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 the Changes 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 -58
City of Seward, Alaska
Contents
Exhibit Page
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
Change in Fund Balances E -2 61
Nonmajor Enterprise Funds:
Combining Statement of Net Position F -1 62
Combining Statement of Revenues, Expenses and
Change in Net Position F -2 63
Combining Statement of Cash Flows F -3 64 -65
Internal Service Funds:
J -1 83
Combining Statement of Net Position G -1 66
Combining Statement of Revenues, Expenses and
J -2 84
Change in Net Position G -2 67
Combining Statement of Cash Flows G -3 68
General Fund:
K -1 86 -87
Balance Sheet H -1 70 -71
Schedule of Revenues, Expenditures and
K -3 89 -90
Change 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 1 -2 81
Nonmajor Capital Project Funds:
Combining Balance Sheet J -1 83
Combining Statement of Revenues, Expenditures and
Change in Fund Balances 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 -90
Schedule of Operating Expenses K -4 91
Schedule of Composition of Net Position K -5 92
Schedule of Electric Capital Projects K -6 93
City of Seward, Alaska
Contents
Exhibit Page
FINANCIAL SECTION, continued
Supplementary Information, continued
Combining and Individual Fund Financial Statements and Schedules, continued:
Enterprise Funds, continued:
Water:
Statement of Net Position K -7 94
Statement of Revenues, Expenses and Change in Net Position K -8 95
Statement of Cash Flows K -9 96
Schedule of Composition of Net Position K -10 97
Wastewater:
Statement of Net Position K -11 98
Statement of Revenues, Expenses and Change in Net Position K -12 99
Statement of Cash Flows K -13 100
Schedule of Composition of Net Position K -14 101
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 -106
Schedule of Composition of Net Position K -18 107
Schedule of Harbor Capital Projects K -19 108
Seward Marine Industrial Center:
Statement of Net Position K -20 109
Statement of Revenues, Expenses and Change in Net Position K -21 110
Statement of Cash Flows K -22 111
Schedule of Composition of Net Position K -23 112
Parking:
Statement of Net Position K -24 113
Statement of Revenues, Expenses and Change in Net Position K -25 114
Statement of Cash Flows K -26 115
Schedule of Composition of Net Position K -27 116
Healthcare Facilities:
Statement of Net Position K -28 117
Statement of Revenues, Expenses and Change in Net Position K -29 118
Statement of Cash Flows K -30 119
Internal Service Funds:
Motor Pool:
Statement of Net Position L -1 122
Statement of Revenues, Expenses and Change in Net Position L -2 123
Statement of Cash Flows L -3 124
Schedule of Composition of Net Position L -4 125
City of Seward, Alaska
Contents
Exhibit Page
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 -5 126
Statement of Revenues, Expenses and Change in Net Position L -6 127
Statement of Cash Flows L -7 128
Teen Council Agency Fund
Statement of Changes in Assets and Liabilities M -1 129
Capital Assets:
Schedule of Governmental Capital Assets N -1 130
Schedule of Changes in Governmental Capital Assets N -2 131
Schedule of Governmental Capital Assets by Function and Activity N -3 132
Schedule of Changes in Governmental Capital Assets by Function
and Activity N -4 133
Schedule of Expenditures of Federal Awards 0 -1 134 -135
Schedule of State Financial Assistance 0 -2 136
Notes to Schedules of Expenditures of Federal Awards
and Schedule of State Financial Assistance 137
IV
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 165 -166
Independent Auditor's Report on Compliance For Each Major
Federal Program and Report on Internal Control Over Compliance
Required by OMB Circular A -133 167 -169
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 170 -171
Schedule of Findings and Questioned Costs 172 -174
Summary Schedule of Prior Audit Findings 175
Corrective Action Plan 176
V
Exhibit Page
STATISTICAL SECTION
Net Position by Component 1 140
Changes in Net Position 2 141 -142
Fund Balances of Governmental Funds 3 143
Changes in Fund Balances of Governmental Funds 4 144
General Fund Revenues by Source 5 145
General Fund Tax Revenues by Source 6 146
Property Tax Rates 7 147
Property Tax Levies and Collections 8 148
Assessed and Estimated Actual Value of Taxable Property 9 149
Principal Property Taxpayers 10 150
Principal Taxable Sales by Line of Business 11 151
Ratios of Outstanding Debt by Type 12 152
Ratio of General Obligation Bonded Debt to Assessed Value
and General Obligation Bonded Debt per Capita 13 153
Computation of Direct and Overlapping Bonded Debt 14 154
Legal Debt Margin 15 155
Revenue Bond Coverage - Electric Enterprise Fund 16 155
Revenue Bond Coverage - Harbor Enterprise Fund 17 157
Demographic and Economic Statistics 18 158
Principal Employers 19 159
Full -Time Equivalent Employees by Fund 20 160
Operating Indicators by Function 21 161
Capital Asset Statistics By Function 22 162
Property Value, Construction, and Bank Deposits 23 163
Miscellaneous Statistics 24 164
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 165 -166
Independent Auditor's Report on Compliance For Each Major
Federal Program and Report on Internal Control Over Compliance
Required by OMB Circular A -133 167 -169
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 170 -171
Schedule of Findings and Questioned Costs 172 -174
Summary Schedule of Prior Audit Findings 175
Corrective Action Plan 176
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June 21, 2015
Honorable Members of the Seward City Council
Citizens of the city of Seward:
The City of Seward (City) Comprehensive Annual Financial Report (CAFR) for the year ended
December 31, 2014 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 on 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 2013 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
with comparative budgetary information, notes to the financial statements, and combining and individual
statements and schedules, as applicable, arranged according to fund type.
The Statistical Section is unaudited and includes a broad range of information including historical trends
over a ten -year period, demographic information, and other non - financial information.
Management is responsible to ensure the accuracy, completeness, and fairness of the presentation of this
information, including all disclosures. To provide a reasonable basis for making these representations,
management has established a comprehensive framework of internal controls which is designed to protect
the government's assets from loss, theft, or misuse, and to provide sufficiently reliable information upon
which to prepare the City's financial statements in accordance with GAAP. Because the cost of internal
controls should not outweigh the benefits, the City's comprehensive framework of internal controls has been
designed to provide reasonable rather than absolute assurance that the financial statements will be free from
material misstatement. As management, we assert that, to the best of our knowledge, this financial report is
complete and reliable in all material respects.
The City's financial statements have been audited by BDO USA, LLP, an independent auditing firm of
certified public accountants. The goal of the independent audit is to provide reasonable assurance that the
financial statements of the City are free of material misstatement. The independent audit involved
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements;
assessing the accounting principles used and the significant estimates made by management; and evaluating
the overall presentation of the financial statements. The independent auditor concluded, based on the audit,
that there was a reasonable basis for rendering an unmodified opinion that the City's financial statements for
the fiscal year ended December 31, 2014, are fairly presented in conformity with GAAP. The independent
auditor's report is presented in the financial section of this report.
As 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
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applicable laws and regulations, and a schedule of findings and questioned 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 29.04,010) 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 Southeentral Alaska, 125 highway miles
south of Anchorage. Year -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 2,768. 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, fire, public works, motor vehicle testing and licensing, jail,
animal control, building inspection, community development, library and museum, 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.
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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 a regular meeting in October. The Council holds public hearings on the proposed budget and generally
adopts the budget 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
The natural beauty of Seward, its year -around deep -water port, access by road system and rail, and its
relatively mild climate combine to make Seward attractive to new marine- related businesses, and a
destination of choice for tens of thousands of visitors. The cost of living in Seward is also relatively low for
Alaska, and taxes are low and stable. The cost of utilities is relatively high in Seward, as in most of Alaska,
but the recent drop in oil prices has brought relief to residents and business recently struggling with high
winter energy costs. Seward is investigating renewable energy opportunities following the Alaska Sealife
Center's successful project converting abundant seawater for heating, and recent temperature studies on bore
holes along the waterfront which demonstrate the feasibility of utilizing geothermal technology to heat City -
owned buildings in the downtown corridor.
Seward has a fairly diversified economy relative to many other places in the state, although it remains fairly
dependent on the visitor industry for jobs and tax revenues. The community's strong tourism, commercial
and recreational fishing, boat tours and amazing outdoor recreational opportunities, bring outside money
into Seward's economy, resulting in strong visitor - related sales. Retail trade in Seward represents 39.2% of
all taxable sales, followed by guided water sales (17.5 %), restaurant and bar (11.9 %), hotels and beds and
breakfast (11.1 %), public administration (6.2 %), wholesale trade (4.5 %), and others (9.6 %). The Borough
unemployment rate is at 7.8 %, which is lower than ten -year average rate of 8.58 %. Borough -wide, per
capita personal income has risen nearly 50% in the last ten years, from $32,529 in 2005 to $48,728 in 2014,
while during that same time period, Seward's population has risen 9.0% from 2,540 in 2005 to 2,768 in
2014. Taxable sales activity in Seward has increased 31% over the past ten years, averaging 3.1% annual
growth, reaching $115,650,415 in taxable sales in 2014. Since sales tax represents the single largest revenue
source for the City's General Fund, the growth in taxable sales is an important measure of the ability of the
City to pay for general government services. Taxable sales have risen from recessionary levels by 27.0 %,
averaging 5.4% annual growth over each of the last five years (taxable sales increased from $90.8 Million in
2009 to $115.6 Million in 2014).
There is growing interest in expansion of marine transportation, ship repair, commercial fishing moorage,
land development and related business activity, and the City is embarking on a $20 Million project to
expand the Seward Marine Industrial Center to enclose the SMIC basin to accommodate larger marine
vessels. This project is generating significant interest from commercial fishing fleets, transportation
companies, marine scientists, and other large marine vessel operators with interest in new commercial
harbor facilities. The Alaska Railroad has also unveiled future plans to expand dock facilities in Seward,
demonstrating a positive and growing economic climate for transportation and freight handling. Growth in
this sector is expected to provide support for the construction and trades industry. Overall, Seward saw 25
commercial construction building permits issued at a value of $8.0 million, and 26 residential construction
building permits issued at a value of $1.0 million in 2014.
MAIII
Seward's downtown corridor is being revitalized by new business activity (two restaurants, one health food
store and a sporting goods store opened in the past two years), reflecting optimism toward improved
economic conditions for local businesses. Increased economic activity has resulted in increased City tax
revenues, with sales tax revenues increasing 26.5 % from 2009 to 2014 ($3.6 million in 2009 to $4.5 million
in 2014), property tax revenues increasing 0.34% ($986,473 in 2009 to $989,910 in 2014), hotel/motel tax
revenues increasing 47.9 % ($285,313 in 2009 to $421,981 in 2014), and campground revenues increasing
13.6% ($478,115 in 2009 to $542,908 in 2014). While the business outlook appears positive, local
businesses are sensitive to high costs of utilities and heating fuel, with those costs determining factors in
whether businesses close in the winter to avoid higher winter operating costs. To address that challenge, the
City is evaluating a seasonal electric tariff which would reduce utility rates in the winter months and
increase rates in the summer. Seward's strong economic activity continues to rely, in large part, on visitor
numbers, but expanded fisheries processing, marine transportation, marine repair, scientific research and
related industries inject a desired degree of diversity in Seward's economic base.
In comparison with other communities in the Kenai Peninsula Borough, Seward's growth outpaced in 2011,
2012 and 2013, but declined in 2014. In 2014, Seward's taxable sales declined (0.77%), as did Homer at
1.42 %) and Seldovia at (- 5.10 %) while Kenai grew 9.22% followed by Soldotna at 0.28 %. The bulk of
Seward's sales tax (47 %) is generated during the period June, July and August, with the influx of summer
visitors. In 2013, Seward's taxable sales were the highest in the borough at 6.35% growth, followed by
Homer (3.55%) and Soldotna (2.15%). In 2012, Seward's taxable sales were the highest and grew by
4.47 %, followed by Soldotna (3.38%) and Kenai (2.19 %). In 2011, Seward's taxable sales grew by 6.84%
followed by Homer (5.57 %) and Kenai (5.05 %).
The City's top ten property taxpayers have become more diverse over the past few 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, communications,
petroleum products, and marine, and account for approximately 21.9% 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.
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.
However, employment by industry figures show that 983 resident workers in 2014 is were employed in
trade /transportation and utilities (232), leisure and hospitality (154), education and health services (121),
local government (109), state government (107), professional and business services (90), manufacturing
50), construction (35) and others (85). Seward maintains a significant government presence (22%
government employees), 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 - profit organizations. Providence Seward Medical and Care Center (the hospital and
long - term -care facility), Seward Community Health Center clinic, and the 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
Ray'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
2014 electric utility rate review, and a more strategic focus on capital infrastructure replacement. In 2014,
plans were developed for major upgrades of infrastructure in nearly every enterprise fund based on the five -
year capital replacement plan which identified critical risk (likely to fail in the next five years), high risk
IX
likely to fail within the next 5 -10 years), and moderate risk (continuously increasing cost to operate and
maintain) infrastructure needs. To address the replacement of infrastructure, enterprise funds have reviewed
rates each year and, combined with automatic tariff increases mirroring the five -year average rise in the
consumer price index, the City is making important progress in the area of enterprise fund physical plant
condition and stronger financial position..
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 fall within the policy band of
between three and six months' worth of expenditures and transfers -out. Reserve levels have reached their
highest levels in more than a decade (representing 3.8 months' worth of expenditures and transfers -out),
with $1.53 million transferred to the Capital Acquisition Fund for future infrastructure needs; the Water
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, non - recurring capital needs; major capital
infrastructure improvements arc being addressed in the Harbor (replacement of A,B,C, D and S- Floats),
Water (construction of new water storage tank), Electric (completion of the electric utility warehouse and
backup generator project), and Wastewater (dredging of the Lowell Point and SMIC sewage lagoons, and
installation of aerators) 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. The City is also working with healthcare facilities to develop a
prioritized plan for use of the I% sales tax dedicated to healthcare, to plan for expansion or relocation of the
hospital and the clinic, while ensuring repayment of long -term care facility bonds.
Financial Condition
The City has struggled for many years to bring its General Fund unassigned fund balance to a level that
meets its own policy band of between three and six months' reserves. The City's unassigned fund balance
fell in 2014 by $1,249,489, to $4,698,970, representing 3.8 months' reserves. This is down from 5.8
months' at the end of 2013, but is due to the transfer of more than $1.5 million in reserves to the Capital
Acquisition Fund to pay for future infrastructure needs. This is a major accomplishment, given that the City
has not had a major source of revenues for general government capital needs in more than twenty years. The
General Fund reserves are still among the highest level 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 PERS liabilities ($1,312,335) out of the General Fund in 2012. 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
1.2 million cost sharing required to repay the Army Corps of Engineers loan, to match grants and address
building and infrastructure deferred maintenance, etc. The City's reserve levels may be called on to mitigate
potential health system financial shortfalls, 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.
In recent 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. The State of
Alaska is experiencing a significant budgetary shortfall of $3.5 Billion, threatening revenue sharing and
other funding from the State. The City expects to see a reduction in state funding for jails, dispatching, and
space lease of more than $400,000 in 2015. The strength of Seward's retail sales has enabled the City to
absorb most State funding reductions in years when revenue sharing funding levels were reduced, and the
City currently programs those funds to be used entirely for capital spending, so that the loss of future
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revenue sharing will not impact the operating budget. However, the loss of jail, dispatching and space lease
revenues will adversely impact the City's general fund. The City has been reducing its dependence on grant
funding for major repairs and replacement of infrastructure assets by increasing enterprise fund rates, so the
impact, while major, will not threaten the viability of those enterprise operations. One major policy decision
that could have a material impact the City's finances however, would be any change in the State's current
policy of funding retirement system rates above 22 %. The City is not currently statutorily obligated for
these payments since they are paid on the City's behalf by the State, representing $1,423,759 in 2014,
689,220 in 2013, and $625,512 in 2012. However, the State has determined that while it is currently
statutorily responsible to make these payments, it is not Iegally responsible to make the payments. This
leaves significant latitude for the State legislature to fund pension obligations at a level significantly lower
than they are currently. The State's contribution on the City's behalf in 2014 is equivalent to a 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 benefit pension plan on the City's behalf
for all of the City's funds, and is the equivalent of a 1.26% increase in the City's sales tax rate (from 4.0% to
5.26 %), or an approximately 4.5 mill property tax increase above the current 3.12 mill rate.
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. The Water and Wastewater Funds still have insufficient resources to meet capital needs, although
the bulk of their major capital infrastructure needs have been addressed over the past two years. 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 completed a number of major projects this year including 1) installation of new automated pay
stations on the campground; 2) renovation of harbor restrooms; 3) replacement of the 250 -Ton travelift with
a 330 -Ton lift; 4) ADA sidewalk improvements; and 5) electric transformer upgrades and repairs. There are
a number of major capital projects in the works, including: 1) construction of the electric warehouse; 2) $20
million to expand the Seward Marine Industrial Center breakwater; 3) upgrades to the transmission line at
SMIC; 4) beach erosion repair; 5) construction of a new water storage tank and refurbishment of existing
tanks; 6) repairs to the Lowell Point and SMIC sewage lagoons; 7) boardwalk repairs; 8) harbor fish
cleaning station upgrades; 9) replacement of a number of floats in the Small Boat Harbor; 10) major road
improvements; 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
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 (JIA), a government
insurance pool established by the Alaska Municipal League. The J1A provides the City's insurance
coverage for property, general liability, public officials and employees' liability, law enforcement
XI
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 M. 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 PERS employers, eliminating the previous
methodology of assessing each employer its own rate. The City of Seward now shares in the pooled liability
of the PERS plan. The legislature's cap on local government contribution rates brims stability to Seward's
retirement rates, mitigating the need for significant annual rate increases, although future State legislatures
can eliminate the State subsidy above 22 %. In 1998, taxpayers contributed $194,666 toward General Fund
retirement contributions, and in 2014 the amount was $813,158. This amount was in addition to $951,815
paid by the State on behalf of the General Fund, for a total General Fund PERS cost of $1,764,973 in 2014.
The State of Alaska paid a total of $1,423,759 toward City of Seward's PERS liability in 2014, with
951,815 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, 2013. This is the 20th
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 Program's requirements and we are submitting it to the GFOA to determine its eligibility for
another certificate.
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.
Respectfully submitted,
James Hunt, City Manager
1411
Kristin Erchinger, Finance Dire r
City of Seward, Alaska
GFOA Certificate
LE
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Seward
Alaska
For its Comprehensive Annual
Financial Report
for the Fiscal Year Ended
December 31, 2013
Executive Director /CEO
XIII
City of Seward, Alaska
List of Principal Officials
CITY OF SEWARD
LIST OF PRINCIPAL OFFICIALS
COUNCIL MEMBERS
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.
XIV
Term Expires
Jean Bardarson Mayor 2015
Marianna Keil Vice Mayor 2016
David Squires Council Member 2015
Ristine Casagranda Council Member 2016
Christy Terry Council Member 2015
Dale Butts Council Member 2016
Iris Darling Council Member 2015
ADMINISTRATION
James Hunt City Manager
Ron Long Assistant 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 8t Recreation Director
Valarie Kingsland Library Director
CITY CLERK
Johanna Kinney City Clerk
ATTORNEY
Will Earnhart City Attorney, Wohlforth, Brecht 8t 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.
XIV
City of Seward, Alaska
Organizational Chart
City of Seward
Organization Chart
Cith-ensof
Seward
Mayor &
Council
City Clerk City Manager City Attorney Boards & Commissions
Parks and Community
Public Works Enterprises Finance Library/Museum Recreation Development
Electric Water Sewer
Harbor/
SMIC
xv
Public Sakty
Police/jail Fire/Building
Animal Control Inspection
This page intentionally left blank.
XVI
I Tel: 907 - 278 -8878 3601 C Street, Suite 600
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, 2014, 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 financial statements of the Providence Seward Medical and Care Center ( PSMCC)
which represent 21 % and 100% respectively, of the assets and revenues of the Healthcare Facilities
Enterprise Fund, and 5% and 51% respectively, of the assets, and revenues of the business -type
activities. Those statements 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 financial statements 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 PSMCC
were not audited in accordance with Government Auditing Standards.
BDO USA, LLP, a Delaware Limited liability partnership, is the U.S. member of BDO International Limited, a UK company Limited by guarantee, and forms part of the
international BDO network of independent member firms.
BDO is the brand name 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, 2014, 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.
2
Supplementary and Other Information
Our audit for the year ended December 31, 2014 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 Federal Awards, the Schedule of State Financial
Assistance, the combining and individual fund financial statements and schedules, and the
introductory and statistical sections for the year ended December 31, 2014 are presented for
purposes of additional analysis and are not a required part of the basic financial statements. The
Schedule of Federal Awards and the Schedule of State Financial Assistance are required by Office
of Management and Budget OMB Circular A -133, Audits of States, Local Governments, and Non -
Profit Organizations and the State of Alaska Audit Guide and Compliance Supplement for State
Single Audits, respectively.
The accompanying Schedule of Federal Awards, the 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 audits of the basic financial statements for the year ended
December 31, 2014 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, 2014.
We also previously audited, in accordance with auditing standards generally accepted in the United
States of America, the basic financial statements of City of Seward as of and for the year ended
December 31, 2013 (not presented herein) and have issued our report thereon dated June 18,
2014, which contained 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 individual fund financial statements and schedules for the year
ended December 31, 2013 are presented for purposes of additional analysis and are not a required
part of the basic financial statements. Such information is the responsibility of management and
was derived from and relates directly to the underlying accounting and other records used to
prepare the 2013 financial statements. The individual fund financial statements and schedules
have been subjected to the auditing procedures applied in the audit of the 2013 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 financial
statements or to those financial statements themselves, and other additional procedures in
accordance with auditing standards generally accepted in the United States of America. In our
opinion, the 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.
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.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated
September 21, 2015 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 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.
Do as fi, L b p
Anchorage, Alaska
September 21, 2015
4
CITY OF SEWARD
Management's Discussion and Analysis
December 31, 2014
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, 2014. 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 $170,356,262 at December 31, 2014. Of
this amount, $141,617,269 represents net investment in capital assets, $4,507,696 is restricted
for capital purposes and the remainder of $24,231,297 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
70,565,049. Of this amount, $8,715,566 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 $12,545,271. Governmental activities decreased by
344,408 and business -type activities increased by $12,889,679. The bulk of the increase in
business -type activity net position is due to an $11 million capital contribution associated with
the Harbor Breakwater project.
The City's governmental funds reported combined ending fund balances of $10,217,264,
representing an increase of $649,619 compared to the prior year. While $7,097,354 of the fund
balance is legally available for spending, only $4,698,970 has not already been earmarked for
specific purposes (unassigned fund balance). This reflects a decrease in available unassigned
fund balance of $1,249,489 resulting from a one -time transfer of $1,321,335 from the General
Fund to the Capital Acquisition Fund, representing approximately 50% of the excess revenues
and transfers -in over expenditures and transfers -out from 2012 and 2013.
The total debt of governmental activities decreased by ($74,450) or (1.9 %). This was comprised
of payment reductions on one bond and one lease and an overall increase in accrued leave. The
total debt of business -type activities decreased by ($856,684) or (2.2 %) as a result of routine
bond and loan payments, , an overall reduction of accrued leave balances, and a debt refunding
of prior debts designed to save $309,589 in future cash payments.
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 and deferred outflows,
less liabilities and deferred inflows, 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. 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 for services (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, and which provides more detail than the
government -wide statements.
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
C.
CITY OF SEWARD
Management's Discussion and Analysis, continued
Statement of Revenues, Expenditures, and Changes in Fund Balances provide a reconciliation to
facilitate the comparison between governmental funds and governmental activities.
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 86 -119 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 122 -128 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 129 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 -58 of this
report.
7
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, 2014, the City's assets exceeded liabilities by $170,356,262. A significant portion of the
City's net position (83.1 %) 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, 2014 and 2013
Governmental Business -Type
Activities Activities Total
2014 2013 2014 2013 2014 2013
Current and other assets $12,669,621 11,892,415 32,200,384 27,435,780 44,870,005 39,328,195
Capital assets 63,030,199 64,489,145 117,632,107 106,526,738 180,662,306 171,015,883
Total assets &
deferred outflows 75,699,820 76,381,560 149,832,491 133,962,518 225,532,311 210,344,078
Long -term liabilities
outstanding 4,097,443 4,164,720 39,167,467 39,588,491 43,264,910 43,753,211
Other liabilities 1,037,328 1,307,383 10.873.811 7.472.493 11,911.139 8.779.876
Total liabilities 5,134,771 5,472,103 50,041,278 47.060.984 55.176.049 52.533.087
Net position:
Net investment in capital
assets, 59,407,826 60,739,625 82,209,443 70,569,222 141,617,269 131,308,847
Restricted 2,441,657 26,080 2,066,039 5,440,802 4,507,696 5,466,882
Unrestricted 8.715.566 10.143.752 15.515.731 10.891.510 24.231.297 21.035.262
Total net position $ 70 565 049 70.909.457 99 791 213 86 901 534 170.356.262 157.810.991
At the end of 2014, 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, 2014 and 2013
Governmental Business -Type
Activities Activities Total
2014 2013 2014 2013 2014 2013
Revenues:
Program revenues:
Charges for services $ 1,943,365
Operating grants /
contributions 1,210,430
Capital grants /
contributions 819,241
General revenues:
1,813,742 35,657,480 39,102,440 38,600,845 40,916,182
1,002,434 472,944 170,531 1,683,374 1,172,965
23,034 14,713,420 4,125,258 15,532,661 4,148,292
Sales taxes 4,535,707 4,583,057 4,535,707 4,583,057
Property taxes 989,910 1,261,276 989,910 1,261,276
Payments in lieu of tax 82,490 81,670 82,490 81,670
Other 2.247.147 1,957.725 1.202.873 481.380 3,450.020 2,439.105
Total revenues 11,828,290 10,722,938 53,046,717 43,879,609 64,875,007 54,602,547
Expenses:
General government 3,291,580 2,199,711 3,291,580 2,199,711
Public safety 3,476,471 3,510,922 3,476,471 3,510,922
Public works 1,635,967 1,851,321 1,635,967 1,851,321
Parks & Rec/ Library 2,119,821 1,827,952 2,119,821 1,827,952
Clinic 1,454,476 1,454,476
Unallocated interest 157,984 208,840 157,984 208,840
Alaska Sealife Center 1,279,570 848,940 1,279,570 848,940
Electric 10,255,601 10,590,994 10,255,601 10,590,994
Water 1,175,129 1,087,747 1,175,129 1,087,747
Wastewater 1,117,152 1,015,474 1,117,152 1,015,474
Harbor 3,792,623 3,837,952 3,792,623 3,837,952
SMIC 1,013,658 899,343 1,013,658 899,343
Healthcare Facilities 20,344,929 20,858,042 20,344,929 20,858,042
Parking 214.775 146.239 214,775 146,239
Total expenses 13,415,869 10,447,686 37,913,867 38,435,791 51,329,736 48,883,477
Increase (decrease) in net
assets before transfers (1,587,579) 275,252 14,132,850 5,443,818 12,545,271 5,719,070
Transfers
Change in net position
1.243.171 546,005 (1,243,171) 546 005) - -
344,408) 821,257 12,889,679 4,897,813 12,545,271 5,719,070
Beginning net position 70.909.457 70.088.200 86.901.534 82.003.721 157.810.991 152.091.921
Ending net position $ 70 565 049 70 909 457 99 791 213 86 901 534 170 356 262 157 810 991
CITY OF SEWARD
Management's Discussion and Analysis, continued
Governmental Activities
The City of Seward's net position in Governmental activities decreased by ($344,408). The following
items highlight major components of the decrease in Governmental activities net position:
Overall revenues for governmental activities were up by $1,105,352, or approximately 10.3%
compared with the prior year.
Overall expenditures were up by $2,968,183 or 20.5% primarily due to: the addition of a new
community health center, representing $1,493,709 in total expenditures; an increase of $536,521
in retirement benefit costs; $85,000 in library /museum bond principal; $49,314 in animal control
costs resulting from hiring employees rather than independent contractors; and an increase of
282,757 in health insurance costs.
Operating grants brought in $1.2 million -- approximately $207,996 higher than the prior year —
including $864,354 in new federal funds from the US Dept. of Health, Health Resources and
Services Administration, for the Seward Community Health Center.
Governmental funds experienced net transfers -in of $1,243,171 in 2014 versus net transfers -in
of $546,005 in 2013, including $700,000 from the Hospital Enterprise Fund to the clinic and
245,415 from Commercial Passenger Tax proceeds to the Bus Transportation project.
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, adding the new Seward Community Health Center cli
4,000,000
3,500,000
3,000,000
2,500.000
c
52,000.000
1,500.000
1,000.000
500.000
0 -F -E
Gen'l Govt Public Public Parks & Library Clinic Sealife Unallocated
Safety Works Rec Center interest
Revenues Expenses
nic in 2014:
Business -Type Activities
Business -type activities increased the net position of the City by $12,889,679, including adjustments for
Motor Pool Internal Service Fund activities. As is the case with governmental activities, a substantial
portion (82.4 %) of the $82.2 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 Healthcare Facilities and Water, as
follows: Electric Enterprise Fund by $1,368,075; Harbor Enterprise Fund by $11,789,164;
10
CITY OF SEWARD
Management's Discussion and Analysis, continued
Seward Marine Industrial Center Fund by $1,442,057; and Non -Major Funds by $100,136
comprised of Water Enterprise Fund decrease of ($336,632); Wastewater Enterprise Fund
increase of $378,560; and Parking Enterprise Fund increase of $58,208). Healthcare Facilities
Enterprise Fund net position decreased by ($1,893,635).
Allocations of the Motor Pool Internal Service Fund to the business -type activities increased net
position by $83,882.
The Electric Enterprise Fund experienced earnings from operations of $1,285,921, an increase of
756,376 from the prior year. Operating revenues were higher by $56,737 or 0.51% and
operating costs were down by ($479,007) or (4.7 %). The operating performance was impacted
by net decreases of ($63,043) in salaries and benefits and ($399,563) in services and supplies,
resulting largely from a focus of staff and resources on the Electric Generator and Warehouse
Replacement Project. Salary and benefit costs were lower than the prior year by ($5,397), and
the amount of personnel costs billed out to work orders and in -house projects such as the new
warehouse, was higher by $104,914.
The Electric Enterprise Fund (excluding associated capital projects) experienced an increase in
cash during the year of $809,039, from a prior cash balance of $2,320,341 to a balance of
3,129,380, excluding bond reserves. Including related capital projects and bond reserves, the
ending electric utility- related cash balance is $5,606,511 with $2,477,131 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 resulted in a contribution to the depreciation
reserve fund for the future replacement of capital assets, of $452,117 in 2014. To address the
need to build reserves to address replacement of infrastructure, recent rate increases were
approved as follows: 10% in 2012, 5% in 2013 and 2.6% in 2014. Rates are slated to increase
2.6% in 2015.
The net increase in Seward Marine Industrial Center (SMIC) net position of $1,442,057 results
from an operating loss of ($543,865) -- which includes depreciation expense of $602,368 --
capital grant contributions of $1,731,339, and net transfers -in from the General Fund of
247,438 for a portion of the cost of purchasing a new 330 -Ton Boat Lift. The cash balance in
the SMIC fund is $0.
The net decrease in Water Enterprise Fund net position of ($336,632) is due to transfers -out
totaling $600,748, including a one -time contribution to the Wastewater Fund of $500,000 to
assist with dredging and disposal of sewage lagoons. The water utility ends the year with
1,050,027 in cash (excluding water- related capital projects) representing a significant decrease
of ($1,700,611) (61.8 %) from 2013, reflecting a transfer of $1.3 Million to the Water Major
Repair and Replacement Fund, for future replacement of capital assets. Including related capital
projects, the ending Water utility cash balance is $2,956,785.
The net increase in Harbor Enterprise Fund net position of $11,789,164 is largely due to
recording the federal grant share of the harbor breakwater project totaling $11,386,769, plus
961,178 in Commercial Passenger Vessel Tax proceeds. The enterprise fund experienced a
loss from operations of ($389,818), and is not able to fund replacement of existing assets due to
the need to spend cash on servicing debt ($658,048 in 2014). The Harbor Enterprise Fund
excluding capital projects and reserved cash) ended the year with a cash balance of $1,080,479
down $776,208 from 2013). Including capital project funds and bond reserves, the ending
harbor cash balance is $5,441,863 with $4,361,384 restricted by bond and capital project
covenants.
11
CITY OF SEWARD
Management's Discussion and Analysis, continued
The decrease in net position of the Healthcare Facilities Enterprise Fund of ($1,893,635) is due
largely to booking a loss on the disposal of the old hospital building of $1,246,969 (booking this
loss was not required under previous accounting treatment for general fixed assets of the City,
but is required under enterprise fund accounting). In addition, one -time capital funds in the
amount of $150,000 were provided to the Seward Community Health Center for space
modifications and equipment purchases, plus $700,000 to begin operating a federally qualified
community health center, as a co- applicant grantee with the City of Seward. The Fund ended
the year with earnings from operations of $176,783 and transfers from the City's sales tax of
1,136,752. The financial stability of the Healthcare Facilities Fund continues to depend in
large part, on the census of the long -term care facility 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 $24.08 million.
Other non -major enterprise funds experienced the following: 1) increase in Parking Enterprise
Fund net position of $58,208 and an increase in cash of $71,821 with parking revenues lower
than the prior year by ($18,869) or (6.0 %); and 2) a net increase in Wastewater Enterprise Fund
net position of $378,560, and a decrease in cash (excluding capital projects) of ($570,240) to
123,640.
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 $10,217,264. Of this amount: $367,791 is nonspendable (inventory, prepaid items);
none is currently restricted, $2,126,418 has been committed by the City Council for working capital,
hospital line of credit, and insurance reserves; $3,024,085 has been assigned by the administration
for payment of grant- related projects; and $4,698,970 is unassigned, and legally available for
spending. These 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 $649,619, representing a net decrease in the
General Fund of ($1,228,695) and a combined net increase in other governmental funds of
1,878,314.
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 $198,682 higher than expenditures, and after subtracting net transfers
of $(1,427,377), fund balance decreased by $1,228,695. General Fund revenues came in $246,632
2.2 %) higher than in 2013, and expenditures came in $977,712 or 9.3% 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 2014 is $4,698,970, equal to approximately 3.8
months' reserves, down from 5.8 months' at the end of 2013. The recent decrease in fund balance is
due, primarily to the transfer of $1.53 Million to the Capital Acquisition Fund in 2014, to address
repair and replacement of general government infrastructure in addition to $350,000 to the SMIC
Fund to assist with purchasing a 330 -Ton Boat Lift, and $241,272 to the Harbor Enterprise Fund,
representing a portion of the raw fish tax. The level of General Fund fund balance was increased
significantly when more than $2.0 million in Exxon Valdez oil spill settlement proceeds was
received in 2009 and 2010. In the City's case, an adequate level of fund balance is between $3.72
million and $7.4 million (based on 2014 actuals), which results in the General Fund currently being
on the low -end of the desired level of unassigned fund balance, but within the policy band. There is
a marked improvement in this metric of financial stability over the past few years.
Special Revenue Funds
Special revenue fund projects experienced an aggregate net increase in fund balance of $306,219 to
327,208, with all projects maintaining a positive fund balance, as follows: the newly created
Seward Community Health Center clinic fund with a fund balance of $193,369; Bus Transportation
project with a balance of $131,341; and Two Lakes Park with a balance of $2,498.
Non -Mai or Capital Project Funds
Capital projects experienced an aggregate net increase in fund balance of $1,572,095 to $2,441,657,
with all projects maintaining a positive fund balance, as follows: the Capital Acquisition Fund with a
fund balance of $2,434,445; Kawabe Park with a balance of $5,929; and Fire Department
Equipment Fund with a balance of $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 $98 million, with $82.2 million invested in capital
assets net of related debt, leaving unrestricted net position of approximately $13.7 million, and restricted
net position of $2.1 million.
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 cost
13
CITY OF SEWARD
Management's Discussion and Analysis, continued
of replacing vehicles into each program's annual budget, rather than to incur costs as one -time expenses
in the year of the vehicle /equipment replacement. Budgets are not able to sustain annual contributions
to replace all vehicles and equipment, so one -time funds may also be requested for vehicle /equipment
replacement. The balance of unrestricted cash in the motor pool at year -end is $736,050 reflecting a
decrease of ($531,801) or (41.9 %). In 2014, the Motor Pool loaned $1.029 million to the SMIC Fund
for the purchase of a 330 -Ton Boat Lift. The Fund also has loans receivable from the Healthcare
Facilities Enterprise Fund in the amount of $861,518 related to the payoff of prior hospital PERS
liabilities. The Harbor Enterprise Fund owes the Motor Pool Fund $53,952 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 2014 is $475,070.
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 $911,586 related primarily to State
payments on behalf of the City for PERS of $897,728, reduced jail contract amount
74,649) and various general government grants totaling $88,507.
Expenditures were increased by $1.2 million during the year. Budget amendments included
the following: $897,728 related to the State payments on behalf of the City for public
employee's retirement system costs; $193,358 increased health insurance costs; $4,817 for
historic preservation grant; $30,400 small tools and equipment for DMV move and volunteer
fire equipment grant; $4,064 for floodplain management training grant; $24,289 for Division
of Forestry grant for local firefighter assistance; and $41,305 for fire radios grant.
Transfers to other funds increased by a total of $1,635,878 due to $1,321,335 being
transferred to the Capital Acquisition Fund, representing approximately 50% of the 2012 and
2013 surplus of revenues and transfers -in over expenditures and transfers -out in the General
Fund, and $350,000 to the SMIC Enterprise Fund to assist with the purchase of a 330 -Ton
replacement boat lift.
There was no change from the original transfers -in to the General Fund of $1,928,684, to the
final transfers -in balance. The bulk of transfers -in to the General Fund come from enterprise
fund payments -in- lieu -of -tax ($1,296,563) which are based on 8% of operating revenues in
the enterprise funds. Other transfers -in include land lease revenues which the General Fund
shares 50150 with the Harbor and SMIC Enterprise Funds ($241,936), reimbursement for
lobbying costs ($70,185), ambulance contribution from CPV tax proceeds ($20,000) 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 $464,106 or 4.1% higher than budget primarily
due to sales tax revenues exceeding budget by $190,156; an unbudgeted insurance recovery of $83,276;
bed tax higher by $36,981; building permits higher by $17,514; unbudgeted project management fees of
29,490; campground fees higher by $57,908; museum admissions higher by $12,630; and investment
earnings higher by $27,657. General Fund expenditures were under budget by $425,146 or 3.6 %. Most
of this variance was due to $100,161 in budgetary debt service savings, where repayments to the Electric
Fund for past SMIC deficit contributions, were booked as transfers between funds rather than
expenditures. Additional savings included $201,680 in salary savings related, in part, to vacancy factor
in the police, jail, parks and finance departments; $30,428 in legal cost savings; $51,735 in savings for
heating fuel and gasoline; $22,465 in unspent promotions; and $57,138 in unspent capital equipment
funds.
General Fund Actual Highlights
General Fund revenues exceeded expenditures by $198,682, and after transfers between funds were
accounted for, there was a net decrease in fund balance of ($1,228,695) to $7,448,399.
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2014, the City had $180,662,306 invested in capital assets net of accumulated
depreciation, representing an overall increase of $9,646,423 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, 2014, the City had total debt outstanding of $42,117,453. Of this amount, $3.4
million represents outstanding general obligation bonds backed by the full faith and credit of the City for
construction of the library /museum. An additional $35.1 million represents: revenue bonds backed by
operating revenues from the harbor enterprise fund ($5.3 million), electric enterprise fund ($5.6
million), and long -term care facility ($24.1 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
2014 2013 2014 2013 2014 2013
Land and improvements 5,510 5,432 30,170 17,484 35,680 22,916
Buildings 45,768 47,275 22,691 25,116 68,459 72,391
Improvements other
than buildings 7,329 7,266 51,551 53,031 58,880 60,297
Machinery and equipment 65,836 4,348 6,655 5,565 72,491 9,913
Construction in progress 259 168 6,565 5,331 6,824 5,499
Total net capital assets 63 030 64 489 117 632 106 527 180 662 171 016
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, 2014, the City had total debt outstanding of $42,117,453. Of this amount, $3.4
million represents outstanding general obligation bonds backed by the full faith and credit of the City for
construction of the library /museum. An additional $35.1 million represents: revenue bonds backed by
operating revenues from the harbor enterprise fund ($5.3 million), electric enterprise fund ($5.6
million), and long -term care facility ($24.1 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 second year of its Biennial Budget for the period January 1, 2014 through
December 31, 2015. The budget was prepared with the goal of maintaining current service levels and
making capital improvements to sidewalks, replacement of A,B,C,D and S -floats in the harbor,
completing construction of the new electric warehouse, constructing a new water storage tank, dredging
the Lowell Point and SMIC sewer lagoons, constructing a new breakwater at SMIC, reaching full
staffing levels at the Seward Community Health Center, 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, given the General Fund's
reliance on visitor revenues.
The General Fund's primary source of revenue, sales tax, is budgeted to increase by 0.8% over 2014
Budget. Given the timing of the budget passage in 2013, this equates to a reduction of approximately
154,200) or (3.4 %) from 2014 actuals. The recent growth in economic activity, combined with
sustained low fuel prices, makes it very likely the City will exceed this target. The second largest source
of revenues is administrative fee reimbursement from enterprise funds, and those fees are recorded at
budgeted levels. Property tax revenues are budgeted to come in 5.2% higher than 2014 actuals.
However, given the past three years' actual property tax revenues, it is unlikely that those projections
will be met, and are estimated to fall short by $30,000 from 2015 budget. Bed tax revenues were
budgeted to increase 1% over 2014 budget estimates, but the 2015 budget is $33,131 or 7.8% lower than
2014 actuals, making it highly likely that those targets will be exceeded in 2015.
On the General Fund cost side, expenditures were budgeted 0.3% (or $28,656) higher than 2014 budget,
and $765,837 or 6.7% lower than 2014 actuals. Part of this perceived reduction in expenses from 2014
comes from the fact that the General Fund original budget does not attempt to estimate the amount of
State of Alaska contributions on- behalf of the City for public employees' retirement system
contributions which, in 2014, totaled $897,728 in the General Fund alone. Once those amounts are
known and the budget is amended for those actual contributions, both the budget and actuals will be
considerably higher than the original budget. The 2015 General Fund budget is balanced with no
anticipated utilization of reserves.
16
Governmental Business -Type
Activities Activities Total
2014 2013 2014 2013 2014 2013
General obligation bonds 3,395 3,480 3,395 3,480
Revenue bonds 35,065 36,945 35,065 36,945
Capital leases 31 31
Loans 3,041 1,968 3,041 1,968
Compensated absences 457 415 159 208 616 623
Total outstanding debt 3 852 3 926 38 265 39 122 42 117 43 049
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 second year of its Biennial Budget for the period January 1, 2014 through
December 31, 2015. The budget was prepared with the goal of maintaining current service levels and
making capital improvements to sidewalks, replacement of A,B,C,D and S -floats in the harbor,
completing construction of the new electric warehouse, constructing a new water storage tank, dredging
the Lowell Point and SMIC sewer lagoons, constructing a new breakwater at SMIC, reaching full
staffing levels at the Seward Community Health Center, 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, given the General Fund's
reliance on visitor revenues.
The General Fund's primary source of revenue, sales tax, is budgeted to increase by 0.8% over 2014
Budget. Given the timing of the budget passage in 2013, this equates to a reduction of approximately
154,200) or (3.4 %) from 2014 actuals. The recent growth in economic activity, combined with
sustained low fuel prices, makes it very likely the City will exceed this target. The second largest source
of revenues is administrative fee reimbursement from enterprise funds, and those fees are recorded at
budgeted levels. Property tax revenues are budgeted to come in 5.2% higher than 2014 actuals.
However, given the past three years' actual property tax revenues, it is unlikely that those projections
will be met, and are estimated to fall short by $30,000 from 2015 budget. Bed tax revenues were
budgeted to increase 1% over 2014 budget estimates, but the 2015 budget is $33,131 or 7.8% lower than
2014 actuals, making it highly likely that those targets will be exceeded in 2015.
On the General Fund cost side, expenditures were budgeted 0.3% (or $28,656) higher than 2014 budget,
and $765,837 or 6.7% lower than 2014 actuals. Part of this perceived reduction in expenses from 2014
comes from the fact that the General Fund original budget does not attempt to estimate the amount of
State of Alaska contributions on- behalf of the City for public employees' retirement system
contributions which, in 2014, totaled $897,728 in the General Fund alone. Once those amounts are
known and the budget is amended for those actual contributions, both the budget and actuals will be
considerably higher than the original budget. The 2015 General Fund budget is balanced with no
anticipated utilization of reserves.
16
CITY OF SEWARD
Management's Discussion and Analysis, continued
There are no proposed changes to tax rates in 2015 with the mill rate remaining at 3.12 mills, the City
sales tax rate remaining at 4.0 %, and the hotel /motel bed tax rate remaining at 4.0 %. The harbor tariff
includes a 2.6% rate increase in 2015, 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 $139,103 toward replacement of aging harbor infrastructure. The electric
tariff rates will increase by 2.6% in 2015 to address significant capital infrastructure needs, including
completion of the warehouse construction. The Electric Fund will contribute $86,560 toward
replacement of aging infrastructure, a reduction from the prior year, but an improvement over recent
years in which little funding was available for capital needs. The water tariff will increase rates 2.6% in
2015 and the department will construct a new water storage tank with grant funds, to mitigate summer
water storage capacity concerns. The Water Fund will be unable to contribute funding toward
replacement of aging infrastructure due to the start of debt service reimbursement for the Third Avenue
Water Line project. The wastewater tariff will increase rates 5.2% in 2015 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
36,596 toward replacement of aging infrastructure. In the future, enterprise fund tariffs are expected to
provide annual incremental rate increases equal to the consumer price index, enabling them to keep pace
with the increased cost of goods and services, and 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, 2014 Activities Activities Total
Assets
Cash and investments 9,858,347 10,128,907 19,987,254
Receivables, net of allowance for doubtful accounts:
5,454,000
488,083 1,136,111
Taxes 541,551 541,551
Accounts 61,832 7,237,520 7,299,352
Assessments, due within one year 5,678 5,678
Grants, shared revenues, and loans 639,524 2,148,794 2,788,318
Accrued interest 102,986 102,986
Other 506,803 506,803
Prepaid items 358,741 5,569 364,310
Inventories 9,050 1,013,539 1,022,589
Restricted cash and investments 11,887,145 11,887,145
Other assets 118,000 118,000
Assessments, due after one year 1,851 1,851
Internal balances 1,097,590 1,097,590)
Capital assets not being depreciated 5,768,182 36,734,672 42,502,854
Capital assets being depreciated, net of depreciation 57,262,017 80,897,435 138,159,452
Total Assets $ 75,699,820 $ 149,588,323 $ 225,288,143
Deferred Outflows of Resources
Unamortized deferred loss on refunding - 244,168 244,168
Total Assets and Deferred Outflows of Resources $ 75,699,820 $ 149,832,491 $ 225,532,311
Liabilities
Accounts payable
Payable to Providence Health and Services - Washington
Accrued payroll and related liabilities
Accrued interest
Other accrued liabilities
Funds held in trust
Customer deposits
Unearned revenue
Other liabilities
358,637 986,432 1,345,069
5,454,000 5,454,000
488,083 1,136,111 1,624,194
51,717 427,032 478,749
27,431 27,431
95,982 95,982
257,912 257,912
15,478 2,500,324 2,515,802
112,000 112,000
Noncurrent liabilities:
5,134,771 50,041,278 55,176,049
Due within one year:
59,407,826
2,441,657
8,715,566
82,209,443
2,066,039
15,515,731
141,617,269
4,507,696
24,231,297
Annual leave 119,049 45,358 164,407
Notes payable
75,699,820
129,244 129,244
Bonds payable 90,000 1,685,000 1,775,000
Due in more than one year:
Annual leave 356,021 113,808 469,829
Notes payable 2,911,973 2,911,973
Bonds payable, including bond premium 3,532,373 34,282,084 37,814,457
Total Liabilities 5,134,771 50,041,278 55,176,049
Net Position
Net investment in capital assets
Restricted for capital projects, bond retirement, £t commercial passenger vessel tax
Unrestricted
59,407,826
2,441,657
8,715,566
82,209,443
2,066,039
15,515,731
141,617,269
4,507,696
24,231,297
Total Net Position 70,565,049 99,791,213 170,356,262
Total Liabilities and Net Position 75,699,820 149,832,491 225,532,311
See accompanying notes to basic financial statements.
20
City of Seward, Alaska
Statement of Activities
Year Ended December 31, 2014
Governmental Activities
Program Revenues
Fees,
2,466,099)
Fines Et Operating Capital
Changes for Grants Et Grants Et
Functions: Expenses Services Contributions Contributions
Governmental Activities
2,853,723)
2,466,099) 2,466,099)
General government 3,291,580 282,318 155,539 $ -
Public safety 3,476,471 937,659 72,713
Public works 1,635,967 20,383 101,242 411,900
Parks and recreation 1,315,282 663,298 17,728 -
Library 804,539 39,707 9,261 334,628
Clinic 1,454,476 62,306 864,354 -
Sea Life Center 1,279,570
Unallocated interest 157,984
219,505
Parking
Exhibit A -2
Net (Expense) Revenue and
Changes in Net Position
Business -
Governmental type
Activities Activities Total
2,853,723) $ 2,853,723)
2,466,099) 2,466,099)
1,102,442) 1,102,442)
634,256) 634,256)
420,943) 420,943)
527,816) 527,816)
1,279,570) 1,279,570)
157,984) 157,984)
Total Governmental
Activities 13,415,869 2,005,671 1,148,124 819,241 (9,442,833) - (9,442,833)
Business -type Activities
2,407,141
129,353 129,353
37,489)
Electric 10,255,601 11,433,004 174,276 1,055,462
Water 1,175,129 1,227,631 76,851
Wastewater 1,117,152 1,016,890 62,773
Harbor 3,792,623 3,212,432 158,044 11,707,114
SMIC 1,013,658 469,793 1,731,339
Healthcare Facilities 20,344,929 18,004,351 1,000 219,505
Parking 214,775 293,379
2,407,141 2,407,141
129,353 129,353
37,489) 37,489)
11,284,967 11,284,967
1,187,474 1,187,474
2,120,073) 2,120,073)
78,604 78,604
Total Business -type
Activities 37,913,867 35,657,480 472,944 14,713,420 - 12,9293977 12,929,977
Total Primary
Government $51,329,736 $ 37,663,151 $ 1,621,068 $ 15,532,661 $ (9,442,833) $ 12,9293977 $ 3,487,144
General Revenues
Taxes:
Sales taxes 4,535,707 4,535,707
Property taxes 989,910 989,910
Other taxes 421,981 421,981
Payment in lieu of taxes 82,490 82,490
Grants and entitlements not
restricted to a specific purpose 1,684,132 961,178 2,645,310
Insurance recovery 5,520 5,520
Investment income 141,034 236,175 377,209
Transfers 1,243,171 1,243,171)
Total General Revenues and Transfers 9,098,425 40,298) 9,058,127
Change in Net Position 344,408) 12,889,679 12,545,271
Net Position, beginning 70,909,457 86,901,534 157,810,991
Net Position, ending $ 70,565,049 $ 99,791,213 $ 170,356,262
See accompanying notes to basic financial statements.
21
Exhibit B -1
City of Seward, Alaska
Governmental Funds
Balance Sheet
Major Fund Total
Nonmajor Governmental
December 31, 2014 General Funds Funds
Assets
Cash and investments 5,804,899 2,842,328 $ 8,647,227
Receivables, net of allowance for doubtful accounts:
Inventory 9,050
Taxes 541,551 541,551
Accounts 61,832 61,832
Grants and shared revenues 1,101 638,423 639,524
Accrued interest 54,789 54,789
Prepaid items 341,995 16,746 358,741
Inventory 9,050 9,050
Due from other funds 1,532,519 1,532,519
Total Assets $ 8,347,736 $ 3,497,497 $ 11,845,233
Liabilities
Accounts payable $ 267,588 $ 91,049 $ 358,637
Accrued payroll and related liabilities 477,893 10,190 488,083
Accrued liabilities 27,431 - 27,431
Funds held in trust 95,982 - 95,982
Due to other funds - 627,393 627,393
Unearned revenue 15.478 - 15.478
Total Liabilities 884,372 728,632 1,613,004
Deferred Inflows
Delinquent property taxes 14,965 14,965
Total Liabilities and Deferred Inflows 899.337 728,632 1.627.969
Fund Balances
Nonspendable:
Inventory 9,050 9,050
Prepaid items 341,995 16,746 358,741
Committed:
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Assigned:
Parks and recreation 2,498 2,498
General government 307,964 307,964
Capital projects 2,441,657 2,441,657
Insurance 171,966 171,966
Miscellaneous 100,000 100,000
Unassigned 4,698,970 4,698,970
Total Fund Balances 7,448,399 2,768,865 10,217,264
Total Liabilities, Deferred Inflows, and Fund Balances $ 8,347,736 $ 3,497,497 $ 11,845,233
See accompanying notes to basic financial statements.
22
Exhibit B -2
City of Seward, Alaska
Reconciliation of Governmental Funds Balance Sheet
to Statement of Net Position
December 31, 2014
Total fund balances for governmental funds
Total net position reported for governmental activities in the
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
Accrued leave
Unamortized bond premium
Total long term liabilities
Total Net Position of Governmental Activities
23
10,217,264
Internal
Governmental Service
5,509,589 $
258,593
70,147, 968
22,395,774 -
8,849,577 6,162,868
46,284,161) (4,010,009)
60,877,340 $ 2,152,859 63,030,199
14,965
3,129,570
2,152,859)
475,070
1,451,781
Internal
Governmental Service
3,395,000) $
51,717)
475,070)
227,373)
3,674,090) $ (475,070) (4,149,160)
70,565,049
See accompanying notes to basic financial statements.
Fvkihif R -Z
City of Seward, Alaska
Governmental Funds
Statement of Revenues, Expenditures and Change in Fund Balances
Year Ended December 31, 2014
Major Fund
General
Nonmajor
Funds
Total
Govern -
mental
Funds
Revenues
Taxes 6,027,632 6,027,632
Licenses and permits 185,925
25,275
185,925
Intergovernmental 2,611,218 1,310,640 3,921,858
Charges for services 2,650,995 2,650,995
Fines and bails 14,073
12,860
14,073
Investment income 80,658 80,658
Other 124,873 554,231 679,104
Total Revenues 11,695,374 1,864,871 13,560,245
Expenditures
Current:
General government 2,952,577 277,177 3,229,754
Public safety 3,455,033 25,275 3,480,308
Public works 1,574,388 85,254 1,659,642
Parks and recreation 1,337,371 26,201 1,363,572
Library/Museum 559,652 12,860 572,512
Clinic 1,454,476 1,454,476
Debt service:
Principal payments 85,000 85,000
Retirement benefits 1,373,271 1,373,271
Interest and other costs 159,400 159,400
Capital outlay:
General government 316,524 316,524
Public works 411,900 411,900
Public safety 47,438 47,438
Total Expenditures 11,496,692 2,657,105 14,153,797
Excess of Revenues over
under) Expenditures 198,682 792,234) 593,552)
Other Financing Sources (Uses)
Transfers in 1,955,575 3,047,825 5,003,400
Transfers out 3,382,952) 377,277) 3,760,229)
Net Other Financing Sources (Uses) 1,427,377) 2,670,548 1,243,171
Net Change in Fund Balances 1,228,695) 1,878,314 649,619
Fund Balances, beginning 8,677,094 890,551 9,567,645
Fund Balances, ending 7,448,399 2,768,865 10,217,264
See accompanying notes to basic financial statements.
24
City of Seward, Alaska
Reconciliation of the Change in Fund Balances of Governmental Funds
to Statement of Activities
Year Ended December 31, 2014
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 of $2,435,840 exceeded
capital outlays of $1,201,052.
Revenues in the Statement of Activities that do not provide current
financial resources are not reported as revenues in the funds. This
is the increase 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:
Accrued interest payable $ 1,416
Amortization of bond premium 10,827
Principal payments on long -term debt 85,000
An internal service fund is used by the City 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
25
Exhibit B -4
649,619
1,234,788)
2,456
97,243
141,062
344,408)
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, 2014 Budget Budget Actual Variance
Revenues
10,702,199 11,921,838 11,496,692 425,146
Taxes 5,834,149 5,834,149 6,027,632 193,483
Licenses and permits 163,350 163,350 185,925 22,575
Intergovernmental 1,636,610 2,548,196 2,611,218 63,022
Charges for services 2,600,873 2,582,923 2,650,995 68,072
Fines and bails 9,000 9,000 14,073 5,073
Investment income 53,000 53,000 80,658 27,658
Other 22,700 40,650 124,873 84,223
Total Revenues 10,319,682 11,231,268 11,695,374 464,106
Expenditures
10,702,199 11,921,838 11,496,692 425,146
Current:
General government 2,880,415 3,090,890 2,952,577 138,313
Public safety 3,317,552 3,556,315 3,455,033 101,282
Public works 1,637,293 1,656,124 1,574,388 81,736
Parks and recreation 1,251,166 1,326,689 1,337,371 10,682)
Library 545,822 573,988 559,652 14,336
Debt service:
36,333) 1,980,264) 1,228,695) 751,569
Principal payments 195,784 195,784 85,000 110,784
Retirement benefits 714,767 1,362,648 1,373,271 10,623)
Interest and other costs 159,400 159,400 159,400
26
Total Expenditures 10,702,199 11,921,838 11,496,692 425,146
Excess of Revenues over
under) Expenditures 382,517) 690,570) 198,682 889,252
Other Financing Sources (Uses)
Transfers in 1,928,684 1,928,684 1,955,575 26,891
Transfers out 1,582,500) 3,218,378) 3,382,952) 164,574)
Net Other Financing Sources (Uses) 346,184 1,289,694) 1,427,377) 137,683)
Net Change in Fund Balances 36,333) 1,980,264) 1,228,695) 751,569
Fund Balances, beginning 8,677,094
Fund Balances, ending 7,448,399
See accompanying notes to basic financial statements.
26
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. 2014 Electric Harbor SMIC Facilities Funds Funds Funds
Assets
8,531 45,358
400,000 460,000 825,000 1,685,000
Current Assets
26,254 147,012 72,898 246,164
212,634 36,078 9,200 - 257,912
567,677
Cash and investments 3,129,380 1,080,479 4,055,188 1,863,860 10,128,907 1,211,120
Receivables:
5,245,000 4,885,000 23,250,000 33,380,000
Accounts 959,002 155,496 38,131 6,935,000 244,900 8,332,529
Accrued interest 48,197
Assessments 2,144 3,534 5,678
Interfund loans 19,552 19,552 226,613
Grants and loans 466,607 375,073 1,307,114 2,148,794
Other receivables 35,812 470,795 196 506,803
Less allowance for doubtful accounts 43,155) 23,834) 1,017,000) 11,020) 1,095,009)
Prepaid expenses 5,569 5,569
Inventory 920,239 93,300 1,013,539
Total Current Assets 5,493,006 1,589,358 1,345,245 10,443,983 2,194,770 21,066,362 1,485,930
Noncurrent Assets
Restricted cash and investments 2,477,131 4,361,384 1,973,360 3,075,270 11,887,145
Assessments receivable, net of current portion 1,851 1,851
Other assets 118,000 118,000
Interfund loans, net of current portion 296,195 296,195 1,717,944
Property, plant and equipment:
Total capital assets not being depreciated 2,472,900 18,356,353 15,227,531 677,888 36,734,672
Totalcapitalassets being depreciated 57,271,587 33,588,623 41,874,439 36,731,829 21,739,668 191,206,146 6,162,868
Less accumulated depreciation 37,151,823) 14,981,892) 28,688,691) 16,218,430) 13,267,875) 110,308,711) 4,010,009)
Total Noncurrent Assets 25,367,841 41,324,468 28,413,279 22,604,759 12,224,951 129,935,298 3,870,803
Total Assets 30,860,847 42,913,826 29,758,524 33,048,742 14,419,721 151,001,660 5,356,733
Deferred Outflows
Unamortized deferred loss on refunding 4,904 239,264 - - - 244,168 -
Total Assets and Deferred Outflows $ 30,865,751 $ 43,153,090 $ 29,758,524 $ 33,048,742 $ 14,419,721 $ 151,245,828 $ 5,356,733
Liabilities
Current Liabilities
Accounts payable
Payable to Providence Health and Services - Washington
Due to contractual agencies
Accrued payroll and related liabilities
Accrued interest
Current portion:
Accrued annual leave
Bonds payable
Notes payable
Interfund loans
Customer deposits
Unearned revenue
Due to other funds
487,954 $ 90,409 $ 207,852 $ 190,000 $ 10,217 $ 986,432 $
5,454,000 - 5,454,000
64,819 57,594 - 990,000 23,698 1,136,111
23,553 31,919 - 350,765 20,795 427,032
17,700 19,127 8,531 45,358
400,000 460,000 825,000 1,685,000
129,244 129,244
26,254 147,012 72,898 246,164
212,634 36,078 9,200 - 257,912
567,677 39,647 1,893,000 2,500,324
905,126 - 905,126
119,049
Total Current Liabilities 1,206,660 1,289,058 1,308,837 9,775,663 192,485 13,772,703 119,049
Noncurrent Liabilities, net of current portion
2,066,039 2,066,039
Accrued annual leave 33,975 45,810 271 33,752 113,808 356,021
Bonds payable 5,245,000 4,885,000 23,250,000 33,380,000
Unamortized bond premium 33,420 547,862 320,802 902,084
Notes payable 1,201,196 1,710,777 2,911,973
Other liabilities 112,000 112,000
Interfund loans 27,698 882,075 1,104,367 2,014,140
Total Noncurrent Liabilities 5,312,395 6,707,566 882,346 24,787,169 1,744,529 39,434,005 356,021
Total Liabilities 6,519,055 7,996,624 2,191,183 34,562,832 1,937,014 53,206,708 475,070
Net Position
Net investment in capital assets 17,597,059 30,798,488 28,413,279 1,909,043) 7,309,660 82,209,443 2,152,859
Restricted for commercial passenger vessel tax 2,066,039 2,066,039
Unrestricted (deficit) 6,749,637 2,291,939 845,938) 394,953 5,173,047 13,763,638 2,728,804
Total Net Position 24,346,696 35,156,466 27,567,341 1,514,090) 12,482,707 98,039,120 4,881,663
Total Liabilities and Net Position 30,865,751 43,153,090 29,758,524 33,048,742 14,419,721 5,356,733
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds 1,752,093
Net Position of business -type activities 99,791,213
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
Enterprise Funds
Major Funds Total Internal
Healthcare Nonmajor Enterprise Service
Year Ended December 31, 2014 Electric Harbor SMIC Facilities Funds Funds Funds
Operating Revenues
Charges for services $11,097,045 $ 3,212,432 $ 469,793 $ 18,004,351 $ 2,537,900 $35,321,521 $ -
Vehicle rental and interfund
charges - - - - 1,018,070
Total Operating Revenues 11,0973045 332123432 469,793 18,004,351 2,537,900 35,321,521 13018,070
Operating Expenses
Salaries and employee benefits 1,372,102 1,142,099 110,734 11,399,000 870,115 14,894,050 435,180
Services and supplies 5,837,658 850,298 171,597 3,354,176 701,463 10,915,192 815
Administration 864,237 366,221 128,959 873,173 464,989 2,697,579 -
Depreciation 1,737,127 1,243,632 602,368 2,2013219 449,813 6,234,159 438,402
Total Operating Expenses 9,811,124 3,602,250 1,013,658 17,827,568 2,486,380 34,740,980 874,397
Earnings (Loss) from Operations 1,285,921 (389,818) (543,865) 176,783 51,520 580,541 143,673
Nonoperating Revenues (Expenses)
1,055,462 11,707,114 1,731,339 219,505
Intergovernmental - PERS on- behalf 174,276 158,044 139,624 471,944 -
Investment income 139,150 44,690 1,625 104 50,606 236,175 60,376
Salary credits - work orders 208,130 208,130 -
Supply credits - work orders 127,829 127,829 -
Insurance recovery 5,520 5,520 21,006
Interest expense 286,592) 207,946) 1,270,392) 28,082) (1,793,012) (111)
Commercial passenger vessel tax
22,978,621
961,178
26,125,284
961,178 -
Loss on disposal of capital assets
4,656,719
1,246,969) 1,246,969)
Grant revenue 1,000 1,000
Other expenses 216,788) 216,788)
Net Nonoperating Revenues (Expenses) 146,005 955,966 7,145 (235163257) 162,148 (1,244,993) 813271
Earnings (Loss) before Contributions
and Transfers 1,431,926 566,148 (536,720) (2,339,474) 213,668 (664,452) 224,944
Capital contributions 1,055,462 11,707,114 1,731,339 219,505 14,713,420
Transfers in 110,784 241,272 350,000 1,136,752 598,010 2,436,818
Transfers out 1,230,097) 725,370) 102,562) 910,418) 711,542) 3,679,989)
Change in Net Position 1,368,075 11,789,164 1,442,057 1,893,635) 100,136 12,805,797 224,944
Net Position, beginning 22,978,621 23,367,302 26,125,284 379,545 12,382,571 4,656,719
Net Position, ending $24,346,696 $ 35,156,466 $27,567,341 $ (135143090) $ 12,482,707 $ 4,881,663
Adjustment to reflect the consolidation of internal
service fund activities related to enterprise funds 83,882
Change in net position of business -type activities
28
12,889,679
See accompanying notes to basic financial statements.
Exhibit C -3
City of Seward, Alaska
Proprietary Funds
Statement of Cash Flows
Net cash flows from (for) operating activities 2,967,345 99,757 (8,548) 3,179,418 616,163 6,854,135 641,945
Cash Flows from (for) Noncapital Financing Activities
Transfers in 110,784 241,272 350,000 1,136,752 - 1,838,808
Transfers out (1,230,097) (725,370) (102,562) (910,418) (711,542) (3,679,989)
Increase in due to other funds - 905,126 - 905,126
Net cash flows from (for) noncapital financing activities (1,119,313) (484,098) 1,152,564 226,334 (711
Cash Flows from Capital and Related Financing Activities
Enterprise Funds
Principal payments on long -term debt
Major Funds
445,000)
1,252,817)
785,000)
Total Internal
31,320)
Interest payments on long -term debt 291,536) 213,048)
Healthcare Nonmajor Enterprise Service
Year Ended December 31, 2014 Electric Harbor SMIC Facilities Funds Funds Funds
Cash Flows from (for) Operating Activities
Payment to refunding bond escrow agent 3,937,576) 3,937,576)
Receipts from customers and users 10,988,797 $ 2,781,538 $ 468,481 15,836,556 2,551,956 32,627,328 $
Payments to suppliers 6,152,133) 1,360,735) 237,028) 338,965) 765,148) 8,854,009) 815)
Payments to employees 1,005,682) 954,825) 111,042) 11,445,000) 718,656) 14,235,205) 375,310)
Payments for interfund services used 863,637) 366,221) 128,959) 873,173) 451,989) 2,683,979)
Receipts from vehicle rentals and interfund charges
Insurance recovery 5,520
1,018,070
Net cash flows from (for) operating activities 2,967,345 99,757 (8,548) 3,179,418 616,163 6,854,135 641,945
Cash Flows from (for) Noncapital Financing Activities
Transfers in 110,784 241,272 350,000 1,136,752 - 1,838,808
Transfers out (1,230,097) (725,370) (102,562) (910,418) (711,542) (3,679,989)
Increase in due to other funds - 905,126 - 905,126
Net cash flows from (for) noncapital financing activities (1,119,313) (484,098) 1,152,564 226,334 (711
Cash Flows from Capital and Related Financing Activities
Principal payments on long -term debt 380,000) 445,000)
1,252,817)
785,000) 128,667) 1,738,667) 31,320)
Interest payments on long -term debt 291,536) 213,048) 1,300,165) 29,530) 1,834,279) 208)
Issuance of refunding bonds, including premium
140,124
3,966,233
1,625 104 50,606
3,966,233
Payment to refunding bond escrow agent 3,937,576) 3,937,576)
1,029,087)
Transfers in
18,576
598,010 598,010
75,571
Acquisition of property, plant and
158,700 39,075 1,625 104 50,606 250,110 889,110)
equipment 1,160,342) 1,864,099) 2,977,501) 227,857) 244,644) 6,474,443) 214,244)
Capital contributions received 1,275,502 1,994,827 690,077 220,505 19,382 4,200,293
Insurance recovery 5,520 5,520 21,006
Increase in due to other funds
5,606,511 $ 5,441,863 6,028,548 4,939,130
Issuance of interfund loan 1,029,087 1,029,087
Interfund loan payments 24,885) 69,262) 94,147)
Commercial passenger vessel tax receipts
3,129,380 $
613,445
4,055,188 1,863,860
613,445
1,211,120
Decrease in due to contracted agencies
2.477.131
406,000)
3.075.270
406,000)
Net cash flows from (for) capital and related
financing activities 556,376) 89,897 1,252,817) 2,567,779) 214,551 4,072,524) 224,766)
Cash Flows from (for) Investing Activities
Investment income received 140,124 39,075 1,625 104 50,606 231,534 64,406
Interfund loan disbursements 1,029,087)
Interfund loan receipts 18,576 18,576 75,571
Net cash flows from (for) investing activities 158,700 39,075 1,625 104 50,606 250,110 889,110)
Net Increase (Decrease) in Cash
and Investments 1,450,356 255,369) 107,176) 838,077 169,778 2,095,666 471,931)
Cash and Investments, beginning 4,156,155 5,697,232 107,176 5,190,471 4,769,352 19,920,386 1,683,051
Cash and Investments, ending 5,606,511 $ 5,441,863 6,028,548 4,939,130 22,016,052 1,211,120
Reconciliation of Cash and Investments
to Statement of Net Position
Current assets 3,129,380 $ 1,080,479 4,055,188 1,863,860 10,128,907 1,211,120
Restricted assets 2.477.131 4.361.384 1.973.360 3.075.270 11.887.145
Total Cash and Investments $ 5,606,511 $ 5,441,863 $ - $ 6,028,548 $ 4,939,130 $ 22,016,052 $ 1,211,120
See accompanying notes to basic financial statements.
29
Exhibit C -3, continued
City of Seward, Alaska
Proprietary Funds
Statement of Cash Flows, continued
See accompanying notes to basic financial statements.
30
Enterprise Funds
Major Funds Total Internal
Healthcare Nonmajor Enterprise Service
Year Ended December 31, 2014 Electric Harbor SMIC Facilities Funds Funds Funds
Reconciliation of Earnings (Loss) from Operations
to Net Cash from (for) Operating Activities
Earnings(loss)from operations 1,285,921 $ 389,818) 543,865) $ 176,783 51,520 580,541 $ 143,673
Adjustments to reconcile earnings (loss)
from operations to net cash flows from (for)
operating activities:
Depreciation 1,737,127 1,243,632 602,368 2,201,219 449,813 6,234,159 438,402
Other nonoperating expenses 216,788) 216,788)
Other nonoperating revenues - workorder reimbursements:
Salaries 208,130 208,130
Supplies 127,829 127,829
Noncash expense- PIERS on- behalf 174,276 158,044 139,624 471,944
Increase (decrease) in allowance for
doubtful accounts 4,459 838) 298,000 279 301,900
Increase) decrease in assets:
Receivables 90,488) 1,307) 3,146) 4,338,795) 13,777 4,419,959)
Prepaid expenses 5,569) 5,569)
Inventory 46,735) 42,952) 89,687)
Other assets 188,650 188,650
Increase (decrease) in liabilities:
172,612) 510,437) 65,431) 130,439) 7,733) 886,652)
Other payables 2,957,000 2,957,000
Accrued payroll and related liabilities 25,281 36,285 308) 46,000) 12,997 28,255
Accrued annual leave 41,267) 7,055) 1,162) 49,484) 59,870
Customer deposits 22,219) 1,890 9,200 11,129)
Unearned revenue 430,639) 7,366) 1,873,000 1,434,995
Net Cash from (for) Operating Activities 2,967,345 $ 99,757 8,548) $ 3,179,418 616,163 6,854,135 $ 641,945
Noncash Capital and Related Financing Activities
Purchase of equipment included in accounts payable 101,041 $ 194,925 $ 295,966 $
Purchased equipment through issuance of notes payable 1,201,196 1,201,196 $
Increase in land from non -cash capital contribution 11,386,763 11,386,763 $
See accompanying notes to basic financial statements.
30
Exhibit D -1
City of Seward, Alaska
Fiduciary Fund
Statement of Fiduciary Net Position
Teen Council
December 31, 2014 Agency Fund
Assets
Cash and investments
Other assets
49,884
150
Total Assets $ 50,034
Liabilities
Accounts payable $ 1,423
Other accrued liabilities 193
Due to Teen Council 48,418
Total Liabilities $ 50,034
See accompanying notes to basic financial statements.
31
City of Seward, Alaska
Notes to Basic Financial Statements
December 31, 2014
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 GASB 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 GASB 61 for inclusion as a component unit. However, many activities associated with
the clinic are reported in the SCHC Special Revenue Fund as the City is the named grantee on the
primary operating grant.
The hospital and long -term care facilities (the PSMCC) are owned by the City of Seward. The
facilities are managed by Providence Health 8t 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 properly 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.
Prior Years Amounts
In certain schedules, prior year amounts have been presented for purposed comparison. Some
amounts reported for the prior year have been reclassified to conform to the current year
presentation
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 20 -40 years
Infrastructure 50 years
System infrastructure 20 -50 years
Machinery and equipment 3 -8 years
Improvements other than buildings 3 -40 years
Accrued Annual Leave
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, 2014. 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 mill 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, 2014:
Fiduciary Fund
Government -Wide Statement of
Statement of Net Fiduciary
Position Net Position Totals
Cash and investments $19,987,254 $ 49,884 $ 20,037,138
Restricted cash and investments 11,887,145 - 11,887,145
31,874,399 $ 49,884 $ 31,924,283
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, 2014 are as follows:
Healthcare Facilities Fund $ 1,973,360
Electric Fund 677,911
Harbor Fund 690,198
Total Restricted for Bond Retirement $ 3,341,469
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 $ 3,671,186
Electric Fund 1,799,220
Water Fund 1,906,758
Wastewater Fund 1,168, 512
Total Restricted for Capital Projects $ 8,545,676
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, 2014 are as follows:
Investment Maturities (in Years)
Less than 1
Investment Fair Value year 1 to 5 years Over 5 years
Certificates of deposit $ 5,831,087 $ $ 5,587,249 $ 243,838
U.S. government agencies 1,338,638 1,338,638 -
U.S. treasury SLGS 247,300 - 247,300
U.S. Government Bonds 8,011,829 8,011,829 -
Total Subject To Interest Rate Risk 15,428,854 $ $14,937,716 $ 491,138
Pooled investments 9,089,962
Money market account 3,368,131
Total investments 27,886,947
Bank deposits 4,037,336
Total Cash And Investments $ 31,924,283
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, 2014 was as follows:
Total assets not being depreciated 5,600,561 180,272 12,651 5,768,182
Capital assets being depreciated:
Buildings 69, 977,179 170,789 70,147, 968
Improvements other than buildings 21,971,826 423,948 22,395,774
Machinery and eaUioment 14.359.507 652.938 15.012.445
Total assets being depreciated 106, 308, 512 1,247,675 - 107, 556,187
Less accumulated depreciation for:
Buildings 22, 702,198 1,677,888 24, 380, 086
Improvements other than buildings 14,706,226 360,750 15,066,976
Machinery and eaUioment 10.011.504 835.604 10.847.108
Total accumulated depreciation 47,419,928 2,874,242 - 50,294,170
Total capital assets being depreciated,
net 58,888,584 (1,626,567 57,262,017
Governmental Activity Capital Assets,
net $ 64,489,145 $ (1,446,295) $ 12,651 $ 63,030,199
The ending balances include $6,162,868 and $4,010,009 of equipment cost and accumulated
depreciation, respectively, related to the Motor Pool Internal Service Fund.
41
Balance Balance
January 1, Additions and Deletions and December 31,
Governmental Activities 2014 Reclassifications Reclassifications 2014
Capital assets not being depreciated:
Land and land improvements 5,432,289 77,300 5,509,589
Construction in Droc!ress 168.272 102.972 12.651 258.593
Total assets not being depreciated 5,600,561 180,272 12,651 5,768,182
Capital assets being depreciated:
Buildings 69, 977,179 170,789 70,147, 968
Improvements other than buildings 21,971,826 423,948 22,395,774
Machinery and eaUioment 14.359.507 652.938 15.012.445
Total assets being depreciated 106, 308, 512 1,247,675 - 107, 556,187
Less accumulated depreciation for:
Buildings 22, 702,198 1,677,888 24, 380, 086
Improvements other than buildings 14,706,226 360,750 15,066,976
Machinery and eaUioment 10.011.504 835.604 10.847.108
Total accumulated depreciation 47,419,928 2,874,242 - 50,294,170
Total capital assets being depreciated,
net 58,888,584 (1,626,567 57,262,017
Governmental Activity Capital Assets,
net $ 64,489,145 $ (1,446,295) $ 12,651 $ 63,030,199
The ending balances include $6,162,868 and $4,010,009 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
Balance Balance
January 1, Additions and Deletions and December 31,
Business type Activities 2014 Reclassifications Reclassifications 2014
Capital assets not being depreciated:
Land and land improvements $ 17,483,769 $ 12,685,872 $ - $ 30,169,641
Construction in progress 5,330,600 3,739,501 2,505,070 6,565,031
Total assets not being depreciated 22,814,369 16,425,373 2,505,070 36,734,672
Capital assets being depreciated:
Buildings 38,105, 986 268,626 1,245,896 37,128, 716
Infrastructure 893,035 77,571 970,786
Improvements other than buildings 132,601,385 2,472,883 135,074,268
Machinery and equipment 16,771,631 2,186,143 925,218 18,032,556
Total assets being depreciated 188, 372, 037 5,005,223 2,171,114 191, 206, 326
Less accumulated depreciation for:
Buildings 12,989, 541 1,447,754 14,437, 295
Infrastructure 300,235 75,242 375,477
Improvements other than buildings 80,162,744 3,955,737 84,118,481
Machinery and equipment 11,207,148 755,426 585,116 11,377,458
Total accumulated depreciation 104,659,668 6,234,159 585,116 110,308,711
Total capital assets being
depreciated, net 83,712,369 (1,228,936) 1,585,998 80,897,435
Business Type Capital Assets, net $ 106,526,738 $ 15,196,437 $ 4,091,068 $ 117,632,107
Depreciation for the year ended December 31, 2014 was charged to the functions as follows:
Depreciation Internal
Excluding Internal Service Fund Total
Governmental Activities Service Fund Allocation Depreciation
General government 250,047 94,376 344,423
Public safety 174,019 145,410 319,429
Public works 234,492 182,990 417,482
Parks and recreation 73,430 15,626 89,056
Library 242,854 242,854
Sea Life Center 1,460,998 1,460,998
Total Governmental Activities $ 2,435,840 $ 438,402 $ 2,874,272
42
City of Seward, Alaska
Notes to Basic Financial Statements
Depreciation
Excluding
Internal
Business -type Activities Service Fund
Electric 1,737,127
Water 202,548
Wastewater 222,789
Harbor 1,243,632
SMIC 602,368
Parking 24,476
Healthcare facilities 2,201,219
SMIC Enterprise Fund 350,000
Total Business -Type Activities 6,234,159
5. Interfund Receivables, Payables and Transfers
A schedule of interfund balances and transfers as of and for the year ended December 31, 2014,
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 the SMIC Enterprise Fund 905,126
Due to the General Fund from nonmajor governmental funds 627,393
Total Due From Other Funds 1,532,519
Transfers
From General Fund to:
SMIC Enterprise Fund 350,000
Harbor Enterprise Fund 241,272
Electric Enterprise Fund 110,784
Healthcare Facilities Enterprise Fund 1,136,752
Nonmajor governmental funds 1,544,144
Total transfers from General Fund 3,382,952
From Harbor Enterprise Fund to:
General Fund 381,945
Nonmajor governtmental funds 245,415
Nonmajor enterprise fund 98,010
Total transfers from Harbor Enterprise Fund 725,370
43
City of Seward, Alaska
Notes to Basic Financial Statements
Transfers, continued
From Water Enterprise Fund to:
General Fund $ 100,748
Nonmajor enterprise fund 500,000
Total transfers from Water Enterprise Fund 600,748
From nonmajor governmental funds to General Fund 29,429
From Electric Enterprise Fund to General Fund 1,230,097
From SMIC Enterprise Fund to General Fund 102,562
From nonmajor enterprise fund to General Fund 110,794
From nonmajor special revenue funds to nonmajor capital project funds 347,848
From Healthcare Facilities Enterprise Fund to nonmajor governmental fund 910,418
Total Transfers To Other Funds $ 7,440,218
The City has four 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 $1,973,360 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 2012 this loan was reassigned to the Healthcare Facilities Fund.
In 2014, the Motor Pool Fund loaned $1,029,087 to the SMIC Fund for the purpose of purchasing a 330 -
ton Boat Lift. The loan is to be repaid in seven annual installments of $147,012 for a total amount of
1,029,087.
Amounts outstanding at December 31, 2014 were are follows:
Payable from the Healthcare Facilities Enterprise Fund to:
Motor Pool Internal Service Fund $ 861,518
Electric Enterprise Fund 315,747
Total payable from the Healthcare Facilities Enterprise Fund 1,177,265
Payable from the Harbor Enterprise Fund to Motor Pool Internal Service Fund 53,952
Payable from the SMIC Enterprise Fund to Motor Pool Internal Service Fund 1,029,087
Total Interfund Loans Payable $ 2,260,304
44
City of Seward, Alaska
Notes to Basic Financial Statements
6. Long Term Liabilities
The following is a summary of long -term liability transactions of the City for the year ended
December 31, 2014:
Balance at Due
Balance at December 31, Within
January 1, 2014 Additions Retirements 2014 One Year
Governmental Activities
General obligation bonds -
3,480,000 2012 General
Obligation bonds, due in
annual installments of
90,000 to $240,000, plus
interest at 4.0% to 5.0%
through September 1, 2036 $ 3,480,000 $
Loaders capital lease
obligation, due in monthly
installments of $7,895,
including interest at 3.97%
through April 21, 2014 31,320
85,000 $ 3,395,000 $ 90,000
31,320
Accrued leave 415,200 549,488 489,618 475,070 119,049
Total Governmental Activities
Long -Term Liabilities $ 3,926,520 $ 549,488 $ 605,938 3,870,070 $ 209,049
Plus unamortized bond
premium 227,373
4,097,443
Liquidation of govermental 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.
45
City of Seward, Alaska
Notes to Basic Financial Statements
46
Balance at Due
Balance at December 31, Within
Business -type Activities January 1, 2014 Additions Retirements 2014 One Year
Revenue bonds:
6,000,000 2008 Electric
revenue bonds, due in annual
installments of $125,000 to
375,000, plus interest at
4.0% to 6.0% through June 1,
2038 5,490,000 120,000 5,370,000 125,000
27,000,000 2008 Series One
long term care facility bonds,
due in annual installments of
825,000 to $1,875,000, plus
interest at 4.0% to 5.1
through April 1, 2033 24,860,000 785,000 24,075,000 825,000
4,500,000 2006 harbor
revenue bonds, due in annual
installments of $210,000 to
215,000, plus interest at
4.0% through June 1, 2016 3,370,000 2,945,000 425,000 210,000
1,965,000 2007 refunding
harbor revenue bonds, due in
annual installments of
175,000 to $235,000, plus
interest at 4.0% to 5.0%
through June 1, 2021 1,615,000 175,000 1,440,000 175,000
2,290,000 2005 refunding
electric revenue bonds, due
in one final installment of
275,000, plus interest at
5.0% on June 1, 2015 535,000 260,000 275,000 275,000
46
Revenue bonds, continued:
1,500,000 2005 harbor
revenue bonds, due in final
installment of $75,000, plus
interest at 5.0% on June 1,
2015
3,405,000 2014 refunding
harbor revenue bonds, due in
annual installments of
65,000 to $400,000, plus
interest at 1.25% to 5.00%
through April 1, 2026
Notes payable:
26,231 sewer note payable
to State of Alaska
Department of Environmental
Conservation, due in final
installment of $1,333, plus
interest at 1.5% and retired
in 2014
City of Seward, Alaska
Notes to Basic Financial Statements
Balance at Due
Balance at December 31, Within
January 1, 2014 Additions Retirements 2014 One Year
1,075,000 $
1,333
1,000,000 $ 75,000 $ 75,000
3,405,000
1,333
3,405,000
2,652,849 water note
payable to State of Alaska
Department of Environmental
Conservation, due in annual
installments of $156,844,
including interest at 1.5%
through April 1, 2027 1,967,355 127,334 1,840,021 129,244
1,201,196 harbor note
payable to U.S. Department of
Defense, payment terms are
yet to be established 1,201,196 - 1,201,196 -
Accrued leave 208,379 176,981 226,194 159,166 45,358
Total Business type Activities
Long -Term Liabilities 39,122,067 $ 4,783,177 $ 5,639,861 38,265,383 $ 1,859,602
Plus unamortized bond
premium 902,084
39,167,467
47
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
2015 90,000 $ 155,150 245,150
2016 95,000 151,550 246,550
2017 100,000 146,800 246,800
2018 105,000 141,800 246,800
2019 110,000 136,550 246,550
2020 -2024 635,000 600,500 1,235,500
2025 -2029 790,000 444,050 1,234,050
2030 -2034 1,000,000 235,825 1,235,825
2035 -2036 470,000 30,175 500,175
3,395,000 $ 2,042,400 $ 5,437,400
Revenue Bonds Business type Activities
Year ending December 31, Principal Interest Total
2015 1,685,000 1,622,311 3,307,311
2016 1,465,000 1,560,630 3,025,630
2017 1,525,000 1,500,825 3,025,825
2018 1,580,000 1,436,388 3,016,388
2019 1,650,000 1,369,226 3,019,226
2020 -2024 8,625,000 5,703,889 14,328,889
2025 -2029 8,795,000 3,583,003 12,378,003
2030 -2034 8,355,000 1,285,391 9,640,391
2035 -2038 1,385,000 150,282 1,535,282
35,065,000 $ 18,211,945 $ 53,276,945
Notes Payable Business type Activities
Year ending December 31, Principal Interest Total
2015 129,244 $ 27,600 156,844
2016 131,182 25,662 156,844
2017 133,150 23,694 156,844
2018 135,147 21,697 156,844
2019 137,175 19,669 156,844
2020 -2024 717,361 66,859 784,220
2025 -2027 456,762 13,771 470,533
1,840,021 $ 198,952 $ 2,038,973
48
City of Seward, Alaska
Notes to Basic Financial Statements
Advance Refundin
In 2014, the City issued $3,405,000 in harbor revenue bonds with interest rates ranging from 1.25%
to 5 %, the proceeds of which were used to partially advance refund $930,000 of outstanding 2005
harbor revenue bonds with an interest rate of 5% and $2,745,000 of outstanding 2006 harbor
revenue bonds with an interest rate of 5 %. The net proceeds of $3,937,576, (including a $561,233
premium and existing debt service reserve funds of $462,610, and after a payment of $48,369 in
underwriting fees and other issuance costs and establishment of new debt service reserve funds of
442,898) were deposited in an irrevocable trust with an escrow agent to provide funds for the
future debt service payment on the refunded bonds. As a result, $930,000 of the 2005 harbor
revenue bonds and $2,745,000 of the 2006 harbor revenue bonds are considered defeased and the
liability for that portion of the bonds has been removed from the statement of net position.
Although the advance refunding resulted in the recognition of an accounting loss of $209,039 for
the year ended December 31, 2014, the City in effect reduced its aggregate debt service
payments by $309,589 over the next 12 years and obtained an economic gain (difference between
the present values of the old and new debt service payments) of $272,363.
At the time of refunding, the 2005 bonds carried a call date of June 30, 2015 and the 2006 bonds
carried a call date of June 30, 2016.
At December 31, 2014 defeased debt outstanding totaled $3,675,000. Subsequent to year end the
2005 bonds were called leaving an undefeased balance of $2,745,000.
Authorized but unissued debt
Subsequent to year end, the City authorized the issuance of electric revenue refunding bonds in
the amount of $6,200,000 and long term care facility revenue refunding bonds in the amount of
25,900,000 to refund $5,370,000 of electric revenue bonds and $23,250,000 of long term care
facility revenue bonds. Due to adverse market conditions following the authorization,
management believes it is unlikely that these bonds will be refunded before the authorization
expires.
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, 2014 as
follows:
Long -term care facility bond reserves $ 1,973,360
Electric bond reserves 677,911
Harbor bond reserves 690,198
49
City of Seward, Alaska
Notes to Basic Financial Statements
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 2014. The bond coverage calculations are as follows:
Electric Revenue Bonds
Total revenues, excluding grants $ 11,236,195
Total operating expenses, excluding depreciation (7,738,038)
Available for debt service $ 3,498,157
Debt service payments:
Principal $ 380,000
Interest 291,536
Total Debt Service Payments $ 671,536
Debt Coverage 5.21
Harbor Revenue Bonds
Total revenues, excluding grants 3,257,122
Total operating expenses, excluding depreciation 2,358,618)
Available For Debt Service 898,504
Debt service payments:
Principal 445,000
Interest 213,048
Total Debt Service Payments 658,048
Debt Coverage 1.37
50
City of Seward, Alaska
Notes to Basic Financial Statements
8. 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:
General Nonmajor
Fund Funds Totals
Nonspendable:
Inventory 9,050 $ 9,050
Prepaid items 341,995 16,746 358,741
307,964 307,964
Total nonspendable 351,045 16,746 367,791
171,966
Miscellaneous 100,000
Committed:
100,000
Capital projects
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
2,752,119 3,024,085
Total committed 2,126,418 2,126,418
Assigned:
Park and recreation 2,498 2,498
General government 307,964 307,964
Insurance 171,966 171,966
Miscellaneous 100,000 100,000
Capital projects 2,441,657 2,441,657
Total assigned 271,966 2,752,119 3,024,085
Unassigned 4,698,970 4,698,970
Total Fund Balances 7,448,399 $ 2,768,865 10,217,264
9. 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 (3.26% for
pension and 3.49% for healthcare). Police and firefighters are required to contribute 7.5% of their
annual covered salary (3.62% for pension and 3.88% for healthcare).
Employer and Other Contribution Rates
There are several contribution rates associated with the pension and healthcare contributions and
related liabilities. These amounts are calculated on an annual basis.
Employer Effective Rate: This is the required funding rate for participating employers. The
contractual rate is statutorily capped at 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 Board. This rate is actuarially determined to calculate annual funding requirements
of the Plan, without regard to the statutory rate cap.
State Contribution Rate: This is the rate actually paid by the State as an on- behalf payment.
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 State fiscal year FY15 (six months ended December 2014), the rate uses
an 8.00% pension discount rate and a 4.90% healthcare discount rate. Additionally, the GASB 43
rate disregards all future Medicare Part D payments.
52
City of Seward, Alaska
Notes to Basic Financial Statements
From 2008 through June 30, 2014, legislation provided that the State of Alaska contribute the
difference between the ARM Board adopted rate and the employer effective (statutory) rate.
These additional contributions are recognized by each employer as an on- behalf payment and are
reflected as revenue and expense/ expenditures within the financial statements.
Effective beginning July 1, 2014, the State passed additional legislation appropriating a one -time
funding contribution to the Plan in the amount of $1 billion. This $1 billion is allocated among all
participating employers and will be recorded as an on- behalf payment. This amount significantly
exceeds the required on- behalf payment established as the difference between the ARM Board
rate and the employer effective rate. In addition, prior to July 1, 2015, there are no constraints
or restrictions on the actuarial cost method or other assumptions used in the ARM Board valuation.
Effective July 1, 2015, the Legislature requires the ARM Board to adopt employer contribution
rates for past service liabilities using a level percent of pay method over a closed 25 year term
which ends in 2039, resulting in lower ARM Board rates. As a result of these changes, the State
fiscal year 2015 on- behalf payment will be significantly higher than under previous calculations,
and in State fiscal year 2016, the on- behalf amounts will be lower than under previous
calculations.
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, 2014 were determined as part of the June
30, 2011 actuarial valuation. Rates for the six months ended December 31, 2014 (State FY15)
were determined in the June 30, 2012 valuation.
Employer ARM Board State
Effective Adopted Contribution GASB 43
January to June 2014 Rate Rate Rate Rate
Pension 10.64% 18.38% 7.74% 27.94%
Postemployment healthcare 11.36% 17.30% 5.94% 52.55%
Total contribution rate 22.00% 35.68% 13.68% 80.49%
July to December 2014
Pension
Postemployment healthcare
12.54%
9.46%
25.09%
18.94%
42.41% 33.05%
55.07%
Total contribution rate 22.00% 44.03% 42.41% 88.12%
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 has also made additional contributions to the Plan as noted above. In accordance
with the provisions of GASB Statement Number 24, these additional contributions are considered
on- behalf payments and are recorded as revenue and expense/ expenditures in these financial
statements. However, because the City is not statutorily obligated for these payments, the
State's contributions, in the amounts of $1,423,759, $689,220, and $625,512 for 2014, 2013, and
2012, respectively, have been excluded from pension and OPEB cost as shown below.
53
City of Seward, Alaska
Notes to Basic Financial Statements
Annual Total City
Annual OPEB Benefit Contri- % of TBC
Year Ended December 31, Pension Cost Cost Cost (TBC) butions Contributed
2014 $ 503,381 $ 379,743 $ 883,124 $ 883,124 100%
2013 460,434 433,439 893,873 893,873 100%
2012 405,911 517,664 923,575 923,575 100%
10. 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. 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:
Police /Fire
January to June 2014 Other Tier IV Tier IV
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%
July to December 2014
Individual account 5.00% 5.00%
Retiree medical plan 1.66% 1.66%
Occupational death and disability benefits 0.22% 1.06%
Total Contribution Rate 6.88% 7.72%
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, 2014, for actual remittance, this
amount is calculated as a flat rate for each full time or part -time employee per pay period and
approximates $1,961 per year for each full -time employee, and $1.26 per hour for part -time
employees.
54
City of Seward, Alaska
Notes to Basic Financial Statements
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 Defined Benefit Unfunded Liability (DBUL) payment,
this amount is intended to mitigate reduced contributions in the DB plan due to the declining payroll
base that resulted from the creation of the DC plan.
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, 2014 were $193,451 and $149,443, respectively.
11. 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 $6.07 per compensable hour per the terms of a negotiated agreement
expiring December 31, 2014. Per the terms of a negotiated agreement, the City's contribution
rate for permanent employees is $1,000 per employee per month through June 30, 2014 and
1,050 per employee per month through June 30, 2015. The total City contribution for the year
ended December 31, 2014 was $72,669. Employees are not required to contribute.
12. 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.
13. 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.
55
City of Seward, Alaska
Notes to Basic Financial Statements
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
31, 2014.
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.
14. 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.
Subsequent to year end, the City was served legal notice of a claim in excess of $350,000 from a
supplier, following contract termination. The City disputes this claim. It is too early in the legal
process to determine any outcome, therefore no liability has been reflected in these financial
statements related to this matter.
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
56
City of Seward, Alaska
Notes to Basic Financial Statements
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.
15. New Accounting Pronouncements
The Governmental Accounting Standards Board has passed several new accounting standards with
upcoming implementation dates as follows. Management has not fully evaluated the potential
effects of these statements, but believes that GASB Statements 68 and 75 will result in the biggest
reporting change. Actual impacts have not yet been determined:
GASB 68 - Accounting and Financial Reporting for Pensions - Effective for year -end December 31,
2015 - This statement contains changes to the accounting and reporting standards for employer
participants in government sponsored pension plans.
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.
GASB 72 - Fair Value Disclosures - Effective for year -end December 31, 2016 - This statement
defines fair value and describes how fair value should be measured, what assets and liabilities
should be measured at fair value, and what information about fair value should be disclosed in the
notes to the financial statements.
GASB 73 - Accounting and Financial Reporting for Pensions and Related Assets That Are Not within
the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67
and 68 - Effective for year -end December 31, 2016 - establishes requirements for those pensions
and pension plans that are not administered through a trust meeting specified criteria (in other
words, those not covered by Statements 67 and 68.
GASB 74 - Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans -
Effective for year -end December 31, 2017 - This statement addresses the financial reports of
defined benefit OPEB plans that are administered through trusts that meet specified criteria.
GASB 75 - Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions -
Effective for year -end December 31, 2017 - This statement contains changes to the accounting and
reporting standards by employer participants in government sponsored Other postemployment
benefit plans.
GASB 76 - The Hierarchy of Generally Accepted Accounting Principles for State and Local
Governments - Effective for year -end December 31, 2016 - This statement reduces the GAAP
hierarchy to two categories of authoritative GAAP from the four categories under GASB Statement
No. 55.
57
City of Seward, Alaska
Notes to Basic Financial Statements
GASB 77 - Tax Abatement Disclosures - Effective for year -end December 31, 2016, with earlier
application encouraged - This statement requires local governments to provide financial
disclosures relating to tax abatements affecting the government. This includes information about
abatement agreements entered into directly by the government, including conditions and criteria
under which taxes can be abated, the type and dollar amount of the tax. In addition, the
statement requires disclosure of tax abatements issued by other governments that affect the local
government's revenue recognition and reporting.
58
Supplementary Information
59
1
Exhibit E -1
City of Seward, Alaska
Nonmajor Governmental Funds
Combining Balance Sheet
Special Capital
December 31, 2014 Revenue Projects Total
Assets
Cash and investments 347,551 2,494,777 2,842,328
Grants receivable 627,393 627,393
Prepaid items 16,746 16,746
Other receivables 11,030 11,030
Total Assets 1,002,720 2,494,777 3,497,497
Liabilities
Accounts payable 37,929 53,120 91,049
Accrued compensation 10,190 10,190
Due to other funds 627,393 627,393
Total Liabilities 675,512 53,120 728,632
Fund Balances
Nonspendable - Prepaid items 16,746 16,746
Assigned:
Parks and recreation 2,498 2,498
General government 307,964 307,964
Capital projects 2,441,657 2,441,657
Total Fund Balances 327,208 2,441,657 2,768,865
Total Liabilities and Fund Balances 1,002,720 2,494,777 3,497,497
1
Exhibit E -2
City of Seward, Alaska
Nonmajor Governmental Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances
Year Ended December 31, 2014
Special
Revenue
Capital
Projects Total
Revenues
Intergovernmental $ 961,748 348,892 1,310,640
Local grants 21,576 470,349 491,925
Other 62,306 62,306
Total Revenues 1,045,630 819,241 1,864,871
Expenditures
Current:
General government 121,512 155,665 277,177
Public works 85,254 85,254
Public safery 25,275 25,275
Parks and recreation 23,606 2,595 26,201
Library/Museum 12,860 12,860
Clinic 1,454,476 1,454,476
Capital outlay:
General government 39,233 277,291 316,524
Public works 411,900 411,900
Public safety 47,438 47,438
Total Expenditures 1,724,081 933,024 2,657,105
Excess of Revenues over
under) Expenditures (678,451) (113,783) (792,234)
Other Financing Sources (Uses)
Transfers in 1,014,099 2,033,726 3,047,825
Transfers out (29,429) (347,848) (377,277)
Net Other Financing Sources (Uses) 984,670 1,685,878 2,670,548
Net Change in Fund Balances 306,219 1,572,095 1,878,314
Fund Balances, beginning 20,989 869,562 890,551
Fund Balances, ending $ 327,208 $ 2,441,657 $ 2,768,865
61
Exhibit F -1
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Net Position
December 31, 2014 Water Wastewater Parking Total
Assets
Accrued annual leave 15,508 18,244
Current Assets
33,752
Notes payable 1,710,777
Cash and investments 1,050,027 123,640 $ 690,193 1,863,860
Receivables:
2,176 7,718 323 $ 10,217
Accounts 156,674 88,226 - 244,900
Assessments 3,534 3,534
Other 196
Unrestricted
196
Less allowance for doubtful accounts 7,050) 3,970) 11,020)
Inventory 93,300 93,300
Total Current Assets 1,296,681 207,896 690,193 2,194,770
Noncurrent Assets
Restricted cash and investments 1,906,758 1,168,512 - 3,075,270
Property, plant and equipment, net of
accumulated depreciation 4,643,297 4,418,777 87,607 9,149,681
Total Assets 7,846,736 5,795,185 777,800 $ 14,419,721
Accrued annual leave 15,508 18,244
Liabilities
33,752
Notes payable 1,710,777
Current Liabilities
1,710,777
Total Liabilities
Accounts payable 2,176 7,718 323 $ 10,217
Accrued payroll and related liabilities 9,863 13,835 23,698
Accrued interest 20,795 20,795
Current portion:
7,309,660
Unrestricted 3,150,233
Accrued annual leave 4,864 3,667 8,531
Notes payable 129,244 129,244
Total Current Liabilities 166,942 25,220 323 192,485
Noncurrent Liabilities, net of current portion
Accrued annual leave 15,508 18,244 33,752
Notes payable 1,710,777 1,710,777
Total Liabilities 1,893,227 43,464 323 1,937,014
Net Position
Net investment in capital assets 2,803,276 4,418,777 87,607 7,309,660
Unrestricted 3,150,233 1,332,944 689,870 5,173,047
Total Net Position 5,953,509 5,751,721 777,477 12,482,707
Total Liabilities and Net Position 7,846,736 5,795,185 777,800 14,419,721
62
63
Exhibit F -2
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Revenues, Expenses and Change in Net Position
Year Ended December 31, 2014 Water Wastewater Parking Total
Operating Revenues - charges for services $ 1,227,631 1,016,890 293,379 2,537,900
Operating Expenses
Salaries and employee benefits 381,246 364,932 123,937 870,115
Services and supplies 295,875 366,915 38,673 701,463
Administration 268,904 164,020 19,065 451,989
Rents and leases 13,000 13,000
Depreciation 202,548 222,789 24,476 449,813
Total Operating Expenses 1,148, 573 1,118, 656 219,151 2,486, 380
Earnings (Loss) from Operations 79,058 101,766) 74,228 51,520
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 76,851 62,773 139,624
Investment income 38,268 4,888 7,450 50,606
Interest expense 28,071) 11) 28,082)
Net Nonoperating Revenues (Expenses) 87,048 67,650 7,450 162,148
Earnings (Loss) before Transfers 166,106 34,116) 81,678 213,668
Transfers in 98,010 500,000 598,010
Transfers out 600,748) 87,324) 23,470) 711,542)
Change in Net Position 336,632) 378,560 58,208 100,136
Net Position, beginning 6,290,141 5,373,161 719,269 12,382,571
Net Position, ending 5,953,509 5,751,721 777,477 12,482,707
63
Exhibit F -3
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Cash Flows
Year Ended December 31, 2014 Water Wastewater Parking Total
Cash Flows from Operating Activities
Receipts from customers and users 1,221,510 1,037,067 293,379 2,551,956
Payments to suppliers 340,235) 362,451) 62,462) 765,148)
Payments to employees 300,726) 293,919) 124,011) 718,656)
Payments for interfund services used 268,904) 164,020) 19,065) 451,989)
Net cash flows from operating activities 311,645 216,677 87,841 616,163
Cash Flows for Noncapital Financing Activities -
Transfers out (600,748) (87,324) (23,470) (711,542)
Cash Flows from (for) Capital and Related Financing Activities
Principal payments on notes payable 127,334) 1,333) 128,667)
Interest payments on notes payable 29,510) 20) 29,530)
Transfers in 98,010 500,000 598,010
Acquisition of property, plant and equipment 97,913) 146,731) 244,644)
Capital contribution received 19,382 19,382
Net cash flows from (for) capital and
related financing activities (137,365) 351,916 214,551
Cash Flows from Investing Activities
Investment income received 38,268 4,888 7,450 50,606
Net Increase (Decrease) in Cash and Investments (388,200) 486,157 71,821 169,778
Cash and Investments, beginning 3,344,985 805,995 618,372 4,769,352
Cash and Investments, ending $ 2,956,785 $ 1,292,152 $ 690,193 $ 4,939,130
Reconciliation of Cash and Investments
to Statement of Net Position
Current assets $ 1,050,027 $ 123,640 $ 690,193 $ 1,863,860
Restricted assets 1,906,758 1,168,512 - 3,075,270
Total Cash and Investments $ 2,956,785 $ 1,292,152 $ 690,193 $ 4,939,130
64
Exhibit F -3, continued
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Cash Flows, continued
Year Ended December 31, 2014 Water Wastewater Parking Total
Reconciliation of Earnings (Loss) from Operations to Net
Cash from Operating Activities
Earnings (loss) from operations
Adjustments to reconcile earnings (loss) from operations
to net cash flows from operating activities:
Depreciation
Noncash expense - PERS on- behalf
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
79,058 $ (101,766) $ 74,228 $ 51,520
202,548 222,789 24,476 449,813
76,851 62,773 139,624
288 9) 279
6,409) 186 6,223)
20,000 20,000
42,952) 42,952)
1,408) 4,464 10,789) (7,733)
4,552 8,519 74) 12,997
883) 279) 1,162)
Net Cash from Operating Activities $ 311,645 $ 216,677 $ 87,841 $ 616,163
65
Exhibit G -1
City of Seward, Alaska
Internal Service Funds
Combining Statement of Net Position
Noncurrent Assets
Compensated
Interfund loans, net of current portion
Motor Annual
1,717,944
December 31, 2014 Pool Leave Total
Assets
6,162,868 6,162,868
Current Assets
4,010,009) 4,010,009)
Cash and investments 736,050 475,070 1,211,120
Receivables:
3,870,803 3,870,803
Accrued interest 48,197 48,197
Interfund loans 226,613 226,613
Total Current Assets 1,010,860 475,070 1,485,930
Noncurrent Assets
Interfund loans, net of current portion 1,717,944 1,717,944
Property, plant and equipment:
Equipment and vehicles 6,162,868 6,162,868
Less accumulated depreciation 4,010,009) 4,010,009)
Net property, plant and equipment in service 2,152,859 2,152,859
Total Noncurrent Assets 3,870,803 3,870,803
Total Assets 4,881,663 475,070 5,356,733
Liabilities
Current Liabilities
Accrued annual leave - current portion 119,049 119,049
Noncurrent Liabilities, net of current portion
Accrued annual leave 356,021 356,021
Total Liabilities 475,070 475,070
Net Position
Net investment in capital assets 2,152,859 2,152,859
Unrestricted 2,728,804 2,728,804
Total Net Position 4,881,663 4,881,663
Total Liabilities and Net Position 4,881,663 475,070 5,356,733
67
Exhibit G -2
City of Seward, Alaska
Internal Service Funds
Combining Statement of Revenues, Expenses and Change in Net Position
Compensated
Motor Annual
Year Ended December 31, 2014 Pool Leave Total
Operating Revenues
Vehicle rental and interfund charges 582,890 435,180 1,018,070
Operating Expenses
Salaries and employee benefits 435,180 435,180
Supplies and maintenance 815 815
Depreciation 438,402 438,402
Total Operating Expenses 439,217 435,180 874,397
Earnings from Operations 143,673 143,673
Nonoperating Revenues (Expenses)
Investment income 60,376 60,376
Insurance recovery 21,006 21,006
Interest expense 111) 111)
Net Nonoperating Revenues (Expenses) 81,271 81,271
Change in Net Position 224,944 224,944
Net Position, beginning 4,656,719 4,656,719
Net Position, ending 4,881,663 4,881,663
67
Exhibit G -3
City of Seward, Alaska
Internal Service Funds
Combining Statement of Cash Flows
Compensated
Motor Annual
Year Ended December 31, 2014 Pool Leave Total
Cash Flows from Operating Activities
Receipts from vehicle rentals and interfund charges 582,890 435,180 1,018,070
Payments to suppliers 815) 815)
Payments to employees 375,310) 375,310)
Net cash flows from operating activities 582,075 59,870 641,945
Cash Flows for Capital and Related Financing Activities
Interest payments on capital leaase obligations 208) 208)
Acquisition of equipment and vehicles 214,244) 214,244)
Insurance recovery 21,006 21,006
Principal payments on capital lease obligations 31,320) 31,320)
Net cash flows from capital and
related financing activities 224,766) 224,766)
Cash Flows for Investing Activities
Interfund loan receipts 75,571 75,571
Interfund loan disbursements 1,029,087) 1,029,087)
Investment income received 64,406 64,406
Net cash flows for investing activities 889,110) 889,110)
Net Increase (Decrease) in Cash and Investments 531,801) 59,870 471,931)
Cash and Investments, beginning 1,267,851 415,200 1,683,051
Cash and Investments, ending 736,050 475,070 1,211,120
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 143,673 143,673
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 438,402 438,402
Increase in liabilities - accrued annual leave 59,870 59,870
Net Cash from Operating Activities 582,075 59,870 641,945
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
70
Exhibit H -1
City of Seward, Alaska
General Fund
Balance Sheet
December 31, 2014 2013
Assets
Cash and investments 5,804,899 7,372,250
Receivables
Taxes:
Personal property 10,878 14,592
Less allowance for doubtful accounts 342) 322)
Net personal property 10,536 14,270
Motor vehicle 3,014 4,646
Hotel /motel room 12,173 16,451
Real property 19,113 12,693
Sales 496,715 508,020
Net taxes 541,551 556,080
Accounts 61,832 108,547
Grants and shared revenues 1,101 12,125
Accrued interest 54,789 21,558
Total Receivables 659,273 698,310
Prepaid items 341,995 472,738
Inventory 9,050 8,711
Due from other funds 1,532,519 999,502
Total Assets 8,347,736 9,551,511
70
Exhibit H -1, continued
City of Seward, Alaska
General Fund
Balance Sheet, continued
December 31, 2014 2013
Liabilities
Accounts payable 267,588 242,535
Accrued payroll and related liabilities 477,893 323,201
Accrued liabilities 27,431 27,638
Funds held in trust 95,982 82,446
Unearned revenue 15,478 186,088
Total Liabilities 884,372 861,908
Deferred Inflows
Delinquent property taxes 14,965 12,509
Total Liabilities and Deferred Inflows 899,337 874,417
Fund Balance
Nonspendable:
Inventory 9,050 8,711
Prepaid items 341,995 472,738
Committed:
Working capital 1,500,000 1,500,000
Insurance 126,418 126,418
Hospital line of credit 500,000 500,000
Assigned
Insurance 171,966 120,768
Other Assigments 100,000
Unassigned 4,698,970 5,948,459
Total Fund Balance 7,448,399 8,677,094
Total Liabilities, Deferred Inflows, and Fund Balance 8,347,736 9,551,511
71
Year Ended December 31,
Exhibit H -2
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and
Change in Fund Balance - Budget and Actual
2014 2013
Licenses and permits:
Budget Actual Variance Actual
Revenues
50,000 67,514 17,514 96,940
Taxes:
1,000 1,050 50 1,170
Sales 4,345,549 4,535,707 190,158 4,583,057
Property 1,028,000 986,449 41,551) 1,276,898
Hotel /motel room 385,000 421,981 36,981 408,256
Payments in lieu of taxes 74,000 82,490 8,490 81,670
Penalty and interest 1,600 1,005 595) 1,644
PERS relief 897,728 951,816 54,088 522,688
Totaltaxes 5,834,149 6,027,632 193,483 6,351,525
Licenses and permits:
Building permits 50,000 67,514 17,514 96,940
Taxi permits 1,000 1,050 50 1,170
Department of Motor Vehicles commissions 89,000 93,526 4,526 85,134
Animal control licenses 350 260 90) 360
Business licenses 21,000 19,890 1,110) 18,900
Miscellaneous 2,000 3,685 1,685 2,422
Total licenses and permits 163,350 185,925 22,575 204,926
Intergovernmental:
Jail contract 670,821 663,146 7,675) 605,735
Dispatch contracts 99,140 99,140 99,620
Raw fish tax 520,000 482,543 37,457) 480,290
Shared fisheries and landing tax 18,247 18,247 22,176
Liquor tax 22,000 16,700 5,300) 21,650
Library grants 9,261 9,261 8,387
Revenue sharing 250,000 214,826 35,174) 323,939
PERS relief 897,728 951,816 54,088 522,688
Other grants 88,507 155,539 67,032 10,873
Total intergovernmental 2,548,196 2,611,218 63,022 2,095,358
72
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, 2014 2013
Total charges for services 2,582,923 2,650,995 68,072 2,614,684
Fines and bails 9,000 14,073 5,073 9,530
Investment income 53,000 80,658 27,658 5,359
Other:
Budget Actual Variance Actual
Revenues, continued:
1,460) 3,781
Refuse contract 15,000 18,145
Charges for services:
24,841
Insurance recovery 83,276 83,276
Administrative 1,764,873 1,794,787 $ 29,914 1,767,345
Rents and leases 152,500 143,260 9,240) 153,886
Copying charges 9,000 8,245 755) 8,545
Work orders 1,698 1,698 1,943
Recreation 625,550 663,298 37,748 653,054
Library 31,000 39,707 8,707 29,911
Total charges for services 2,582,923 2,650,995 68,072 2,614,684
Fines and bails 9,000 14,073 5,073 9,530
Investment income 53,000 80,658 27,658 5,359
Other:
Sale of land, equipment and gravel 2,000 540 1,460) 3,781
Refuse contract 15,000 18,145 3,145 24,841
Insurance recovery 83,276 83,276 120,768
Other 23,650 22,912 738) 17,970
Totalother 40,650 124,873 84,223 167,360
Total Revenues 11,231,268 11,695,374 464,106 11,448,742
Expenditures
General government:
Mayor and council:
Salaries 36,984 44,811 7,827) 51,733
Employee benefits 12,646 18,905 6,259) 19,584
Audit 70,000 72,283 2,283) 74,670
Legal 130,000 101,432 28,568 71,107
Purchased services 7,050 5,590 1,460 2,479
Supplies and maintenance 12,500 10,943 1,557 7,890
Legislative representation 176,700 183,575 6,875) 162,457
General and administrative 95,600 52,487 43,113 70,103
Total mayor and council 541,480 490,026 51,454 460,023
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, 2014 2013
Budget Actual Variance Actual
Expenditures, continued:
General government, continued:
150,975 144,356 6,619 133,809
City manager:
108,029 110,777 2,748) 99,868
Salaries 236,802 230,342 $ 6,460 $ 227,014
Employee benefits 141,783 150,555 8,772) 134,962
Purchased services 17,135 20,659 3,524) 50,173
Supplies and maintenance 8,900 8,115 785 8,073
General and administrative 33,850 41,724 7,874) 36,014
Total city manager 438,470 451,395 (12,925) 456,236
City clerk:
Salaries 150,975 144,356 6,619 133,809
Employee benefits 108,029 110,777 2,748) 99,868
Purchased services 22,000 10,004 11,996 7,441
Supplies and maintenance 130 130) 22
General and administrative 19,700 17,178 2,522 14,249
Total city clerk 300,704 282,445 18,259 255,389
Management information systems:
Salaries 159,036 153,813 5,223 127,926
Employee benefits 87,113 90,655 3,542) 80,478
Purchased services 13,400 7,342 6,058 2,579
Supplies and maintenance 36,000 35,082 918 33,583
General and administrative 9,000 6,124 2,876 8,642
Capital outlay 4,000 4,000 3,894
Total management information
308,549 293,016 15,533 257,102
Finance:
Salaries 395,556 396,369 813) 371,078
Employee benefits 285,941 244,059 41,882 240,520
Purchased services 29,100 17,452 11,648 17,130
Supplies and maintenance 56,000 58,702 2,702) 77,315
General and administrative 22,000 25,914 3,914) 29,741
Capital outlay 3,000 2,666 334
Total finance 791,597 745,162 46,435 735,784
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, 2014 2013
Total community development 306,839 262,219 44,620 214,535
General services:
Purchased services 40,746 49,582 (8,836) 21,866
Supplies and maintenance 45,200 50,058 (4,858) 15,579
General and administrative 27,200 38,674 (11,474) 83,351
Total general services 113,146 138,314 (25,168) 120,796
Contributions to organizations:
Budget Actual Variance Actual
Expenditures, continued:
75,000 75,000 60,000
General government, continued:
190,105 190,000 105 170,000
Community development:
25,000 25,000 25,000
Salaries 145,992 119,502 26,490 112,325
Employee benefits 88,343 80,500 7,843 70,650
Purchased services 48,200 41,053 7,147 16,286
Supplies and maintenance 7,700 7,912 212) 4,435
General and administrative 12,604 13,252 648) 10,839
Capital outlay 4,000 4,000
Total community development 306,839 262,219 44,620 214,535
General services:
Purchased services 40,746 49,582 (8,836) 21,866
Supplies and maintenance 45,200 50,058 (4,858) 15,579
General and administrative 27,200 38,674 (11,474) 83,351
Total general services 113,146 138,314 (25,168) 120,796
Contributions to organizations:
Senior Citizens 75,000 75,000 60,000
Chamber of Commerce 190,105 190,000 105 170,000
Boys and Girls Club 25,000 25,000 25,000
Total contributions to organizations 290,105 290,000 105 255,000
Total general government 3,090,890 2,952,577 138,313 2,754,865
Public safety:
Police:
Salaries 1,020,370 969,753 50,617 950,401
Employee benefits 651,910 700,274 48,364) 655,830
Purchased services 124,400 120,307 4,093 117,821
Supplies and maintenance 62,400 56,187 6,213 57,272
General and administrative 39,700 40,859 1,159) 58,033
Total police 1,898,780 1,887,380 11,400 1,839,357
75
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, 2014 2013
Budget Actual Variance Actual
Expenditures, continued:
Salaries
Public safety, continued:
46,457 9,139 64,782
Employee benefits 38,180
Jail:
3,509 -
Purchased services 6,800 13,309
Salaries 301,800 272,819 $ 28,981 $ 272,084
Employee benefits 229,276 234,425 5,149) 210,561
Purchased services 60,000 61,181 1,181) 56,848
Supplies and maintenance 26,830 24,711 2,119 8,717
General and administrative 92,810 88,989 3,821 104,000
Total jail 710,716 682,125 28,591 652,210
Animal control:
Salaries 55,596 46,457 9,139 64,782
Employee benefits 38,180 34,671 3,509 -
Purchased services 6,800 13,309 6,509) -
Supplies and maintenance 16,600 16,936 336) 265
General and administrative 3,094 3,094) 106
Total animal control 117,176 114,467 2,709 65,153
Fire:
Employee benefits
Salaries 160,584 162,394 1,810) 157,734
Employee benefits 118,147 128,740 10,593) 116,831
Purchased services 182,252 176,783 5,469 218,078
Supplies and maintenance 37,850 41,364 3,514) 37,956
General and administrative 8,850 9,904 1,054) 18,927
Capital outlay 41,305 41,305
Total fire 548,988 519,185 29,803 549,526
Volunteer training:
Employee benefits 10,004 8,263 1,741 -
Purchased services 6,400 3,786 2,614 1,096
Supplies and maintenance 27,401 40,077 12,676) 14,738
General and administrative 46,921 41,156 5,765 25,132
Total volunteer training 90,726 93,282 (2,556) 40,966
Emergency preparedness:
Purchased services 7,050 2,717 4,333 1,826
Supplies and maintenance 2,500 960 1,540 476
General and administrative 2,500 984 1,516 1,622
Total emergency preparedness 12,050 4,661 7,389 3,924
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, 2014 2013
Total building inspection 139,756 138,156 1,600 129,588
Engineering:
Budget Actual Variance Actual
Expenditures, continued:
22,384 5,051 17,333
147,870
Public safety, continued:
15,739 4,846 10,893
110,815
Building inspection:
51 51)
70,601
Salaries 70,416 72,838 2,422) 64,337
Employee benefits 46,790 48,771 1,981) 42,054
Purchased services 9,750 10,892 1,142) 8,987
Supplies and maintenance 5,000 4,284 716 8,226
General and administrative 7,800 1,371 6,429 5,984
Total building inspection 139,756 138,156 1,600 129,588
Engineering:
Salaries 22,384 5,051 17,333
147,870
Employee benefits 15,739 4,846 10,893
110,815
Purchased services 51 51)
70,601
Supplies and maintenance
61,950
5,784 5,784)
47,481
General and administrative 45 45)
9,147
Total engineering 38,123 15,777 22,346
Total public safety 3,556,315 3,455,033 101,282 3,280,724
Public works:
Roads and streets:
Salaries 224,816 212,188 12,628 201,731
Employee benefits 135,634 142,965 7,331) 118,877
Purchased services 285,400 298,445 13,045) 375,431
Supplies and maintenance 234,053 185,491 48,562 264,035
General and administrative 8,820 3,798 5,022 3,633
Total roads and streets 888,723 842,887 45,836 963,707
City shop:
Salaries 145,764 118,767 26,997 147,870
Employee benefits 106,114 107,415 1,301) 110,815
Purchased services 97,450 70,314 27,136 70,601
Supplies and maintenance 61,950 85,576 23,626) 47,481
General and administrative 5,400 1,011 4,389 9,147
Total city shop 416,678 383,083 33,595 385,914
Municipal building:
Salaries 80,100 71,338 8,762 66,977
Employee benefits 72,898 76,427 3,529) 65,593
Purchased services 150,225 158,031 7,806) 132,849
Supplies and maintenance 41,750 32,795 8,955 23,744
General and administrative 750 27 723 900
Capital outlay 5,000 9,800 4,800) 30,385
Total municipal building 350,723 348,418 2,305 320,448
Total public works 1,656,124 1,574,388 81,736 1,670,069
77
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, 2014 2013
Budget Actual Variance Actual
Expenditures, continued:
1,717,832 1,617,671 100,161 996,150
Parks and recreation:
189,852 181,976 7,876 179,354
Salaries 580,572 573,284 7,288 $ 578,686
Employee benefits 338,272 298,378 39,894 289,751
Purchased services 258,285 289,401 31,116) 243,697
Supplies and maintenance 107,700 144,744 37,044) 130,597
General and administrative 36,860 31,564 5,296 25,345
Capital outlay 5,000 5,000 13,349
Total parks and recreation 1,326,689 1,337,371 (10,682) 1,281,425
Library:
1,717,832 1,617,671 100,161 996,150
Salaries 189,852 181,976 7,876 179,354
Employee benefits 131,451 129,467 1,984 125,052
Purchased services 188,817 174,298 14,519 93,000
Supplies and maintenance 45,500 54,505 9,005) 95,663
General and administrative 18,368 19,406 1,038) 42,678
Total library 573,988 559,652 14,336 535,747
Debt service:
Principal payments 195,784 85,000 110,784 -
Retirement benefits 1,362,648 1,373,271 (10,623) 836,750
Interest and other costs 159,400 159,400 159,400
Total debt service 1,717,832 1,617,671 100,161 996,150
Total Expenditures 11,921,838 11,496,692 425,146 10,518,980
Excess of Revenues over (under) Expenditures 690,570) 198,682 889,252 929,762
Other Financing Sources (Uses)
Transfers in 1,928,684 1,955,575 26,891 2,165,076
Transfers out 3,218,378) 3,382,952) 164,574) 1,829,114)
Net Other Financing Sources (Uses) (1,289,694) (1,427,377) (137,683) 335,962
Net Change in Fund Balance $ (1,980,264) (1,228,695) $ 751,569 1,265,724
Fund Balance, beginning 8,677,094 7,411,370
Fund Balance, ending $ 7,448,399 $ 8,677,094
78
Exhibit 1 -1
City of Seward, Alaska
Nonmajor Special Revenue Funds
Combining Balance Sheet
Liabilities
Accounts payable $
Parks and
37,929
Accrued payroll and related liabilities 10,190 10,190
Due to other funds
Recreation General Government Public Works
Two
48,119
Bus
Lakes Transportation Natural
16,746
December 31, 2014 Park SCHC Grant Disasters Total
2,498
General government 176,623 131,341 307,964
Assets
Total Fund Balances 2,498 193,369 131,341 - 327,208
Cash and investments 2,498 213,712 131,341 347,551
Grants receivable 627,393 627,393
Prepaid items 16,746 16,746
Other receivables 11,030 11,030
Total Assets 2,498 241,488 131,341 627,393 1,002,720
Liabilities
Accounts payable $ 37,929 $ 37,929
Accrued payroll and related liabilities 10,190 10,190
Due to other funds 627,393 627,393
Total Liabilities 48,119 627,393 675,512
Fund Balances
Nonspendable - prepaid items 16,746 16,746
Assigned:
Parks and recreation 21498 - 2,498
General government 176,623 131,341 307,964
Total Fund Balances 2,498 193,369 131,341 - 327,208
Total Liabilities and Fund Balances $ 2,498 $ 241,488 $ 131,341 $ 627,393 $ 1,002,720
79
Exhibit 1 -2
City of Seward, Alaska
Nonmajor Special Revenue Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances
Total Revenues 3,178 14,550 926,660
General
101,242 1,045,630
7,438
Parks and Recreation Clinic Government Public Works
Expenditures
Two Miscellaneous
193,369 $ 131,341
Bus
Salaries and employee benefits
Lakes Litter Pass Through
536,329
Transportation Natural
552,910
Year Ended December 31, 2014 Park Control Grants SCHC Grant Disasters Total
Revenues
22 311,945 287 312,254
Intergovernmental 14,550 864,354 82,844 $ 961,748
Local grants 3,178 - 18,398 21,576
Other 62,306 62,306
Total Revenues 3,178 14,550 926,660
11,031) 306,219
101,242 1,045,630
7,438 11,031 20,989
Expenditures
2,498 $ $ 193,369 $ 131,341 327,208
Salaries and employee benefits 8,426 536,329 8,155 552,910
Contracted services 441,216 120,716 47,303 609,235
Supplies 22 311,945 287 312,254
General and administrative 49,516 796 29,509 79,821
Capital outlay 39,233 39,233
Miscellaneous 608 14,550 115,470 130,628
Total Expenditures 22 9,034 14,550 1,493,709 121,512 85,254 1,724,081
Excess of Revenues over
under) Expenditures 22) (5,856) 567,049) 121,512) 15,988 678,451)
Other Financing Sources (Uses)
Transfers in 51856 760,418 245,415 2,410 1,014,099
Transfers out 29,429) 29,429)
Net Other Financing Sources (Uses) - 5,856 760,418 245,415 (27,019) 984,670
Net Change in Fund Balances 22) 193,369 123,903 11,031) 306,219
Fund Balances, beginning 2,520 7,438 11,031 20,989
Fund Balances, ending 2,498 $ $ 193,369 $ 131,341 327,208
80
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 purchase of fire department equipment.
Dairy Hill - To account for all activities related to Dairy Hill construction costs.
Kawabe Park - To account for all activities related to Kawabe Park capital costs.
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.
81
82
Exhibit J -1
City of Seward, Alaska
Nonmajor Capital Project Funds
Combining Balance Sheet
Public Safety General Government
Fi re
Department Kawabe Capital
December 31, 2014 Equipment Park Acquisition Total
Assets
Cash and investments 1,283 $ 5,929 2,487,565 2,494,777
Total Assets 1,283 $ 5,929 2,487,565 2,494,777
Liabilities
Account payable 53,120 53,120
Total Liabilities 53,120 53,120
Fund Balances
Assigned - capital projects 1,283 5,929 2,434,445 2,441,657
Total Fund Balances 1,283 5,929 2,434,445 2,441,657
Total Liabilities and Fund Balances 1,283 $ 5,929 2,487,565 2,494,777
82
Exhibit J -2
City of Seward, Alaska
Nonmajor Capital Project Funds
Combining Statement of Revenues, Expenditures
and Change in Fund Balances
Excess of Revenues over
under) Expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
2,595) (432,956) 321,768 (113,783)
2,033,726 - 2,033,726
347,848) (347,848)
Net Other Financing Sources (Uses) 2,033,726 (347,848) 1,685,878
Net Change in Fund Balances - 2,595) 1,600,770
Parks and General
8,524 833,675 26,080 869,562
Public Safety Public Works Recreation Government Library
5,929 2,434,445
Fire
Department Kawabe Capital Library/
Year Ended December 31, 2014 Equipment Dairy Hill Park Acquisition Museum Total
Revenues
Intergovernmental 72,713 265,593 10,586 348,892
Local grants 146,307 324,042 470,349
Total Revenues 72,713 411,900 334,628 819,241
Expenditures
Contracted services 98,750 1,501 100,251
Supplies and maintenance 22,195 2,595 56,881 11,359 93,030
Capital outlay 47,438 411,900 277,291 736,629
Other services and charges 3,080 34 3,114
Total Expenditures 72,713 411,900 2,595 432,956 12,860 933,024
Excess of Revenues over
under) Expenditures
Other Financing Sources (Uses)
Transfers in
Transfers out
2,595) (432,956) 321,768 (113,783)
2,033,726 - 2,033,726
347,848) (347,848)
Net Other Financing Sources (Uses) 2,033,726 (347,848) 1,685,878
Net Change in Fund Balances - 2,595) 1,600,770 26,080) 1,572,095
Fund Balances, beginning 1,283 8,524 833,675 26,080 869,562
Fund Balances, ending $ 1,283 $ 5,929 2,434,445 2,441,657
83
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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
Fvkihif V -1
City of Seward, Alaska
Electric Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
40,168,506 39,987,789
Current Assets
7,463,775
Cash and investments 3,129,380 1,815,684
Receivables:
2,241,949 1,326,014
Accounts 959,002 859,921
Assessments 2,117
Interfund loan, current portion 19,552 18,576
Grant 466,607 683,326
Interest 16,614 17,588
Other 19,198 27,791
Less allowance for doubtful accounts 43,155) 38,696)
Net receivables 1,437,818 1,570,623
Prepaid expenses 5,569
Inventory 920,239 873,504
Total Current Assets 5,493,006 4,259,811
Restricted Cash and Investments
Bond retirement 677,911 677,911
Capital Droiects 1,799,220 1,662,560
Total Restricted Cash and Investments 2,477,131 2,340,471
Assessments Receivable, net of current portion 1,851 3,055
Interfund Loan, net of current portion 296,195 315,747
Property, Plant and Equipment
Land and land rights
Buildings
Improvements other than buildings
Equipment
230,951 230,951
9,578,169 9,474,575
40,168,506 39,987,789
7,524,912 7,463,775
Total property, plant and equipment in service 57,502,538 57,157,090
Less accumulated depreciation 37,151,823) 35,414,696)
Net property, plant and equipment in service 20,350,715 21,742,394
Construction in progress 2,241,949 1,326,014
Total Property, Plant and Equipment 22,592,664 23,068,408
Total Assets 30,860,847 29,987,492
Deferred Outflows
Unamortized deferred loss on refundinp- 4,904 9,808
Total Assets and Deferred Outflows $ 30,865,751 $ 29,997,300
86
Exhibit K -1, continued
City of Seward, Alaska
Electric Enterprise Fund
Statement of Net Position, Continued
December 31, 2014 2013
Liabilities
1,206,660 1,261,781
Current Liabilities
Accounts payable 487,954 559,525
Accrued payroll and related liabilities 64,819 39,538
Accrued interest 23,553 25,036
Current portion:
5,312,395 5,756,898
Accrued annual leave 17,700 22,829
Bonds payable 400,000 380,000
Customer deposits 212,634 234,853
Total Current Liabilities 1,206,660 1,261,781
Noncurrent Liabilities, net of current portion
Accrued annual leave 33,975 70,113
Bonds payable 5,245,000 5,645,000
Unamortized bond premium 33,420 41,785
Total Noncurrent Liabilities 5,312,395 5,756,898
Total Liabilities 6,519,055 7,018,679
Net Position
Net investment in capital assets 17,597,059 17,689,342
Unrestricted 6,749,637 5,289,279
Total Net Position 24,346,696 22,978,621
Total Liabilities and Net Position 30,865,751 29,997,300
87
Exhibit K -2
City of Seward, Alaska
Electric Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues
300
Residential 3,233,812 3,181,813
Small general service 1,800,254 1,818,346
Large general service 4,575,343 4,534,714
Industrial 1,028,669 1,029,934
Harbor power 300,446 321,825
Street and yard lights 74,222 71,020
Miscellaneous 84,299 82,656
Total Operating Revenues 11,097,045 11,040,308
Operating Expenses
1,055,462 1,380,430
Power 5,091,242 5,288,384
Distribution 253,840 583,578
Administration and general 2,728,915 2,880,666
Depreciation 1,737,127 1,758,135
Total Operating Expenses 9,811,124 10,510,763
Earnings from Operations 1,285,921 529,545
Nonoperating Revenues (Expenses)
Gain on disposal of capital assets 300
Intergovernmental - PERS on- behalf 174,276 39,084
Investment income 139,150 98,863
Salary credits - work orders 208,130 103,216
Supply credits - work orders 127,829 117,416
Interest expense 286,592) 303,453)
Other expenses 216,788) 60,733)
Net Nonoperating Revenues (Expenses) 146,005 5,307)
Earnings Before Contributions and Transfers 1,431,926 524,238
Capital contributions 1,055,462 1,380,430
Transfers in 110,784 110,784
Transfers out 1,230,097) 1,220,015)
Change in Net Position 1,368,075 795,437
Net Position, beginning 22,978,621 22,183,184
Net Position, ending $ 24,346,696 $ 22,978,621
L.U.
Exhibit K -3
City of Seward, Alaska
Electric Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Receipts from customers and users 10,988,797 11,346,872
Payments to suppliers 6,152,133) 6,091,747)
Payments to employees 1,005,682) 1,388,444)
Payments for interfund services used 863,637) 859,630)
Net cash flows from operating activities 2,967,345 3,007,051
Cash Flows for Noncapital Financing Activities
Transfers in 110,784 110,784
Transfers out 1,230,097) 1,220,015)
Net cash flows for noncapital financing activities 1,119,313) 1,109,231)
Cash Flows for Capital and Related Financing Activities
Principal payments on bonds payable 380,000) 360,000)
Interest payments on bonds payable 291,536) 308,210)
Acquisition of property, plant and equipment 1,160,342) 1,527,797)
Proceeds from sale of capital assets 300
Capital contributions received 1,275,502 702,673
Net cash flows for capital and related financing activities 556,376) 1,493,034)
Cash Flows from Investing Activities
Investment income received 140,124 98,863
Interfund loan receipts 18,576 17,650
Net cash flows from investing activities 158,700 116,513
Net Increase in Cash and Investments 1,450,356 521,299
Cash and Investments, beginning 4,156,155 3,634,856
Cash and Investments, ending $ 5,606,511 $ 4,156,155
Reconciliation of Cash and Investments to Statement of Net Position
Current assets $ 3,129,380 $ 1,815,684
Restricted assets 2,477,131 2,340,471
Total Cash and Investments $ 5,606,511 $ 4,156,155
F-101
Exhibit K -3, continued
City of Seward, Alaska
Electric Enterprise Fund
Statement of Cash Flows, Continued
Year Ended December 31, 2014 2013
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 1,285,921 529,545
Adjustments to reconcile earnings from operations to net
cash flows from operating activities:
Depreciation 1,737,127 1,758,135
Other nonoperating expenses 216,788) 60,733)
Other nonoperating revenue - workorder reimbursements:
Salaries 208,130 103,216
Supplies 127,829 117,416
Noncash expense - PERS on- behalf 174,276 39,084
Increase (decrease) in allowance for doubtful accounts 4,459 10,305)
Increase) decrease in assets:
Receivables 90,488) 296,070
Prepaid expenses 5,569)
Inventory 46,735) 57,043
Increase (decrease) in liabilities:
Accounts payable 172,612) 149,164
Accrued payroll and related liabilities 25,281 7,814
Accrued annual leave 41,267) 197)
Customer deposits 22,219) 43,725
Unearned revenue 22,926)
Net Cash from Operating Activities 2,967,345 3,007,051
Noncash Capital and Related Financing Activities
Purchase of equipment included in accounts payable $ 101,041 $
M
91
Exhibit K -4
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Operating Expenses
Year Ended December 31, 2014 2013
Power
Salaries and employee benefits 135,999 186,037
Purchased services 91,764 198,358
Power for resale 4,857,231 4,817,413
Supplies, maintenance and other 6,248 86,576
Total Power 5,091,242 5,288,384
Distribution
Salaries and employee benefits 166,646 246,925
Purchased services 78,287 211,412
Supplies and maintenance 9,507 124,641
Administration and general 600) 600
Total Distribution 253,840 583,578
Administration and General
Salaries and employee benefits 1,069,457 1,105,399
Purchased services 220,956 365,317
Supplies and maintenance 132,050 238,929
Administrative fee 864,237 859,030
Other 442,215 311,991
Total Administration and General 2,728,915 2,880,666
Depreciation 1,737,127 1,758,135
Total Operating Expenses 9,811,124 10, 510,763
91
Exhibit K -5
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
Grants and other external contributions $ 30,739,365 $ 29,680,492
Related accumulated amortization (17,994,404) (18,956,833)
City - generated equity and transfers from other funds 11,601,735 12,254,962
Total Net Position $ 24,346,696 $ 22,978,621
92
Exhibit K -6
City of Seward, Alaska
Electric Enterprise Fund
Schedule of Electric Capital Projects
Standby
Electric Customer
Year Ended December 31, 2014 Generation Projects
Funding Sources
State grants
Electric fund customers
Electric funds
906,907 $ -
148,555
9,028 -
Total Funding Sources 915,935 148,555
Capital Outlay $ 915,935 $ 148,555
93
Exhibit K -7
City of Seward, Alaska
Water Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets
Cash and investments 1,050,027 2,902,730
Receivables:
Accounts 156,674 150,261
Assessments 3,534 7,069
Grants and loans 12,313
Other 196 200
Less allowance for doubtful accounts 7,050) 63762)
Net receivables 153,354 163,081
Inventory 93,300 50,348
Total Current Assets 13296,681 3,1163159
Restricted Cash and Investments- capital projects 13906,758 442,255
Assessments Receivable, net of current portion 3,534
Property, Plant and Equipment
Land and land rights 100,420 2,507
Buildings 1,287,853 1,287,853
Improvements other than buildings 6,203,911 6,203,911
Equipment 1,308,670 1,308,670
Total property, plant and equipment in service 8,900,854 8,802,941
Less accumulated depreciation 4,724,014) 4,521,466)
Net property, plant and equipment in service 4,176,840 4,281,475
Construction in progress 466,457 466,457
Total Property, Plant and Equipment 4,643,297 4,747,932
Total Assets 7,846,736 8,309,880
Liabilities
Current Liabilities
Accounts payable 2,176 3,584
Accrued payroll and related liabilities 9,863 5,311
Accrued interest 20,795 22,234
Current portion:
Accrued annual leave 4,864 4,722
Notes payable 129,244 127,334
Total Current Liabilities 166,942 163,185
Noncurrent Liabilities, net of current portion
Accrued annual leave 15,508 16,533
Notes payable 1,710,777 1,840,021
Total Noncurrent Liabilities 1,726,285 1,856,554
Total Liabilities 1,893,227 2,019,739
Net Position
Net investment in capital assets 2,803,276 2,780,577
Unrestricted 3,150,233 3,509,564
Total Net Position 5,953,509 6,290,141
Total Liabilities and Net Position 7,846,736 8,309,880
94
Exhibit K -8
City of Seward, Alaska
Water Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues
231,930 231,271
Residential 440,828 424,640
Small general service 110,312 119,516
Large general service 201,030 201,869
Industrial 236,152 260,903
Seward Marine Industrial Center 45,141 55,439
Ship water sales 57,110 77,216
Miscellaneous 137,058 141,127
Total Operating Revenues 1,227,631 1,280,710
Operating Expenses
Salaries and benefits 381,246 286,287
Purchased services 231,930 231,271
Contracted services 3,100 5,439
Supplies and maintenance 60,845 65,896
Administration and general 268,904 254,302
Depreciation 202,548 216,025
Total Operating Expenses 1,148,573 1,059,220
Earnings from Operations 79,058 221,490
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 76,851 21,963
Investment income 38,268 2,718
Interest expense 28,071) 29,974)
Net Nonoperating Revenues (Expenses) 87,048 5,293)
Earnings Before Contributions and Transfers 166,106 216,197
Capital contributions 24,485
Transfers in 98,010
Transfers out 600,748) 107,937)
Change in Net Position 336,632) 132,745
Net Position, beginning 6,290,141 6,157,396
Net Position, ending 5,953,509 6,290,141
95
Exhibit K -9
City of Seward, Alaska
Water Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Receipts from customers and users 1,221,510 1,211,545
Payments to suppliers 340,235) 394,469)
Payments to employees 300,726) 264,817)
Payments for interfund services used 268,904) 254,302)
Net cash flows from operating activities 311,645 297,957
Cash Flows for Noncapital Financing Activities
Transfers out 600,748) 107,937)
Net cash flows for noncapital financing activities 600,748) 107,937)
Cash Flows for Capital and Related Financing Activities
Principal payments on notes payable 127,334) 125,452)
Interest payments on notes payable 29,510) 31,392)
Transfers in 98,010
Acquisition of property, plant and equipment 97,913) 52,038)
Capital contributions received 19,382 27,326
Net cash flows for capital and related financing activities 137,365) 181,556)
Cash Flows from Investing Activities
Investment income received 38,268 2,718
Interfund loan receipts 1,973,360
Net cash flows from investing activities 38,268 1,976,078
Net Increase (Decrease) in Cash and Investments 388,200) 1,984,542
Cash and Investments, beginning 3,344,985 1,360,443
Cash and Investments, ending 2,956,785 3,344,985
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 1,050,027 2,902,730
Restricted assets 1,906,758 442,255
Total Cash and Investments 2,956,785 3,344,985
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 79,058 221,490
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 202,548 216,025
Noncash expense - PERS on- behalf 76,851 21,963
Increase (decrease) in allowance for doubtful accounts 288 2,342)
Increase) decrease in assets:
Accounts receivable 6,409) 66,823)
Inventory 42,952) 5,014
Increase (decrease) in liabilities:
Accounts payable 1,408) 96,877)
Accrued payroll and related liabilities 4,552 295
Accrued annual leave 883) 788)
Net Cash from Operating Activities 311,645 297,957
96
Exhibit K -10
City of Seward, Alaska
Water Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
Grants and other external contributions $ 3,581,193 $ 3,581,193
Related accumulated amortization (1,889,251) (1,913,724)
Contributions from other funds 596,766 498,756
City - generated equity 3,664,801 4,123,916
Total Net Position $ 5,953,509 $ 6,290,141
97
Exhibit K -11
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets
Cash and investments 123,640 693,880
Receivables:
Accounts 88,226 88,412
Other 20,000
Less allowance for doubtful accounts 3,970) 3,979)
Net receivables 84,256 104,433
Total Current Assets 207,896 798,313
Restricted Cash and Investments - capital projects 1,168,512 112,115
Property, Plant and Equipment
Land and land rights 111,011 111,011
Buildings 2,418,398 2,418,398
Infrastructure 29,698
Improvements other than buildings 8,952,968 8,952,968
Equipment 874,270 757,237
Total property, plant and equipment in service 12,386,345 12,239,614
Less accumulated depreciation 7,967,568) 7,744,779)
Net Property, Plant and Equipment in Service 4,418,777 4,494,835
Total Assets 5,795,185 5,405,263
Liabilities
Current Liabilities
Accounts payable 7,718 3,254
Accrued payroll and related liabilities 13,835 5,316
Accrued interest 9
Current portion:
Accrued annualleave 3,667 4,798
Notes payable 1,333
Total Current Liabilities 25,220 14,710
Noncurrent Liabilities, net of current portion
Accrued annual leave 18,244 17,392
Total Liabilities 43,464 32,102
Net Position
Net investment in capital assets 4,418,777 4,493,502
Unrestricted 1,332,944 879,659
Total Net Position 5,751,721 5,373,161
Total Liabilities and Net Position 5,795,185 5,405,263
98
Exhibit K -12
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues
Residential
Small general service
Large general service
Seward Marine Industrial Center
Miscellaneous
568,985 536,399
165,574 153,961
244,239 235,097
34,370 32,273
3,722 2,861
Total Operating Revenues 1,016,890 960,591
Operating Expenses
1,118,656 1,016,175
Salaries and employee benefits 364,932 279,352
Purchased services 230,427 285,563
Contracted services 78,981
Supplies and maintenance 57,507 25,603
Administration and general 164,020 157,250
Other 4,101
Depreciation 222,789 264,306
Total Operating Expenses 1,118,656 1,016,175
Loss from Operations 101,766) 55,584)
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 62,773 21,717
Investment income 4,888 2,478
Interest expense 11) 746)
Net Nonoperating Revenues (Expenses) 67,650 23,449
Loss Before Transfers 34,116) 32,135)
Transfers in 500,000
Transfers out 87,324) 82,327)
Change in Net Position 378,560 114,462)
Net Position, beginning 5,373,161 5,487,623
Net Position, ending $ 5,751,721 $ 5,373,161
Exhibit K -13
City of Seward, Alaska
Wastewater Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014
Cash from Operating Activities
2013
Cash Flows from Operating Activities
Loss from operations 101,766) 55,584)
Adjustments to reconcile loss from operations
Receipts from customers and users 1,037,067 965,875
Payments to suppliers
222,789
362,451)
Noncash expense- PERS on- behalf
315,624)
Payments to employees
Increase (decrease) in allowance for doubtful accounts
293,919)
103)
263,298)
Payments for interfund services used 164,020)
186
157,250)
Net cash flows from operating activities
20,000
216,677
Increase (decrease) in liabilities:
229,703
Cash Flows from (for) Noncapital Financing Activities
Accounts payable 4,464 357)
Accrued payroll and related liabilities
Transfers out
764
87,324)
279)
82,327)
Cash Flows from (for) Capital and Related Financing Activities
216,677 229,703
Principal payments on notes payable 1,333) 61,024)
Interest payments on notes payable 20) 932)
Transfers in 500,000
Acquisition of property, plant and equipment 146,731)
Net cash flows from (for) capital and related financing activities 351,916 61,956)
Cash Flows from Investing Activities
Investment income received 4,888 2,478
Net Increase in Cash and Investments 486,157 87,898
Cash and Investments, beginning 805,995 718,097
Cash and Investments, ending 1,292,152 805,995
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 123,640 693,880
Restricted assets 1,168,512 112,115
Total Cash and Investments 1,292,152 805,995
Reconciliation of Loss from Operations to Net
Cash from Operating Activities
Loss from operations 101,766) 55,584)
Adjustments to reconcile loss from operations
to net cash flows from operating activities:
Depreciation 222,789 264,306
Noncash expense- PERS on- behalf 62,773 21,717
Increase (decrease) in allowance for doubtful accounts 9) 103)
Increase) decrease in assets:
Accounts receivable 186 2,309
Other receivable 20,000 3,078
Increase (decrease) in liabilities:
Accounts payable 4,464 357)
Accrued payroll and related liabilities 8,519 764
Accrued annual leave 279) 6,427)
Net Cash from Operating Activities 216,677 229,703
M
Exhibit K -14
City of Seward, Alaska
Wastewater Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
Grants and other external contributions $ 10,405,799 $ 10,405,799
Related accumulated amortization (7,062,014) (7,226,634)
Contributions from other funds 661,550 161,550
City - generated equity 1,746,386 2,032,446
Total Net Position $ 5,751,721 $ 5,373,161
101
Exhibit K -15
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
181175,054 5,117,479
Current Assets
775,201 610,169
Cash and investments 1,080,479 4,023,796
Receivables:
31,122,701 28,830,535
Accounts 155,496 154,189
Grants 375,073 932,089
Interest 3,284
Assessments 2,144 4,286
Less allowance for doubtful accounts 23,834) 24,672)
Net receivables 508,879 1,069,176
Total Current Assets 11589,358 5,092,972
Restricted Cash and Investments
Bond retirement 690,198 709,910
Capital projects 3,671,186 963,526
Total Restricted Cash and Investments 4,361,384 1,673,436
Assessments Receivable, net of current portion 2,144
Property, Plant and Equipment
Land and land rights 181175,054 5,117,479
Buildings 775,201 610,169
Infrastructure 97,723 49,850
Improvements other than buildings 31,122,701 28,830,535
Equipment 1,592,998 1,592,998
Total property, plant and equipment in service 51,763,677 36,201,031
Less accumulated depreciation 14,981,892) 13,738,260)
Net property, plant and equipment in service 361781,785 22,462,771
Construction in progress 181,299 2,063,758
Total Property, Plant and Equipment 36,963,084 24,526,529
Total Assets 42,913,826 31,295,081
Deferred Outflows
Unamortized deferred loss on refunding 239,264 51,607
Total Assets and Deferred Outflows $ 43,153, 090 $ 31, 346, 688
102
Exhibit K -15, continued
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Net Position, continued
December 31, 2014 2013
Liabilities
Current Liabilities
Accounts payable 90,409 600,846
Accrued payroll and related liabilities 57,594 21,309
Accrued interest 31,919 26,304
Current portion:
Accrued annual leave 19,127 17,594
Bonds payable 460,000 445,000
Interfund loan 26,254 24,885
Unearned revenue 567,677 998,316
Customer deposits 36,078 34,188
Total Current Liabilities 1,289,058 2,168,442
Noncurrent Liabilities, net of current portion
Accrued annual leave 45,810 54,398
Bonds payable 4,885,000 5,615,000
Notes payable 1,201,196
Interfund loan 27,698 53,952
Unamortized bond premium 547,862 87,594
Total Noncurrent Liabilities 6,707,566 5,810,944
Total Liabilities 7,996,624 7,979,386
Net Position
Net investment in capital assets 30,798,488 19,140,452
Restricted for commercial passenger vessel tax 2,066,039 2,079,621
Unrestricted 2,291,939 2,147,229
Total Net Position 35,156,466 23,367,302
Total Liabilities and Net Position 43,153,090 31,346,688
103
Exhibit K -16
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues
Moorage 1,622,680 1,581,547
Wharfage 30,232 66,540
Boat lift fees 110,659 107,198
Power sales 390,587 431,219
Rentals and leases 318,711 341,625
Passenger transit fees 604,800 611,065
Miscellaneous 134,763 96,729
Total Operating Revenues 3,212,432 3,235,923
Operating Expenses
Salaries and employee benefits 1,142,099 1,000,555
Purchased services 486,873 308,231
Power for resale 239,239 271,895
Supplies and maintenance 124,186 166,643
Administration and general 366,221 439,882
Depreciation 1,243,632 1,392,277
Total Operating Expenses 3,602,250 3,579,483
Loss from Operations 389,818) 343,560)
Nonoperating Revenues (Expenses)
Intergovernmental - PERS on- behalf 158,044 83,767
Investment income 44,690 30,898
Commercial passenger vessel tax 961,178 343,265
Interest expense 207,946) 279,387)
Net Nonoperating Revenues (Expenses) 955,966 178,543
Income (Loss) Before Contributions and Transfers 566,148 165,017)
Capital contributions 11,707,114 1,293,192
Transfers in 241,272 320,000
Transfers out 725,370) 616,069)
Change in Net Position 11,789,164 832,106
Net Position, beginning 23,367,302 22,535,196
Net Position, ending 35,156,466 23,367,302
104
105
Exhibit K -17
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Receipts from customers and users 2,781,538 3,335,705
Payments to suppliers 1,360,735) 298,361)
Payments to employees 954,825) 903,575)
Payments for interfund services used 366,221) 439,882)
Net cash flows from operating activities 99,757 1,693,887
Cash Flows for Noncapital Financing Activities
Transfers in 241,272 320,000
Transfers out 725,370) 616,069)
Net cash flows for noncapital financing activities 484,098) 296,069)
Cash Flows from (for) Capital and Related Financing Activities
Principal payments on long -term debt 445,000) 420,000)
Issuance of refunding bonds, including premium 3,966,233
Payment to refunding bond escrow agent 3,937,576)
Interest payments on long -term debt 213,048) 284,374)
Acquisition of property, plant and equipment 1,864,099) 2,262,544)
Capital contributions received 1,994,827 423,211
Interfund loan payment 24,885) 23,588)
Commercial passenger vessel tax receipts 613,445 686,530
Net cash flows from (for) capital and related financing activities 89,897 1,880,765)
Cash Flows from Investing Activities
Investment income received 39,075 27,614
Net Decrease in Cash and Investments 255,369) 455,333)
Cash and Investments, beginning 5,697,232 6,152,565
Cash and Investments, ending 5,441,863 5,697,232
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 1,080,479 4,023,796
Restricted assets 4,361,384 1,673,436
Total Cash and Investments 5,441,863 5,697,232
105
Noncash Capital and Related Financing Activities
Purchase of equipment through issuance of Notes Payable $ 1,201,196 $
Increase in land from non -cash capital contribution $ 11,386,763 $
106
Exhibit K -17, continued
City of Seward, Alaska
Harbor Enterprise Fund
Statement of Cash Flows, Continued
Year Ended December 31, 2014 2013
Reconciliation of Loss from Operations to Net
Cash from Operating Activities
Loss from operations $ 389,818) $ 343,560)
Adjustments to reconcile loss from operations to net cash
flows from operating activities:
Depreciation 1,243,632 1,392,277
Noncash expense - PERS on- behalf 158,044 83,767
Increase (decrease) in allowance for doubtful accounts 838) 4,344)
Increase) decrease in assets - receivables 1,307) 66,844
Increase (decrease) in liabilities:
Accounts payable 510,437) 448,408
Accrued payroll and related liabilities 36,285 3,399
Accrued annual leave 7,055) 9,814
Customer deposits 1,890 26,533)
Unearned revenue 430,639) 63,815
Net Cash from Operating Activities $ 99,757 $ 1,693,887
Noncash Capital and Related Financing Activities
Purchase of equipment through issuance of Notes Payable $ 1,201,196 $
Increase in land from non -cash capital contribution $ 11,386,763 $
106
Exhibit K -18
City of Seward, Alaska
Harbor Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
Grants and other external contributions $ 36,345,854 $ 24,638,740
Related accumulated amortization (7,890,674) (8,674,497)
Contributions from other funds 6,239,014 5,997,742
City - generated equity 462,272 1,405,317
Total Net Position $ 35,156,466 $ 23,367,302
107
Exhibit K -19
City of Seward, Alaska
Harbor Enterprise Fund
Schedule of Harbor Capital Projects
108
Sewer Fish Harbor
D Float Floats Pump Cleaning ARRC Restroom
Year Ended December 31, 2014 Replacement Replacement Station Station Dredging Improvements
Funding Sources
State grants 233,484 19,640
Federal grants 12,638 54,594
Harbor Fund 254,359 9,855 4,212 469,615 33,830
Total Funding Sources 487,843 93855 16,850 54,594 469,615 53,470
Capital Outlay 487,843 93855 16,850 54,594 469,615 53,470
108
Exhibit K -20
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets
Cash 107,176
Account receivable 38,131 34,985
Grant receivable 1,307,114 265,852
Total Current Assets 1,345,245 408,013
Property, Plant and Equipment
Land and land rights 12,021,821 12,021,821
Buildings 280,287 280,287
Improvements other than buildings 39,943,792 39,943,792
Equipment 1,650,360 908,789
Total property, plant and equipment in service 53,896,260 53,154,689
Less accumulated depreciation 28,688,691) 28,785,839)
Net property, plant and equipment in service 25,207,569 24,368,850
Construction in progress 3,205,710 1,474,371
Total Property, Plant and Equipment 28,413,279 25,843,221
Total Assets 29,758,524 26,251,234
Liabilities
Current Liabilities
Accounts payable 207,852 78,358
Interfund loan payable - current portion 147,012
Accrued payroll and related liabilities 579
Deposits 9,200
Unearned revenue 39,647 47,013
Due to other funds 905,126
Total Current Liabilities 1,308,837 125,950
Noncurrent Liabilities
Interfund loan, net of current portion 882,075
Accrued leave - long term 271
Total Noncurrent Liabilities 882,346
Total Liabilities 2,191,183 125,950
Net Position
Net investment in capital assets 28,413,279 25,843,221
Unrestricted (deficit) 845,938) 282,063
Total Net Position 27,567,341 26,125,284
Total Liabilities and Net Position 29,758,524 26,251,234
109
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, 2014 2013
Operating Revenues
88,737 66,404
Moorage 6,763 $ 995
Wharfage 5,995 10,975
Boat lift fees 133,949 105,453
Storage 107,481 91,128
Rentals and leases 156,195 144,005
Power sales 53,820 36,892
Miscellaneous 5,590 2,506
Total Operating Revenues 469,793 391,954
Operating Expenses
Salaries and employee benefits 110,734 90,734
Purchased services 88,737 66,404
Contracted services 17,113
Supplies and maintenance 65,747 38,744
Administration and general 128,959 101,630
Depreciation 602,368 601,831
Total Operating Expenses 1,013,658 899,343
Loss from Operations (543,865) (507,389)
Nonoperating Revenues
Investment income 1,625 201
Insurance recovery 5,520 -
Total Nonoperating Revenues 7,145 201
Loss before Contributions and Transfers 536,720) 507,188)
Capital contributions 1,731,339 1,197,395
Transfers in 350,000 164,461
Transfers out 102,562) 91,322)
Change in Net Position 1,442,057 763,346
Net Position, beginning 26,125,284 25,361,938
Net Position, ending $ 27,567,341 $ 26,125,284
ME
Fvkihif V -77
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from (for) Operating Activities
Receipts from customers and users 468,481 417,352
Payments to suppliers 237,028) 43,811)
Payments to employees 111,042) 90,314)
Payments for interfund services used 128,959) 101,630)
Net cash flows from (for) operating activities 8,548) 181,597
Cash Flows from Noncapital Financing Activities
Transfers in 350,000 164,461
Transfers out 102,562) 91,322)
Net cash flows from noncapital financing activities 247,438 73,139
Cash Flows for Capital and Related Financing Activities
7,366) 6,692
Acquisition of property, plant, and equipment 2,977,501) 1,257,842)
Issuance of interfund loan 1,029,087
Increase in due to other funds 905,126
Insurance recovery 5,520
Capital contributions received 690,077 965,578
Net cash flows for capital and related financing activities 347,691) 292,264)
Cash Flows from Investing Activities
Investment income received 1,625 201
Net Decrease in Cash and Investments 107,176) 37,327)
Cash and Investments, beginning 107,176 144,503
Cash and Investments, ending 107,176
Reconciliation of Loss from Operations to Net
Cash from (for) Operating Activities
Loss from operations 543,865) 507,389)
Adjustments to reconcile loss from operations to net cash
flows from (for) operating activities:
Depreciation 602,368 601,831
Increase) decrease in assets - accounts receivable 3,146) 18,706
Increase (decrease) in liabilities:
Accounts payable 65,431) 61,337
Accrued payroll and related liabilities 308) 420
Deposits 9,200
Unearned revenue 7,366) 6,692
Net Cash from (for) Operating Activities 8,548) 181,597
Noncash Capital and Related Financing Activities
Purchase of equipment included in accounts payable $ 194,925 $
Exhibit K -23
City of Seward, Alaska
Seward Marine Industrial Center Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
Grants and other external contributions $ 38,870,677 $ 37,139,338
Related accumulated amortization (25,229,100) (25,714,005)
Contributions from other funds 17,472,393 17,122,393
City - generated deficit (3,546,629) (2,422,442)
Total Net Position $ 27,567,341 $ 26,125,284
112
113
Exhibit K -24
City of Seward, Alaska
Parking Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets
Cash and investments 690,193 618,372
Property, Plant and Equipment
Improvements other than buildings 513,540 513,540
Equipment 150,360 150,360
Total property, plant and equipment in service 663,900 663,900
Less accumulated depreciation 576,293) 551,817)
Net Property, Plant and Equipment in Service 87,607 112,083
Total Assets 777,800 730,455
Liabilities
Current Liabilities
Accounts payable 323 11,112
Accrued payroll and related liabilities 74
Total Current Liabilities 323 11,186
Net Position
Net investment in capital assets 87,607 112,083
Unrestricted 689,870 607,186
Total Net Position 777,477 719,269
Total Liabilities and Net Position 777,800 730,455
113
114
Exhibit K -25
City of Seward, Alaska
Parking Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues - parking fees 293,379 312,248
Operating Expenses
Salaries and employee benefits 123,937 70,871
Supplies and maintenance 16,873 12,550
Purchased services 21,800 4,620
Rents and leases 13,000 13,000
Administration and general 19,065 25,934
Depreciation 24,476 23,968
Total Operating Expenses 219,151 150,943
Earnings from Operations 74,228 161,305
Nonoperating Revenues - investment income 7,450 227
Earnings Before Transfers 81,678 161,532
Transfers out 23,470) 24,980)
Change in Net Position 58,208 136,552
Net Position, beginning 719,269 582,717
Net Position, ending 777,477 719,269
114
Net Increase in Cash and Investments 71,821 153,983
Cash and Investments, beginning 618,372
Exhibit K -26
City of Seward, Alaska
Parking Enterprise Fund
690,193 618,372
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Receipts from customers and users 293,379 312,248
Payments to suppliers 62,462) 26,058)
Payments to employees 124,011) 70,966)
Payments for interfund services used 19,065) 25,934)
Net cash flows from operating activities 87,841 189,290
Cash Flows from Noncapital Financing Activities
10,789) 4,112
Transfers out 23,470) 24,980)
Cash Flows from Capital and Related Financing Activities
Acquisition of property, plant and equipment 10,554)
Cash Flows from Investing Activities
Investment income received 7,450 227
Net Increase in Cash and Investments 71,821 153,983
Cash and Investments, beginning 618,372 464,389
Cash and Investments, ending 690,193 618,372
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 74,228 161,305
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 24,476 23,968
Increase (decrease) in liabilities:
Accounts payable 10,789) 4,112
Accrued payroll and related liabilities 74) 95)
Net Cash from Operating Activities $ 87,841 $ 189,290
115
Exhibit K -27
City of Seward, Alaska
Parking Enterprise Fund
Schedule of Composition of Net Position
December 31, 2014 2013
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 769,827 711,619
Total Net Position $ 777,477 $ 719,269
116
Exhibit K -28
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Net Position
December 31, 2014 2013
Assets
22,788,808 24,034,704
Current Assets
843,185 843,185
Cash and investments 4,055,188 3,217,111
Receivables:
4,930,986 4,589,802
Accounts 6,935,000 2,917,000
Other 470,795 150,000
Less allowance for doubtful accounts 1,017,000) 719,000)
Net receivables 6,388,795 2,348,000
Total Current Assets 10,443,983 535653111
Restricted Cash and Investments - bond retirement 1,973,360 1,973,360
Other Assets 118,000 3063650
Property, Plant and Equipment
190,000 320,439
Buildings 22,788,808 24,034,704
Infrastructure 843,185 843,185
Improvements other than buildings 8,168,850 8,168,850
Equipment 4,930,986 4,589,802
Total property, plant and equipment in service 36,731,829 37,636,541
Less accumulated depreciation 16,218,430) 13,902,811)
Net Property, Plant and Equipment in Service 20,513,399 23,733,730
Total Assets 33,048,742 31,578,851
Liabilities
Current Liabilities
Accounts payable 190,000 320,439
Accrued payroll and related liabilities 990,000 1,036,000
Accrued interest 350,765 364,295
Current portion:
Bonds payable 825,000 785,000
Interfund loan payable 72,898 69,262
Unearned revenue 1,893,000 20,000
Payable to Providence Health and Services - Washington 5,454,000 2,360,000
Due to contractual agencies 406,000
Total Current Liabilities 9,775,663 5,360,996
Noncurrent Liabilities, net of current portion
Bonds payable 23,250,000 24,075,000
Interfund loan payable 1,104,367 1,177,265
Other liabilities 112,000 249,000
Unamortized bond premium 320,802 337,045
Total Noncurrent Liabilities 24,787,169 25,838,310
Total Liabilities 34,5623832 31,199,306
Net Position
Net investment in capital assets 1,909,043) 510,045
Unrestricted (deficit) 394,953 130,500)
Total Net Position 1,514,090) 379,545
Total Liabilities and Net Position 33,048,742 31,578,851
117
118
Exhibit K -29
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Revenues, Expenses
and Change in Net Position
Year Ended December 31, 2014 2013
Operating Revenues
Net patient service revenues $ 17,853,000 20,948,000
Miscellaneous 151,351 932,406
Total Operating Revenues 18,004,351 21,880,406
Operating Expenses
Salaries and employee benefits 11,399,000 11,851,000
Purchased services 2,347,050 3,014,007
Supplies and maintenance 1,007,126 1,068,308
Administration and general 873,173 1,251,035
Depreciation 2,201,219 2,292,696
Total Operating Expenses 17,827,568 19,477,046
Earnings from Operations 176,783 2,403,360
Nonoperating Revenues (Expenses)
Investment income 104 2,730
Interest expense 1,270,392) 1,337,533)
Nonoperating grant 1,000 4,000
Loss on disposal of capital assets 1,246,969) 43,463)
Net Nonoperating Revenues (Expenses) 2,516,257) 1,374,266)
Earnings (Loss) before Contributions and Transfers 2,339,474) 1,029,094
Capital contributions 219,505 244,338
Contributions to Seward Community Health Center 14,582)
Transfers in 1,136, 752 1,136,104
Transfers out 910,418) 134,704)
Change in Net Position 1,893,635) 2,260,250
Net Position, beginning 379,545 1,880,705)
Net Position, ending $ 1,514,090) 379,545
118
Exhibit K -30
City of Seward, Alaska
Healthcare Facilities Enterprise Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Earnings from operations 176,783 $
Receipts from customers and users 15,836,556 22,666,406
Payments to suppliers 338,965) 5,035,526)
Payments to employees
2,292,696
11,445,000) 11,846,000)
Payments for interfund services used
Increase) decrease in assets:
873,173) 1,251,035)
Net cash flows from operating activities
4,338,795)
3,179,418 4,533,845
Cash Flows from Noncapital Financing Activities
175,350
Increase (decrease) in liabilities:
Transfers in
Accounts payable
1,136,752 1,136,104
Transfers out
2,957,000
910,418) 134,704)
Net cash flows from noncapital financing activities
5,000
226,334 1,001,400
Cash Flows for Capital and Related Financing Activities
Net Cash from Operating Activities 3,179,418 $ 4,533,845
Principal payments on long -term debt 785,000) 1,460,000)
Acquisition of property, plant, and equipment 227,857) 332,194)
Principal payments on interfund loans 69,262) 2,039,167)
Capital contributions received 220,505 233,756
Interest payments on long -term debt 1,300,165) 1,372,946)
Increase (decrease) in due to contractual agencies 406,000) 214,000
Net cash flows for capital and related financing activities 2,567,779) 4,756,551)
Cash Flows from Investing Activities
Investment income received 104 2,730
Net Increase in Cash and Investments 838,077 781,424
Cash and Investments, beginning 5,190,471 4,409,047
Cash and Investments, ending 6,028,548 5,190,471
Reconciliation of Cash and Investments to Statement of Net Position
Current assets 4,055,188 3,217,111
Restricted assets 1,973,360 1,973,360
Total Cash and Investments 6,028,548 5,190,471
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations 176,783 $ 2,403,360
Adjustments to reconcile earnings from operations to net cash
flows from operating activities:
Depreciation 2,201,219 2,292,696
Increase in allowance for doubtful accounts 298,000 23,000
Increase) decrease in assets:
Accounts receivable 4,338,795) 539,000
Other assets 188,650 175,350
Increase (decrease) in liabilities:
Accounts payable 130,439) 136,439
Other payables 2,957,000 1,029,000)
Accrued payroll and related liabilities 46,000) 5,000
Unearned revenue 1,873,000 12,000)
Net Cash from Operating Activities 3,179,418 $ 4,533,845
119
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120
Internal Service Funds
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.
121
Exhibit L -1
City of Seward, Alaska
Motor Pool Internal Service Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets
Cash and investments 736,050 1,267,851
Receivables:
Accrued interest 48,197 52,227
Interfund loans 226,613 75,571
Total Current Assets 1,010,860 1,395,649
Interfund Loans, net of current portion 1,717,944 915,470
Property, Plant and Equipment
Equipment and vehicles 6,162,868 5,948,624
Less accumulated depreciation 4,010,009) 3,571,607)
Net Property, Plant and Equipment 2,152,859 2,377,017
Total Assets 4,881,663 4,688,136
Liabilities
Current Liabilities
Accrued interest 97
Current portion of capital lease obligations 31,320
Total Liabilities 31,417
Net Position
Net investment in capital assets 2,152,859 2,345,697
Unrestricted 2,728,804 2,311,022
Total Net Position 4,881,663 4,656,719
Total Liabilities and Net Position 4,881,663 4,688,136
122
123
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, 2014 2013
Operating Revenues - vehicle rental 582,890 674,365
Operating Expenses
Depreciation 438,402 413,535
Supplies and maintenance 815 13,705
Total Operating Expenses 439,217 427,240
Earnings from Operations 143,673 247,125
Nonoperating Revenues (Expenses)
Gain on disposal of capital assets 1,120
Investment income 60,376 52,599
Insurance recovery 21,006
Interest expense 111) 4,231)
Net Nonoperating Revenues (Expenses) 81,271 49,488
Change in Net Position 224,944 296,613
Net Position, beginning 4,656,719 4,360,106
Net Position, ending 4,881,663 4,656,719
123
Exhibit L -3
City of Seward, Alaska
Motor Pool Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from Operating Activities
Receipts from vehicle rentals and other charges $ 582,890 $ 674,365
Payments to suppliers (815) (240,902)
Net cash flows from operating activities 582,075 433,463
Cash Flows for Capital and Related Financing Activities
Principal payments on capital lease obligations 31,320) 198,178)
Interest payments on capital lease obligations 208) 6,738)
Acquisition of equipment and vehicles 214,244) 179,765)
Insurance recovery 21,006
Proceeds from sale of capital assets 1,120
Net cash flows from capital and related financing activities (224,766) (383,561)
Cash Flows for Investing Activities
Interfund loan receipts
Interfund loan disbursements
Investment income received
75,571 71,745
1,029,087) -
64,406 56,424
Net cash flows from (for) investing activities (889,110) 128,169
Net Increase in Cash and Investments (531,801) 178,071
Cash and Investments, beginning 1,267,851 1,089,780
Cash and Investments, ending $ 736,050 $ 1,267,851
Reconciliation of Earnings from Operations to Net
Cash from Operating Activities
Earnings from operations $ 143,673 $ 247,125
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 438,402 413,535
Decrease in assets - prepaid expenses - 7,895
Decrease in liabilities - account payable (235,092)
Net Cash from Operating Activities $ 582,075 $ 433,463
124
Exhibit L -4
City of Seward, Alaska
Motor Pool Internal Service Fund
Schedule of Composition of Net Position
Year Ended December 31, 2014 2013
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 4,049,339 3,824,395
Total Net Position $ 4,881,663 $ 4,656,719
125
126
Exhibit L -5
City of Seward, Alaska
Compensated Annual Leave Internal Service Fund
Statement of Net Position
December 31, 2014 2013
Assets
Current Assets - cash and investments 475,070 415,200
Liabilities
Current Liabilities - accrued annual leave 119,049 109,956
Noncurrent Liabilities, net of current portion - accrued annual leave 356,021 305,244
Total Liabilities 475,070 415,200
126
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, 2014 2013
Operating Revenues - interfund charges $ 435,180 $ 385,937
Operating Expenses - salaries and employee benefits 435,180 385,937
Change in Net Position - -
Net Position, beginning
Net Position, ending $ $
127
Exhibit L -7
City of Seward, Alaska
Compensated Annual Leave Internal Service Fund
Statement of Cash Flows
Year Ended December 31, 2014 2013
Cash Flows from (for) Operating Activities
Receipts from interfund charges $ 435,180 $ 385,937
Payments to employees (375, 310) (425, 341)
Net cash flows from (for) operating activities 59,870 (39,404)
Cash and Investments, beginning 415,200 454,604
Cash and Investments, ending $ 475,070 $ 415,200
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 (for) operating activities - increase
decrease) in accrued annual leave 59,870 (39,404)
Net Cash from (for) Operating Activities $ 59,870 $ (39,404)
128
Exhibit M -1
City of Seward, Alaska
Teen Council Agency Fund
Statement of Changes in Assets and Liabilities
Balance at Balance at
January 1, December 31,
Year Ended December 31, 2014 2014 Additions Deletions 2014
Assets
Cash and investments $ 51,364 $ 24,389 $ 25,869 $ 49,884
Other assets 150 - - 150
Total Assets 51,514 24,389 25,869 $ 50,034
Liabilities
Accounts payable 7,241 5,818 $ 1,423
Other accrued liabilities 60 133 193
Due to Teen Council 44,213 24,256 20,051 48,418
Total Liabilities 51,514 24,389 25,869 $ 50,034
129
Exhibit N -1
City of Seward, Alaska
Schedule of Governmental Capital Assets
December 31, 2014 2013
Capital Assets
Land and land improvements $ 5,509,589 $ 5,432,289
Buildings 70,147,968 69,977,179
Improvements other than buildings 22,395,774 21,971,826
Equipment * 8,849,577 8,410,883
Construction in progress 258,593 168,272
Total Capital Assets $ 107,161,501 $ 105,960,449
All Exhibit N Schedules exclude the Motor Pool Internal Service Fund assets. Those assets are included in the
Governmental Capital Assets as reported in Note 4 to the financial statements.
130
Exhibit N -2
City of Seward, Alaska
Schedule of Changes in Governmental Capital Assets
131
Balance at Balance at
January 1, Additions/ Deletions/ December 31,
Year Ended December 31, 2014 2014 Reclass Reclass 2014
Land and land improvements 5,432,289 77,300 5,509,589
Buildings 69, 977,179 170,789 70,147, 968
Improvements other than buildings 21,971,826 423,948 22,395,774
Equipment 8,410,883 438,694 8,849,577
Construction in progress 168,272 102,972 12,651 258,593
105,960,449 1,213,703 12,651 107,161,501
131
City of Seward, Alaska
Schedule of Governmental Capital Assets by Function and Activity
December 31, 2014
Function and Activity
Land and
Land
Improve-
ments Buildings
Improve-
ments
Otherthan
Buildings
Exhibit N -3
Equipment Total
General Government
City Council /Mayor 44,554 44,554
City manager 495,092 495,092
City clerk
156,720
33,910 33,910
Finance
1,185,895 46,746
167,675 167,675
Community development 5,232 7,142 12,374
Municipal building 3,178,250 29,091 55,596 3,262,937
Alaska SeaLife Center 50,029,497 3,252,868 4,666,761 57,949,126
General services 1,479,080 8,005,937 53,025 9,538,042
Community and Senior Center 2,524,330 2,524,330
Non - departmental 5,509,589 49,063 19,805 5,578,457
Total General Government 5,509,589 57,265,452 11,287,896 5,543,560 79,606,497
Public Safety
Police 1,705,377 1,705,377
Jail 9,408 9,408
Animal control 156,720 156,720
Fire 1,185,895 46,746 874,369 2,107,010
Building inspection 2,600 2,600
Seward Volunteer Ambulance Corp 58,382 38,508 96,890
Total Public Safety 1,400,997 46,746 2,630,262 4,078,005
Public Works
Streets 254,567 9,487,895 278,538 10,021,000
Engineering 3,621 3,621
City shop 785,766 78,970 864,736
Total Public Works 1,040,333 9,487,895 361,129 10,889,357
Parks and recreation 744,071 1,573,237 251,957 2,569,265
Library - 9,697,115 62,669 9,759,784
Total Capital Assets
Allocated to Functions $ 5,509,589 70,147,968 22,395,774 8,849,577 106,902,908
Construction in progress 258,593
Total Capital Assets 107,161,501
132
Exhibit N -4
City of Seward, Alaska
Schedule of Changes in Governmental Capital Assets by Function and Activity
Year Ended December 31, 2014
133
Capital Capital
Assets at Assets at
January 1, Additions/ Deletions/ December 31,
Function and Activity 2014 Reclass Reclass 2014
General Government
City Council /Mayor 44,554 44,554
City manager 495,092 495,092
City clerk 33,910 33,910
Finance 97,115 70,560 167,675
Community development 12,374 12,374
Municipal building 3,251,710 11,227 3,262,937
Alaska Sealife Center 57,767,697 181,429 57,949,126
General services 9,538,042 9,538,042
Community and Senior Center 2,524,330 2,524,330
Non - departmental 5,501,157 77,300 5,578,457
Total General Government 79,265,981 340,516 79,606,497
Public Safety
Police 1,682,105 23,272 1,705,377
Jail 9,408 9,408
Animal control 156,720 156,720
Fi re 2,017,015 89,995 2,107, 010
Building inspection 2,600 2,600
Seward Volunteer Ambulance Corp 12,210 84,680 96,890
Total Public Safety 3,880,058 197,947 4,078,005
Public Works
Streets 9,574,888 446,112 10,021,000
Engineering 3,621 3,621
City shop 851,232 13,504 864,736
Total Public Works 10,429,741 459,616 10,889,357
Parks and recreation 2,456,613 112,652 2,569,265
Library 9,759,784 9,759,784
Construction in progress 168,272 102,972 12,651 258,593
105,960,449 1,213,703 12,651 107,161,501
133
City of Seward, Alaska
Schedule of Expenditures of Federal Awards
Year Ended December 31, 2014
Grant Title
Catalog of
Federal
Domestic
Assistance
Number
Department of Agriculture
54,594
Passed through State of Alaska Department
5,287
of Natural Resources -
3,000
2014 Volunteer Fire Assistance Grant 10.664
Department of Commerce
Passed through State of Alaska Department of
45.310 CED -14- 770 -198
of Education Et Early Development -
Alaska OWL Project FY14 IT Aide Award 11.557
Department of Defense
134
Navigation Projects - Seward Harbor 12.107
Department of Interior
Passed through State of Alaska Department of Fish and Game -
Seward Harbor Boat Sewage Pump -Out Station 15.616
Passed through State of Alaska Department of
Commerce, Community Et Economic Development -
Seward NE Harbor Fish Cleaning Station 15.668
Passed through State of Alaska Department
of Natural Resources -
Seward Historic Preservation Plan Revision 15.904
Passed through Kenai Mountains - Turnagain Arm
Communities Association -
Seward Historic Preservation Plan Revision 15.939
Total Department of Interior
Department of Justice
Bullet Proof Vest Partnership Program 16.607
Department of Transportation
Passed through State of Alaska Department
of Transportation and Public Facilities -
Exhibit 0 -1
Federal
Total Share of
Grant Grant Expen-
Number Award ditures
2014VFA $ 9,455 $ 9,455
02- 42- 1310560 6,160 5,219
P2- 010391 11,386,763 11,386,763
COOP 14 -157 39,576 12,638
10 -CIAP -036 579,000 54,594
HPF -13596 8,052 5,287
N/A 3,000 3,000
Passed through State of Alaska Department
75,519
N/A
AK Highway Safety DUI High Visibility Enforcement 20.607 154AL- 14- 01- 00(A) -12
AK Highway Safety DUI High Visibility Enforcement 20.608 164AL- 15- 01- 00(A) -9
Total Department of Transportation
Institute of Museum and Library Services
Passed through State of Alaska Department
of Education and Early Development -
Continuing Education Program 45.310 CED -14- 770 -198
Department of Health Et Human Services
Seward Community Health Center - HRSA 93.224 H80CS26600
134
1,282 1,282
881 881
1,101 1,101
1,982
2,000 2,000
1,039,750 864,354
Exhibit 0 -1, continued
City of Seward, Alaska
Schedule of Expenditures of Federal Awards, continued
Year Ended December 31, 2014
Catalog of
Federal Federal
Domestic Total Share of
Assistance Grant Grant Expen-
Grant Title Number Number Award ditures
Department of Homeland Security
Assistance to Firefighters - Radios
Assistance to Firefighters - Operation and Safety
Total CFDA 97.044
Passed through State of Alaska Department of
Commerce, Community Et Economic Development -
ASFPM Conference
Passed through State of Alaska Department
of Military and Veterans Affairs:
September 2012 Flood (FEMA)
October 2013 Flood (FEMA)
Total CFDA 97.036
Dairy Hill Drainage Upgrade (FEMA)
State Homeland Security Program
Total Department of Homeland Security
97.044 EMW- 2009 -FO -11029 $ 69,909 $ 1,258
97.044 EMW- 2012 -FO -04243 24,377 24,377
25,635
97.023 AR -29820 5,000 4,573
97.036 FEMA- 4094 -DR -AK 390,187 39,493
97.036 FEMA- 4161 -DR -AK 121,336 24,448
63,941
97.039 1865.0003
97.067 11 SHSP- GR34076
262,487 199,195
48,336 48,336
341,680
Total Federal Financial Assistance $ 12,688,254
135
City of Seward, Alaska
Schedule of State Financial Assistance
Year Ended December 31, 2014
Grant Title
Department of Commerce, Community
and Economic Development
Community Library
Fisheries Resource Landing
Harbor Restroom Renovations
Marine Industrial Center Expansion
State Revenue Sharing
Passed through Kenai Peninsula Borough -
Dairy Hill Mitigation and Land Acquisition
Total Department of Commerce, Community
and Economic Development
Department of Military and Veteran Affairs
Dairy Hill Drainage Upgrade
September 2012 Flood
Oct 2013 Flood /Storm
Total Department of Military and Veteran Affairs
Department of Revenue
Fish Taxes
Liquor Licenses
Commercial Passenger Vessel Tax 2011
Commercial Passenger Vessel Tax 2012
Passed through Kenai Peninsula Borough:
Commercial Passenger Vessel Tax 2011
Total Department of Revenue
Department of Natural Resources
2014 Fire Incident in Soldotna
Department of Administration
PERS Relief
Department of Transportation and Public Facilities
Seward Small Boat Harbor D -Float Replacement
Department of Education and Early Development
Public Library Assistance
Public Library Assistance
Total Department of Education and Early Development
Alaska Energy Authority
Seward Power Plant Intergration
Total State Financial Assistance
Major program
136
Exhibit 0 -2
State
Total Share of
Grant Grant Expendi-
Number Award tures
11 -DC -374 4,700,000 10,586
N/A 18,247 18,247
12 -DC -615 130,000 19,640
13 -GO -014 10,000,000 1,731,339
N/A 214,826 214,826
14 -DC -070 175,967 146,307
2,140,945
1865.0003 87,496 66,399
FEMA- 4094 -DR -AK 130,062 13,164
FEMA- 4161 -DR -AK 40,177 8,149
87,712
N/A 482,543 482,543
N/A 16,700 16,700
N/A 324,865 290,271
N/A 343,265 297,354
N/A 1,086,570 370,885
1,457,753
73403140 18,921 18,921
N/A 1,423,759 1,423,759
13 -HG -009 1,143,286 233,484
PLA -14- 770 -68 6,600 2,637
PLA -14- 770 -65 6,650 1,298
3,935
7910011 5,940,000 906,907
6,273,416
City of Seward, Alaska
Notes to Schedule of Expenditures of Federal Awards and Schedule of State
Financial Assistance
Year Ended December 31, 2014
1. Basis of Presentation
The accompanying schedule of expenditures of federal awards and the schedule of state financial
assistance (the "Schedules ") include the federal and state grant activity of City of Seward, Alaska
under programs of the federal government and State of Alaska for the year ended December 31,
2014. The information in the Schedules is presented in accordance with the requirements of Office
of Management and Budget (OMB) Circular A -133, Audits of States, Local Governments, and Non -
Profit Organizations and the State of Alaska Audit Guide and Compliance Supplement for State
Single Audits. Because the Schedules present only a selected portion of the operations of City of
Seward, Alaska, they are not intended to and do not present the financial position, changes in net
position or cash flows of City of Seward, Alaska.
Expenditures reported on the Schedules are reported on the modified accrual basis of accounting.
2. Navigation Projects - Seward Harbor - Federal Assistance
In 2014, the City has reported federal expenditures in the amount of $11,386,763 associated with a
Navigation Project conducted and administered by the Army Corps of Engineers. Amounts reported
as "expended" represent receipt of the non -cash contribution of major rebuild of the Seward Harbor
Breakwater. In 2014, the City recorded receipt of this asset in the Harbor Enterprise Fund and has
capitalized this item as a land improvement.
3. Commercial Passenger Vessel Tax - State Assistance
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, is reported as restricted net position in
the fund financial statements. At December 31, 2014, the cumulative unspent Vessel Tax receipts
were $2,066,039. Total vessel tax funds expended in 2014 and reported on the schedule of state
financial assistance were $958,510.
137
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138
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 140
Table 2 Changes in Net Position 141 -142
Table 3 Fund Balances of Governmental Funds 143
Table 4 Changes in Fund Balances of Governmental Funds 144
Table 5 General Fund Revenues by Source 145
Table 6 General Fund Tax Revenues by Source 146
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 147
Table 8 Property Tax Levies and Collections 148
Table 9 Assessed and Estimated Actual Value of Taxable Property 149
Table 10 Principal Property Taxpayers 150
Table 11 Principal Taxable Sales by Line of Business 151
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 152
Table 13 Ratio of General Obligation Bonded Debt to Assessed Value and General Obligation
Bonded Debt per Capita 153
Table 14 Computation of Direct and Overlapping Bonded Debt 154
Table 15 Legal Debt Margin 155
Table 16 Revenue Bond Coverage - Electric Enterprise Fund 156
Table 17 Revenue Bond Coverage - Harbor Enterprise Fund 157
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 158
Table 19 Principal Employment by Industry 159
Table 20 Full -Time Equivalent Employees by Fund 160
Table 21 Operating Indicators by Function 161
Table 22 Capital Asset Statistics by Function 162
Table 23 Property Value, Construction, and Bank Deposits 163
Table 24 Miscellaneous Statistics 164
139
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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.
141
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Expenses
Governmental activities:
General government 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 3,291,580
Public safety 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 3,476,471
Public works 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 1,635,967
Parks and recreation 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 1,315,282
Library 367,077 378,487 384,835 398,108 478,385 437,082 466,300 446,200 489,548 804,539
Clinic 1,454,476
Healthcare facilities 468,703 924,795 535,226 412,797 3,910,190 2,804,000
Sealife Center 1,028,302 1,578,315 1,672,365 1,736,147 1,294,636 731,528 51,939 965,206 848,940 1,279,570
Unallocated interest 432,438 347,367 306,989 116,906 236,982 1,505,248 173,993 206,778 208,840 157,984
Total governmental activities expenses 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 13,415,869
Business -type activities:
Electric 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 10,255,601
Water 760,363 813,245 859,799 1,194,311 1,066,860 1,093,419 1,230,833 1,246,997 1,087,747 1,175,129
Wastewater 705,508 693,096 747,484 901,759 916,909 1,078,318 1,044,654 1,013,492 1,015,474 1,117,152
Harbor 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 3,792,623
Seward Marine Industrial Center 1,521,930 1,278,774 1,076,730 1,149,453 990,466 926,290 1,081,862 928,458 899,343 1,013,658
Healthcare facilities 20,416,615 21,856,797 20,858,042 20,344,929
Parking 112,013 117,150 129,623 119,723 118,309 157,229 205,407 237,522 146,239 214,775
Total business -type activities expenses 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 37,913,867
Total Primary Government Expenses 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 51,329,736
Program Revenues
Governmental activities:
Charges for services:
General government 61,798 106,589 400,074 196,240 223,545 201,335 190,795 184,410 202,893 282,318
Public safety 687,763 761,316 706,575 669,988 744,939 682,906 740,204 809,645 897,319 937,659
Public works 219,843 239,984 111,756 116,833 84,849 168,196 40,910 36,721 30,565 20,383
Parks and recreation 565,168 529,289 592,063 627,038 622,067 608,361 620,943 609,342 653,054 663,298
Library 8,601 8,677 7,736 12,800 14,799 13,794 9,953 9,208 29,911 39,707
Clinic 62,306
Healthcare facilities 2,569,886
Operating grants and contributions 157,809 148,785 680,176 84,144 542,354 620,310 1,128,278 1,037,711 1,002,434 1,148,124
Capital grants and contributions 880,372 2,124,245 1,459,744 999,171 2,860,172 1,709,977 3,573,497 3,442,599 23,034 819,241
Total governmental activities program revenues: 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 3,973,036
Business -type activities:
Electric 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 11,433,004
Water 1,019,832 1,008,765 996,633 998,541 972,713 1,034,888 1,069,732 1,150,109 1,280,710 1,227,631
Wastewater 791,988 811,546 800,168 801,095 796,454 851,416 864,740 929,514 960,591 1,016,890
Harbor 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 3,212,432
Seward Marine Industrial Center 324,828 286,640 290,221 304,517 263,775 296,139 413,454 414,737 391,954 469,793
Healthcare facilities 16,838,000 18,728,364 21,880,406 18,004,351
Parking 177,098 175,792 182,133 240,339 162,120 192,046 268,105 293,443 312,248 293,379
Operating grants and contributions 1,260,476 65,247 159,595 445,228 2,674,610 401,734 154,295 170,531 472,944
Capital grants and contributions 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 14,713,420
Total business -type activities program revenues 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 50,843,844
Total Primary Government Revenues 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 54,816,880
Net
Governmental activities 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( 9,442,833(
Business -type activities 2,421,335 204,532 2,793,257 1,616,888 738,779( 911,945 2,723,844( 1,665,635( 4,962,438 12,929,977
Total Primary Government Net Expense 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( 3,487,144
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.
141
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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
2005 787,503 3,411,283 96,614 284,656 1,804 4,581,860
2006 847,875 3,518,435 77,714 310,570 1,479 4,756,073
2007 873,513 4,068,600 76,609 343,162 1,381 5,363,265
2008 953,957 4,137,758 80,126 362,004 1,236 5,535,081
2009 975,687 3,585,304 84,922 285,313 1,329 4,932,555
2010 954,687 3,742,751 75,317 328,396 1,003 5,102,154
2011 1,001,020 4,147,010 78,574 334,824 1,821 5,563,249
2012 1,013,580 4,189,330 76,160 380,210 1,856 5,661,136
2013 1,276,898 4,583,057 81,670 408,256 1,644 6,351,525
2014 986,449 4,535,707 82,490 421,981 1,005 6,027,632
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 Hospital 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.
146
City of Seward, Alaska
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
Per $1,000 of Assessed Value)
Fiscal Year City Borough (1)
2005 3.12 6.50
2006 3.12 6.50
2007 3.12 5.50
2008 3.12 4.50
2009 3.12 4.50
2010 3.12 4.50
2011 3.12 4.50
2012 3.12 4.50
2013 3.12 4.50
2014 3.12 4.50
1) Includes Kenai Peninsula Borough only.
8.12
2) Kenai Peninsula Community College.
0.50
3) Seward /Bear Creek Flood Service Area created effective 2004.
Source: "Alaska Taxable, 2014"
0.50
147
Table 7
KPCC Flood Service
2) 3) Total
0.10 0.50 10.22
0.10 0.50 10.22
0.00 0.50 9.12
0.00 0.50 8.12
0.00 0.50 8.12
0.00 0.50 8.12
0.00 0.50 8.12
0.00 0.50 8.12
0.00 0.50 8.12
0.00 0.50 8.12
City of Seward, Alaska
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected in the Fiscal Year of
the Levy
Fiscal Total Tax Levy
Year for Fiscal Year Amount
652
2005 762,207 744,646
2006 818,043 817,364
2007 847,411 816,305
2008 919,341 903,535
2009 948,693 937,198
2010 966,821 944,796
2011 966,657 945,194
2012 979,589 944,950
2013 1,237,645 1,212,490
2014 954,497 942,952
Source: Kenai Peninsula Borough
Collections in
Percentage of Subsequent
Levy Years
97.696%
99.917%
96.329%
98.281%
98.788%
97.722%
97.780%
96.464%
97.967%
98.790%
148
Table 8
Total Collections to Date
Percentage of
Amount Levy
17,561 762,207 100.000%
652 818,016 99.997%
31,079 847,384 99.997%
15,779 919,314 99.997%
11,468 948,666 99.997%
22,001 966,797 99.997%
21,120 966,314 99.965%
34,003 978,953 99.935%
17,049 1,229,539 99.345%
942,952 98.790%
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Table 11
City of Seward, Alaska
Principal Taxable Sales by Line of Business
December 31, 2014
Percent of CY05 Percent of
CY14 Taxable Total Taxable Taxable Total Taxable
Type of Business Sales (1) Sales Sales (2) Sales
Retail Trade 45,384,945 39.2% 47,716,275 54.2%
Services (2) 2,041,289 1.8% 33,845,081 38.5%
Transportation, Communications, Public Utilities 1,857,858 1.6% 3,109,097 3.5%
Finance, Insurance, Real Estate 1,180,937 1.0% 1,757,644 2.0%
Construction 619,147 0.5% 705,441 0.8%
Manufacturing 860,747 0.7% 496,808 0.6%
Agriculture, Forestry, Fisheries 9,281 0.0% 254,646 0.3%
Wholesale Trade 5,205,213 4.5% 106,760 0.1%
Guiding Water 20,198,262 17.5% 0.0%
Restaurant /Bar 13,799,798 11.9% 0.0%
Hotel /Motel /Bed Et Breakfast 12,789,342 11.1% 0.0%
Public Administration 7,207,211 6.2% 0.0%
Information 2,575,822 2.2% 0.0%
Rental Residential Property 1,907,146 1.6% 0.0%
115,636,998 100% 87,991,752 100%
1) Source: Kenai Peninsula Borough, Finance Dept, Sales Tax Division
2) Services category is broken down in more detail in 2014; all blank Types of Business in 2005 can be considered "Services"
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 sales
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 sales by Line of Business.
151
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Table 13
City of Seward, Alaska
Ratio of General Bonded Debt to Assessed Value and
General Bonded Debt per Capita
Last Ten Fiscal Years
General Bonded Debt # ^
153
Ratio of General
Fiscal Assessed Bonded Debt to General Bonded
Year Population (1) Value (2) Governmental Business -Type Total Assessed Value Debt per Capita
2005 2540 247,173 6,349 521 6,870 2.78% 2,705
2006 2606 263,529 5,576 374 5,950 2.26% 2,283
2007 2627 278,153 4,738 222 4,960 1.78% 1,888
2008 2661 292,802 4,016 169 4,185 1.43% 1,573
2009 2609 301,784 3,246 114 3,360 1.11% 1,288
2010 2693 311,277 2,426 59 2,485 0.80% 923
2011 2733 304,944 3,480 1,550 5,030 1.65% 1,840
2012 2754 314,828 3,480 710 4,190 1.33% 1,521
2013 2487 396,613 3,480 - 3,480 0.88% 1,399
2014 2768 292,233 3,395 3,395 1.16% 1,227
Amounts expressed in thousands. Excludes revenue bonds of Business -Type entities.
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) Source: Alaska Department of Commerce, Community Et Economic Development Certified Municipal Population.
2) Source: Kenai Peninsula Borough (expressed in thousands).
153
City of Seward, Alaska
Computation of Direct and Overlapping Bonded Debt
December 31, 2014
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
3,395,000 (1) 100% 3,395,000
43,000,000 (2) 4.2% (3) 1,806,000
S 46.395.000 S 5.201.000
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 $44,660,000 less Central Emergency Services unrelated to Seward.
3) Based on ratio of City of Seward assessed value (real and personal property = $292,232,945)
to total assessed value of the Kenai Peninsula Borough ($6,970,238,357)
Source: "2014 Alaska Taxable" p. 50, 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.
154
Table 15
City of Seward, Alaska
Legal Debt Margin
December 31, 2014
No debt limit mandated by law.
155
Table 16
City of Seward, Alaska
Revenue Bond Coverage
Electric Enterprise Fund
Last Ten Fiscal Years
Debt Service Requirements (3)
156
Net Revenue
Fiscal Gross Operating Available for
Year Revenues(1) Expenses(2) Debt Service Principal Interest Total Coverage (4)
2005 $ 7,542,541 5,539,190 2,003,351 165,000 129,181 294,181 6.81
2006 8,246,477 7,855,990 390,487 210,000 87,500 297,500 1.31
2007 8,709,107 6,651,455 2,057,652 195,000 80,938 275,938 7.46
2008 8,920,730 6,396,886 2,523,844 205,000 175,825 380,825 6.63
2009 9,173,257 8,589,154 584,103 305,000 367,023 672,023 0.87
2010 8,903,337 6,854,897 2,048,440 315,000 353,586 668,586 3.06
2011 10,410,908 8,620,529 1,790,379 330,000 339,298 669,298 2.68
2012 11,344,047 7,844,098 3,499,949 345,000 323,987 668,987 5.23
2013 11,139,471 8,531,996 2,607,475 360,000 308,210 668,210 3.90
2014 11,236,195 8,073,997 3,162,198 380,000 290,053 670,053 4.72
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.
156
Table 17
City of Seward, Alaska
Revenue Bond Coverage
Harbor Enterprise Fund
Last Ten Fiscal Years
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; both of these bonds were refunded
in 2014.
157
Debt Service Requirements (3)
Net Revenue
Fiscal Gross Revenues Operating Available for
Year (1) Expenses (2) Debt Service Principal Interest Total Coverage (4)
2005 $ 2,002,229 1,310,211 692,018 105,000 150,542 255,542 2.71
2006 2,752,802 1,388,971 1,363,831 110,000 293,848 403,848 3.38
2007 2,905,013 1,472,842 1,432,171 310,000 376,504 686,504 2.09
2008 2,896,828 1,506,685 1,390,143 325,000 374,203 699,203 1.99
2009 2,632,937 1,903,985 728,952 340,000 356,540 696,540 1.05
2010 2,850,942 1,784,887 1,066,055 360,000 337,990 697,990 1.53
2011 3,017,003 2,040,903 976,100 385,000 318,459 703,459 1.39
2012 3,228,955 2,171,180 1,057,775 400,000 299,765 699,765 1.51
2013 3,266,821 2,187,206 1,079,615 420,000 284,374 704,374 1.53
2014 3,257,122 2,358,618 898,504 294,885 179,484 474,369 1.89
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; both of these bonds were refunded
in 2014.
157
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City of Seward, Alaska
Principal Employment by Industry - Current and Nine Years Ago
Industry
T.hlo 10
2014 2005
Resident Resident
Workers Workers
Trade, Transportation and Utilities 232 238
Leisure and Hospitality 154 205
Educational and Health Services 121 123
Local Government 109 111
State Government 107 140
Professional and Business Services 90 37
Manufacturing 50 62
Construction 35 56
Other 28 26
Financial Activities 27 35
Natural Resources and Mining 25 26
Information 5 11
983 1070
Source: Alaska Department of Labor and Workforce Development, Research and Analysis.
Http: / /live. taborstats.alaska.gov /alari/
Beginning in 2012, the State of Alaska by statute prohibits release of data relative to the number
of employees working for an employer. Nor can it rank employers according to size.
Beginning in 2014, the City of Seward is providing Employment by Industry data to demonstrate
the comparative change in employment over time by Industry rather than Employer.
159
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Table 23
City of Seward, Alaska
Property Value, Construction (3), and Bank Deposits
Last Ten Fiscal Years
1) "Estimated Actual Value" from Table 9.
2) Bank deposit data as of 12/31 through 2013. Beginning 2014, data as of June 30.
Source: https: / /www5.fdic.gov/ sod /sodMarketRpt. asp ?barltem= &sState= all &sZipCode =99664
3) Source: Construction Data - City of Seward Building Department
163
Commercial Construction Residential Construction
Fiscal Total Real Property Number of Value of Number of Value of Bank Deposits
Year Value (1) Permits Permits Permits Permits 2)
2005 198,141,000 21 888,820 33 1,974,323 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 1,928,879 60,821,068
2009 244,392,800 31 18,694,201 24 966,926 54,337,541
2010 242,037,200 36 4,376,321 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 6,254,641 18 717,400 82,765,489
2013 248,357,800 30 14,551,644 22 927,616 75,607,197
2014 249,826,500 25 8,072,217 26 1,070,400 79,852,000
1) "Estimated Actual Value" from Table 9.
2) Bank deposit data as of 12/31 through 2013. Beginning 2014, data as of June 30.
Source: https: / /www5.fdic.gov/ sod /sodMarketRpt. asp ?barltem= &sState= all &sZipCode =99664
3) Source: Construction Data - City of Seward Building Department
163
Table 24
City of Seward, Alaska
Miscellaneous Statistics
December 31, 2014
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 33,401
Fire Department - Number of volunteers 30
Sewer System - Maximum daily capacity (gallons) 1,300,000
Water System - Maximum daily capacity (gallons) 8,856,000
Electric System:
20
Miles of distribution lines 70
Miles of transmission lines 42
Harbor - Number of permanent slips 654
City Employees:
Regular Employees - Full -time equivalent 95
Temporary Employees - Full -time equivalent 9
Demographics:
School Enrollment, City of Seward (3) 588
Unemployment Rate - Borough -Wide (1) 8%
Population (2) 2,768
Per - capita Personal Income (4) 48,728
Qualified Voters 1,732
Facilities and Services not included in the reporting entity:
Education:
Elementary School
Number of students enrolled 277
Number of teachers 20
Middle School
Number of students enrolled 125
Number of teachers 9
High School
Number of students enrolled 186
Number of teachers 13
Alaska Vocational Technical Center
Number of students served annually 1,249
Number of teachers (includes Instructional Aides) 35
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 long -term care beds 40
Number of employees:
Exempt 11
Non - Exempt (includes non -staff rotating physicians) 122
Peninsula Borough; assumed to be representative of Seward, as specific Seward data unavailable
http: // live. taborstats.alaska.gov/tabforce/labdata.cfm?s=14Eta=O)
2) Source: Alaska Department of Commerce, Community Et Economic Development Certified Municipal Population.
3) State of Alaska Department of Education Et Early Development - https: / /education. alaska. gov /stats/
4) Source: US Dept. of Commerce, Bureau of Economic Analysis. Personal income is estimated by multiplying Kenai Peninsula
Borough per- capita personal income by Seward population, as Seward - specific data unavailable
http://www.bea.gov/iTable/index—regional.cfm)
164
I Tel: 907 - 278 -8878 3601 C Street, Suite 600
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, 2014, 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 September
21, 2015. 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, and accordingly, this report does
not include reporting on internal control over financial reporting or instances of reportable
noncompliance associated with the operating account of Providence Seward Medical and Care
Center.
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. 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.
BDO USA, LLP, a Delaware Limited Liability partnership, is the U.S. member of BDO International Limited, a UK company Limited by guarantee, and forms part of the
international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
165
Compliance and Other Matters
As part of obtaining reasonable assurance about whether City of Seward's financial statements
are free from 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.
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.
1.t)o tts fi, L b P
Anchorage, Alaska
September 21, 2015
166
I Tel: 907 - 278 -8878 3601 C Street, Suite 600
Fax: 907 - 278 -5779 Anchorage, AK 99503
www.bdo.com
Independent Auditor's Report on Compliance For Each Major Federal Program
and Report on Internal Control Over Compliance Required by OMB Circular A -133
Honorable Mayor and City Council
City of Seward, Alaska
Report on Compliance for Each Major Federal Program
We have audited City of Seward's compliance with the types of compliance requirements
described in the OMB Compliance Supplement that could have a direct and material effect on
each of City of Seward's major federal programs for the year ended December 31, 2014. City of
Seward's major federal programs are identified in the summary of auditor's results section of
the accompanying schedule of findings and questioned costs.
Management's Responsibility
Management is responsible for compliance with the requirements of laws, regulations,
contracts, and grants applicable to its federal programs.
Auditor's Responsibility
Our responsibility is to express an opinion on compliance for each of City of Seward's major
federal 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
OMB Circular A -133, Audits of States, Local Governments, and Non - Profit Organizations. Those
standards and OMB Circular A -133 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 federal 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 federal program. However, our audit does not provide a legal determination of City of
Seward's compliance.
BDO USA, LLP, a Delaware Limited liability partnership, is the U.S. member of BDO International Limited, a UK company Limited by guarantee, and forms part of
the international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
167
Opinion on Each Major Federal 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 federal programs for the year ended December 31, 2014.
Other Matters
The results of our auditing procedures disclosed an instance of noncompliance, which is
required to be reported in accordance with OMB Circular A -133 and which is described in the
accompanying schedule of findings and questioned costs as item 2014 -001. Our opinion on each
major federal program is not modified with respect to this matter.
City of Seward's response to the noncompliance finding 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 federal program to determine the auditing procedures that are
appropriate in the circumstances for the purpose of expressing an opinion on compliance for
each major federal program and to test and report on internal control over compliance in
accordance with OMB Circular A -133, 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 federal 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 federal 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 federal 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.
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 over compliance that we consider to be
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material weaknesses. However, we identified a certain deficiency in internal control over
compliance, as described in the accompanying schedule of findings and questioned costs as item
2014 -001 that we consider to be a significant deficiency.
City of Seward's response to the internal control over compliance finding 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.
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 OMB Circular A -133. Accordingly, this report is not suitable for any other
purpose.
1.t)o tts fi, L b P
Anchorage, Alaska
September 21, 2015
169
I Tel: 907 - 278 -8878 3601 C Street, Suite 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, 2014. 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.
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, 2014.
BDO USA, LLP, a Delaware Limited liability partnership, is the U.S. member of BDO International Limited, a UK company Limited by guarantee, and forms part of the
international BDO network of independent member firms.
BDO is the brand name for the BDO network and for each of the BDO Member Firms.
170
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.
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. 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.
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.
J)o asfi, LbP
Anchorage, Alaska
September 21, 2015
171
City of Seward, Alaska
Schedule of Findings and Questioned Costs
Year Ended December 31, 2014
Section I - Summary of Auditor's Results
Financial Statements
Type of auditor's report issued: Unmodified
Internal control over financial reporting:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified? yes X none reported
Noncompliance material to financial statements noted? yes X no
Federal Awards
Internal control over major federalprograms:
Material weakness(es) identified? yes X no
Significant deficiency(ies) identified? X yes none reported
Type of auditor's report issued on compliance for
major federal programs: Unmodified
Any audit findings disclosed that are required to be reported
in accordance with Section 510(a) of OMB Circular A -133? X yes no
Identification of major federal programs:
CFDA Number Name of Federal Program or Cluster Agency
93.224 HRSA Health Care Cluster Department of Health and
Human Services
12.107 Navigation Projects - Seward Harbor Department of Defense
Dollar threshold used to distinguish between a Type A and Type B programs: $ 300,000
Auditee qualified as low -risk auditee?
State Financial Assistance
Type of auditor's report issued on compliance for
major programs:
Internal control over major programs:
Material weakness(es) identified?
Significant deficiency(ies) identified?
Dollar threshold used to distinguish a state major program:
172
yes X no
Unmodified
yes X no
yes X none reported
75,000
City of Seward, Alaska
Schedule of Findings and Questioned Costs, continued
Year Ended December 31, 2014
Section II - Financial Statement Findings Required to be Reported in Accordance with
Government Auditing Standards
There were no financial statement findings required to be reported in accordance with
Government Auditing Standards.
Finding 2014 -001
Agency
CFDA No.
Program
Award No
Section III - Federal Award Findings and Questioned Costs
Program Income, Noncompliance and
Significant Deficiency in Internal Control over Compliance
U.S. Department of Health and Human Services
93.224
Consolidated Health Centers
H80CS26600 Award Year FY14
Criteria or specificPer item J.2. of the Compliance Supplement for the Health Center Cluster,
requirement health centers are required to make every reasonable effort to collect
appropriate reimbursement for their costs in providing health services to
persons eligible for medical assistance under Title XIX of the Social Security
Act (Medicaid), entitled to insurance benefits under Title XVIII of the Social
Security Act (Medicare) or entitled to assistance for medical expenses under
any other public assistance program or private health insurance program.
Condition During the fiscal year, the Health Center opened to the public before
implementing the medical billing software necessary to bill insurance or
other medical assistance programs. Billing was not performed for a period
of approximately three months.
Questioned Costs There are no known questioned costs.
Context This is the first year the Health Center has been in operation. The Health
Center was opened prior to bringing the billing system online. Billing
functions were established approximately three months after opening.
Based on our review of a HRSA site visit, the billing system has been
implemented and was deemed appropriately functioning.
Effect The lack of software in the beginning part of the year served to reduce
possible program income for that time period.
Cause The Health Center was in high demand and was opened to treat patients
prior to the necessary billing software being obtained.
Recommendation We recommend that the Health Center continue to operate the medical
billing software and bill third parties before expensing the services to the
grant.
Views of Responsible See the corrective action plan.
Officials and Planned
Corrective Actions
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City of Seward, Alaska
Schedule of Findings and Questioned Costs, continued
Year Ended December 31, 2014
Section IV - State Award Findings and Questioned Costs
There were no State award findings and questioned costs required to be reported in accordance
with the State of Alaska Audit Guide and Compliance Supplement for State Single Audits.
174
City of Seward, Alaska
Summary Schedule of Prior Audit Findings
Year Ended December 31, 2014
Financial Statement Findings and Questioned Costs
Finding 2013 -001 Year End Inventory Count Procedures
Significant Deficiency
Condition Inventory was overstated due to incomplete reconciliation and adjustment.
Status Resolved.
State Award Findings and Questioned Costs
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 FY13
Condition AEA reports were not submitted within 30 days of month end as required by
the grant agreement.
Status Resolved.
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City of Seward, Alaska
Corrective Action Plan
Year Ended December 31, 2014
Person Responsible Kris Erchinger
907 - 224 -4064
kerchinger@cityofseward. net
Federal Award Findings
Finding 2014 -001 Program Income
Corrective Action First -time recipients of Section 330 federal grant funds from the
Department of Health 8t Human Services, Health Resources and Services
Administration are required to meet specific program requirements to
operate as a federally qualified health center. HRSA allows a new -start
clinic only 120 days from the date of their Notice of Grant Award, to open
the doors to the clinic and begin seeing patients. Unfortunately, this was a
new start clinic with no employees. The Board of the Seward Community
Health Center had to recruit and hire an executive director who then hired
administrative staff, recruited new physicians and nursing staff, remodeled
a clinic space, purchased supplies and equipment, then started seeing
patients. It took time for new staff to research appropriate electronic
health records programs, clinic practice management, and billing software,
for the Board to approve those major purchases, and for staff to purchase
and install the hardware and then implement the software programs and
obtain training to operate them. In addition, prior to billing patients for
services, the clinic needed to establish a fee schedule, enroll as a
participating provider with commercial and managed -care payers in the
area, obtain approval from Medicare as a federally qualified health center
for billing purposes, develop an accounts receivable system and all
associated financial policies and procedures, develop a sliding fee scale,
etc. and train staff in proper medical billing procedures.
During the first year of operation (2014), the clinic ended the year with an
accounts receivable balance of $115,417.89, with an offset of an estimated
67,735.49 in allowances for uncollectible accounts. However, the City of
Seward contributed $700,000 to the clinic in its first year of operations for
the purpose of providing start -up funding for the new clinic, such that no
federal funds were at risk for the portion of the receivables not collected.
Expected Completion All necessary billing systems and personnel were in place prior to the end of
2014.
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