HomeMy WebLinkAbout09252023 City Council LAYDOWN 2 Finance Dept Seward, City of Final ACFR 2022 City of Seward, Alaska
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Annual Comprehensive Financial Report
Year Ended December 31, 2022
Prepared by City of Seward Finance Department
Annual Comprehensive Financial Report
of the
City of Seward, Alaska
For the Fiscal Year Ended
December 31 , 2022
Sue McClure
Mayor
Norm Regis
Acting City Manager
Prepared by the Finance Department
Sully Jusino
Finance Director
City of Seward, Alaska
Table of Contents
Exhibit No. Page No.
INTRODUCTORY SECTION
Letter of Transmittal I-V
GFOA Certificate of Achievement VI
List of Principal Officials VII
Organization Chart VIII
FINANCIAL SECTION
Independent Auditor's Report 1-4
Management Discussion and Analysis (MDEtA) 5-16
Basic Financial Statements:
Government-wide Financial Statements:
Statement of Net Position A-1 17-18
Statement of Activities B-1 19
Fund Financial Statements:
Balance Sheet - Governmental Funds C-1 20
Reconciliation of Governmental Funds Balance Sheet to
Statement of Net Position C-2 21
Statement of Revenues, Expenditures and Changes
in Fund Balances - Governmental Funds D-1 22
Reconciliation of Statement of Revenues, Expenditures
and Change in Fund Balances of Governmental Funds to the
Statement of Activities D-2 23
Proprietary Funds:
Statement of Net Position E-1 24-25
Statement of Revenues, Expenses and Changes in Net Position E-2 26
Statement of Cash Flows E-3 27-28
Notes to Financial Statements 29-67
City of Seward, Alaska
Table of Contents, Continued
Exhibit No. Page No.
Required Supplementary Information:
Schedule of Revenues, Expenditures, and Change in Fund Balance -
Original and Final Budget and Actual:
General Fund F-1 68
Public Employees' Retirement System:
Schedule of the City's Proportionate Share of the Net Pension Liability G-1 69
Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset) G-2 70
Schedule of the City's Contributions (Pension) G-3 71
Schedule of the City's Contributions (OPEB) G-4 72
International Brotherhood of Electrical Workers (IBEW) Defined Benefit
Pension Plan - Schedule of the City's Contributions (Pensions) G-5 73
Notes to Required Supplementary Information 74-75
Additional Supplementary Information:
General Fund -
Schedule of Revenues, Expenditures and Changes in
Fund Balance - Budget and Actual H-1 76-81
Other Governmental Funds:
Combining Balance Sheet 1-1 82-83
Combining Statement of Revenues, Expenditures
and Changes in Fund Balances 1-2 84-85
Nonmajor Enterprise Funds:
Combining Statement of Net Position J-1 86
Combining Statement of Revenues, Expenses and Changes in Net Position J-2 87
Combining Statement of Cash Flows J-3 88
Internal Service Funds:
Combining Statement of Net Position K-1 89
Combining Statement of Revenues, Expenses and Changes in Net Position K-2 90
Combining Statement of Cash Flows K-3 91
City of Seward, Alaska
Table of Contents, Continued
Exhibit No. Page No.
STATISTICAL SECTION:
Net Position by Component 1 92
Changes in Net Position 2 93-94
Fund Balances of Governmental Funds 3 95
Changes in Fund Balances of Governmental Funds 4 96
General Fund Revenues by Source 5 97
General Fund Tax Revenues by Source 6 98
Property Tax Rates 7 99
Property Tax Levies and Collections 8 100
Assessed and Estimated Actual Value of Taxable Property 9 101
Principal Property Taxpayers Compared with Nine Years Ago 10 102
Principal Taxable Sales by Line of Business 11 103
Ratios of Outstanding Debt by Type 12 104
Ratio of General Obligation Bonded Debt to Assessed Value and
General Obligation Bonded Debt per Capita 13 105
Computation of Direct and Overlapping Bonded Debt 14 106
Legal Debt Margin 15 107
Revenue Bond Coverage - Electric Enterprise Fund 16 108
Revenue Bond Coverage - Harbor Enterprise Fund 17 109
Demographic and Economic Statistics 18 110
Full-Time Equivalent Employees by Fund 19 111
Operating Indicators by Function 20 112
Capital Asset Statistics by Function 21 113
Property Value, Construction, and Bank Deposits 22 114
Miscellaneous Statistics 23 115
LETTER OF TRANSMITTAL
AL City of Seward
Address: 410 Adams Street, P.O. Box 167, Seward, Alaska 99664
Phone: 907.224.4050; Fax: 907.224.4038
August 30, 2023
Honorable Members of the Seward City Council
Citizens of the City of Seward:
The City of Seward (City) is required by Alaska Statutes (AS 29.35.120 Annual Audit) and Seward City Code to
publish a complete set of financial statements presented in conformity with generally accepted accounting
principles (GAAP). Pursuant to these requirements, the Annual Comprehensive Financial Report of the City
for year ended December 31, 2022 is hereby submitted.
Management is responsible for ensuring 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 designed to protect the
government's assets from loss, theft, or misuse and to provide sufficient reliable information upon which to
prepare the City's financial statements in accordance with GAAP. Because the cost of internal control should
not exceed anticipated benefits, the objective is to provide reasonable, rather than absolute, assurance that
the financial statements are free of any material misstatements. Management asserts that, to the best of
our knowledge, this financial report is complete and reliable in all material respects.
Altman, Rogers & Co., a firm of independent certified public accountants, has issued an unmodified (clean)
opinion on the City's financial statements for the year ended December 31, 2022. 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. Based on the independent audit, it was concluded that there was a reasonable basis upon
which to render an unmodified opinion that the City's financial statements for the fiscal year ended
December 31, 2022, are fairly presented in conformity with GAAP. The independent auditor's report is
presented in the financial section of this report.
Management's discussion and analysis (MD&A) immediately follows the independent auditors report and
provides a narrative introduction, overview, and analysis of the basic financial statements. This letter of
transmittal is designed to complement the MD&A and should be read in conjunction with the MD&A.
As a recipient of federal grant awards, the City is required to undergo an audit in accordance with the
provisions of the Federal Single Audit Act Requirements of 1996, the related OMB 2 CFR Part 200 (formerly
OMB Circular A-133). A schedule of expenditures of federal awards, the independent auditor's report on
internal controls and compliance with applicable laws and regulations, and a schedule of findings and
questioned costs (if any) are prepared under a separate cover.
I
The City is required to undergo an audit in accordance with the provisions of Alaska State Regulation 2 AAC
45.010 due to the City receiving state grant funding. A schedule of state financial assistance, 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.
PROFILE OF THE GOVERNMENT
The City was incorporated on June 1, 1912 and became a first-class City under Alaska Statute's (AS
29.04.010 Home rule) upon adoption of the City Charter by a referendum vote on January 5, 1960. The
community is located on the eastern side of the Kenai Peninsula in Southcentral Alaska, 125 highway miles
south of Anchorage. 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 2,717 as of the 2020 census.
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 are
elected and serve three-year terms. City Council appropriates three positions as follows: City Manager, City
Clerk, and the City Attorney. The City Manager is responsible for managing the daily operations of the City.
The City Clerk's primary responsibilities involve the safekeeping of public records and the administration of
City elections. All other officers and employees of the City are appointed by the City Manager.
The City is empowered to levy a property tax on both real and personal property located within 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 and administrative charges assessed to enterprise funds,
intergovernmental revenues, property tax, recreation and camping fees, hotel/motel tax, and land rent and
leases. 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.
BUDGETARY CONTROL
The City's budget serves as the foundation for financial planning and control. The City Council approves a
Biennial (two-year) budget for the General Fund, eight enterprise funds, and one internal service fund,
Motor Pool. Budgets are adopted by fund, function, and object code level. 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 two-year budget in November. 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. The City Manager is authorized to make
transfers between departments and line items within a Fund for amounts up to $30,000. Council action is
required for transfers between funds, for all single-item purchases exceeding $30,000 (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, which is the only governmental fund that has a legally adopted
budget.
I I
LOCAL 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 marine and tourism-related businesses and has
remained a destination of choice for tens of thousands of visitors. The cost of living in Seward is relatively
low for Alaska, and taxes are low and stable.
Seward has a fairly diversified economy with a thriving tourism industry, which helps drive the local job
market and tax revenues, which both peak from May through August annually. Strong tourism, commercial
and recreational fishing, boat tours, and recreational opportunities collectively contribute as a healthy
revenue source for the City.
Seward has a statewide reputation as a maritime powerhouse due to quality port and harbor infrastructure
and healthy growth in marine-related businesses. The City's recent $25 million investment in Seward Marine
Industrial Center (SMIC) expansion resulted in enclosing the basin by constructing a new breakwater, a new
fishing pier, lineal moorage, dock upgrades, fencing, marine washdown pad, 10-ton crane, expansion of the
330-ton lift dock and pit, upgrades to electrical infrastructure, conversion of high-mast lights to LED, and
other improvements. These investments are encouraging growth in marine transportation, ship repair,
commercial fishing, land development and related business activity, and are attracting commercial fishing
interests, transportation companies, marine scientists, the US Coast Guard and other large marine vessel
operators with interest in expanded commercial facilities.
Seward's downtown corridor continues to experience strong revitalization post the COVID-19 pandemic.Just
as many City's across the country experienced, several businesses were closed for all or most of 2020 due to
the pandemic. This presented a series of challenges on a scale not seen in years. However, as previously
shuttered businesses are purchased, improved, and opened to new ventures, the City remains optimistic
and has seen tourism and related revenues bounce back to pre-Covid levels and in some cases even higher
than pre-Covid levels.
SHORT-TERM FINANCIAL PICTURE
In 2022, Seward's sales tax revenues came in at$7.6 million, or around 12% higher than the prior year's $6.8
million. Despite large fluctuations due to the pandemic, over the past ten years, on average, sales tax
revenues have increased steadily and represent 75% of the City's overall tax revenues, and 49% of the
overall General Fund revenues. The bulk of Seward's sales tax (around 2/3) is generated during the summer
months when the City experiences a large increase in tourism. Given the consistent growth in visitors to
Seward it is likely Seward can continue to experience healthy sales tax growth.
The City's top ten property taxpayers have become more diverse over the past few years. The top-ten
taxpayers represent various industries including tourism, seafood processing, grocery, hotel/motel,
communications, petroleum products, and marine businesses, and account for approximately 23% of all
taxable property in the community. The bulk of these entities are visitor-related and drive the City's tourism
industry. And since sales tax, bed tax and camping fees are largely tourism-related these types of taxpayers
contribute approximately 54% of the General Fund revenue.
III
FACTORS AFFECTING FINANCIAL CONDITION
LONG-TERM FINANCIAL PLANNING
An improved focus on long-term financial planning has resulted in tangible financial improvements in the
short-term. General Fund reserves have risen to the top end of the policy band of between three to six
months' expenditures and transfers-out, with Reserve levels remaining around 6 months of expenditures
and transfers-out; the Capital Acquisition Fund receives periodic contributions toward general government
infrastructure needs; and State revenue sharing funds are used for one-time, non-recurring capital needs.
FINANCIAL CONDITION
The City's fund balance continues to remain financially healthy.The City has worked hard to bring its General
Fund unassigned fund balance within the policy band of between three to six months' reserves. Unassigned
fund balance increased in 2022 by $.2 million to $8.8 million representing 6 months' reserves, down slightly
from 2021. Maintaining fund balance levels within the policy band remains a priority since the City
frequently relies on reserves to address unanticipated emergencies and unexpected expenses city-wide.
INFRASTRUCTURE CONDITION
The City continues to refine the assessment of capital infrastructure condition and address the most critical
and high-risk repair and replacement projects as funding allows. Major improvements in infrastructure
condition have resulted from enterprise fund incremental rate increases over the past eight years and
aggressive pursuit of grants. Recent infrastructure improvements and corresponding demand for land
leases at Seward Marine Industrial Center, have significantly improved the prospects for eliminating annual
deficits.
The City has made significant improvements to enterprise fund capital assets based largely on categorizing
and prioritizing capital needs as "critical", "high risk" or "moderate risk" and targeting resources to the most
critical needs. Nearly $100 million in capital grants have been deployed over the past ten years, allowing
external funds to pay the lion's share of capital improvements, including: $27 million SMIC expansion; $6
million electrical upgrades including a new warehouse, automated controls and backup generators; $2
million Snow River flood mitigation; $5.5 million new water tank construction and old tank refurbishments;
new harbor floats, docks, restrooms, fish cleaning stations, sewer pump-out station, launch ramps and
improvements; Wastewater utility dredging of Lowell Point and SMIC sewage lagoons. These improvements
came at little cost to the local taxpayers but will have lasting benefits to residents of Seward for decades to
come.
MAJOR PROJECTS
In 2022, the City took a thoughtful and thorough approach to major projects and took advantage of funding
opportunities for future projects. Construction of the new animal shelter facility was concluded, as well as
the continuing redevelopment of the Jesse Lee home site. An infrastructure bond was issued in the Electric
Fund that resulted in the approval of significant projects to improve the overall Electric distribution network.
In the Harbor replacement of G, K, and L floats neared completion.
Other major capital projects in the works or in the near future, include: 1) ongoing sidewalk replacement
and ADA ramp projects; 2) continuing upgrades to the Electric system funded by a $10 million revenue bond
issued in 2022 as well as Electric fund reserves; 3) and various infrastructure projects funded by ARPA
grants.
IV
Future capital initiatives which require funding and attention include: a new planned public works facility,
replacement of the parks warehouse, a new public safety facility for fire and police services, continued
electric system work, water and sewer infrastructure expansion, completion of the heat loop project,
replacement of utility piping; and a number of other major capital initiatives.
FINANCIAL AND BUDGET REPORTING AWARDS
The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate
of Achievement for Excellence in Financial Reporting to the City of Seward for its annual comprehensive
financial report (ACFR) for the year ended December 31, 2021. This was the first award after a two year
break due to pandemic related delays and staffing shortfalls resulting in the City not submitting for the
Certificate of Achievement for their 2019 or 2020. A Certificate of Achievement is valid for a period of one
year only. We believe that our current annual comprehensive 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
The presentation of this report would not have been possible without the skill, effort, and dedication of the
entire staff in the Finance Department. Additional thanks are extended to the other City departments for
their assistance in providing necessary information and data to complete the report. Credit is also given to
the Mayor and Council members for their interest and support of our efforts in conducting the financial
operations of the City in a responsible and progressive manner.
Respectfully submitted, no
Norm Regi/Mager'
Sully Jusino
Acting City Deputy Finance Director
V
DO
Government Finance Officers Association
Certificate of
Achievement
for Excellence
in Financial
Reporting
Presented to
City of Seward
Alaska
For its Annual Comprehensive
Financial Report
For the Fiscal Year Ended
December 31, 2021
P- 7s�
Executive Director/CEO
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7.
LIST OF PRINCIPAL OFFICIALS
COUNCIL MEMBERS
Term Expires
Sue McClure Mayor 2025
John Osenga Vice Mayor 2024
Bob Barnwell Council Member 2023
Mike Calhoun Council Member 2024
Liz DeMoss Council Member 2023
Randy Wells Council Member 2025
Kevin Finch Council Member 2025
ADMINISTRATION
Norm Regis Acting City Manager
Sully Jusino Finance Director
Alan Nickell Chief of Police
Clinton Crites Fire Chief
Robin Montgomery Manager of Electric Utility
Doug Schoessler Public Works Director
Norman Regis Harbormaster
Jason Bickling Community Development Director
Melanie Hauze Parks &Recreation Director
Bailey Sayler Library Director
CITY CLERK
Kris Peck City Clerk
CITY ATTORNEY
Brooks Chandler City Attorney,
Boyd, Chandler, Falconer&Munson,LLP
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 three 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.
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PUBLIC
. ACCOUNTANTS
Independent Auditor's Report
Honorable Mayor and City Council
City of Seward
Seward, Alaska
Report on the Audit of the Financial Statements
Opinions
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 the
City of Seward, Alaska (the City), as of and for the year ended December 31, 2022, and the
related notes to the financial statements, which collectively comprise the City of Seward, Alaska's
basic financial statements as listed in the table of contents.
In our opinion, based on our audit and the report of the 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 the City of Seward, Alaska, as of December 31, 2022, and the
respective changes in financial position, and, where applicable, cash flows thereof for the year
then ended in accordance with accounting principles generally accepted in the United States of
America.
We did not audit the financial statements of the Providence Seward Medical and Care Center
(PSMCC) which represent 38%, 29%, and 100% respectively, of the assets and deferred outflows of
resources, net position and revenues of the Healthcare Facilities Enterprise Fund, and 7%, 3%, and
57% respectively, of the assets and deferred outflows of resources, net position and revenues of
the business-type activities as of December 31, 2022, and the respective changes in financial
position, and where applicable, cash flows thereof for the year then ended. 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 PSMCC, is based solely on
the report of the other auditors.
Basis for Opinions
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 Governmental
Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities
under those standards are further described in the Auditor's Responsibilities for the Audit of the
Financial Statements section of our report. We are required to be independent of the City of
Seward, Alaska, and to meet our other ethical responsibilities, in accordance with the relevant
ethical requirements relating to our audit. We believe that the audit evidence we have obtained is
sufficient and appropriate to provide a basis for our audit opinions.
1
3000 C Street N. Suite 201 Anchorage,Alaska 99503 Phone 907-274-2992 Fax 907-274-2993
Offices in Juneau and Soldotna A Professional Corporation
Honorable Mayor and City Council
City of Seward
Emphasis of Matter
Change in Accounting Principle
As discussed in Note 16 to the financial statements, in 2022, the City implemented GASB Statement
No. 87, Leases, which established standards of accounting and financial reporting for leases by lessees
and lessors. The requirements of this Statement apply to financial statements of all state and local
governments.
The new standard requires the City to recognize certain lease assets and liabilities for leases. It
establishes a single model for lease accounting based on the underlying principle that leases are
financings of the right to use an underlying asset for a period of time. Under this Statement, a lessee
is required to recognize a liability and an intangible right-to-use lease asset, and a lessor is required
to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the relevance
and consistency of information about the City's leasing activities. Our opinion is not modified with
respect to this matter.
Responsibilities of Management for the Financial Statements
Management is responsible for the preparation and fair presentation of the financial statements in
accordance with accounting principles generally accepted in the United States of America, and for
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.
In preparing the financial statements, management is required to evaluate whether there are
conditions or events, considered in the aggregate, that raise substantial doubt about the City of
Seward, Alaska's ability to continue as a going concern for twelve months beyond the financial
statement date, including any currently known information that may raise substantial doubt shortly
thereafter.
Auditor's Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditor's report
that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute
assurance and therefore is not a guarantee that an audit conducted in accordance with generally
accepted auditing standards will always detect a material misstatement when it exists. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control. Misstatements are considered material if there is a substantial likelihood
that, individually or in the aggregate, they would influence the judgment made by a reasonable user
based on the financial statements.
2
Honorable Mayor and City Council
City of Seward
In performing an audit in accordance with generally accepted auditing standards and Government
Auditing Standards, we:
• Exercise professional judgment and maintain professional skepticism throughout the audit.
• Identify and assess the risks of material misstatement of the financial statements, whether
due to fraud or error, and design and perform audit procedures responsive to those risks. Such
procedures include examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements.
• Obtain an understanding of internal control relevant to the audit 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 City of Seward, Alaska 's internal control. Accordingly,
no such opinion is expressed.
• Evaluate the appropriateness of accounting policies used and the reasonableness of significant
accounting estimates made by management, as well as evaluate the overall presentation of
the financial statements.
• Conclude whether, in our judgment, there are conditions or events, considered in the
aggregate, that raise substantial doubt about the City of Seward, Alaska 's ability to continue
as a going concern for a reasonable period of time.
We are required to communicate with those charged with governance regarding, among other
matters, the planned scope and timing of the audit, significant audit findings, and certain internal
control-related matters that we identified during the audit.
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, budgetary comparison schedule on page 68,
Schedules of Net Pension and OPEB Liabilities (Assets) and Contributions for the Public Employees'
Retirement System and International Brotherhood of Electrical Workers Plan, and notes to the
required supplementary information on pages 69-75 be presented to supplement the basic financial
statements. Such information is the responsibility of management and, 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 and other auditors 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.
3
Honorable Mayor and City Council
City of Seward
Supplementary Information
Our audit was conducted for the purpose of forming opinions on the financial statements that
collectively comprise the City of Seward, Alaska's basic financial statements. The combining and
individual fund financial statements and schedules 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 basic financial statements. The information has been subjected to the
auditing procedures applied in the audit of the basic financial statements and certain additional
procedures, including comparing and reconciling such information directly to the underlying
accounting and other records used to prepare the basic financial statements or to the basic financial
statements themselves, and other additional procedures in accordance with auditing standards
generally accepted in the United States of America by us and other auditors. In our opinion, based on
our audit and the report of the other auditors, the combining and individual fund financial
statements and schedules are fairly stated, in all material respects, in relation to the basic financial
statements as a whole.
Other Information
Management is responsible for the other information included in the annual report. The other
information comprises the introductory and statistical sections but does not include the basic
financial statements and our auditor's report thereon. Our opinions on the basic financial statements
do not cover the other information, and we do not express an opinion or any form of assurance
thereon.
In connection with our audit of the basic financial statements, our responsibility is to read the other
information and consider whether a material inconsistency exists between the other information and
the basic financial statements, or the other information otherwise appears to be materially
misstated. If, based on the work performed, we conclude that an uncorrected material misstatement
of the other information exists, we are required to describe it in our report.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated August 30,
2023, on our consideration of the City of Seward, Alaska'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 solely to describe the scope of our
testing of internal control over financial reporting and compliance and the results of that testing, and
not to provide an opinion on the effectiveness of the City of Seward, Alaska's 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, Alaska's internal
control over financial reporting and compliance.
Anchorage, Alaska
August 30, 2023
4
Management Discussion and Analysis
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
This section of the Annual Comprehensive Financial Report provides a narrative overview and analysis of
the financial activities of the City of Seward for the fiscal year ended December 31, 2022. It is designed to
focus on significant financial matters, provide an overview of the City's financial activities, highlight changes
in the City's financial position, identify material changes from the original budget and explain any important
subjects. In addition to this management's discussion and analysis(MD&A), readers are encouraged to read
the Letter of Transmittal found on pages I-V of this report,which provides additional summary information.
FINANCIAL HIGHLIGHTS
• At December 31, 2022, the City of Seward's assets and deferred outflows exceeded liabilities and
deferred inflows by $213.8 million (net position). Of this amount, $159.2 million represents net
investment in capital assets, $2.2 million is restricted for commercial passenger vessel tax, and the
remaining $S2.4 million represents unrestricted net position. Unrestricted net position does not
necessarily reflect a surplus of resources, since a portion of net position can be designated for
capital grants, capital replacement, or other purposes determined by the City Council.
• Excluding business-type activities, the assets of the primary government exceeded liabilities by
$58.3 million. Of this amount, $11.1 million in unrestricted net position is legally unreserved and
available to meet the government's ongoing financial obligations, although Council has earmarked
a portion of these funds for specific purposes.
• The City's total net position increased by $7.7 million. Governmental activities increased by $0.6
million and business-type activities increased by$7.1 million.
• The City's governmental funds reported combined ending fund balances of $14.6 million
representing an increase of$0.3 million compared to the prioryear.While$13.7 million of the fund
balance is legally available for spending, only $8.0 million has not already been earmarked for
specific purposes (unassigned fund balance). This reflects a decrease in available unassigned fund
balance of$0.5 million as compared to 2021.
• The total debt of governmental activities decreased by$267 thousand excluding the effect on net
pension liability. The total debt of business-type activities increased by $9.2 million, this includes
the issuance of the 2022 Electric revenue bonds that were issued for electric system infrastructure
improvements. Net pension liability of governmental activities increased by $2.2 million and
increased business-type activities in the amount of$308 thousand for combined total net pension
liability debt increase of$2.S million.
OVERVIEW OF FINANCIAL STATEMENTS
The MD&A is intended to serve as an introduction to the City's basic financial statements, which include 1)
government-wide financial statements; 2) fund financial statements; and 3) notes to the 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; the
government-wide financial statements, and the fund financial statements.
Government-wide Financial Statements
The government-wide financial statements are intended to provide a comprehensive look at all financial
activities of the City. These statements summarize the City's overall financial condition and contain both
short-term and long-term information about the City's entity-wide finances, similar to a private-sector
business. These statements combine and consolidate short-term, spendable resources with capital assets
and long-term obligations.
5
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
The Statement of Net Position examines, on an entity-wide basis, the difference between the City's assets
and deferred outflows, and its liabilities and deferred inflows, resulting in net position.Overtime, increases
or decreases in net position may indicate whether the City's financial position is improving or deteriorating.
The purpose of this statement is to present the overall financial position of the City. 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 reflects expenses for various programs and functions of the City, as offset
by program revenue. Program revenues include fees, fines, and charges for services, as well as operating
grants, capital grants, and contributions. Revenues and expenses are reported when incurred, regardless
of the timing of the related cash flows. Therefore, revenues and expenses may be reported in this
statement for items that will result in cash flows in future periods.
Both of the government-wide financial statements distinguish functions of the City of Seward that are
principally supported by taxes and intergovernmental revenues (governmental activities) from other
functions that are intended to recover all or a significant portion of their costs through user fees and
charges (business-type activities). The governmental activities of the City of Seward include general
government, public safety, public works, parks and recreation, library/museum, the Seward Community
Health Center (clinic) and the Alaska Sealife Center. The business-type activities of the City include the
hospital and long-term care facilities (healthcare facilities), harbor, marine industrial center, electric,water,
wastewater, and parking. The government-wide financial statements can be found on pages 17-19 of this
report.
Fund Financial Statements
Fund financial statements focus on specific areas of City operations and provide more detail than the
government-wide statements. A fund is a grouping of related accounts used to maintain control over
resources that have been segregated for specific activities or purposes. The City of Seward, like other state
and local governments, uses fund accounting to ensure and demonstrate compliance with legal
requirements. The funds of the City of Seward are divided into three categories: governmental funds,
proprietary funds, and fiduciary funds, each of which is further described below.
Governmental Funds
Governmental Funds are used to account for essentially the same functions reported as governmental
activities in the government-wide financial statements. However, unlike the government-wide financial
statements, which provide a broad overview and include short-term and long-term information, the
governmental funds' financial statements focus on near-term inflows and outflows of resources, and on
the balance of spendable resources available at the end of the year. Such information is useful in evaluating
a government's near-term financing requirements.
Since the focus of governmental funds is narrower than that of the government-wide financial statements,
it is useful to compare the information presented for governmental funds, with similar information
presented for governmental activities in the government-wide financial statements. Such a comparison
enables the reader to better understand the long-term impact of a government's near-term financing
decisions. The Governmental Funds Balance Sheet and the Governmental Funds Statement of Revenues,
Expenditures, and Changes in Fund Balances provide a reconciliation to facilitate the comparison between
governmental funds and governmental activities.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
The City of Seward maintains sixteen 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
fifteen governmental funds aggregated and shown in the Non-major Funds column on these same two
statements. Individual fund information for the nonmajor governmental funds is provided in the form of
combining statements elsewhere in this report (see pages 82-85).
The City of Seward adopts a 2-year budget for the General Fund. A budgetary comparison statement(page
68) demonstrates compliance with the budget, and a list of budgetary highlights is found later in this
document. The basic governmental fund financial statements are found on pages 20-23 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 24-28 and 86-88 of this report.
Internal service funds accumulate and allocate costs internally among the various functions of the City.The
City utilizes two internal service funds to account for its motor pool equipment replacement program and
compensated annual leave resources. The motor pool 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 89-91 of this report.
Notes to the Basic Financial Statements
The notes provide additional information essential to a complete understanding of the data in the
government-wide and fund financial statements.The notes can be found on pages 29-67 of this report.
Other Information
In addition to the basic financial statements and accompanying notes, this report presents certain required
supplementary information on the City's retirement plans on pages 69-75 of this report.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
GOVERNMENT-WIDE FINANCIAL ANALYSIS
Statement of Net Position
At December 31, 2022,the City's assets and deferred outflows exceeded liabilities and deferred inflows by
$213.8 million. A significant portion of the City's net position (74%) 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, 2021 and 2022
Governmental Business-Type
Activities Activities Total
2021 2022 2021 2022 2021 2022
Current and other assets 20,424,224 22,903,818 53,554,347 71,916,977 73,978,571 94,820,795
Capital assets 53,189,682 52,262,664 129,327,007 133,643,554 182,516,689 185,906,218
Total assets 73,613,906 75,166,482 182,881,354 205,560,531 256,495,260 280,727,013
Deferred outflows 597,589 780,496 1,742,204 1,715,765 2,339,793 2,496,261
Total assets&
deferred outflows 74,2 11,495 75,9 66,978 184, 223,558 207,276,296 258, 335,053 283,223,274
Long-term liabilities
outstanding 10,612,175 13,509,858 26,263,784 35,751,937 36,875,959 49,261,795
Other liabilities 1,751,398 3,155,262 8,706,302 10,283,964 10,457,700 13,439,226
Total liabilities 12,363,573 16,665,120 34,970,086 46,035,901 47,333,659 62,701,021
Deferred inflows 4,071,795 924,669 1,284,416 5,762,260 5,356,211 6,686,929
Total liabilities&
deferred inflows 16,4 55,368 17,5 99,789 36,254,502 51,798,161 52, 889,870 69,387,950
Net position:
Net investment in capital
assets 47,873,119 47,109,476 111,642,392 112,121,255 159,515,511 159,230,731
Restricted - - 2,036,464 2,220,386 2,036,464 2,220,386
Unrestricted 9,903,008 11,247,713 34,690,200 41,136,494 44,593,208 52,384,207
Total net position 57,776,127 58,357,189 148, 669,056 155,478,135 206, 445,183 213,835,324
8
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
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, 2021 and 2022
Governmental Business-Type
Activities Activities Total
2021 2022 2021 2022 2021 2022
Revenues:
Program revenues:
Charges for services 2,670,162 2,576,008 51,292,519 52,580,559 53,962,681 55,156,567
Operating grants/
contributions 3,166,769 1,840,221 1,673,325 264,035 4,840,094 2,104,256
Capital grants/
contributions 1,763,029 1,147,823 388,239 4,750,241 2,151,268 5,898,064
General revenues:
Sales taxes 6,861,114 7,635,648 - - 6,861,114 7,635,648
Property taxes 1,636,727 1,705,639 - - 1,636,727 1,705,639
Payments in lieu of tax 89,061 11,027 - - 89,061 11,027
Other 1,103,352 1,863,765 (104,961) (508,997) 1,003,391 1,354,768
Total revenues 17,295,214 16,780,131 53,249,122 57,085,838 70,544,336 73,865,969
Expenses:
General government 2,682,966 2,537,226 - - 2,630,377 2,537,226
Public safety 4,371,314 4,819,285 - - 4,312,925 4,819,285
Public works 3,447,427 3,835,674 - - 3,434,392 3,835,674
Parks and recreation 1,269,771 1,683,508 - - 1,263,134 1,683,508
Library 881,107 927,788 - - 878,900 927,788
Clinic 2,121,653 1,928,031 - - 2,121,653 1,928,031
Unallocated interest 171,623 144,521 - - 171,623 144,521
Alaska Sealife Center 1,396,490 1,313,755 - - 1,396,490 1,313,755
Electric - - 12,435,907 13,399,889 12,435,907 13,399,889
Water - 1,398,746 1,536,791 1,398,746 1,536,791
Wastewater - 1,305,684 1,315,450 1,305,684 1,315,450
Harbor - 3,689,010 3,971,031 3,689,010 3,971,031
SMIC - 2,212,217 2,477,022 2,212,217 2,477,022
Healthcare Facilities - 24,903,943 26,174,009 24,903,943 26,174,009
Parking - 90,237 111,848 90,237 111,848
Total expenses 16,342,351 17,189,788 46,035,744 48,986,040 62,378,095 66,175,828
Increase(decrease) in net
assets before transfers 952,863 (409,657) 7,213,378 8,099,798 8,166,241 7,690,141
Transfers 850,387 990,719 (850,387) (990,719) - -
Change in net position 1,803,250 581,062 6,362,991 7,109,079 8,166,241 7,690,141
Beginning net position 55,972,877 57,776,127 142,006,065 148,369,056 197,978,942 206,145,183
Ending net position 57,7 66,127 58,3 77,189 148,369,056 155, 778,135 206,145,183 213, 335,324
9
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
Governmental Activities
The City of Seward's net position in Governmental activities increased by$0.6 million.The following items are
of particular note:
• Overall revenues for governmental activities were down by around $500 thousand or 3% compared
with the prior year, due to some large one-time operating grants in 2021 which were not received in
2022.
• Overall expenses were higher by around $850 thousand or 5%. Expenditures were higher in most
departments and functions and the increase was primarily due to increased operating costs driven by
inflation.
• Sales tax revenue increased by$800 thousand or 11%due to a continued bounce back from the impact
of COVID-19 and an overall strong tourism industry.
• 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:
General Government Programs - Revenues vs. Expenses
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
Gen'I Govt Public Public Parks&Rec Library Clinic Sea Life Interest
Safety Works Center
■Revenues ■Expenses
10
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
Business-type Activities
Business-type activities increased the net position of the City by$7.1 million. As is the case with governmental
activities, a substantial portion (72%) of the $155.5 million in net position is invested in capital assets. The
increase in net position is comprised of the following:
Net position decreased in two major enterprise funds: Seward Marine Industrial Center Fund by $1.6 million;
and Electric Enterprise Fund by $.85 million. Net position increased in two major enterprise funds - Harbor
Enterprise Fund by$4.2 million and Healthcare Facilities Enterprise Fund by $5.8 million. Overall net position
in Nonmajor Enterprise Funds decreased by$.7 million.
• The Electric Enterprise Fund experienced earnings from operations of$1.4 million, an increase of$1.1
million from the prior year. Operating revenues were $1.7 million higher than the prior year and
operating costs were up by only $0.6 million. The operating performance was impacted by a net
decrease of $0.1 million in investment income and an increase of $.3 million in interest expense as
well as an overall decrease in nonoperating revenue of around $.5 million.
• The net decrease in Seward Marine Industrial Center (SMIC) net position of$1.6 million is a result of
a net operating loss of$1.6 million which was driven by a continuing large depreciation expense due
to the $26 million expansion project coming online. Operating revenues increased by around $.1
million but this was offset by an increase in operating expenses of$.02 million which resulted in a $.1
million larger loss than the previous year.
• The net increase in Healthcare Facilities Enterprise Fund net position of$5.8 million is mainly result of
positive operating income of$4.4 million and net operating transfer-in in the amount of$1.8 million.
Due to those factors, Healthcare Facilities Enterprise Funds presents positive net position at the end
of 2022 in the amount of$18.0 million compared to $12.1 million in 2021.
• The net increase in Harbor Enterprise Fund net position of $4.2 million is due to large grants and
contributions resulting in a nonoperating income of around $4.5 million which offset the operating
loss of nearly $.4 million. The Harbor saw a decrease of $.2 million in operating revenues and an
increase of$.3 million in operating expenses. The Harbor Enterprise Fund ended the year with a cash
balance of$4.6 million, but the amount of cash set aside for debt service reserves is $0.4 million.
• Other nonmajor enterprise funds experienced the following: 1) decrease in Parking Enterprise Fund
net position of$0.4 million; 2) a decrease in Wastewater Enterprise Fund net position of$0.2 million;
and 3) a decrease in Water Enterprise Fund net position of $0.1 million. These are all decreases as
compared to the prior year primarily due to one-time grant receipts in 2021.
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; long-term capital assets and long-term debt are not 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 net resources available for spending at the end of the year.
11
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
At the end of the year, the City of Seward's governmental funds reported combined ending fund balances of
$14.6 million. Of this amount: $0.8 million is nonspendable (prepaid items); none is currently restricted; $2.0
has been committed by the City Council for working capital and the hospital line of credit; $3.7 million has
been assigned by the administration (primarily for capital projects); and $8.0 million is unassigned, and legally
available for spending. These classifications of fund balance promulgated in GASB Statement No. 54, reflect
efforts to create a hierarchy of fund balance to enable the reader of the financial statements to understand
the extent to which fund balance reserves are available for spending. The hierarchy lists, in order, the least
spendable to the most spendable fund balance; first are resources which are not available for spending
(nonspendable), then resources which are restricted by legislation or external agencies (restricted), next
resources which the City Council has committed to spend for a specific purpose by way of enabling legislation,
and then resources which have been assigned for a specific use but don't meet the definition of restricted or
committed, and finally, the unassigned fund balance which remains available for spending. Fund balances in
the governmental funds increased by$.3 million.
The overall net increase in fund balance is due to the following:
General Fund
General Fund revenues were $.8 million higher than expenditures, but after subtracting net transfers out of
$0.1 million, fund balance increased by $.6 million. General Fund revenues came in $.4 million higher than in
2021, mainly due to the continued increase in sales tax revenues.This was more than offset by expenditures,
which came in $1.6 million 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
to six-months' expenditures and routine transfers-out to other funds. The General Fund unassigned fund
balance at the end of 2022 is $8.8 million, equal to approximately 6.0 months' reserves, which is down from
6.4 months at the end of 2021 due to an increase in annual expenditures despite the increase in unassigned
fund balance. In the City's case, an adequate level of fund balance is between $4.4 million and $8.8 million,
which results in the General Fund currently being on the high end of the range of the desired level of
unassigned fund balance.
Special Revenue Funds
Special revenue funds experienced an increase in fund balance of $251 in 2022, there was limited activity in
the special revenue funds during the year.
Capital Project Funds
All capital project funds combined experienced a net decrease in fund balance of$.3 million in 2022. This was
due to a decrease from the construction of the new animal shelter of around $1.6 million and an increase to
the capital acquisition fund from a excess fund balance transfer from the General Fund and the sale of City
land resulting in an increase of$1.4 million.All but one capital project funds maintained a positive fund balance
in 2022, as follows: Capital Acquisition Fund $2.0 million, Street and Sidewalks Fund $0.07 million; Energy
Efficiency Fund $0.1 million;Animal Shelter Fund ($0.8) million and the Developer Reimbursement$.9 million.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
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 SMIC)
report the same functions presented as business-type activities in the government-wide financial statements,
but individual fund statements are presented in more detail. Enterprise funds reported total net position of
$149.5 million with $109.5 million invested in capital assets net of related debt, leaving unrestricted net
position of approximately $37.8 million and restricted net position of $2.2 million. Of the unrestricted net
position, $13.6 million is restricted cash (bond reserve funds, bond proceeds, etc.) not available for
appropriation, and current liabilities total $12.1 million. The most material current liability is $3.8 million due
in the Healthcare Enterprise Fund to Providence Health and Services. More specific factors influencing net
position of the enterprise funds are addressed above in the discussion of the City's business-type activities.
The City maintains two internal service funds;the motor pool and compensated annual leave funds.The Motor
Pool Internal Service Fund accumulates cash for replacement of City vehicles and heavy equipment.
Departments contribute to the motor pool to purchase vehicles and pay into the motor pool to forward-fund
vehicle replacement. This funding mechanism spreads the vehicle costs over the life of the vehicle in each
program's annual budget, rather than incur one-time expenses in the year of vehicle/equipment purchases.
The cash balance in the motor pool is $2.6 million, reflecting a decrease of $1.1 million due to an interfund
loan made from the fund during the year.
However, the Motor Pool maintains outstanding loans receivable from the Healthcare Facilities Enterprise
Fund of$0.3 million related to the payoff of prior hospital PERS liabilities and an outstanding loan receivable
from the Animal Shelter Capital Project Fund of$0.9 million related to the construction the new animal shelter
facility. 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 2021 is$0.5 million.
General Fund Budgetary Highlights
On a budgetary basis, General Fund revenues came in $1,903,298 or 14% higher than budget primarily due to
a continued strong sales tax revenue stream which exceeded the budget by $1.6 million. Intergovernmental
revenues were above budget by $416,850, investment income was lower by $205,606, charges for services
were higher by$80,048 and licenses and permits by$39,471, other revenues were under budget by$69,247,
and fines and bails exceeded budget by$13,059.
General Fund Actual Highlights
General Fund revenues exceeded expenditures by $765,305, and after transfers between funds were
accounted for, there was a net increase in fund balance of$617,451.
13
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
CAPITAL ASSETS AND DEBT ADMINISTRATION
Capital Assets
As of December 31, 2022, the City had $185.9 million invested in capital assets net of accumulated
depreciation, representing an overall increase of$2.6 million from the previous year.
Table 3
City of Seward Capital Assets
(in thousands, net of depreciation)
Governmental Business-Type
Activities Activities Total
2021 2022 2021 2022 2021 2022
Land and improvements 5,509 5,509 30,703 30,703 36,212 36,212
Buildings 34,614 34,853 15,113 14,049 49,727 48,902
Improvements other
than buildings 10,985 10,358 30,848 27,602 41,833 37,960
Machinery and equipment 1,658 1,452 7,651 8,515 9,309 9,967
Infrastructure - - 44,060 46,678 44,060 46,678
Right-to-use asset - - 786 1,197 786 1,197
Construction in progress 424 91 952 4,899 1,376 4,990
Total net capital assets 53,190 52,263 130,113 133,643 183,303 185,906
Additional information regarding the City of Seward's capital assets can be found in Footnote 5 on pages 42-
44.
Long-term Debt
As of December 31, 2022, the City had total debt outstanding of$43.79 million, excluding unamortized bond
premiums. Of this amount, $4.4 million represents outstanding general obligation bonds backed by the full
faith and credit of the City for construction of the library/museum and a road improvement bond.An additional
$27.9 million represents: revenue bonds backed by operating revenues from the harbor enterprise fund ($1.S
million), the electric enterprise fund ($13.0 million), and long-term care facility ($13.4 million).The remaining
debt represents water and wastewater loans ($1.6 million), compensated absences ($0.7 million), and net
pension and OPEB liabilities ($9.2 million).
Table 4
City of Seward Outstanding Debt
(in thousands)
Governmental Business-Type
Activities Activities Tota 1
2021 2022 2021 2022 2021 2022
General obligation bonds 4,660 4,445 - - 4,660 4,445
Revenue bonds - - 20,510 27,855 20,510 27,855
Loans - - 1,802 1,600 1,802 1,600
Compensated absences 465 500 158 204 623 704
Net pension liability 4,830 7,052 1,828 2,137 6,658 9,189
Total outstanding debt 9,955 11,997 24,298 31,796 34,253 43,793
14
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
Further detail regarding the City's long-term outstanding debt can be found on pages 46-49.
Economic Factors and Next Year's Budget and Rates
The past several years have seen strong economic growth in Seward, interrupted in 2020 by the COVID-19
pandemic. This growth has been driven largely by increased visitors and expansion of marine repair-related
business.Growth has positively impacted nightly lodging businesses,charter and tour boat operators,and local
retailers, and has driven up the cost of residential homes.The downtown business district has seen more retail
activity and aesthetic improvements to some store fronts.The harbor is bustling, and there is growing interest
in land leases at the Seward Marine Industrial Center on the east side of Resurrection Bay.
The General Fund's primary source of revenue, sales tax, was greatly impacted in 2020 but saw a strong
recovery in 2021 and shows promise to continue to be strong in the future. The City continues to be
conservative with spending as the 2023 summer season progresses to see where sales tax and bed tax
revenues come in and to deal with any operating interruptions. Based on 2022 sales tax numbers, the
Administration increased the 2023 sales tax budget by $500,000 but still kept it below the 2022 actual sales
tax receipts. Property tax revenues are budgeted to remain level in 2023. Parks and recreation revenues are
budgeted to increase just under $200 thousand, based solely on increased campground rates and continued
high utilization.
On the General Fund cost side, expenditures were budgeted at $16,035,835. The General Fund budget was
balanced largely due to ongoing revenue enhancements (increased property, bed tax, and grant revenue due
to steady increases in construction activity) and continued monitoring of expenditures.
Tax rates are maintained at 2022 levels after the increase in property tax rates from 3.12 to 3.84 mills to cover
a general obligation bond for community-wide road improvements.The City sales tax rate remains at 4.0%and
the hotel/motel bed tax rate remains at 4.0%. The harbor tariffs include a 1.2% rate increase in 2022 and .8%
in 2023, equal to the consumer price index for Anchorage averaged over the five previous full years.
The electric tariff rates resumed approved increases of 1.2% in 2022 and .8% in 2023. A seasonal rate was
implemented to provide rate relief to year-round residents by increasing rates in the summer when residential
consumption tends to be lower and reducing rates in the winter. The City council continues to review the
sustainability of the Electric fund operations after a referendum to sell the utility failed to pass. A rate study
will be done in 2023 to determine the long-term rates necessary to maintain the infrastructure of the utility
with some large increases anticipated beginning in 2024.
The water tariff increased 1.2% in 2022 as funds are needed to repay$159K annual debt on the Third Avenue
Water Main upgrade. In 2023, the tariff will increase .8%. The Water Fund has not contributed toward
replacement of aging infrastructure in a number of years, as all funds are needed to cover new debt payments
and is undergoing a rate study to determine if any changes are needed to continue to fund ongoing
infrastructure and operational needs.
The wastewater tariff increased rates 1.2% in 2022 and .8% in 2023 with rate increases critical to the financial
solvency of the Fund due to the unavoidable need to incur new debt related to the replacement of the two
sewage lagoons in 2019, at an annual new debt service requirement of more than $75,000 per year. These
rate levels do not address critical or high-risk wastewater capital infrastructure needs and the City is in the
process of undergoing a rate study.
15
MANAGEMENT'S DISCUSSION AND ANALYSIS
For the year ended December 31, 2022 City of Seward
In the future, enterprise fund tariffs are expected to provide annual incremental rate increases equal to the
CPI, enabling them to keep pace with the increased cost of goods and services, preventing further erosion of
financial stability of those Funds.
Requests for Information
The City of Seward's financial statements and the accompanying information are designed to present users
(citizens, taxpayers, elected officials, customers, investors, and creditors)with a general overview of the City's
finances, and to demonstrate accountability to taxpayers and ratepayers. Questions concerning the
information in this report, or requests for additional information, can be addressed to the City of Seward,
Attention: Finance Director, P.O. Box 167, Seward,Alaska 99664.
16
Basic Financial Statements - Overview
These financial statements provide a summary 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:
Government-wide - Statement of Net Position
Government-wide - 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
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 Assets and Liabilities
Notes to Basic Financial Statements
Exhibit A-1
City of Seward, Alaska
Statement of Net Position
Governmental Business-type
December 31, 2022 Activities Activities Total
Assets and Deferred Outflows of Resources
Cash and investments $ 15,569,249 39,619,509 55,188,758
Receivables, net of allowance for doubtful accounts:
Taxes 925,837 - 925,837
Accounts 312,532 7,597,066 7,909,598
Grants, shared revenues, and loans 1,324,907 1,773,641 3,098,548
Interfund loans - 899,483 899,483
Leases 600,707 5,833,960 6,434,667
Accrued interest 96,011 5,454 101,465
Other - 1,009,358 1,009,358
Prepaid items 814,310 232,998 1,047,308
Inventory - 808,200 808,200
Restricted cash and investments 13,581,849 13,581,849
Other assets - 77,000 77,000
Internal balances 390,853 (390,853) -
Capital assets not being depreciated 5,599,670 35,602,192 41,201,862
Capital assets being depreciated, net of depreciation 46,662,994 98,041,362 144,704,356
Net pension and OPEB assets 2,869,412 869,312 3,738,724
Total Assets 75,166,482 205,560,531 280,727,013
Deferred Outflows of Resources
Pension and OPEB related 780,496 236,457 1,016,953
Unamortized deferred loss on refunding - 1,479,308 1,479,308
Total Deferred Outflows of Resources 780,496 1,715,765 2,496,261
Total Assets and Deferred Outflows of Resources $ 75,946,978 207,276,296 283,223,274
(continued)
17
ExhibitA-1, continued
City of Seward, Alaska
Statement of Net Position, Continued
Governmental Business-type
December 31, 2022 Activities Activities Total
Liabilities, Deferred Inflows of Resources, and Net Position
Current Liabilities
Accounts payable $ 683,457 2,024,166 2,707,623
Payable to Providence Health and Services-Washington - 3,842,000 3,842,000
Due to contractual agencies - 166,000 166,000
Accrued payroll and related liabilities 403,113 1,407,712 1,810,825
Accrued interest 23,097 328,457 351,554
Other accrued liabilities 110,582 - 110,582
Customer deposits 16,730 570,353 587,083
Unearned revenue 1,918,283 1,945,276 3,863,559
Noncurrent Liabilities
Due within one year:
Accrued compensated absences 101,935 68,471 170,406
Lease liability - 113,000 113,000
Notes payable - 205,477 205,477
Bonds payable 230,000 1,570,000 1,800,000
Interfund loans 31,016 - 31,016
Due in more than one year:
Accrued compensated absences 398,246 135,178 533,424
Lease liability - 1,157,000 1,157,000
Notes payable - 1,394,434 1,394,434
Bonds payable 4,827,792 28,971,789 33,799,581
Interfund loans 868,467 - 868,467
Net pension and OPEB liabilities 7,052,402 271367588 9,188,990
Total Liabilities 16,665,120 46,035,901 62,701,021
Deferred Inflows of Resources
Related to leases 558,373 5,680,190 6,238,563
Pension and OPEB related 270,900 82,070 352,970
Unamortized deferred gain on refunding 95,396 - 95,396
Total Deferred Inflows of Resources 924,669 5,762,260 6,686,929
Total Liabilities and Deferred Inflows of Resources 17,589,789 51,798,161 69,387,950
Net Position
Net investment in capital assets 47,109,476 112,121,255 159,230,731
Restricted for commercial passenger vessel tax - 2,220,386 2,220,386
Unrestricted 11,247,713 41,136,494 52,384,207
Total Net Position 58,357,189 155,478,135 213,835,324
Total Liabilities, Deferred Inflows of Resources, and Net Position $ 75,946,978 207,276,296 283,223,274
See accompanying notes to basic financial statements.
18
Exhibit B-1
City of Seward, Alaska
Statement of Activities
Net(Expense)Revenue and
Program Revenues Changes in Net Position
Fees, Operating Capital
Fines Et Grants Et Grants Et Govern- Business-
Charges for Contri- Contri- mental type
Year Ended December 31,2022 Expenses Services butions butions Activities Activities Total
Governmental Activities
General government $ 2,537,226 536,378 (42,176) (2,043,024) (2,043,024)
Public safety 4,819,285 496,511 (62,081) (4,384,855) (4,384,855)
Public works 3,835,674 29,638 (6,317) 1,147,823 (2,664,530) (2,664,530)
Parks and recreation 1,683,508 1,484,294 (8,669) - (207,883) (207,883)
Library 927,788 29,187 42,350 (856,251) (856,251)
Clinic 1,928,031 - 1,917,114 (10,917) (10,917)
SeaLife Center 1,313,755 - (1,313,755) (1,313,755)
Interest on long-term debt 144,521 - - (144,521) (144,521)
Total Governmental
Activities 17,189,788 2,576,008 1,840,221 1,147,823 (11,625,736) - (11,625,736)
Business-type Activities
Electric 13,3997889 14,448,657 (6,404) - 1,042,364 170427364
Water 1,5367791 1,679,399 (6,662) 135,946 135,946
Wastewater 1,315,450 1,277,389 (6,299) - (44,360) (447360)
Harbor 37971,031 3,782,483 (18,207) 4,7387641 4,531,886 475317886
SMIC 27477,022 966,262 (3,151) 11,600 (1,502,311) (1,502,311)
Healthcare Facilities 26,174,009 30,034,000 305,000 - 4,164,991 4,164,991
Parking 111,848 392,369 (242) - 280,279 280,279
Total Business-type
Activities 48,986,040 52,580,559 264,035 4,750,241 8,608,795 8,608,795
Total $66,175,828 55,156,567 2,104,256 5,898,064 (11,625,736) 8,608,795 (3,016,941)
General Revenues
Taxes:
Sales taxes 7,635,648 - 7,635,648
Property taxes 1,705,639 1,705,639
Other taxes 804,511 804,511
Payment in lieu of taxes 11,027 11,027
Grants and entitlements not
restricted to a specific purpose 523,958 523,958
Investment income(loss) (128,204) (508,997) (6377201)
Gain on disposal of capital assets 663,500 663,500
Transfers 990,719 (990,719) -
Total General Revenues and Transfers 12,206,798 (1,499,716) 1077077082
Changes in net position 581,062 7,109,079 7,690,141
Net Position, beginning of year 57,776,127 148,3692056 206,145,183
Net Position, end of year $ 58,357,189 $155,4782135 $213,835,324
See accompanying notes to basic financial statements.
19
Exhibit C-1
City of Seward, Alaska
Governmental Funds
Balance Sheet
Total
General Nonmajor Governmental
December 31, 2022 Fund Funds Funds
Assets
Cash and investments $ 9,993,997 5,075,071 15,069,068
Receivables, net of allowance for
doubtful accounts:
Taxes 925,837 - 925,837
Accounts 312,532 - 312,532
Grants, shared revenues, and loans 59,981 1,264,926 1,324,907
Leases 600,707 - 600,707
Accrued interest 96,011 96,011
Prepaid items 814,310 814,310
Due from other funds 1,140,724 - 1,140,724
Total Assets $ 13,944,099 6,339,997 20,284,096
Liabilities and Fund Balances
Liabilities
Accounts payable 542,489 140,968 683,457
Accrued payroll and related liabilities 403,113 - 403,113
Accrued liabilities 110,582 110,582
Deposits 16,730 - 16,730
Due to other funds - 1,140,724 1,140,724
Unearned revenue 111,867 1,806,416 1,918,283
Interfund loans payable - 899,483 899,483
Total Liabilities 1,184,781 3,987,591 5,172,372
Deferred Inflows of Resources
Related to leases 558,373 - 558,373
Total Liabilities and Deferred Inflows
of Resources 1,743,154 3,987,591 5,730,745
Fund Balances
Nonspendable:
Prepaid items 814,310 - 814,310
Committed:
Working capital 1,500,000 1,500,000
Hospital line of credit 500,000 500,000
Assigned:
Insurance 597,995 - 597,995
Capital projects - 3,147,327 3,147,327
Public works - 2,499 2,499
Unassigned (deficit) 8,788,640 (797,420) 7,991,220
Total Fund Balances 12,200,945 2,352,406 14,553,351
Total Liabilities, Deferred Inflows of Resources, and Fund Balances $ 13,944,099 $ 6,339,997 $20,284,096
See accompanying notes to basic financial statements.
20
Exhibit C-2
City of Seward, Alaska
Reconciliation of Governmental Funds Balance Sheet
to Statement of Net Position
December 31, 2022
Total fund balances for governmental funds $ 14,553,351
Capital assets used in governmental activities are not financial
resources and therefore are not reported in the funds.These
assets consist of:
Land $ 5,509,589
Construction in progress 90,081
Buildings 72,592,708
Improvements other than buildings 29,294,548
Machinery and equipment 10,804,328
Accumulated depreciation (66,028,590)
Total capital assets 52,262,664
Other long-term assets are not available to pay for current period
expenditures and therefore,are unavailable in the funds:
Proportionate share of the collective net OPEB assets 2,869,412
Deferred outflows of resources related to pensions and OPEB liabilities(assets)
are not deemed available to pay current period expenditures and therefore
are not reported as governmental fund assets. 780,496
Deferred inflows of resources related to pensions and OPEB liabilities(assets)
are not deemed available to pay current period expenditures and therefore
are not reported as governmental fund liabilities. (270,900)
An internal service fund is used by the City to charge the cost of
accrued compensated absences for the governmental funds.The
net position of the internal service fund attributable to governmental
activities is included in the governmental column of the
Statement of Net Position.
Net position related to governmental activities 390,853
Plus amount reported with long-term liabilities 500,181 891,034
Long-term liabilities are not deemed due and payable in the
current period and therefore are not reported as governmental Internal
fund liabilities.These long-term liabilities consist of: Governmental Service
General obligation bonds payable $ (4,445,000)
Accrued interest on bonds (23,097)
Unamortized bond premium (612,792)
Deferred gain on refunding (95,396)
Accrued compensated absences (500,181)
Proportionate share of the collective net pension and OPEB liabilities (7,052,402)
Total long-term liabilities $ (12,228,687) (500,181) (12,728,868)
Total Net Position of Governmental Activities $ 58,357,189
See accompanying notes to basic financial statements.
21
Exhibit D-1
City of Seward, Alaska
Governmental Funds
Statement of Revenues, Expenditures and Changes in Fund Balances
Total
General Nonmajor Governmental
Year Ended December 31, 2022 Fund Funds Funds
Revenues
Taxes $ 10,160,723 10,160,723
Licenses and permits 205,996 - 205,996
Intergovernmental 1,298,852 3,057,838 4,356,690
Charges for services 3,849,457 - 3,849,457
Fines and bails 28,759 - 28,759
Investment income (loss) (128,106) (98) (128,204)
Otherrevenues 199,613 14,648 214,261
Total Revenues 15,615,294 3,072,388 18,687,682
Expenditures
Current:
General government 4,780,624 228,020 5,008,644
Public safety 5,219,660 - 5,219,660
Public works 1,964,534 1,359,576 3,324,110
Parks and recreation 1,707,417 - 1,707,417
Library 766,273 - 766,273
Clinic - 1,917,114 1,917,114
Debt service:
Principal payments 215,000 - 215,000
Interest payments 196,481 - 196,481
Capital outlay - 1,654,915 1,654,915
Total Expenditures 14,849,989 5,159,625 20,009,614
Excess of revenues over
(under)expenditures 765,305 (2,087,237) (1,321,932)
Other Financing Sources (Uses)
Proceeds from sale of assets - 663,500 663,500
Transfersin 2,649,411 1,359,568 4,008,979
Transfers out (2,797,265) (220,995) (3,018,260)
Total Other Financing Sources (Uses) (147,854) 1,802,073 1,654,219
Change in Fund Balances 617,451 (285,164) 332,287
Fund Balances, beginning of year 11,583,494 2,637,570 14,221,064
Fund Balances, end of year $ 12,200,945 2,352,406 14,553,351
See accompanying notes to basic financial statements.
22
Exhibit D-2
City of Seward, Alaska
Reconciliation of Statement of Revenues, Expenditures and Change in
Fund Balances of Governmental Funds to the Statement of Activities
Year Ended December 31, 2022
Net change in fund balances - total governmental funds $ 332,287
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 ($2,580,448)exceeded
capital outlays ($1,653,430). (927,018)
Some expenses reported in the Statement of Activities do not require the
use of current financial resources and, therefore, are not reported as
expenditures in governmental funds.
Change in accrued interest payable $ 1,375
Change in the proportionate share of the unfunded
net pension and OPEB liabilities (assets) (3,095,100) (3,093,725)
Changes in deferred inflows and outflows of resources are the results of
timing differences in the actuarial report and adjustments to reflect
employee and non-employee contributions based on the measurement
date.
Change in deferred inflows and outflows of resources
related to pension and OPEB liabilities (assets) 3,881,592
The issuance of long-term debt provides current financial resources to
governmental funds, while the repayment of the principal of long-term
debt consumes the current financial resources of governmental funds.
Neither transaction, however, has any effect on net position:
Principal repayments 215,000
Amortization of deferred gain on bond refunding 6,814
Bond premium amortization 43,771 265,585
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. 122,341
Change in Net Position of Governmental Activities $ 581,062
See accompanying notes to basic financial statements.
23
Exhibit E-1
City of Seward,Alaska
Proprietary Funds
Statement of Net Position
Major Enterprise Funds Nonmajor Total Internal
Healthcare Enterprise Enterprise Service
December 31,2022 Electric Harbor SMIC Facilities Funds Funds Funds
Assets and Deferred Outflows of Resources
Current Assets
Cash and investments $ 7,194,423 1,096,848 280,265 19,747,830 8,651,860 36,971,226 3,148,464
Receivables,net of allowance
for doubtful accounts:
Accounts 1,548,878 156,905 59,955 5,471,000 360,328 7,597,066 -
Accrued interest - - - - 5,454 5,454 18,245
Interfund loans - - - - 66,416 66,416 111,347
Grants 577,195 607,650 11,600 577,196 1,773,641 -
Leases - 4,192,159 1,641,801 - - 5,833,960 -
Other 687,866 - - 310,000 11,492 1,009,358
Prepaid items 232,998 - - 232,998
Inventory 739,121 - - - 69,079 808,200
Total Current Assets 10,980,491 6,053,562 1,993,621 25,528,830 9,741,825 54,298,319 3,278,056
Noncurrent Assets
Restricted cash and investments 8,697,195 3,491,704 - 1,392,950 - 13,581,849 -
Other assets - 77,000 - 77,000 -
Interfund loans,net of current portion - - - - 594,719 594,719 1,135,663
Property,plant and equipment:
Capital assets not being depreciated 2,223,975 20,937,365 12,033,421 196,000 211,431 35,602,192 -
Capital assets being depreciated,
net of depreciation 18,010,119 19,734,815 32,205,308 12,804,850 12,631,767 95,386,859 2,654,503
Net pension and OPEB assets 135,906 386,363 66,882 - 280,161 869,312 -
Total Noncurrent Assets 29,067,195 44,550,247 44,305,611 14,470,800 13,718,078 146,111,931 3,790,166
Total Assets 40,047,676 50,603,809 46,299,232 39,999,630 23,459,903 200,410,250 7,068,222
Deferred Outflows of Resources
Related to pensions and OPEB 36,967 105,093 18,192 - 76,205 236,457 -
Unamortized deferred loss on refunding 334,455 64,703 - 1,080,150 - 1,479,308
Total Deferred Outflows of Resources 371,422 169,796 18,192 1,080,150 76,205 1,715,765
Total Assets and Deferred Outflows
of Resources $ 40,419,098 50,773,605 46,317,424 41,079,780 23,536,108 202,126,015 7,068,222
(continued)
24
Exhibit E-1.continued
City of Seward,Alaska
Proprietary Funds
Statement of Net Position,continued
Major Enterprise Funds Nonmajor Total Internal
Healthcare Enterprise Enterprise Service
December 31,2022 Electric Harbor SMIC Facilities Funds Funds Funds
Liabilities,Deferred Inflows of Resources,and Net Position
Current Liabilities
Accounts payable $ 647,233 99,635 18,105 1,018,000 21,754 1,804,727 219,439
Payable to Providence Health and
Services-Washington - - - 3,842,000 - 3,842,000 -
Due to contractual agencies - - - 166,000 - 166,000
Accrued payroll and related
liabilities 83,444 56,908 4,004 1,219,000 44,356 1,407,712
Accrued interest 97,208 22,292 - 214,498 12,704 346,702 -
Current portion:
Accrued compensated absences 20,553 18,108 3,345 - 26,465 68,471 101,935
Bonds payable 200,000 370,000 - 1,000,000 - 1,570,000 -
Notes payable - - - 205,477 205,477
Interfund Loans - 66,416 - 80,331 - 146,747 -
Lease liability - - - 113,000 113,000
Customer deposits 529,953 24,100 16,300 - - 570,353
Unearned revenue - 646,086 21,444 600,998 676,748 1,945,276
Total Current Liabilities 1,578,391 1,303,545 63,198 8,253,827 987,504 12,186,465 321,374
Noncurrent Liabilities,net of current portion
Accrued compensated absences 16,429 78,235 1,934 - 38,580 135,178 398,246
Bonds payable,including
unamortized premium 14,308,560 1,277,687 - 13,385,542 - 28,971,789 -
Notes payable - - - 1,394,434 1,394,434
Interfund loans 594,719 267,196 - 861,915
Lease liability - - - 1,157,000 - 1,157,000
Net pension and OPEB liability 334,029 949,599 164,382 688,578 2,136,588
Total Noncurrent Liabilities 14,659,018 2,900,240 166,316 14,809,738 2,121,592 34,656,904 398,246
Total Liabilities 16,237,409 4,203,785 229,514 23,063,565 3,109,096 46,843,369 719,620
Deferred Inflows of Resources
Related to teases - 4,080,799 1,599,391 - - 5,680,190 -
Related to pensions and OPEB 12,831 36,476 6,314 - 26,449 82,070 -
Total Liabilities and Deferred Inflows
of Resources 16,250,240 8,321,060 1,835,219 23,063,565 3,135,545 52,605,629 719,620
Net Position
Net investment in capital assets 14,757,184 39,532,094 44,238,729 (304,542) 11,243,287 109,466,752 2,654,503
Restricted for commercial passenger
vessel tax - 2,220,386 - - - 2,220,386 -
Unrestricted 9,411,674 700,065 243,476 18,320,757 9,157,276 37,833,248 3,694,099
Total Net Position 24,168,858 42,452,545 44,482,205 18,016,215 20,400,563 149,520,386 6,348,602
Total Liabilities,Deferred Inflows of
Resources and Net Position $ 40,419,098 50,773,605 46,317,424 41,079,780 23,536,108 7,068,222
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 5,957,749
Net Position of Business-type Activities $ 155,478,135
See accompanying notes to basic financial statements.
25
Exhibit E-2
City of Seward,Alaska
Proprietary Funds
Statement of Revenues,Expenses and Changes in Net Position
Major Enterprise Funds Nonmajor Total Internal
Healthcare Enterprise Enterprise Service
Year Ended December 31,2022 Electric Harbor SMIC Facilities Funds Funds Funds
Operating Revenues
Charges for services $ 14,424,290 3,545,830 887,087 30,034,000 3,309,024 52,200,231 -
Vehicle rental and interfund
charges - - - - - - 1,202,111
Total Operating Revenues 14,424,290 3,545,830 887,087 30,034,000 3,309,024 52,200,231 1,202,111
Operating Expenses
Salaries and employee benefits 1,131,129 1,077,541 277,392 18,431,000 764,661 21,681,723 500,181
Services and supplies 8,818,755 873,319 270,895 4,783,000 883,314 15,629,283 14,788
Administration 1,421,513 431,173 278,231 628,504 506,136 3,265,557 -
Depreciation 1,583,678 1,544,067 1,650,504 1,813,449 791,874 7,383,572 380,198
Total Operating Expenses 12,955,075 3,926,100 2,477,022 25,655,953 2,945,985 47,960,135 895,167
Income(Loss)from Operations 1,469,215 (380,270) (1,589,935) 4,378,047 363,039 4,240,096 306,944
Nonoperating Revenues(Expenses)
Intergovernmental-PERS on-behalf (6,404) (18,207) (3,151) - (13,203) (40,965) -
Intergovernmental-Provider relief fund - - 305,000 - 305,000 -
Interest income - 215,495 79,175 - 16,321 310,991 18,245
Investment income(loss) (159,137) (77,750) (4,441) (151,821) (115,848) (508,997) (52,440)
(Loss)on sale of capital assets -
Interest expense (472,921) (69,800) (521,056) (25,107) (1,088,884)
Bond issuance costs (90,380) (90,380)
Nonoperating grant revenue - - - -
Other revenue(expenses) 24,367 21,158 - 3,OOD 23,763 72,288
Total Nonoperating
Revenues(Expenses) (704,475) 70,896 71,583 (364,877) (114,074) (1,040,947) (34,195)
Income(Loss)Before Contributions
and Transfers 764,740 (309,374) (1,518,352) 4,013,170 248,965 3,199,149 272,749
Capital contributions:
Federal sources - 2,899,553 11,600 - - 2,911,153 -
State of Alaska 1,535,263 - 1,535,263
Kenai Peninsula Borough 303,825 303,825
Transfersin 608,962 1,839,744 39,869 2,488,575
Transfers out (1,614,003) (785,598) (116,872) - (962,821) (3,479,294)
Change in net position (849,263) 4,252,631 (1,623,624) 5,852,914 (673,987) 6,958,671 272,749
Net Position,beginning of year 25,018,121 38,199,914 46,105,829 12,163,301 21,074,550 6,075,853
Net Position,end of year $ 24,168,858 42,452,545 44,482,205 18,016,215 20,400,563 6,348,602
Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds. 150,408
Change in Net Position of Business-type Activities $ 7,109,079
See accompanying notes to basic financial statements.
26
Exhibit E-3
City of Seward,Alaska
Proprietary Funds
Statement of Cash Flows
Major Enterprise Funds Nonmajor Total Internal
Healthcare Enterprise Enterprise Service
Year Ended December 31,2022 Electric Harbor SMIC Facilities Funds Funds Funds
Cash Flows from(for)Operating Activities
Receipts from customers and users $ 13,901,564 3,618,899 861,529 31,658,998 4,549,833 54,590,823 -
Payments to suppliers (9,317,630) (858,531) (389,635) (4,462,504) (912,655) (15,940,955) 138,770
Payments to employees (1,837,403) (1,153,815) (174,140) (18,318,000) (813,504) (22,296,862) (465,145)
Payments for interfund services used (1,305,392) (515,488) (147,212) - (469,170) (2,437,262) -
Receipts from vehicle rentals and interfund charges - - - - - - 1,202,111
Net cash flows from operating activities 1,441,139 1,091,065 150,542 8,878,494 2,354,504 13,915,744 875,736
Cash Flows from(for)Noncapital Financing Activities
Transfers in - 608,962 - 1,839,744 39,869 2,488,575 -
Transfers out (1,614,003) (785,598) (116,872) - (962,821) (3,479,294) -
Net cash flows from(for)noncapital
financing activities (1,614,003) (176,636) (116,872) 1,839,744 (922,952) (990,719) -
Cash Flows from(for)Capital and Related
Financing Activities
Issuance of bonds payable 10,092,211 - - - - 10,092,211 -
Leases - 104,135 36,765 (325,000) - (184,100) -
Bond issuance costs (90,380) - - - - (90,380) -
Principal payments on long-term debt (190,000) (350,000) - (950,000) (202,441) (1,692,441) -
Interest payments on long-term debt (432,998) (84,850) - (518,507) (27,036) (1,063,391) -
Acquisition of property,plant and equipment (1,534,499) (7,178,878) (11,600) (1,456,287) (145,052) (10,326,316) (1,059,001)
Capital contributions - 4,130,991 - - - 4,130,991 Proceeds from interfund loans - 733,212 - - - 733,212 -
Principal payments on interfund loans - (72,077) - (76,324) - (148,401) -
Interfund interest payments - (10,867) - (22,252) - (33,119) -
Net cash flows from(for)capital and
related financing activities 7,844,334 (2,728,334) 25,165 (3,348,370) (374,529) 1,418,266 (1,059,001)
Cash Flows from(for)Investing Activities
Investment income(loss) (159,137) (77,750) (4,441) (151,821) (115,848) (508,997) (52,440)
Interfund loans disbursed - - - - (733,212) (733,212) (930,500)
Interfund loan receipts - - - - 72,077 72,077 107,341
Interfund interest received - - - - 10,867 10,867 22,252
Net cash flows from(for)investing activities (159,137) (77,750) (4,441) (151,821) (766,116) (1,159,265) (853,347)
Net change in cash and investments 7,512,333 (1,891,655) 54,394 7,218,047 290,907 13,184,026 (1,036,612)
Cash and Investments,beginning of year 8,379,285 6,480,207 225,871 13,922,733 8,360,953 37,369,049 4,185,076
Cash and Investments,end of year $ 15,891,618 4,588,552 280,265 21,140,780 8,651,860 50,553,075 3,148,464
Reconciliation of cash and investments to the
Statement of Net Position:
Cash and investments $ 7,194,423 1,096,848 280,265 19,747,830 8,651,860 36,971,226 3,148,464
Restricted cash and investments 8,697,195 3,491,704 - 1,392,950 - 13,581,849 -
Total cash and investments $ 15,891,618 4,588,552 280,265 21,140,780 8,651,860 50,553,075 3,148,464
(continued)
27
Exhibit E-3.continued
City of Seward,Alaska
Proprietary Funds
Statement of Cash Flows,continued
Major Enterprise Funds Nonmajor Total Internal
Healthcare Enterprise Enterprise Service
Year Ended December 31,2022 Electric Harbor SMIC Facilities Funds Funds Funds
Reconciliation of earnings(loss)from operations
to net cash flows from(for)operating activities:
Income(loss)from operations $ 1,469,215 (380,270) (1,589,935) 4,378,047 363,039 4,240,096 306,944
Adjustments to reconcile earnings(loss)
from operations to net cash flow from(for)
operating activities:
Depreciation 1,583,678 1,544,067 1,650,504 1,813,449 791,874 7,383,572 380,198
Other nonoperating revenues(expenses) 24,367 21,158 - 3,000 23,763 72,288 -
Noncash expense-PERS on-behalf (6,404) (18,207) (3,151) - (13,203) (40,965)
Increase(decrease)in allowance for doubtful accounts (2,221) 18,752 - (254,000) (828) (238,297)
(Increase)decrease in assets and deferred
outflows of resources:
Customer receivables (643,069) (51,223) (18,608) 1,378,000 541,077 1,206,177
Prepaid expenses (225,922) - - (225,922)
Inventory (17,874) 24,213 6,339
Other assets - - - (7,000) - (7,000)
Net pension and OPEB assets 16,562 137,528 43,791 46,376 244,257
Deferred outflows of resources-pension and OPEB (41,592) (21,430) (24,896) (20,917) (108,835) -
Increase(decrease)in liabilities and
deferred inflows of resources:
Accounts payable (138,958) (69,527) 12,279 (252,000) (16,539) (464,745) 153,558
Other payables - - 1,205,000 - 1,205,000 -
Accrued payroll and related liabilities (6,030) 20,204 277 113,D0o 10,770 138,221 35,036
Accrued compensated absences 16,083 25,814 (4,544) - 8,218 45,571 -
Customer deposits 98,197 (1,500) (1,000) - - 95,697
Unearned revenue - 85,882 (5,950) 500,998 676,748 1,257,678
Net pension and OPEB liabilities (380,925) 287,229 164,382 - 238,272 308,958
Deferred inflows of resources-pension and OPEB (303,968) (507,412) (72,607) - (318,359) (1,202,346)
Net Cash Flows from Operating Activities $ 1,441,139 1,091,065 150,542 8,878,494 2,354,504 13,915,744 875,736
See accompanying notes to basic financial statements.
28
City of Seward, Alaska
Notes to Basic Financial Statements
December 31, 2022
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 City reports the Providence Seward Medical Care Center (PSMCC) as an enterprise fund in
accordance with the provisions of GASB Statement No. 61, The Financial Reporting Entity: Omnibus.
In 2013, the City entered into a contractual agreement with a nonprofit organization as co-signees
to a federally funded health clinic program. The nonprofit organization is legally separate and does
not meet the criteria under GASB Statement No. 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 Et Services - Washington, a nonprofit corporation (the
Corporation), under a management and operating agreement. Under the operating agreement, the
Corporation is responsible for day-to-day management of the hospital and long-term care facilities
in exchange for a management fee. All financial risks and rewards from the operations of the
hospital and long-term care facilities accrue to the City. The City is responsible for debt obligations,
including payment of revenue bonds through revenues generated at the PSMCC. The City pays for
all capital costs of the healthcare facilities and is legally obligated to finance potential deficits.
Government-Wide and Fund Financial Statements
The accounting policies of the City conform to accounting principles generally accepted in the
United States of America as applicable to governments. The following is a summary of the more
significant policies:
The government-wide financial statements (i.e., the statement of net position and the statement
of activities) report information on all of the nonfiduciary activities of the primary government. All
fiduciary activities are only reported in the fund financial statements. 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.
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.
29
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
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.
Separate financial statements are provided for governmental funds and proprietary funds. Major
individual governmental funds and major individual enterprise funds are reported as separate
columns in the fund financial statements. The remaining governmental and enterprise funds are
being aggregated and reported as nonmajor funds. The internal service funds are combined into a
single aggregated presentation in the proprietary 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
transactions occur 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.
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, pensions and other
postemployment benefits 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 City.
30
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
The City reports the following major funds based on the required quantitative criteria:
Major Governmental Funds:
The General Fund is the government's main operating fund. It accounts for all financial resources of
the general government, except those required to be reported in another fund.
Major Enterprise 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.
Additionally, the City also reports the following funds:
Special Revenue Funds - account for revenue sources that are legally restricted or committed to
expenditure for specific purposes.
Capital Project Funds - account for the acquisition of capital assets or construction of major capital
projects not being financed by proprietary funds.
Internal Service Funds - the City reports two Internal Service Funds which account for the activities
relating to the City's motor pool activities of the other funds 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 Absences Internal Service Fund accounts for the accrual and
payment of compensated absences of the governmental activities.
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.
31
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in
the United States of America requires management to make estimates and assumptions that affect the
reported amounts of assets, deferred outflows of resources, liabilities, and deferred inflows of resources
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenditures / expenses during the reporting period. Actual results could differ
from those estimates.
Cash and Investments
A central treasury is used to account for the City's cash and investments to maximize investment income.
Investment income is allocated among the funds based on their respective cash balances. Investments are
stated at fair value. For purposes of the statement of cash flows, the City has defined cash as demand
deposits and all investments maintained in the cash management pool, regardless of maturity period,
since various funds use the cash management pool essentially as a demand deposit account.
Accounts Receivable
All trade and tax receivables are shown net of an allowance for uncollectible accounts, determined by
historical experience. Ambulance receivable allowance is recorded at 30 percent, based on historical
recoveries.
Inventory
Inventories are valued 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).
Restricted Assets
Restricted cash and investments are held in the proprietary funds, and are restricted because their use is
limited by bond covenant or grant agreements for the construction of capital assets.
Leases —Lessor Accounting
The City is a lessor for non-cancellable leases and recognizes a lease receivable and a deferred inflow of
resources in the financial statements. At the commencement of a lease, the City initially measures the
lease receivable at the present value of payments expected to be received during the lease term.
Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The
deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted
for lease payments received at or before the lease commencement date. Subsequently, the deferred
inflow of resources is recognized as revenue over the life of the lease term.
Key estimates and judgments include how the City determines (1) the discount rate it uses to discount the
expected lease receipts to present value, (2) lease term, and (3) lease receipts.
a) The City uses its current borrowing rate as the discount rate for leases.
b) The lease term includes the non-cancellable period of the lease; the term of the lease contract,
including options to extend, must be more than 12 months. Lease receipts included in the
measurement of the lease receivable is composed of fixed payments from the lessee.
32
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
The City monitors changes in circumstances that would require a remeasurement of its leases and will
remeasure the lease receivable and deferred inflows of resources if certain changes occur that are
expected to significantly affect the amount of the lease receivable.
Prepaid Items
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as
prepaid items. The prepaid items do not reflect available resources and, thus, an equivalent portion of
fund balance is classified as nonspendable in the governmental fund financial statements. Cost is recorded
as an expenditure or expense as the prepayment is applied (consumption method).
Interfund Balances
Activity between funds that are representative of lending/borrowing arrangements outstanding at the end
of the year are referred to as either "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 acquisition value at the date of donation. Acquisition value is the price that would be paid
to acquire an asset with equivalent service potential in an orderly market transaction at the acquisition
date. 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.
Capital assets reimbursed by outside entities, including granting agencies, are recorded as capital
contributions in the enterprise funds.
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 10-50 years
Machinery and equipment 3-8 years
Improvements other than buildings 3-40 years
33
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Accrued Compensated Absences
The City allows employees to accumulate earned but unused vacation and sick leave benefits. All accrued
compensated absences are accrued when incurred in the government-wide, proprietary fund, and
governmental fund financial statements. Accrued compensated absences that are earned in the
governmental funds are accounted for in the Compensated Absences Internal Service Fund.
Long-term Debt
In the government-wide and proprietary fund financial statements, long-term debt and other long-term
obligations are reported as liabilities in the Statement of Net Position. Bond premiums and discounts are
amortized over the life of the bonds on a straight-line basis, which approximates the effective interest
rate method. Bonds payable as reported include amounts of unamortized bond premiums or discounts.
In the fund financial statements, governmental fund types recognize bond premiums and discounts during
the current period. The face amount of the debt issues are reported as other financing sources. Premiums
received on debt issuances are reported as other financing sources while discounts on debt issuances are
reported as other financing uses. Principal payments on debt are reported as debt service expenditures.
Fund Balance and Fund Balance Flow Assumptions
Governmental fund financial statements 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 externally
by creditors, grantors, contributors, or laws or regulations of other governments; or 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.
34
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
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.
Net Position and Net Position Flow Assumptions
Net position represents the residual interest in the City's assets and deferred outflows of resources after
liabilities and deferred inflows of resources are deducted and consists of three components: net
investment in capital assets, restricted, and unrestricted net position. Net investment in capital assets
includes capital assets, net of accumulated depreciation, reduced by outstanding debt incurred to acquire,
construct, or improve those capital assets, excluding unexpended proceeds. The restricted category
represents the balance of assets restricted for general use by external parties (creditors, grantors,
contributors, or laws or regulations of other governments) or imposed by law through constitutional
provisions or enabling legislation. Unrestricted net position consists of the net position not meeting the
definition of either of the other two components.
Sometimes the City will fund outlays for a purpose from both restricted and unrestricted resources. In
order to calculate the amounts to report as restricted and unrestricted net position in the government-
wide and proprietary fund financial statements, a flow assumption must be made about the order in which
the resources are considered to be applied. It is the City's policy to consider restricted net position to
have been depleted before unrestricted net position is applied.
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, 2021. Outstanding purchase orders, if any, at December 31, are cancelled
and new ones are issued in the subsequent year.
Unearned 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 "recognizable"; 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.
35
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Pension Plans
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 Fund employees participate in the International Brotherhood of Electrical Workers (IBEW) Defined
Benefit Pension Plan.
Pension and Other Postemployment Benefits (OPEB)
For purposes of measuring the net pension and OPEB assets and liabilities, deferred outflows of resources
and deferred inflows of resources related to pensions and OPEB, and pension and OPEB expense,
information about the fiduciary net position of the Public Employees' Retirement System (PERS) and
additions to/from PERS's fiduciary net position have been determined on the same basis as they are
reported by PERS. For this purpose, benefit payments (including refunds of employee contributions) are
recognized when due and payable in accordance with the benefit terms. Investments are reported at fair
value.
Deferred Outflows of Resources and Deferred Inflows of Resources
In addition to assets, the statement of net position will sometimes report a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources,
represents a consumption of net assets that applies to a future period(s) and so will not be recognized as
an outflow of resources (expense/expenditure) until then. Generally, the City reports deferred charges
on bond refunding and pension and OPEB related items as deferred outflows of resources. These items are
amortized to expense over time.
In addition to the liabilities, the financial statements may also present deferred inflows of resources.
Deferred inflows of resources represent an acquisition of net assets that applies to a future period and
will not be recognized until later. The City reports certain pension and OPEB related items as deferred
inflows of resources. These items are amortized as a reduction of expense over varying periods of time
based on their nature.
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, any delinquent real and personal property taxes not currently available are reflected as
deferred inflows of the General Fund. No amounts were reported as of December 31, 2022.
36
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
2. Stewardship, Compliance, and Accountability
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 five 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. 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 Cash and Investment Balances
The following is a reconciliation of the City's cash and investment balances to the financial statements as
of December 31, 2022:
Government-Wide
Statement of Net
Position
Cash and investments $ 55,188,758
Restricted cash and investments 13,581,849
Total Cash and Investments $ 68,770,607
37
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
As of December 31, 2022, the City had the following investments:
Investment Maturities (in Years)
Less than 1
Investment Fair Value year 1 to 5 years Over 5 years
U.S. treasury securities (SLGS) $ 13,893,925 8,502,341 5,391,584 -
U.S. government bonds 4,931,297 1,647,376 3,283,921 -
Total Subject to Interest Rate Risk 18,825,222 10,149,717 8,675,505 -
Carried at Amortized Cost
Pooled investments / AMLIP 11,410,093
Certificates of deposit 9,354,402
Money market account 3,409,531
Total Investments 42,999,248
Cash 25,771,359
Total Cash and Investments $ 68,770,607
Fair Value Measurement
The City categorizes its fair value measurements within the fair value hierarchy established by generally
accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair
value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs
are significant other observable inputs; Level 3 inputs are significant unobservable inputs. The City's
investments that are classified as Level 2 are valued using third party pricing models provided by
brokerages. The City has the following recurring fair value measurements as of December 31, 2022:
Total Level Level Level
Investments by fair value level:
U.S. treasury securities (SLGS) $ 13,893,925 - 13,893,925 -
U.S. government bonds 4,931,297 - 4,931,297 -
Total investments at fair value 18,825,222 - 18,825,222 -
Investments measured at
amortized cost:
Pooled investments / AMLIP 11,410,093
Certificates of deposit 9,354,402
Money market account 3,409,531
Total investments at
amortized cost 24,174,026
Total Investments $ 42,999,248
38
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Restricted Cash and investments
The City maintains bond redemption and reserve accounts as required by bond covenants. The balances
at December 31, 2022 are as follows:
Electric Enterprise Fund $ 944,990
Harbor Enterprise Fund 442,898
Healthcare Enterprise Facilities Fund 1,392,950
Total Restricted for Bond Retirement $ 2,780,838
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:
Electric Enterprise Fund $ 7,752,205
Harbor Enterprise Fund 3,048,806
Total Restricted for Capital Projects $ 10,801,011
Custodial Credit Risk
The fair value of the City's investments at year-end is shown above. GASB Statement No. 3, as amended
by GASB Statement 40, establishes categories as an indication of the level of custodial credit 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. To limit exposure to custodial credit risk, City
policy requires that all deposits and investments be fully insured or collateralized. As of December 31,
2022, $5,745,000 of the Healthcare Facilities Enterprise Fund Cash balance attributable to PSMCC was
subject to custodial credit risk.
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 value 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, Continued
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 of Credit Risk
The City's investment policy places no limit on the amount that can be invested in any one issuer.
Approximately 7% of the total portfolio is held with the Federal Home Loan Mortgage Corporation.
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. All of the U.S. Treasuries (SLGS) and Bond investments are rated AAA by Standard and
Poor's. AMLIP investments are rated AAAm.
At December 31, 2022, the City's investments in U.S. Treasuries (SLGS) and Bond investments implicitly
guaranteed by the U.S. Government were rated AAA.
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, Continued
4. Receivables
Aggregate receivables including applicable allowances for doubtful accounts, are as follows:
Governmental Funds Enterprise Funds
Total
General Nonmajor Governmental
Fund Funds Funds Electric Harbor
Receivables:
Taxes $ 925,837 925,837 - -
Accounts 312,532 - 312,532 1,621,862 215,653
Grants, shared revenues and loans 59,981 1,264,926 1,324,907 577,195 607,650
Accrued interest 96,011 - 96,011 - -
Leases 600,707 600,707 - 4,192,159
Other - - - 687,866 -
Gross receivables 1,995,068 1,264,926 3,259,994 2,886,923 5,015,462
Less: allowance for doubtful accounts - - - (72,984) (58,748)
Net receivables $ 1,995,068 1,264,926 3,259,994 2,813,939 4,956,714
Enterprise Funds
Non m ajor Total Total
Healthcare Enterprise Enterprise Primary
SMIC Facilities Funds Funds Government
Receivables:
Taxes $ - - - - 925,837
Accounts 59,955 7,269,000 375,245 9,541,715 9,854,247
Grants, shared revenues and loans 11,600 - 577,196 1,773,641 3,098,548
Accrued interest - 5,454 5,454 101,465
Leases 1,641,801 - - 5,833,960 6,434,667
Other - 310,000 11,492 1,009,358 1,009,358
Gross receivables 1,713,356 7,579,000 969,387 18,164,128 21,424,122
Less: allowance for doubtful accounts - (1,798,000) (14,917) (1,944,649) (1,944,649)
Net receivables $ 1,713,356 5,781,000 954,470 16,219,479 19,479,473
5. Leases
Leases receivable
The City is the lessor on several multiple year lease agreements with third parties for various nonfinancial
assets. The lengths of the lease terms vary, and the City used their estimated incremental borrowing
rate of 5% when there was no stated interest rate in the lease contracts. The City recognized $611,721
in lease revenue and $312,655 in interest revenue for the fiscal year ended December 31, 2022. As of
December 31, 2022, the City's receivables for lease payments were $6,434,667. The City also recognized
deferred inflows of resources associated with lessor agreements of $6,238,563 at December 31, 2022
that will be recognized as revenue over the remaining lives of the various lease terms.
41
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
6. Capital Assets
Capital asset activity for the year ended December 31, 2022 was as follows:
Balance Balance
January 1, Additions and Deletions and December 31,
Governmental Activities 2022 Reclassifications Reclassifications 2022
Capital assets not being depreciated:
Land and land improvements $ 5,509,589 - 5,509,589
Construction in progress 423,695 1,604,720 (1,938,334) 90,081
Total assets not being
depreciated 5,933,284 1,604,720 (1,938,334) 5,599,670
Capital assets being depreciated:
Buildings and improvements 70,654,374 1,938,334 72,592,708
Improvements other than buildings 29,294,548 29,294,548
Machinery and equipment 10,755,618 48,710 10,804,328
Total assets being depreciated 110,704,540 1,987,044 112,691,584
Less accumulated depreciation for:
Buildings and improvements 36,040,365 1,699,422 37,739,787
Improvements other than buildings 18,309,753 626,621 18,936,374
Machinery and equipment 9,098,024 254,405 9,352,429
Total accumulated depreciation 63,448,142 2,580,448 66,028,590
Total capital assets being
depreciated 47,256,398 (593,404) 46,662,994
Governmental Activities Capital
Assets, net $ 53,189,682 1,011,316 (1,938,334) 52,262,664
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42
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Balance Balance
January 1, Additions and Deletions and December 31,
Business-type Activities 2022 Reclassifications Reclassifications 2022
Capital assets not being depreciated
and amortized:
Land and land improvements $ 30,703,256 - 30,703,256
Construction in progress 951,818 4,038,118 (91,000) 4,898,936
Total assets not being
depreciated and amortized 31,655,074 4,038,118 (91,000) 35,602,192
Capital assets being depreciated:
and amortized:
Buildings and improvements 38,061,267 - 38,061,267
Infrastructure 51,185,227 4,609,514 55,794,741
Improvements other than buildings 140,189,499 - 140,189,499
Right-to-use asset 947,000 618,000 1,565,000
Machinery and equipment 30,682,733 2,119,685 32,802,418
Total assets being depreciated
and amortizd: 261,065,726 7,347,199 268,412,925
Less accumulated depreciation and
amortization for:
Buildings and improvements 22,948,104 1,064,288 24,012,392
Infrastructure 7,125,067 1,991,365 9,116,432
Improvements other than buildings 109,341,860 3,245,656 112,587,516
Right-to-use asset 161,000 207,000 368,000
Machinery and equipment 23,031,762 1,255,461 24,287,223
Total accumulated depreciation
and amortization 162,607,793 7,763,770 170,371,563
Total capital assets being
Depreciated and amortized 98,457,933 (416,571) 98,041,362
Business-type Activities Capital
Assets, net $ 130,113,007 3,621,547 (91,000) 133,643,554
The ending balances include $9,594,956 and $6,940,453 of equipment cost and accumulated
depreciation and amortization, respectively, related to the Motor Pool Internal Service Fund.
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43
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Depreciation and amortization for the year ended December 31, 2022 was charged to the functions as
follows:
Governmental Activities
General government $ 77,237
Public safety 198,109
Public works 665,795
Parks and recreation 72,207
Library 242,428
Clinic 10,917
SeaLife Center 1,313,755
Total Governmental Activities $ 2,580,448
Business-type Activities
Electric $ 1,583,678
Harbor 1,544,067
SMIC 1,650,504
Healthcare facilities 1,813,449
Water 415,894
Wastewater 349,339
Parking 26,641
In addition, depreciation on capital
assets held by the City's Motor Pool
internal service fund is charged to
the various functions based on
their usage of the assets. 380,198
Total Business-type Activities $ 7,763,770
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44
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
7. Interfund Receivables, Payables and Transfers
A schedule of interfund balances and transfers as of and for the year ended December 31, 2022, 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.
Transfers
From General Fund to:
Healthcare Facilities Enterprise Fund $ 1,839,744
Nonmajor Enterprise Funds 39,869
Nonmajor Governmental Funds 917,652
Total transfers from General Fund 2,797,265
From Electric Enterprise Fund to:
General Fund 1,614,003
From Harbor Enterprise Fund to:
General Fund 557,578
Nonmajor Governmental Funds 228,020
From SMIC Enterprise Fund to:
General Fund 116,872
From Nonmajor Enterprise Funds to:
General Fund 353,859
Harbor Enterprise Fund 608,962
From Nonmajor Governmental Funds to:
General Fund 7,099
Nonmajor Governmental Funds 213,896
Total Transfers From Other Funds $ 3,700,289
The City has the following outstanding interfund loans:
In 2020, the Motor Pool Internal Service Fund issued an interfund loan in the amount of $565,268 to the
Healthcare Facilities Enterprise Fund for the purpose of paying the Seward General Hospital PERS
unfunded pension liability. Repayment is scheduled over seven years bearing interest at 5.25%. At
December 31, 2022 the outstanding balance of the loan is $347,527 of which $80,331 is presented as
current. At December 31, 2022 $18,245 of interest has been accrued on this loan.
In 2022, the Motor Pool Internal Service Fund issued an interfund loan in the amount of $930,500 to the
Animal Shelter Capital Project Fund for the purpose of financing construction of the new animal shelter.
Repayment is scheduled over 30 years and is an interest free loan. At December 31, 2022 the outstanding
balance of the loan was $899,483, of which $31,016 is presented as current.
In 2022, the Parking Enterprise Fund issued an interfund loan in the amount of $733,212 to the Harbor
Enterprise Fund to finance construction of the North East Harbor Launch Ramp and is scheduled to be
repaid over ten years bearing interest at 2.5%. At December 31, 2022 the outstanding balance of the
loan was $661,135, of which $66,416 is presented as current.
45
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
8. Long-term Liabilities
The following is a summary of long-term liability transactions of the City for the year ended
December 31, 2022:
Balance at Balance at Due
January 1, December 31, Within
Governmental Activities 2022 Additions Retirements 2022 One Year
General obligation bonds -
$2,890,000 2018 General
Obligation bonds, due in
annual installments of
$110,000 to $200,000,
plus interest at 2.5% to
5.0%through May 1, 2037 $ 2,480,000 115,000 2,365,000 120,000
$2,180,000 2021 General
Obligation Refunding
Bond, due in annual
installments of$100,000
to $200,000, plus interest
at 4.0%to 5.0%through
December 1, 20361 2,180,000 - 100,000 2,080,000 110,000
Net pension and OPEB liabilities 4,830,467 2,221,935 - 7,052,402 -
Accrued compensated absences 465,145 500,181 465,145 500,181 101,935
Total Governmental Activities
Long-term Liabilities $ 9,955,612 2,722,116 680,145 11,997,583 331,935
Plus unamortized bond premium 612,792
$ 12,610,375
Liquidation of governmental accrued compensated absences is made by the Compensated Absences
Internal Service Fund. All other debt service payments above are made by the General Fund.
46
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Balance at Balance at Due
January 1, December 31, Within
Business-type Activities 2022 Additions Retirements 2022 One Year
Revenue bonds:
$17,135,000 refunding long-term
care facility bonds, due in
annual installments of$870,000
to $1,405,000, plus interest at
2.0%to 5.0%through August 1,
2033 $ 14,300,000 950,000 13,350,000 1,000,000
$5,045,000 refunding electric
revenue bonds, due in annual
installments of$165,000 to
$330,000, plus interest at 2.0%
to 5.0%, through August 1, 2038 4,385,000 190,000 4,195,000 200,000
$8,835,000 electric revenue
bonds, due in annual
installments of$150,000 to
$565,000, plus interest at 5.0%,
through December 31, 2052 8,835,000 8,835,000
$830,000 2014 A refunding harbor
revenue bonds, due in annual
installments of$65,000 to
$100,000, plus interest at 5.0%,
through April 1, 2025 380,000 90,000 290,000 95,000
$2,575,000 2014 B refunding harbor
revenue bonds, due in annual
installments of$210,000 to
$320,000, plus interest at 3.0%
to 5.0%, through April 1, 2026 1,445,000 260,000 1,185,000 275,000
Notes payable:
$678,740 sewer note payable to
State of Alaska Department of
Environmental Conservation,
due in annual installments of
$36,688 including interest at
1.5%through September 1, 2035 457,929 29,820 428,109 30,267
47
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Balance at Balance at Due
January 1, December 31, Within
Business-type Activities 2022 Additions Retirements 2022 One Year
Notes payable, continued:
$620,047 sewer note payable to
State of Alaska Department of
Environmental Conservation,
due in annual installments of
$35,944 including interest at
1.5%through September 11,
2035 $ 450,853 29,181 421,672 29,618
$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 April1, 2027 893,570 - 143,440 750,130 145,592
Net pension and OPEB liabilities 1,827,630 308,958 - 2,136,588 -
Accrued compensated absences 158,078 203,649 158,078 203,649 68,471
Total Business-type Activities
Long-term Liabilities $ 24,298,060 9,347,607 1,850,519 31,795,148 1,843,948
Plus unamortized bond premium 2,686,789
$ 34,481,937
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48
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Annual debt service requirements to maturity on the bonds and notes follow:
General Obligation Bonds Governmental Activities
Year Ending December 31, Principal Interest Total
2023 $ 230,000 185,606 415,606
2024 235,000 175,544 410,544
2025 245,000 165,232 410,232
2026 255,000 152,856 407,856
2027 265,000 139,952 404,952
2028-2032 1,530,000 520,833 2,050,833
2033-2037 1,685,000 171,532 1,856,532
$ 4,445,000 1,511,555 5,956,555
Revenue Bonds Business-type Activities
Year Ending December 31, Principal Interest Total
2023 $ 1,570,000 1,125,056 2,695,056
2024 1,635,000 1,046,556 2,681,556
2025 1,870,000 964,806 2,834,806
2026 1,860,000 866,506 2,726,506
2027 1,570,000 826,106 2,396,106
2028-2032 8,745,000 3,222,375 11,967,375
2033-2037 4,125,000 1,978,463 6,103,463
2038-2042 1,905,000 1,399,050 3,304,050
2043-2047 2,005,000 952,750 2,957,750
2048-2052 2,570,000 398,000 2,968,000
27,855,000 12,779,668 40,634,668
Notes Payable Business- type Activities
Year Ending December 31, Principal Interest Total
2023 $ 205,477 23,999 229,476
2024 208,560 20,917 229,477
2025 211,689 17,788 229,477
2026 214,864 14,613 229,477
2027 218,086 11,390 229,476
2028-2032 332,394 30,769 363,163
2033-2035 208,841 6,256 215,097
$ 1,599,911 125,732 1,725,643
49
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
9. Revenue Bond Requirements
Pledged Revenues
The enterprise funds have pledged future customer revenues, net of specified operating expenses,
to repay revenue bonds.
Electric Revenue Bonds
The Electric Enterprise Fund has pledged future electric customer revenues, net of specified
operating expenses, to repay Electric Enterprise Fund revenue bonds. Proceeds from the bonds
provided financing for construction and other capital improvements. The bonds are payable solely
from electric customer net revenues and are payable through 2052. The total principal and interest
remaining to be paid on the bonds is $22,943,625. Principal and interest paid for the current year
and total customer net revenues were $622,998 and $2,918,123, respectively.
Harbor Revenue Bonds
The Harbor Enterprise Fund has pledged future harbor customer revenues, net of specified operating
expenses, to repay Harbor Enterprise Fund revenue bonds. Proceeds from the bonds provided
financing for construction and other capital improvements. The bonds are payable solely from
harbor customer net revenues and are payable through 2026. The total principal and interest
remaining to be paid on the bonds is $1,625,600. Principal and interest paid for the current year
and total customer net revenues were $434,850 and $1,107,205, respectively.
Healthcare Revenue Bonds
The Healthcare Enterprise Fund has pledged future healthcare customer revenues, net of specified
operating expenses, to repay Healthcare Enterprise Fund revenue bonds. Proceeds from the bonds
provided financing for construction and other capital improvements. The bonds are payable solely
from healthcare customer net revenues and are payable through 2033. The total principal and
interest remaining to be paid on the bonds is $16,065,444. Principal and interest paid for the current
year and total customer net revenues were $1,468,507 and $6,039,675, respectively.
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50
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Revenue Requirements
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 2022. The bond coverage calculations are as follows:
Electric Revenue Bonds
Total revenues, excluding grants $ 14,289,520
Total operating expenses, excluding depreciation (11,371,397)
Available for Debt Service $ 2,918,123
Debt service payments:
Principal $ 190,000
Interest 432,998
Total Debt Service Payments $ 622,998
Debt Coverage 4.68
Harbor Revenue Bonds
Total revenues, excluding grants $ 3,704,733
Total operating expenses, excluding depreciation (2,382,033)
Available for Debt Service $ 1,322,700
Debt service payments:
Principal $ 350,000
Interest 84,850
Total Debt Service Payments $ 434,850
Debt Coverage 3.04
51
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
10. Fund Balances
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 Fund Nonmajor Funds Totals
Nonpendable:
Prepaid items $ 814,310 - 814,310
Committed:
Working capital 1,500,000 - 1,500,000
Hospital line of credit 500,000 - 500,000
Total committed 2,000,000 - 2,000,000
Assigned:
Insurance 597,995 - 597,995
Capital projects - 3,147,327 3,147,327
Public works - 2,499 2,499
Total assigned 597,995 3,149,826 3,747,821
Unassigned (deficit) 8,788,640 (797,420) 7,991,220
Total Fund Balances $ 12,200,945 2,352,406 14,553,351
Deficits of ($10,576) and ($786,844) exist in the Teen Council Special Revenue Fund and Animal
Shelter Capital Project Fund, respectively. It is expected that these deficits will be eliminated
through future revenues or transfers from the General Fund.
11. Employee Retirement Systems and Plans
The City follows Governmental Accounting Standards Board (GASB) Codification P20, Accounting for
Pensions by State and Local Governmental Employees and GASB Codification P50, Accounting and
Financial Reporting by Employers for Post-employment Benefits Other than Pensions. GASB
Codification P20 and GASB Codification P50 establish uniform standards for the measurement,
recognition, and display of pension and other post-employment benefits other than pensions
(healthcare) expenditures/expense and related liabilities, assets, note disclosure and applicable
required supplementary information in the financial reports of state and local governmental
employers.
All full-time employees and certain permanent part-time employees of the City participate in the
State of Alaska Public Employees' Retirement System (PERS). In addition to the pension plan, PERS
also administers other post-employment benefit (OPEB) plans.
The system is governed by the Alaska Retirement Management Board. The benefit and contribution
provisions are established by State law and may be amended only by the State legislature. The
Administrator of the Plan is the Commissioner of Administration or the Commissioner's designee.
52
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Summary of Significant Accounting Policies. The financial statements for PERS are prepared using
the accrual basis of accounting. Plan member contributions are recognized in the period in which
the contributions are due. The City's contributions are recognized when due and a formal
commitment to provide the contributions has been made. Benefits and refunds are recognized when
due and payable in accordance with the terms of the plan. All plan investments are reported at fair
value.
PERS acts as the common investment and administrative agencies for the following multiple-employer
plans:
Plan Name Type of Plan
Defined Benefit Pension Plan (DB) Cost-sharing, Defined Benefit Pension
Defined Contribution Pension Plan (DC) Defined Contribution Pension
Defined Benefit Other Postemployment
Benefits (OPEB):
Occupational Death and Disability Plan Cost-sharing, Defined Benefit OPEB
Alaska Retiree Healthcare Trust Plan Cost-sharing, Defined Benefit OPEB
Retiree Medical Plan Cost-sharing, Defined Benefit OPEB
Defined Contribution Other Postemployment
Benefits (DC):
Healthcare Reimbursement Arrangement Defined Contribution OPEB
Plan
Other Postemployment Benefit Plans (OPEB)
Occupational Death and Disability Plan (ODD)
The Occupational Death and Disability Plan provides death benefits for beneficiaries of plan
participants and long-term disability benefits to all active members within the System. For the year
ended December 31, 2022 the employer contribution rate is 0.68% for peace officers and firefighters
and 0.31% for all other members.
Alaska Retiree Healthcare Trust Plan (ARHCT)
Beginning July 1, 2007, the Alaska Retiree Healthcare Trust Plan (ARHCT), a Healthcare Trust Fund
of the State, was established. The ARHCT is self-funded and provides major medical coverage to
retirees of the System. The System retains the risk of loss of allowable claims for eligible members.
The ARHCT began paying member healthcare claims on March 1, 2008. Prior to that, healthcare
claims were paid for by the Retiree Health Fund (RHF). For the year ended June 30, 2022 (latest
available information) employer contributions were 6.46% of annual payroll.
Retiree Medical Plan (RMP)
The retiree medical plan provides major medical coverage to retirees of the DC plan. The plan is
self-insured. Members are not eligible to use this plan until they have at least 10 years of service
and are Medicare age eligible. For the year ended December 31, 2022 employer contributions were
1.07%.
53
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Healthcare Reimbursement Arrangement Plan
The Healthcare Reimbursement Arrangement Plan was established to allow medical expenses to be
reimbursed from individual savings accounts established for eligible participants. Employer
contributions are 3% of the average annual compensation of all employees in the plan.
Investments
The Board is the investment oversight authority of the system's investments. As the fiduciary, the
Board has the statutory authority to invest the assets under the Prudent Investor Rule. Fiduciary
responsibility for the Board's invested assets is pursuant to AS 37.10.210.390.
State of Alaska Department of Treasury provides staff for the Board. Treasury has created a pooled
environment by which it manages investments of the Board. Additionally, Treasury manages a mix
of Pooled Investment Funds and Collective Investment Funds for the DC Participant-directed Pension
plans under the Board's fiduciary responsibility.
Rate of Return
The money-weighted rate of return expresses investment performance, net of investment expense,
adjusted for the changing amounts actually invested. The annual weighted rate of return, net of
investment expense, for the year ended June 30, 2022 (latest available report) for the DB Plans for
PERS are: DB Pension 6.00%, ARHCT 6.03%, ODD 6.30%, and RMP is 6.28%.
For additional information on securities lending, interest rates, credit risks, foreign exchange,
derivatives, fair value, and counterparty credit risks, see the separately issued report on the Invested
Assets of the State of Alaska Retirement and Benefits Plans at:
http://treasury.dor.alaska.gov/armb/Reports-and-Policies/Annual-Audited-Financial-
Schedules.aspx.
The long-term expected rate of return on pension and OPEB plan investments was determined using
the building-block method in which best-estimate ranges of expected future real rates of return
(expected returns, net of pension plan investment expense and inflation) are developed for each
major asset class. These ranges are combined to produce the long-term expected rate of return by
weighting the expected future real rates of return by the target asset allocation percentage and
adding expected inflation. The best estimates of arithmetic real rates of return for each major asset
class are summarized below for the PERS plan (rates shown below exclude an annual inflation
component of 2.88%):
Long-Term Expected
Asset Class Real Rate of Return
Broad Domestic Equity 6.51%
Global Equity (non-U.S.) 5.70%
Aggregate Bonds 0.31%
Real Assets 3.71%
Private Equity 9.61%
Cash Equivalents (0.50)%
54
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Discount Rate: The discount rate used to measure the total pension and OPEB liabilities and assets
is 7.25%, which represents a decrease of 0.13% since the prior measurement period. The projection
of the cash flows used to determine the discount rate assumes that Employer and State contributions
will continue to follow the current funding policy, which meets State statutes. Based on those
assumptions, the net pension and OPEB plans fiduciary net pension and OPEB liabilities and assets
were projected to be available to make all projected future benefit payments of current plan
members. Therefore, the long-term expected rate of return on pension and OPEB plan investments
were applied to all periods of projected benefit payments to determine the total pension and OPEB
liabilities and assets. In the event benefit payments are not covered by the plan's fiduciary net
position, a municipal bond rate would be used to discount the benefits not covered by the plan's
fiduciary net position. The S&P Municipal Bond 20-Year High Grade Index rate was 4.09% as of June
30, 2022.
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 actual employer pay-in rate. Under current legislation, this
rate is statutorily capped at 22% of eligible wages, subject to the salary floor, and other termination
costs as described below. This rate is calculated on all PERS participating wages, including those
wages attributable to employees in the defined benefit plan.
ARM Board Adopted Rate: This is the rate formally adopted by the Alaska Retirement Management
Board. This rate is actuarially determined and used to calculate annual Plan funding requirements,
without regard to the statutory rate cap or the GASB accounting rate. Prior to July 1, 2015, there
were 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. This will result in lower ARM Board Rates in future years.
On-behalf Contribution Rate: This is the rate paid in by the State as an on-behalf payment as
mandated under current statute. Under state law, subject to annual appropriation, the state will
contribute an on-behalf payment into the plan in an amount equal to the difference between the
ARM Board Rate and the Employer Effective Rate. On-behalf contribution amounts have been
recognized in these financial statements as both revenue and expenditures.
GASB Rate: This is the rate used to determine the long-term pension and healthcare liability for plan
accounting purposes. Certain actuarial methods and assumptions for this rate calculation are
mandated by the Governmental Accounting Standards Board (GASB). Medicare Part D subsidies are
not reflected in this rate. The City uses a 7.25% discount rate.
55
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Employer Contribution rates for the plan year ended 2022 (measurement period) are as follows:
ARM
Employer Board State
Effective Adopted Contribution
Rate Rate Rate
PERS:
Pension 22.00% 24.79% 2.79%
OPEB 0.00% 0.00% 0.00%
Total PERS contribution rates 22.00% 24.79% 2.79%
Termination Costs: If the City decides to terminate coverage for a department, group, or other
classification of members, even if that termination results from the decision to divest of a particular
City function, all affected employees in that department, group, or other classification of members
become immediately vested in the plan. The City must pay to have a termination study completed.
The purpose of the study is to calculate the City's one-time termination costs. The costs represent
the amount necessary to fully fund the costs of plan members who become vested through this process
and for other changes in actuarial assumptions, such as, earlier than expected retirement, that arise
from the act of termination of coverage. The City must pay a lump sum within 60 days of termination
or arrange a payment plan that is acceptable to the PERS Administrator. For plan year ended 2022
(measurement period) the past service rate for PERS is 16.01%.
Actuarial Assumptions: The total pension and OPEB liabilities on June 30, 2021 (latest available)
were determined by an actuarial valuation as of June 30, 2019 which was rolled forward to the
measurement date June 30, 2021. These actuarial assumptions were based on the results of an
actuarial experience study for the period from July 1, 2013 to June 30, 2017.
Inflation 2.50% per year.
Salary Increases Increases range from 2.85% to 8.5% based on
service.
Investment return / discount rate 7.25%, net of expenses based on average
inflation of 2.50% and a real return of 4.75%.
Mortality Based upon 2017 - 2021 actual experience study
and applicable tables contained in Pub-210,
projected with MP-2021 generational
improvement.
Healthcare cost trend rates Pre-65 medical: 7.0% grading down to 4.5%
Post-65 medical: 5.5% grading down to 4.5%
Rx/EGWP: 7.5% grading down to 4.5%.
Ultimate trend rates reached in FY2050.
56
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
The actuarial assumptions used in the June 30, 2021 actuarial valuation are the same as those used
in the June 30, 2020 valuation with the following exceptions related to the ARHCT plan:
1. Per capita claims costs were updated to reflect recent experience.
2. Normal cost for administrative expenses were updated to reflect recent two years of actual
administrative expenses paid from plan assets.
The changes of assumptions from the latest experience study significantly reduced deferred inflows
of resources attributable to the City, as well as a net OPEB benefit recognized by the City for the
State's proportionate share of OPEB plan expense attributable to the City. In some instances the
reduction of revenues and expenses reported for the State's proportionate share of OPEB plan
expense attributable to the City creates a net negative Pension/OPEB expense (net pension/OPEB
benefit) which results in negative operating grants and contributions for certain functions reported
on the Statement of Activities.
Alaska Public Employee Retirement System (PERS) - Defined Benefit Plan (DB)
Plan Description. The City participates in the Alaska Public Employees' Retirement System (PERS), a
cost sharing multiple employer defined benefit pension plan. PERS provides retirement benefits,
disability and death benefits, and post-employment healthcare to plan members and beneficiaries.
The Plan was established and is administered by the State of Alaska, Department of Administration.
The Public Employee's Retirement System issues a publicly available financial report that includes
financial statements and required supplementary information for PERS. This report may be obtained
from the system at Pouch C, Juneau, Alaska 99811 or online at: http://doa.alaska.gov/drb/pers.
Pension Benefits. All tier employee benefits vest with five years of credited service. There are three
tiers of employees based on entry date. Tier I employees enrolled prior to July 1, 1986, with five or
more years of credited service are entitled to annual pension benefits beginning at normal retirement
age 55 or early retirement age 50. For Tier II and III employees enrolled after June 30, 1986, but
before July 1, 2006, the normal and early retirement ages are 60 and 55, respectively. All tier
employees with 30 or more years of credited service may retire at any age and receive a normal
benefit.
The PERS defined benefit plan is closed to new hires enrolled on or after July 1, 2006. New hires
after this date participate in the PERS defined contribution plan (DC) described later in these notes.
Currently there are 150 employers participating in PERS defined benefit plan and 151 participating in
PERS defined contribution and OPEB plans.
Retirement benefits are calculated by multiplying the average monthly compensation (AMC) times
credited PERS service times the percentage multiplier. The AMC is determined by averaging the
salaries earned during the five highest (three highest for peace officers/firefighters members or
members hired prior to July 1, 1996) consecutive payroll years. Members must earn at least 115 days
of credit in the last year worked to include it in the AMC calculation. The PERS pays a minimum
benefit of $25 per month for each year of service when the calculated benefit is less.
57
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
The percentage multipliers for peace officers/firefighters are 2% for the first ten years of service and
2.5%for all service over 10 years. The percentage multipliers for all other participants are 2%for the
first ten years, 2.25% for the next ten years, and 2.5% for all remaining service earned on or after
July 1, 1986. All service before that date is calculated at 2%.
Post-employment healthcare benefits are provided without cost to all members first enrolled before
July 1, 1986. Members first enrolled after June 30, 1986, but before July 1, 2006, and who have not
reached age 60 may elect to pay for major medical benefits.
Post Retirement Pension Adjustments. The plan has two types of postretirement pension adjustments
(PRPA). The automatic PRPA is issued annually to all eligible benefit recipients, when the cost of
living increases in the previous calendar year. The discretionary PRPA may be granted to eligible
recipients by the DB Plan's administrator if the funding ratio of the DB Plan meets or exceeds 105%.
If both an automatic and discretionary PRPA are granted, the retiree is eligible for both adjustments,
the one that provides the retiree with the greatest benefit will be paid.
Funding Policy. In April 2008 the Alaska Legislature passed 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 paid to
participants of the PERS Tier IV defined contribution plan (DC) described later in these footnotes.
The state legislature capped the rate at 22%, with the State contributing an on-behalf payment for
the difference between the actuarial contribution and the cap.
Salary Floor. During the 25t" legislation session, Senate Bill 125 passed, which established a June 30,
2008 salary floor under AS 39.35.255(a)(2). The salary floor is the total base salaries paid by an
employer to active employees of the system as of the fiscal year ending June 30, 2008. The statute
requires the Division of Retirement and Benefits (Division) to collect employer contributions at a
minimum based on FY 2008 base salaries.
Employee Contribution Rate. PERS active members are required to contribute 6.75%, 7.5% for peace
officers and firefighters, and 9.6% for certain school district employees.
Employer contributions for the year ended December 31, 2022, were:
Pensions Other Post-Employment
(DB) Benefits (DB) Total
$ 850,713 116,431 967,144
Public Employees Retirement Plans
For the year ended December 31, 2022 the State of Alaska contributed $334,033 (100% pension cost)
on-behalf of the City, which has been recorded in the fund financial statements under the modified-
accrual basis of accounting. In the government-wide financial statements the on-behalf contribution
has been adjusted as of the measurement date June 30, 2022 to a total of ($176,184), to represent
the pension/OPEB expense/(benefit) attributable to the State under the full accrual basis of
accounting.
58
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Pension and OPEB Liabilities and Assets, Pension and OPEB Expense, and Deferred Outflows of
Resources and Deferred Inflows of Resources Related to Pensions and OPEB: At December 31, 2022,
the City reported liabilities and assets that reflected a reduction for State pension and OPEB support
provided to the City. The amount recognized by the City as its proportionate share of net pension
and OPEB liabilities (assets), the related State support, and the total portion of the net pension and
OPEB liabilities (assets) that were associated with the City were as follows:
Defined Benefit: Pension
City's proportionate share of the net pension liability $ 9,188,990
State's proportionate share of the net pension liability 2,542,744
Total $ 11,731,734
OPEB
City's proportionate share of the ARHCT OPEB (asset) $ (3,520,238)
State's proportionate share of the ARHCT OPEB (asset) (1,007,644)
Total $ (4,527,882)
City's proportionate share of the ODD OPEB (asset) $ (124,946)
City's proportionate share of the RMP OPEB (asset) $ (93,540)
Total City's share of net pension and OPEB liabilities and assets $ 5,450,266
The net pension and OPEB liabilities and assets were determined by an actuarial valuation as of June
30, 2021, rolled forward to the measurement date of June 30, 2022 and adjusted to reflect updated
assumptions. The City's proportion of the net pension and OPEB liabilities and assets were based on
the present value of contributions for FY2023 through FY2039, as determined by projections based
on the June 30, 2021 valuation.
The City's proportionate share and changes in the pension and OPEB liabilities and assets were as
follows:
June 30, 2022 June 30, 2021
Measurement Measurement Change
Pension 0.1803% 0.1815% (0.0012)%
OPEB:
ARHCT 0.1789% 0.1824% (0.0035)%
ODD 0.2850% 0.2561% 0.0289%
RMP 0.2693% 0.2416% 0.0277%
59
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Based on the measurement date of June 30, 2022, the City recognized pension and OPEB expense
(benefit) of $772,746 and ($1,531,032), respectively, for the year ended December 31, 2022. At
December 31, 2022, the City reported deferred outflows of resources and deferred inflows of
resources related to pensions and OPEB from the following sources:
Pension
Deferred Deferred
Outflows Inflows
Defined Benefit: of Resources of Resources
Differences between expected and actual
experience $ - -
Changes of assumptions -Net difference between projected and actual
earnings on pension plan investments 262,716 -
Changes in proportion and differences between
City contributions and proportionate
share of contributions - -
City contributions subsequent to the
measurement date 469,551 -
Total $ 732,267 -
OPEB ARHCT
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual
experience $ - (24,916)
Changes of assumptions - (161,549)
Net difference between projected and actual
earnings on OPEB plan investments 199,715 -
Changes in proportion and differences between
City contributions and proportionate
share of contributions 5,684 -
City contributions subsequent to the
measurement date - -
Total $ 205,399 (186,465)
60
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
OPEB ODD
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual
experience $ - (40,989)
Changes of assumptions - (796)
Net difference between projected and actual
earnings on OPEB plan investments 4,231 -
Changes in proportion and differences between
City contributions and proportionate
share of contributions 321 (8,809)
City contributions subsequent to the
measurement date 9,228 -
Total $ 13,780 (50,594)
OPEB RMP
Deferred Deferred
Outflows Inflows
of Resources of Resources
Differences between expected and actual
experience $ 4,636 (3,676)
Changes of assumptions 18,112 (112,157)
Net difference between projected and actual
earnings on OPEB plan investments 13,342 -
Changes in proportion and differences between
City contributions and proportionate
share of contributions 2,592 (78)
City contributions subsequent to the
measurement date 26,825 -
Total $ 65,507 (115,911)
$469,551 and $36,053 are reported as deferred outflows of resources related to pension and OPEB
resulting from City contributions subsequent to the measurement date and will be recognized as a
reduction of the net pension and OPEB liabilities and as an increase to the net pension and OPEB
assets in the year ended December 31, 2023, respectively. Other amounts reported as deferred
outflows of resources and deferred inflows of resources related to pension and OPEB will be
recognized in pension and OPEB expense as follows:
Year Ended OPEB OPEB OPEB
December 31, Pension ARHCT ODD RMP
2023 $ (31,233) (214,323) (9,078) (13,019)
2024 (80,057) (70,040) (9,289) (13,670)
2025 (192,186) (157,784) (9,961) (15,730)
2026 (566,192) 461,081 (4,132) 2,268
2027 - - (6,160) (16,552)
Thereafter - - (7,422) (20,526)
Total $ 262,716 18,934 (46,042) (77,229)
61
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
For the year ended December 31, 2022, the City recognized $6,365 and ($13,039) of pension and
OPEB amortization of the net deferred outflows and inflows of resources, respectively.
Sensitivity of the Net Pension and OPEB Liabilities and Assets to Changes in the Discount Rate: The
following presents the net pension and OPEB liabilities and assets of the plan calculated using the
discount rate of 7.25%, as well as what the Plans' net pension and OPEB liabilities and assets would
be if they were calculated using a discount rate that is 1-percentage-point lower (6.25%) or 1-
percentage-point higher (8.25%) than the current rate:
1% Decrease Current Rate 1% Increase
(6.25%) (7.25%) (8.25%)
Net pension liability $ 12,370,356 9,188,990 6,506,442
Net OPEB ARHCT (asset) $ (2,091,529) (3,520,238) (4,718,338)
Net OPEB ODD (asset) $ (117,698) (124,946) (130,615)
Net OPEB RMP liability (asset) $ 17,205 (93,540) (177,992)
Sensitivity of the City's proportionate share of the Net OPEB liability and assets to changes in the
healthcare cost trend rates. The following present the City's proportionate share of the net OPEB
liability (asset), as well as what the City's proportionate share of the net OPEB liability (asset) would
be if it were calculated using healthcare cost trend rates that are 1-percentage-point lower or 1-
percentage-point higher than the current healthcare cost trend rates:
1% Decrease Current Rate 1% Increase
Net OPEB ARHCT (asset) $ (4,859,281) (3,520,238) (1,921,162)
Net OPEB RMP liability (asset) $ (189,590) (93,540) 35,832
Alaska Public Employee Retirement System (PERS) - Defined Contribution Plan (DC)
Plan Description and Funding Requirements. Cities and Public Employers in the State of Alaska have
a defined contribution retirement plan (PERS Tier IV) for new hires first enrolled on or after July 1,
2006. This Plan is administered by the State of Alaska, Department of Administration in conjunction
with the defined benefit plan noted above. The Administrator of the Plan is the Commissioner of
Administration or the Commissioner's designee. Plan members make mandatory contributions of 8%
of gross eligible compensation. This amount goes directly to the individual's account. State statutes
require the employer to contribute 5% of employees' eligible compensation. Additionally, employers
are required to contribute to OPEB (DB): 1.07% for the retiree medical plan (DB), 0.31% and 0.68%
(peace officers) for occupational and death and disability benefits (DB) and 3% of employers' average
annual employee compensation to the health reimbursement arrangement (HRA DC). The effective
employer contribution is capped at 22% with anything in excess of the previously listed rates being
contributed to the Defined Benefit Unfunded Liability (DBUL).
Plan members are 100% vested with their contributions.
Members become vested in employers' contributions as follows:
2 years of service - 25%
3 years of service - 50%
4 years of service - 75%
5 years of service - 100%
62
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
The City contributed $387,815 for the year ended December 31, 2022, which included forfeitures of
$45,965 which have been applied as employer contributions.
12. International Brotherhood of Electrical Workers
Defined Benefit Plan
Certain Electric Fund employees are members of the International Brotherhood of Electrical Workers
(IBEW), and participate in a cost-sharing defined benefit plan, the Alaska Electrical Pension Plan of
the Alaska Electrical Pension Fund (IEBW Plan). The Alaska Electrical Pension Trust (AEPT) Board of
Trustees administers the IBEW Plan and has the authority to establish and amend benefit terms and
approve changes in employer required contributions. Each year, AEPT issues annual financial reports
that can be obtained by writing the plan administrator, Alaska Electrical Pension Trust, 2600 Denali
Street, Suite 200, Anchorage, Alaska 99503. The City had six employees covered by the Plan as of
December 31, 2022.
The IBEW Plan provides several levels of retirement benefits, including early retirement, normal
retirement, late retirement, and disability retirement and includes several options for spouse
participation and death benefits. The City contributes to the IBEW Plan for its covered employees
according to the terms of its Agreement Covering Terms and Conditions of Employment (Agreement)
with the IBEW Local 1547. The current Agreement became effective on July 1, 2022 and expires on
June 30, 2025. The Agreement automatically renews for a period of one year from its expiration
date and for successive periods of one year each thereafter for so long as there is no proper
notification of an intent to negotiate a successor Agreement.
Employer contributions are determined from hours of work reported by participating employers and
the contractual employer contribution rate in effect. The City's required contribution to the IBEW
Plan for each hour for which compensation is paid to the employee for July 1, 2021 to June 30, 2022
was $8.96 and July 1, 2022 to December 31, 2022 was $9.33. The City's total employer contributions
to the IBEW Plan for 2022 were $152,357. These amounts are paid during the normal course of
business in the month following each year end. The City is not subject to withdrawal penalties, nor
are there any future minimum payments to the IBEW Plan required other than the contribution per
hour compensated as required by the Agreement.
Defined Contribution Plan - Money Purchase Plan
The Agreement requires employer contributions to be made in an amount of $225 per month for
eligible employees to the Alaska Electrical Workers Money Purchase Plan (Money Purchase Plan).
The City's employer and employee contributions to the Money Purchase Plan during 2022 were
$18,900 and $47,559, respectively. One hundred percent (100%) of the City's required contributions
to the IBEW plans have been made through these contributions to the AETF.
13. Deferred Compensation Plan
The City offers its employees a voluntary deferred compensation plan created in accordance with
Internal Revenue Code Section 457. The Plan, available to all employees, permits them to defer a
portion of their salary until future years. The deferred compensation is not available to employees
until termination, retirement, death, or unforeseeable emergency. The provisions of the Plan
require that all assets and income of the Plan be held in trust for the exclusive benefit of
participants and their beneficiaries.
63
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
14. Risk Management
The City faces a considerable number of risks of loss, including (a) damage to and loss of property
and contents, (b) employee torts, (c) professional liability; i.e., errors and omissions, (d)
environmental damage, (e) workers' compensation; i.e., employee injuries, and (f) medical
insurance costs of employees.
The City is a member of the Alaska Municipal League Joint Insurance Association (JIA), a
governmental insurance pool established by the Alaska Municipal League. The JIA provides the City
coverage for property, including building and contents, automobiles, mobile equipment, data
processing equipment and boiler and machinery; casualty, including general liability, public officials
and employees liability, law enforcement professional liability, auto liability and employee benefit
liability; workers' compensation, including employers liability; and commercial blanket bond. The
City maintains supplemental marine insurance and firefighters group accident coverage with
insurance companies placed through JIA. The City has no coverage for potential losses from
environmental damages.
The JIA is a public entity risk pool organized to share risks among its members. The Association's
bylaws provide for the assessment of supplemental contributions from members in the event that
losses and expenses for any coverage year exceed the annual contributions and income earned on
such contributions for the year. Such supplemental contributions shall be based on each member's
deposit contribution in comparison to the aggregate deposit contributions of all members. The
Association made no supplemental assessments during the year ended December 31, 2022.
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.
64
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
15. Commitments and Contingencies
Amounts received or receivable from grantor agencies are subject to audit and adjustment by
grantor agencies, principally the state and federal government. Any disallowed claims, including
any amount already collected, could become a liability of the applicable funds.
The City of Seward is the owner of the Alaska Seal-ife 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. Should the City be required to
cover any shortfall, there could be a material adverse impact on the General Fund undesignated
reserves.
Various other claims and lawsuits against the City are pending, but are either covered by insurance
or are the types which are normal and reasonable in view of the City's operations. City management
believes the total amount of the liability, if any, which may arise from such claims and lawsuits
beyond that which is covered by insurance would not have a material effect on the City's financial
condition or its ability to carry on its activities as now conducted.
16. Change in Accounting Principle
In 2022, the City implemented GASB Statement No. 87, Leases, which established standards of
accounting and financial reporting for leases by lessees and lessors. The requirements of this
Statement apply to financial statements of all state and local governments.
The new standard requires the City to recognize certain lease assets and liabilities for leases. It
establishes a single model for lease accounting based on the underlying principle that leases are
financings of the right to use an underlying asset for a period of time. Under this Statement, a
lessee is required to recognize a liability and an intangible right-to-use lease asset, and a lessor is
required to recognize a lease receivable and a deferred inflow of resources, thereby enhancing the
relevance and consistency of information about the City's leasing activities.
As a result of implementing this new accounting pronouncement, there were no changes in beginning
of year net position on fund balance.
65
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
17. Subsequent Accounting Pronouncements
The Governmental Accounting Standards Board has issued several new accounting principles with
upcoming implementation dates covering several topics as follows:
• GASB 94 Public-Private and Public-Public Partnerships and Availability Payments
Arrangements. Effective for fiscal years beginning after June 15, 2022.
• GASB 96 Subscription-Based Information Technology Arrangements. Effective for
fiscal years beginning after June 15, 2022.
• GASB 99 Omnibus 2022. Multiple effective dates.
• GASB 100 Accounting Changes and Error Corrections—an amendment of GASB Statement
No. 62. Effective for fiscal years beginning after June 15, 2023. Multiple
effective dates.
• GASB 101 Compensated Absences. Effective for fiscal years beginning after December
15, 2023.
GASB Statement No. 94 is not expected to have any significant impact on the financial statements of
the City.
GASB Statement No. 96 will improve financial reporting by establishing a definition for Subscription-
based information technology arrangements (SBITAs) and providing uniform guidance for accounting
and financial reporting for transactions that meet that definition. That definition and uniform
guidance will result in greater consistency in practice. Establishing the capitalization criteria for
implementation costs also will reduce diversity and improve comparability in financial reporting by
governments. This Statement also will enhance the relevance and reliability of a government's
financial statements by requiring a government to report a subscription asset and subscription
liability for a SBITA and to disclose essential information about the arrangement. The disclosures will
allow users to understand the scale and important aspects of a government's SBITA activities and
evaluate a government's obligations and assets resulting from SBITAs.
GASB Statement No. 99 will enhance comparability in the application of accounting and financial
reporting requirements and will improve the consistency of authoritative literature. Consistent
authoritative literature enables governments and other stakeholders to more easily locate and apply
the correct accounting and financial reporting provisions, which improves the consistency with which
such provisions are applied. The comparability of financial statements also will improve as a result
of this Statement. Better consistency and comparability improve the usefulness of information for
users of state and local government financial statements.
66
City of Seward, Alaska
Notes to Basic Financial Statements, Continued
Effective Date: The requirements of this Statement are effective as follows:
• The requirements related to extension of the use of LIBOR, accounting for SNAP
distributions, disclosures of nonmonetary transactions, pledges of future revenues by
pledging governments, clarification of certain provisions in Statement 34, as amended, and
terminology updates related to Statement 53 and Statement 63 are effective upon issuance.
• The requirements related to leases, PPPs, and SBITAs are effective for fiscal years beginning
after June 15, 2022, and all reporting periods thereafter.
• The requirements related to financial guarantees and the classification and reporting of
derivative instruments within the scope of Statement 53 are effective for fiscal years
beginning after June 15, 2023, and all reporting periods thereafter.
GASB Statement No. 100 will improve the clarity of the accounting and financial reporting
requirements for accounting changes and error corrections, which will result in greater consistency
in application in practice. In turn, more understandable, reliable, relevant, consistent, and
comparable information will be provided to financial statement users for making decisions or
assessing accountability. In addition, the display and note disclosure requirements will result in more
consistent, decision useful, understandable, and comprehensive information for users about
accounting changes and error corrections.
GASB Statement No. 101 unified recognition and measurement model in this Statement will result in
a liability for compensated absences that more appropriately reflects when a government incurs an
obligation. In addition, the model can be applied consistently to any type of compensated absence
and will eliminate potential comparability issues between governments that offer different types of
leave.
The model also will result in a more robust estimate of the amount of compensated absences that a
government will pay or settle, which will enhance the relevance and reliability of information about
the liability for compensated absences.
67
Required Supplementary Information
Exhibit F-1
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures, and Changes
in Fund Balance- Original and Final Budget and Actual
Budgeted Amounts Variance with
Year Ended December 31, 2022 Original Final Actual Final Budget
Revenues
Taxes $ 8,532,000 8,532,000 10,160,723 1,628,723
Licenses and permits 166,525 166,525 205,996 39,471
Intergovernmental 882,002 882,002 1,298,852 416,850
Charges for services 3,769,409 3,769,409 3,849,457 80,048
Fines and bails 15,700 15,700 28,759 13,059
Investment income (loss) 77,500 77,500 (128,106) (205,606)
Other 268,860 268,860 199,613 (69,247)
Total Revenues 13,711,996 13,711,996 15,615,294 1,903,298
Expenditures
Current:
General government 4,211,376 5,279,258 4,780,624 498,634
Public safety 5,432,351 5,529,295 5,219,660 309,635
Public works 1,840,495 3,073,155 1,964,534 1,108,621
Parks and recreation 2,055,385 2,157,655 1,707,417 450,238
Library 650,689 661,499 766,273 (104,774)
Debt service:
Principal payments 215,000 215,000 215,000 -
Interest and payments 196,481 242,733 196,481 46,252
Total Expenditures 14,601,777 17,158,595 14,849,989 2,308,606
Excess of Revenues Over(Under)Expenditures (889,781) (3,446,599) 765,305 4,211,904
Other Financing Sources(Uses)
Transfers in 2,453,060 2,453,060 2,649,411 196,351
Transfers out (1,539,869) (1,539,869) (2,797,265) (1,257,396)
Total Other Financing Sources(Uses) 913,191 913,191 (147,854) (1,061,045)
Change in Fund Balance $ 23,410 (2,533,408) 617,451 3,150,859
Fund Balance, beginning of year 11,583,494
Fund Balance,end of year $ 12,200,945
See accompanying notes to required supplementary information.
68
Exhibit G-1
City of Seward, Alaska
Schedule of the City's Proportionate Share of the Net Pension Liability
Public Employees' Retirement System (PERS)
December 31, 2022
City's
Proportionate
Share of the Plan Fiduciary
City's City's State of Alaska Net Pension Net Position as
Proportion Proportionate Proportionate Liability as a a Percentage
of the Net Share of the Share of the Total City's Percentage of of the Total
Pension Net Pension Net Pension Net Pension Covered Covered Pension
Year Liability Liability Liability Liability Payroll Payroll Liability
2015 0.1853% $ 8,985,893 $ 2,408,070 $ 11,393,963 $ 5,021,085 179% 63.96%
2016 0.2068% $ 11,558,576 $ 1,457,718 $ 13,016,294 $ 5,098,436 227% 59.55%
2017 0.1565% $ 8,088,553 $ 3,013,251 $ 11,101,804 $ 4,902,901 165% 63.37%
2018 0.1867% $ 9,276,595 $ 2,687,289 $ 11,963,884 $ 5,160,904 180% 65.19%
2019 0,1569% $ 8,586,970 $ 3,409,173 $ 11,996,143 $ 5,123,006 168% 63.42%
2020 0.1512% $ 8,920,386 $ 3,692,619 $ 12,613,005 $ 4,838,355 184% 61.61%
2021 0.1815% $ 6,658,097 $ 901,089 $ 7,559,186 $ 5,588,777 119% 76.46%
2022 0.1803% $ 9,188,990 $ 2,542,744 $ 11,731,734 $ 5,779,823 159% 67.97%
See accompanying notes to Required Supplementary Information.
69
Exhibit G-2
City of Seward, Alaska
Schedule of the City's Proportionate Share of the Net OPEB Liability (Asset)
Public Employees' Retirement System (PERS)
December 31, 2022
City's
Proportionate Plan Fiduciary
City's City's State of Alaska Share of the Net Position as
Proportion Proportionate Proportionate Net OPEB a Percentage
of the Net Share of the Share of the Total Liability as a of the Total
OPEB Net OPEB Net OPEB Net OPEB City's Percentage of OPEB
Liability Liability Liability Liability Covered Covered Liability
Year (Asset) (Asset) (Asset) (Asset) Payroll Payroll (Asset)
Alaska Retiree Healthcare Trust Plan(ARHCT):
2017 0.1565% $ 1,321,817 $ 492,356 $ 1,814,173 $ 4,90Z,901 26.96% 89.68%
2018 0.1866% $ 1,915,028 $ 556,157 $ 2,471,185 $ 5,160,904 37.11% 88.12%
2019 0.1569% $ 232,830 $ 92,538 $ 325,368 $ 5,123,006 4.54% 98.13%
2020 0.1511% $ (684,490) $ (283,697) $ (968,187) $ 4,838,355 -14.15% 106.15%
2021 0.1824% $ (4,678,439) $ (610,964) $ (5,289,403) $ 5,588,777 -83.71% 135.54%
2022 0.1789% $ (3,520,238) $ (1,007,644) $ (4,527,882) $ 5,779,823 -60.91% 128.51%
Occupational Death and Disability(ODD):
2017 0.2280% $ (32,352) $ $ (32,352) $ 4,902,901 -0.66% 212.97%
2018 0.2258% $ (43,856) $ $ (43,856) $ 5,160,904 -0.85% 270.62%
2019 0.2477% $ (60,055) $ $ (60,055) $ 5,123,006 -1.17% 297.43%
2020 0.2547% $ (69,440) $ $ (69,440) $ 4,838,355 -1.44% 283.81%
2021 0.2561% $ (112,865) $ $ (112,865) $ 5,588,777 -2.02% 374.22%
2022 0.2850% $ (124,946) $ $ (124,946) $ 5,779,823 -2.16% 348.80%
Retiree Medical Plan(RMP):
2017 0.2280% $ 11,890 $ $ 11,890 $ 1,703,098 0.70% 93.98%
2018 0.2258% $ 28,734 $ $ 28,734 $ 1,690,592 1.70% 88.71%
2019 0.2275% $ 54,424 $ $ 54,424 $ 1,306,356 4.17% 83.17%
2020 0.2385% $ 16,914 $ $ 16,914 $ 1,370,400 1.23% 95.23%
2021 0.2416% $ (64,842) $ $ (64,842) $ 1,489,300 -4.35% 115.10%
2022 0.2693% $ (93,540) $ $ (93,540) $ 1,610,791 -5.81% 120.08%
See accompanying notes to Required Supplementary Information.
70
Exhibit G-3
City of Seward, Alaska
Schedule of the City's Contributions (Pension)
Public Employees' Retirement System (PERS)
December 31, 2022
Contributions
Relative to the Contributions
Contractually Contractually Contribution City's as a Percentage
Required Required Deficiency Covered of Covered
Year Contribution Contribution (Excess) Payroll Payroll
2015 $ 485,647 $ (485,647) $ $ 5,098,436 9.53%
2016 $ 541,407 $ (541,407) $ $ 4,902,901 11.04%
2017 $ 645,662 $ (645,662) $ $ 5,160,904 12.51%
2018 $ 644,586 $ (644,586) $ $ 5,123,006 12.58%
2019 $ 550,925 $ (547,855) $ 3,070 $ 4,838,355 11.39%
2020 $ 567,373 $ (570,443) $ (3,070) $ 4,894,286 11.59%
2021 $ 703,865 $ (716,692) $ (12,827) $ 5,522,664 12.75%
2022 $ 857,967 $ (850,713) $ 7,254 $ 6,158,904 13.93%
See accompanying notes to Required Supplementary Information.
71
Exhibit G-4
City of Seward Alaska
Schedule of the City's Contributions (OPEB)
Public Employees' Retirement System (PERS)
December 31, 2022
Contributions
Relative to the Contributions
Contractually Contractually Contribution City's as a Percentage
Required Required Deficiency Covered of Covered
Year Contribution Contribution (Excess) Payroll Payroll
Alaska Retiree Healthcare Trust Plan (ARHCT):
2017 $ 285,897 $ (285,897) $ $ 5,160,904 5.54%
2018 $ 207,098 $ (207,098) $ $ 5,123,006 4.04%
2019 $ 209,371 $ (209,371) $ $ 4,838,355 4.33%
2020 $ 163,155 $ (163,155) $ $ 4,894,286 3.33%
2021 $ 110,629 $ (110,629) $ $ 5,522,664 2.00%
2022 $ 47,816 $ (47,816) $ $ 6,158,904 0.78%
Occupational Death and Disability(ODD):
2017 $ 5,285 $ (5,285) $ $ 5,160,904 0.10%
2018 $ 7,742 $ (7,742) $ $ 5,123,006 0.15%
2019 $ 10,726 $ (10,726) $ $ 4,838,355 0.22%
2020 $ 12,097 $ (12,097) $ $ 4,894,286 0.25%
2021 $ 14,889 $ (14,889) $ $ 5,522,664 0.27%
2022 $ 17,905 $ (17,905) $ $ 6,158,904 0.29%
Retiree Medical Plan (RMP):
2017 $ 26,831 $ (26,831) $ $ 1,703,098 1.58%
2018 $ 26,770 $ (26,770) $ $ 1,690,592 1.58%
2019 $ 34,650 $ (34,650) $ $ 1,306,356 2.65%
2020 $ 42,569 $ (42,569) $ $ 1,370,400 3.11%
2021 $ 45,130 $ (45,130) $ $ 1,489,300 3.03%
2022 $ 50,710 $ (50,710) $ $ 1,762,795 2.88%
See accompanying notes to Required Supplementary Information.
72
Exhibit G-5
City of Seward,Alaska
Schedule of the City's Contributions (Pension)
International Brotherhood of Electrical Workers (IBEW) Defined Benefit Pension Plan
December 31, 2022
Contributions
Relative to the Contributions
Contractually Contractually Contribution City's as a Percentage
Required Required Deficiency Covered of Covered
Year Contribution Contribution (Excess) Payroll Payroll
2013 $ 88,389 $ (88,389) $ $ 719,381 12.29%
2014 $ 72,669 $ (72,669) $ $ 806,727 9.01%
2015 $ 81,964 $ (81,964) $ $ 668,257 12.27%
2016 $ 102,429 $ (102,429) $ $ 752,587 13.61%
2017 $ 129,627 $ (129,627) $ $ 790,348 16.40%
2018 $ 103,547 $ (103,547) $ $ 958,591 10.80%
2019 $ 113,631 $ (113,631) $ $ 862,937 13.17%
2020 $ 133,453 $ (133,453) $ $ 865,034 15.43%
2021 $ 127,768 $ (127,768) $ $ 921,477 13.87%
2022 $ 152,357 $ (152,357) $ $ 992,737 15.35%
See accompanying notes to required supplementary information.
73
City of Seward, Alaska
Notes to Required Supplementary Information
December 31, 2022
Budgets and Budgetary Accounting
The City follows these procedures in establishing the budgetary data reflected in the fund financial
statements:
• The City manager must submit to the city council by November 15th a proposed operating budget for
the next biennial fiscal year commencing the following January 1. The operating budget includes
proposed expenditures which shall not exceed the expected revenues of the city.
• The budget proposal of the city manager shall be reviewed by the council and shall be available for
public inspection in the office of the city clerk. The Council shall direct that a public hearing on the
biennial budget proposal shall be held not less than one week before its final adoption. Notice of
the public hearing shall be published in a newspaper by the City clerk at least one week prior to the
date of the hearing.
• At a regular meeting held not less than ten days prior to the end of the fiscal year, the council shall,
by resolution, adopt a budget for the next two fiscal years and make appropriation of the money
needed therefore. If the council does not adopt a biennial budget prior to the third day preceding
the commencement of the next fiscal year, it shall be held to make an appropriation therefore,
without any further council action.
• Amendments to the budget can occur anytime during the fiscal year through the City Council or
administrative action. Generally, the following actions are required at the level of the particular
change.
o The City Council may at any time, amend the budget by passing an appropriating resolution
that amends the original budget.
o Unencumbered appropriation balances may be transferred to any department within the
same fund by the city manager at any time. At the request of the city manager, or on its
own initiative, the council may transfer unencumbered balances from one fund to another.
• Appropriations lapse at year end to the extent that they have not been expended for all funds, except
Capital Projects Funds, which lapse at project completion.
• Budgets adopted by the City Council are in accordance with accounting principles generally accepted
in the United States of America.
• The City published a separate 2022-2023 biennial budget document. That document may be obtained
from the City of Seward, City Clerk, 410 Adams Street City Hall Building, Seward, AK 99664 or at
www.cityofseward.us.
Excess of Expenditures over Appropriations
The Council approves operating budgets and appropriations of direct costs at the function and
department level. For the year ended December 31, 2022, expenditures exceeded appropriations in the
following General Fund function:
Library $ 104,774
74
City of Seward, Alaska
Notes to Required Supplementary Information, Continued
Public Employees' Retirement System
Schedule of City's Proportionate Share of Net Pension and OPEB Liability (Asset)
The table is presented based on the Plan measurement date which is six months prior to fiscal year end
for all years presented.
Changes in Actuarial Assumptions, Methods, and Benefits Since the Prior Valuation
Defined Benefit Pension and Postemployment Healthcare Benefit Plan
a) Changes in Methods Since the Prior Valuation - June 30, 2020 to June 30, 2021
There were no changes in actuarial methods since the prior valuation.
b) Changes in Assumptions Since the Prior Valuation - June 30, 2020 to June 30, 2021
Healthcare claim costs are updated annually. Retired member contributions were updated to
reflect the 5% decrease from CY20 to CY21. The amounts included in the normal cost for
administrative expenses were changed from $7,223,000 to $7,625,000 for pension, and from
$4,934,000 to $5,531,000 for healthcare (based on the most recent two years of actual
administrative expenses paid from plan assets). There were no other changes in actuarial
assumptions since the prior valuation.
c) Changes in Benefit Provisions Since the Prior Valuation - June 30, 2020 to June 30, 2021
There were no changes in benefit provisions since the prior valuation.
Defined Contribution Occupational Death and Disability and Retiree Medical Benefits Plan
a) Changes in Methods Since the Prior Valuation - June 30, 2020 to June 30, 2021
There were no changes in actuarial methods since the prior valuation.
b) Changes in Assumptions Since the Prior Valuation - June 30, 2020 to June 30, 2021
Healthcare claim costs are updated annually. The amounts included in the normal cost for
administrative expenses were changed from $1,000 to $16,000 for occupational death and
disability, and from $20,000 to $24,000 for retiree medical (based on the most recent two years of
actual administrative expenses paid from plan assets). There were no other changes in actuarial
assumptions since the prior valuation.
c) Changes in Benefit Provisions Since the Prior Valuation - June 30, 2020 to June 30, 2021
There have been no changes in benefit provisions valued since the prior valuation.
The GASB requires ten years of information be presented. However, until a full ten years of information is
available, the City will present only those years for which information is available.
Schedule of City Contributions (Pension) and (OPEB)
The table valuation date is June 30, 2021 which was rolled forward to June 30, 2022. Actuarially
determined contribution rates are calculated as of June 30t", two years prior to the fiscal year in which
contributions are reported.
75
Additional Supplementary Information
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.
Exhibit H-1
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance - Budget and Actual
Year Ended December 31, 2022
Final
Budget Actual Variance
Revenues
Taxes:
Sales $ 6,000,000 7,635,648 1,635,648
Property 1,723,500 1,705,639 (17,861)
Hotel/motel room 675,000 804,511 129,511
Payments in lieu of taxes 130,000 11,027 (118,973)
Penalties and interest 3,500 3,898 398
Totaltaxes 8,532,000 10,160,723 1,628,723
Licenses and permits:
Building permits 65,100 106,020 40,920
Taxi permits 1,100 2,179 1,079
Department of Motor Vehicles commissions 75,000 58,422 (16,578)
Animal control licenses 175 85 (90)
Business licenses 22,000 33,120 11,120
Miscellaneous 3,150 6,170 3,020
Total licenses and permits 166,525 205,996 39,471
Intergovernmental:
Jail contract 368,952 368,952 -
Dispatch contracts 98,800 98,800
Raw fish tax 400,000 370,953 (29,047)
Shared fisheries business and landing tax 2,750 9,928 7,178
Library grants 7,000 50,777 43,777
Community assistance program - 136,622 136,622
PERS relief program - 256,365 256,365
Other grants 4,500 6,455 1,955
Total intergovernmental 882,002 1,298,852 416,850
Charges for services:
Administrative 2,063,484 2,179,467 115,983
Rents and leases 124,700 149,972 25,272
Copying charges 5,750 5,180 (570)
Work orders 1,775 1,357 (418)
Recreation 1,547,100 1,484,294 (62,806)
Library 26,600 29,187 2,587
Total charges for services $ 3,769,409 3,849,457 80,048
(continued)
76
Exhibit H-1, continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance - Budget and Actual, continued
Year Ended December 31, 2022
Final
Budget Actual Variance
Revenues, continued
Fines and bails $ 15,700 28,759 13,059
Investment income (loss) 77,500 (128,106) (205,606)
Other revenues:
Sale of land, equipment and gravel 225,000 80,287 (144,713)
Refuse contract 22,000 28,281 6,281
Insurance recovery - 44,085 44,085
Interest - 17,985 17,985
Other 21,860 28,975 7,115
Total other 268,860 199,613 (69,247)
Total Revenues 13,711,996 15,615,294 1,903,298
Expenditures
General government:
Mayor and council:
Salaries 202,300 204,774 (2,474)
Employee benefits 203,310 208,812 (5,502)
Audit 120,175 113,847 6,328
Legal 5,000 - 5,000
Purchased services 66,550 71,902 (5,352)
Supplies and maintenance 10,275 12,016 (1,741)
Legislative representation 177,500 185,171 (7,671)
General and administrative 109,275 55,075 54,200
Total mayor and council 894,385 851,597 42,788
City manager:
Salaries 390,063 382,766 7,297
Employee benefits 227,037 203,498 23,539
Purchased services 20,850 30,443 (9,593)
Supplies and maintenance 10,575 13,650 (3,075)
General and administrative 60,500 49,287 11,213
Total city manager 709,025 679,644 29,381
(continued)
77
Exhibit H-1, continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance- Budget and Actual, continued
Year Ended December 31, 2022
Final
Budget Actual Variance
Expenditures,continued
Management information systems:
Salaries $ 241,950 263,955 (22,005)
Employee benefits 157,091 178,298 (21,207)
Purchased services 87,617 92,948 (5,331)
Supplies and maintenance 73,000 40,196 32,804
General and administrative 26,100 23,939 2,161
Total management information systems 585,758 599,336 (13,578)
Finance:
Salaries 573,345 384,774 188,571
Employee benefits 387,823 302,493 85,330
Purchased services 414,750 443,935 (29,185)
Supplies and maintenance 45,345 47,065 (1,720)
General and administrative 40,750 35,171 5,579
Total finance 1,462,013 1,213,438 248,575
Community development:
Salaries 204,169 210,822 (6,653)
Employee benefits 178,899 168,717 10,182
Purchased services 735,576 668,806 66,770
Supplies and maintenance 8,151 6,290 1,861
General and administrative 27,100 11,003 16,097
Total community development 1,153,895 1,065,638 88,257
General services:
Salaries 34,225 15,096 19,129
Employee benefits 7,215 9,041 (1,826)
Purchased services 199,050 121,316 77,734
Supplies and maintenance 10,025 9,108 917
General and administrative 9,950 2,693 7,257
Total general services 260,465 157,254 103,211
Contributions to organizations:
Senior Citizens 80,000 80,000 -
Chamber of Commerce 108,717 108,717
Boys and Girls Club 25,000 25,000
Total contributions to organizations 213,717 213,717 -
Total general government $ 5,279,258 4,780,624 498,634
(continued)
78
Exhibit H-1,continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance- Budget and Actual, continued
Year Ended December 31, 2022
Final
Budget Actual Variance
Expenditures,continued
Public safety:
Police:
Salaries $ 1,506,081 1,370,278 135,803
Employee benefits 1,106,183 987,352 118,831
Purchased services 194,475 215,946 (21,471)
Supplies and maintenance 109,125 102,570 6,555
General and administrative 145,350 123,905 21,445
Capital outlay - 16,947 (16,947)
Total police 3,061,214 2,816,998 244,216
Jail:
Salaries 340,304 355,963 (15,659)
Employee benefits 246,818 273,316 (26,498)
Purchased services 61,200 67,159 (5,959)
Supplies and maintenance 23,025 21,215 1,810
General and administrative 119,738 115,747 3,991
Total jail 791,085 833,400 (42,315)
Animal control:
Salaries 87,700 85,985 1,715
Employee benefits 41,825 42,855 (1,030)
Purchased services 12,575 15,209 (2,634)
Supplies and maintenance 14,550 5,132 9,418
General and administrative 2,600 2,246 354
Capital outlay 31,999 - 31,999
Total animal control 191,249 151,427 39,822
Fire:
Salaries 225,907 220,069 5,838
Employee benefits 184,750 184,706 44
Purchased services 227,250 220,751 6,499
Supplies and maintenance 158,500 137,736 20,764
General and administrative 84,225 80,036 4,189
Total fire 880,632 843,298 37,334
Volunteer training:
Employee benefits 16,100 11,004 5,096
Purchased services 35,733 36,680 (947)
Supplies and maintenance 80,192 81,164 (972)
General and administrative 53,100 49,172 3,928
Total volunteer training $ 185,125 178,020 7,105
(continued)
79
Exhibit H-1,continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance- Budget and Actual, continued
Year Ended December 31, 2022
Final
Budget Actual Variance
Expenditures,continued
Public safety,continued:
Emergency preparedness:
Purchased services $ 17,950 14,438 3,512
Supplies and maintenance 22,250 17,818 4,432
General and administrative 10,000 4,286 5,714
Total emergency preparedness 50,200 36,542 13,658
Building inspection:
Salaries 163,250 161,736 1,514
Employee benefits 171,495 172,628 (1,133)
Purchased services 12,025 6,804 5,221
Supplies and maintenance 9,620 4,249 5,371
General and administrative 13,400 14,558 (1,158)
Total building inspection 369,790 359,975 9,815
Total public safety 5,529,295 5,219,660 309,635
Public works:
Roads and streets:
Salaries 285,994 288,749 (2,755)
Employee benefits 258,287 249,667 8,620
Purchased services 1,335,972 180,980 1,154,992
Supplies and maintenance 219,266 272,502 (53,236)
General and administrative 143,725 145,147 (1,422)
Capital outlay 126,766 24,950 101,816
Total roads and streets 2,370,010 1,161,995 1,208,015
City shop:
Salaries 127,575 139,712 (12,137)
Employee benefits 84,401 90,948 (6,547)
Purchased services 120,462 146,488 (26,026)
Supplies and maintenance 60,040 78,074 (18,034)
General and administrative 12,075 12,605 (530)
Capital outlay - 21,570 (21,570)
Total city shop 404,553 489,397 (84,844)
Municipal building:
Salaries 46,300 47,062 (762)
Employee benefits 29,477 32,463 (2,986)
Purchased services 150,070 218,040 (67,970)
Supplies and maintenance 12,595 15,577 (2,982)
General and administrative 150 - 150
Capital outlay 60,000 - 60,000
Total municipal building 298,592 313,142 (14,550)
Total public works $ 3,073,155 1,964,534 1,108,621
(continued)
80
Exhibit H-1, continued
City of Seward, Alaska
General Fund
Schedule of Revenues, Expenditures and Changes
in Fund Balance- Budget and Actual, continued
Year Ended December 31, 2022
Final
Budget Actual Variance
Expenditures, continued
Parks and recreation:
Salaries $ 600,096 457,099 142,997
Employee benefits 301,339 242,781 58,558
Purchased services 744,525 651,290 93,235
Supplies and maintenance 226,570 160,567 66,003
General and administrative 65,125 56,439 8,686
Capital outlay 220,000 139,241 80,759
Total parks and recreation 2,157,655 1,707,417 450,238
Library:
Salaries 312,270 325,434 (13,164)
Employee benefits 95,619 176,814 (81,195)
Purchased services 123,800 138,258 (14,458)
Supplies and maintenance 118,110 115,599 2,511
General and administrative 11,700 10,168 1,532
Total library 661,499 766,273 (104,774)
Debt service:
Principal payments 215,000 215,000 -
Interest and other costs 242,733 196,481 46,252
Total debt service 457,733 411,481 46,252
Total Expenditures 17,158,595 14,849,989 2,308,606
Excess of revenues over
(under)expenditures (3,446,599) 765,305 4,211,904
Other Financing Sources(Uses)
Transfers in 2,453,060 2,649,411 196,351
Transfers out (1,539,869) (2,797,265) (1,257,396)
Total Other Financing Sources(Uses) 913,191 (147,854) (1,061,045)
Change in fund balance $ (2,533,408) 617,451 3,150,859
Fund Balance, beginning of year 11,583,494
Fund Balance,end of year $ 12,200,945
81
Nonmajor Governmental Funds
Nonmajor Special Revenue Funds
Nonmajor Special Revenue Funds are used to account for expenditures associated with dedicated
or restricted revenue sources.
Teen Council - To account for the funds held by the City on behalf of the local teen council.
Public Education Signage - To account for the costs of installing signage.
SCHC - To account for the costs of running a community health center.
Bus Transportation - To account for city bussing transportation.
Beachfront Erosion - To account for the costs associated with the beachfront erosion.
Nonmajor Capital Project Funds
Nonmajor Capital Project Funds are established to account for the resources expended to acquire
or construct assets of a relatively permanent nature.
FEMA Landslide Cat. A- To account for Lowell Point debris removal resulting from a landslide
in 2022.
FEMA Landslide Cat. B - To account for hazard mitigation work related to the Lowell Point
landslide that occurred in 2022.
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.
Animal Shelter - To account for all activities related to animal shelter capital costs.
Streets and Sidewalks - to account for all activities related to street and sidewalk capital
costs.
Energy Efficiency - To account for all activities related to energy efficiency capital costs.
Utility Improvement - To account for public utility improvements of the approved
improvement districts of the City.
Developer Reimbursement - to account for funds to help offset the cost of the development
of a new subdivision in the city
Flood Mitigation - To account for flood mitigation projects.
ARPA - To account for American Rescue Plan Act funds that have been committed for capital
projects.
Jesse Lee Home - To account for a State Designated Legislative grant for use towards
hazardous material removal and site remediation at the Jesse Lee Home.
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Enterprise Funds and Internal Service Funds
Enterprise Funds
Enterprise Funds are established to account for the financing and 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.
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.
Healthcare Facilities -To account for the provision of services provided by Seward Community
Health Center, Providence Seward Medical and Care Center (PMSCC) and long-term care
facilities.
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.
Parking - To account for the provision of public parking services.
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 Absences - The Compensated Absences Internal Service Fund was created in
2005 for the purpose of accumulated cash reserves to pay compensated absences cash-outs
for governmental funds.
Exhibit J-1
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Net Position
December 31,2022 Water Wastewater Parking Total
Assets and Deferred Outflows of Resources
Current Assets
Cash and investments $ 4,019,259 4,014,383 618,218 8,651,860
Receivables
Accounts 179,124 196,121 - 375,245
Accrued interest - - 5,454 5,454
Interfund loans-current portion - - 66,416 66,416
Grants 288,598 288,598 - 577,196
Other 11,492 - 11,492
Less allowance for doubtful accounts (6,092) (8,825) (14,917)
Inventory 69,079 - - 69,079
Total Current Assets 4,561,460 4,490,277 690,088 9,741,825
Noncurrent Assets
Interfund loans,net of current portion - - 594,719 594,719
Land 100,420 111,011 - 211,431
Property,plant and equipment,net of
accumulated depreciation 7,891,301 4,558,742 181,724 12,631,767
Net pension and OPEB assets 141,357 133,667 5,137 280,161
Total Assets 12,694,538 9,293,697 1,471,668 23,459,903
Deferred Outflows of Resources
Related to pensions and OPEB 38,450 36,358 1,397 76,205
Total Assets and Deferred Outflows of Resources $ 12,732,988 9,330,055 1,473,065 23,536,108
Liabilities,Deferred Inflows of Resources,and Net Position
Current Liabilities
Accounts payable $ 10,712 11,042 - 21,754
Accrued payroll and related liabilities 23,426 19,264 1,666 44,356
Accrued interest 8,595 4,109 - 12,704
Unearned revenue 338,374 338,374 - 676,748
Current portion:
Accrued compensated absences 13,301 11,688 1,476 26,465
Notes payable 145,592 59,885 - 205,477
Total Current Liabilities 540,000 444,362 3,142 987,504
Noncurrent liabilities,net of current portion
Accrued compensated absences 20,460 18,120 - 38,580
Notes payable 604,538 789,896 - 1,394,434
Net pension and OPEB liabilities 347,427 328,525 12,626 688,578
Total Noncurrent Liabilities 972,425 1,136,541 12,626 2,121,592
Total Liabilities 1,512,425 1,580,903 15,768 3,109,096
Deferred Inflows of Resources
Related to pensions and OPEB 13,345 12,619 485 26,449
Total Liabilities and Deferred Inflows of Resources 1,525,770 1,593,522 16,253 3,135,545
Net Position
Net investment in capital assets 7,241,591 3,819,972 181,724 11,243,287
Unrestricted 3,965,627 3,916,561 1,275,088 9,157,276
Total Net Position 11,207,218 7,736,533 1,456,812 20,400,563
Total Liabilities,Deferred Inflows of
Resources,and Net Position $ 12,732,988 9,330,055 1,473,065 23,536,108
86
Exhibit J-2
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Revenues, Expenses and Changes in Net Position
Year Ended December 31, 2022 Water Wastewater Parking Total
Operating Revenues - charges for services $ 1,656,638 1,276,338 376,048 3,309,024
Operating Expenses
Salaries and employee benefits 391,138 348,277 25,246 764,661
Purchased services 355,909 338,030 21,107 715,046
Supplies and maintenance 77,610 74,302 16,356 168,268
Administration 286,481 192,155 27,500 506,136
Depreciation 415,894 349,339 26,641 791,874
Total Operating Expenses 1,527,032 1,302,103 116,850 2,945,985
Earnings (loss)from operations 129,606 (25,765) 259,198 363,039
Nonoperating Revenues
Intergovernmental - PERS on-behalf (6,662) (6,299) (242) (13,203)
Investment income (loss) (50,541) (54,558) (10,749) (115,848)
Interest income 16,321 16,321
Interest expense (11,760) (13,347) - (25,107)
Other revenue (expenses) 22,761 1,051 (49) 23,763
Total Nonoperating Revenues (46,202) (73,153) 5,281 (114,074)
Income Before Transfers 83,404 (98,918) 264,479 248,965
Transfers in - 39,869 - 39,869
Transfers out (178,076) (145,699) (639,046) (962,821)
Change in net position (94,672) (204,748) (374,567) (673,987)
Net Position, beginning of year 11,301,890 7,941,281 1,831,379 21,074,550
Net Position, end of year $ 11,207,218 7,736,533 1,456,812 20,400,563
87
Exhibit J-3
City of Seward, Alaska
Nonmajor Enterprise Funds
Combining Statement of Cash Flows
Year Ended December 31,2022 Water Wastewater Parking Total
Cash Flows from(for)Operating Activities
Receipts from customers and users $ 2,272,516 1,901,269 376,048 4,549,833
Payments to suppliers (411,414) (440,468) (60,773) (912,655)
Payments to employees (420,390) (377,345) (15,769) (813,504)
Payments for interfund services used (282,570) (174,575) (12,025) (469,170)
Net cash flows from(for)operating activities 1,158,142 908,881 287,481 2,354,504
Cash Flows from(for)Noncapital Financing Activities
Transfers in - 39,869 - 39,869
Transfers out (178,076) (145,699) (639,046) (962,821)
Net cash flows from(for)noncapital financing activities (178,076) (105,830) (639,046) (922,952)
Cash Flows from(for)Capital Financing Activities
Principal payments on notes payable (143,440) (59,001) (202,441)
Interest payments on notes payable (13,404) (13,632) (27,036)
Acquisition of property,plant and equipment (43,320) (101,732) (145,052)
Net cash flows from(for)capital financing activities (156,844) (115,953) (101,732) (374,529)
Cash Flows from Investing Activities
Interfund loans disbursed (733,212) (733,212)
Interfund loan receipts 72,077 72,077
Interfund interest received 10,867 10,867
Investment income(loss) (50,541) (54,558) (10,749) (115,848)
Net cash flows from(for)investing activities (50,541) (54,558) (661,017) (766,116)
Net increase in cash and investments 772,681 632,540 (1,114,314) 290,907
Cash and Investments, beginning of year 3,246,578 3,381,843 1,732,532 8,360,953
Cash and Investments,end of year $ 4,019,259 4,014,383 618,218 8,651,860
Reconciliation of earnings(loss)from operations to
net cash flows from(for)operating activities:
Earnings(loss)from operations $ 129,606 (25,765) 259,199 363,039
Adjustments to reconcile earnings(loss)from operations
to net cash flows from(for)operating activities:
Other non-operating revenues(expenses) 22,761 1,051 (49) 23,763
Depreciation 415,894 349,339 26,641 791,874
Noncash State PERS relief (6,662) (6,299) (242) (13,203)
Increase(decrease)in allowance for doubtful accounts (984) 156 - (828)
(Increase)decrease in assets and deferred outflows of resources:
Receivables 255,727 285,350 541,077
Inventory 24,213 - 24,213
Net pension and OPEB assets 27,967 23,546 (5,137) 46,376
Deferred outflows of resources-pension and OPEB (11,623) (7,897) (1,397) (20,917)
Increase(decrease)in liabilities and deferred inflows of resources:
Accounts payable 1,803 (10,556) (7,786) (16,539)
Accrued payroll and related liabilities 7,557 1,547 1,666 10,770
Unearned revenue 339,374 338,374 - 676,748
Accrued compensated absences 5,348 1,394 1,476 8,218
Net pension and OPEB liabilities 116,425 109,221 12,626 238,272
Deferred inflows of resources-pension and OPEB (168,264) (150,580) 485 (318,359)
Net cash flows from(for)operating activities $ 1,158,142 908,881 287,481 2,354,504
88
Exhibit K-1
City of Seward, Alaska
Internal Service Funds
Combining Statement of Net Position
Compensated
Motor Annual
December 31, 2022 Pool Leave Total
Assets and Deferred Outflows of Resources
Current Assets
Cash and investments $ 2,648,283 500,181 3,148,464
Receivables
Accrued interest 18,245 - 18,245
Interfund loans - current portion 111,347 - 111,347
Total Current Assets 2,777,875 500,181 3,278,056
Noncurrent Assets
Interfund loans, net of current portion 1,135,663 - 1,135,663
Property, plant and equipment, net
Equipment and vehicles 9,594,956 9,594,956
Less accumulated depreciation (6,940,453) (6,940,453)
Net property, plant and equipment in service 2,654,503 2,654,503
Total Noncurrent Assets 3,790,166 - 3,790,166
Total Assets $ 6,568,041 500,181 7,068,222
Liabilities and Net Position
Current Liabilities
Accounts payable $ 219,439 - 219,439
Accrued compensated absences - current portion - 101,935 101,935
Total Current Liabilities 219,439 101,935 321,374
Noncurrent Liabilities
Accrued compensated absences, net of current portion - 398,246 398,246
Total Liabilities 219,439 500,181 719,620
Net Position
Net investment in capital assets 2,654,503 - 2,654,503
Unrestricted 3,694,099 3,694,099
Total Net Position 6,348,602 - 6,348,602
Total Liabilities and Net Position $ 6,568,041 500,181 7,068,222
89
Exhibit K-2
City of Seward, Alaska
Internal Service Funds
Combining Statement of Revenues, Expenses and Changes in Net Position
Compensated
Motor Annual
Year Ended December 31, 2022 Pool Leave Total
Operating Revenues
Vehicle rental and interfund charges $ 701,930 500,181 1,202,111
Operating Expenses
Salaries and employee benefits - 500,181 500,181
Supplies and maintenance 14,788 - 14,788
Depreciation 380,198 - 380,198
Total Operating Expenses 394,986 500,181 895,167
Earnings from operations 306,944 - 306,944
Nonoperating Revenues
Interest income 18,245 18,245
Investment income (loss) (52,440) (52,440)
Total Nonoperating Revenues (34,195) (34,195)
Change in net position 272,749 272,749
Net Position, beginning of year 6,075,853 6,075,853
Net Position, end of year $ 6,348,602 6,348,602
90
Exhibit K-3
City of Seward, Alaska
Internal Service Funds
Combining Statement of Cash Flows
Compensated
Motor Annual
Year Ended December 31, 2022 Pool Leave Total
Cash Flows from (for)Operating Activities
Receipts from vehicle rentals and interfund charges $ 701,930 500,181 1,202,111
Payments to suppliers 138,770 - 138,770
Payments to employees - (465,145) (465,145)
Net cash flows from (for) operating activities 840,700 35,036 875,736
Cash Flows (for)Capital Financing Activities
Acquisition of equipment and vehicles (1,059,001) - (1,059,001)
Cash Flows from (for) Investing Activities
Investment income received (52,440) (52,440)
Interfund loans disbursed (930,500) (930,500)
Interfund loan receipts 107,341 107,341
Interfund interest received 22,252 22,252
Net cash flows from (for) investing activities (853,347) - (853,347)
Net change in cash and investments (1,071,648) 35,036 (1,036,612)
Cash and Investments, beginning of year 3,719,931 465,145 4,185,076
Cash and Investments, end of year $ 2,648,283 500,181 3,148,464
Reconciliation of earnings from operations to
net cash flows from operating activities:
Earnings from operations $ 306,944 - 306,944
Adjustments to reconcile earnings from operations
to net cash flows from operating activities:
Depreciation 380,198 380,198
Increase (decrease)in liabilities:
Accounts payable 153,558 - 153,558
Accrued compensated absences - 35,036 35,036
Net cash flows from operating activities $ 840,700 35,036 875,736
91
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 92
Table 2 Changes in Net Position 93-94
Table 3 Fund Balances of Governmental Funds 95
Table 4 Changes in Fund Balances of Governmental Funds 96
Table 5 General Fund Revenues by Source 97
Table 6 General Fund Tax Revenues by Source 98
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 99
Table 8 Property Tax Levies and Collections 100
Table 9 Assessed and Estimated Actual Value of Taxable Property 101
Table 10 Principal Property Taxpayers Compared with Nine Years Ago 102
Table 11 Principal Taxable Sales by Line of Business 103
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 104
Table 13 Ratio of General Obligation Bonded Debt to Assessed Value and General Obligation
Bonded Debt per Capita 105
Table 14 Computation of Direct and Overlapping Bonded Debt 106
Table 15 Legal Debt Margin 107
Table 16 Revenue Bond Coverage - Electric Enterprise Fund 108
Table 17 Revenue Bond Coverage - Harbor Enterprise Fund 109
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 110
Table 19 Full-Time Equivalent Employees by Fund ill
Table 20 Operating Indicators by Function 112
Table 21 Capital Asset Statistics by Function 113
Table 22 Property Value, Construction, and Bank Deposits 114
Table 23 Miscellaneous Statistics 115
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Table 6
City of Seward, Alaska
General Fund Tax Revenues by Source
Last Ten Fiscal Years
Payments-in- Hotel/Motel
Fiscal Year Property Tax Sales Tax (1) Lieu-of-Tax Tax (2) Other (3) Total
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
2015 1,003,665 4,883,996 88,331 458,605 4,007 6,438,604
2016 1,152,216 5,004,992 90,382 505,845 2,506 6,755,941
2017 1,213,627 5,160,344 107,157 520,907 1,170 7,003,205
2018 1,464,361 5,326,437 73,207 556,065 1,699 7,421,769
2019 1,556,874 5,674,689 76,694 591,674 6,310 7,906,241
2020 1,564,692 3,805,487 46,312 217,434 2,502 5,636,427
2021 1,655,216 6,861,114 89,061 713,633 7,003 9,326,027
2022 1,705,639 7,635,648 11,027 804,511 3,898 10,160,723
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.
98
Table 7
City of Seward, Alaska
Property Tax Rates
Direct and Overlapping Governments
Last Ten Fiscal Years
(Per $1,000 of Assessed Value)
Flood Service
Fiscal Year City Borough (1) KPCC (2) (3) Total
2013 3.12 4.50 0.00 0.50 8.12
2014 3.12 4.50 0.00 0.50 8.12
2015 3.12 4.50 0.00 0.75 8.37
2016 3.12 4.50 0.00 0.75 8.37
2017 3.12 4.50 0.00 0.75 8.37
2018 3.84 4.70 0.00 0.75 9.29
2019 3.84 4.70 0.00 0.75 9.29
2020 3.84 4.70 0.00 0.75 9.29
2021 3.84 4.70 0.00 0.75 9.29
2022 3.84 4.70 0.00 0.75 9.29
1) Includes Kenai Peninsula Borough only.
2) Kenai Peninsula Community College.
3) Seward/Bear Creek Flood Service Area created effective 2004.
99
Table 8
City of Seward, Alaska
Property Tax Levies and Collections
Last Ten Fiscal Years
Collected in the Fiscal Year of
the Levy Total Collections to Date
Collections in
Fiscal Total Tax Levy Percentage of Subsequent Percentage of
Year for Fiscal Year Amount Levy Years Amount Levy
2013 1,235,742 1,212,490 98.118% 18,734 1,231,224 99.634%
2014 968,272 942,952 97.385% 21,572 964,523 99.613%
2015 1,006,912 978,629 97.191% 21,119 978,629 97.191%
2016 1,101,723 1,074,987 97.573% 22,950 1,097,937 99.656%
2017 1,189,014 1,172,169 98.583% 28,556 1,200,725 100.985%
2018 1,458,073 1,419,345 97.344% 13,990 1,433,335 98.303%
2019 1,552,098 1,486,245 95.757% 56,760 1,543,005 99.414%
2020 1,563,721 1,489,328 95.243% 41,880 1,531,208 97.921%
2021 1,627,613 1,539,140 94.564% 68,778 1,607,918 98.790%
2022 1,733,341 1,639,939 94.611% 86,612 1,726,551 99.608%
Source: Kenai Peninsula Borough
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Table 11
City of Seward, Alaska
Principal Taxable Sales by Line of Business
December 31, 2022
FY2022 Percent of FY2013 Percent of
Taxable Sales Total Taxable Taxable Sales Total Taxable
Type of Business (1) Sales (2) Sales
Retail Trade $ 70,627,006 38.7% $ 45,177,719 39.6%
Guiding 40,824,196 22.3% 20,377,253 17.9%
Hotel/Motel/B Et B 22,952,144 12.6% 12,173,596 10.7%
Restaurant/Bar 21,698,162 11.9% 12,976,943 11.4%
Public Administration 10,017,986 5.5% 7,398,715 6.5%
Wholesale Trade 7,307,735 4.0% 5,669,531 5.0%
Services 2,941,760 1.6% 1,610,206 1.4%
Rental Residental Propert 2,677,174 1.5% 2,009,867 1.8%
Information 1,552,351 0.8% 2,715,261 2.4%
Manufacturing 1,077,017 0.6% - 0.0%
Professional, Scientific 819,457 0.4% - 0.0%
Other 191,345 0.1% 4,033,282 3.5%
$ 182,686,332 100% $ 114,142,373 100%
1) Source: Kenai Peninsula Borough, Finance Dept., Sales Tax Division
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.
103
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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#
Ratio of General General
Fiscal Assessed Bonded Debt to Bonded Debt
Year Population (1) Value (2) Governmental Business-Type Total Assessed Value per Capita
2013 2487 296,613 3,718 3,718 1.27% 1,495
2014 2768 292,233 3,622 3,622 1.13% 1,309
2015 2740 320,219 3,522 3,522 1.10% 1,285
2016 2663 348,138 3,210 3,210 0.92% 1,205
2017 2518 381,264 6,299 6,299 1.65% 2,502
2018 2584 367,824 6,082 6,082 1.65% 2,354
2019 2545 392,999 5,636 5,636 1.43% 2,215
2020 2509 407,470 5,370 5,370 1.32% 2,140
2021 2603 423,380 4,660 4,660 1.10% 1,790
2022 2482 403,358 4,445 4,445 1.10% 1,791
# 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.
1) Source: Alaska Department of Commerce, Community Et Economic Development Certified Municipal Population.
2) Source: Kenai Peninsula Borough (expressed in thousands).
105
Table 14
City of Seward, Alaska
Computation of Direct and Overlapping Bonded Debt
December 31, 2022
Net General
Obligation Percentage
Bonded Debt Applicable to Amount Applicable
Jurisdiction Outstanding Seward to City of Seward
Direct:
City of Seward $ 5,057,792 100% 5,057,792
Overlapping:
Kenai Peninsula Borough (KPB) 22,099,501 4.5% 999,444
$ 27,157,293 6,057,236
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.
3) Based on ratio of City of Seward assessed value (real and personal property= $403,357,702)
to total assessed value of the Kenai Peninsula Borough ( $8,918,959,155)
Source: "2022 Alaska Taxable"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.
106
Table 15
City of Seward, Alaska
Legal Debt Margin
December 31, 2022
No debt limit mandated by law.
107
Table 16
City of Seward, Alaska
Revenue Bond Coverage
Electric Enterprise Fund
Last Ten Fiscal Years
Debt Service Requirements (3)
Net Revenue
Fiscal Gross Operating Available for
Year Revenues(l) Expenses (2) Debt Service Principal Interest Total Coverage (4)
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
2015 11,674,228 8,887,162 2,787,066 400,000 273,261 673,261 4.14
2016 11,607,631 9,421,854 2,185,777 240,000 109,739 349,739 6.25
2017 13,010,358 10,267,321 2,743,037 150,000 193,118 343,118 7.99
2018 11,168,299 9,730,414 1,437,885 160,000 185,400 345,400 4.16
2019 12,544,308 9,801,084 2,743,224 165,000 180,199 345,199 7.95
2020 12,516,634 10,057,074 2,459,560 170,000 171,949 341,949 7.19
2021 13,295,324 10,783,920 2,511,404 180,000 163,451 343,351 7.31
2022 14,289,520 11,371,397 2,918,123 190,000 432,998 622,998 4.68
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
108
Table 17
City of Seward, Alaska
Revenue Bond Coverage
Harbor Enterprise Fund
Last Ten Fiscal Years
Debt Service Requirements (3)
Net Revenue
Fiscal Gross Revenues Operating Available for
Year (1) Expenses (2) Debt Service Principal Interest Total Coverage (4)
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
2015 3,396,213 2,289,480 1,106,733 460,000 223,262 683,262 1.62
2016 3,323,340 2,500,625 822,715 470,000 200,380 670,380 1.23
2017 3,480,176 2,132,971 1,347,205 480,000 193,100 673,100 2.00
2018 3,564,884 2,268,324 1,296,560 490,000 177,900 667,900 1.94
2019 3,616,290 1,961,095 1,655,195 510,000 158,301 668,301 2.48
2020 3,126,459 2,189,254 937,205 530,000 134,899 664,899 1.41
2021 3,716,628 2,119,662 1,596,966 560,000 110,549 670,549 2.38
2022 3,704,733 2,382,033 1,322,700 350,000 84,850 434,850 3.04
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.
109
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Table 22
City of Seward, Alaska
Property Value, Construction, and Bank Deposits
Last Ten Fiscal Years
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)
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
2015 251,015,800 30 16,808,765 11 759,860 75,514,000
2016 267,717,900 27 2,661,974 26 1,603,866 87,091,000
2017 274,511,700 14 2,324,733 21 1,070,477 86,329,000
2018 282,031,815 20 3,993,376 23 1,391,200 81,076,000
2019 305,984,502 19 10,577,917 20 1,406,850 80,659,000
2020 462,425,120 24 3,590,628 21 2,984,130 95,961,000
2021 331,020,645 24 3,605,605 26 2,831,337 126,126,000
2022 313,981,161 33 6,815,974 31 3,982,685 141,807,000
1) "Estimated Actual Value" from Table 9.
2) Bank deposit data as of 12/31 through 2014. Beginning 2015, data as of June 30.
Source: https://www5.fdic.ciov/sod/sodMarketRpt.asp?barltem=&sState=all&sZipCode=99664
3) Source: Construction Data - City of Seward Building Department
114
Table 23
City of Seward, Alaska
Miscellaneous Statistics
December 31, 2022
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 24,429
Fire Department- Number of volunteers 21
Sewer System-Maximum daily capacity(gallons) 463,000
Water System-Maximum daily capacity(gallons) 118,983
Electric System:
Miles of distribution lines 200
Miles of transmission lines 75
Harbor- Number of permanent slips 556
City Employees:
Regular Employees- Full-time equivalent 92
Temporary Employees- Full-time equivalent 6
Demographics:
School Enrollment, City of Seward (3) 508
Unemployment Rate- Borough-Wide(1) 4.5%
Population (2) 2,482
Per-capita Personal Income(4) 59,041
Qualified Voters 1,796
Facilities and Services not included in the reporting entity:
Education:
Elementary School
Number of students enrolled 227
Number of teachers 19
Middle School
Number of students enrolled 144
Number of teachers 12
High School
Number of students enrolled 137
Number of teachers 19
Alaska Vocational Technical Center
Number of students served annually 776
Number of teachers(includes Instructional Aides) 30
Healthcare Facilities-a component unit of the reporting entity:
Providence Seward Medical Et Care Center
Number of patient beds(6)combination of inpatient care 8 swing beds 6
Number of long-term care beds 40
Number of employees: 138
Exempt 14
Non-Exempt(includes non-staff rotating physicians) 124
(1)Source: State of Alaska Department of Labor; represents not seasonally adjusted, annual unemployment rates for Kenai Peninsula
Borough; assumed to be representative of Seward, as specific Seward data unavailable
(http://live.taborstats.alaska.gov/tabforce/labdata.cfm?s=l4Eta=0)
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: U.S. Dept. of Commerce, Bureau of Economic Analysis. (http://www.bea.gov/iTable/index_regional.cfm) KPB per-capita
personal income used, as Seward specific data not available (2021 - last updated November 16, 2022)
115