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FY25 Annual Comprehensive Financial ReportCITY KALISPELL CITY OF KALISPELL, MONTANA ANNUAL COMPREHENSIVE FINANCIAL REPORT FISCAL YEAR 2025 July 1, 2024 - June 30, 2025 Prepared by the City of Kalispell Finance Department INTRODUCTORY SECTION CITY OF KALISPELL ANNUAL COMPREHENSIVE FINANCIAL REPORT TABLE OF CONTENTS INTRODUCTORY SECTION Tableof Contents.................................................................................................................................................. 1-2 ACFRLetter of Transmittal................................................................................................................................ 3-6 OrganizationalChart........................................................................................................................................... 7 City Elected and Appointed Officials.................................................................................................................. 8 FINANCIAL SECTION IndependentAuditor's Report.............................................................................................. 10-13 Management's Discussion and Analysis.................................................................................... 14-25 Basic Financial Statements: Government -wide Financial Statements: Statementof Net Position..................................................................................................................... 28 Statementof Activities......................................................................................................................... 29 Governmental Fund Financial Statements: Balance Sheet — Governmental Funds................................................................................................31-32 Reconciliation of the Balance Sheet — Governmental Funds to the Statement of Net Position ..... 33 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds.. 34 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities...................................................................... 35 Proprietary Fund Financial Statements: Statement of Net Position — Proprietary Funds................................................................................. 37 Statement of Revenues, Expenses, and Changes in Net Position — Proprietary Funds .................. 38 Statement of Cash Flows — Proprietary Funds.................................................................................. 39 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position — Custodial Funds ................................................... 41-42 Notes to the Financial Statements................................................................................. 43-106 Required Supplementary Information other than Management Discussion and Analysis: Schedule of City's Total Liability and Related Ratios — Other Post -Employment HealthcareBenefits.............................................................................................................................. 108 Schedule of City Contributions — Other Post -Employment Healthcare Benefits ............................ 109 Schedule of Proportionate Share of the Net Pension Liability/Schedule of Contributions Post Employment Benefits/Required Notes.....................................................................111-120 Budgetary Comparison Schedule — General and Major Special Revenue/Required Notes........ 121-123 Supplemental Information: Combining and Individual Governmental Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds...........................................129-137 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — Nonmajor Governmental Funds..............................................................................138-146 Budgetary Comparison Schedule — Nonmajor Governmental Funds............................................................................148-172 Combining and Individual Proprietary Fund Statements: Combining Statement of Net Position — Nonmajor Proprietary Funds ......................................... 174 Combining Statement of Revenues, Expenditures, and Changes in Fund Net Position — NonmajorProprietary Funds....................................................................................................... 175 Combining Statement of Cash Flows — Nonmajor Proprietary Funds .......................................... 176 Combining and Individual Internal Service Fund Statements: Combining Statement of Net Position — Internal Service Funds .......................................... 178 Combining Statement of Revenues, Expenditures, and Changes in Fund Net Position - InternalService Funds........................................................................................... 179 Combining Statement of Cash Flows — Internal Service Funds .................................................... 180 CITY OF KALISPELL ANNUAL COMPREHENSIVE FINANCIAL REPORT TABLE OF CONTENTS Combining and Individual Custodial Fund Statements: Combining Statement of Net Position — Custodial Funds ...................................................... 182 Combining Statement of Revenues, Expenditures, and Changes in Fund Net Position - CustodialFunds....................................................................................................183 STATISTICAL SECTION Financial Trends NetPosition by Component..................................................................................................................... 185 Changesin Net Position........................................................................................................................... 186 FundBalances of Governmental Funds................................................................................................. 187 Changes in Fund Balances, Governmental Funds................................................................................ 188 Revenue Capacity MarketValue of Taxable Property......................................................................................................... 189 Direct and Overlapping Property Tax Rates......................................................................................... 190 PrincipalProperty Tax Payers............................................................................................................... 191 Property Tax Levies and Collections...................................................................................................... 192 Debt Capacity Ratios of Outstanding Debt by Type...................................................................................................... 193 Ratios of General Bonded Debt Outstanding........................................................................................ 194 LegalDebt Margin Information............................................................................................................. 195 Direct and Overlapping Governmental Activities Debt........................................................................ 196 PledgedRevenue Coverage..................................................................................................................... 197 Demographics and Economics Demographic and Economic Statistics................................................................................................... 198 PrincipalEmployers................................................................................................................................ 199 Operating Statistics Full-time Equivalent City Government Employees by Function/Program......................................... 200 OperatingIndicators by Function.......................................................................................................... 201 Capital Assets Statistics by Function/Program..................................................................................... 202 Additional Information TheWater System.................................................................................................................................... 203 TheSewer System.................................................................................................................................... 204 Tax Increment District Information.......................................................................................................205-207 Special Improvement District Information............................................................................................ 208 West Side TIF Operating Data..................................................................................... 209 SINGLE AUDIT SECTION Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters based on an Audit of Financial Statements Performed in Accordance with GovernmentAuditing Standards........................................................................................................... 211-212 Independent Auditor's Report on Compliance for Each Major Program and Report on Internal Control Over Compliance Required by Uniform Guidance............................................................................... 213-215 Schedule of Expenditures of Federal Awards and Notes................................................................................ 216 Notes to the Schedule of Expenditures of Federal Awards............................................................................. 217 Schedule of Findings and Questioned Costs..................................................................................................... 218-221 2 CITY OF KALISPELL February 12, 2026 City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 Telephone (406) 758-7000 Fax - (406) 758-7758 To the Honorable Mayor, Members of the City Council, and Citizens of the City of Kalispell, Montana: State law requires that all general-purpose local governments publish within six months of the close of each fiscal year (by December 31) a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP). State law also requires a biannual audit of these statements in accordance with generally accepted auditing standards by a firm of licensed certified public accountants to be completed within nine months of the close of every other fiscal year (by March 31). It is the belief of the City Council and the Executive Staff that an annual audit ensures a higher level of financial management and fiscal responsibility. Pursuantto this policy and these requirements, the audited annual financial report for the City of Kalispell, Montana for the fiscal year ended June 30, 2025, is submitted for your review. Management Representation The Finance Office prepared this report. Responsibility for the accuracy, completeness, and fairness of the data presented, including all disclosures, rests with the City. We believe the information provided is accurate in all material respects and presented in a manner that fairly reflects the financial position and results of operations of the City, as measured by the financial activity of its various funds. All disclosures necessary to enable the reader to gain a comprehensive understanding of the City's financial affairs have been included. To provide a reasonable basis for making these representations, management has established and maintains an internal control system designed to safeguard the City's assets from loss, theft, or misuse. The internal control framework also ensures that sufficient accounting data are compiled to allow for the preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (U.S. GAAP) and in compliance with applicable laws and regulations. The system of internal control provides reasonable, though not absolute, assurance that these objectives will be achieved. The concept of reasonable assurance recognizes that: (1) the cost of internal control should not exceed the benefits likely to be derived, and (2) the evaluation of costs and benefits requires estimates and judgment by management. Independent Auditor Eide Bailly LLP, a firm of licensed certified public accountants, has audited the financial statements of the City. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City for the fiscal year ended June 30, 2025, 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 significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditors concluded, based upon 3 the audit, that there was a reasonable basis for rendering an unmodified opinion that the City's financial statements for the fiscal year ended June 30, 2025, are fairly presented in conformity with US GAAP. The independent auditor's report is presented as a component of the financial section of this report. Transmittal Letter GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management's Discussion and Analysis (MD&A). The letter of transmittal is designed to complement MD&A and should be read in conjunction with it. The City of Kalispell's MD&A immediately precedes the City's basic financial statements within this report. Profile of the City of Kalispell The City of Kalispell, incorporated in 1892, is the county seat of Flathead County and is located in the Flathead Valley in northwestern Montana. The area has historically been one of the fastest -growing regions in the state, due in part to its position as the commercial, medical, and governmental center for the surrounding region. Kalispell serves as a service hub for a regional population that extends well beyond its municipal boundaries. The City operates under a Council -Manager form of government. The governing body consists of a Mayor and eight City Council members elected on a non -partisan basis. The City Manager, appointed by the Council, is responsible for the administration of City operations and for carrying out the policies established by the governing body. Kalispell provides a full range of municipal services, including police protection, fire and emergency medical services, municipal court, street maintenance, parks and recreation, planning and building services, and general administrative support. The City also operates enterprise activities, including water, wastewater, solid waste, and stormwater utilities. These services are supported through a combination of property taxes, user fees, charges for services, intergovernmental revenues, and other financing mechanisms authorized by state statute. The City is empowered to levy property taxes on real and personal property within its corporate limits and may extend those limits through annexation when approved by the City Council. Annexation occurs periodically to accommodate growth and ensure the efficient provision of municipal services. The Kalispell community continues to experience steady growth in population, housing development, and economic activity. Commercial and industrial development, major public infrastructure projects, and ongoing investment in the downtown core all contribute to the City's long-term financial stability. To manage these demands, Kalispell engages in long-term financial planning, annual budget development, and ongoing capital improvement programming to support the maintenance and expansion of essential public facilities. Budget to Actual Comparisons State municipal budget law requires that no money, other than payments from agency funds, may be drawn from the treasury of a municipality except pursuant to an adopted appropriation. As a result, a legally adopted budget is required for all City funds except agency funds. In compliance with these requirements, the City legally adopts annual budgets for all applicable governmental and proprietary funds. Consistent with prior years, the City establishes the legal level of budgetary control at the fund level. The City Manager and Finance Director are authorized to approve transfers of appropriations within a fund as necessaryto ensure efficient operations. Transfers between funds, however, requireformal approval bythe City Council. Budget -to -actual comparisons are provided within this report for each governmental fund for which an annual appropriated budget has been adopted. For the General Fund, the budget -to -actual- comparison is presented as part of the Required Supplementary Information section. Factors Affecting Financial Condition Kalispell, Montana, continues to experience sustained population growth, maintaining its position as one of the fastest -growing communities in the state. According to the U.S. Census Bureau, Kalispell's population has risen steadily since 2020, with continued in -migration into the Flathead Valley. While growth has moderated slightly from the peak post -pandemic surge, development activity and housing demand remain strong. The rapid population growth has continued to apply pressure to the local housing market. While home prices have stabilized from the highs seen in 2022, affordability remains a significant challenge. Inventory levels remain constrained, and construction costs continue to be elevated due to inflationary pressures. Though median home prices have softened from their peak, the gap between household incomes and housing availability persists, reflecting broader statewide trends influenced by strong in -migration and limited workforce housing. The disparity between population growth and housing availability has contributed to rising home prices, making affordability a concern for many residents. This trend is consistent with broader patterns observed across Montana, where an influx of new residents has driven up housing demand and prices. Despite challenges in the housing market, Kalispell continues to attract and retain businesses across a range of industries, including healthcare, technology, manufacturing, and commercial services. Tourism remains a major economic driver, with Glacier National Park, Flathead Lake, and area ski resorts contributing to year- round visitation. Ongoing commercial development, industrial expansion, and regional infrastructure improvements continue to support a healthy and diversified local economy. Revenue Growth and Reform City revenues can be categorized as statutorily limited, circumstantial, or discretionary. The City has limited control over restricted and circumstantial revenues, and even discretionary revenues must be managed carefully to balance community expectations with long-term financial sustainability. Since the passage of Initiative 105 in 1986, which capped certain property taxes at 1986 levels, the City's ability to raise revenues for basic services has become increasingly constrained. Subsequent legislative actions, including SB 184 and more recent mill levy reforms, have further complicated the City's ability to generate property tax growth. Adjustments to dollar -based levies and inflation indexing have required ongoing refinement of the City's revenue models and budget planning processes. The City's cash reserves in most funds continue to range between 10% and 20% of appropriations While state law allows for reserves of up to 50%, Kalispell's current reserve levels provide adequate cash flow between semi-annual property tax receipts and help avoid short-term borrowing for operational needs. Maintaining healthy reserves remains an important component of the City'sfinancial strategy, particularly in an environment of economic uncertainty and service growth demands. Growth in taxable valuation has generated additional revenue capacity; however, these increases accompany additional service demands. Departments such as Police, Fire, Municipal Court, Public Works, Building, and Parks continue to experience elevated workloads driven by population growth, development activity, and expanded service areas. Staffing challenges, rising personnel costs, and increased overtime requirements — particularly in public safety — continue to influence operational budgets. Montana's constitution and state law require periodic reappraisal of propertyto ensure equitable taxation (15-7-111, MCA). The Montana Department of Revenue (DOR) is responsible forvaluing all taxable real and personal property, conducting biennial reappraisals of residential, commercial, industrial, agricultural, and forestland property. These reappraisals cycles, combined with statewide legislative adjustments to tax rates and classifications, continue to influence the City's long-term revenue planning. Acknowledgements The City Administration continues to take seriously its responsibility for transparency in governmental operations and accountability to the public. The Annual Comprehensive Financial Report is one of the key documents supporting this commitment and serves as an important tool in keeping the community informed about the City's financial condition and operations. The preparation of this report represents the collaborative efforts of staff across all City departments. Their professionalism, dedication, and commitment to accurate financial reporting and responsible stewardship of public resources are sincerely appreciated. The support and leadership of the Mayor and City Council remain essential to the City's ability to meet its goals and provide high -quality services to the citizens of Kalispell. Thank you for your continued confidence in the financial management of the City. Sincerely, Aimee Cooke Finance Director MUNICIPAL JUDGE Alison Howard CITY OF KALISPELL, MONTANA ORGANIZATIONAL CHART CITIZENS OF KALISPELL CITY COUNCIL MAYOR Mark Johnson WARD I WARD II WARD III WARD IV Karl Gabriel Sam Nunnally Jessica Dahlman Jed Fisher Sandy Carlson Chad Graham Ryan Hunter Sid Daoud CITY CLERK Aimee Brunckhorst CITY MANAGER Jarod Nygren FINANCE Aimee Cooke PUBLIC WORKS INFORMATION Susie Turner TECHNOLOGY Erika Billiet PLANNING,& PARKS & BUILDING COMMUNITY RECREATION DEVELOPMENT Chad Fincher PJ Sorensen (Interim) PUBLIC SAFETY PUBLIC SAFETY LEGAL FIRE POLICE Johnna Preble Jay Hagen Jordan Venezio CITY OF KALISPELL, MONTANA CITY ELECTED AND APPOINTED OFFICIALS TERM ELECTED OFFICIALS EXPIRES Mayor Mark Johnson 12/2025 Council members: Kari Gabriel Ward I 12/2027 Jessica Dahlman Ward III 12/2025 Sandy Carlson Ward I 12/2026 Ryan Hunter Ward III 12/2027 Sam Nunnally Ward II 12/2027 Sid Daoud Ward IV 12/2027 Chad Graham Ward II 12/2026 Jed Fisher Ward IV 12/2025 APPOINTED CITY OFFICIALS Interim City Manager Jarod Nygren City Attorney Johnna Preble City Clerk Aimee Brunckhorst Police Chief Jordan Venezio Fire Chief Jay Hagen Finance Director Aimee Cooke Public Works Director Susie Turner Parks Director Chad Fincher Planning, Building, Community Dev. Jarod Nygren Human Resource Director Denise Michel City Treasurer Carrie Jones 8 FINANCIAL SECTION Eide r4Badly Independent Auditor's Report To the Honorable Mayor and Members of City Council City of Kalispell, Montana Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Kalispell (the City), as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Kalispell, as of June 30, 2025, 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. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards). 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, 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. Emphasis of Matter As discussed in Note Qto the financial statements, the City has adopted the provisions of Governmental Accounting Standards Board (GASB) Statement No. 101, Compensated Absences for the year ended June 30, 2025. Accordingly, a restatement has been made to the governmental activities, business -type activities and internal service funds net position as of July 1, 2024 to restate beginning net position. Our opinions are not modified with respect to this matter. eidebalift.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE Correction of Error As discussed in Note Qto the financial statements, the City has identified certain errors related to its financial statements for the year ended June 30, 2024 and has corrected these amounts. These corrections relate to the classification of deferred revenues at fiscal year-end. Accordingly, a restatement has been made to the fund balances of the Westside Tax Increment Financing Fund and the Community Development Fund as of July 1, 2024 to correct the errors. Our opinions are 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'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 GAAS and Government 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. In performing an audit in accordance with GAAS 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'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. is Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City'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, Schedule of Total Liability and Related Ratios — OPEB, Schedule of Contributions — OPEB, Schedule of Proportionate Share of the Net Pension Liability for the Last Ten Fiscal Years for PIERS, MPORS, and FURS, Schedule of Contributions for the Last Ten Fiscal Years for PIERS, MPORS, and FURS, and Budgetary Comparison Schedule for the General Fund, Street Maintenance Fund, and American Recovery Plan Act Fund 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 have applied certain limited procedures to the required supplementary information in accordance with GAAS, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining fund financial statements and the individual budgetary comparison 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 GAAS. In our opinion, the combining fund financial statements and the individual budgetary comparison are fairly stated, in all material respects, in relation to the basic financial statements as a whole. W 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 February 12, 2026 on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, 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'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 the City's internal control over financial reporting and compliance. 70 Denver, Colorado February 12, 2026 13 MANAGEMENT'S DISCUSSION AND ANALYSIS 14 MANAGEMENT'S DISCUSSION AND ANALYSIS As management of the City of Kalispell, we offer readers of the City of Kalispell's financial statements this narrative overview and analysis of the financial activities of the City of Kalispell for the fiscal year ended June 30, 2025. We encourage readers to consider the information presented here in conjunction with additional information that we have furnished in our Letter of Transmittal. Financial Highlights ➢ The assets and deferred outflows of the City of Kalispell exceeded its liabilities and deferred inflows at the close of the most recent fiscal year by $292,097,129 (net position). Of this amount, $37,929,141 (unrestricted net position) may be used to meet the government's ongoing obligations to citizens and creditors. ➢ Total City net position increased by $25,355,969 over the prior fiscal year. Developers contributed $2,907,263 in new streets and over $2.5 million in water and sewer infrastructure during the year. ➢ As of June 30, 2025, the City's governmental funds reported combined ending fund balances of $35,460,379, an increase of $6,520,848 from the prior year. Of this amount, $3,113,612 is unassigned fund balance, available for spending at the City's discretion. ➢ At fiscal year-end, the total of the assigned and unassigned components of fund balance for the general fund was $4,710,006, representing 32% of total General Fund expenditures for fiscal year 2025. ➢ The City's total debt increased by $2,282,518 during fiscal year 2025. Debt of governmental activities decreased by 12%, largely due to scheduled repayments of urban renewal bonds, assessment debt, and Intercap loans. In contrast, business -type activities debt increased by 8%, primarily due to continued draws on State Revolving Fund (SRF) loans for major water and sewer infrastructure projects. The City drew approximately $3.0 million in additional SRF loan proceeds during the year to support ongoing construction of the Lower Zone Reservoir, Emerging Contaminants, and Lead Service line replacement projects. These investments increased the total SRF debt from $36.8 million in FY2024 to $39.8 million in FY2025. Overview of the Financial Statements The financial section of the City of Kalispell's Annual Comprehensive Financial Report (ACFR) includes three main components: 1. Government -wide financial statements 2. Fund financials statements 3. Notes to the Financial statements In addition to these basic financial statements, this report also includes other supplementary information to provide detail and context. M The Management's Discussion and Analysis (MD&A) is intended to serve as an introduction to these financial statements and to assist readers in understanding the overall financial condition and operating results of the City of Kalispell. Readers are encouraged to review this analysis in conjunction with the accompanying statements and notes for a more complete understanding of the City's financial position. Government -wide Financial Statements The government -wide financial statements are designed to provide readers with a broad overview of the City of Kalispell's finances. The way information is presented in these statements is comparable to how the financial information of a private -sector business would be presented. The Statement of Net position reports all assets, deferred outflows, liabilities, and deferred inflows of resources. The difference between these categories (net position) serves as an indicator of the City's overall financial health. A decline in net position may indicate a reduction in the City's ability to meet future obligations. The Statement of Activities presents the change in net position during the most recent fiscal period. Revenues and expenses are reported when the underlying event occurs, regardless of when the cash transaction takes place. As a result, some items — such as uncollected but earned taxes and accrued leave benefits — are reported in this statement even though related cash flows will occur in future periods. The government -wide statements distinguish between governmental activities, which are primarily supported by taxes and intergovernmental revenues, and business -type activities, which recover most of their costs through user fees and charges for services. Governmental activities include general government, public safety, public works, parks and recreation, and community development. Business - type activities include the City's water, sewer, and solid waste operations. The statements also include two legally separate component units: the Business Improvement District and the Tourism Business Improvement District, whose financial information is presented separately from the primary government. Fund Financial Statements Like most other governmental entities, the City of Kalispell uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Funds are established to account for specific activities or objectives of the government. The City's funds are classified into three categories: governmental, proprietary, and fiduciary. ➢ Governmental funds correspond with the functions reported as governmental activities in the government -wide financial statements. These fund statements focus on near -term inflows and outflows of spendable resources, providing a more detailed view of the City's short-term fiscal health than the government -wide statements. ➢ A reconciliation has been prepared to help users more easily compare the governmental fund balance sheet to the government -wide statement of activities. These reconciliations can be useful in contrasting, comparing, and understanding the long-term impact (government -wide statements) of near -term decisions (governmental funds statements). ill ➢ The City of Kalispell maintains numerous individual governmental funds. Separate information is presented for those considered major funds based on the significance of each fund's assets, liabilities, revenues and expenditures relative to total governmental activity. For fiscal year 2025, the City's major governmental funds include the General Fund (always reported as major), the Street Maintenance Fund, and the Emergency Responder Levy Fund. All other nonmajor governmental funds are combined and presented in a single column. ➢ The City of Kalispell adopts an annual appropriated budget for its funds. A budgetary comparison statement has been provided for the general fund and the other major governmental funds to demonstrate compliance with this budget. ➢ The City of Kalispell maintains two different types of proprietary funds. Enterprise funds and internal service funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements. Water, sewer, and solid waste make up the City of Kalispell's enterprise funds. ➢ The City of Kalispell uses two internal service funds to accumulate and allocate its information technology transactions and central garage transactions internally among its various functions. Under the old reporting model internal service funds were reported as proprietary funds because they recovered most of their cost through user fees from other funds. Under the new model these funds are eliminated through an allocation process and categorized as either a governmental or business -type activity. Because the City of Kalispell's internal service funds benefit governmental morse so than business -type functions, they have been included within the governmental activities in the government -wide financial statements. ➢ The proprietary fund financial statements present information of the same type as that provided in the government -wide financial statements but in more detail. The Water and Sewer funds are reported as major funds, while the Solid Waste fund is presented as a non -major enterprise fund. ➢ The City of Kalispell maintains one fund to account for resources held by the government for the benefit of outside parties. This fiduciary fund is not reflected in the government -wide financial statements because the resources are not available to support the City of Kalispell's own programs. The City of Kalispell must ensure that the assets reported in this fund are used for their intended purpose. The accounting method used for fiduciary funds is like that used for proprietary funds. Notes to the Financial Statements The information contained in the government -wide and fund financial statements is meant to be used in concurrence with the notes to the financial statements. The notes present further details of the data provided by these statements. Other Information GASB Statement 75 —Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions schedules, GASB Statement 68 — Accounting and Financial Reporting for Pensions schedules, 17 and the general and major special revenue funds budgetary comparison schedules is included in the section for required supplementary information on pages 121-123. ANALYZING THE CITY AS A WHOLE As mentioned prior, net position can be an important indicator of an entity's financial well-being. For the period ending June 30, 2025, the City of Kalispell's assets and deferred outflows or resources exceeded liabilities and deferred inflows or resources by $292,097,129. The largest portion of the City's net position ($210,077,154 or 72%) reflects its net investment in capital assets (e.g., land, buildings, machinery and equipment, infrastructures). The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City's 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. A summary of net position is shown in the following table: Governmental Business -type Activities Activities Change Change FY25 FY24 Inc(Dec)FY25 FY24 Inc(Dec) Current and Other Assets $ 48,715,013 $ 42,730,592 $ 5,984,421 $ 67,157,933 $ 56,244,582 $ 10,913,351 Capital Assets 103,821,711 104,458,090 $ (636,379) 151,223,951 140,831,243 10,392,708 Total Assets 152,536,724 147,188,682 5,348,042 218,381,884 197,075,825 21,306,059 Deferred Outflows of Resources 4,176,987 3,678,610 498,377 456,711 323,656 133,055 Long-term Liabilities Outstanding $ 21,115,859 $ 20,332,551 $ 783,308 $ 41,325,510 $ 37,513,353 $ 3,812,157 Other Liabilities 10,964,593 11,014,175 (49,582) 5,937,126 4,382,143 1,554,983 Total Liabilities 32,080,452 31,346,726 733,726 47,262,636 41,895,496 5,367,140 Deferred Inflow of Resources 1,850,009 2,257,996 (407,987) 2,262,080 2,354,398 (92,318) Net Position: Net Investment in Capital Assets 99,039,555 99,031,934 7,621 111,037,599 103,571,410 7,466,189 Restricted 30,751,220 26,431,014 4,320,206 13,339,614 12,626,778 712,836 Unrestricted (7,007,525) (8,200,378) 1,192,853 44,936,666 36,951,399 7,985,267 Total net position $ 122,783,250 $ 117,262,570 $ 5,520,680 $169,313,879 $153,149,587 $ 16,164,292 An additional portion of the City's total net position ($44,090,834 or 15.1%) represents resources that are subject to external restrictions on how they may be used. This total includes $30,751,220 related to governmental activities and $13,339,614 related to business type activities. The remaining balance of unrestricted net position ($37,929,141) may be used to meet the City's ongoing obligations to citizens and creditors. Beginning balances for fiscal year 2025 were restated for implementation of GASB Statement No. 101 and for correction of a prior -period classification error affecting deferred inflows reported in certain governmental funds. The deferred inflow correction affected governmental fund reporting and had no impact on the government -wide statements. Additional information regarding these restatements is presented in the notes to the financials statements. 18 Overall, the City's net position increased approximately 8% for fiscal year 2025 in comparison to fiscal year 2024 ($292 million compared to $270 million). The following sections discuss the changes in net position for governmental and business -type activities in more detail. Changes in Net Position Revenues Program revenues (by major source): Charges for services Operating grants and contributions Capital grants and contributions General revenues (by major source): Property taxes for general purposes Video poker approptionment Miscellaneous Interest/investment earnings State entitlement Gas Tax Unrealized gain (loss) on Investments Transfers - net Total Revenues Program expenses General government Public Safety Public Works Parks and recreation Community development Debt service - interest Miscellaneous Water Sewer Solid Waste Total expenses Excess (deficiency) before special items and transfers Extraordinary item - Contribution to other GOdt Increase (decrease) in net position Net Position - beginning Restatement Net position - beginning restated Net Position - ending Governmental Business -type Activities Activities Change Change FY25 FY24 Inc (Dec) FY25 FY24 Inc (Dec) 5,962,205 $ 8,466,353 $ (2,504,148) $ 23, 703, 828 $ 20, 084, 023 $ 3,619,805 5,181, 512 7,455,386 (2,273,874) 30,179 47,077 (16, 898) 2,907,263 13,628,990 (10,721,727) 3,588,263 6,837,591 (3,249,328) 23, 850, 459 14, 338, 867 9,511,592 56,150 56,826 (676) 671,057 368,915 302,142 - - - 1,427,742 1,357,287 70,455 2,124,960 1,952,712 172,248 3,812,177 3,631,373 180,804 - - - 973,563 1,032,934 (59,371) - - - 292, 370 149,231 143,139 530,600 270,830 259,770 (1,259,135) (4,045,439) 2,786,304 1,259,135 4,045,439 (2,786,304) 43, 875, 363 46, 440, 723 (2,565,360) 31, 236, 965 33, 237, 672 (2,000,707) 5,086,436 4,685,456 400,980 18,186,142 15, 354, 211 2,831,931 7,669,533 7,768,321 (98, 788) 3,647,889 3,740,127 (92, 238) 1,819,589 1,239,273 580,316 219,604 249,989 (30, 385) 474,321 454,180 20,141 4,933,230 3,922,215 1,011,015 8,303,187 7,826,279 476,908 1,517,473 1,474,770 42,703 37,103, 514 33, 491, 557 3,611,957 14, 753, 890 13, 223, 264 1,530,626 6,771,849 13,523,434 (6,751,585) 16,483,075 20,014,408 (3,531,333) 6,771,849 13,523,434 (6,751,585) 16,483,075 20,014,408 (3,531,333) 117, 262, 569 103, 739,135 13, 523, 434 153,155, 516 133,135,179 20, 020, 337 (1,251,168) - (1,251,168) (324,713) - (324,713) 116, 011, 401 103, 739,135 12, 272, 266 152, 830, 804 - 19, 695, 625 $ 122, 783, 250 $ 117, 262, 569 $ 5,520,681 $ 169, 313, 879 $ 153,149, 587 $ 16,164, 292 Governmental Activities. Governmental activities in fiscal year 2025 increased the City's net position by $6,771,849, compared to an increase of $13,523,434 in the prior year. Overall, revenues of the governmental activities decreased $2,565,360. Expenses increased by $3,611,957. The key elements of the overall change in net position were as follows: ➢ Total program revenues decreased $15,499,749, while general revenues increased $12,934,389. ➢ General revenues increased by approximately $12.9 million, driven primarily by a $9.5 million increase in property tax collections resulting from growth in taxable value and implementation of the Emergency Responder Levy. ➢ Interest and investment earnings increased by $2.1 million compared to the prior year, reflecting higher interest rates and higher average investment balances during fiscal year 2025. This increase also reflects improved classification of investment activity in the financial statements. iK ➢ Capital Grants and Contributions (program revenues) were $10,721,727 lower than fiscal year 2024, due to fewer donated street assets and the completion of several major infrastructure projects recognized in the prior year. ➢ Operating Grants and Contributions (program revenues) decreased by $2,273,874, primarily due to the conclusion of ARPA-funded projects that had provided significant revenue support in FY24. ➢ Public Safety's program expenses increased about 18% ($2,831,931) compared to the prior year. This increase reflects continued investment in public safety equipment and apparatus, higher vehicle replacement costs, and increased personnel expenses. The increase also corresponds with the Emergency Responder Levy, which provided additional dedicated funding for public safety staffing, equipment, and operational needs. ➢ Community Development program expenses increased approximately 46.8% ($580,316) compared to the prior year. The increase is primarily related to expanded grant activity and housing and neighborhood infrastructure improvements, including the Morning Star and Green Acres water and sewer upgrade projects. These initiatives were funded through multiple state and federal grant programs, such as the Community Block Grant (CDBG) and Department of Natural Resources and Conservation (DNRC) programs, passed through the City to support low- income housing areas. ➢ General Government program expenses increased approximately 8% ($367,502) compared to the prior year. The increase is primarily due to higher personnel costs and administrative support expenses, including wage adjustments, technology upgrades, and increased costs for professional and contractual services supporting citywide operations. The table and charts below help illustrate the information presented above. The table and bar chart present the cost and net cost (total cost less revenues generated by the activity) of each of the City's largest governmental programs; General Government (administration), Public Safety (police and fire), Public Works (streets, light maintenance and signs and signals), Culture and Recreation (parks, urban forestry, pool, etc.), and Community Development. Net cost shows the financial burden placed on City taxpayers by each of these functions. The pie chart illustrates the different revenue sources for the City's governmental activities and how much each source contributes. Expenses and Program Revenues -Governmental Activities for fiscal year2025 S 20,000,000 515,000,000 S 10,000,000 55,000,000 S0 gen gov't pub safety pub v,rorks parksjrec comm dev expenses ■ prog rev K Revenue by source - Governmental Activities Fiscal Year 2024 ■ Charges for services ■ Operating grants/contributions ® Capital grants/contributions ■ Property taxes ■ State entitlement ■ Other Business -type activities. Business -type activities increased the City of Kalispell's net position by $16,483,075. The factors leading to this increase were: ➢ Overall, revenues of the City's business -type activities decreased $2,000,707 from the prior fiscal year. This decrease reflects a reduction in capital grants and contributions of $3,249,328, partially offset by an increase in charges for services of $3,619,805 resulting primarily from water and sewer rate adjustments implemented during the year. In FY25, the City recognized $3,588,263 in capital grants and contributions, most of which were developer -contributed infrastructure in the water and sewer systems. ➢ Program expenses increased $1,530,626 (12%) from the prior fiscal year. The increase was primarily attributed to higher personnel costs resulting from market and cost of living salary adjustments. In addition, operating costs rose in response to greater demand for services associated with the City's continued population and development growth. The following charts help illustrate the information presented above related to business -type activities net position. Expenses and Program Revenues -Business Type Activities Fiscal Year 2025 $16,000,000 $14,000,0DO $12,000,000 $10,000,000 $8, 000, 000 $ 6, 000, 000 $ 4, 000, 000 $2,000,(Do 0 - - $0 water sewer solid waste M expenses ■ prog rev Q Revenue by Source -Bus iness-Type Activities Fiscal Year 2025 0% 82 ANALYZING THE CITY'S INDIVIDUAL FUNDS Governmental Funds ■ Charges for services ■ Operating grants/contributions m Capital grants/contributions ■ Investment/other Earnings The focus of the City of Kalispell's governmental funds is to provide information on near -term inflows, outflows, and balances of spendable resources (fund balance). Spendable fund balance (restricted, committed, assigned, and unassigned) is a useful tool when assessing the net resources, a government has available to spend at the end of a fiscal period. At the end of fiscal year 2025, the City of Kalispell's governmental funds reported combined ending fund balances of $35,460,379, an increase of $6,520,848 in comparison with the prior fiscal year. Approximately 8% of this amount ($3,113,612) constitutes unassigned fund balance, which is available for spending at the City's discretion. The remainder of the fund balance is either nonspendable, restricted, or assigned to indicate that it is 1) not in spendable form ($0), 2) restricted for particular purposes ($30,751,220), or 3) assigned for particular purposes ($1,595,547). MAJOR GOVERNMENTAL FUNDS The General Fund is the chief operating fund of the City of Kalispell. At the end of fiscal year 2025 unassigned fund balance of the general fund was $3,114,929, while total fund balance was $4,710,476. The fund balance increased by $100,914 during fiscal year 2025. As a measure of the general fund's liquidity, it may be useful to compare both unassigned fund balance and total fund balance to total general fund expenditures. Unassigned fund balance represents approximately 20% of total general fund expenditures, while total fund balance represents approximately 31% of that same amount. The Street Maintenance fund is a special revenue fund established to account for the maintenance, construction, equipment, and other costs incurred in the maintenance of the City's streets. Assessments on properties within the City of Kalispell boundaries remain the primary source of this fund's revenue. On June 30, 2025, the fund balance of this fund was $5,060,133, an increase of $391,797 from the prior fiscal year. The Emergency Responder Levy Fund was established in fiscal year 2024 and became a major governmental fund in fiscal year 2025. The fund accounts for property tax revenue approved by voters in 2023 to provide dedicated support for police, fire, and emergency medical services. Fiscal year 2025 represented the first full year of collections, during which the fund provided stable, recurring revenue to support personnel, equipment, and operational needs within the City's public safety departments. At June 30, 2025, the fund reported a restricted fund balance of $1,759,350, reflecting revenues exceeding expenditures as the City continues to align long-term service levels with available levy resources. Additional information regarding fund balance classifications is presented in the accompanying footnote disclosures. Proprietary Funds The City of Kalispell's proprietary funds financial statements provide the same type of information found in the government -wide financial statements, but in greater detail. Unrestricted net position and the total growth in net position of the proprietary funds by fund are presented below. Beginning net position amounts reflect restatements recorded for the implementation of GASB Statement 101, as discussed in the notes to the financial statements. Proprietary Fund Net Position % Of Unrestricted Unrestricted Change in % Change in Net Position Net Position Net Position Net Position Water - major fund $ 17,417,325 39% $ 7,272,235 44% Sewer - major fund $ 26,446,338 59% $ 8,854,287 54% Other - solid waste $ 1,073,003 2% $ 356,553 2% Total $ 44,936,666 100% $ 16,483,075 100% Note: Beginning net position for proprietary funds was restated for the implementation of GASB Statement No. 101, resulting in an increase of $324,713. The restatement affected beginning net position only and did not impact current -year changes in net position. Additional information is provided in the notes to the financial statements. For the discussion regarding major changes in net position of the proprietary funds see the explanation above in the business -type activities of statement of activities. GENERAL FUND BUDGETARY HIGHLIGHTS The City of Kalispell's general fund expenditures budget for fiscal year 2025 was $15,733,210. Actual expenditures for the year were $14,606,955, a favorable variance of $1,121,255, primarily due to personnel vacancies and departmental operating savings. Actual revenues of the general fund were $14,231,516, $423,202 more than the budgeted amount of $13,808,314. The positive variance was largely the result of higher -than -anticipated property tax collections, business license revenues, and investment earnings. 23 CAPITAL ASSETS AND DEBT ADMINISTRATION Capital Assets At the end of 2025, the City of Kalispell has $255,184,841, net of depreciation invested in a broad range of capital assets, including police and fire equipment, streets, buildings, land, park facilities, garbage collection equipment, and water and sewer lines. CITY OF KALISPELL'S CAPITAL ASSETS (NET OF DEPRECIATION/AMORIZATION)- Land Governmental activities 2025 $ 3,743,166 2024 $ 3,743,166 Business -type activities 2025 $ 354,021 2024 $ 354,021 Total 2025 $ 4,097,187 2024 $ 4,097,187 Buildings 3,952,269 4,413,468 21,657 23,999 3,973,926 4,437,467 Improvements (not buildings) 12,277,765 12,521,015 12,277,765 12,521,015 Machinery and equipment 4,553,526 3,997,358 1,304,192 1,220,923 5,857,718 5,218,281 Information Technology 262,038 291,425 262,038 291,425 Central Garage 74,558 87,245 74,558 87,245 Infrastructure 78,896,096 79,158,056 78,896,096 79,158,056 Construction in Progress 62,296 246,360 25,546,965 28,692,040 25,609,261 28,938,400 Source of Supply 4,120,763 4,298,925 4,120,763 4,298,925 Pumping Plant 5,240,739 1,625,619 5,240,739 1,625,619 Treatment Plant 15,784,114 14,985,822 15,784,114 14,985,822 Transmission and Distribution 80,023,326 71,316,687 80,023,326 71,316,687 General Plant 832,265 889,254 832,265 889,254 Storm Sewer system 17,995,910 17,423,954 17,995,910 17,423,954 Right to Use - lease $ 41,309 $ 16,866 97,870 102,328 Right to Use - Subscription $ 15,996 10,010 Total $ 103,863,019 $104,490,951 $ 151,321,822 $ 140,943,582 $ 255,184,841 $ 245,434,533 assets of the City's internal service funds included in governmental activities Major Governmental funds capital asset events during the fiscal year 2025 included the following: ➢ Vehicles and other equipment with a cost basis of $1,482,054 were added. This included several new police vehicles, fire department apparatus and SCBA units, and a 2025 ambulance. Additional purchases included street, parks, and public works vehicles and equipment, such as a front-end loader, sander/deicer combo, plows, and trailers. ➢ Building improvements totaled $125,121, including a City Hall roof repair and Fire Station door replacement. ➢ Infrastructure improvements totaled $625,290, consisting of airport lighting upgrades, Fire Station 61 boiler replacement, alley paving, pool improvements, and sidewalk replacements. ➢ Disposed assets during the year totaled $35,958, primarily fully depreciated vehicles sold or replaced within the Street and Community Development departments. Major Business -type funds capital asset events during the fiscal year 2025 included the following: ➢ The City invested in continued water system upgrades totaling $5,619,615, which included completion of the North Main Well ($3.69 million), Westview Well Rehabilitation ($109,449), and Water Meter System Upgrade ($484,286). Developer -contributed assets totaled $1,112,179, consisting of new mains, wells, and related infrastructure installed and conveyed to the City. 24 ➢ The Sewer Fund Capitalized $11,806,686 in new infrastructure and equipment, including major projects such as the Grandview Lift Station ($6.46 million), Lift Station #9 ($1.37 million), and WWTP Influent Pipe & Diversion Structure ($1.75 million). Developer -contributed sewer assets totaled $1,430,197 during the year. ➢ The Storm Sewer Fund recorded $1,102,753 in new stormwater infrastructure and equipment additions including the Meridian Drainage Basin, stormwater mains, and treatment structures, with $674,604 of these assets contributed by developers. ➢ The Solid Waste Department added $285,597 in vehicles and equipment, including a 2025 Peterbilt 320, a Chevrolet Silverado, and a Ford F-150. Additional information on capital assets can be found in the notes of the basic financial statements (Note D. Capital Assets). Debt At the end of fiscal year 2025, the City of Kalispell had a total long-term debt outstanding of $44,968,506. Of this amount $3,555,000 represents bonds secured solely by specific revenue sources (i.e., revenue bonds). The remainder consists primarily of $40,218,280 in State Revolving Fund loans outstanding for water and sewer infrastructure improvements. In addition, the City had $359,388 in special assessment debt for which it is secondarily liable in the event of property owner default, and $835,838 in contract loans, which include equipment and vehicle purchases and Intercap financing for smaller capital acquisitions. CITY OF KALISPELL'S OUTSTANDING DEBT Governmental Business -type Total activities activities 2025 2024 2025 2024 2025 2024 Revenue/Urban Renewal bonds 3,555,000 3,775,000 $ - $ - $ 3,555,000 3,775,000 SRF loans 407,135 435,326 39,811,145 36,802,655 40,218,280 37,237,981 Assessments 359,388 580,433 - - 359,388 580,433 Contract debt/loans 460,633 635,396 375,205 457,178 835,838 1,092,574 Total $ 4,782,156 $ 5,426,155 $ 40,186, 350 $ 37, 259, 833 $ 44, 968, 506 $ 42, 685, 988 Other long-term obligations of the City include compensated absences ($2,576,891), other post - employment benefits (OPEB) liability ($2,624,394), net pension liability ($12,998,205), and lease and subscription liabilities ($183,945). More detailed information about the City's long-term liabilities is presented in the notes to the financial statements (Note E. Long -Term Debt). ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES The City's elected and appointed officials considered many factors when adopting the fiscal year 2025 budget and setting tax rates and fees for its business -type activities. Some of these factors include capital improvements identified in the City's Capital Improvement Program, inflation and interest rates, labor contracts, the local economy, national and global evens, and citizens' ability to pay. Inflation, in particular, has a significant impact on the cost of City projects. According to the Bureau of Labor Statistics, the Consumer Price Index for All Urban Consumers (CPI-U) increased 2.7 percent for the twelve months ended June 2025. W BASIC FINANCIAL STATEMENTS `V GOVERNMENT -WIDE FINANCIAL STATEMENTS 27 City of Kalispell, Montana Statement of Net Position June 30, 2025 Primary Government Component Units Governmental Business -type Downtown Activities Activities Total BID Tourism BID ASSETS Current assets: Cash and investments S 38,892,731 $ 48,196,546 $ 87,089,277 $ 38,754 $ 185,237 Taxes and assessments receivable, net 2,050,826 153,228 2,204,054 8,488 Accounts receivable 361,423 982,046 1,343,469 305,896 Notes, loans, and contracts receivable 2,134,922 - 2,134,922 Due from other governments 1,410,894 2,193,638 3,604,532 5,497 Inventories - 70,263 70,263 Due from Other 25,336 2,309 27,645 Contracts Receivable 70,185 93,898 164,083 Lease/SBITA Receivable 49,642 49,642 Total current assets 44,946,317 51,741,570 96,687,887 52,739 491,133 Noncurrent assets: Restricted cash and investments 3,727,387 13,244,923 16,972,310 Capital assets- land 3,743,166 327,471 4,070,637 Capital assets - construction in progress 62,296 25,128,257 25,190,553 40,290 Capital assets - net of depreciation 100,016,249 125,768,223 225,784,472 Lease/SBITA Receivable - 2,073,570 2,073,570 Lease/SBITA Right of use asset, net 41,309 97,870 139,179 Total noncurrent assets 107,590,407 166,640,314 274,230,721 40,290 Total Assets 152,536,724 218,381,884 370,918,608 52,739 531,423 DEFERRED OUTFLOWS OF RESOURCES Pensions 2,998,139 388,100 3,386,239 OPEB 1,178,848 68,611 1,247,459 Total deferred outflows of resources 4,176,987 456,711 4,633,698 LIABILITIES Current liabilities: Accounts payable 721,069 2,043,059 2,764,128 2,810 4,685 Accrued payroll 672,472 100,283 772,755 Revenues collected in advance 48,473 - 48,473 Capital debt 708,114 2,625,872 3,333,986 Compensated absences payable 2,257,840 308,126 2,565,966 Lease/SBITA Purchase 41,309 97,870 139,179 Due to Contractor - Retainage 21,250 761,916 783,166 Due to P/R Benefit Providers 795,071 - 795,071 Deposits payable 5,698,995 5,698,995 Total current liabilities 10,964,593 5,937,126 16,901,719 2,810 4,685 Noncurrent liabilities: Deposits payable 250 923,120 923,370 Capital debt 4,074,042 37,560,480 41,634,522 Compensated absences payable 1,288,290 496,116 1,784,406 Total OPEB liability 3,104,163 180,451 3,284,614 Net pension liability 12,649,114 2,165,343 14,814,457 Total noncurrent liabilities 21,115,859 41,325,510 62,441,369 Total Liabilities 32,080,452 47,262,636 79,3 4 33,088 2,810 4,685.00 DEFERRED INFLOWS OF RESOURCES Property tax/special assessment revenue - - - 8,488 Pensions 291,359 48,152 339,511 OPEB 1,558,650 90,715 1,649,365 Leases 2,123,213 2,123,213 Total deferred inflows of resources 1,850,009 2,262,080 4,112,089 8,488 NET POSITION Net investment in capital assets 99,039,555 111,037,599 210,077,154 Restricted for: General government 15,785 15,785 Public safety 8,966,010 8,966,010 Public works 9,805,650 9,805,650 Culture R recreation 3,244,935 3,244,935 Housing R community development 7,426,347 7,426,347 Debt service 1,292,493 1,962,509 3,255,002 Replacement and depreciation - 936,113 936,113 Capital projects - 10,020,992 10,020,992 Other purposes - 420,000 420,000 Unrestricted (7,007,525) 44,936,666 37,929,141 41,441 526,738 Total net position $ 122,783,250 $ 169,313,879 $ 292,097,129 $ 41,441 $ 526,738 The notes to the financial statements are an integral part of this statement. 28 Vcc� cc O N m N M M Omi M (NO N m N 00 o (n0 N N N � N F» r « N N (NO V �fi M 7 7 V N N N M M (NO (NO � m N N N cc N N F» F» (O_ « N V O N O O m O N N N O N N O M N V V O N V N Oi N f") N m m N o M N N M N f� r V N N N N I- V N N O N N N N N H3 V N N N O O M N M . O m lc O (O O O O o: N f� N N L O N N N M N O M N N N N V O M N N N m N V N M M N (O (O N N N � m f") N f") v i (V o M N3 O N m o M N V M N N N N f� N N N O r f") M f") � (O (V �2 M N O N (MO N N - O N M (O ? N N N N m O N m N r N 0 `m E N3 N3 N3 O- N Q'S - N N N N Y O O O N N E N N N (O_ N N N N N « p NO N « uN O O O mo � N ry .N O O- N m m m O_ 6> C C C m N« oPj u u u N N ry« Nr� N N a N _m m N O N O .O E r r N N a H O m N 0 0 zD,zz (n0 V m N CM') fN') ONi OM N M N N O m N N M NO O O � N N F» F» e» N v N � N V r N M O A N N O N N � N M Yi N3 0) N GOVERNMENTAL FUND FINANCIAL STATEMENTS MAJOR GOVERNMENTAL FUNDS General Fund — The City's primary operating fund and accounts for the financial operations of the City not accounted for in any other fund. Principal sources of revenue are property taxes, state and local shared revenue, charges for services, and fines and forfeitures. Principal expenditures are for public safety. Emergency Responder Levy - Accounts for voter -approved levy revenues dedicated to support police, fire, and emergency medical services operations. Street Maintenance — Accounts for special assessment revenues levied, received, and expended to keep streets clean, safe, and driveable. 30 >. C N LL d LL R Q a U coNV 00) 00) 0c0 M �I MIM O O coN V N M (MI I-Ir- O 00 N N M M 00 6% (O O (M N V - r N N N In N(M Ci0O I00 00 N (O V d) ' d) 00 ' lai M M M N M M co r- (O 000 r r N O - N V co co 00 N N N 6% co LO 00 00 M i i i d) LOI ' I' V In N 11 I IC4 co(M ' ' 031 V r CO LO co co 00 d) O r 'It(O N N 0) M (O (O O Cl) N M O O 11 'It DN 0) CO N r 0) t In N 0) r- 00 01 V N O 0) coN N lf1 I- M m 00 In 00 In N In (O N ItN 1- M O O N 00 00 coMcoON1 r co 'It DN 0) CO N r 0) t In N 0) r- 00 01 V N O 0) coN N lf1 I- M m 00 In 00 In N In (O N ItN 1- M O O N 00 00 coMcoON1 r co co 0000 01 01 V o0 ' ' (M ' M In (O N V 000 M ' ' t ' ' IOC\l CIO M 0 Ir- 10 M ' ' ' r- MIO ' NO In N In I N co 00) V OO V 00 I V M UM N N V O N In r N N d) V In 00 'It 00 M - M 0000 M M r ' r 0 0 r ' r 00 00 M M (1) 0) W U 0 0 N O ` C � W N > N N N LL E N > a a O N 0 R U 0) 5 O R d O O 0 - � 'U C •- N >. O E m T C >. co: U 0 R d- R U o U a J 2 .O R R R a m ` O U N 0) O C a)O H W 0) V) (4 LL 0 0) J U Q Q ~ Z 0~ D d Z Q~ R C R N C � O ^2 N LL G M R N N � y u N Cl) - E w O m 0 O u U >. C N LL d LL R Q In O O to r Cl) I- N 00 N 10) 1 O ((00 00) M V r N N (O (M In (O N0VN O a-) N O NM MLO OV0) 00 V 00 0) Cl) I- Cl) In M ER In O r In r Cl)I�T O 00 (O � Cl) It �N I- (O to d) (M N ' ' ' MIn (O to V (O N O 0 r N V N 1 I- V Cl) I- - Cl) N ER 6% N M Cl) C (00 (00 N O O C LO In R N N a O LO 0) LO 6% O LO 0) LO I- N 00 0) (0 In V V N I- r- In N d) N 00 co M V O (0 N N co V 6% 00 00 O 00 LO ER N M d) N 00 N ER ER co V N N LO (M d) Cl) O 00 00 r O N 6% a s= a s= R N O U 0 O N 0) E O CL 0 N 0 0) O 0) a C - >, a N w E E E U E � E N a R Z .. Q O 0 T N U Y O O U U 0) T N N O 0) O p O N O a a� 0 0 0 '� a m R m LL�c7aaUx�Qc7a� �� City of Kalispell, Montana Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position June 30, 2025 Total fund balances - governmental funds 35,460,379 Capital assets used in governmental activities are not financial resources and, therefore, are not reported in the funds. Land 3,743,166 Construction in progress 62,296 Depreciable capital assets (net) 99,679,654 103,485,116 Taxes and Assessments receivable that will be collected but are not available soon enough to pay for current -period expenditures are deferred inflows of resources in the funds. 2,050,825 Notes, loans, contracts receivable that will be collected but are not available soon enough to pay for current -period expenditures are deferred inflows of resources in the funds. 2,134,922 Internal service funds are used by management to to account for any activity that provide goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost -reimbursement basis. The percentage of assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the internal service funds attributable to governmental activities are reported on the Statement of Net Position. 935,236 Long-term liabilities (current and non -current portions) are not due and payable in the current period and therefore are not reported as liabilities in the funds. Capital debt (4,782,156) Compensated absences payable (3,423,198) OPEB liability (3,104,163) Pension liability (12,649,114) (23,958,631) Employer contributions to a plan during the reporting period not recognized as of the plan's measurement date and the proportionate share of collective plan expense that is applicable to future periods are reported as deferred outflows of resouces on the Statement of Net Position. Pensions 2,998,139 OPEB 1,178,848 The proportionate share of reductions to collective plan expense that are applicable to future periods is reported as deferred inflows of resouces on the Statement of Net Position. Pensions (291,359) OPEB (1,558,650) Ambulance receivables that will be collected but are not available soon enough to pay for current -period expenditures are deferred inflows of resources in the funds. 348,425 Total net position - governmental activities 122,783,250 The notes to the financial statements are an integral part of this statement. 33 y I L I LL y R N W N i O E N C } O `y Cl) O ur- I O y = y IL ta7 O C LL � R R m R N o0 (M N M 01 00 d) (O M (O N o0 N o0 (M a/ N M_ V I- 00 'ItO E I� (O M 'It (0 (O r C y o0 M o0 d) V co N N N co r- V 0) j N co O LL R O F ER y Cl) 0) V V CO CO -O CO V O 0) O CO N C In (O (O V r- V V 0 7 I- O V In N N (O R LL N 00 d) O M In E _ N C (O (O o0 C R 00 V M (O O Z E r ` F > O 0 ER >. Q N � j LL LL ER Lo 00 a/ u 0) In N (O C ' ' Cl) ' 0) N (M V CR (. N 2N N (O V co)) o0 C (M Cl) R ER > V (h O i i i i i i V C u J Cl) C M aI M M C V V E Q W y a/ LL' ER C 7 r- (O r� N V (3 N LL V N O I- V In V I- N V V N u ER In M o0 N r M M M In I 01 N� V I(D 00 (O N I O: d) r V M M N 00 M (O w O 01 N Io (O It I- It(M I� V N M (O o0 d) d) V (O o0 N N o0 N O In M LO (O r N w M r N N NI V r MIN ON V NP: VInOo0 o0 V O N O In r (Oo0 N NM� V N N LO (fl (0 CO Lr (fl V N V M O O 0) I- V V I- 00 N Cl) C V M M M M In m N E;00 I- r 00 r It Cl) h ' r- V (O (M ' O r- N N N In N N V r- (O O (O V N � N d) 0) (O N V N 0) V Cl) 00 N C Cl) I) (O O o0 N co N N O Cl) In (O (O O (O M (M d) 00 00 0) (O r N 00 N r (O 0: Cl) N O (O V (O V N d) M N n (f. 6% V 0 r N V 0) 0) Cl) M M M i i i d) (O r ' ' r M M r 0) O d) 00 r 00 ' 00 O 031 M V M M (cO (cO co N Cl) V V In 6% I� 0) (O O 00 O O O V It 0) In 00 O N N ' N ' ' ' ' ' ' (3 00 C In ' N M ' ' M N 0M0 M O (00 `-' N N N N N N Q - 6% dn) N m O M � n : (O w (O O ONO(O N co In N (O ' (NO rV N V((OoMIN01 V I- M 0) InNV n O M 'It M M (O N N 00 (O O0) 0) (O 0) 00 I0) O I- Cl) In r OO OMN I- It I ,It O M NdM OM (OO (O r co I 'I, F, F, a) a 21 > W a) R O co � a a)a Q U j a N a O y E m w 0 > U w a a 2 E R w 0 7 0cm cm w E .� w U F E Z � .w y 'In w o E w R y R M. o 0 O° Z aa) F °a m �` m ° x y 0 y m 0 w 0 .. w 3 m .Z Z o LL yo o cLi m E m m z o R— E Z .� a) a) m Q w w W y e o1 °� y w s= m W 2 -0-0 w= N y y m x x W y y a) m O a R a a W m° r N>° H X (7 a s U 2 m H w F m m o z ay aH Uii wU U OHH a LLMLLLL City of Kalispell, Montana Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Fiscal Year Ended June 30,2025 Net change in fund balances - total governmental funds Governmental funds report capital outlays as expenditures. However, in the Statement of Activities, the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. Capital assets purchased - capital outlay Depreciation expense In the Statement of Activities, the acquisition value of capital asset donations is recognized as revenue. Governmental funds do not recognize these revenues: Acquisition value of donated capital assets In the Statement of Activities, the loss or gain on the sale or disposal of capital assets is recognized. Governmental funds recognize the proceeds from the sale of these assets: Revenues reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in governmental funds: Tax and assessment revenue Governmental funds that record notes and loans receivable may report loan disbursements as expenditures and/or principal loan re -payments as revenue in the Statement of Revenues, Expenditures, and Changes in Fund Balances. In the Statement of Activities, these transactions are not reported as expenses or revenues. Write-offs of receivable balances not recognized as expenditures in in the Statement of Revenues, Expenditures, and Changes in Fund Balances. but are reported as an expense in the Statement of Activities The change in compensated absences payable is reported as an increase or decrease to expense on the Statement of Activities, but is not recognized as an increase or decrease to expenditures on the Statement of Revenues, Expenditures and Changes in Fund Balance: Change in compensated absence liability Repayment of debt principal during the reporting period consumes current financial resources and are recognized as expenditures in the governmental funds, but the repayment of long-term debt principle balances reduces the liability in the Statement of Net Position: Long-term debt principal payments Long term debt incurred during the reporting period provide current financial resources to governmental funds and are recognized as an inflow, an other financing source, in the Statement of Revenues, Expenditures, and Changes in Fund Balances. Long term debt incurred is recognized as an increase in liabilities in the Statement of Net Position. Proceeds from general long-term debt Internal service funds are used by management to to account for any activity that provides goods or services to other funds, departments, or agencies of the primary government and its component units, or to other governments, on a cost -reimbursement basis.. The percentage of net revenue of the internal service funds attributable to governmental activities is reported on the Government -Wide Statement of Activities. Revenues and expenditures attributable to governmental funds are not reported on the Statement of Revenues, Expenditures and Changes in Fund Balance. The change in other post employment benefits is reported as an expense on the Statement of Activities, but is not reported as an expenditure on the Statement of Revenues, Expenditures and Changes in Fund Balance: Employer contributions made to pension plans during the reporting period consume current financial resources, thus are reported as expenditures in the Statement of Revenues, Expenditures, and Changes in Fund Balances. However, only the amount of pension expense recognized by the plan during the measurement period is reported as expenses in the Statement of Activities. The difference between on -behalf contributions to fund pension liabilities recognized as revenue during the reporting period in the Statement of Revenues, Expenditures, and Changes in Fund Balances and on -behalf contributions recognized during the measurement period increases (decreases) operating grants and contributions reported on the Statement of Activities. Revenues from ambulance services reported in the Statement of Activities that do not provide current financial resources are not reported as revenues in governmental funds: Capital contributions of infrastructure assets from homeowners are not current financial resources and therefore are not reported in governmental funds: Change in net position - Statement of Activities The notes to the financial statements are an integral part of this statement. 6,520,848 2,022,963 (5,549,969) (3,527,006) 2,907,263 174,747 33,877 (262,389) 1,028,683 (34,574) (46,711) (316,919) (1,783,255) 1,980,231 71,616 25,438 6,771,849 W PROPRIETARY FUND FINANCIAL STATEMENTS MAJOR ENTERPRISE FUNDS Water Fund — Accounts for the City's water utility operations, including water impact fees. Sewer Fund — Accounts for the City's sewer and storm water utility operations, including sewer and storm impact fees. INTERNAL SERVICE FUNDS Information Technology Fund — used to account for the goods and services provided by the information technology department to other departments of the City on a cost - reimbursement basis. Central Garage Fund — used to account for the goods and services provided by the central garage to other departments of the City on a cost -reimbursement basis. M1. City of Kalispell, Montana Statement of Net Position Proprietary Funds June 30, 2025 Governmental Business -Type Activities Activities Major Enterprise Funds Total Nonmajor Total Enterprise Internal Service Water Sewer Enterprise Funds Funds Funds ASSETS Current assets Cash and cash equivalents $ 13,118,563 $ 18,714,876 $ 980,229 $ 32,813,668 $ 550,475 Investments 5,585,092 9,288,146 509,640 15,382,878 277,083 Taxes and assessments receivable, net - 79,953 73,275 153,228 - Accounts receivable 482,658 499,388 - 982,046 - Due from other governments 1,966,520 142,107 85,011 2,193,638 - Inventories 70,263 - - 70,263 - Due from Other 750 1,559 - 2,309 - Contracts Receivable 13,050 80,848 - 93,898 35,990 Lease/SBITA Receivable 49,642 49,642 Total current assets 21,286,538 28,806,877 1,648,155 51,741,570 863,548 Noncurrent assets Cash and cash equivalents 1,817,636 7,326,012 - 9,143,648 - Investments 415,920 3,685,355 - 4,101,275 - Capital assets - land 105,958 221,513 - 327,471 - Capital assets - construction in progress 24,411,806 716,451 - 25,128,257 - Capital assets - net of depreciation 44,519,844 79,922,530 1,325,849 125,768,223 336,595 Lease/SBITA Receivable 2,073,570 - - 2,073,570 - Lease/SBITA Right of use asset, net 97,870 97,870 41,309 Total noncurrent assets 73,344,734 91,969,731 1,325,849 166,640,314 377,904 Total assets 94,631,272 120,776,608 2,974,004 218,381,884 1,241,452 DEFERRED OUTFLOWS OF RESOURCES Pensions 124,754 183,522 79,824 388,100 - OPEB 28,692 39,919 68,611 Total deferred outflows of resources 153,446 223,441 79,824 45671 LIABILITIES Current liabilities Accounts payable 1,841,566 188,639 12,854 2,043,059 123,323 Accrued payroll 26,932 57,415 15,936 100,283 18,652 Capital debt 1,113,576 1,512,296 - 2,625,872 - Compensated absences payable 44,340 169,003 94,783 308,126 65,068 Lease/SBITA Purchase - 97,870 - 97,870 41,309 Due to Contractor - Retainage 730,463 31,453 761,916 Total current liabilities 3,756,877 2,056,676 123,573 5,937,126 248,352 Noncurrent liabilities Deposits payable 316,453 606,667 - 923,120 - Capital debt 21,655,241 15,530,034 375,205 37,560,480 - Compensated absences payable 180,169 259,818 56,129 496,116 57,864 Total OPEB liability 75,226 105,225 - 180,451 - Net pension liability 696,044 1,023,929 445,370 2,165,343 Total noncurrent liabilities 22,923,133 17,525,673 876,704 41,325,510 57,864 Total liabilities 26,680,010 19,582,349 1,000,277 47,262,636 306,216 DEFERRED INFLOWS OF RESOURCES Pensions 15,479 22,769 9,904 48,152 - OPEB 37,935 52,780 - 90,715 - Leases 2,123,213 2,123,213 Total deferred inflows of resources 2,176,627 75,549 9,904 2,262,080 NET POSITION Net investment in capital assets 46,268,791 63,818,164 950,644 111,037,599 336,595 Debt service 919,475 1,043,034 - 1,962,509 - Replacement and depreciation - 936,113 - 936,113 - Capital projects 1,322,490 8,698,502 - 10,020,992 Other purposes - 400,000 20,000 420,000 - Unrestricted 17,417,325 26,446,338 1,073,003 44,936,666 598,641 Total net position $ 65,928,081 $ 101,342,151 $ 2,043,647 $ 169,313,879 $ 935,236 The notes to the financial statements are an integral part of this statement. 37 City of Kalispell, Montana Statement of Revenues, Expenses, and Changes in Fund Net Position Proprietary Funds For Fiscal Year Ended June 30,2025 Governmental Business -Type Activities Activities Major Enterprise Funds Other Enterprise Water Sewer Funds Totals Internal Service Funds OPERATING REVENUES Charges for services $ 7,112,083 $ 11,276,198 $ 1,780,633 $ 20,168,914 $ 1,501,399 Miscellaneous revenues 591,415 726,349 63,586 1,381,350 4,045 On -behalf - pensions 9,701 14,271 6,207 30,179 - Lease Revenue 49,642 49,642 Total operating revenues 7,762,841 12,016,818 1,850,426 21,630,085 1,505,444 OPERATING EXPENSES Personal services 1,480,506 2,558,581 802,838 4,841,925 939,249 Supplies 122,980 370,758 165,956 659,694 485,691 Purchased services 634,206 1,502,706 66,100 2,203,012 670,778 Building materials 384,340 44,207 - 428,547 - Fixed charges 454,179 821,262 253,374 1,528,815 40,809 Depreciation 1,397,352 2,580,649 204,670 4,182,671 89,907 Total operating expenses 4,473,563 7,878,163 1,492,938 13,844,664 2,226,434 Operating income (loss) 3,289,278 4,138,655 357,488 7,785,421 (720,990) NON -OPERATING REVENUES (EXPENSES) Licenses/permits revenue - - - - 191,168 Intergovernmental revenue - - - - 450,000 Interest revenue 772,673 1,308,678 43,609 2,124,960 25,719 Debt service interest expense (459,667) (425,024) (24,535) (909,226) (1,771) Unrealized Gain (Loss) on Investments 168,259 342,350 19,991 530,600 9,163 Impact Fees 565,127 1,538,795 2,103,922 Total non -operating revenues (expenses) 1,046,392 2,764,799 39,065 3,850,256 674,279 Income (loss) before contributions, transfers, special R extraordinary items 4,335,670 6,903,454 396,553 11,635,677 (46,711) Capital contributions 2,780,610 807,653 - 3,588,263 - Transfers in 155,955 1,143,180 - 1,299,135 - Transfers (out) (40,000) (40,000) Change in net position 7,272,235 8,854,287 356,553 16,483,076 (93,662) Net position - beginning 58,752,671 92,661,880 1,740,965 153,155,516 1,028,898 Restatements (96,825) (174,016) (53,871) (324,713) (46,951) Net position - beginning restated 58,655,846 92,487,864 1,687,094 152,830,803 981,947 Net position - ending $ 65,928,081 $ 101,342,151 $ 2,043,647 $ 169,313,879 $ 935,236 The notes to the financial statements are an integral part of this statement 38 City of Kalispell, Montana Statement of Cash Flows Proprietary Fund For Fiscal Year Ended June 30, 2025 Cash Flows from Operating Activities: Cash received from customers Cash received from miscellaneous sources Cash paid to suppliers of goods and services Cash paid to employees Cash received (paid) from deposits Net cash provided (used) by operating activities Cash Flows from Non -Capital and Related Financing Activities: Transfers to other funds Transfers from other funds Short-term loans to other funds Intergovernmental revenue received Cash received from Charter Franchise Fees Net cash provided (used) by non -capital and related financing activities Cash Flows from Capital and Related Financing Activities: Principal paid on capital debt Proceeds from capital debt Interest paid on capital debt Acquisition and construction of capital assets Capital Contributions received Cash Received from Contractors - Retainage Cash Received from Impact Fees Net cash provided (used) by non -capital and related financing activities Cash Flows from Investing Activities: Interest on investments Increase (Decrease) in fair value of investments Cash payments made for new notes, loans, contracts Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as of: June 30, 2024 June 30, 2025 Displayed on Statement of Net Position -Proprietary Funds as: Cash and cash equivalents Restricted cash and cash equivalents Total at end of year Reconciliation of operating income to net cash provided by operating activity: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in assessments receivable (Increase) decrease in accounts receivable (Increase) decrease in inventories Increase (decrease) in customer deposits Increase (decrease) in accounts payable Increase (decrease) in accrued payables Increase (decrease) in compensated absences payable Increase (decrease) in OPEB liability Increase (decrease) in net pension liability (Increase) decrease in deferred outflows -pension Increase (decrease) in deferred inflows -pension (Increase) decrease in deferred outflows-OPEB Increase (decrease) in deferred inflows-OPEB (Increase) decrease in contracts receivable (Increase) decrease in due from other Net cash provided (used) by operating activities Schedule of non -cash transactions Depreciation The notes to the financial statements are an integral part of this statement. Governmental Business -type Activities Activities Major Enterprise Funds Total Nonmajor Enterprise Total Enterprise Internal Service $ 7,089,499 $ 11,421,805 $ 1,747,784 $ 20,259,088 $ 1,501,399 591,415 726,349 63,586 1,381,350 14,887 89,063 (2,757,218) (484,489) (3,152,644) (1,121,024) (1,369,009) (2,434,223) (768,525) (4,571,757) (914,934) 115,846 233,333 349,179 6,516,814 7,190,046 558,356 14,265,216 (519,672) - - (40,000) (40,000) - 155,955 1,143,180 - 1,299,135 - - - - 2,395 - - - - 450,000 191,168 155,955 1,143,180 (40,000) 1,259,135 643,563 (1,113,576) (1,503,728) (81,973) (2,699,277) - 5,625,797 - - 5,625,797 - (459,667) (425,024) (24,535) (909,226) (1,771) (8,653,212) (3,768,798) (285,597) (12,707,607) (47,833) 2,103,705 408,615 (9,118) 2,503,202 - (84,567) (202,435) - (287,002) - 565,127 1,538,795 2,103,922 (2,016,393) (3,952,575) (401,223) (6,370,191) (49,604) 772,673 1,308,678 43,609 2,124,960 25,719 168,259 (2,903,120) 83,595 (2,651,266) 80,326 (207,402) (207,402) 733,530 (1,594,442) 127,204 (733,708) 106,045 5,389,906 2,786,209 244,337 8,420,452 180,332 9,546,293 23,254,679 735,892 33,536,864 370,143 $ 14,936,199 $ 26,040,888 $ 980,229 $ 41,957,316 $ 550,475 $ 13,118,563 $ 18,714,876 $ 980,229 $ 32,813,668 $ 550,475 1,817,636 7,326,012 9,143,648 $ 14,936,199 $ 26,040,888 $ 980,229 $ 41,957,316 $ 550,475 $ 3,192,453 $ 3,964,639 $ 303,617 $ 7,460,709 $ (767,941) 1,397,352 2,580,649 204,670 4,182,671 89,907 - (14,190) (33,110) (47,300) - (98,183) 8,945 261 (88,977) - 8,348 - - 8,348 - 115,846 233,333 - 349,179 - 1,676,420 (18,285) 941 1,659,076 76,254 3,698 10,982 2,836 17,516 3,863 86,490 210,216 46,616 343,322 67,403 (7,193) 37,110 - 29,917 - 191,450 97,963 60,264 349,677 - (51,487) (49,072) (23,907) (124,466) - (2,519) (10,257) (3,832) (16,608) - 4,154 (12,743) - (8,589) - (25,972) (96) - (26,068) - 25,202 150,852 - 176,054 10,842 755 755 $ 6,516,814 $ 7,190,046 $ 558,356 $ 14,265,216 $ (519,672) 1,397,352 2,580,649 204,670 4,182,671 89,907 39 FIDUCIARY FUND FINANCIAL STATEMENTS CUSTODIAL FUNDS Custodial Funds — used to account for assets held by the City as an agent for individuals, private organizations, other governments, and/or other funds. 40 City of Kalispell, Montana Statement of Fiduciary Net Position Fiduciary Funds June 30, 2025 Custodial Funds ASSETS Cash and cash equivalents $ 44,192 Total assets 44,192 NET POSITION Restricted for: Individuals, organizations, and other governments 44,192 Total net position $ 44,192 The notes to the financial statements are an integral part of this statement City of Kalispell, Montana Statement of Fiduciary Net Position Fiduciary Funds June 30, 2025 ADDITIONS Bed Tax Collection Kalispell Golf Association Total additions DEDUCTIONS Payment to outside entities Total deductions Change in net position Net position - beginning Net position -ending Custodial Funds $ 1,027,695 71,000 1,098,695 1,101,699 1,101,699 (3,004) 47,196 $ 44,192 The notes to the financial statements are an integral part of this statement. E,N NOTES TO THE FINANCIAL STATEMENTS 43 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Kalispell's accompanying financial statements have been prepared in conformity with generally accepted accounting principles (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB), the accepted standard -setting body for establishing governmental accounting and financial reporting principles. The accompanying financial statements present the financial position of the City and the various funds and fund types, the results of operations of the City and the various funds and fund types, and the cash flows of the proprietary funds. The financial statements are presented as of June 30, 2025, and for the year then ended. The more significant accounting policies of the City are described below. Recently Implemented Accounting Pronouncements GASB Statement No. 101, Compensated Absences. This Statement updates the recognition and measurement guidance for compensated absences by aligning the recognition and measurement guidance under a unified model and by amending certain previously required disclosures. Implementation of this standard resulted in a restatement of beginning net position as of July 1, 2024, as described in Note Q. A. Financial Reporting Entity In determining the financial reporting entity, the City complies with the provisions for GASB statement No. 14, The Financial Reporting Entity, and includes all component units of which the City appointed a voting majority of the units' board; the City is either able to impose its will on the unit or a financial benefit or burden relationship exists. Primary Government The City of Kalispell is a political subdivision of the State of Montana governed by an elected Mayor and Council duly elected by the registered voters of the City. The City utilizes the City Manager form of government. The City is considered a primary government because it is a general-purpose local government. Further, it meets the following criteria: (a) It has a separately elected governing body (b) It is legally separate and (c) It is fiscally independent from the State and other local governments. The accompanying financial statements present the primary government and entities for which the government is considered financially accountable (component units). These financial statements include all funds, agencies, boards, commissions, and authorities, which meet the criteria for inclusion in the City's financial report. These criteria include financial accountability, appointment of a majority of the secondary government and the financial benefit or burden derived by the primary government from a secondary government. 44 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Discretely Presented Component Units Discretely presented component units are separate legal entities that meet the component unit criteria described above but do not meet the criteria for blending. The City's discretely presented component units, the Downtown Business Improvement District and the Tourism Business Improvement District are legally separate organizations of the City, but the City is financially accountable. Neither the Business Improvement District nor the Tourism Business Improvement District issue financial statements separate from the City of Kalispell. The City reports the two component units in separate columns to emphasize that they are legally separate from the City and from each other. Downtown Business Improvement District On April 3, 2017, by resolution 5801, the City created the Downtown Business Improvement District (BID). The Mayor and City Council appoint the Board of Directors. The City is able to impose its will on the BID as it is authorized to levy assessments to support the activities of the BID and approves their annual budget. The purpose of said Business Improvement District is to promote the health, safety, prosperity, security, and general welfare of the inhabitants of the City of Kalispell and the proposed district and appears to be of special benefit to the property within the District. The District boundaries are roughly 3rd Avenue East to 3rd Avenue West between Center Street and 51h Street South. Publicly owned property and owner -occupied single-family dwellings are exempt from the assessments related to the District. Tourism Business Improvement District On May 3, 2010, by resolution 5425, the City created the Tourism Business Improvement District (TBID). The Mayor with the approval of the City Council, appointed seven owners of property within the district to act as the Board of Trustees of the District. The City is able to impose its will on the TBID as it is authorized to levy assessments to support the activities of the TBID and approves their annual budget. The purpose of said Tourism Business Improvement District is to promote the health, safety, prosperity, security, and general welfare of the inhabitants of the City of Kalispell and the proposed district and appears to be of special benefit to the property within the District. The District is made up of those properties within the corporate limits of the City of Kalispell with five or more rooms providing overnight stays for transient patrons at its business. B. Basis of Presentation, Measurement Focus, and Basis of Accounting Government -wide Financial Statements The government -wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these government -wide financial statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported 261 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 separately from certain legally separate component units for which the primary government is financially accountable. Eliminations have been made to minimize the double counting of business -type activities. 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. The City does not charge indirect expenses to programs or functions. The types of programs reported as program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) operating grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported as general revenues. Separate financial statements are provided for governmental funds, proprietary funds, and fiduciary funds, even though the latter are excluded from the government -wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Certain eliminations have been made as prescribed by GASB 34 regarding inter -fund activities, payables, and receivables. All internal balances in the Statement of Net Position have been eliminated except those representing balances between the governmental activities and business -type activities, which are presented as internal balances and eliminated in the total primary government column. In the Statement of Activities, internal service fund financial statements have been eliminated; however, interfund services provided and used are not eliminated in the process of consolidation. Interfund services provided and used are not eliminated in the process of consolidation. Measurement Focus and Basis of Accounting On the government -wide Statement of Net Position and the Statement of Activities, both governmental and business -type activities are presented using the economic resources measurement focus and the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred, regardless of the timing of the cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. The City generally applies restricted resources to expenses incurred before using unrestricted resources when both restricted and unrestricted net assets are available. The City has chosen not to accrue the interest payable of general long-term debt at year-end. This practice results in interest expense reported for governmental activities on the statement of activities to equal the interest expenditure on the statement of revenues, expenditures, and changes in fund balance. Although this is contrary to full accrual accounting, the City feels that it is immaterial in the presentation of its financial statements. e11 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Fund Financial Statements Basis of Presentation The financial records of the City are organized into funds. A fund is an independent fiscal and accounting entity with a self -balancing set of accounts. Fund accounting segregates funds according to their intended purpose and is used to aid management in demonstrating compliance with finance - related legal and contractual provisions. The minimum number of funds is maintained consistent with legal and managerial requirements. Funds are organized into three categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within governmental and proprietary categories. Each major fund is displayed in a separate column in the governmental or proprietary funds statements. All the remaining funds are aggregated and reported in a single column as non - major funds. A fund is considered major if it is the primary operating fund of the City (General Fund) or meets the following criteria: a) Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least 10 percent of the corresponding total for all funds of that category or type; and b) Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise funds are at least 5 percent of the corresponding total for all governmental and enterprise funds combined. Measurement focus and Basis of Accounting Governmental funds are used to account for the City's general government activities. Governmental fund types use the flow of current financial resources measurement focus and the modified accrual basis of accounting. Under the modified accrual basis of accounting, revenues are recognized when susceptible to accrual, (i.e., when they are "measurable and available"). "Measurable" means the amount of the transaction can be determined and "available" means collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues available if they are collected within 60 days after year-end (except for property taxes). Expenditures are recorded when the related fund liability is incurred except for un-matured interest on general long-term debt which is recognized when due, and certain compensated absences and claims and judgements which are recognized when the obligations are expected to be liquidated with expendable available financial resources. Real and personal property taxes, special assessments, charges for current services, and interest earnings are susceptible to accrual. Other receipts and taxes become measurable and available when cash is received by the City and are recognized as revenue at that time. The City recorded real and personal property taxes and assessments levied for the current year as revenue. Taxes and assessments receivable remaining unpaid at year-end and not expected to be collected soon enough thereafter to be available to pay obligations of the current year were recorded as deferred revenue, with a corresponding reduction in revenues, as required by generally accepted accounting principles. In addition, prior period delinquent taxes and assessments collected in the current period were recorded as revenue in the current period as required by generally accepted accounting principles. 47 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Entitlements and shared revenues are recorded at the time of receipt or earlier if the susceptible to accrual criteria are met. Expenditure driven grants are recognized as revenue when the qualifying expenditures have been incurred and all other grant requirements have been met. Major Governmental Funds The City reports the following major governmental funds: The General Fund is always a major fund. This is the City's primary operating fund, and it accounts for all financial resources of the City except those required to be accounted for in other funds. The Emergency Responder Levy Fund (special revenue) fund was established to account for the proceeds of a voter -approved property tax levy dedicated to the City's emergency response services, including Police and Fire operations. Expenditures of this fund are restricted to personnel, equipment, and other costs associated with maintaining emergency response services within the City. The Street Maintenance Fund (special revenue) fund was established to account for the repairs and other costs incurred in the maintenance of the City's streets. An assessment of the City of Kalispell's taxpayers is the main source of revenue for this fund. Proprietary funds are accounted for using the accrual basis of accounting. These funds account for operations that are primarily financed by user charges. The flow of economic resources focuses concerns determining costs as a means of maintaining the capital investment and management control. Revenues are recognized when earned and expenses are recognized when incurred. Allocations of costs, such as depreciation, are recorded in proprietary funds. Proprietary funds distinguish operating revenues and expenses from non -operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connections with a proprietary fund's principal ongoing operations. The principal operating revenues for enterprise funds are charges to customers for sales and services. Operating expenses for enterprise funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as non -operating revenues and expenses. When both restricted and unrestricted resources are available for use, it is the City's policy to use restricted resources first, then unrestricted resources as they are needed. Major Proprietary Funds The City reports the following major proprietary funds: The Water Fund accounts for the activities of the City's water distribution operations. The Sewer Fund accounts for the activities of the City's sewer collection and treatment operations and includes the storm sewer system. Additionally, the City reports the following fund types: Internal Service. These funds account for the financing of goods and services provided by one department to other departments on a cost reimbursement basis. These funds account for the City's fleet repair and maintenance (Central Garage) and provide technology systems and a means to 48 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 distribute public information (Information Technology) to City staff for their respective provisions of services to the City of Kalispell. Eliminations have been made to minimize the double accounting of internal activities. The City's policy for internal service elimination is to eliminate amounts related to overhead and indirect expenditures and not services provided. Assets of the internal service fund are allocated to the governmental -type funds and the business -type funds based on which fund type benefits the most from its services. Accordingly, the Information Technology and Central Garage funds' assets are included with the governmental activities. All Fiduciary Funds reported account for assets held by the City of Kalispell in a trustee capacity (custodial fund). The custodial fund does not present results of operations or have a measurement focus. Agency funds are accounted for using the accrual basis of accounting. The Kalispell Police Department (KPD) Evidence custodial fund accounts for assets that the City holds as evidence but will be returned to the owner when it is no longer required as evidence. The Tourism Business Improvement District (TBID) custodial fund accounts for money received for hotel bed tax collections. These funds are held for quarterly distribution to TBID. The Kalispell Golf Association custodial fund was established to account for funds temporarily held by the City and disbursed on behalf of the Association. This fund was used as a pass -through for specific financial activities and did not represent ongoing fiduciary operations. C. Assets, Liabilities, and Net Assets or Equity 1. Cash, Cash Equivalents, and Investments Cash and investments are under the management of the City's Treasurer and consist primarily of demand deposits and investments in U.S. Government Bonds. Interest income earned on City deposits is distributed to the appropriate funds utilizing a formula based on the average balance of cash and investments of each fund. Montana State statutes authorize the City to invest in interest -bearing savings accounts, certificates of deposits, and time deposits insured up to $250,000 by the Federal Deposit Insurance Corporation or fully collateralized, U.S. government and U.S. agency obligations and repurchase agreements where there is a master repurchase agreement and collateral held by a third party. Cash equivalents are short-term, highly liquid investments that are both readily convertible to known amounts of cash and have maturities at purchase date of three months or less. The City's cash and cash equivalents (including restricted assets) are cash on hand, demand, savings and time deposits, STIP and all short-term investments with original maturity dates of three months or less from the date of acquisition. Investments, with limited exceptions, are reported at fair value. Investments in nonparticipating certificates of deposit are reported at cost. Money market investments, including U.S. Treasury and Agency obligations, which mature within one year of acquisition are reported at amortized cost. Fair E,M City of Kalispell, Montana Notes to Financial Statements June 30, 2025 value is defined as the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value is determined annually, and requires the use of valuation techniques, a specific method or a combination of methods using one or more of three approaches: market, cost, or income approach. 2. Receivables Between Funds Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non -current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Advances between funds are offset by a fund balance reserve account in applicable governmental funds to indicate they are not available for appropriation and are not expendable available financial resources. Taxes Property tax levies are set within forty-five days of the state providing shared revenue figures, in connection with the budget process. Real property (and certain attached personal property) taxes are billed within ten days after the third Monday in October and are due in equal installments on November 30 and the following May 31. After those dates, they become delinquent, and a lien is filed upon the property. After three years, the City may exercise the lien and take title to the property. Special assessments are billed in two equal installments due November 30 and the following May 31. Personal property taxes (other than those billed with real estate) are generally billed no later than the second Monday in July (normally in May or June), based on the prior November's levies. Personal property taxes, other than mobile homes, are due thirty days after billing. Mobile home taxes are billed in two halves, the first due thirty days after billing: the second due September 30. The tax billings are considered past due after the respective due dates are subject to penalty and interest charges. An allowance for uncollectable accounts was not maintained for real and personal property taxes and special assessments receivable. The direct write-off method is used for these accounts. Ambulance An allowance, based on history, for estimated uncollectible accounts receivable of 64% is maintained for the Ambulance fund. This allowance account has been adjusted to $642,529 at June 30, 2025. Ambulance accounts receivable $1,003,951 Times allowance percentage 64.0% @ June 30, 2025 S 642,529 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Water/Sewer A reserve for estimated uncollectible accounts receivable of 0.5% of metered sales is maintained for the Water Fund and Sewer Fund. The reserve balances are as follows for June 30, 2025: Water $35,323 Sewer $44,757 Lease Receivables The City of Kalispell entered into a contract to lease a portion of its water tower space for a period of 25 years to the following: Lease Origination Date Interest Rate Lease Term Maturity Date Annual Payment Bullitt 7/1/2021 1.03% 25 years 6/1/2045 $ 33,039 Sprint 7/1/2021 1.03% 25 years 6/1/2045 $ 32,314 Verizon 7/1/2021 1.03% 25 years 12/1/2045 $ 48,804 The City of Kalispell has accrued a receivable for water tower leases. The remaining receivable for these leases was $2,123,212 for the year ended June 30, 2025. Deferred inflows related to these leases were $2,123,212 as of June 30, 2025. Interest revenue recognized on these leases was $65,514 for year ended June 30, 2025. Principle receipts of $49,643 were recognized during the fiscal year. The interest rate used to value the lease was 1.03%. Final receipt is expected in fiscal year 2045. The following are lease receivables to the City of Kalispell on June 30, 2025. Lease Receivable Lease Receivable For Fiscal Year Ended Beginning Balance Principal Interest Total Ending Balance 2026 $ 2,123, 212 $ 54,629 $ 62,957 $ 117,586 $ 2,068,583 2027 $ 2,068,583 $ 59,868 $ 61,246 $ 121,114 $ 2,008,715 2028 $ 2,008,715 $ 65,370 $ 59,376 $ 124,746 $ 1,943,345 2029 $ 1,943,345 $ 71,153 $ 57,336 $ 128,489 $ 1,872,192 2030 $ 1,872,192 $ 77,228 $ 55,118 $ 132,346 $ 1,794,964 2031 $ 1,794,964 $ 83,598 $ 52,715 $ 136,313 $ 1,711,366 2032 $ 1,711,366 $ 90,284 $ 50,116 $ 140,400 $ 1,621,082 2033-2045 $ 1,621,082 $ 1,621,082 $ 322,881 $ 1,943,963 $ - Total $ 2,123, 212 $ 721,745 $ 2,844,957 Cnntrarts The following are contracts receivable to the City of Kalispell on June 30, 2025. Source Municipal Court Franchise Fees -Charter (formerly Bresnan) Total Governmental Activities Impact Fees Impact Fees Total Proprietary Funds Amount $ 34,195 $ 35,990 $ 70,185 $ 13,050 $ 80,848 $ 93,898 Total City contracts receivable $ 164,083 I.1 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 3. Inventories and Prepaid Items Inventories for materials and supplies for governmental fund types are expended at the time of purchase. The amounts on hand in governmental funds are considered immaterial. Enterprise Fund inventory of materials and supplies are valued at cost and First -In -First -Out (FIFO) method is utilized. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government -wide and fund financial statements. Prepaid items arise when charges are entered in the accounts for benefits not yet received. In subsequent periods, when the benefit criteria are met, or when the City has a legal claim to the resources, the prepaid items are removed from the balance sheet and expenses are recognized. 4. Restricted Assets Certain proceeds of the City's enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. When an expense is incurred for which both restricted and unrestricted net assets are available, it is the City's policy to first apply the restricted resources. S. Capital Assets Capital assets, which include property, plant, and equipment, are reported in the applicable governmental or business -type activities columns in the governmental -wide financial statements. The City defines capital assets as assets with an initial, individual cost of more than $5,000 and an estimated useful life in excess of five years. Such assets are recorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assets are recorded at acquisition value. More detailed information on the City's streets and all capital assets can be found in Note 3, D. Police vehicles are an exception despite a useful life less than 5 years. The City has determined that it is important to capitalize and depreciate these because the total cost, as a group, is substantial. The costs of normal maintenance and repairs that do not add to the value of the assets or extend asset lives are not capitalized. Improvements are capitalized and depreciated over the remaining useful lives of the related assets. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of fixed assets is reflected in the capitalized value of the asset constructed, net of interest earned on the invested proceeds over the same period. Depreciation has been provided for the property, plant and equipment of the City of Kalispell using the straight-line method. The useful lives of these assets have been estimated as follows: Buildings 20-50 years Improvements Other than buildings 10-50 years Streets 40 years Machinery, vehicles and equipment 3-20 years Water and Sewer lines, pump stations 10-50 years Intangible assets 5-50 years 6% City of Kalispell, Montana Notes to Financial Statements June 30, 2025 6. Compensated Absences It is the City's policy and state law to permit employees to accumulate earned but unused vacation and sick leave benefits, subject to certain limits. Employees may accrue up to two times their annual vacation accrual; any excess balance must be used within 90 days following the start of the new calendar year. There is no limit on sick accrual. Upon separation from City service, employees are paid 100% of accumulated vacation leave and 25% of accumulated sick leave. In fiscal year 2012, the City of Kalispell began offering a voluntary employees beneficiary association (VEBA) plan. A tax-free post -retirement medical expense account used by retirees and their eligible dependents to pay for any eligible medical expenses. The plan is funded by 50% of the employee's unused sick leave at the time of retirement, which is contributed by the City into the plan. The benefit to the retirees of this plan is that they receive two times the amount of unused sick leave at retirement, none of which is subject to tax. In accordance with GASB Statement No. 101, compensated absences are recognized based on the leave that is expected to be used or paid out. The liability associated with governmental fund -type employees is reported in the Governmental Activities column of the Statement of Net Position. The liability associated with proprietary fund -type employees is recorded in the respective fund and the Business -type Activities column of the Statement of Net Position. Based on historical leave usage patterns, the City classifies the portion of vacation leave expected to be used within the next fiscal year as a current liability, with all other vacation and sick leave classified as long-term. 7. Long -Term Debt and Lease Obligations In the government -wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, or proprietary fund type statement of net position. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are expensed when incurred. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of the debt issued is 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. Issuance costs, whether withheld from the actual debt proceeds received, are reported as debt service expenditures. The City of Kalispell, the lessee, has entered into lease agreements for the contractual right to use (RTU) another entity's nonfinancial asset for a period of time (referred to as the lease term) in an exchange or exchange -like transaction. Under the provisions of GASB Statement No. 87-Leases, a lessee with lease contract(s) having a determined term or more than 12 months are required to report the present value of future lease principal payments for the right to use the nonfinancial assets as a lease asset, an intangible asset, which is amortized on a straight line basis over the lease term and as a lease payable in the government -wide and/or in the proprietary and fiduciary statement of net 53 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 position. The City of Kalispell on September 7`h, 2018 entered into a lease agreement with BNSF Railway Company to construct and maintain one pipeline across or along the rail corridor. The term of the lease purchase is 25 years with an interest rate of 3.00%. Business -Type Activities At June 30, 2025, the principal and interest requirements to maturity are as follows; Fiscal Year Ended 2026 2027 2028 2029 2030 2031-2038 Totals: Principal Interest Total $ 4,818 $ 2,936 $ 7,754 $ 5,195 $ 2,792 $ 7,987 $ 5,591 $ 2,636 $ 8,227 $ 6,005 $ 2,468 $ 8,473 $ 6,440 $ 2,288 $ 8,728 $ 69,821 $ 10,116 $ 79,937 $ 97,870 $ 23,236 $ 121,106 The City has entered into multiple printer lease agreements with various leasing companies to provide printing equipment for its operations. The term and interest rates varies by lease agreement. Governmental Activities At June 30, 2025, the principal and interest requirements to maturity are as follows; Fiscal Year Ended Principal Interest Total 2026 $ 14,953 $ 1,713 $ 16,666 2027 $ 10,318 $ 1,084 $ 11,402 2028 $ 7,289 $ 614 $ 7,903 2029 $ 5,992 $ 301 $ 6,293 2030 $ 2,757 $ 37 $ 2,794 Total $ 41,309 $ 3,749 $ 45,058 The total amount of lease assets and related accumulated amortization for the fiscal year end June 30, 2025, are as follows: Intangible right -to -use (RTU) lease assets being amortized: Lease asset -Intangible Total lease assets being amortized Less accumulated amortization for: Lease asset -Intangible Total accumulated amortization Total lease asset value Governmental Business - Activities Type $ 113,187 $ 102,328 $ 113,187 $ 102,328 $ (71,878) $ (4,458) $ (71,878) $ (4,458) $ 41,309 $ 97,870 The City of Kalispell, the lessor, owns nonfinancial assets and has entered into lease agreement(s) giving another entity the contractual right to use (RTU) the City of Kalispell nonfinancial asset for a period of time (referred to as the lease term) in an exchange or exchange -like transaction. Under the provisions of GASB Statement No. 87-Leases, a lessor with lease contract(s) having a determined term of more than 12 54 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 months are required to report the present value of future principal lease payments as a lease receivable and a deferred inflow of resources -lease revenue in the fund level balance sheet and/or the statement of net position. Lease revenue is recognized as an inflow on a straight-line basis over the lease term. 8. SBITA Under the provisions of GASB Statement No. 96-Subscripton Based Information Technology (SBITA), a government with SBITA arrangement(s) having a determined term of more than 12 months are required to report a subscription right -to -use asset, an intangible asset, and a corresponding subscription liability. The subscription asset is amortized on a straight-line basis over the subscription term. The subscription liability is measured using the present value of future principal payments at the commencement of the subscription term. The asset and liability are reported in the government - wide and/or in the proprietary and fiduciary statement of net position. The City has entered into agreement(s) for the contractual right to use (RTU) another party's information technology (IT) software alone or in combination with tangible capital assets (the underlying IT assets). The City entered into a 3-year subscription arrangement with ArcGis Pro on July 7, 2022. The government is required to make annual payments of $27,500, with the first payment due on August 1, 2022. The estimated useful life of the software is 3 years. The annual interest rate charged on the software subscription is 5.75%. The total amount of subscription assets and related accumulated amortization for the fiscal year ended June 30, 2025 are as follows: Intangible right -to -use (RTU) subscription assets: Less accumulated amortization Net subscription assets 9. Net Position/Fund Balance Governmental Business -Type Activities Activities $ 16,381 $ 10,678 (16,381) (10,678) Net position in the government wide and proprietary fund financial statements show the amount of the capital assets less any outstanding debt issued to fund them as "net investment in capital assets." Restricted net position are those that have constraints placed on them by external parties or imposed by law or enabling legislation. The City implemented GASB Statement 54 for fiscal year 2011. As a result, the classifications for fund balance now used for governmental funds are reported in two general classifications, non -spendable and spendable: Non -spendable represents the portion of fund balance that is not in spendable form such as 611 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 inventories and prepaids, and, in the general fund, long-term notes and loans receivable. Spendable fund balance is further categorized as restricted, committed, assigned, and unassigned. Restricted fund balance contains balances that can be spent only for the specific purposes stipulated by external parties or through enabling legislation. External parties include grantors, debt covenants, votes, and laws and regulations of other governments. Committed fund balance includes amounts that can be used only for the specific purposes determined by a formal action of the government's highest level of decision -making authority, the City Council. The City Council formally adopts a Resolution to establish, modify, or rescind a fund balance commitment. Assigned fund balances are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed. Fund balances are assigned by the governing body. The City Council has the authority to express assignments in the General fund. In governmental funds other than the general fund, assigned fund balance represents the remaining amount that is not restricted or committed. Also included in the assigned fund balance for the general fund are assignments for the portion of the current general fund balance projected to be used to fund expenditures and other cash outflows more than the expected revenues and other cash inflows in the next fiscal year. Unassigned fund balance is the residual classification for the government's general fund and includes all spendable amounts not contained in the other classifications. In other funds, the unassigned classifications is used only to report a deficit balance resulting from overspending for specific purposes for which amounts have been restricted, committed, or assigned. General Fund: restricted, committed, assigned, unassigned Special Revenue Funds: restricted, committed, assigned Debt Service Funds: assigned, committed, restricted Capital Project Funds: restricted, committed, assigned NOTE 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Budgetary Data Policies The State of Montana's budget law stipulates that money, other than payments from Agency funds, may not be drawn from the treasury of municipality except pursuant to an appropriation. The City legally adopts a budget for the required funds. Process An annual appropriated operating budget is adopted each fiscal year for the general fund, special revenue funds, debt service funds and capital projects funds on the modified accrual basis. In addition, a budget is adopted for the enterprise and internal service funds on a full accrual basis. The appropriated budget is prepared by fund, function, and for the general fund and certain other funds, by department. 611 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 The final budget is legally enacted by the City Council, after holding public hearings as required by State statutes, and within forty-five days of the State providing final shared revenue figures. The City Manager and Finance Director may make budget appropriation transfers within a fund between general classifications of salaries and wages, maintenance and operation and capital outlay. Reported budget amounts represent the originally adopted budget as amended by resolution of the City Council. It is management's responsibility to see that the budget is followed to the budgetary line item. The City Council may amend a final budget when shortfalls in budgeted revenues require reductions in approved appropriations to avert deficit spending; when savings result from unanticipated adjustments in projected expenditures; when unanticipated state or federal monies are received; or when a public emergency occurs which could not have been foreseen at the time of adoption. The City Manager is granted budget amendment authority for the expenditure of funds from debt service funds, enterprise funds, internal service funds, trust funds, federal and state grants accepted and approved by the City Council, special assessments, and donations. The procedure to amend the budget in total can be made only after the City prepares a resolution, notice is published of a public hearing, and a public hearing is held in accordance with state law. The City had no violations of budget law for fiscal year 2025, as all expenditures/expenses in total by fund are less than the related appropriations or are transfers of closed funds as allowed by State law. All budget amendments and closeout transfers during FY2025 are described below: Fund 2887 — Rural Development Loan Revolving: The fund balance was increased $44,253 to transfer the City's outstanding obligations for the Intermediary Relending Program (IRP) loan funds to Montana West Economic Development (MWED). Fund 4290 — Sidewalk & Curb Construction Fund: The fund balance was increased $9,574 to cover sidewalk replacement costs for two properties, with additional assessment revenue to be received once levied. Fund 5210 — Water Operations Fund: The fund balance was increased $300,000 to cover emergency well replacement costs to allow the city to proceed with the repair plan and the emergency procurement process. Fund 5310 — Sewer Operations Fund: The fund balance was increased $117,982 for the approved transfer of SLIPA Grant funds from the Storm Sewer Fund (5349) to Sewer Fund for the Slipline Rehabilitation Project. This adjustment reallocates existing grant resources to the appropriate fund for project completion. Fund 5349 — Storm Sewer Fund: The fund balance was decreased by $117,982 to transfer SLIPA Grant funds to the Sewer Operations Fund (5310) for the Slipline Rehabilitation Project. This adjustment reallocates the remaining grant balance to the fund administering the project. Fund 2916 — Drug Enforcement Grant Fund: The fund balance increased $18,004 following grantor approval allowing the task force to reimburse the City for time and costs associated with the Drug K9 when assisting with task force operations. 57 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 NOTE 3. DETAILED NOTES ON ALL FUNDS A. Cash, Cash Equivalents, and Investments The City categorizes its fair value measurements within the fair value hierarchy established by GAAP. The hierarchy, as follows, is based on the valuation inputs used to measure fair value. Valuation techniques used maximize the use of observable inputs and minimize the use of unobservable inputs. • Leve 1 inputs — Quotes prices in active markets for identical assets; these investments are valued using prices quoted in active markets. • Level 2 inputs — Significant other observable inputs; these investments are valued using matrix pricing. • Level 3 Inputs — Significant unobservable inputs; these investments are valued using consensus pricing. On June 30, 2025, the carrying amount of the City's deposits in local banks and investments is $104,329,70. Interest bearing account balances are covered by the Federal Depository Insurance Corporation (FDIC) up to $250,000 per bank, per depositor. In addition, all noninterest bearing transaction account balances are fully insured by FDIC coverage. The remaining balances are covered by collateral held by the pledging bank's agent in the City's name. The City's reports cash and investments as follows: Governmental activities Business -type activities Fiduciary funds Component unit Unrestricted Restricted Total $38, 892, 731 $3, 727, 387 $42, 620,118 48,176, 546 13, 264, 923 61, 441, 469 44,192 - 44,192 223,991 - 223,991 $87,337,460 $16,992,310 $104,329,770 Reconciliation of carrying amount to deposit balances: Governmental & Business Investment Activities Agency BID Certificates of Deposit $ 1,243,000 $ $ U.S. Treasury Securities 3,750,000 U.S. Government Bonds 35,653,349 Fair Value Measurement <1 1-5 Total level: $ 1,243,000 $ - $ 3,750,000 Level - - 35,653,349 Level 4,700,000 30,953,349 State of Montana - Short Term Investment Pool Account 57,040,658 57,040,658 S & C Bonds - internal 59,387 59,387 Demand deposits 6,312,213 44,192 223,991 6,580,396 Petty Cash 2,980 - - 2,980 $104,061,587 $ 44,192 $ 223,991 $ 104,329,770 $ 4,700,000 $ 30,953,349 Under the City's investment policy and as authorized by Montana law, the City is restricted to investing funds in specific types of investment instruments. These investments are low risk, locked into a guaranteed rate of return, and are, therefore, not impacted significantly by changes in short-term interest rates. Along with limitations placed on investments by state law, the City minimizes custodial credit risk by restrictions set forth in City policy. Custodial credit risk for investments is the risk that in the event of a financial institution failure, the City's investments may not be returned, or the City will not be able to recover the collateral securities in the possession of the outside party. 58 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 The City voluntarily participates in the STIP (Short Term Investment Pool) administered by the Montana Board of Investments (MBOI). Shares, the prices of which are fixed at $1.00 per share, represent a local government's STIP ownership and participants may buy or sell shares with one -business days' notice. STIP administrative expenses are charged daily against the STIP income, which is distributed on the first calendar day of each month. Shareholders have the option to automatically reinvest their distribution income in additional shares. STIP is not registered with the Securities and Exchange Commission. STIP is not FDIC insured or otherwise insured or guaranteed by the federal government, the State of Montana, the MBOI or any other entity against investment losses and there is no guaranteed rate of return on funds invested in STIP shares. The MBOI maintains a reserve fund to offset possible losses and limit fluctuations in STIP's valuation. The STIP investment portfolio consists of securities with maximum maturity of two years. Information on investments held in STOP can be found in the Annual Report on the MBOI website at Annual Reaorts - Montana Board of Investments (investmentmt.com). Investments in the pool are reported at a Net Asset Value (NAV). The fair value of pooled investments is determined annually and is based on year-end market prices. The unit value of the pool is fixed at $1 for both participant redemptions and purchases. Investments in STIP are carried and reported at cost. STIP income is automatically reinvested in additional units. The STIP is not rated by a national rating agency. B. Interfund Receivables and Payables (Due to/from Other Funds) The composition of interfund balances and due to/from as of June 30, 2025, was as follows: Receivable Fund General Fund - Major Governmental General Fund - Major Governmental General Fund - Major Governmental General Fund - Major Governmental General Fund - Major Governmental General Fund - Major Governmental C. Transfers Payable Fund Health Levy - Special Revenue CD Projects Fund DUI Grant Law Enforcement Grant Safe Street Grants SID 344 - Debt Service Fund Total - Due To Other Funds (Governmental Funds) The following is an analysis of transfers between funds during Fiscal Year 2025: From Health Levy - Special Revenue Fund Health Levy - Special Revenue Fund Health Levy - Special Revenue Fund Emergency Responder Levy - Special Revenue Fund Westside TIF - Special Revenue Fund General Fund - Major Governmental General Fund - Major Governmental General Fund - Major Governmental ARPA Fund - Capital Project ARPA Fund - Capital Project Old School Tech TIF - Special Revenue Fund Old School Ind TIF - Special Revenue Fund Solid Waste - Enterprise Fund CD Projects - Special Revenue Fund SID 3615 S&C - Debt Service Fund SID Revolving - Debt Service Fund Westside TIF - Debt Service Fund To General - Major Governmental Parks - Special Revenue Fund EMS - Special Revenue Fund Law Enforcement Grant -Special Revenue Fund 2 Mile Drive Improvements - Special Revenue Fund Ambulance - Special Revenue Drug Enforcement Grant - Special Revenue Fund Law Enforcement Grant -Special Revenue Fund Water - Enterprise Fund Sewer - Enterprise Fund SID - 344 - Debt Service Fund SID - 344 - Debt Service Fund Gas Tax - Special Revenue Fund General - Major Governmental SID Revolving - Debt Service Fund SID - 344 - Debt Service Fund Westside TIF - Special Revenue Fund TOTAL Amount Purpose $ 52,905 S/T Loan 1,317 S/T Loan 45,657 S/T Loan 66 124,836 5,211 $ 229,992 Amount Purpose $ 1,200,000 Operations 120,000 Operations 160,000 Operations 7,500 Operations 520,000 Operations 685,000 Operations 64,000 Operations 9,750 Operations 155,955 Operations 1,143,180 Operations 60,000 Operations 6,000 Operations 40,000 Operations 35,103 Operations 240 Operations 9,100 Operations 2,700,000 Operations $ 6,915,828 6Tj City of Kalispell, Montana Notes to Financial Statements June 30, 2025 D. Capital Assets Capital asset activities for the year ended June 30, 2025 were as follows: Assets Contributed In fiscal year 2025, Governmental Activities report contributed assets with a value of $2,932,701. Of this amount, $25,438 represents sidewalks replaced or repaired and paid for directly by homeowners (not assessed), and $2,907,263 represents streets and related infrastructure contributed to the City by developers. In fiscal year 2025; Business -type Activities report contributed assets with a value of $2,727,323. Developers contributed approximately 10,481 linear feet of water mains, including 39 new fire hydrants valued at $1,297,125, to the Water Fund. These contributions were associated with eight separate development projects. The Sewer Fund received 8,365 linear feet of sewer mains valued at $755,594, and 5,458 linear feet of storm sewer mains valued at $674,604. These 13,823 linear feet of mains were distributed among eight separate development projects. Construction in Progress Additions to construction in progress for Governmental Activities during Fiscal Year 2025 included $62,296 for continued work on the Four Mile Drive project. Reductions to construction in progress for Governmental Activities totaled $246,360 representing the completion and capitalization of the ambulance build project. Additions to construction in progress for Business -type Activities totaled $8,226,823. Major projects included the Lower Zone Reservoir rehabilitation and roof replacement project ($3,551,069); continued development of a new well and associated storage ($2,478,128); design and construction of a fermenter for the Wastewater Treatment Plant ($64,438); Lift Station #36 improvements ($54,949); creation of a pathway along the north side of Four Mile Drive ($62,296); re -lining of failing sewer mains ($9,751); replacement and/or supplemental water sources to address PFAS detection in the existing Armory and Grandview Wells ($1,617,393); and the construction phase of a new EQ Basin for the Wastewater Treatment Plant ($388,947). Reductions to construction in progress of Business -type Activities included, in the water fund, completion of the North Main Well replacement ($3,462,989) and the Westview Well rehabilitation ($37,826); and in the Sewer Fund, the completion of the Lift Station #9 relocation and upgrade project ($1,211,941); the Lift Station #3 and Four Mile project ($5,312,425); and the Wastewater Treatment Plant Influent Pipe and Diversion Structure Reconstruction project ($1,346,718). [:1i1 Go\ernmental Acti\ties: Capital assets not being depreciated: Land Construction in Progress Total capital assets not being depreciated Capital assets being depreciated: Buildings Impro\ements other than buildings Machinery and equipment General Ambulance Parking Infrastructure Total capital assets being depreciated Less accumulated depreciation for: Buildings Impro\ements other than buildings Machinery and equipment General Ambulance Parking Infrastructure Total accumulated depreciation Capital assets being amortorized: Right to use asset Intangible - Subscription Asset Less accumulated amortization - Subscription Total accumulated amortization Total capital assets being depreciated, net Total capital assets being amortorized, net Go\ernmental acti\ities capital assets, net Internal seMce funds: Information Technology Less accumulated depreciation - Information Technology Capital Asset being amortorized: Right to use asset - Lease Right to use asset - Subscription Less accumulated amortization - Lease Less accumulated amoritzation - Subscription Central Garage Less accumulated depreciation - Central Garage Internal seMce funds assets, net City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Balance Balance July 1, 2024 Additions Contributions Transfers Deductions June 30, 2025 $ 3,743,166 $ - $ $ - $ $ 3,743,166 246,360 62,296 (246,360) 62,296 3,989,526 62,296 (246, 360) 3,805,462 16, 930, 421 125,121 - 17, 055, 542 27, 363, 492 599,852 25,438 27, 988, 782 12, 387, 233 1,145, 668 - (35, 958) 13, 496, 942 659,376 90,026 246,360 995,762 41,046 - - 41,046 126, 690, 634 - 2,907,263 - 129, 597, 897 184, 072, 202 1,960,667 2,932,701 246,360 (35, 958) 189,175, 972 (12, 516, 953) (586, 320) - - (13,103, 273) (14,842,477) (868,540) (15,711,017) (8,531,045) (848, 461) 35,958 (9,343,548) (518, 206) (77, 425) - (595, 631) (41, 046) (41, 046) (47, 532, 578) (3,169, 223) - (50, 701, 801) (83, 982, 307) (5,549,969) 35,958 (89, 496, 316) 38,829 38,829 (25,155) (13,674) (38,829) 13,674 (13, 674) 100,089,895 (3,589,302) 2,932,701 246,360 99,679,654 13,674 (13, 674) - - - $ 104, 093, 095 $ (3,540,680) $ 2,932,701 $ - $ $ 103, 485,116 Balance Balance July 1, 2024 Additions Contributions Transfers Deductions June 30, 2025 $ 804,601 $ 35,343 $ - $ $ $ 839,944 (513,177) (64, 729) (577, 906) 76,253 36,934 113,187 6,594 - 6,594 (59,387) (12,491) (71,878) (4,272) (2,322) (6,594) 348,498 348,498 (261,253) (12,687) (273,940) $ 397,856 $ (19, 952) $ $ $ $ 377,904 Governmental activities depreciation was charged to functions/programs of the primary government as follows: Governmental Activities General Government Public Safety Public Works Parks and Recreation Total Governmental Activites Depreciaton Amortization Total $ 4,206,187 $ 10,888 $ 4, 217, 075 591,068 - 591,068 41,690 - 41,690 711,024 2,786 713,810 $ 5,549,969 $ 13,674 $ 5,563,643 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Balance Transfers/ Construction Balance Business -type activities: July 1, 2024 Additions Contributions in Progress Deductions June 30, 2025 Capital assets not being depreciated: Land Water $ 105,958 $ - $ - $ - $ - $ 105,958 Sewer 221,513 - - - - 221,513 Sewer (Storm) 26,550 - - - - 26,550 Construction in progress Water 20,266,031 7,646,590 - (3,500,814) - 24,411,807 Sewer 8,426,009 572,884 - (7,871,084) - 1,127,809 Storm - 7,349 - - - 7,349 Solid Waste Total capital assets not being depreciated 29,046,061 8, 226,823 (11,371,898) 25,900,986 Capital assets being depreciated: Water - - - - - - General Plant 1,555,418 36,782 - - (27,784) 1,564,416 Source of Supply 6,459,325 - - - - 6,459,325 Transmission and Distribution 48,152,284 555,909 1,297,126 37,826 - 50,043,145 Pumping Plant 3,981,044 228,984 - 3,462,988 - 7,673,016 Sewer General Plant 1,097,902 18,006 - - - 1,115,908 Transmision and Distribution 53,819,720 1,639,038 755,593 6,524,366 - 62,738,717 Storm Sewer System 25,215,283 428,148 674,604 - - 26,318,035 Treatment Plant Equipment 639,867 - - - - 639,867 Treatment Plant 42,414,558 424,312 - 1,346,718 - 44,185,588 Solid Waste Buildings 345,442 - - - - 345,442 Machinery and equipment 3,012,589 285,597 (443,939) 2,854,247 Total capital assets being depreciated 186,693,432 3,616,776 2,727,323 11,371,898 (471,723) 203,937,706 Capital assets being amortorized: Right to use asset Intangible - Lease Asset 126,019 - - - - 126,019 Intangible - Subscription Asset 28,426 28,426 Total capital assets being amortorized 154,445 154,445 Less accumulated depreciation for: Water General Plant (1,024,593) (63,384) - - 27,784 (1,060,193) Source of Supply (2,160,400) (178,162) - - - (2,338,562) Transmision and Distribution (14,310,072) (1,078,955) - - - (15,389,027) Pumping Plant (2,355,425) (76,852) - - - (2,432,277) Sewer General Plant (739,473) (48,393) - (787,866) Transmision and Distribution (16,345,245) (1,024,264) - - - (17,369,509) Storm Sewer System (7,791,329) (530,796) - - - (8,322,125) Treatment Plant Equipment (478,731) (23,704) - - - (502,435) Treatment Plant (27,589,872) (949,034) - - - (28,538,906) Solid Waste Buildings (321,443) (2,342) - - - (323,785) Machinery and equipment (1,791,666) (202,328) 443,939 (1,550,055) Total accumulated depreciation (74,908,249) (4,178,214) 471,723 (78,614,740) Less accumulated amortization for: Right to use assets Intangible - Lease Asset (23,691) (4,458) - - - (28,149) Intangible - Subscription Asset (18,416) (10,010) (28,426) Total accumulated amortizaton (42,107) (14,468) (56,575) Total capital assets being depreciated, net 111,785,183 (561,438) 2,727,323 11,371,898 125,322,966 Total capital assets being amortorized, net 112,338 (14,468) - - - 97,870 Business -type activities capital assets, net $ 140,943,582 $ 7,650,917 $ 2,727,323 $ $ $ 151,321,821 Business -type activities depreciation was charged to functions/programs of the primary government as follows: Business -Type Activities Depreciaton Amortization Total Water $ 1,397,352 - $ 1,397,352 Sewer - Sanitary 1,072,657 7,128 1,079,785 Treatment 972,738 - 972,738 Storm 530,796 4,670 535,466 Solid Waste 204,670 2,670 207,340 Total Buisiness-typeActivites $ 4,178,214 $ 14,468 $ 4,192,681 62 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 E. Long -Term Debt During the year ended June 30, 2025, the following changes occurred in long-term liabilities: Balance Balance Due within July 1, 2024 Additions Reductions June 30, 2025 1 year Governmental Activities: Revenue Bonds $ 3,775,000 $ $ (220,000) $ 3,555,000 $ 230,000 State Revolving Fund 435,326 (28,191) 407,135 28,884 Assessments 580,433 34,574 (255,619) 359,388 280,516 Contract Debt/Loans 635,396 - (174,763) 460,633 168,714 Intermediary Program 350,109 (350,109) - - SBITA Purchase 13,674 - (13,674) - - Compensated Absences, net 1,956,592 1,466,606 3,423,198 2,192,772 Other postemployment benefits' 2,299,378 804,785 3,104,163 - Pensions' 12,427,592 221,522 12,649,114 Governmental Activities Sub Total $ 22,473,500 $ 2,527,487 $ (1,042,356) $ 23,958,631 $ 2,900,886 Internal Service Funds: Lease Purchase $ 16,866 $ 36,934 $ (12,491) $ 41,309 $ 14,953 SBITA Purchase 2,322 - (2,322) - - Compensated Absences, net 55,528 67,404 122,932 65,068 Internal Service Funds Sub Total $ 74,717 $ 104,338 $ (14,813) $ 164,241 $ 80,021 Government -wide Governmental Activities $ 22,548,217 $ 2,631,825 $ (1,057,169) $ 24,122,872 $ 2,980,907 *The governmental funds that are expected to liquidate the pension and other postemployment benefits liabilities are the General, Parks, Ambulance, Building, Light Maintenance, Street Maintenance, and Urban Forestry. Balance Balance Due within July 1, 2024 Additions Reductions June 30, 2025 1 year Business -type Activities: State Revolving Fund $ 36,802,655 $ 5,634,364 $ (2,625,872) $ 39,811,147 $ 2,354,851 Contract Debt/Loans 457,178 - (81,973) 375,205 86,223 Lease Purchase 102,328 (4,458) 97,870 4,818 SBITA Purchase 10,010 - (10,010) - - Compensated Absences, net 460,921 343,321 804,242 308,126 Other postemployment benefits 150,534 29,916 180,451 - Pensions 1,815,666 349,677 2,165,343 Business -type Activities Total $ 39,799,291 $ 6,357,278 $ (2,722,313) $ 43,434,258 $ 2,754,018 Total City $ 62,347,508 $ 9,112,035 $ (3,779,482) $ 67,680,062 $ 5,734,925 63 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Legal Debt Margin At June 30, 2025, the general obligation debt issued by the City did not exceed its legal debt margin as demonstrated by the following computation: Total assessed value of taxable property (market value-2025) General limitation percentage General limitation of indebtedness Outstanding general obligation bonds at June 30 Outstanding loans subject to limitation' Parks Equipment Park Improvements Forestry Equipment Public Safety Equipment Street Maintenance Equipment SID Bonds Total debt subject to limit Excess limit over outstanding debt margin $ 6,720,995,583 2.80% 188,187, 876 98,171 37,342 195,449 129,672 300,000 760,633 $ 187,427,243 *A State of Montana, Board of Investment's attorney gave an opinion that loans under 7-5-4306, MCA are subject to the limit of indebtedness. These loans are displayed on page 69 (Loans/Contracted Debt). Special Assessment Debt -Special assessment bonds are secured by a lien on the assessed properties. The primary source of repayment is the assessments levied against the benefiting properties. However, the City is liable, to an extent, for repayment of these special assessment bonds. State law authorizes the City to establish a revolving fund to ensure the payment of debt service on the bonds if assessed property owner's default. Origination Interest Due Principal Annual Balance Purpose Date Rate Term Date Amount Payment June 30, 2025 SID344 6/15/2006 5.10% 20 years 2026 $ 4,520,000 $ 230,000 $ 230,000 SID345 5/15/2014 3.00% 15 years 2029 242,000 varies 70,000 2016 S&C 1/2/2014 3.75% 8 years 2025 9,792 $ 1,224 - 2017 S&C 1/2/2015 4.50% 8 years 2026 4,288 $ 536 536 2018 S&C 1/4/2016 5.50% 8 years 2027 7,145 $ 893 1,786 2019 S&C 6/30/2016 4.75% 8 years 2028 15,824 $ 1,978 5,934 2020 S&C 1/4/2021 3.25% 8 years 2029 4,046 $ 506 2,023 2021 S&C 1/6/2022 3.25% 8 years 2030 4,165 $ 521 2,603 2022 S&C 1/4/2023 7.50% 8 years 2031 14,380 $ 1,798 10,785 2023 S&C 1/2/2024 8.50% 8 years 2032 1,309 $ 164 1,145 2024 S&C 1/2/2025 7.50% 8 years 2033 34,574 $ 4,322 34,574 Total Special Assessment Bonds $ 4,857,523 $ 359,388 *In the event that all future and delinquent assessments are paid and that there are no future adjustments to assessments by the City of Kalispell, there is a projected surplus of principal assessments in SID's 344 and 345 of$23,413 and $25,839, respectively. 64 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Revenue Bonds — Revenue bonds are directly related to and paid from the fund. The 2018 West Side Tax Increment bonds are accounted for in the Government -wide financial statements and are paid directly from tax increment in the district. Issue Interest Purpose Date Rate Governmental Acti\ities: 2018 - West Side TIF 5/29/18 3%-5% Governmental Activities Sub Total Final Bonds Balance Term Maturity Issued June 30, 2025 19 years 1/1/2037 $ 4,960,000 $ 3,555,000 $ 4,960,000 $ 3,555,000 Significant Provisions of the Series 2018 West Side Tax Increment Urban Renewal Revenue Bonds The 2018 Bonds mature on January 1, 2037. The 2018 Bonds with stated maturities from 2019 through 2028 shall not be subject to redemption prior to their stated maturities. The 2018 Bonds with stated maturities on or after July 1, 2029, will be subject to redemption on July 1, 2028, and any day thereafter, at the option of the City, in whole or in part, at a redemption price equal to the principal amount thereof to be redeemed plus interest accrued to the redemption date, without premium. Interest on the Bonds varies from 3.00% for the Bonds with stated maturities from July 1, 2019, through July 1, 2025, to 5.00% for the $500,000 Term Bond with the stated maturity of January 1, 2033. Reserve Account — The City shall maintain a debt service reserve account with a balance equal to the lesser of: (i) ten percent (10%) of the original principal amounts of the Bonds; (ii) the maximum amount of principal and interest payable on the Bonds in the current or any future fiscal year; or (iii) 125% of the average debt service on the Bonds payable in any fiscal year. 125% of the average debt service ($6,043,125/16 years) $472,119 City's Reserve $480,011 State Revolving Fund —the City has thirteen (13) loan agreements with the State Revolving Fund (SRF). These obligations are to be repaid from the operating income of the fund. SRFLOANS Interest Amount Outstanding Purpose Origination Rate Term Barrawed June 30. 2025 Governmental Activities: 2017 Streets - 4th Ave E FY18 2.50°0 20 years $ 615.098 $ 407.135 Govemmental Activities Sub Total $ 615.098 $ 407.135 Business -type Activities: 2013 Sewer - WWTP Digester Lid FY13 3.00°0 20 years $ 1 .102.746 $ 515.000 2012 Sewer- WWTP System Improvements FY13 2.25°'o 15 years 12.827.000 1.969.000 2018 Sewer - West side Interceptor FY18 2 50% 30 years 12.194.241 10.013.000 2023 Sewer - Liftstation #9 FY23 2.50% 20 years 1.354.432 1.223.000 2024 Sewer - Liftstation #3 G randview FY24 2.50 6 20 years 1.526.735 1.476.735 2012 Water - Sheepherders Well Starage FY13 2 25% 15 years 1.340.000 206.000 2017 Water - 4th Ave E FY18 2.50°0 20 years 1.974.988 1.307.270 2020 Water Mi. ❑r. Transmission FY20 2.50°0 20 years 2.147.106 1.655.000 2023 Water Upperzone Well!Tank FY23 2.50°`0 30 years 16.714.246 16,276,246 2024 Water - LZ Roof Replacement FY24 2 50% 30 years 3.361.301 3.324.301 2021 Storm Sewer - Regional Facilities FY21 2.50°0 20 years 2.152.737 1.798.000 2017 Storm Sewer - 4th Ave E FY18 2.50 6 20 years 71.914 47.595 Bus iness-type Activities Sub Total $ 56.762.050 $ 39.211.147 Total SRF Loans $ 57.383.148 $ 40.218.282 65 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Water Debt Required Information Debt Service Account - Monthly an amount equal to not less than 1/6 of the interest due within the next six months and 1/12 of the principal to become due within the next twelve months shall be credited to the debt service account. The debt service account was zero as of June 30, 2025, as all debt service payments were made as of the end of the fiscal year, leaving no accrued interest or principal balance. Reserve Account - The City shall keep in the reserve account an amount equal to or greater than 50% of the maximum amount of principal and interest required in the current or any subsequent fiscal year ($1,838,949 * 0.50 = $919,475). As of June 30, 2025, the debt service reserve account contains $919,475. Maximum P & 1 $ 1,838,949 Total Reserve Requirement $ 919,475 Reserve balance 6/30/25 $ 919,475 Property Insurance — The City will cause all buildings, properties, fixtures, and equipment to be kept insured in amounts that are ordinarily carried. Liability Insurance —The City will carry insurance against liability of the City and its employees. Rates and Charges — Rates and charges will be made and kept sufficient to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the system and to produce in each fiscal year net revenues more than such current expenses, equal to 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year. Water Fund Cash Flow Debt Coverage Water Service Charges $ 7,112,084 Misc. Revenue 591,415 Total Operating Revenue 7,703,499 Less: Operating Expense (excludes depreciation) 3,173,036 Available for Debt Service $ 4,530,463 .Maximum Debt Service $1,838,950 Estimated Coverage FY25 246% "includes all water fund borrowings Sewer Debt Required Information Operating Reserve — The city shall keep in the operating reserve account an amount equal to one month's operating expenses. As of June 30, 2025, the operating reserve account contains $400,000. Debt Service Account - Monthly an amount equal to not less than 1/6 of the interest due within the next six months and 1/12 of the principal to become due within the next twelve months shall be credited to the debt service account. The debt service account was zero as of June 30, 2025, as all City of Kalispell, Montana Notes to Financial Statements June 30, 2025 debt service payments were made as of the end of the fiscal year, leaving no accrued interest or principal balance. Reserve Account - The City shall keep in the reserve account an amount equal to or greater than 50% of the maximum amount of principal and interest required in the current or any subsequent fiscal year ($2,085,639 * 0.50 = $1,042,820). As of June 30, 2025, the debt service reserve account contains $1,043,034. Bond reserve dollars are held in both the storm fund ($70,807), and sewer fund ($972,227). Rates and Charges — Rates and charges will be made and kept sufficient to provide gross income and revenues adequate to pay promptly the reasonable and current expenses of operating and maintaining the system and to produce in each fiscal year net revenues more than such current expenses, equal to 110% of the maximum amount of principal and interest payable from the Revenue Bond Account in any subsequent fiscal year. Sewer Fund Cash Flow Debt Coverage *Operating Revenue $12,002,547 Total 12,002,547 Less: Operating Expense (excludes depreciation 5,471,530 Available for Debt Service $ 6,531,017 **Maximum Debt Service $ 2,085,639 Estimated Coverage FY25 313% *includes storm sewer assessments **includes all sewer/storm fund borrowings Loans/Contracted Debt Origination Interest Purpose Date Rate Term Due Date Principal Balance Amount June 30, 2025 Governmental Activities BOI: Woodland Playground (Parks 8/23/2019 varies 5 years 2/15/2025 97,772 - BOI:Fire Pumper 3/16/2018 varies 10 years 2/15/2028 467,684 156,101 BOI:Ambulance 1/19/2021 varies 5 years 2/15/2026 189,438 39,348 BOI: Front end Loader (Streets) 11/25/2022 varies 5 years 2/15/2028 212,950 129,672 BOI: Tractor (Parks) 6/2/2023 varies 5 years 8/15/2028 43,000 31,341 BOI: Truck/Mower (KYAC) 6/2/2023 varies 5 years 8/15/2028 12,605 9,327 BOI: Toolcat (Parkline) 6/2/2023 varies 5 years 8/15/2028 79,000 57,503 BOI: Truck w/Dumpbed 6/2/2023 varies 5 years 8/15/2028 46,719 37,342 Sub total BOI loans $ 1,149,168 $ 460,633 USDA: Intermediary Relending Program 10/12/2004 1.00% 30 years 10/12/2034 $ 520,000 $ - Relending Program 11/27/2006 1.00% 30 years 11/27/2036 257,500 - Sub total USDA Intermediary 777,500 - Total loans/contracted debt - Governmental Activities $ 1,926,668 $ 460,633 BOI - Board of Investments Intercap Loan Program 67 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Loans/Contracted Debt Origination Interest Purpose Date Rate Term Due Date Principal Balance Amount June 30, 2025 Business Type Activities BOI: Solid Waste Truck 2/23/2024 varies 5 years 2/15/2029 457,178 375,205 Total loans/contracted debt - Business Type Activities $ 457,178 $ 375,205 BOI - Board of Investments Intercap Loan Program Requirements to amortize debt The annual requirements to amortize all long-term debt outstanding; excluding compensated absences payable, other post -employment benefits, and net pension liability, as of June 30, 2025, were as follows: Governmental Activities: SPECIAL ASSESSMENT CONTRACTED INTERMEDIARY SRF REVENUE FY BONDS LOANS/DEBT LOAN PROGRAM LOANS BONDS ENDED PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST PRINCIPAL INTEREST TOTAL 2026 280,518 19,045 168,715 23,031 - - 28,884 10,000 230,000 137,875 898,068 2027 23,066 3,185 133,380 14,596 - - 29,808 9,272 235,000 130,688 578,995 2028 22,173 2,290 137,535 7,927 - - 30,732 8,521 245,000 123,050 577,228 2029 24,195 1,413 21,003 1,050 - - 31,657 7,747 250,000 115,087 452,152 2030 3,689 691 - - - - 32,350 6,949 260,000 106,650 410,329 2031-2035 5,747 720 - - - - 175,844 22,096 1,465,000 363,175 2,032,582 2036-2040 - - - - - - 77,860 2,253 870,000 45,600 995,713 TOTAL $ 359,388 $ 27,344 $ 460,633 $ 46,604 $ - $ - $ 407,135 $ 66,838 $ 3,555,000 $ 1,022,125 $ 5,945,067 Business -type Activities: SRF FY LOANS(1)(2) ENDED PRINCIPAL INTEREST TOTAL 2026 2,354,851 1,008,632 3,363,483 2027 2,413,192 951,822 3,365,014 2028 1,349,268 899,847 2,249,115 2029 1,380,343 868,609 2,248,952 2030 1,415,650 830,516 2,246,166 2031-2035 7,495,156 3,598,757 11,093,913 2036-2040 7,783,140 2,636,801 10,419,941 2041-2045 6,499,000 1,508,300 8,007,300 2046-2050 5,533,000 676,488 6,209,488 2051-2055 3,587,547 121,075 3,708,622 TOTAL $39,811,147 $13,100,847 $52,911,994 (1) The 2023 water fund SRF loan ($16,714,246) is included on this schedule. The City has not drawn all funds for this loan. An amortization schedule will not be available until all funds have been drawn. Final loan amount will be approximately $19,854,000. (2) The 2024 water fund SRF loan ($3,361,301) is included on this schedule. The City has not drawn all funds for this loan. An amortization schedule will not be available until all funds have been drawn. Final loan amount will be approximately $7,892,000. F. Employee Benefit Pension Plans Substantially all City of Kalispell full-time employees participate in one of three statewide, cost sharing, multiple -employer retirement benefit plans administered by the Public Employees Retirement Board 68 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 (PERB). The authority to establish or amend contribution requirements for all plans and provide cost of living adjustments for defined benefits plans is assigned to the State legislature. PERB issues a publicly available comprehensive annual financial report that includes financial statements and required supplementary information for these plans. It is available from the Montana Public Employees Retirement Administration (MPERA) at 100 North Park Avenue, Suite 200, P.O. Box 200131, Helena, Montana, 59620- 0131 or at their website, http://mpera.mt.gov. The Montana Public Employees Retirement Administration (MPERA) prepares its financial statements using the accrual basis of accounting. For the purposes of measuring the net pension liability, deferred inflows of resources and deferred outflows of resources related to pensions, pension expense, information about the fiduciary net position and additions to, and deductions from, fiduciary net position have been determined on the same accrual basis as they are reported by MPERA. For this purpose, member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the period incurred. Investments are reported at fair value. MPERA adheres to all applicable Governmental Accounting Standards Board (GASB) statements. Total City of Kalispell pension expense from all three (3) plans (PERS, MPORS, FURS) the City participates in were $1,933,785. Contributions to pension plans are as required by state statute. Information about each plan follows: PUBLIC EMPLOYEES' RETIRMENT SYSTEM - DEFINED BENEFIT GASB 68 NOTES TO THE FINANACIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2025 (REPORTING DATE), JUNE 30, 2024 (MEASUREMENT DATE) In accordance with the Governmental Accounting Standards Board (GASB) Statement 68, Accounting and Financial Reporting for Pensions, employers and the non -employer contributing entity are required to recognize and report certain amounts associated with participation in the Public Employees' Retirement System Defined Benefit Retirement Plan (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost -sharing, single -employer, or agent plans. This report provides information for employers who are using a June 30, 2024, measurement date for the 2025 reporting. If an employer's fiscal year end is after June 30th, the employer will not use the measurements shown in this report but will need to wait for the measurement date as of June 30, 2025. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are City of Kalispell, Montana Notes to Financial Statements June 30, 2025 recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported atfairvalue. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). GENERAL INFORMATION ABOUT THE PENSION PLAN Plan Description: The PERS-Defined Benefit Retirement Plan (DBRP), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple -employer, cost -sharing plan established July 1, 1945, and governed by Title 19, chapters 2 & 3, Montana Code Annotated (MCA). This plan provides retirement benefits to covered employees of the State, and local governments, and certain employees of the Montana University System, and school districts. Benefits are established by state law and can only be amended by the Legislature. All new members are initially members of the PERS-DBRP and have a 12-month window during which they choose to remain in the PERS-DBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. All new members from the universities also have a third option to join the university system's Montana University System Retirement Program (MUS-RP). Benefits provided: The PERS-DBRP provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. SERVICE RETIREMENT: • Hired prior to July 1, 2011: o Age 60, 5 years of membership service o Age 65, regardless of membership service o Any age, 30 years of membership service • Hired on or after July 1, 2011: o Age 65, 5 years of membership service o Age 70, regardless of membership service EARLY RETIREMENT: • Hired prior to July 1, 2011: o Age 50, 5 years of membership service o Any age, 25 years of membership service • Hired on or after July 1, 2011: o Age 55, 5 years of membership service Second Retirement: (requires returning to PERS-covered employer or PERS service) • Retired before January 1, 2016 and accumulate less than 2 years additional service credit or retired on or after January 1, 2016 and accumulate less than 5 years additional service credit: o A refund of member's contributions plus return interest (currently 2.02% rill City of Kalispell, Montana Notes to Financial Statements June 30, 2025 effective July 1, 2018). o No service credit for second employment. o Start the same benefit amount the month following termination; and o Guaranteed Annual Benefit Adjustment (GABA) starts again in the January immediately following the second retirement. Retired before January 1, 2016 and accumulate at least 2 years of additional service credit: o A recalculated retirement benefit based on provisions in effect after the initial retirement; and o GABA starts on the recalculated benefit in the January after receiving the new benefit for 12 months. Retired on or after January 1, 2016 and accumulate 5 or more years of service credit: o The same retirement as prior to the return to service. o A second retirement benefit as prior to the second period of service based on laws in effect upon the rehire date; and o GABA starts on both benefits in the January after receiving the original and the new benefit for 12 months. MEMBER'S HIGHEST AVERAGE COMPENSATION (HAC) Hired prior to July 1, 2011 highest average compensation during any consecutive 36 months. Hired on or after July 1, 2011— highest average compensation during any consecutive 60 months. COMPENSATION CAP Hired on or after July 1, 2013 — 110% annual cap on compensation considered as a part of a member's highest average compensation. MONTHLY BENEFIT FORMULA Members hired prior to July 1, 2011 o Less than 25 years of membership service: 1.785% of HAC per year of service credit; 0 25 years of membership service or more: 2% of HAC per year of service credit. Members hired on or after July 1, 2011 o Less than 10 years of membership service: 1.5% of HAC per year of service credit; 0 10 years or more, but less than 30 years of membership service: 1.785% of HAC per year of service credit; 0 30 years or more of membership service: 2% of HAC per year of service credit. GUARANTEED ANNUAL BENEFIT ADJUSTMENT (GABA) After the member has completed 12 full months of retirement, the member's benefit increases by the applicable percentage (provided below) each January, inclusive of all other adjustments to the member's benefit. • 3.0% for members hired prior to July 1, 2007 • 1.5% for members hired between July 1, 2007 and June 30, 2013 • Members hired on or after July 1, 2013: (a) 1.5% for each year PERS is funded at or above 90%; (b) 1.5% reduced by 0.1% for each 2.0% PERS is funded below 90%; and (c) 0% whenever the amortization period for PERS is 40 years or more r`i City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Contributions: The State Legislature has the authority to establish and amend contribution rates. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member's compensation. Contributions are deducted from each member's salary and remitted by participating employers. Special Funding: The state of Montana, as the non -employer contributing entity, paid to the Plan, additional contributions that qualify as special funding. Those employers who received special funding are all participating employers. Not Special Funding: Per Montana law, state agencies and universities paid their own additional contributions. The employer paid contributions are not accounted for as special funding for state agencies and universities but are reported as employer contributions. Member and employer contribution rates are shown in the table below. MemberFiscal ooDistricts Year 2025 Hired < 07/01/11 7.900% Hired> 07/01/11 7.900% Employer 9.170% Employer 9.070% State 0.100% Employer State 8.800% 0.370% 2024 7.900% 7.900% 9.170% 9.070% 0.100% 8.800% 0.370% 2023 7.900% 7.900% 9.070% 8.970% 0.100% 8.700% 0.370% 2022 7.900% 7.900% 8.970% 8.870% 0.100% 8.600% 0.370% 2021 7.900% 7.900% 8.870% 8.770% 0.100% 8.500% 0.370% 2020 7.900% 7.900% 8.770% 8.670% 0.100% 8.400% 0.370% 2019 7.900% 7.900% 8.670% 8.570% 0.100% 8.300% 0.370% 2018 7.900% 7.900% 8.570% 8.470% 0.100% 8.200% 0.370% 2017 7.900% 7.900% 8.470% 8.370% 0.100% 8.100% 0.370% 2016 7.900% 7.900% 8.370% 8.270% 0.100% 8.000% 0.370% 2015 7.900% 7.900% 8.270% 8.170% 0.100% 7.900% 0.370% 2014 7.900% 7.900% 8.170% 8.070% 0.100% 7.800% 0.370% 2012 - 2013 6.900% 7.900% 7.170% 7.070% 0.100% 6.800% 0.370% 2010 - 2011 6.900% 7.170% 7.070% 0.100% 6.800% 0.370% 2008 - 2009 6.900% 7.035% 6.935% 0.100% 6.800% 0.235% 2000 - 2007 6.900% 6.900% 6.800% 0.100% 6.800% 0.100% 1. Member contributions to the system of 7.9% are temporary and will be decreased to 6.9% on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below 25 years following the reduction of both the additional employer and additional member contribution rates. 2. Employer contributions to the system: a. Effective July 1,2014, following the 2O13Legislative session, PERS-employer contributions increase an additional 0.1% a year and will continue over 10 years through 2024. For fiscal years beginning after June 30, 2024, the additional contribution amount stays at 2.27%. The additional employer r`a City of Kalispell, Montana Notes to Financial Statements June 30, 2025 contributions including the 0.27% added in 2007 and 2009, will terminate on January 1 following actuary valuation results that show the amortization period has dropped below 25 years and would remain below the 25 years following the reduction of both the additional employer and additional member contributions rates. b. Effective July 1, 2013, employers are required to make contributions on working retirees' compensation. Member contributions for working retirees are not required. c. The portion of employer contributions allocated to the Plan Choice Rate (PCR) are included in the employers reporting. The PCR was paid off effective March 2016 and the contributions previously directed to the PCR are now directed to member accounts. 3. Non -Employer Contributions: a. Special Funding i. The state contributed 0.1% of members' compensation on behalf of local government entities. ii. The state contributed 0.37% of members' compensation on behalf of school district entities. iii. The state contributed a Statutory Appropriation from the General Fund of $35,329,705. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer's fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2024, is on an actuarial valuation performed by the Plan's actuary as of June 30, 2024. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer's and the State of Montana's NPLforJune 30, 2024, and 2023, are displayed below. The employer's proportionate shareequalsthe ratioof the employer's contributions to the sum of all employer and non -employer contributions during the measurement period. The state's proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $9,895,481 and the employer's proportionate share was 0.404597 percent. Changes in actuarial assumptions and methods: There have been no changes to the assumptions or other inputs that affected the measurement of the TPL since the previous measurement date. 73 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer's reporting date that are expected to have a significant effect on the employer's proportionate share of the collective NPL. Pension Expense: At June 30, 2024, the employer recognized a Pension Expense of $1,019,484 for its proportionate share of the Plan's pension expense. The employer also recognized grant revenue of $137,919 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. Recognition of Deferred Inflows and Outflows: At June 30, 2024, the employer reported its proportionate share of the Plan's deferred outflows of resources and deferred inflows of resources from the following sources: DeferredDeferred Resources Resources I Expected vs. Actual Experience $500,064 $0 Projected Investment Earnings vs. Actual 0 220,049 Investment Earnings Changes in Assumptions 0 0 Changes in Proportion and Differences Between 401,143 0 Employer Contributions and Proportionate Share of Contributions Employer Contributions Subsequent to the 872,391 Measurement Date Total $1,773,598 $220,049 Other amounts reported as deferred outflows and inflows of resources related to pensions are recognized in the employer's pension expense as follows: 74 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 For the Measurement Recognition Year ended June 30: future of Deferred Outflows and Deferred Inflows in years as an increase or (decrease) to Pension Expense Thereafter Actuarial Assumptions: The total pension liability as of June 30, 2024, was determined on the results of an actuarial valuation date of June 30, 2024, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment Return (net of pension plan investment expense, 7.30% including inflation General Wage Growth * 3.50% *includes Inflation at 2.75% Merit Increases 0% to 4.80% Postretirement Benefit Increases 1. Guaranteed Annual Benefit Adjustment (GABA) each January • After the member has completed 12 full months of retirement, the member's benefit increases by the applicable percentage (provided below) each January, inclusive of all other adjustments to the member's benefit. • Members hired prior to July 1, 2007 3.0% • Members hired between July 1, 2007 & June 30, 2013 1.5% • Members hired on or after July 1, 2013 • For each year PERS is funded at or above 90% 1.5% • The 1.5% is reduced by 0.1% for each 2.0% PERS is funded below 90% • 0% whenever the amortization period for PERS is 40years or more 0% Mortality: • Active Participants PUB-2010 General Amount Weighted Employee Mortality projected to 2021 for males and females. Projected generationally using MP-2021. • Disabled Retirees PUB-2010 General Amount Weighted Disabled Retiree Mortality table, projected to 2021, set forward one year for both males and females. • Contingent Survivors PUB-2010 Amount Weighted Contingent Survivor Mortality projected to 2021 with ages set forward one year for males and females. Projected generationally using MP-2021. PUB-2010 General Amount Weighted Healthy • Healthy Retirees Retiree Mortality table projected to 2021, with ages set forward one year and adjusted 104% for males and 103% for females. Projected generationally using MP-2021. rAi- City of Kalispell, Montana Notes to Financial Statements June 30, 2025 The actuarial assumptions and methods utilized in the June 30, 2024 valuation, were developed in the five-year experience study for the period ending 2021. However, the current long-term rate of return is based on analysis in the experience study, without consideration for the administrative expenses analysis shown in the experience study. The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non -employer contributing entities would be made based on the Board's funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 0.10% of the salaries paid by local governments and 0.37% paid by school districts. In addition, the state contributed a statutory appropriation from the general fund. Based on those assumptions, the Plan's fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2128. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2024, is based on analysis in the experience study report dated May 2, 2022 without consideration for the administrative expense analysis shown in the experience study. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best -estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long-term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. Cash 3.0% (0.33%) Domestic Equity 30.0% 5.90% International Equity 17.0% 7.14% Private Investments 15.0% 9.13% Real Assets 5.0% 4.03% Real Estate 9.0% 5.41 % Core Fixed Income 15.0% 1.14% Non -Core Fixed Income 6.00% 3.02% Total 100.0% rV City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer's sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. PERS Disclosure for the defined contribution plan CITY OF KALISPELL contributed to the state of Montana Public Employee Retirement System Defined Contribution Retirement Plan (PERS-DCRP) for employees that have elected the DCRP. The PERS-DCRP is administered by the PERB and is reported as a multiple- employer plan established July 1, 2002, and governed by Title 19, chapters 2 & 3, MCA. All new PERS members are initially members of the PERS-DBRP and have a 12-month window during which they may choose to remain in the PERS-DBRP or join the PERS-DCRP by filing an irrevocable election. Members may not be participants of both the defined benefit and defined contribution retirement plans. Member and employer contribution rates are specified by state law and are a percentage of the member's compensation. Contributions are deducted from each member's salary and remitted by participating employers. The state Legislature has the authority to establish and amend contribution rates. Benefits are dependent upon eligibility and individual account balances. Participants are vested immediately in their own contributions and attributable income. Participants are vested after 5 years of membership service for the employer's contributions to individual accounts and the attributable income. Non -vested contributions are forfeited upon termination of employment per 19-3-2117(5), MCA. Such forfeitures are used to cover the administrative expenses of the PERS-DCRP. At the plan level for the measurement period ended June 30, 2024, the PERS-DCRP employer did not recognize any net pension liability or pension expense for the defined contribution plan. Plan level non - vested forfeitures for the 351 employers that have participants in the PERS-DCRP totaled $1,345,278. Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan's fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620-0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annuaIreportsi/annuaIreports. MUNICIPAL POLICE OFFICERS' RETIRMENT SYSTEM GASB 68 NOTES TO THE FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2025 (REPORTING DATE), JUNE 30, 2024 (MEASURMENT DATE) 77 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 In accordance with the Governmental Accounting Standards Board (GASB) Statement 68, Accounting and Financial Reporting for Pensions, employers and the non -employer contributing entity are required to recognize and report certain amounts associated with participation in the Municipal Police Officers' Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost -sharing, single -employer, or agent plans. This report provides information for employers who are using a June 30, 2024 measurement date for the 2025 reporting. If an employer's fiscal year end is after June 301h, the employer will not use the measurements shown in this report but will need to wait for the measurement date as of June 30, 2025. Summary of Significant Accounting Policies MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported atfairvalue. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). General Information about the Pension Plan Plan Description — 76a: The Municipal Police Officers' Retirement System (MPORS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple -employer, cost -sharing defined benefit plan established in 1974 and governed by Title 19, chapters 2 & 9, Montana Code Annotated (MCA). This plan provides retirement benefits to all municipal police officers employed by first- and second-class cities and other cities that adopt the plan. Benefits are established by state law and can only be amended by the Legislature. Deferred Retirement Option Plan (DROP): Beginning July 2002, eligible members of MPORS can participate in the DROP by filing a one-time irrevocable election with the Board. The DROP is governed by Title 19, Chapter 9, Part 12, MCA. A member must have completed at least twenty years of membership service to be eligible. They may elect to participate in the DROP for a minimum of one month and a maximum of 60 months and may only participate in the DROP once. A participant remains a member of the MPORS but will not receive membership service or service credit in the system for the duration of the member's DROP period. During participation in the DROP, all mandatory contributions continue to the retirement system. A monthly benefit is calculated based on salary and years of service to date as of the beginning of the DROP period. The monthly benefit is paid into the member's DROP account until the end of the DROP period. At the end of the DROP period, the participant may receive the balance of the DROP account in a lump -sum payment or in a direct rollover to another eligible plan, as allowed by the IRS. If the participant continues employment after the DROP period ends, they will 78 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 again accrue membership service and service credit. The DROP account cannot be distributed until employment is formally terminated. Benefits provided: MPORS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and compensation. Member rights are vested after five years of service. Service retirement and monthly benefit formula: • 20 years of membership service, regardless of age. • Age 50 with 5 years of membership service (Early Retirement). • 2.5% of FAC x years of service credit. Second retirement: Re -calculated using specific criteria for members who return to covered MPORS employment prior to July 1, 2017: • Less than 20 years of membership service, upon re-employment, repay benefits and subsequent retirement is based on total MPORS service. • More than 20 years of membership service, upon re-employment, receives initial benefit and a new retirement benefit based on additional service credit and FAC after re- employment. Applies to retirement system members re-employed in a MPORS position on or after July 1, 2017: • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: o is not awarded service credit for the period of reemployment; o is refunded the accumulated contributions associated with the period of reemployment; o starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: o is awarded service credit for the period of reemployment; o starting the first month following termination of service, receives: • the same retirement benefit previously paid to the member, and • a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members rehire date; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a GABA: • on the initial retirement benefit in January immediately following second retirement, and • on the second retirement benefit starting in January after receiving that benefit for at least 12 months. A member who returns to covered service is not eligible for a disability benefit. Member's final average compensation (FAC) • Hired prior to July 1, 1977 - average monthly compensation of final year of service; • Hired on or after July 1, 1977 - final average compensation (FAC) for last consecutive 36 months. rol City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Compensation Cap • Hired on or after July 1, 2013: 110% annual cap on compensation considered as a part of a member's FAC. Guaranteed Annual Benefit Adjustment (GABA) • Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months, a GABA will be made each year in January equal to 3%. Minimum benefit adjustment (non-GABA) • The minimum benefit provided may not be less than 50% of the compensation paid to a newly confirmed police officer of the employer that last employed the member as a police officer in the current fiscal year. Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member's compensation. Contributions are deducted from each member's salary and remitted by participating employers. Special Funding: MCA 19-9-702 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions GASB Statement 68 allows a measurement date of up to 12 months before the employer's fiscal year- end. The basis for the Total Pension Liability (TPL) as of June 30, 2024, is on an actuarial valuation performed by the Plan's actuary as of June 30, 2024. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer's and the State of Montana's NPLforJune 30, 2024, and 2023, are displayed below. The employer's proportionate shareequalsthe ratioof the employer's contributions to the sum of all employer and non -employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government's collective NPL that is associated with the non -state employer. The state's proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $3,270,760 and the employer's proportionate share was 1.4628 percent. 80 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Changes in actuarial assumptions and methods: There have been no changes to the actuarial assumptions or other inputs that affected the measurement of the TPL since the previous measurement date. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer's reporting date that are expected to have a significant effect on the employer's proportionate share of the collective NPL. Pension Expense: At June 30, 2024 measurement date, the employer recognized its proportionate share of the Plan's pension expense of $448,747. The employer also recognized grant revenue of $945,929 for the support provided by the State of Montana for its proportionate share of the pension expense associated with the employer. 81 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Recognition of Deferred Inflows and Outflows: At June 30, 2024, the employer reported its proportionate share of the Plan's deferred outflows of resources and deferred inflows of resources from the following sources: of measurement date Deferred Outflows 11 ResourcesAs Inflows I I Expected vs. Actual Experience $70,570 $0 Projected Investment Earnings vs. Actual 0 44,795 Investment Earnings Changes in Assumptions 0 22,108 Changes in Proportion and Differences Between Employer Contributions and Proportionate Share 0 12,841 of Contributions Employer Contributions Subsequent to the 556,072 Measurement Date Total $626,641 $79,744 Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For the Mencnrement Vear Recognition ended June 30: future of Deferred Outflows and Deferred Inflows in years as an increase or (decrease) to Pension Expense Actuarial Assumptions: The total pension liability as of June 30, 2024, was determined by an actuarial valuation date of June 30, 2024, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: Investment Return (net of pension plan investment expense, 7.30% including inflation) General Wage Grove-th * 3.50% *includes Inflation at 2.75% Merit Increases 1.0% to 6.4% Postretirement Benefit Increases 1. Guaranteed Annual Benefit Adjustment (GABA) each January • Members hired on or after July 1, 1997 or those electing GABA 3.0% • Requires 12 full months of retirement before GABA will be made 2. Minimum Benefit Adjustment (non-GABA) The minimum benefit provided should not be less • Benefit for a retired member or member's survivor and member did than 50% of the monthly compensation paid to a not elect GABA newly confirmed police officer of the employer that last employed the member as a police officer 82 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 • Active Participants PUB-2010 Safety Amount Weighted Employee Mortality projected to 2021 for males and females. Projected generationally using MP-2021. • Healthy Retirees PUB-2010 Safety Amount Weighted Healthy Retiree mortality table projected to 2021 set forward one year for males and adjusted 105% for males and 100% for females. Projected generationally using MP-2021. • Disabled Retiree PUB-2010 Safety Amount Weighted Disabled Retiree mortality table projected to 2021, set forward 1 year for males. • Contingent Survivor PUB-2010 Amount Weighted Contingent Survivor Mortality projected to 2021, set forward one year for males. Projected generationally using MP- 2021. The actuarial assumptions and methods utilized in the June 30, 2024 valuation, were developed in the five-year experience study for the period ending June 30, 2021. However, the current long-term rate of return is based on analysis in the experience study, without consideration for the administrative expenses analysis shown in the experience study. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non -employer contributing entities would be made based on the Board's funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 29.37% of the salaries paid by employers. Based on those assumptions, the Plan's fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2133. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2024 is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown in the experience study. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best -estimate ranges of expected future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long- term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rates of return for each major asset class as of the most recent experience study, are summarized in the following table. 83 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Cash Domestic Equity International Equity Private Investments Real Assets Real Estate Core Fixed Income Non -Core Fixed Income 3.0% 30.0% 17.0% 15.0% 5.0% 9.0% 15.0% 6.0% Total 100.0% (0.33%) 5.90% 7.14% 9.13% 4.03% 5.41% 1.14% 3.02% Sensitivity of the proportionate share of the net pension liability to changes in the discount rate: The following presents the employer's sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate Pension plan fiduciary net position: The stand-alone financial statements of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan's fiduciary net position. These reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620- 0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annuaIreportsi/annuaIreports. FIREFIGHTERS' UNIFIED RETIREMENT SYSTEM GASB 68 NOTES TO THE FINANCIAL STATEMENTS FOR FISCAL YEAR ENDED JUNE 30, 2025 (REPORTING DATE), JUNE 30, 2024 (MEASURMENT DATE) In accordance with the Governmental Accounting Standards Board (GASB) Statement 68, Accounting and Financial Reporting for Pensions, employers and the non -employer contributing entity are required to recognize and report certain amounts associated with participation in the Firefighters' Unified Retirement System (the Plan). This includes the proportionate share of the collective Net Pension Liability; Pension Expense; and Deferred Outflows and Deferred Inflows of Resources associated with pensions. Employers are provided guidance in GASB Statement 68, paragraph 74, where pension amounts must be combined as a total or aggregate for reporting, whether provided through cost -sharing, single -employer, or agent pension plans. This report provides information for employers who are using a June 30, 2024 measurement date for the 2025 reporting. If an employer's fiscal year end is after June 30th, the employer 84 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 will not use the measurements shown in this report but will need to wait for the measurement date as of June 30, 2025 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES MPERA prepared financial statements using the accrual basis of accounting. The same accrual basis was used by MPERA for the purposes of determining the Net Pension Liability (NPL); Deferred Outflows of Resources and Deferred Inflows of Resources related to pensions; Pension Expense; the Fiduciary Net Position; and Additions to or Deductions from Fiduciary Net Position. Member contributions are recognized in the period in which contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Revenues are recognized in the accounting period they are earned and become measurable. Benefit payments and refunds are recognized in the accounting period in which they are due and payable in accordance with the benefit terms. Expenses are recognized in the period incurred. Investments are reported atfairvalue. MPERA adhered to all accounting principles generally accepted by the United States of America. MPERA applied all applicable pronouncements of the Governmental Accounting Standards Board (GASB). GENERAL INFORMATION ABOUT THE PENSION PLAN Plan Description: The Firefighters' Unified Retirement System (FURS), administered by the Montana Public Employee Retirement Administration (MPERA), is a multiple -employer, cost -sharing defined benefit plan established in 1981, and governed by Title 19, chapters 2 & 13, Montana Code Annotated (MCA). This plan provides retirement benefits to firefighters employed by first- and second-class cities, other cities and rural fire district departments that adopt the plan, and to firefighters hired by the Montana Air National Guard on or after October 1, 2001. Benefits are established by state law and can only be amended by the Legislature. Benefits provided: The FURS provides retirement, disability, and death benefits to plan members and their beneficiaries. Benefits are based on eligibility, years of service, and highest average compensation (HAC). Member rights are vested after five years of service. SERVICE RETIREMENT AND MONTHLY BENEFIT FORMULA: • Hired on or after July 1, 1981, or member has elected to be covered byGABA: 0 20 years of membership service, regardless of age 0 2.5% of HAC x years of service credit • Hired prior to July 1, 1981, and who had not elected to be covered by GABA, the greater of above, or: o If membership service is less than 20 years: 2% of the highest monthly compensation (HMC) for each year of service credit, or o If membership service is greater or equal to 20 years: 50% of HMC plus 2% of HMC for each year of service credit in excess of 20 • Early retirement: Age 50 with 5 years of membership service - Normal retirement benefit calculated using HAC and service credit SECOND RETIREMENT: Applies to retirement system members re-employed in a FURS position on or afterJuly 1, 2017: 85 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: o is not awarded service credit for the period of reemployment; o is refunded the accumulated contributions associated with the period of reemployment; o starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: o is awarded service credit for the period of reemployment; o starting the first month following termination of service, receives: • the same retirement benefit previously paid to the member; and • a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the members' rehire date, and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a GABA: • on the initial retirement benefit in January immediately following second retirement, and • on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Member's compensation period used in benefit calculation • Hired prior to July 1, 1981 and not electing GABA: highest monthly compensation (HMQ • Hired after June 30, 1981 and those electing GABA: highest average compensation (HAC) during any consecutive 36 months (or shorter period of total service). • Part-time firefighter: 15% of regular compensation of a newly confirmed full-time firefighter. Compensation Cap • Hired on or after July 1, 2013: 110% annual cap on compensation considered as a part of a member's HAC. Guaranteed Annual Benefit Adjustment (GABA) Hired on or after July 1, 1997, or those electing GABA, and has been retired for at least 12 months — the member's benefit increases by 3.0% each January. Minimum Benefit Adjustment (non-GABA) A member with 10 or more years of membership service who has not elected to be covered under GABA - the minimum benefit provided may not be less than 50% of the monthly compensation paid to a newly confirmed active firefighter of the employer that last employed the member as a firefighter in the current fiscal year. M1 City of Kalispell, Montana Notes to Financial Statements June 30, 2025 Contributions: The State Legislature has the authority to establish and amend contribution rates to the plan. Member and employer contribution rates are specified by Montana Statute and are a percentage of the member's compensation. Contributions are deducted from each member's salary and remitted by participating employers. Special Funding: MCA 19-13-604 requires the State of Montana to contribute a percentage of total compensation directly to the Plan annually after the end of each fiscal year. Member, Employer and State contribution rates are shown in the table below. Member Fiscal Year Non-GABA GABA Employer State 1998 - 2025 9.500% 10.700% 14.360% 32.610% 1997 7.800% 14.360% 32.610% 87 City of Kalispell, Montana Notes to Financial statements June 30, 2025 PENSION LIABILITIES, PENSION EXPENSE, AND DEFERRED OUTFLOWS OF RESOURCES AND DEFERRED INFLOWS OF RESOURCES RELATED TO PENSIONS GASB Statement 68 allows a measurement date of up to 12 months before the employer's fiscal year-end. The basis for the Total Pension Liability (TPL) as of June 30, 2024, is on an actuarial valuation performed by the Plan's actuary as of June 30, 2024. The Total Pension Liability (TPL) minus the Fiduciary Net Position equals the Net Pension Liability (NPL). The proportionate shares of the employer's and the State of Montana's NPLforJune 30, 2024, and 2023, are displayed below. The employer's proportionate shareequalsthe ratioof the employer's contributions to the sum of all employer and non -employer contributions during the measurement period. Due to the existence of the special funding situation, the state is required to report a proportionate share of a local government's collective NPL that is associated with the non -state employer. The state's proportionate share for a particular employer equals the ratio of the contributions for the particular employer to the total state contributions paid. The employer recorded a liability of $1,648,217 and the employer's proportionate share was 1.2167 percent. Changes in actuarial assumptions and methods: There have been no changes to the actuarial assumptions or other inputs that affected the measurement of the TPL since the previous measurement date. Changes in benefit terms: There have been no changes in benefit terms since the previous measurement date. Changes in proportionate share: There were no changes to the Plan between the measurement date of the collective NPL and the employer's reporting date that are expected to have a significant effect on the employer's proportionate share of the collective NPL. Pension Expense: At June 30, 2024 measurement date, the employer recognized its proportionate share of the Plan's pension expense of $396,640. The employer also recognized grant revenue of $926,563 for the support provided by the State of Montana for its proportionate share of the pension expense that is associated with the employer. 88 City of Kalispell, Montana Notes to Financial statements June 30, 2025 Recognition of Deferred Inflows and Outflows: At June 30, 2024, the employer reported its proportionate share of the Plan's deferred outflows of resources and deferred inflows of resources from the following sources: As of measurement date Expected vs. Actual Experience Deferred Outflows 11 ResourcesResources $181,643 Inflows I $0 Projected Investment Earnings vs. Actual Investment Earnings 0 39,718 Changes in Assumptions 283,392 0 Changes in Proportion and Differences Between Employer Contributions and Proportionate Share of Contributions 15,642 0 Employer Contributions Subsequent to the Measurement Date 505,325 Total $986,002 $39,718 Other amounts reported as deferred outflows and inflows of resources related to pensions will be recognized in pension expense as follows: For the Mencnrement Vear Recognition ended June 30: future of Deferred Outflows and Deferred Inflows in years as an increase or (decrease) to Pension Expense Actuarial Assumptions: The total pension liability as of June 30, 2024, was determined by an actuarial valuation date of June 30, 2024, using the following actuarial assumptions, applied to all periods included in the measurement. Among those assumptions were the following: 89 City of Kalispell, Montana Notes to Financial statements June 30, 2025 Investment Return (net of pension plan investment expense, 7.30% including inflation) General Wage GroiAlh * 3.50% *includes Inflation at 2.75% Merit Increases 1.00% to 6.40% Postretirement Benefit Increases 1. Guaranteed Annual Benefit Adjustment (GABA) each January • Members hired on or after July 1, 1997 or those electing GABA 3.0% • Requires 12 full months of retirement before GABA will be made 2. Minimum Benefit Adjustment (non-GABA) The minimum benefit provided should be less than • Members with 10 or more years of membership service and member 50% of the current base compensation of a newly did not elect GABA confirmed active firefighter of the employer that last employed the member as a fire fighter. Mortality: • Active Participants PUB-2010 Safety Amount Weighted Employee Mortality Table projected to 2021 for males and females. Projected generationally using MP-2021. PUB-2010 Safety Amount Weighted Healthy • Healthy Retirees Retiree Mortality Table projected to 2021, set forward one year for males, adjusted 105% for males and 100% for females. Projected generationally using MP-2021. Mortality continued: • Contingent Survivors PUB-2010 Safety Amount Weighted Contingent Survivor Mortality Table projected to 2021, set forward one year for males. Projected generationally using MP-2021. • Disabled Retirees PUB-2010 Amount Weighted Disabled Retiree Mortality Table projected to 2021, set forward one ear for males. The actuarial assumptions and methods utilized in the June 30,2024 valuation, were developed in the five-year experience study for the period ending June 30, 2021. However, the current long-term rate of return is based on analysis in the experience study, without consideration for the administrative expense analysis shown in the experience study. Discount Rate: The discount rate used to measure the TPL was 7.30%. The projection of cash flows used to determine the discount rate assumed that contributions from participating plan members, employers, and non -employer contributing entities would be made based on the Board's funding policy, which established the contractually required rates under the Montana Code Annotated. The state contributed 32.61% of the salaries paid by employers. Based on those assumptions, the Plan's fiduciary net position was projected to be adequate to make all the projected future benefit payments of current plan members through the year 2133. Therefore, the long-term expected rate of return on pension plan investments was applied to all periods of projected benefit payments to determine the TPL. A municipal bond rate was not incorporated in the discount rate. Target Allocations: The long-term expected rate of return on pension plan investments is reviewed as part of regular experience studies prepared for the Plan about every five years. The long-term rate of return as of June 30, 2024, is based on analysis in the experience study report dated May 2, 2022, without consideration for the administrative expense analysis shown in the experience study. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and an analysis in which best -estimate ranges of expected 0111 City of Kalispell, Montana Notes to Financial statements June 30, 2025 future real rates of return (expected returns, net of investment expense and inflation), along with estimates of variability and correlations for each asset class. These ranges were combined to develop the long-term expected rate of return by weighing the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The assumption is intended to be a long- term assumption (30 to 50 years) and is not expected to change absent a significant change in the asset allocation, a change in the underlying inflation assumption, or a fundamental change in the market that alters expected returns in future years. The target asset allocation and best estimates of arithmetic real rate of return for each major asset class as of the most recent experience study, are summarized in the following table. Cash 3.0% (0.33%) Domestic Equity 30.0% 5.90% International Equity 17.0% 7.14% Private Investments 15.0% 9.13% Real Assets 5.0% 4.03% Real Estate 9.0% 5.41% Core Fixed Income 15.0% 1.14% Non -Core Fixed Income 6.0% 3.02% Total 100.0 Sensitivity of the proportionate share of the net pension liability to changes in the discount rate — 78g: The following presents the employer's sensitivity of the NPL to the discount rate in the table below. A small change in the discount rate can create a significant change in the liability. The NPL was calculated using the discount rate of 7.30%, as well as what the NPL would be if it were calculated using a discount rate 1.00% lower or 1.00% higher than the current rate. CITY OF KALISPELL's Net Pension Liability $3,256,758 1 $1,648,217 1 $364,174 Pension plan fiduciary net position: The stand-alone financial statements (76d) of the Montana Public Employees Retirement Board (PERB) Annual Comprehensive Financial Report (ACFR) and the GASB 68 Report disclose the Plan's fiduciary net position. The reports, as well as the actuarial valuations and experience study, are available from the PERB at PO Box 200131, Helena MT 59620- 0131, (406) 444-3154 or are available on the MPERA website at https://mpera.mt.gov/about/annuaIreportsi/annuaIreports. 011 City of Kalispell, Montana Notes to Financial statements June 30, 2025 G. Postemployment Health Insurance Benefits (OPEB) Plan Description. In fiscal year 2025, the City of Kalispell provided employee medical insurance through a single -employer plan administered by the Montana Municipal Interlocal Authority (MMIA). The City also provided dental coverage through single -employer defined benefit plan. As required by state law (Section 2-18-704, MCA), terminated employees may remain on the City's health insurance plan for up to 18 months if they pay the monthly premiums. This benefit also satisfies the requirements of the federal COBRA law. In accordance with Montana law, retirees may remain on the City's health plan if they wish. The City's contract with Allegiance Benefits details eligibility provisions. MMIA administers the benefit plan, which covers both active and retired members. Retirees may continue coverage for themselves and their eligible dependents if they qualify for public employee retirement by virtue of their employment with the City. To continue coverage, retirees are required to pay 100 percent of the premium. The City's current collective bargaining agreements do not include any obligation for employer contributions toward retiree premiums. Montana Codes Annotated (MCA) Section 2-18-704 states (1) an insurance contract or plan issued under this part must contain provisions that permit: (a) The member of a group who retires from active service under the appropriate retirement provisions of a defined benefit plan provided by law or, in the case of the defined contribution plan provided in Title 19, chapter 3, part 21, a member with at least 5 years of service and who is a least age 50 while in covered employment to remain a member of the group until the member becomes eligible for Medicare under the federal Health Insurance for the Aged Act, 42 U.S. C. 1395, as amended, unless the member is a participant in another group plan with substantially the same or greater benefits at an equivalent cost or group plan with substantially the same or greater benefits at an equivalent cost; (b) The surviving spouse of a member to remain a member of the group as long as the spouse is eligible for retirement benefits accrued by the deceased member as provided by law unless the spouse is eligible for Medicare under the federal Health Insurance for the Aged Act or unless the spouse has or is eligible for equivalent insurance coverage as provided in subsection (1)(a); (c) The surviving children of a member to remain members of the group if they are eligible for retirement benefits accrued by the deceased member as provide by law unless they have equivalent coverage in subsection (1)(a) or are eligible for insurance coverage by virtue of the employment of a surviving parent or legal guardian. Funding Policy. MMIA health insurance rates are actuarially set each year, and benefits may be adjusted to maintain plan funding. The City pays MMIA the monthly premiums and allocates the cost to participants as appropriate. The City has no direct liability for health claims and funds the plan on a pay-as-you-go basis. There is no prefunding of OPEB obligations since the City pays the full amount due each month. oil City of Kalispell, Montana Notes to Financial statements June 30, 2025 OPEB Liabilities, OPEB Expenses, and Deferred Outflows of Resources Related to OPEB. The City's total other post -employment benefit (OPEB) liability of $3,284,613 as of June 30, 2025, was determined by an actuarial valuation as of that date. Actuarial assumptions and other inputs. The total OPEB liability in the June 30, 2025 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods included in the measurement, unless otherwise specified: Inflation Salary increases Discount rate Premium trend rate Retirees share of benefit -related costs 3.50 percent 3.50 percent 4.22 percent 4.10 percent 100 percent of projected premiums The discount rate was based on the S&P Municipal Bond 20 Year High Grade Rate Index as of June 30, 2025. Mortality rates were based on the PUB-2010 General (for PERS) and Safety (MPORS and FURS) amount -weighted employee mortality tables projected to 2021 for males and females and projected generationally using improvement scale MP-2021; consistent with the PERS, FURS, and MPORS Pension Actuarial Valuations as of June 30, 2024. The actuarial assumptions used in the June 30, 2025 valuation represent a reasonable long-term expectation of future OPEB outcomes. The assumptions are tested with each valuation for ongoing reasonableness and are updated when appropriate. Changes in the Total OPEB Liability. Total OPEB Liability OPEB Liability at June 30,2024 $ 2,449,911 Changes for the year: Service cost $ 291,838 Interest $ 103,386 Difference between expected and actual experience $ (120,724) Changes in assumptions $ 560,202 Change of benefit terms $ - OPEB Liability at June 30,2025 $ 3,284,614 Sensitivity of the Total OPEB Liability to Changes in the Discount Rate. The following table presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower or higher than the current discount rate. ON City of Kalispell, Montana Notes to Financial statements June 30, 2025 1% Decrease Trend Rate 1% Increase (3.10%) (4.10%) (5.10%) Total OPEB Liability $ 2,905,026 $ 3,284,614 $3,732,025 Sensitivity of the Total OPEB Liability to Changes in the Healthcare Cost Trend Rates. The following table presents the total OPEB liability of the City, as well as what the City's total OPEB liability would be if it were calculated using a medical trend rate that is 1-percentage-point lower or higher than the current trend rate. 1% Decrease Trend Rate 1% Increase (3.10%) (4.10%) (5.10%) Total OPEB Liability $ 2,905,026 $ 3,284,613 $3,732,025 For the year ended June 30, 2025, the City reported deferred inflows and deferred outflows of resources related to OPEB from the following sources: Differences between expected and actual experience Changes in assumptions or other inputs Total Deferred Inflows Deferred Outflows of Resources of Resources $ (155,974) $ 20,250 $ (1,493,392) $ 1,227,208 $ (1,649,355) $ 1,247,459 Amounts reported as deferred outflows/deferred outflows of resources related to OPEB as of June 30, 2025 will be recognized in OPEB expense as follows: Fiscal Year Ending June 30: 2025 2026 2027 2028 2029 2030 2031 2032 2033 Actual to Expected Changes in Experience Assumptions Outflow Outflow Total $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (14,406) $ 66,850 $ 52,444 $ (5,476) $ 25,402 $ 19,926 $ (120,724) $ 560,202 $ 439,478 02l City of Kalispell, Montana Notes to Financial statements June 30, 2025 H. Amounts Due From Other Governments On June 30, 2025, the amounts due from other governments consisted of the following: General Fund Amount Debt Service Funds Due from: Flathead County -Taxes $ 390,036 State of Montana -Video Gaming Fees $ 425 Sub Total $ 390,461 al Revenue Funds Amount Due from: Flathead County -Taxes $ 635,014 Flathead County -Drug Grant $ 23,266 DNRC / Morning Star Project $ 6,101 State / Step Grant $ 48,373 US Dept of Trans - Safe Street Grant $ 130,930 U.S. DOJ $ 13,697 State of Montana - HMEP Grant Hazmat $ 4,841 Kalispell Municipal Court $ 175 Sub Total $ 862,397 I. Restricted Cash/Investments Amount Due from: Flathead County -Taxes $ 158,036 Total Governmental Funds $ 1,410,894 e Funds Amount Due from: Flathead County -Taxes $ 175,058 DNRC / ARPA $ 52,060 DNRC / WRF-SRF Funding $ 1,966,520 Total Business -type Funds $ 2,193,638 Total City of Kalispell $ 3,604,532 The following restricted cash/investments were held as of June 30, 2025. These amounts are reported within the cash/investment accounts on the Balance Sheet - Governmental Funds, and as restricted cash and investments on the Statement of Net Position - Proprietary Funds. RESTRICTED CASH: Business-tVDe Activities Water Bond Reserve Plant Investment/Impact Fees (1) Sewer Operating Reserve (2) Bond Reserve Plant Investment/Impact Fees (sanitary) (1) Plant Investment/Impact Fees (treatment plant) (1) Plant Investment/Impact Fees (storm) (1) Treatment Plant Replacement (3) Total business -type activities restricted cash/investments Governmental Activities Impact Fees Public Safety Growth related Capital (1) Urban Forestry Developers (4) Debt Service Westside TIF Bond Reserve Debt Service SID 345 Bond Reserve Debt Service Revolving Fund - SID 344 Bond Reserve Debt Service Revolving Fund - SID 345 Bond Reserve Total governmental activities restricted cash/investments Total restricted cash/investments July 1, 2024 Additions Subtractions June 30, 2025 $ 679,193 $ 240,282 $ - 919,475 1,030,394 650,087 (366, 400) 1,314,081 400,000 20,000 - 420,000 1,197, 587 - (154, 553) 1,043,034 4,111,949 1,197,356 (1,010,621) 4,298,684 2,440,034 565,626 (980,419) 2,025,241 2,017,822 452,367 (161,896) 2,308,293 749,799 481,135 (294, 821) 936,113 12,626,778 3,606,853 (2,968,709) 13,264,923 2,563,086 419,775 (32, 785) 2,950,074 141,368 - (840) 140,528 480,011 - 480,011 11,172 - 11,172 129,517 3,983 133,500 12,100 - 12,100 3,337,254 423,758 (33,625) 3,727,387 $ 15,964,032 $ 4,030,611 $ (3,002,334) $ 16,992,310 4i City of Kalispell, Montana Notes to Financial statements June 30, 2025 (1) Plant investment/impact fee cash. Montana State legislation regulating impact fees to fund capital improvements, MCA 7-6-1601 through 7-6-1604 (see 7-6-1603 below related to expending impact fees), became effective April 19, 2005 and sets forth the procedures and requirements for the imposition of impact fees by local governments. On October 16, 2006, by ordinance no. 1587, the Kalispell City Council authorized and established the procedure and imposition of impact fees to fund capital improvements related to additional capacity (growth). MCA 7-6-1603 states, "the collection and expenditure of impact fees must be reasonably related to the benefits accruing to the development paying the impact fees..." (2) Sewer operating reserve cash is restricted by ordinance no. 859 (1-month operating expenses). (3) Treatment plant replacement cash is restricted by an agreement with Flathead County Water District (third party). (4) Urban forestry receives cash from developers to be used to plant trees in new city developments (third party). J. Joint Ventures Joint ventures are independently constituted entities generally created by two or more governments for a specific purpose, which are subject to joint control, in which the participating governments retain 1) an ongoing financial interest or 2) an ongoing financial responsibility. City -County Health Department The City -County Health Department is operated under an interlocal agreement between Flathead County and the City of Kalispell. The Department operates under the supervision and control of the City -County Health Board. The Board consists of seven members, six of whom are appointed by the Board of County Commissioners. The Department is financed, in addition to revenue generated by providing health services, by the City and the County levying an identical mill levy in order that all property within the City of Kalispell and all property in Flathead County outside the City limits are taxed equally. The operation is accounted for in the County Health Fund and is included in the general-purpose financial statements of Flathead County within the Special Revenue Fund. 911 Dispatch Center The 911 Dispatch Center is operated under an interlocal agreement between Flathead County, the City of Columbia Falls, the City of Whitefish, and the City of Kalispell. The Center operates under the supervision and control of the Flathead Emergency Communications Center Board. The Board consists of six members, the Flathead County Sheriff, a County Commissioner chosen by the Board of County Commissioners, the County Attorney or other elected County officer, and an elected official or designee from each of the cities of Kalispell, Whitefish, and Columbia Falls. The Department is financed by funds received by all members from the State (9-1-1 fees) pursuant to Section 10-4-302, M.C.A. Any additional operating funds needed will be shared proportionally by all members. Under the supervision of the Board, the Director shall hire Oil City of Kalispell, Montana Notes to Financial statements June 30, 2025 and direct staff to carry out the responsibilities of the County's Office of Emergency Services and the Flathead County Fire Service Area. K. County Provided Services The City of Kalispell is provided various financial services by Flathead County. The County serves as cashier and treasurer for the City for tax assessment collections and other revenues received by the County, which are subject to distribution to the various taxing jurisdictions located in the County. The collections made by the County on behalf of the City are accounted for in an agency fund in the City's name and are periodically remitted to the City by the County Treasurer. The County charges the City for fees associated with City Special Assessments. L. 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. A variety of methods are used to provide insurance for these risks. Commercial policies, transferring all risks of loss, except for relatively small deductible amounts are purchased for property and content damage and professional liabilities. The City participates in two statewide public risk pools operated by the Montana Municipal Insurance Authority, for workers' compensation and for tort liability coverage. Employee medical insurance is provided through a statewide health insurance pool administered by MMIA. Given the lack of coverage available, the City has no coverage for potential losses from environmental damage. Effective July 1, 1987 The City of Kalispell joined with other Montana cities to form the Montana Municipal Insurance Authority, a self-insurance pool offering Worker's Compensation and Liability Coverage. Both public entity risk pools currently operate as common risk management and insurance programs for the member governments. The liability limits for damages in tort action are $750,000 per claim and $1.5 million per occurrence with an $11,250 deductible per occurrence. State tort law limits the City's liability to $1.5 million. The city pays an annual premium for its employee injury insurance coverage, which is allocated to the employer funds based on total salaries and wages. The agreements for formation of the pools provide that they will be self-sustaining through member premiums. The tort liability plan and workers' compensation program issued bonds in the amount of $4.41 million and $7.610 million, respectively, to immediately finance the necessary insurance reserves. All members signed a contingent note for a pro rata share of this liability in case operating revenue was insufficient to cover the debt service. The City's share is $201,445 for liability and $281,715 for Workers' Compensation to finance the necessary insurance reserves. Based on the plan's current financial position, the City does not expect to make any payment on these notes. Separate financial statements are available from the Montana Municipal Insurance Authority. On October 1, 2004, Kalispell signed a 5-year agreement, since then extended, and through the Montana Municipal Insurance Authority, to create a statewide health insurance pool. The City pays the total monthly premium for employees who only choose to cover themselves. For employees who choose to cover additional dependents, the City pays a percentage of the extra costs. 0fA City of Kalispell, Montana Notes to Financial statements June 30, 2025 M. Contingencies The City is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the City's legal counsel that resolution of these matters will not have a material adverse effect on the financial condition of the City. The effect on the financial statements cannot be determined at this time due to litigation. Accordingly, no provision has been made in the financial statements for these contingent liabilities. N. Receivables Taxes/Assessments Receivable The following funds had taxes and/or assessments receivable at June 30, 2025. FUND Source General - Major Governmental Taxes Downtown TIF Taxes Westside TIF Taxes Parks Taxes Emergency Responder Levy Taxes Old School "Tech" TIF Taxes Old School "Ind" TIF Taxes Rail Park TEDD Taxes Health Levy Taxes Light Maintenance District Assessments Street Maintenance - Major Governmental Assessments Urban Forestry Assessments Westside TIF debt service Taxes SID 344 Assessments SID 345 Assessments S & C's Assessments Sewer - Major Business -type Solid waste Accounts Receivable Total Governmental Funds Assessments Assessments Total Business -type Funds Total City Amount $ 328,376 72,224 62,709 147,141 60,059 68,208 6,119 49,191 28,092 177,139 36,167 91,598 801,594 61,532 60,677 $ 2,050,826 79,953 73,275 153,228 $ 2,204,054 At June 30, 2025, the Ambulance fund had accounts receivable deferred net of $348,425. Total net accounts receivable of the Ambulance fund is $361,423. The difference is the result of $12,998 being receivable, and therefore recognized as revenue, prior to the Ambulance fund conversion from a proprietary fund to a special revenue fund. or-] City of Kalispell, Montana Notes to Financial statements June 30, 2025 Loans Receivable Community Development Loan Revolvin Second Avenue West Partners In August of 2002, the City of Kalispell entered two (2) notes receivable agreements with 2nd Avenue West Partners, L.P. (Hampstead Partners) for property on 2nd Avenue West in Kalispell. The property consists of a 40-unit low-income apartment complex known as 2nd Avenue West Independent Living Center. As stipulated in the agreement, this property is restricted as low-income housing, and shall remain as such for a period of thirty-five years. One of these notes is for $480,000, and bears interest at 1% per annum. The second of these notes is for $400,000, and bears interest at 4.81% per annum. These loans mature on February 28, 2032. Payments of interest on the note are due on or before the last day of the taxable year, to the extent there is surplus cash, as defined bythe note. Unpaid interest shall accrue until paid, but not compound on the first loan. Payments of principal are not required until the maturity date of the loans. The notes are secured by a deed of trust on the property. Accrued interest as of June 30, 2025, is $108,671, and $748,292, respectively. Community Development Block Grant Economic Development Program In fiscal year 2007, the City entered a community development program with funding from a community development block grant economic development program. Eligibility for these low interest loans is tied to the creation of jobs within Kalispell with a percentage of the jobs created to be filled by low and moderate -income persons. Rural Development Loan Revolving On May 5, 2003, the City Council passed Resolution No. 4780 establishing an Economic Development Revolving Loan Fund (ED RLF) for small business retention and expansion. The resolution also created an Economic Development Loan Review Committee to process all applications for assistance. Additionally, on August 16, 2004 and again on November 6, 2006, the City Council, by Resolution No. 4929 and 5158, respectively, authorized the City Manager to enter into loan agreements with the United States Department of Agriculture, Rural Development office, in the amount of $520,000 and $750,000. These monies will be used to assist in the retention and expansion of small business, which may stimulate economic development activity by assisting the private sector where a funding gap exists, and alternative sources of public and private financing are not adequate. In Fiscal year 2025, the City completed the transfer and consolidation of its remaining Rural Development loan activities and balances into the Montana West Economic Development (MWED) Community Development Block Grant — Economic Revolving Loan Program. This action, originally authorized by City Council through Resolution No. 6158 on September 5, 2023, formally transitioned all related loan receivables, restricted cash, and program responsibilities to MWED to streamline administration and align ongoing management with MWED's regional economic development efforts. Following the transfer, the City no longer reports any Rural Development revolving loan activity within its financial statements. OR City of Kalispell, Montana Notes to Financial statements June 30, 2025 SUMMARY COMMUNITY DEVELOPMENT LOANS RECEIVABLE From CD Loan Rewlving RD Loan Rewlving Westside TIF ori�c % To 2018 3.00 Wheatons 2002 1.00 Hampstead Partners" 2002 4.81 Hampstead Partners" 2002 1.00 Hampstead Partners - Interest Portion" 2002 4.81 Hampstead Partners - Interest Portion" 2020 3.00 PKM, LLC (NW DRYWALL) 2020 3.00 PKM, LLC (NW DRYWALL) Total Governmental Funds "Long Term Loans Receivable - Matures 2032 O. City Court Contracts Receivable Oriq. Amt. Balance Purpose 46,991 2,513 Jobs 480,000 480,000 Low Income Housing 400,000 400,000 Low Income Housing - 108,671 Low Income Housing - 748,292 Low Income Housing 250,000 - Small Business 500,000 395,446 Redevelopment $ 1,676,991 $ 2,134, 922 Contracts receivable of the City Court, because of the uncertainty regarding when and if they will be collected, are no longer booked as an asset on the statement of net position/balance sheet of the Governmental-Type/General Fund. These receivables, at June 30, 2025, amounted to $2,724,240. P. Fund Balance Classification by Major Purposes The table presented below displays the City's fund balances by major purpose as displayed on page 23, the governmental funds balance sheet. 111it City of Kalispell, Montana Notes to Financial statements June 30, 2025 Nonspendable - not in spendable form Long-term recievables Prepaids Total nonspendable Restricted General Government -Health Insurance Public Safety - Opioid Public Safety-admin. Public Safety -EMS Public Safety -Building Inspection Public Safety -Fire capital improvements Public Safety -Police capital improvements Public Safety -Police equip. Public Safety -Police personnel Public Safety -Fire equip. Public Safety -Fire personnel Public Safety - EMS Levy Public Works -Street cleanning and Maint. Public Works -Street Lights Public Works -roads and streets Public Works -transportation infrastructure Culture and Recreation -Park improvements Culture and Recreation -Equipment Culture and Recreation -Programs Culture and Recreation -trees and maintenance Community Development- Rail Park Tedd Community Development -Downtown TIF Community Development -Old School Station Community Development -South Kalispell TIF Community Development-Westside TIF Community Development -Revolving loan funds Community De\,elopment - Grants Debt Service-SID Debt Service -Old School improvements Debt Service -The Willows improvements Debt Service-S & C warrants Debt Service -Core area improvements Total restricted Assigned Capital Equipment Parking Miscellaneous Total assigned Unassigned Total fund balances Q. Restatement Emergency Other Total General Responder Street Governmental Go\,ernmental Fund Levy Maint. Funds Funds 15,785 15,785 29,297 29,297 6,303 6,303 66,014 66,014 4,070,887 4,070,887 2,690,754 2,690,754 259,323 259,323 12,794 12,794 42,002 42,002 6,293 6,293 22,993 22,993 1,759,350 - - 1,759,350 - 5,060,133 21,006 5,081,139 - 1,205,336 1,205,336 1,896,408 1,896,408 1,565,313 1,565,313 336,869 336,869 1,560,705 1,560,705 1,347,361 1,347,361 287,994 287,994 1,359,843 1,359,843 85,960 85,960 5,501,781 5,501,781 185,691 185,691 62,532 62,532 234,990 234,990 10 10 25,099 25,099 7,307 7,307 1,025,087 1,025,087 1,759,350 5,060,133 23, 931, 737 30, 751, 220 23,542 23,542 1,572,005 1,572,005 1,595,547 1,595,547 3,114,929 - - (1,317) 3,113,612 4,710,476 1,759,350 5,060,133 23, 930, 420 35, 460, 379 During fiscal year 2025, the City of Kalispell recorded restatements to beginning net position and fund balances resulting from (1) the adoption of a new accounting standard, (2) the correction of a prior -period classification error, and (3) changes within the financial reporting entity related to major fund presentation. These restatements are described below. City of Kalispell, Montana Notes to Financial statements June 30, 2025 Change in Accounting Principle As of July 1, 2024, the City adopted GASB Statement No. 101, Compensated Absences. The provisions of this standard modernize the types of leave that are considered compensated absences and provide guidance for consistent recognition and measurement of compensated absence liabilities. The adoption of GASB Statement No. 101 resulted in a restatement of beginning net position as of July 1, 2024, totaling $1,575,881, allocated as follows: The effect of adopting GASB Statement No. 101 on beginning fund net position is presented in the tables below. July 1, 2024 Change in As Previously Accounting July 1, 2024 Reported Principle As Restated Government -Wide Governmental Activities $ 117,262,569 $ (1,251,168) $ 116,011,401 Business -Type Activities 153,155,516 (324,713) 152,830,803 Total Primary Government $ 270,418,085 $ (1,575,881) $ 268,842,204 Proprietary Funds Major Funds: Water $ 58,752,671 $ (96,825) $ 58,655,846 Sewer 92,661,880 (174,016) 92,487,864 Nonmajor Funds 1,740,965 (53,871) 1,687,094 Total Proprietary Funds $ 153,155,516 $ (324,712) $ 152,830,803 Correction of Error in Previously Issued Financial Statements During fiscal year 2025, a prior -period classification error was identified related to the reporting of deferred revenues in certain governmental funds. Amounts related to loan and assessment receivables in the Westside Tax Increment Financing (TIF) Fund and the Community Development Fund were reported as fund balance rather than deferred inflows of resources in previously issued financial statements. As a result, beginning fund balance as of July 1, 2024 was restated to properly reflect deferred inflows of resources in the following amounts: • Westside TIF Fund: $416,716 • Community Development Fund: $1,684,329 The effect of this correction is shown in the table below. I11YA City of Kalispell, Montana Notes to Financial statements June 30, 2025 June 30 ,2024 Error Correction Error Correction June 30 ,2024 As Previously Westside TIF Community As Restated Reported Development Nonmajor Funds $ 21,762,678 (416,716) (1,684,329) $ 19,661,633 Total governmental funds $ 31,040,576 (416,716) (1,684,329) $ 28,939,531 Change Within the Financial Reporting Entity - Major Fund Presentation During fiscal year 2025, the City determined that the American Rescue Plan Act (ARPA) Fund no longer met the quantitative threshold for presentation as a major governmental fund. Accordingly, the ARPA Fund, which had previously been presented as a major governmental fund, is reported as a nonmajor governmental fund beginning in fiscal year 2025. Because the ARPA Fund had no beginning fund balance as of July 1, 2024, this presentation change did not affect beginning governmental fund balances. Total governmental fund balances remain unchanged; only the presentation of the ARPA Fund within the governmental fund financials statements have been modified. The effects of this change on beginning governmental fund balances is presented below: Governmental Funds Nonmajor Governmental Funds ARPA Fund (Former Major Fund) R. Subsequent Events July 1,2024 Change to or Within July 1 ,2024 As Previously the Financial Reporting As Restated Reported System $ 21,762,678 $ $ 21,762,678 WWTP Fermenter Rehabilitation Project The City Council approved the issuance of Sewerage System Revenue Bonds to finance rehabilitation of the wastewater treatment plant fermenter and related improvements. Funding includes a $750,000 Subordinate Lien Taxable Series 2025A Bond and a $1,052,000 Tax -Exempt Series 2025B Bond through the State Revolving Fund (SRF) Loan Program. Green Acres Sewer Improvement Protect The City Council approved the issuance of Special Improvement District Bonds to finance sewer improvements serving the Green Acres Community. Funding includes a $168,386 Taxable Series 2025A Bond and a $175,000 Tax -Exempt Series 2025B Bond through the State Revolving Fund (SRF) Loan Program, with repayment from special assessments levied within the district. `1IN City of Kalispell, Montana Notes to Financial statements June 30, 2025 Lead Service line Replacement Protect On August 26, 2025, the City opened bids for the 2025 Lead Service Line Replacement Project to remove and replace aging lead and galvanized service lines throughout the community. The project is designed to improve water quality and system reliability and will be financed through the Montana Department of Natural Resources and Conservation (DNRC) Drinking Water State Revolving Fund (SRF) loan program. On September 2, 2025, the City Council approved Resolution No. 6292, declaring the City's official intent to reimburse eligible design, engineering, and preliminary construction costs from future SRF bond proceeds. The total project cost is anticipated to be partially offset through federal loan forgiveness under the lead service line replacement funding provisions, with final contract award contingent upon funding confirmation and Council concurrence. Waste Water Treatment Plant Dewatering Proiect The City Council approved the issuance of State Revolving Fund (SRF) revenue bonds to finance the Wastewater Treatment Plant Dewatering Project, which will replace aging sludge dewatering equipment and improve operational efficiency at the facility. The project is designed to enhance solids handling, reduce disposal costs, and support future treatment capacity needs. Funding will be provided through a combination of wastewater utility funds and SRF loan proceeds administered by the Montana Department of Environmental Quality (DEQ) and the Department of Natural Resources and Conservation (DNRC). The total project cost is estimated at approximately $3.5 million, with bond issuance and construction expected to occur during fiscal year 2026. PFAS Water Treatment Improvements Subsequent to year-end, the City advanced projects to address the presence of per -and polyfluoroalkyl substances (PFAS) detected in portions of the municipal water system. In April 2025, the City amended its engineering agreements to design alternative water source and treatment solutions for the Grandview and Armory well sites. The City has since initiated bidding for PFAS-related water main improvements connecting the lower pressure zone storage tanks near the Buffalo Hill Golf Course to improve system redundancy and water quality. Construction of ion exchange treatment units at the Grandview Wells was completed in September 2025, with the new system placed into service to remove PFAS contaminants. These projects are being funding through a combination of a federal Emerging Contaminants Grant and State Revolving Fund (SRF) loan proceeds administered by the Montana Department of Environmental Quality (DEQ) and the Department of Natural Resources and Conservation (DNRC). Ambulance Billing Services The City Council approved a contract with a third -party provider to manage ambulance billing and collection services for the Fire Department. The transition from in-house billing to contracted services begins in fall 2025 and is intended to improve collection efficiency and reduce administrative workload. Implementation of the new billing system is expected to be completed during fiscal year 2026. S. Commitments The City entered into contract(s) for professional engineering and construction services for the Lower Zone Tank(s) Replacement and Rehabilitation (W-RR-11) project. Tank #1 is currently being constructed, and tank #2 bids were opened in October 2025. Total project costs are estimated at $17,376,660. For the I[K! City of Kalispell, Montana Notes to Financial statements June 30, 2025 year ended June 30, 2025, the City had incurred $3,839,963 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into contract(s) for professional engineering and construction services for the 1 MG Elevated Storage Tank & Wells (W-T-01,W-W-01 & W-W-02) project. The contract commitment for the project is $19,107,012. For the year ended June 30, 2025, the City had incurred $18,954,452 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into contract(s) for professional engineering and construction services for the Wastewater Treatment Plant Fermenter Rehabilitation (WWTP-Misc 8) Project. The project went out to bid in February 2024 and the City received no bids for the project. The engineering consultant investigated different engineering and bidding specifications and rebid the project. The project was awarded and is currently under construction. Total project costs are estimated at $3,177,948. For the year ended June 30, 2025, the City incurred $278,869 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for professional engineering services for the Wastewater Treatment Plant Equalization Basin Expansion (WWTP-EQB-2) Project. The project went out to bid in February 2024 and the bids exceeded the engineer's cost estimate and the bids were rejected. The engineering consultant will investigate different engineering and bidding specifications and rebid the project at a later date. Total project costs are estimated at $8,837,848. For the year ended June 30, 2025, the City had incurred $351,206 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into contract(s) for professional engineering and construction services for the Wastewater Treatment Plant Biosolids Alternate Disposal (WWTP-BDD 2) Plan. The contract commitment for the project is $5,864,100. For the year ended June 30, 2025, the City had incurred $397,057 towards the project, which is reported as construction in progress in the Statement of Net Position. The City entered into a contract for professional engineering services for Lift Station #36 Improvements and Conveyance Project (WW-LS-06). The project construction bid was awarded in October 2025. Total project costs are estimated at $3,856,000. For the year ended June 30, 2025, the City had incurred $67,625 towards the project, which is reported as construction in progress in the Statement of Net Position. In 2024 the City applied for EPA funding to address PFAS contamination in its drinking water. The City was awarded a grant and funding through DEQ and the SRF program with 100% loan and grant forgiveness, and the City entered into contract(s) for professional engineering and construction services. Phase 1 of the project includes preliminary engineering, engineering design, and a temporary treatment system for Grandview Wells which provides immediate PFAS removal. Phase 2 includes construction of transmission lines, new permanent water wells and facilities to replace existing water sources contaminated with PFAS. The temporary treatment system for Grandview Wells is complete and bids for the transmission line were awarded with work to start in early winter of 2025. Total project costs are estimated at $23,732,000. For the year ended June 30, 2025, the `11R City of Kalispell, Montana Notes to Financial statements June 30, 2025 City has incurred $1,617,392 towards the project, which is reported as construction in progress in the Statement of Net Position. The City is rebidding construction services for the Sewer Main Slip Lining (WW-RR11, 13, 16, 17, and 18) Project. Total project costs are estimated at $890,982. For the year ended June 30, 2025, the City had incurred $9,751 towards the project, which is reported as construction in progress in the Statement of Net Position. The City was awarded a Transportation Alternatives (TA) grant for the completion of a pathway along Four Mile Drive. The City entered into contract(s) for engineering and construction services for the Four Mile Drive Path Project. The Professional Services and Construction commitments for the project are $1,121,653. For the year ended June 30, 2025, the City had incurred $62,296 towards the project, which is reported as construction in progress in the Statement of Net Position. WIN REQUIRED SUPPLEMENTARY INFORMATION OTHER THAN MANAGEMENT DISCUSSION AND ANALYSIS `11rm City of Kalispell, Montana Required Supplementary Information June 30, 2025 SCHEDULE OF TOTAL LIABILITY AND RELATED RATIOS OTHER POSTEMPLOYMENT BENEFITS June 30, 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025 Total OPEB Liability Service cost $ 332,296 $ 298,579 $ 227,903 $ 253,580 $ 326,193 $ 208,761 $ 149,521 $ 150,319 $ 291,838 Interest $ 7,695 $ 137,494 $ 135,435 $ 76,055 $ 72,682 $ 157,217 $ 124,257 $ 95,911 $ 103,386 Difference between expected and actual experience $ 13,222 $ (137,426) $ (736,800) $ (98,937) $ (235,464) $ (48,744) $ 148,753 $ (134,050) $ (120,724) Changes in assumptions $ 1,013,936 $ (253,167) $ (798,142) $ 244,123 $ 346,504 $ (1,152,520) $ 378,221 $ 4,118 $ 560,202 Changes in benefit terms $ - $ - $ - $ - $ - $ - $ - Contributions by employer $ $ $ $ $ $ $ $ $ Net change in total OPEB liability $ 1,439,149 $ 45,480 $ (1,171,604) $ 474,821 $ 509,915 $ (835,286) $ (675,042) $ 116,298 $ 834,702 Total OPEB liability-beginning(restated) $ 2,546,180 $ 2,546,180 $ 3,985,329 $ 2,813,725 $ 3,288,546 $ 3,798,461 $ 3,008,655 $ 2,333,613 $ 2,449,911 Total OPEB liability -ending $ 3,985,329 $ 2,591,660 $ 2,813,725 $ 3,288,546 $ 3,798,461 $ 2,963,175 $ 2,333,613 $ 2,449,911 $ 3,284,613 Cove red-em ployee payroll $10,456,215 $10,748,989 $ 11,430,605 $ 11,794,098 $ 12,822,159 $ 13,270,935 $15,925,614 $16,483,010 $20,624,554 Total OPEB liability as a percentage of covered - employee payroll 38.1% 24.1% 24.6% 27.9% 29.6% 22.3% 14.7% 14.9% 15.9% Notes to Schedule: Changes of assumptions and other inputs Discount rate 3.13% 3.45% 3.36% 2.66% 2.18% 4.09% 4.13% 4.11% 4.22% Medical trend 4.50% 4.50% 3.50% 3.50% 3.20% 3.20% 2.50% 2.50% 4.10% Governmental Accounting Standards Board, Statement 75 requires this information to be provided for 10 years. Because fiscal year 2018 was the first year of implementation, 10 years is not available Qty of Kalispell SCHEDULE OF CONTRIBUTIONS OTHER POSTEMPLOYMENT BENEFITS June 30, 2025 2017 2018 2019 2020 2021 2022 2023 2024 2025 Contractually required contribution $ $ - $ $ $ $ $ $ $ Contributions in relation to the contractually required contribution $ $ $ $ $ $ $ $ $ Contribution deficiency (excess) $ $ $ $ $ $ $ $ $ City'sco\ered-employee payroll $ 10,456,215 $ 10,748,989 $ 11,430,605 $ 11,794,098 $ 12,822,159 $13,270,935 $15,925,614 $16,483,010 $20,624,554 Contributions as a percentage of covered - employee payroll 0% 0% 0% 0% 0% 0% 0% 0% 0% Go\emmental Accounting Standards Board, Statement 75 requires this information to be provided for 10 years. Because fiscal year 2018 was the first year of implementation, 10 years is not available. 108 N W O d� o C E E a �o o = C c E Gcl i N G o QEco N Gl � Y Q U) d Q _0 U T _O N Qc N G ry W •� U a .O a � O a o V' N 01 00 V' 00 O 69 69 69 o r-- 00 M oc o 0 O N oc 0� ocO � 00 M O 69 69 69 00 oc 00 r M W) M 00 r� V N ll: O 00 69 00 69 V 69 ~ oc O oc r-- M r- r- V r-- 00 o0 oy o N �_ 01 M Vr M O 69 69 69 \O l� M C1 M O n O � O C� oc l� N \O M M \O M l- N M l� M O � 69 N 01 69 V1 69 C:1 V1 N OC M l� 01 00 O o0 G1 ,may M O 01 69 N � V1 69 O 0t � �r 00 00 V1 M M � 00 `O 01 OM1 N 00 0 M o N O 01 o s9 00 s9 \O s9 \O 00 l� 0 C1 v1 M O 69 69 69 0 O 00 N 0 M M � M l� O 69 69 69 DD M 0 en � O V1 o0 M 01 l� 00 l— O 69 69 69 p , i a M 00 --i O 00 O 69 69 � 69 00 69 00 69 V'� o rq M o0 69 69 � 69 01 69 01 69 00 0 69 69 � 69 o0 O 00 O 01 O \p \p \p 69 69 � 69 N 69 N 69 --� tr) 69 kr) 69 V') 59 oo 00 00 � � M v 6S yr 69 O 69 o0 O 00 O 01 M �O 69 M �O V') DD cc E o 64 69 � 69 59 _ En � 69 O O M N 59 rq N 69 01 0 N N N bR En 69 O O O O 01 M 69 01 M 69 � � � I- � M O oc 69 oc 69 00 69 ti U � O O 0 Rs w i City of Kalispell, Montana Required Supplementary Information June 30, 2025 Changes of Benefit Terms The following changes to the plan provisions were made as identified: 2017: Working Retiree Limitations — for PERS Effective July 1, 2017, if a PERS retiree returns as an independent contractor to what would otherwise be PERS-covered employment, general contractor overhead costs are excluded from PERS working retiree limitations. Refunds 1) Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. 2) Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. 3) Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump -sum payment. Lump -sum payouts Effective July 1, 2017, lump -sum payouts in all systems are limited to the member's accumulated contributions rate than the present value of the member's benefit. Disabled PERS Defined Contribution (DC) Members PERS members hired after July 1, 2011, have a normal retirement age of 65. PERS DC members hired after July 1, 2011 who became disabled were previously only eligible for a disability benefit until age 65. Effective July 1, 2017, these individuals will be eligible for a disability benefit until they reach 70, thus ensuring the same 5-year time period available to PERS DC disabled members hired prior to July 1, 2011, who have a normal retirement age of 60 and are eligible for a disability benefit until age 65. Changes in Actuarial Assumptions and Methods Method and assumptions used in calculations of actuarially determined contributions Actuarially determined contributions are determined on the valuation date payable in the fiscal year beginning immediately following the valuation date. The following actuarial assumptions and methods were used to determine contribution rates reported for fiscal year ending June 30, 2024, which were based on the results of the June 30, 2023 actuarial valuation: General Wage Growth* 3.50% Investment Rate of Return* 7.30%, net of pension plan investment and administrative expenses *Includes inflation at 2.75% Merit salary increase 0%to 4.80% Asset valuation method Four-year smoothed market Actuarial cost method Entry age Normal Amortization method Level percentage of payroll, open Remaining amortization period 30 years INS City of Kalispell, Montana Required Supplementary Information June 30, 2025 Mortality • Active Participants PUB-2010 General Amount Weighted Employee Mortality projected to 2021 for males and females. Projected generationally using MP-2021. • Disabled Retirees PUB-2010 General Amount Weighted Disabled Retiree mortalitytable, projected to 2021, set forward one yearfor both males and females. PUB-2010 General Amount Weighted Contingent Survivor Mortality • Contingent Survivors projected to 2021 with ages set forward one yearfor males and females. Projected generationally using MP-2021. PUB-2010 General Amount Weighted Healthy Retiree Mortality Table projected to 2021, with ages set forward one year and adjusted 104%for • Health Retirees males and 103%forfemales. Projected generationally using MP-2021. The actuarial assumptions and methods utilized in the June 30, 2023 valuation, were developed in the five-year experience study for the period ending 2022. INVA C O m m E o(0 C � O i LO (0 O N O O Ocn y E N Q Y CL 7 O O U) U � S ry o0 C o vNj M 0 V1 V' 5A 69 69 69 c M O N o 0 00 01 V1 \J 00 O N N 69 V1 69 o0 69 N 69 M W 01 00 N lc V1 01 OC V) 01 01 00 M 00 a1 01 o0 ll� \0 N 69 V1 69 o0 69 N 69 V) 00 � a OC .�-i V1 N �' 00 O N 69 V) 69 00 69 N 69 00 N O � OC � ~ p M �r V ,�-i N O ~ 00 M 69 \O 69 01 69 N 69 0 oc 00 M DD 00 O V 69 69 69 69 V3 � O O O oN0 � V en o O v N 69 V) 69 00 69 N 69 lr� N r-- � oo r.. M 69 69 N 69 r.. 69 O l� l� M iNn N o00 O �t C1 NV1 00 o0 M 69 \n 69 01 69 N 69 O 00 0 0 cls V M M 69 \O 69 01 69 M 69 O U � O ..r C O N it is � W O tj �+ C: FH i N m O a N N N N co f/1 O M W Y CL C O_ O U) iL CC ry O N N _ M M N 69 69 N 69 69 69 N 69 oo 69 69 N 69 l— r- O N 00 01 00 01 69 01 O � _ N 69 69 N 69 V'1 69 69 N 69 rO rO O c l- W) l- W) 69 N 00 � M 69 69 N 69 01 01 69 01 � 69 69 N 69 O O O M oc r" � � N 00 oo O oo � � s9 rq N � UU U�UU UQ W Ate., U gip., d a 4 Q 0 O 4 Q City of Kalispell, Montana Required Supplementary Information June 30, 2025 Changes of Benefit Terms The following changes to the plan provision were made as identified: 2017: Working Retiree Limitations — for MPORS Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: o may not become an active member in the system; and o are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. Members who return for 480 or more hours in a calendar year: o must become an active member of the system; o will stop receiving a retirement benefit from the system; and o will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. Employee, employer and state contributions, if any, apply as follows: o employer contributions and state contributions (if any) must be paid on all working retirees; o employee contributions must be paid on working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit — for MPORS Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: o is not awarded service credit for the period of reemployment; o is refunded the accumulated contributions associated with the period of reemployment; o starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: o is awarded service credit for the period of reemployment; o starting the first month following termination of service, receives: * the same retirement benefit previously paid to the member, and * a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member's rehire date; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a GABA: * on the initial retirement benefit in January immediately following second retirement, and "P City of Kalispell, Montana Required Supplementary Information June 30, 2025 * on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Refunds • Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. • Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. • Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump -sum payment. Lump -sum payouts ❑ Effective July 1, 2017, lump -sum payouts in all systems are limited to the member's accumulated contributions rate than the present value of the member's benefit. Changes in Actuarial Assumptions and Methods Method and assumptions used in calculations of actuarially determined contributions Actuarially determined contributions are determined on the valuation date payable in the fiscal year beginning immediately following the valuation date. The following actuarial assumptions and methods were used to determine contribution rates reported for fiscal year ending June 30, 2023, which were based on the results of the June 30, 2022 actuarial valuation: General Wage Growth* 3.50% Investment Rate of Return* 7.30%, net of pension plan investments and administrative expenses *Includes inflation at 2.75% Merit salary increases 1%to 6.40% Asset valuation method Four-year smoothed market Actuarial cost method Entry Age Normal Amortization method Level percentage of pay, open Mortality • Active Participants PUB-2010 Safety Amount Weighted Employee Mortality projected to 2021 for males and females. Projected generationally using MP-2021. • Healthy Retiree PUB-2010 Safety Amount Weighted Healthy Retiree mortality table projected to 2021 set forward one yearfor males and adjusted 105%for males, and 100%forfemales. Projected generationally using MP-2021. PUB-2010 Safety Amount Weighted Disabled Retiree mortality table projected to 2021, set forward one yearfor males. • Disabled Retiree PUB-2010 Safety Amount Weighted Contingent Survivor Mortality projected to 2021, set forward one yearfor males. Projected • Contingent Survivor generationally using MP-2021. The actuarial assumptions and methods utilized in the June 30, 2022 valuation, were developed in the five-year experience study for the period ending 2021. `N12, Ps o oc 0 0 7 � 7 M M V1 00 C) O O 69 M 69 Ct 6900 69 o N o 0 0�1 V1 ,M _,i \O oc C) N 01 DD 69 M 69 V1 CA 69 o0 O o0 V1 V V) oc 69 M 69 V1 69 N 69 oc W) rl V1 00 CF' M Moc en O 00 00 � N M 01 69 M 69 Gt 69 N 69 oc M N V1 O oc 69 M 69 It 69 N 69 00 M N � --� \O l� l� \O M N O N M � DD 01 O 00 � 69 �t 69 vl 69 N 69 N O_ 00 W) 00 69 N 69 M 69 N 69 V1 O V1 ti oc OC a M M ~ 00 06 06 69 69bo \O 69 N 69 c M � O 01 0 0 N o0 o0 N \O l� 00 69 69 69 69 0 00 p o 0 kn � N It M 00 V) In M 00 In 00 69 M 69 V1 69 N 69 N N O d O ..r c O N it is � N �O �+ c Fti 2 N U m O — c14 y N E co O O y O N N W CL Y Q 7 O r+ O U) ry O U O W o O O r �o �o s9 N oc oc \p M N N 01 69 69 ti 69 N N 69 00 ooc M 69 69 N 69 01 M 01 M 69 N M N oc 01 cc 01 r N N N O 69 69 N 69 0 69 oc N N O 69 69 N 69 r O O N 01 01 01 01 N M N N O 69 69 N 69 N M oc crq M M N 69 69 N 69 01 01 O M 69 69 N 69 O O 69 00 00 00 M M M 1p 69 69 N 69 01 N 01 N 69 N 00 oc 69 69 N 69 rq N N 69 r- oc � 69 69 M 69 �i ci � W CZ O O O cz r2 r2 p a0i UU U�UU UQ WAS., U "" i City of Kalispell, Montana Required Supplementary Information June 30, 2025 Changes of Benefit Terms The following changes to the plan provision were made as identified: 2017: Working Retiree Limitations —for FURS Applies to retirement system members who return on or after July 1, 2017 to covered employment in the system from which they retired. • Members who return for less than 480 hours in a calendar year: o may not become an active member in the system; and o are subject to a $1 reduction in their retirement benefit for each $3 earned in excess of $5,000 in the calendar year. • Members who return for 480 or more hours in a calendar year: o must become an active member of the system; o will stop receiving a retirement benefit from the system; and o will be eligible for a second retirement benefit if they earn 5 or more years of service credit through their second employment. Employee, employer and state contributions, if any, apply as follows: o employer contributions and state contributions (if any) must be paid on all working retirees; o employee contributions must be paid in working retirees who return to covered employment for 480 or more hours in a calendar year. Second Retirement Benefit — for FURS Applies to retirement system members who return on or after July 1, 2017 to active service covered by the system from which they retired. • If the member works more than 480 hours in a calendar year and accumulates less than 5 years of service credit before terminating again, the member: o is not awarded service credit for the period of reemployment; o is refunded the accumulated contributions associated with the period of reemployment; o starting the first month following termination of service, receives the same retirement benefit previously paid to the member; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a Guaranteed Annual Benefit Adjustment (GABA) in January immediately following second retirement. If the member works more than 480 hours in a calendar year and accumulates at least 5 years of service credit before terminating again, the member: o is awarded service credit for the period of reemployment; o starting the first month following termination of service, receives: * the same retirement benefit previously paid to the member, and * a second retirement benefit for the period of reemployment calculated based on the laws in effect as of the member's rehire date; and o does not accrue post -retirement benefit adjustments during the term of reemployment but receives a GABA: * on the initial retirement benefit in January immediately following second retirement, and INK City of Kalispell, Montana Required Supplementary Information June 30, 2025 * on the second retirement benefit starting in January after receiving that benefit for at least 12 months. • A member who returns to covered service is not eligible for a disability benefit. Refunds Terminating members eligible to retire may, in lieu of receiving a monthly retirement benefit, refund their accumulated contributions in a lump sum. Terminating members with accumulated contributions between $200 and $1,000 who wish to rollover their refund must do so within 90 days of termination of service. Trusts, estates, and charitable organizations listed as beneficiaries are entitled to receive only a lump -sum payment. Lump -sum payouts ❑ Effective July 1, 2017, lump -sum payouts in all systems are limited to the member's accumulated contributions rate than the present value of the member's benefit. Changes in Actuarial Assumptions and Methods Method and assumptions used in calculations of actuarially determined contributions Actuarially determined contributions are determined on the valuation date payable in the fiscal year beginning immediately following the valuation date. The following actuarial assumptions and methods were used to determine contribution rates reported for fiscal year ending June 30, 2023, which were based on the results of the June 30, 2022 actuarial valuation: General Wage Growth* 3.50% Investment Rate of Return* 7.30%, net of pension plan investments and administrative expenses *Includes inflation at 2.75% Merit salary increases 1%to 6.40% Asset valuation method Four-year smoothed market Actuarial cost method Entry Age Normal Amortization method Level percentage of payroll, open IPO City of Kalispell, Montana Budgetary Comparison Schedule For Fiscal Year Ended June 30, 2025 REVENUES Taxes and Assessments Licenses and permits Intergovernmental Charges for Services Fines and Forfeitures Miscellaneous Investment and Royalty Earnings Increase (decrease) in Investments Total revenues EXPENDTIURES Current: General Government Personal services Operations and maintenance Public Safety Personal services Operations and maintenance Public Works Personal services Operations and maintenance Culture and Recreation Operations and maintenance Housing and Community Development Personal services Operations and maintenance Miscellaneous Debt Service Debt service - principal Debt service - interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance Fund balances - beginning Fund balances - ending The notes to the financial statements are an integral part of this statement. GENERALFUND BUDGETED AMOUNTS ORIGINAL FINAL ACTUAL AMOUNTS VARIANCE WITH FINAL BUDGET POSITIVE (NEGATIVE) $ 7,670,000 $ 7,670,000 $ 7,724,704 $ 54,704 319,000 319,000 361,623 42,623 3,689,434 3,689,434 3,732,732 43,298 1,266,880 1,266,880 1,270,705 3,825 460,000 460,000 437,225 (22,775) 53,000 53,000 134,468 81,468 350,000 350,000 485,929 135,929 - - 84,130 84,130 13,808,314 13,808,314 14,231,516 423,202 2,881,218 2,881,218 2,498,547 382,671 1,055,623 1,055,623 966,648 88,975 9,550,675 9,550,675 9,090,796 459,879 1,130,350 1,130,350 999,689 130,661 35,795 35,795 35,543 252 43,712 43,712 47,826 (4,114) 21,600 21,600 21,600 - 14,711 14,711 10,960 3,751 6,450 6,450 1,843 4,607 479,356 479,356 474,321 5,035 49,506 49,506 49,505 1 21,821 21,821 11,111 10,710 437,393 437,393 398,566 38,827 15,733,210 15,733,210 14,606,955 1,121, 255 (1,924,896) (1,924,896) (375,439) 1,544,457 1,215,452 (758,750) 1,215,452 (758,750) 1,235,103 19,651 (758,750) 456,702 456,702 476,353 19,651 $ (1,468,194) $ (1,468,194) 100,914 $ 1,564,108 4,609,562 $ 4,710,476 [IPA REVENUES Taxes and Assessments Charges for Services Miscellaneous Investment and Royalty Earnings Increase (decrease) in Investments Total revenues EXPENDTIURES Current: Public Safety Personal services Operations and maintenance Public Works Personal services Operations and maintenance Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance Fund balances - beginning Fund balances -ending The notes to the financial statements are an integral part of this statement. City of Kalispell, Montana Budgetary Comparison Schedule For Fiscal Year Ended June 30, 2025 2273 Emergency Responder Levy VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET ACTUAL POSITIVE ORIGINAL FINAL AMOUNTS (NEGATIVE) $ 4,450,000 $ 4,450,000 $ 4,336,346 $ (113,654) 6,700 6,700 4,450,000 4,450,000 4,343,046 (106,954) 2,587,528 2,587,528 1,745,136 842,392 400,710 400,710 407,111 (6,401) 898,000 898,000 583,949 314,051 3,886,238 3,886,238 2,736,196 1,150,042 563,762 563,762 1,606,850 1,043,088 190,000 190,000 160,000 (30,000) (18,000) (18,000) (7,500) 10,500 172,000 172,000 152,500 (19,500) $ 735,762 $ 735,762 $ 1,759,350 $ 1,023,588 $ 1,759,350 IINA, City of Kalispell, Montana Budgetary Comparison Schedule Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 REVENUES Taxes and Assessments Charges for Services Miscellaneous Investment and Royalty Earnings Net Increase (decrease) in investments Total revenues EXPENDTIURES Current: Public Works Personal services Operations and maintenance Debt Service Debt service - principal Debt service - interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance Fund balances - beginning Fund balances - ending 2500 Street Maintenance VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET ACTUAL POSITIVE ORIGINAL FINAL AMOUNTS (NEGATIVE) $ 3,460,463 $ 3,460,463 $ 3,583,595 $ 123,132 5,000 5,000 29,328 24,328 500 500 15,911 15,411 25,000 25,000 162,265 137,265 - - 48,312 48,312 3,490,963 3,490,963 3,839,411 348,448 1,740,935 1,740,935 1,648,637 92,298 1,685,545 1,685,545 1,320,708 364,837 70,140 70,140 70,140 20,575 20,575 19,971 - 955,300 955,300 388,158 567,142 4,472,495 4,472,495 3,447,614 1,024,277 81.532) (981.532) 391.797 1.372.725 6,328 6,328 (6,328) 6,328 6,328 - (6,328) $ (975,204) $ (975,204) $ 391,797 $ 1,366,397 4,668,336 $ 5,060,133 123 City of Kalispell, Montana Required Supplementary Information June 30, 2025 A. Budgetary Comparison Schedules BUDGETED FUNDS The City adopts an annual budget for all of its funds in accordance with Title 7, Chapter 6, Part 40 of the Montana Code Annotated. Statute requires the adoption of a preliminary budget, public hearings on the preliminary budget and the final adoption of the budget by the first Thursday after the first Tuesday in September or within 30 calendar days of the receipt of the certified taxable valuations from the Department of Revenue. The City must also submit a copy of the final budget to the Department of Administration by the later of October 1 or 60 days after the receipt of taxable values from the Department of Revenue. State statute limits the making of expenditures or incurring of obligations to the amounts of the final budget as adopted or as amended. Budget transfers and amendments are authorized by law, and in some instances, may require further public hearings. Any budget amendments providing for additional appropriations must identify the fund reserves, unanticipated revenue, or previously unbudgeted revenue that will fund the appropriations. Appropriations are created by fund, function, and activity and may further be detailed by department. Expenditure limitations imposed by law extend to the department level which is identified as the legas level of budgetary control. BUDGETARY BASIS The City's budgets are prepared on the budgetary basis (modified accrual) of accounting, which results in accounting for certain funds, proprietary and internal service, on a basis other than generally accepted accounting principles (full accrual). The City's accounting records are maintained on the basis of cash receipts and disbursements during the year. At year-end, certain adjustments are made to the City's accounting records to reflect the basis of accounting described above. Reported budget amounts represent the originally adopted budget and the final budget, which includes amendments. Total fund expenditures may not legally exceed the budgeted expenditures. The budget lapses at the end of each year. Results of operations, on the budget basis of accounting, are presented for the general fund and major special revenue funds with legally adopted annual budgets to provide a meaningful comparison of actual results with the budget. 124 SUPPLEMENTAL INFORMATION 125 COMBINING AND INDIVIDUAL FUND STATEMENTS NONMAJOR GOVERNMENTAL FUNDS SPECIAL REVENUE FUNDS Downtown TIF — Accounts for monies received and expended for approved projects in this TIF district. Westside TIF - Accounts for monies received and expended for approved projects in this TIF district Parks in Lieu — Accounts for monies received by developer's for the purpose of making improvements in specific City parks. Parks — Accounts for the monies received and expended in the operations of the City's Parks Department. Ambulance — Accounts for the monies received and expended in the operations of the City's Ambulance Department. Old School TIF's — Accounts for monies received and expended for approved projects in these TIF districts. Rail Park TEDD — Accounts for the monies received and expended for approved projects in and related to the TEDD. Health Levy — Accounts for revenue from the permissive mill levy which provides funding health insurance premium increases. Building Department — Accounts for all activity of enforcing the building regulations adopted by the City. Public Safety Impact Fees — Accounts for public safety impact fees received and allowed and approved expenditures of each. Light Maintenance — Accounts for special assessment revenues levied, received, and expended for street lighting. Gas Tax and BARSAA — Accounts for revenues from State gasoline taxes apportioned from the State of Montana Department of Highways. 126 122 Urban Forestry — Accounts for special assessment revenues levied, received, and expended to care for almost 7000 trees. MACI Grant — Accounts for grant monies received and City matching monies used to purchase equipment (street sweeper) through the Montana Air & Congestion Initiative. 2 Mile Drive Improvement Project - Accounts for grant and City funds used for roadway, sidewalk, and utility improvements along 2 mile drive to enhance safety and accommodate west -side growth. 4 Mile Drive Path Project - Accounts for grant monies received for the completion of a pathway along the north side of Four Mile Drive. Morning Star Project - Accounts for SRF loan and grant funds used to extend water and sewer infrastructure to the Morning Star subdivision, supporting system reliability and future development in the area. Community Development Loan Revolving Fund — this fund accounts for the lending and repayment of monies loaned to businesses and individuals for approved community development projects. CD Projects - originally established to account for Urban Development Assistance Grants (UDAG). These federal dollars were loaned to businesses and individuals for projects located in economic development zones and approved by the City Community Development department. The main revenue source for this fund is borrower's interest payments. In fiscal year 2015, this fund, with dollars borrowed from the General fund, purchased six undeveloped properties from Flathead County at the Old School Station Industrial/Technical Park, a City special improvement district. Taxes on these properties were five to seven years delinquent, thereby putting the City's SID debt service fund at risk of not making the annual payment. The City has since resold these properties satisfying the debt service fund. Rural Development Loan Revolving (2) — Accounts for monies received, grant and other, and expended in the process of providing gap financing for business retention, expansion, or start-up. Law Enforcement Grants (Stonegarden, Drug Enforcement, DUI) — Accounts for multiple grants received by the Police Department and all related revenues and expenditures. EPA Brownfields Grant — Accounts for Brownfields revitalization projects monies to be used for phase I and phase II environmental assessments. EPA Brownfields Loan Revolving Grant - Accounts for grant monies received for and expenditures related to environmental assessments. Fire Grants - Accounts for multiple grants received by the Fire Department and all related revenues and expenditures. Hazmat Grant — Accounts for the grant monies received for revenues and expenditures related to respond and remedy hazmat calls of the City Fire Department. 123 OPIOID Settlement - Accounts for monies received from a settlement holding the nation's three major pharmaceutical distributors accountable for fueling the opioid epidemic and harm it has caused. Funds are allocated to programs that will help address the ongoing opioid crisis through treatment, education, and prevention efforts. Airport Grant - Accounts for the grant funding received for expenditures related to support upgrades to the Airport runway lighting and security (fencing). EECBG Grant - Accounts for Federal Energy Efficiency and Conservation Block Grant funds used to implement projects that reduce energy use and promote sustainability in City facilities and operations. Green Acres Project - Accounts for SRF loan and grant funds used to replace and upgrade water and sewer infrastructure in the Green Acres area, improving system capacity and service reliability. Safe Streets Grant — Accounts for the grant monies received for revenues and expenditures related to a planning study for the Downtown Corridor. DEBT SERVICE FUNDS Westside TIF Debt Service - Accounts for the debt service payments associated with the Westside Tax Increment District. Debt Service Revolving — Accounts for monies associated with the closing out of debt service funds and covering other debt service fund payment shortages. S & C's - Accounts for the debt service payments associated with Sidewalk & Curb bonds. SID 344 - Accounts for the debt service payments associated with the Special Improvement District #344 bonds. SID 345 - Accounts for the debt service payments associated with the Special Improvement District #345 bonds. CAPITAL PROJECT FUNDS S & C Construction —Accounts for the monies received for and expenditures related to sidewalk and curb construction. 128 V W U O N O N N ... W W O C O O O O (A M V O O M M O O't .0 V V Q H3 H3 Efl f— O) f— r— O O Cl) M O O O) O) (n O V O O I� (n O co (O N ( O O O O O) M ' O O ' N N O r- O r- O ' ' ' O W O Cl) N co Cl) N N f— m m N N O O N (A Cl) O O O O O M M O O O O O a N m W m m m m O O O O . CO O O C m W CO O O O O O Co W W (0 Co c a) LL = M M M M M M R L a) N > a o R N N Q- m R M (fl M Efl r-a) O O N N (f) (n (f) O O N Y = N �i LO oo oo (rS (rS E 'i5 lr M W W M M Lo Lo W .Y O m U U o Z O V V O f— r— r— V V co co LL N O N m M O O) M m f.- m M V (O (O W W N N N N V '''' W V M W@ F N N O V � N N N N m m V O) I� coO) O O O O f— � (f) (f) CA 3 0 c 3 0 0 a) U c R R m c U- LL c R a) a) C a W Z > N a) N R U N U E E a) N a o 0 0 aci a (n c E (n > o N R E a) awl N LL N N a) C (n c c m c w a) .� O aa)) m -o y� c c c c O N � U p N C a) N O N R d R U a) O a) 2. 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O (D o o (D � N Go o o) o) o o o) o) o) a.. C M M CO CO D) D) D) a. CCO CO N N N W fl fl Go LL W CO CO O V LO CO CO I� r Lc. F u O D) r r co o) D) W W a > O LO CO O O CO LO LO O O CC W N N CO O O CO LO LO CC ;O W O O LO M CO CO D) D) N N j� fA M CO V V O O fl fl Go a C O LL a C w N U In O C W U m 0 (D ° ° W o o N LL E N 0 C C C N O O C N N t/1 i-• In N E> N f/) O O C w E f/) (6 C a (6 0 (6 U) N L((D (WD w Z Q a U rn o LA m o° c m F m°° m K W >5 -6. a Q aai w m (6 x H U 75 N H~ m N H W a) 0 'C 9 0 J C N �()IM0 o� Q �� W °� 7 ai�~ o m QC) z -j 13a LLll� I-- City of Kalispell, Montana Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2025 American Total Nonmajor Total Nonmajor S & C Recovery Act Capital Project Governmental Construction Grant Fire Pumper Funds Funds ASSETS Current assets Cash and investments $ $ 94,247 $ $ 94,247.00 $ 20,223,616 Taxes and assessments receivable, net - - 1,398,170 Accounts receivable 361,423 Notes, loans, and contracts receivable 2,134,922 Due from other governments 676,954 Due from Other 6,853 Contracts Receivable - - - Total current assets 94,247 94,247 24,801,938 Noncurrent assets Restricted cash and investments - - 3,727,387 Total noncurrent assets - - 3,727,387 Total assets 94,247 94,247 28,529,325 LIABILITIES Current liabilities Accounts payable 45,774 45,774 259,983 Accrued payroll - - 162,103 Due to other funds - - 229,992 Revenues collected in advance 48,473 48,473 48,473 Due to Contractor - Retainage - - 16,837 Deposits Payable - - - Total current liabilities 94,247 94,247 717,388 Noncurrent liabilities Deposits Payable - - - Total noncurrent liabilities - - - Totalliabilities 94,247 94,247 717,388 DEFERRED INFLOWS OF RESOURCES Property tax/special assessment revenue - - 1,398,170 Notes and Loans receivables 2,134,922 Ambulance Revenue 348,425 Total deferred inflows of resources 3,881,517 FUND BALANCES Restricted for: General government 15,785 Public safety 7,206,660 Public works 4,745,517 Culture & recreation 3,244,935 Housing & community development 7,426,347 Conservation of natural resources 1,292,493 Debt service (1,317) Total Fund Balance $ $ $ $ 23,930,420 Total Liabilities, Deferred Inflow of Resources and Fund Balance $ $ 94,247 $ 94,247 $ 28,529,325 The notes to the financial statements are an integral part of this statement. f611 City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Downtown TIF Westside TIF Parks -in -lieu Parks Ambulance REVENUES Taxes and assessments $ 698,883 $ $ $ 1,489,279 $ - Intergovernmental 6,391 71,488 274,146 Charges for services - 646,663 429,651 Miscellaneous - 21,816 8,214 Investment earnings 43,264 168,124 12,643 47,710 - Net Increase (decrease) in investments 4,997 9,995 3,331 19,158 Total revenues 753,535 178,119 15,974 2,296,114 712,011 EXPENDITURES Current: Public safety - - - - 1,477,781 Public works - - - Culture and recreation - - 3,000 2,303,581 Housing and community development 380,088 294,570 - - - Debt service - principal - - 35,104 38,829 Debt service - interest and other charges 7,009 3,937 Capital outlay - - 92,480 - Total expenditures 380,088 294,570 3,000 2,438,174 1,520,547 Excess (deficiency) of revenues over (under) expenditures 373,447 (116,451) 12,974 (142,060) (808,536) OTHER FINANCING SOURCES (USES) Transfers in - 2,700,000 - 120,000 685,000 Transfers (out) (520,000) - - Total other financing sources (uses) - 2,180,000 - 120,000 685,000 Net change in fund balance 373,447 2,063,549 12,974 (22,060) (123,536) Fund balances- beginning 986,396 3,854,948 323,895 1,582,765 189,550 Restatements - (416,716) - - Fund balances- beginning restated 986,396 3,438,232 323,895 1,582,765 189,550 Fundbalances- ending $ 1,359,843 $ 5,501,781 $ 336,869 $ 1,560,705 $ 66,014 The notes to the financial statements are an integral part of this statement 138 City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Old School Technology Old School Rail Park TIF Industrial TIF TEDD Health Levy Building Dept REVENUES Taxes and assessments $ 88,932 $ 5,497 $ 199,485 $ 1,448,518 $ Intergovernmental 4,062 - 55 26,954 - Charges for services - - - 2,115,354 Miscellaneous - - - - Investment earnings 2,828 143 7,872 123,474 Net Increase (decrease) on investments - - 1,666 36,650 Total revenues 95,822 5,640 209,078 1,475,472 2,275,478 EXPENDITURES Current: Public safety - - 1,334,359 Public works - Culture and recreation - - Housing and community development 15,286 207,520 Debt service - principal - - Debt service - interest and other charges Capital outlay - - - Total expenditures 15,286 - 207,520 - 1,334,359 Excess (deficiency) of revenues over (under) expenditures 80,536 5,640 1,558 1,475,472 941,119 OTHER FINANCING SOURCES (USES) Transfers in - - - - - Transfers (out) (60,000) (6,000) (1,480,000) Total other financing sources (uses) (60,000) (6,000) - (1,480,000) - Net change in fund balance 20,536 (360) 1,558 (4,528) 941,119 Fund balances - beginning 61,223 4,561 286,436 20,313 3,129,768 Fundbalances- ending $ 81,759 $ 4,201 $ 287,994 $ 15,785 $ 4,070,887 The notes to the financial statements are an integral part of this statement. 139 City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Public Safety Light Gas Tax - Impact Fees Maintenance BarSAA Urban Forestry MACI REVENUES Taxes and assessments $ $ 459,150 $ - $ 654,664 $ Intergovernmental - 973,563 - Charges for services 400,704 - - - Miscellaneous - 36,013 - 13,752 Investment earnings 39,670 95,770 43,416 Net Increase (decrease) on investments - 12,494 -547,327 21,657 14,160 Total revenues 400,7 4 1,090,990 725,992 EXPENDITURES Current: Public safety 15,000 - - - Public works - 424,231 547,203 - Culture and recreation - - 556,051 Housing and community development - Debt service - principal 9,378 Debt service - interest and other charges - - 2,553 Capital outlay - 4,100 63,943 58,164 Total expenditures 15, 000 428,331 611,146 626,146 Excess (deficiency) of revenues over (under) expenditures 385,704 118,996 479,844 99,846 OTHER FINANCING SOURCES (USES) Transfers in - - 40,000 - Transfers (out) - Total other financing sources (uses) - - 40,000 - Net change in fund balance 385,704 118,996 519,844 99,846 Fund balances- beginning 2,570,676 1,086,340 2,307,783 1,247,515 21,006 Fundbalances- ending $ 2,956,380 $ 1,205,336 $ 2,827,627 $ 1,347,361 $ 21,006 The notes to the financial statements are an integral part of this statement. IC1i; City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Community 2 Mile Dr 4 Mile Dr Morning Star Development Improvement Project Project Loan Revolving CD Projects REVENUES Taxes and assessments 1 $ $ $ - $ $ Intergovernmental 153,725 Charges for services - Miscellaneous 53,936 - Investment earnings - 7,943 761 Net Increase (decrease) in investments - - - 3,332 Total revenues 53,936 153,725 7,943 4,093 EXPENDITURES Current: Public safety Public works Culture and recreation Housing and community development Debt service - principal Debt service -interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance 153,725 1,901 62,296 - - 62,296 153,725 1,901 - (8,360) - 6,042 4,093 520,000 - (35,103) 520,000 (35,103) 520,000 (8,360) 6,042 (31,010) Fund balances - beginning 122,454 Restatements - Fund balances - beginning restated - 122,454 Fund balances - ending $ 520,000 $ 114,094 $ The notes to the financial statements are an integral part of this statement 1,759,768 29,693 (1,684,329) - 75,439 29,693 $ 81,481 $ (1,317) WIN City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Drug Law Stonegarden Enforcement Enforcement RD Revolving Grant Grant DUI Grant Grant REVENUES Taxes and assessments $ $ - $ - $ - $ - Intergovernmental 16,768 58,106 74,601 112,875 Charges for services - - - 22,232 Miscellaneous 8,545 Investment earnings 1,419 - Increase (decrease) in Investments - - - - Total revenues 1,419 16,768 58,106 74,601 143,652 EXPENDITURES Current: Public safety - 16,690 130,383 74,901 167,663 Public works - - - - Culture and recreation - Housing and community development 533,911 Debt service - principal - Debt service - interest and other charges Capital outlay - - - - Total expenditures 533,911 16,690 130,383 74,901 167,663 Excess (deficiency) of revenues over (under) expenditures (532,492) 78 (72,277) (300) (24,011) OTHER FINANCING SOURCES (USES) Transfers in 64,000 Transfers (out) (208,358) - Total other financing sources (uses) (208,358) 64,000 Net change in fund balance (740,850) 78 (8,277) Fund balances- beginning 740,850 1,539 48,662 Restatements - - - Fund balances- beginning restated 740,850 1,539 48,662 Fund balances - ending $ - $ 1,617 $ 40,385 $ The notes to the financial statements are an integral part of this statement 17,250 17,250 (300) (6,761) 300 19,555 300 19,555 $ 12,794 ICy: City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 National EPA Brownfields Opioid Brownfields Loan Settlement Grant Revolving Fire Grants Hazmat Grants REVENUES Taxes and assessments $ $ $ $ $ - Intergovernmental 28,201 Charges for services - Miscellaneous 51,388 1,830 - Investment earnings - 3,710 - 758 Net increase (decrease) on investments - - - - Total revenues 51,388 3,710 1,830 28,959 EXPENDITURES Current: Public safety 84,090 - 1,940 29,934 Public works - - - Culture and recreation Housing and community development Debt service - principal Debt service - interest and other charges Capital outlay - - - Total expenditures 84,090 - 1,940 29,934 Excess (deficiency) of revenues over (under) expenditures (32,702) 3,710 (110) (975) OTHER FINANCING SOURCES (USES) Transfers in - - - Transfers (out) - Total other financing sources (uses) - - Net change in fund balance (32,702) - 3,710 (110) (975) Fund balances- beginning 61,999 1,115 100,500 6,403 23,968 Fundbalances- ending $ 29,297 $ 1,115 $ 104,210 $ 6,293 $ 22,993 The notes to the financial statements are an integral part of this statement. 143 City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2025 Safe Streets Airport Grant Grant REVENUES Taxes and assessments $ - $ $ Intergovernmental 394,187 308,049 Charges for services - - Miscellaneous Investment earnings Increase (decrease) in Investments Total revenues 394,187 308,049 EXPENDITURES Current: Public safety - - Public works Culture and recreation - Housing and community development 374,086 Debt service - principal - Debt service - interest and other charges - Capital outlay 336,733 - Total expenditures 336,733 374,086 Excess (deficiency) of revenues over (under) expenditures 57,454 (66,037) OTHER FINANCING SOURCES (USES) Transfers in - Transfers (out) Total other financing sources (uses) - Net change in fund balance 57,454 (66,037) Fund balances - beginning - 70,000 Restatements - Fund balances - beginning restated - 70,000 Fund balances - ending $ 57,454 $ 3,963 $ The notes to the financial statements are an integral part of this statement. Total Nonmajor Special EECBG Grant Green Acres Revenues Funds $ $ 5,044,408 2,503,171 3,614,604 195,494 599,505 127,440 12,084,622 3,332,741 971,434 2,862,632 1,819,336 433,420 13,499 617,716 10,050,778 2,033,844 4,146,250 (2,101,103) 2,045,147 4,078,991 20,659,981 (2,101,045) 18,558,936 $ $ 22,637,927 144 City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Debt Service Funds For Fiscal Year Ended June 30, 2025 Westside TIF Total Nonmajor Debt Debt Service SID Revolving S & C's SID 344 SID 345 Service Funds REVENUES Taxes and assessments $ 2,970,024 $ - $ 16,635 $ 178,662 $ 17,804 3 3,183,125 Intergovernmental 278,344 - - - - 278,344 Investment earnings - 8,699 - - - 8,699 Increase (decrease) in Investments 2,499 2,499 Total revenues 3,248,368 11,1 88 16,635 178,662 17,804 3,472,667 EXPENDITURES Current: Debt service -principal 220,000 - 7,618 230,000 18,000 475,618 Debt service -interest and other charges 144,975 1,912 23,860 2,505 173,252 Total expenditures 364,975 9,530 253,860 20,505 648,870 Excess (deficiency) of revenues over (under) expenditures 2,883,393 11,198 7,105 (75,198) (2,701) 2,823,797 OTHER FINANCING SOURCES (USES) Transfers in - 239 - 75,100 - 75,339 Transfers (out) (2,700,000) (9,100) (240) L (2,709,340) Total other financing sources (uses) (2,700,000) (8,861) (240) 75,100 (2,634,001) Net change in fund balance 183,393 2,337 6,865 (98) (2,701) 189,796 Fund balances - beginning 841,694 232,653 442 108 27,800 1,102,697 Fund balances - ending $ 1,025,087 $ 234,990 $ 7,307 $ 10 $ 25,099 $ 1,292,493 The notes to the financial statements are an integral part of this statement. City of Kalispell, Montana Combining Statement of Revenues, Expenditures, and Changes in Fund Balances Nonmajor Special Revenue Funds June 30, 2024 REVENUES Taxes and assessments Intergovemental Charges for Services Miscelleneous Investment earnings Net Increase (Decrease) in investments Total revenues EXPENDITURES General Government Public Safety Public Works Culture and Recreation Housing and Community Development Debt Service - principal Debt Service - interest Capital Outlay Total expenditures Excell (deficiency) of revenues over expenditures American Total Nonmajor Total Nonmajor S & C Recovery Act Capital Project Governmental Construction Grant Fire Pumper Funds Funds - - 8,227,533 1,299,134 1,299,134 4,080,649 - - 3,614,604 195,494 608,204 - - 129,939 1,299,134 1,299,134 16, 856,423 3,332,741 971,434 2,862,632 1,819,336 909,038 - - 186,751 34,574 34,574 652,290 34,574 34,574 10,734,222 (34,574) 1,264,560 6,122,201 OTHER FINANCIING SOURCES (USES) Issuance of debt - Transfers In 4,221,589 Transfers Out - (1,299,134) (1,299,134) (6,109,577) Proceeds from general long term debt 34,574 34,574 34,574 Total other financing sources and uses 34,574 (1,264,560) (1,853,414) Net change in fund blance - 4,268,787 Fund balances - beginning 21,762,678 Restatements (2,101,045) Fund balances - beginning restated $ 19,661,633 Fund balances - ending $ 23,930,420 The notes to the financial statements are an integral part of this statement. iC1: BUDGETARY COMPARISON SCHEDULE - NONMAJOR FUNDS 147 7 C O W LL U a N c to = p O 0 y c to �2 O > W N y e, f6 N N — U a a) N LL m O U C O LL ' co U o 7 O � m Z C ui V co CO co t C W m rn m o v w v rn v v 0 a i M OO Li 10 Q i m 0H L Q a w C Z Z i W N m m N V O r- ~ O coN Q 7 Z H 0 U O Q (A N N O N Q LO V co Z Z D LL n O Q f/i f/i f/i Efl EA w w w w N N W e LJ J MO Z V O LD O m LO O C LO V r— r N r— O N _ W O m CO O) u') cotD co (DLW C M N a O O C a > O Li H V co M r- i m n Q co L Q a w L Z Z W a wwwww ww t»t» CO O m � Or) M J H O M N a u') m Q Z 00 SO M V M CO M O Z) U O SOO M Q � 00 W W OM O m C' LO co m C C C a J O Cr0 W Z z r � a M O Qffl ffl Efl (A (A w w w w 0 W co O O V Cl) O N CO O LO 00 m W C C C 00 ) W Q CD Z m W o to O � O CO w w .s w w w w w C t y < a P) S a) to C L i � U CA a E N C E C1 L O Lp N a p < cu 11 -p a) i E U .� n .5 0. t N a) C b to E 'i E X f Q c m a p K U N X i y a) a°i H �_ -p ° W a) >p E to F N C C O a) a) F ll D y O) N a) 0 .. 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C '2 ~ Z z 2) 2) N z O t W O M N W aci .2 L a < LLJ=c) wc��a0 si ua dT O O O O dT dT 0 M ua O O M EA I N N U C (n N R W 3 R � � N � U C W 7 w U N s3� O U c C c R C9 w U W c z N U � Z t z N N z_ m c c LL O O R R W m = a a 1 0 LL LL O (O c N N N 7 � R O R t LL a N c to a c to o > W o c N R N m NG E U R y r (D Y U G u 7 N U w u O W R O O FF LL U a E r O m z _� MM 0 W � � >= O W N N N H c0 c0 c0 Cl) c0 Cl) O Q m � Z O W g Q z z LL > t» H Cl) Cl) O O Il- Q ::) In In 00 00 t`N') UO Q Q EH O M M J t`M t`M O z z a0 LO a0 to O N O N N (O O LL Q t» w W H J W W 00 00 O W Q (D z Cl) a0 Cl) a0 th O th O O N to to (O mO EH _ = W O ' O O O O O W W H m Q Z aQoW z z LL > EH J to Q ~ � z H o U O Q Q EH O v O v O v o v U)J Q O � O � O r O z � Z_ O LL Q to 0 w H J o o 0 0 W (D z to to to to m 0_ O C y < R N C 75 R � W E N G W W E O R Q R R t fn > O c O O W> R H 7 H Z z .. R a) N N U) t O t W O a < W .2> IL 0 W X 3 7 ) Wc)LL u N v U I (n N C R W 3 R � � N a U w W 3 U N a) C C9 U W c U Z- ( 7 w Z t Z N N Q O� O U U Z_ m c c LL O O R R W _ a a C C H O LL LL to o )§+L] ; «�))4 ) f§stR 23\}\ �2 \/&) \ G\2 2) \ \ \ LU §k z , )/| 2/§ / -- E 0 ` 0 �` - § ° §; j _ §0E k�7) -- LU x\)� x )) / N C O C O � N I� N w w 00 00 rn � w O c w c O c m u O c c o c Sri u v 'v c C a a c c w x v v N v R M n � C E > N N N N U O U C > U ] W N R u > ° c C O o m a w O E N N~ W C C (6 C >` f U N N U U U) > W N N f0 E U _T 0 ~ C '0 z C C z m N c Z .. fn N U UI d' C QMM Q W> N c W N .0 N a N W c Z .� a. O a c W w X>> R wU a. U x w f~ 0 3 3 as [§LU $/ . zCO < ;=GG �&a- z ° $z a� << If z / / ( z = 7 E / z m m ` , 2 2 \OW , (\ we §k w 0 0 ) § § [ f IL 0 a w = LU J ul ) ) } REVENUES Taxes and Assessments Intergovernmental Charges for Services Miscellaneous Investment and Royalty Earnings Increase (decrease) in Investments Total revenues EXPENDTIURES Current: Public Safety Personal services Operations and maintenance Public Works Personal services Operations and maintenance Culture and Recreation Personal services Operations and maintenance Housing and Community Development Personal services Operations and maintenance Debt Service Debt service - principal Debt service - interest and other charges Capital outlay Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Net change in fund balance Fund balances - beginning Restatements Fund balances - beginning restated Fund balances - ending City of Kalispell, Montana Budgetary Comparison Schedule Nonmajor Special Revenue Funds For Fiscal Year Ended June 30, 2026 Total Non -Major Special Revenue Funds VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET ACTUAL POSITIVE ORIGINAL FINAL AMOUNTS (NEGATIVE) $ 5,009,078 $ 5,009,078 $ 5,044,408 $ 35,330 $ 9,532,731 $ 9,532,731 $ 2,503,171 $ (7,029,560) $ 3,052,984 $ 3,052,984 $ 3,614,604 $ 561,620 $ 109,381 $ 109,381 $ 195,494 $ 86,113 $ 262,364 $ 262,364 $ 599,505 $ 337,141 $ 20,500 $ 20,500 $ 127,440 $ 106,940 $ 17,987,038 $ 17,987,038 $ 12,084,622 $ (5,902,416) 2,505,417 2,505,417 2,379,396 126,021 1,158,068 1,158,068 953,345 204,723 146,482 146,482 142,515 3,967 2,762,370 2,762,370 828,919 1,933,451 2,510,881 2,510,881 2,005,048 505,833 1,310,184 1,310,184 857,584 452,600 155,511 155,511 121,453 34,058 13,819,810 13,819,810 1,697,883 12,121,927 196,349 196,349 433,420 (237,071) 91,808 91,808 13,499 78,309 8,790,351 8,790,351 617,716 8,172,635 33,447,231 33,447,231 10,050,778 23,396,453 (15,460,193) (15,460,193) 2,033,844 17,494,037 4,194,720 (1,687,043) 4,194,720 (1,687,043) 4,146,250 (2,101,103) (48,470) (414,060) 2,507,677 2,507,677 2,045,147 (462,530) (12,952,516) (12,952,516) 4,078,991 17,031,507 20,659,981 (2,101,045) 18,558,936 22,637,927 `M-7 O M � N 7 N R y c R w u LL c M O O u 0 W O 0 N N R N N R O % } M N N E S U u Y O O LL E r y LL U _ z 7Z m Q W _ W > (D W W Q > H Z coV% Q Z d W Z > W rn rn CO V rn � rn M o N O m N M M � CO rn Cr J� Q Z N N Cr N N M o � M N N Q Q i fA fA flj Q H Z Z Z) W O Q fA fJj LU W LU O O O O O O 0 O 0 O O O W (J J Z � N � N N O O Z) LD O] � fli fJj W _ > W W ❑ > > V V V LU H Z coV5 Q W Z d Z > W N V O M CO M O I� O Cr � Cr Cr M O O O O Cr M Cr CO N O Q Q f» E» Ev o v v o Ci Cr Ci Cr OC N o O 0 O 0 N Z W N M N N N O Q A 0 W H O V O V V V O �O O I� Cr CO 0 O 0 O Cr CO W (D J Z (") N <D� O Cr Cr N O O W NC1 fA flj N N J C N a x N N U v N C R NL 7 O u N 21 UJ O N c L N U U N N C G7 N C 1 N R N C H O H T LU W N U u W w N C N w N R, .0 Z a a Np . V 0 C C y O � w c CI '0 O c p cn U 5 W j N N O E U F Z Z F O O Z_ O w w C C Z X N C Z C O LL C C R R L L > V% a 2 0 0 0 0 2 H- z c c W U 0 0 ii ii 0 ua a§jT] Z wC:T fE)-® 2e u T t�¢L� 0 LL 2z )\ .L k)LU @/ \ zco < ,/G8 �z=z / 0 = E /, :. / z g , 2 j 0 [/LU % $/ zco < ,/G8 �z=z $zcc� // e w. )} �` z } \ E / / § / /| 2 § 0 21 \ _ z \o _ 2 \ - �| - f 0 -- /\0 ) )) § *)_ °77 z �««� -- z&&22 ¥ [) LU 0° e jj ) } 2 `77 A ) O'E «{$/a fE)-® 2u u »�0 /0 2z \/ / REVENUES Taxes and Assessments I ntergovem mental Investment and Royalty Earnings Net Increase (Decrease) in investments Total revenues EXPENDITURES Current: Debt Service Debt service - principal Debt service - interest and other charges Total expenditures Excess (deficiency) of revenues over (under) expenditures OTHER FINANCING SOURCES (USES) Transfers in Transfers (out) Total other financing sources (uses) Total other financing sources (uses), special and extraordinary items Net change in fund balance Fund balances - beginning Fund balances - ending City of Kalispell, Montana Budgetary Comparison Schedule Nonmajor Debt Service Funds For Fiscal Year Ended June 30, 2025 Total Non -Major Debt Service Funds VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET ACTUAL POSITIVE ORIGINAL FINAL AMOUNTS (NEGATIVE) 3,101,266 3,101,266 3,183,125 81,859 278,344 278,344 278,344 - 2,500 2,500 8,699 6,199 - - 2,499 2,499 3,382,110 3,382,110 3,472,667 90,557 475,620 475,620 475,618 2 173,652 173,652 173,252 400 649,272 649,272 648,870 402 2,732,838 2,732,838 2,823,797 90,959 75,339 75,339 (2,720,000) (2,720,000) (2,709,340) 10,660 (2,720,000) (2,720,000) (2,634,001) 85,999 (2,720,000) (2,720,000) (2,634,001) 85,999 12,838 12,838 189,796 176,958 1,102,697 1,292,493 N N 7 � R O R t LL a N c U) a c to O > w N N R N C G O- tp L M N E U R R O U 4 a N � w LL O LL R O O ?+ y R LL U a E r COO Z v v v v v r• r• r• r• r- V V V V V t") t") (`7 t`7 t`7 ua ua ua r r O 6 r I r O 6 a C t C a sn x s LU <. F 4 H — O t .. O ~ Z Z t w y6 t a a W C) C) u to N I N O U C R W R I 7 E U W 3 C w a0 U c N o s3� j p y c O R u c c c W C9 .� U c v U E Z O Z N N Q O U U Z N m C C LL a 0 R R LL, o I = LL a a c c r O LL LL O I— N d a W ` N 0 O N w N W � OI U c p' O N � C O N R U) O C C w Z L V E z p O Q O N N LL w Lu C U W (p O f H a. O 11 City of Kalispell, Montana Budgetary Comparison Schedule Nonmajor Capital Projects Funds For Fiscal Year Ended June 30, 2025 Total Non -Major Capital Project Funds VARIANCE WITH BUDGETED AMOUNTS FINAL BUDGET ACTUAL POSITIVE ORIGINAL FINAL AMOUNTS (NEGATIVE) REVENUES Intergovernmental $ $ $ 1,299,134 $ 1,299,134 Total revenues 1,299,134 1,299,134 EXPENDITURES Current: Capital outlay 3,299,182 3,299,182 34,574 3,264,608 Total expenditures 3,299,182 3,299,182 34,574 3,264,608 Excess (deficiency) of revenues over (under) expenditures (3,299,182) (3,299,182) 1,264,560 4,563,742 OTHER FINANCING SOURCES (USES) Transfers (out) - - (1,299,134) (1,299,134) Proceeds from general long term debt 1,951,574 1,951,574 34,574 (1,917,000) Total other financing sources (uses) 1,951,574 1,951,574 (1,264,560) (3,216,134) Net change in fund balance $ (1,347,608) $ (1,347,608) $ $ 1,347,608 Fund balances - beginning Fund balances - ending $ firf�: COMBINING AND INDIVIDUAL FUND STATEMENTS NONMAJOR PROPRIETARY FUNDS SOLID WASTE — Accounts for assessments received and expenses incurred in the operation of the City solid waste department. 173 City of Kalispell, Montana Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2025 Solid Waste ASSETS Current assets Cash and cash equivalents $ 980,229 Investments 509,640 Taxes and assessments receivable, net 73,275 Due from other governments 85,011 Total current assets 1,648,155 Noncurrent assets Capital assets - net of depreciation 1,325,849 Total noncurrent assets 1,325,849 Total assets 2.974.004 DEFERRED OUTFLOWS OF RESOURCES Pensions 79,824 Total deferred outflows of resources 79,824 LIABILITIES Current liabilities Accounts payable 12,854 Accrued payroll 15,936 Compensated absences payable 65,558 Total current liabilities 94,348 Noncurrent liabilities Capital debt 375,205 Compensated absences payable 85,354 Net pension liability 445,370 Total noncurrent liabilities 905,929 Total liabilities 1,000,277 DEFERRED INFLOWS OF RESOURCES Pensions 9,904 Total deferred inflows of resources 9.904 NET POSITION Net investment in capital assets 950,644 Unrestricted 1,093,003 Total net position $ 2,043,647 The notes to the financial statements are an integral part of this statement. 174 City of Kalispell, Montana Combining Statement of Revenues, Expenses, and Changes in Net Position Nonmajor Enterprise Funds For Fiscal Year Ended June 30, 2025 OPERATING REVENUES Charges for services Miscellaneous revenues On -behalf - pensions Total operating revenues OPERATING EXPENSES Personal services Supplies Purchased services Fixed charges Depreciation Total operating expenses Operating income (loss) NON -OPERATING REVENUES (EXPENSES) Interest revenue Debt service interest expense Unrealized Gain (Loss) on Investments Total Non -Operating Revenues (Expenses) Income (loss) before contributions, transfers, special & extraordinary items Transfers (out) Change in net position Net position - beginning Net position - ending Solid Waste $ 1,780,633 63,586 6,207 1,850,426 856,709 165,956 66,100 253,374 204,670 1 54r) snG 303,617 43,609 (24,535) 19,991 39,065 342,682 (40,000) 302,682 1,740,965 $ 2,043,647 Iwa City of Kalispell, Montana Combining Statement of Cash Flows Nonmajor Enterprise Funds For Fiscal Year Ended June 30, 2025 Solid Waste Cash received from customers $ 1,747,784 Cash received from miscellaneous sources 63,586 Cash paid to suppliers of goods and services (484,489) Cash paid to employees (768,525) Net cash provided (used) by operating activities 558,356 Cash Flows from Non -Capital and Related Financing Activities: Transfers to other funds (40,000) Net cash provided (used) by non -capital and related financing activities (40,000) Cash Flows from Capital and Related Financing Activities: Principal paid on capital debt (81,973) Interest paid on capital debt (24,535) Acquisition and construction of capital assets (285,597) Capital Contributions received (9,118) Net cash provided (used) by capital financing activities (401,223) Cash Flows from Investing Activities: Interest on investments 43,609 Increase (Decrease) in fair value of investments 83,595 Net cash provided (used) by investing activities 127,204 Net increase (decrease) in cash and cash equivalents 244,337 Cash and cash equivalents as of; June 30, 2024 735,892 June 30, 2025 $ 980,229 Displayed on Combining Statement of Net Position-Nonmajor Enterprise Funds as: Cash and cash equivalents $ 980,229 Reconciliation of operating income to net cash provided by operating activity: Operating income (loss) $ 303,617 Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense 204,670 Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: (Increase) decrease in assessments receivable (33,110) (Increase) decrease in accounts receivable 261 Increase (decrease) in accounts payable 941 Increase (decrease) in accrued payables 2,836 Increase (decrease) in compensated absences payable 46,616 Increase (decrease) in net pension liability 60,264 (Increase) decrease in deferred outflows -pension (23,907) Increase (decrease) in deferred inflows -pension (3,832) Net cash provided (used) by operating activities $ 558,356 Schedule of non -cash transactions Depreciation 204,670 The notes to the financial statements are an integral pars Whis statement. COMBINING AND INDIVIDUAL FUND STATEMENTS INTERNAL SERVICE FUNDS 11FAA ASSETS Current assets Cash and cash equivalents Investments Contracts Receivable Total current assets Noncurrent assets Capital assets - net of depreciation Lease/SBITA Right of use asset, net Total noncurrent assets Total assets LIABILITIES Current liabilities Accounts payable Accrued payroll Compensated absences payable Lease/SBITA Purchase Total current liabilities Noncurrent liabilities Compensated absences payable Total noncurrent liabilities Total liabilities NET POSITION Net investment in capital assets Unrestricted Total net position City of Kalispell, Montana Combining Statement of Net Position Internal Service Funds June 30, 2025 Information Total Internal Service Central Garage Technology Funds $ 22,910 $ 527,565 $ 550,475 57,871 219,212 277,083 - 35,990 35,990 80,781 782,767 863,548 74,557 262,038 336,595 - 41,309 41,309 74,557 303,347 377,904 155,338 1,086,114 1,241,452 12,758 110,565 123,323 5,581 13,071 18,652 12,535 52,533 65,068 - 41,309 41,309 3Q874 217,478 248,352 14,030 43,834 57,864 14,030 43,834 57,864 44,904 261,312 306,216 74,557 262,038 336,595 35,877 562,764 598,641 $ 110,434 $ 824,802 $ 935,236 The notes to the financial statements are an integral part of this statement. 178 C O W O IL d z c .y N C m L U R � � � N O ayi (n 0 LL W N C N � O N G m N CL N lixl N 0 N N V N U a O C a" M >+ > LOLL U W w O a C N E N m co C E O 0 O W (n V O cc) o) Il_ N ;:, ao O W ;:, m W N N ao (o U W V V' cl O V O W Il- O O W N (O I� a0 W (`') 'IT(o W c)Il O r �_ O I� I� N (O (O O (O W cl) a0 N V (A (o (n O O W co Il- c)(n W V (h m ao m a O O (o (n ao cc)Il- 'IT cc) Il- W IT w N (O t W (n N �'-' I� V co O W N c) O_ W m N c c 7 C Lj- m O H fR fR a0 W Il- O (n W V' O a0 a0 O N I-- O N N r N C W (o (o c`') N (o (n N cc) N W O O a0 a0 N W cl) c`') (o O ao I- W I- O ch I� V' N N O N O N O a0 a0 O — O (o cl) W ao (o N I-- r N O N I-- W (h (h V I --co m r 'ITN cl) (14 e a0 ao w (n c0 ao ao c � co I— O w W (n Il- r O_ r co cl) 1� r V O I-- r O r r O m 'ITN w w (O W W (o cl (o cl) (o O (`') (o O c)O (O (o �' cl)a1 O V N V V w W I- N N a) c)Il- c`') (`') N ao c`') (n c)O (O ao O W (6 (O (O N cl) P m U (» (A m U N Q Vl Vl N C N LU W c Z .� a 4 C ° a E w n w �, m N N (n > W oU a O am) C Oc (n O h ccO_ o Of W a) N V1 Oo f yT . OO D N LU Q W > NN O OC ) >W N W U _ m C C O) U > S W m a a (oi > S K a .� c U' .y c m 5 �- z E m cc 'c m O o =o c d o n m O o oa 0 E > -S? E c O NtO . ¢Vl LLJ N o 'O VZ o 0 m �- orn O s W =�X� aawILLL0 �50D �oa �0a) zz a. 0 0 o_j z City of Kalispell, Montana Combining Statement of Cash Flows Internal Service Funds For Fiscal Year Ended June 30, 2025 (Cash Flows from Operating Activities: Cash received from customers Cash received from miscellaneous sources Cash paid to suppliers of goods and services Cash paid to employees Net cash provided (used) by operating activities Cash Flows from Non -Capital and Related Financing Activities: Short-term loans to other funds Intergovernmental revenue received Cash received from Charter Franchise Fees Net cash provided (used) by non -capital and related financing activities Cash Flows from Capital and Related Financing Activities: Interest paid on capital debt Acquisition and construction of capital assets Net cash provided (used) by capital financing activities Cash Flows from Investing Activities: Interest on investments Increase (Decrease) in fair value of investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents as of; June 30, 2024 June 30, 2025 Displayed on Combining Statement of Net Position -Internal Service Funds as: Cash and cash equivalents Reconciliation of operating income to net cash provided by operating activity: Operating income (loss) Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense Change in assets, deferred outflows of resources, liabilities, and deferred inflows of resources: Increase (decrease)in accounts payable Increase (decrease)in accrued payables Increase (decrease) in compensated absences payable (Increase) decrease in contracts receivable Net cash provided (used) by operating activities Schedule of non -cash transactions Depreciation The notes to the financial statements are an integral part of this statement. Information Total Internal Service Central Garage Technology Funds $ 645,001 $ 856,398 $ 1,501,399 776 14,111 14,887 (435,582) (685,442) (1,121,024) (285,324) (629,610) (914,934) (75,129) (444,543) (519,672) 2,395 2,395 450,000 450,000 191,168 191,168 643,563 2,395 (1,771) (1,771) (47,833) (47,833) (49,604) (49,604) 3,337 22,382 25,719 30,909 49,417 80,326 34,246 71,799 106,045 (40,883) 221,215 (460,836) 63,793 306,350 370,143 22,910 527,565 (90,693) 22,910 527,565 550,475 (85,610) (682,331) (767,941) 12,687 77,220 89,907 (15,072) 91,326 76,254 1,322 2,541 3,863 11,544 55,859 67,403 - 10,842 10,842 $ (75,129) $ (444,543) $ (519,672) 12,687 77,220 89,907 180 CUSTODIAL FUNDS The custodial funds of the City of Kalispell are used to account for assets held by the City as an agent for individuals, private organizations, other governments, and/or other funds. KPD Evidence This fund is used to manage and track money, or assets seized as evidence in criminal investigations. TBID Custodial This fund accounts for money received for hotel bed tax collections. These funds are held for distribution to TBID. Kalispell Golf Association This fund accounts for pass -through monies received on behalf of Kalispell Golf Association. Funds are received by the City and remitted to the Association for course improvements and operations. ASSETS Current assets Cash and cash equivalents Total current assets LIABILITIES Total noncurrent liabilities Total liabilities NET POSITION City of Kalispell, Montana Combining Statement of Net Position Fiduciary Funds June 30, 2025 TBID KPD Evidence Custodial Custodial Fund Fund $ 44,192 Kalispell Golf Total Custodial 44,192 44,192 Net investment in capital assets Restricted for: Debt service Replacement and depreciation Capital projects Other Purposes - - Individuals, Organizations, and other governments 44,192 44,192 Total net position $ 44,192 44,192 The notes to the financial statements are an integral part of this statement IRYA City of Kalispell, Montana Combining Statement of Net Position Fiduciary Funds June 30, 2024 TBID KPD Evidence Custodial Kalispell Golf Total Custodial Custodial Fund Fund Association Funds Additions Collections of taxes and fees for other entities $ 1,027,695 1,027,695 KPD Evidence Deposit - - - Collections on behalf of Kalispell Golf Association - 71,000 71,000 Total Additions - 1,027,695 71,000 1,098,695 Deductions Distribution of taxes and fees 1,027,695 - 1,027,695 Payment to outside entities 3,004 - 71,000 74,004 Total Expenses 3,004 1,027,695 71,000 1,101,699 Net Increase (Decrease) In Fiduciary Net Position 31004 - - 3,004 Net Position - beginning 44,192 47,196 Net Position - ending $ 44,192 44,192 183 STATISTICAL SECTION This part of the City of Kalispell's financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosure and required supplementary information says about the government's overall financial health. Contents Financial Trends These schedules contain trend information to help the reader understand how the government's financial performance and well-being have changed over time Revenue Capacity These schedules contain information to help the reader assess the government's most significant local revenue source, the property tax. Debt Capacity These schedules present information to help the reader assess the affordability of the government's current level of outstanding debt and the government's ability to issue additional debt in the future. Demographic and Economic Information These schedules offer demographic and economic indicators to help the reader understand the environment within which the government's financial activities take place. Operating Information These schedules contain service and infrastructure data to help the reader understand how the information in the government's financial report relates to the services the government provides and the activities it performs. Additional Information This category is intended to present other information the City feels is necessary for its users. Sources: Unless otherwise noted, the information in these schedules is derived from the City of Kalispell annual financial report for the relevant year. Note: The City of Kalispell implemented GASB Statement 34 in fiscal year 2003, therefore the data for prior years are not shown; schedules presenting government -wide information include information beginning in that year. 184 - c, O\ Ic M n O O\ l- O MC� M O O Q\ N O\ Q. M EA 69 N ON Oc �O 7 O, M �O O. N M M O- O O c, N� EA !A oc O\ N N Q\ r M L— V V L- C� N N M O\ N O M 00 Vi M ~ EA !A 171 h M -� 10 M -� M � Q. N O �O N �n Oe O� O O\ N N 00 10 V N N Vl O V oc O\ 00 N ~ EA !A V1 10 10 10 Q\ V Q\ O �n 01 M n N N 11 N l� C c, O OO 00 O 10 10 Q\ N O Q\ M M r r 7 I� 00 ~ EA !A l� Q\ N 00 10 N Q\ 0 Q\ ti r C\ Q\ O O Q. -y Q. Q. M -y O. 0 V Z Z N O, V 7 V Q, Q M O Q M 'Qii Y+I l� W zoO iy O N r �1 C� M �O <= O 00 M O, � ,O O� V l� N N K, O V O ✓' Q. 'C V ' Q. O C M N �O N O W O �n M W N N N V N O� N V00 ID, wr�w 'O M O. c, M �O �O �O c, O 'O 'IT w a -� o 00� .-. O, -� Q\ � V N O o O W E-1 ti ti E"y EA 3 U z Vl M M .� .� 7 V' 1O V l� 1O Q. O M N �O N �O G1 r 00Vl O. L O O -� N -� N N Q\ D\ N -- O O N M Q\ Q\ Vl 10 W ~ EA !A 00 -� Vl 7 1O N E N O M �O V -� 7 0000 �O �O 1O 1O N Vl V V O. .-. N -� �n CT Vl Q. N N O D\ O Q. 11 W O 0 -� l� W -y Eli !A C C O O C N O N O N Vl w N N N N N O V V � ) .Q C U > U > U a1 E j C j C a"C C E C E E E N O C > U ; ` U- > U > > U v E> S u 2 u C7 u E E EZtY7 rn a,ZtY7Ea �ZlY7 a > a1 'in a1 E a1 O O O O Unaudited statistical section LO 00 CITY OF KALISPELL, MONTANA CHANGES IN NET POSITION Past Ten Fiscal Years 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 Expenses Governmental activities: General government 5,823,767 5,841,775 6,251,409 6,078,813 6,225,773 6,505,134 4,117,979 4,936,132 8,383,111 5,527,279 Public Safety 9,113,674 10,968,010 11,333,862 11,186,487 11,738,977 15,081,467 12,568,054 14,022,338 15,355,662 18,186,142 Public Works 2,581,002 2,660,513 3,341,768 5,778,281 4,432,162 4,191,268 6,257,894 6,367,131 4,526,822 7,669,533 Parks and recreation 2,057,468 2,184,222 2,554,634 2,530,660 2,371,145 2,787,605 2,661,668 3,336,771 3,740,127 3,647,889 Community Development 928,661 853,455 1,275,659 2,860,796 2,048,260 3,093,846 3,079,481 369,085 1,239,273 1,853,069 Interest 286,401 242,110 226,588 381,767 333,593 283,585 262,187 238,044 249,989 219,604 Total governmental activities expenses $ 20,790,973 $ 22,750,086 $ 24,983,921 $ 28,816,804 $ 27,149,910 $ 31,942,905 $ 28,947,263 $ 29,269,501 $ 33,494,984 $ 37,103,516 Business -type activities: Airport 154,091 155,876 333,572 - - - - - - - Water 2,657,816 2,734,979 3,079,040 3,042,213 3,134,112 3,423,908 3,668,564 3,320,393 3,922,215 4,933,230 Sewer 5,204,622 4,955,925 5,482,339 5,812,173 6,341,537 6,253,823 6,895,290 6,787,742 7,826,279 8,303,187 Solid Waste 880,679 872,161 1,013,000 994,660 1,047,408 1.008,739 1,194,289 1,243,358 1,474,770 1,517,473 Total business -type activities expenses 8,897,208 8,718,941 9,907,951 9,849,046 10,523,057 10.686,470 11,758,143 11,351,493 13,223,264 14,753,890 Total primary government expenses $ 29.688.181 $ 31.469.021 $ 34.891.872 $ 38.665.850 $ 37.672.967 $ 42.629.375 $ 40.705.406 $ 40.620.994 $ 46.718.248 $ 51.857.406 Program Revenues Governmental activities: Charges for services: General government 892,578 789,167 909,258 810,930 797,202 1,082,008 1,376,830 1,364,907 1,155,820 1,273,297 Public Safety 2,219,795 3,155,476 2,816,588 2,570,838 3,006,814 2,986,568 3,764,023 3,082,696 2,752,974 4,011,993 Public Works 2,672,473 2,885,492 3,155,932 3,470,887 3,203,603 2,854,584 2,898,061 2,980,423 3,088,950 29,328 Parks and recreation 730,928 716,491 1,334,208 1,283,827 1,049,706 1,349,752 1,375,248 1,456,528 1,413,347 646,663 Community Development 88,252 66,393 55,664 50,979 64,685 50,894 52,945 53,294 55,262 924 Operating grants and contributions 1,354,890 1,470,485 1,708,661 1,841,137 3,473,490 6,357,875 2,155,425 3,473,355 7,455,386 5,181,512 Capital grants and contributions 942,125 1,544,350 7,512,439 12,331,081 1,045,006 13,319,980 9,576,378 13,628,990 2,907,263 Total governmental activities program revenues $ 8,901,041 $ 10,627,854 $ 17,492,750 $ 22,359,679 $ 11,595,500 $ 15,726,687 $ 24,942,512 $ 21,987,581 $ 29,550,729 $ 14,050,980 Business -type activities: Charges for services: Airport 72,623 74,228 69,656 - - - - - - - Water 3,535,072 3,891,449 4,346,570 4,241,715 3,874,001 4,633,672 5,263,888 5,541,201 6,794,409 8,318,267 Sewer 5,543,740 7,485,750 7,774,762 8,007,450 7,994,232 10,302,333 12,000,967 11,990,402 11,815,082 13,541,342 Solid Waste 988,145 1,005,786 1,021,797 1,048,091 1,076,047 1,096,394 1,117,989 1,320,403 1,474,532 1,844,219 Operating grants and contributions 137,048 32,653 31,078 47,478 55,235 222,879 154,155 61,459 47,077 30,179 Capital grants and contributions 3,338,669 131,626 579,982 6,536,160 5,200,256 799,492 2,360,036 4,338,411 6,837,591 3,588,263 Total business -type activities program revenues 13,615,297 12,621,492 13.823.845 19,880,894 18,199,771 17,054,770 20,897,035 23,251,876 26,968,691 27.322 270 Total primary government program revenues $ 22,516,338 $ 23.249346 $ 31316595 $ 42,240,573 $ 29.795271 $ 32,781,457 $ 45,839,547 $ 45.239.457 $ 56,519,420 $ 41373250 Net (Expense)/Revenue Governmental activities (11,889,932) (12,122,231) (7,491,171) (6,457,125) (15,554,410) (16,216,218) (4,004,751) (7,281,920) (3,944,255) (23,052,536) Business -type activities 4,718,089 3.902.551 3,915,894 10,031,848 7.676,714 6,368,300 9.138.892 11.900.383 13.745.427 12.168.380 Total primary government net expense $ (7,171,843) $ (8.219.680) $ (3.575,277) $ 3,574,723 $ (7-877.696) $ (9,847,918) $ 5.134.141 $ 4.618.463 $ 9.801.1-2 $ (10.484.156) General Revenues and Other Changes in Net Position Governmental activities: Taxes Property taxes 8,357,904 8,848,481 8,912,089 9,647,621 10,393,815 10,109,452 10,489,024 11,458,918 14,338,867 23,850,459 Misc. 111,048 200,015 201,577 99,876 128,414 583,314 634,169 540,803 1,000,009 735,752 Investment earnings 105,557 159,362 210,835 284,576 262,342 387,748 210,249 833,935 1,357,287 3,520,244 Grants and entitlements not restricted 3,132,559 3,184,831 3,177,113 3,074,926 3,425,997 3,251,245 3,069,588 3,544,415 3,631,373 3,812,177 Gas Tax 369,749 371,303 522,832 689,060 835,851 870,890 919,184 1,304,854 1,032,934 973,563 Gain (loss) sale of capital assets 78,497 22,183 (196,262) - 6,500 - - - - - Unrealized Gain (loss) on investments - - - - - - - (615,226) 149,231 292,370 Transfers 35,000 35,000 (8,960,047) (820,691) (4,045,439) (1,259,135) Total governmental activities $ 12,190,314 $ 12,821,175 $ 12,828,184 $ 13,796,059 $ 6,092,872 $ 15,202,649 $ 15,322,214 $ 16,247,008 $ 17,464,262 $ 31,925,430 Business -type activities: Investment earnings 132,339 227,052 288,162 410,448 412,935 209,468 276,681 1,185,464 1,952,712 2,124,960 Gain (loss) sale of capital assets (3,091) - - (2,077,363) - - - - - Other 140,616 19,631 - 209.531 - - 400,000 - - - Unrealized Gain (loss) on investments - - - - - - - (1,116,521) 270,830 530,600 Transfers (35,000) (35,000) 820,691 4,045,439 1,259,135 Total business -type activities $ 234.864 $ 211.683 $ 288.162 $ (1.45-.384) $ 412.935 $ 209,468 $ 676.681 $ 889,634 $ 6.268.981 $ 3,914,695 Total primary government $ 12.425.1-8 $ 13.032.858 $ 13.116346 $ 12.118-675 $ 6-505-807 $ 15-41111- $ 15998.895 $ 17,136,642 $ 23.733243 $ 35,840,125 Change in Net Position Governmental activities 300,382 698,944 5,337,013 7,338,934 (9,461,538) (1,013,569) 11,317,463 8,965,088 13,520,007 8,872,894 Business -type activities 4,952,953 4.114.234 4.204.056 8.574.464 8.089.649 6.577.768 9,815,573 12.790.017 20.014.408 16.483.075 Total primary government $ 5,253,335 $ 4.813.1-8 $ 9.541.069 $ 15913398 $ (1371.889) $ 5564.199 $ 21,133.036 $ 21?55.105 $ 33.534.415 $ 25355969 Unaudited statistical section a, O M M O, L� N V N LO M_ M_ - ;;, V M LO O O O v O N N EA EA EA 'A EA A A EA 69 lA N O N M lc �O VJ r N N N 7 V 7 N N EA 69 fA EA EA 69 EA EA EA 69 W M M ti r V M O W N C �� N O N oc V� N O Q� EA U7 EA EA FA A EA EA lA `O O 10 N 00 ocIC 7 Q, M O 7 10 00 Q1 N Q, ' N N O 00 -� N V V N N 7 Q, O MID, ~ l O V' z: EA fA EA EA 69 A EA EA 69 O Q, N W 10 10 O M M V1 M N N 01 N 7 V Q, O N W W D O N � N M I M M Vl Vl EA !/� EA EA 69 EA EA EA EA 75 r cl C LO zW O 00 CaU N Q� V O V occ, N M t` V' Co U U C/� U00 co a, N N N V C w W Q M �O Q, O O O l� O OCo -�. Co U 1ID, 4"i O N M W vl Q, O Q, N w U EA U7 EA EA EA 69 C V' O O O O Q, 10 'n Q N ID, w 10 C1i N M 7 N N V V Ul � EA to EA EA 69 A EA lA 00 1 C ID, Q� M r+j m EA fF? EA EA 69 A EA EA lA � C a) (n N w T C w E > O N Co — J r C a) Q a) O O > O C at `p at Q at Y n o Qn m s a E s - m> Ca Ca O O C C C C 0 C '� C N a1 C N in N w O t LO C a, C w ~ Z of Q D 01 z w z w t Z Of D wZ) a1 m a) O 5 C7 F- w U) Q F- z° Unaudited statistical se( i` co Revenues Taxes and assessments Licenses and permits Intergovernmental Charges for services Fines and forfeitures Miscellaneous Investment earnings Unrealized gain (loss) on investments Total revenues Expenditures General government Public safety Public works Parks and recreation Community development Capital outlay Debt service: Principal Interest Total expenditures Excess of revenues over(under)expenditures Other Financing Sources (Uses) Transfers in Transfers out Issuance of debt Sales of capital assets Bond premium Total other financing sources (uses) CITY OF KALISPELL, MONTANA CHANGES IN FUND BALANCES, GOVERNMENTAL FUNDS Past Ten Fiscal Years (modified accrual basis of accounting) 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 9,324,431 12,456,526 13,518,677 13,633,324 14,293,833 14,922,135 15,368,617 15,310,239 18,405,069 23,872,178 664,391 1,229,925 1,115,019 746,187 946,567 230,574 227,713 234,758 447,298 386,386 5,743,188 6,314,835 12,269,442 5,883,270 7,639,407 8,472,164 6,685,345 5,892,599 9,663,081 7,813,381 4,935,344 3,006,507 3,022,950 2,887,000 2,863,094 3,818,043 4,725,562 4,193,877 3,870,193 4,889,874 495,347 454,547 443,919 512,889 514,035 495,459 417,159 347,630 383,131 437,225 288,652 138,075 116,693 143,271 108,699 452,102 210,015 400,790 400,287 345,873 105,557 159,363 188,004 261,385 238,482 387,748 181,137 787,612 1,327,261 1,263,098 (615,226) 149,231 262,381 21,556,910 23,759,778 30,674,704 24,067,326 26,604,117 28,778,225 27,815,548 26,552,279 34,645,551 39,270,396 2,991,835 2,495,710 3,127,703 3,233,558 3,392,162 3,206,238 3,074,246 3,356,870 3,557,669 3,939,516 9,540,699 10,873,610 10,644,186 10,719,151 10,879,234 12,123225 10,897,125 11,467,720 12,345,652 15,575,473 2,191,012 2,327,678 2,857,261 5,166,350 3,638,526 3,262,769 3,374,911 3,214,514 4,362,601 4,024,148 1,550,843 1,714,235 1,986,322 2,092,271 1,941,001 2,196,358 2,226,728 2,461,125 2,879,811 2,884,232 923,170 853,455 1,275,659 2,860,796 2,048,260 2,995,286 3,041,410 303,802 1228,093 1,832,139 930,636 1,792,584 11,577,677 1,107,299 926,860 2,790,528 5,755,445 1,425,793 883,359 2,022,963 1,880,720 1,294,872 1,787,726 1,324,876 1,341,973 886,012 892,472 634,535 683,482 1,028,683 286,401 242,110 226,588 381,767 333,593 283,585 260,849 236,331 248,627 217,833 20,295,316 21,594,254 33,483,122 26,886,068 24,501,609 27,744,001 29,523,186 23,100,690 26,189,294 31,524,987 1,261,594 2,165,524 (2,808,418) (2,818,742) 2,102,508 1,034224 (1,707,638) 3,451,589 8,456,257 7,745,409 2,022,611 1,020,234 4,115,790 992,570 1,005,000 1,115,170 5,250,230 3,958,255 5,451,032 5,616,692 (1,987,611) (985,234) (4,115,790) (992,570) (1,005,000) (1,115,170) (5,250,230) (4,579,562) (9,496,471) (6,875,827) 461,833 134,287 6,148,597 104,917 15,824 193,484 4,165 361,936 48,028 34,574 93,272 26,513 20,984 37,399 6,500 - - - - 590,105 195,800 6,169,581 142,316 22,324 193,484 4,165 (259,371) (3,997,411) (1,224,561) Net change in fund balances 1,851,699 2,361,324 3,361,163 (2,676,426) 2,124,832 1,227,708 (1,703,473) 3,192,218 4,458,846 6,520,848 Debt service as a percentage of noncapital expenditures 9.50% 7.31% 10.65% 6.62% 7.11°a 4.69°a 485°a 4.02°a 3.68% 4.23% Unaudited statistical section 188 CITY OF KALISPELL, MONTANA MARKET VALUE OF TAXABLE PROPERTY Past Ten Fiscal Years (in thousands of dollars) Fiscal Taxable Year Real Less Total Total Estimated Value as a Ended Taxable Tax Taxable Direct Market Percentage June 30, Value Increment Valuation Tax Rate Value of Market Value 2016 $ 38,953 $ 1,000 $ 37,953 205.60 $ 2,294,128 1.65% 2017 $ 39,229 $ 1,211 $ 38,018 212.70 $ 2,307,546 1.65% 2018 $ 42,373 $ 1,142 $ 41,231 206.12 $ 2,561,622 1.61 % 2019 $ 43,808 $ 940 $ 42,868 205.76 $ 2,638,150 1.62% 2020 $ 48,698 $ 1,064 $ 47,634 193.30 $ 2,972,359 1.60% 2021 $ 49,672 $ 701 $ 48,971 189.42 $ 3,046,186 1.61% 2022 $ 57,135 $ 1,921 $ 55,214 161.10 $ 3,554,590 1.55% 2023 $ 59,038 $ 2,418 $ 56,620 165.58 $ 3,676,016 1.54% 2024 $ 83,477 $ 2,331 $ 81,146 197.69 $ 5,408,209 1.50% 2025 $ 81,387 $ 1,443 $ 79,944 228.16 $ 6,720,996 1.19% Source: Flathead County and Montana Department of Revenue Note: Reappraised by Montana Department of Revenue every other year Unaudited statistical section GE R CITY OF KALISPELL, MONTANA DIRECT AND OVERLAPPING PROPERTY TAX RATES Past Ten Fiscal Years (rate per $1000 of assessed value) City of Kalispell Overlapping Rates Fiscal General Total Year Obligation Direct Kalispell Ended Basic Health Debt Tax School Community Flathead State June 30, Rate Insurance Service Rate District College County Ed. 2016 170.10 23.00 12.50 205.60 363.75 18.99 145.03 46.00 2017 174.20 26.00 12.50 212.70 348.07 21.45 148.18 46.00 2018 169.62 24.00 12.50 206.12 432.82 20.16 138.11 46.00 2019 171.26 23.00 11.50 205.76 424.34 20.33 142.07 46.00 2020 161.00 21.30 11.00 193.30 403.70 21.46 137.73 46.00 2021 162.62 22.00 4.80 189.42 404.11 20.53 138.79 46.00 2022 138.10 19.50 3.50 161.10 296.95 18.34 143.67 46.00 2023 145.43 20.15 0.00 165.58 397.96 17.81 133.55 46.00 2024 120.60 16.15 0.00 136.75 326.14 12.77 143.86 46.00 2025 120.26 19.00 0.00 139.26 216.88 11.35 107.63 46.00 Source: Flathead County Unaudited statistical section 190 CITY OF KALISPELL, MONTANA PRINCIPAL PROPERTY TAX PAYERS Current Year, and Nine Years Ago Taxpayer FLATHEAD ELECTRIC COOPERATIVE INC INTERMOUNTAIN INFRASTRUCTURE GROUP LLC NORTHWESTERN CORP TRANSMISSION & DISTRIBUTION FLATHEAD HOSPITAL DEVELOPMENT COMPANY LLC SEMITOOL INC LUMEN TECHNOLOGIES INC BIG SKY INVESTMENTS KALISPELL LLC KALISPELL REGIONAL MEDICAL CENTER INC CHARTER COMMUNICATIONS INC TKG MOUNTAIN VIEW PLAZA LLC QWEST/CENTURYLINK INC NORTHWEST HORIZONS INC WAL-MART ESTATE BUSINESS TRUST CROWN ENTERPRISES LLC STATE OF MONTANA DNRC BRESNAN COMMUNICATIONS LLD 2025 Percentage of Total City Taxable Taxable Value Rank Value 2,520,680 1 3.02% 2,215,217 2 2.65% 1,611,817 3 1.93% 1,532,011 4 1.84% 1,165,570 5 1.40% 752,459 6 0.90% 687,538 7 0.82% 669,468 8 0.80% 605,803 9 0.73% 2016 Percentage of Total City Taxable Taxable Value Rank Value 1,772,106 2 4.55% 944,534 3 2.42% 508,052 4 1.30% 567,576 10 0.68% 374,458 Total 12,328,139 Total City Taxable Assessed Value $ 83,476,794 Source: Flathead County GASB, Statement 44 requires the demographic and economic information should indicate the principal property tax payers in the current year and nine years prior for comparison. Unaudited statistical section 191 1,860,308 219,776 352,534 251,977 215,132 373,742 14.77% 6,872,619 $ 38.953,059 5 0.96% 1 4.78% 9 0.56% 7 0.91% 8 0.65% 10 0.55% UIU C!1 � O o � O tj O U N U OHa ca O N cu X O N i� u LL 0 CB N CO � N 7 N C � LU 7 0 0 0 0 0 0 0 0 0 o 00 OC oo OC — kr) oo N 00 00 00 00 O O V) N 01 01 01 01 l— oc oc 01 01 01 01 01 01 01 01 01 oc M M 't 00 — C1 W) — W) a1 M N O o0 O a1 O H O l— 00 00 01 01 O O — O 't oc — W) — It W) 00 C1 M l� N N IO — M 0 0 0 0 0 0 0 0 0 0 00 00 l� 00 M 1p V'� 1p 00 1p �O 00 \p �O N 01 �O 01 01 N l— oc oc oc 01 01 O O O �t O O O 01 --i N O 00 m �O v 00 00 00 01 O O O — O Wn CO Il- W O O N CO �T LO r N N N N N N O O O O O O O O O O N N N N N N N N N N 70 D m 70 N 0- 0 70 Q c LL N O) CB CB N O N M (O N M LO (O w 69 69 69 69 69 69 69 69 69 69 U o O 0 0 0 0 0 0 0 0 N N M (O O Z (O M O C' �' O M O (O E CN N O 00 N a0i N N N N N N N N N N p" �~ O "O 't — M M N l— oc r— --� U 11O M W) l— — W) --� M --� l� 00 l0 M O M S. > _U N 00 V'1 U U 't N O :5 0 o 0 0 0 0 U OC W) W) U M N 01 l� 01 oc oc oc oc Ri M N M N M M N N 1. 01 M O I- O 01 (� It O v'� M O m 00 M O O oc N M It �O O O O 0 01 It 01 N v') N O - n O' M O M O U �+" OC N N "O O M O W) U V'1 01 N M V'1 N V'1 It N � � 01 O M � V'1 � O O O O O O O yMy 01 It N rq � o N N N N N N N N N N 7 O) � � � C m E Q) tf M L 70 Cl co 0 J E O) E U O C O co U LL E co Q Q Q Y co O _ O U U � ai U 7 O U) C O cn N M U Ln U) 7 M C D LO LO LO = M W co O M O CO LO O w Il- O M'IT co O CO N O Il- O�T M N r N r r U U o 0 0 0 0 0 0 f-- C Mr-- C O cY O H Z � Q � � V'1 00 M l— �O V'1 W) 00 M 00 O i O1 O1 O1 M M 00 lr— _ M 1p 00 N l� O M 00 00 V) M L�LtI ;L� w Q � 00 V'1 01 a r--� cz }�r O O�000Noo„ o000 v M M Q Q ccn ni � N `r Q ,y 'n a, " o N Wn W) v� 00 M 00 Z5 cB oT i Q l� M> OM1 \O � '� O cm 00 N W N J 00 V'� m M E � � 0 Q N N N p p O C C Z5 O N N 0 N L L 00 O O Q Q >' 81) O O O O O O C N a--' O1 It CB CB CB N -�g .0a T C C +O O U 75; 73 o O N M rq ai O L .�. w °'W �" — rq rq = = = = 000000000o 7 0 ti NCIA CIA NNNNNNN (� \� � \ — > ] / \ \ § ] \ \ \ / ] \ \ \ § §\ \ )k 0 \ \2 \ \\ , )/ E \ � f) Unaudited statistical section m CITY OF KALISPELL, MONTANA DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT June 30, 2025 Governmental Unit Overlapping General Obligation Debt: Flathead County Flathead Valley Community College Kalispell High School Kalispell Elementary West Valley Elementary Subtotal Overlapping Debt City direct debt Grand total direct and overlapping debt Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable (1) Debt 3,659,249 16.83% 615,727 1,524,991 16.83% 256,604 20,240,000 33.27% 6,733,976 17,785,000 100.00% 17,785,000 3,710,000 39.02% 1,447,551 26,838,858 4,782,156 100.00% S 4,782,156 31,621,014 Sources: Assessed value data used to estimate applicable percentages was provided by the State of Montana, Department of Revenue. Debt outstanding data was provided by each governmental unit. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of Kalispell. This process recognizes that, when considering the City's ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying the debt, of each overlapping government. (1) For debt repaid with property taxes, the percentage of overlapping debt applicable is estimated using taxable assessed property values. Applicable percentages were estimated by determining the portion of another governmental unit's taxable assessed value that is within the City's boundaries and dividing it by each unit's total taxable assessed value. Unaudited statistical section IPb: M O N l� 01 M 01 00 \p O \O 00 rq I— I— W) N l— l— l- � U On 0 � c- O M o0 O l 01 Q m -,t N O 01 w) V'� \p 01 py M M M N N N N N N N U O v� 01 v'� oo O oo O oo l O � � •� l� l� M O U N 4.4 W) N Ste" U IZ Q 00 M 00 � l� � O 1p 00 01 U M M M V'� V'� V'� V'� V'� l� 00 •� U O � • O --i N V'� N l l 00 � \p PLO l� �O N 00 00 O 00 O �O Q" ,byyA �i Q\ It 00 00 V'1 \p �O �O aiti U U Cq O N V'� N � Q., l� �O �O l� � O v'� 01 M �O • V L Q- U N o0 Q\ 00 Q\ .V. tL cl, 6 M M M 01 O_ O M 1p '� cj M N M X 00 00 o U � N N N N N N N N N N r rn CITY OF KALISPELL, MONTANA DEMOGRAPHIC AND ECONOMIC STATISTICS Past Ten Fiscal Years Per Capita K-12 Annual Calendar Total Wages Personal School Unemployment Year Population (in thousands) Income Enrollment* Rate** 2016 22,052 932,844 42,302 5,859 5.60% 2017 22,761 1,041,543 45,760 5,873 5.10% 2018 23,212 1,098,647 47,331 5,920 4.70% 2019 23,938 1,190,844 49,747 5,921 4.70% 2020 24,558 1,231,166 50,133 5,970 4.90% 2021 25,049 1,321,084 52,740 6,211 2.20% 2022 26,110 1,446,781 55,411 6,193 3.00% 2023 est 28,450 1,490,922 52,405 6,148 3.10% 2024 31,540 1,990,048 63,096 8,671 3.40% 2025 32,463 2,210,000 68,100 8,608 3.20% `School District 5 "unadjusted annual (calendar) - October unadjusted (2020) Sources: Kalispell Public Schools Audit Report, enrollment U.S. Census Bureau, population Montana Department of Labor & Industry: Unemployment Rate, Personal Income, Total Wages (Flathead County, City of Kalispell unavailable) Unaudited statistical section 198 CITY OF KALISPELL, MONTANA PRINCIPAL EMPLOYERS Most current information and Ten Year Prior (2016) 2025 2016 Estimated Estimated # of # of Private Employer Employees Employees Industry Logan Health (Kalispell Regional Hospital) 1000+ 1000+ Healthcare Teletech 250-499 500-999 Professional & Tech. Applied Materials (Semitool Inc.) 250-499 250-499 Manufacturing Immanuel Lutheran Home 250-499 100-249 Healthcare AON Service Corporation - NFS 250-499 250-499 Insurance Glacier Bank 250-499 250-499 Banking L C Staffing Service 250-499 100-249 Temp. Services Super1 Foods 250-499 250-499 Grocery Costco 250-499 100-249 Retail Walmart 250-499 250-499 Retail Healthcenter Northwest 250-499 not available Healthcare Sources: Montana Department of Labor & Industry The State of Montana, Department of Labor reports all employers in each county and does not rank them or provide the number of employees as they consider it confidential information. Unaudited statistical section 199 CITY OF KALISPELL, MONTANA Full -Time Equivalent City Government Employees by Function/Program Past Ten Fiscal Years FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 General Government Manager 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Human Resources 1.50 1.50 1.50 1.50 1.50 1.50 2.00 2.00 2.00 2.00 City Clerk 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 1.33 Finance 3.20 3.20 3.20 3.20 3.20 3.20 3.20 3.20 3.20 3.20 Attorney 4.67 4.67 4.67 4.67 5.67 5.67 5.67 5.67 5.67 5.67 Court 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 City Hall 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 1.45 Planning & Zoning 4.25 4.05 3.95 3.95 3.95 3.15 3.15 3.15 3.75 3.75 Building 5.20 6.75 8.65 8.65 8.65 8.45 8.45 9.45 9.65 9.65 Information Technology 2.55 2.55 2.55 2.55 2.55 5.55 5.55 6.00 6.00 6.00 Total General Government 29.15 30.50 32.30 32.30 33.30 35.30 35.80 37.25 38.05 38.05 Public Safety Emergency Levy Fund 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 23.00 23.00 Police 44.00 44.00 46.00 49.75 50.75 50.75 50.75 53.75 54.00 54.00 Fire 23.30 23.30 23.30 23.30 22.90 22.90 21.90 25.90 25.90 25.90 Ambulance 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 9.50 Total Public Safety 76.80 76.80 78.80 82.55 83.15 83.15 82.15 89.15 11240 112.40 Public Works DPW 0.25 0.25 0.25 0.25 0.25 0.25 0.25 0.20 0.25 0.25 Garage 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 3.00 4.00 Street Maint 12.25 12.25 12.25 13.25 13.25 14.25 14.40 14.55 16.75 16.75 Sign/signal 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Light District 1.25 1.25 1.25 1.25 1.25 1.25 1.40 1.25 1.35 1.35 Water 14.80 14.80 15.30 15.30 15.30 15.30 15.50 15.75 16.20 17.20 Sewer 7.05 7.05 7.55 7.55 7.55 8.05 8.25 8.50 8.90 8.90 WWTP 7.55 7.55 8.55 8.55 8.55 8.55 8.55 8.55 9.90 9.90 Storm 6.20 6.20 6.20 6.20 7.20 7.70 7.85 8.00 8.40 8.40 Solid Waste 7.40 7.40 7.40 7.40 7.40 7.40 7.55 7.45 8.50 9.50 Total Public Works 61.75 61.75 63.75 64.75 65.75 67.75 68.75 69.25 75.25 78.25 Parks and Recreation Parks and Recreation 9.80 9.80 9.80 10.60 10.60 10.80 10.80 11.80 13.70 13.70 Forestry 2.85 1.80 1.80 2.00 3.00 3.80 3.80 3.80 3.90 3.90 Total Parks and Recreation 12.65 11.60 11.60 12.60 13.60 14.60 14.60 15.60 17.60 17.60 Community Development UDAG/Comm. Dev. 2.00 2.00 1.75 1.75 2.00 2.00 2.00 2.00 1.20 1.20 Airport Airport 0.50 0.50 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Total all funds 182.85 183.15 188.20 193.95 197.80 202.80 203.30 213.25 244.50 247.50 Source: City Manager's Recommended Budget Unaudited statistical section 200 CITY OF KALISPELL, MONTANA OPERATING INDICATORS BY FUNCTION Past Ten Fiscal Years FY16 FY17 FY18 FY19 FY20 FY21 FY22 FY23 FY24 FY25 General Government Resolutions passed 44 57 58 56 50 53 46 62 54 53 Ordinances passed 17 15 17 17 26 13 24 29 10 15 Payroll claims processed 6169 6473 6351 6008 6351 6619 6522 6900 6467 7522 Accounts payable claims processed 6504 6716 6784 6905 6745 6638 6056 6466 6499 6634 Receipts processed 11775 13073 12687 11686 10209 9432 11503 12576 13320 13791 Conditional use permits granted 6 5 12 4 5 7 11 6 2 3 Public Safety Calls for law enforcement service 34626 33186 34467 36459 33578 32952 32745 36767 37242 33886 Citations 5037 4680 4948 5760 4786 4390 3623 2647 1633 3179 Arrests 1734 1405 1659 1660 1687 1511 1376 1320 955 1641 Calls for fire service 798 882 796 906 1157 1128 1392 1228 1408 1324 Calls for rescue service 2501 2673 2712 2792 2702 2806 3076 3184 3228 3524 Public Works Streets and alleys maintained (Miles) 140 144 155 160 160 166 168 166 170 173 Sidewalk replaced (linear feet) 1589 794 1853 1468 1234 1024 2754 1172 987 1663 Alleys paved 6 6 7 10 13 5 5 4 8 2 Parks Park users (reservations) 103438 102533 101493 92161 92161 92161 83520 96003 97727 95380 Acres of parks 429.49 429.49 429.49 429.49 429.49 429.49 445 467 467 467 Recreation participants (rec, sports, youth, swim) 35697 35370 35370 42526 40303 40303 48857 46028 47153 48981 Miles of trails 8.10 8.85 8.85 8.85 8.85 8.85 8.85 11.02 11.02 11.02 Development Services Building permits issued: Residential 195 222 181 183 216 324 240 127 176 198 Commercial 137 137 176 86 71 182 91 82 66 70 Community Development TIF/TEDDDistricts 4 4 5 5 5 5 5 5 5 5 New development loans 0 1 2 0 2 0 0 0 0 0 Loans being serviced 19 20 10 9 12 12 9 6 6 6 Airport Monthly tie down fees (average) 0 0 0 0 0 0 0 0 0 0 Monthly commercial fees (average) 6 6 4 0 0 0 0 0 0 0 Water Average daily consumption (millions of gallons) 3.13 2.96 2.33 2.33 3.23 3.57 2.33 3.57 4.1 4.1 Number of customers 7785 7907 8083 8263 8363 8579 8856 8856 9148 9532 Sewer Average daily wastewater treated (millions of gall 2.5 2.7 2.8 2.7 2.4 2.6 2.9 2.8 2.8 2.9 Solid Waste Refuse collected (tons per day) 26.0 26.9 27.1 27.7 28.5 30.1 30.9 43 56 53.11 Source: City of Kalispell - updated as available Unaudited statistical section 201 CITY OF KALISPELL, MONTANA Capital Asset Statistics by Function/Program Past Ten Fiscal Years F716 FY17 F718 FY19 FY20 FY21 FY22 FY23 FY24 FY25 Police Stations 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 1.00 Patrol Units (Cars) 11.00 11.00 11.00 11.00 11.00 11.00 12.00 12.00 12.00 12.00 Patrol Units (Motorcycles) 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Fire Stations 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Fire Trucks 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 4.00 Ambulances 4.00 4.00 4.00 4.00 4.00 4.00 3.00 3.00 3.00 3.00 Water Mains (Miles) 129.50 129.75 130.05 137.50 143.00 144.00 152.23 152.23 186.30 186.30 Wastewater Sanitary Mains (Miles) 131.00 131.00 131.60 138.80 141.00 151.00 145.28 145.28 145.30 145.30 Storm Mains (Miles) 53.50 53.50 53.75 66.80 68.00 68.50 41.86 41.86 90.60 90.60 Lift Stations 41.00 41.00 41.00 41.00 43.00 43.00 41.00 41.00 60.00 60.00 Solid Waste Collection Vehicles 8.00 8.00 8.00 6.00 6.00 8.00 8.00 8.00 8.00 8.00 Other Vehicles 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 2.00 Source: City of Kalispell Unaudited statistical section 202 CITY OF KALISPELL, MONTANA TILE WATER SYSTEM Past Four Fiscal Years Major Water System Users User Type of Business Fiscal Year 2021/22 Water Charges of Fiscal Year 2021/22 Fiscal Year Water 2022/23 Revenues Water $3,891,151 Charges % of Fiscal Year 2022/23 Fiscal Year Water 2023/24 Revenues Water $4,619,300 Charges % of Fiscal Year 2023/24 Fiscal Year Water 2024/25 Revenues Water $3,018,291 Charges % of Fiscal Year 2024/25 Water Revenues $3,510,449 Logan Health (KRMC) Hospital $ 81,793 2.10 % $ 76,652 1.66 % $ 98,341 3.26 % $123,911 3.53 Red Lion Hotel Hotel $ 12,594 0.32 % $ 15,402 0.33 % $ 18,323 0.61 % $ 24,218 0.69 John Peschel/Valley LinenCleaner $ 14,603 0.38% $ 15,844 0.34% $ 12,997 0.43% $24,106 0.69% Logan Health North Hospital na na $ 12,941 0.28 % $ 24,767 0.82 % $ 24,767 0.71 Hilton Hotel $ 10,679 0.27% $ 9,577 0.21% $ 13,286 0.44% $ 13,558 0.39% Sems Car Wash Car Wash na na $ 10,349 0.22 % $ 13,109 0.43 % $ 9,858 0.28 The Summit Athletic Club $ 14,440 0.37 % $ 11,305 0.24 % $ 16,164 0.54 % $ 16,796 0.48 Heritage Place Nursing Home $ 22,674 0.58 % $ 22,040 0.48 % $ 26,285 0.87 % $ 34,884 0.99 Devin Khoury Commercial na na $ 10,094 0.22 % $ 7,810 0.26 % $ 10,290 0.29 Pro Clean Car Wash Car Wash $ 10,119 0.26 % $ 9,009 0.20 % $ 10,194 0.34 % $ 10,174 0.29 Holiday Inn Express Hotel na na $ 8,833 0.19 % $ 11,523 0.38 % $ 13,759 0.39 Total $ 166,902 4.29 % $ 202,046 4 % $ 252,798 8 % $306,320 9 Water Sold by Customer Type 2922 2223 2224 Z= Type of Customer Residential 449,259 395,762 286,987 287,818 Commercial 595,963 405,427 375,456 411,582 Total 1,045,222 801,189 662,443 699,400 Total direct rate $ 2.32 $ 2.54 $ 3.65 $ 4.54 per 1000 gallons Water Rates Fiscal Water Irrigation (sprinkling) Year Monthly Rate per Monthly Rate per Ended Base 1000 Base 1000 Jun, 3n ZaIL Gallon Za€ Gallons in city out of city in city out of city in city out of city in city out of city 2022 $ 9.99 $ 12.49 $ 2.99 $ 3.74 $ 9.99 $ 12.49 $ 2.99 $ 3.74 2023 $ 10.99 $ 13.74 $ 3.27 $ 4.09 $ 10.99 $ 13.74 $ 3.27 $ 4.09 2024 $ 12.64 $ 15.80 $ 3.76 $ 4.70 $ 12.64 $ 15.80 $ 3.76 $ 4.70 2025 $ 14.54 $ 18.18 $ 4.32 $ 5.40 $ 14.54 $ 18.18 $ 4.32 $ 5.40 Sources: City of Kalispell City of Kalispell, Resolutions 4798/4799/5491 Some custormers pay to install a separate irrigatic meter and are then billed actual meter readings for their irrigation use. The City also bills customers a "sprinkling" rate based off of an average usage in the "winter months" deduction. Unaudited statistical section 203 CITY OF KALISPELL, MONTANA THE SEWER SYSTEM Past Four Fiscal Years Sewer Sold by Customer Type 2022 2023 2024 2025 Type of Customer Residential 445,326 395,709 387,624 390,145 Commercial 510,803 567,790 526,962 531,108 Total 956,129 963,499 914,586 921,253 Total direct rate $ 4.30 $ 4.07 $ 5.34 $ 5.94 per 1000 gallons Sewer Rates Flathead County Water & Sewer District #1 Fiscal Sewer - Evergreen Year Monthly Rate per Monthly Rate per Ended Base 1000 Base 1000 June 30. Rate Gallons Rate Gallons in city out of city in city out of city Evergreen" Evergreen" 2022 $ 12.65 15.81 $ 7.17 $ 8.96 $ 15,079.00 $ 2.96 2023 $ 14.22 17.78 $ 8.06 $ 10.08 $ 16,339.14 $ 3.27 2024 $ 15.21 19.01 $ 8.62 $ 10.78 $ 17,707.14 $ 3.38 2025 $ 15.80 19.75 $ 8.95 $ 11.19 $ 19,831.40 $ 3.48 Sources: City of Kalispell City of Kalispell, Resolutions 4798/4799/5491 **Evergreen has its own collections system and only uses the City's sewage treatment plant, which results in a reduced charge. The City bills the district, which in turn bills the users within the district. Unaudited statistical section 204 N 0 c O C � i C > N O N } Z f6 X U = X N Lq c al 'i > Y N N o p CO N �U (D a E N U c X m H Ll U P f6 c N N E U > j C LC) C`') C`') r` CO V C`') a0 O O CO CO O r` CO LO r` O N (D (D r` O O O O O (D f6 Efl (A (14 (19 Ef) O O r` C`') O V C`') 00 N O 00 Lr Lr Lr (D O O CY) N C`') C`') U3 U3 U3 U3 Efl CD CD CD CD CD O O O O O LO LO LO LO LO (D (D (D (D (D (D (D (D (D (D (LT (LT (LT (LT ER O — LC) r` N 00 00 O LO LO O N 00 cl r` O M N r` LC) M O N m O (D N LO O N C2 O O 00 m 00 U3 U3 U3 U3 U3 U3 U3 >, ZT C N O V M M V O C M N M 67 V 00 CD- I-- C C O N O O O (f) V C O (C N M O c LO LO C —_ S O N a jp N L L CO Y -c S 00 a0 a0 00 00 00 00 U N N N N N N N 0 M M M M M M M O O O O O O O U3 ER ER ER ER ER ER LO M N O O N N N N N N M N CD00 N N N N N CD CD CD O O O O N N N N N N N MM MWr`M O O (f) CD O CD O (C M Lr O O O 00 IL2 V V L2 N N CU H M ( h U � � N lu- } 0 00 rl- 0 00 M (D 00 Cl) (D Cl) O (D 00 O LC) 00 O N M O 00 � � � O 00 00 3 U3 Efl EA EA GO Efl O CO r` O 00 ((O N I-((O V 0 r C (n N N 0') 00 W C` O 00 00 a � avava(»(s(»va N U a L6 f 0 0 0 O O O a O O O O O O Cl) Cl) Cl) Cl) Cl)C`') ) (A (14 (14 (10) (10) (10) V CM N O O J N N N N N r cl) NC) J 00 N N N N ) 0 0 0 0 0 0 4 N N N N N N P N IE C O N u > N Q' In _ (0 O u a Lo C �5 O N a N m � a vco OrnM m w 00 N CDC`') � LO O N C CO CO — CO O Lf) r` c T 7 C`') C`') 00 LO V m 3 M M N N N c .J O N N C :3 f6 N > > N U3 U3 C4 64 64 64 GO j O r` O V V co U 00 CD— -O 00cl) LO C L6 N N C`') C`') � LO V S M M N N N m m Ll o- T N 0 v 16 CO (»(»(»Ef3 Ef3 (»(» >O N SZ LO LO LO LO LO LO LO c -0 CD CD CD CD CD CD CD O O O O O O O O _ N N O N C N C f6 O .N ER ER ER ER ER U3 Efl N N f6 LO CD m p LO N N N N N U a M N O 00 Qj N N N N N � CD CD CD CD CD CD O O O N N N N N N N CO Z (B V) o 0 0 0 0 0 0 _ N m In r-- 00 O( 0 Lo 00 O N (fl N NU 26 O N N O— O L O > C-) > N Z x U X N (B •L � U � L LL a� N 0fl O M In O In N 2r-O0flOr-O 30 L N 00 N N� M M N O 0) M — 00 00 O 00 — — r- 00 00 r� 0A 0fl N 0A O 00 E 0fl LO 0fl LO 00 00 N m r-r-LnLn�� x U (B � H w U X M 00 M rl- M 0A - N 0fl 0fl - M M N M 0A - 00 O CA i N O 00 O In r 00CF) N r r r- (B O 0fl N M 00 O Lo Lo r r E X 2 � ~ > V9. 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V9. vg� 6E� — LO — r�- � w w (D LO LO 00 O N 00 M r� C O N r- LO M M N N In N In � M (B 0= N C 0fl — N L N > > N M 0A 06 00 00 00 Q N X O L CL Orn00LO(Drl� Yi 0 000 00 N O m 0 0 M LO N— M M M 2 01 -O M — 0A 00 O O 00 O (fl N 00 C)d Cl) N N L N 00 N - LO LO N (fl - N O>rl-rl-LnLnN�I- V) 7 N Q (B �' fl Ki Ki Ki Ki Ki Ki > E LLO M N— O M N N N N N N � N } M N O CA 00 O O O O O O O N N N N N N N E c13 0- 0 m O >, (B � > > � N U 0 0 N u N n v `o n X M 6 c ; I LL H H N � O N c X ; c LL H C H N O N N a O v C N c LL H ; O C o a X LL_ 2 CL N LL N N 0 4 X = O7 C 0 NN m o � a` 0 rn 00 0 0 0 0 0 0 0 0 0 0 V O� C C� Cam') N Cam') O r of O D7 N N f� r f") r O� 0 v) 0 0 0 0 0 0 0 0 0 0 Lo OOi O O c00 V m C O m N v) M V O fn') r r ccN N f") c o O Cj N N N N N N N o � r N � 0 0 0 0 0 0 0 0 0 0 (vj D7 O D7 N f") N N O r c0 c0 �.j tgNV D7 (O O v) � N N 2 O) O) O) 0 Q 11 11 N O H (N 00 7 v) 00 C7 00 r Cl) C U O 6) E 0 M M M N X � EA EA V3 O O O m O O O O O O S N N o C O M M M N m O EA EA EA O1 (N (N co r co X C H a M M M E m m N F C EA EA EA 0) C N M M M N > 00 00 00 ca W r U) C v) 00 00 O O E 5 O c > O ro r CD D C ) L n (N N N i N 0 ca X F V3 V3 V3 m m C o i N N D 00 N W ' O_ w N a O E Y O N m _ N LL (1) H N 6) N F d X Y ID H H u3l u3l 1 p 1 a +� N M M 00 M I a)J N (O (O ] C) v) v) v) C N a) � � m 1 � > I � A > C N EA EA EA 1 � I 0) W W W M M M 6) 6) 6) I I r r r E r r 1 m > 1 O p c_ f � . d N Ff3 Ef3 EA U } LL N N N CITY OF KALISPELL, MONTANA Special Improvement Districts Operating Data June 30, 2025 Outstanding SIDs Original Maturity Bonds Cash Assessments Delinquent Bond Issue Amount Date Outstanding Balance Outstanding Assessments 1 SID 344 $ 4,520,000 6/30/2026 $ 230,000 $ - $ 801,178 $ 590,794 2 SID 345 $ 242,000 6/30/2029 $ 70,000 $ 24,773 $ 45,984 $ - TOTAL $ 4,762,000 $ 300,000 $ 24,773 $ 847,162 $ 590,794 Revolving Fund Balance and Bonds Secured Thereby - SIDs Billing and Collections Fiscal Year Ended June 30, Last Ten Fiscal Years Revolving Fund Principal Cash Amount Balance of Debt 2016 $ 285,488 $ 2,761,499 2017 $ 288,807 $ 2,427,060 2018 $ 292,053 $ 2,045,507 2019 $ 296,996 $ 1,793,229 2020 $ 221,196 $ 1,518,000 2021 $ 222,826 $ 1,409,000 2022 $ 224,033 $ 1,036,000 2023 $ 225,009 $ 778,000 2024 $ 232,653 $ 548,000 2025 $ 234,990 $ 300,000 Assessment Billing $ 448,878 $ 433,302 $ 417,768 $ 329,721 $ 324,327 $ 294,763 $ 283,220 $ 261,104 $ 250,023 $ 238,931 Total Annual Collections $ 396,747 $ 379,258 $ 365,721 $ 272,959 $ 253,437 $ 248,302 $ 238,621 $ 218,367 $ 209,149 $ 199,919 unaudited statistical section 208 N co (O O 00 00 — O O M cy) 00 00 V M N O U M :3 LO LO LO LO LO m r- r- r- r- r- C U co M M M M Q i 00 00 00 00 00 E (h M M M M E X � � � ER ER ER ER EA 0 0 0 0 0 C O O O O O (n O O O O O C Lo Lo O O Lo 0 m Lo r-- O O O co Lr � O N 7 M M co O vi (A w, EA EA 00 N N 00 M O r— O Lo 00 x co co co (O CD m N 00 (O Lo rn � E O O M O (6 N N O 'IT = LO O U (, N H � _ N EA EA EA EA 7 X > 00 00 00 (O M NN N N N N }' N W � C (n ER EA EA EA EA N C N 00 00 O LO E 0 0 0 0 m c o Oo r..:_ (i ri C m N N� r— N 00 N N m ER EA EA 01, EA H N (O L V 00 00 (O LO M N 00 (') I-- LO C14 LO N O 6) N M (O O = O 00 x N M 7 H Uf l (fi EA EA 64 > M 00 M I- M C QJ N (n N O 'IT N O (O O E a0 O N (6 > CD LO LOO M U C — 00 00 00 00 00 7 N N N N N O m (6 M M M M M m > O O O O O LL H N 76 N N N N N UCD N N � }CD N N N CD CD CD CD N N N N N rn O N SINGLE AUDIT SECTION REPORTS OF INDEPENDENT PUBLIC ACCOUNTANTS AND SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS AS REQUIRED BY U.S. OFFICE OF MANAGEMENT AND BUDGET UNIFORM GUIDANCE, AUDITS OF STATE AND m;W=,1.i rw:I I I$1.R piit$] Eide r4Badly Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards The City Council City of Kalispell, Montana We have audited, in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States (Government Auditing Standards), the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Kalispell, Montana (the City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated February 12, 2026. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented, or detected and corrected on a timely basis. Asignificant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. We identified a deficiency in internal control, described in the accompanying Schedule of Findings and Questioned Costs as item 2025-001 that we consider to be a significant deficiency. eidebVkcom 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. City of Kalispell's Response to Findings Government Auditing Standards requires the auditor to perform limited procedures on the City's response to the findings identified in our audit and described in the accompanying Schedule of Findings and Questioned Costs. The City's response was not subjected to the other auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Denver, Colorado February 12, 2026 01VA Eide r4Badly Independent Auditor's Report on Compliance for Each Major Federal Program; Report on Internal Control Over Compliance; and Report on the Schedule of Expenditures of Federal Awards Required by the Uniform Guidance The City Council City of Kalispell, Montana Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the City of Kalispell, Montana's (the City) compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplementthat could have a direct and material effect on each of the City's major federal programs for the year ended June 30, 2025. The City's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. In our opinion, the City complied, in all material respects, with the compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2025. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America (GAAS); the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States (Government Auditing Standards); and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of the City and to meet our other ethical responsibilities, in accordance with 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 opinion on compliance for each major federal program. Our audit does not provide a legal determination of the City's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules and provisions of contracts or grant agreements applicable to the City's federal programs. eideb9TY.com 7001 E. Belleview Ave., Ste. 700 • Denver, CO 80237-2733 • TF 866.740.4100 • T 303.770.5700 • F 303.770.7581 • EOE Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on the City's compliance based on our audit. 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 GAAS, Government Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material, if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about the City's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with GAAS, Government Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, 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 City's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. Obtain an understanding of the City's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. Amaterial weakness in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. P&El! Our consideration of internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Report on Schedule of Expenditures of Federal Awards Required by the Uniform Guidance We have audited the financial statements of the governmental activities, the business -type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Kalispell (the City) as of and for the year ended June 30, 2025, and the related notes to the financial statements, which collectively comprise the City's basic financial statements. We issued our report thereon dated February 12, 2026, which contained unmodified opinions on those financial statements. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by the Uniform Guidance and is 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. In our opinion, the schedule of expenditures of federal awards is fairly stated in all material respects in relation to the basic financial statements as a whole. Denver, Colorado February 12, 2026 P&P -� I �a --- a 4 3 It e Qo wo doe 10 OM 09 a mS ti In w F A m 7 i a W m w M a C4 W ao - U '� '� m I"° C7 C7 Cx7 N N N q a e a wo $m _ tO �* Q w N N N N N oo a v ov o0 00 as 00 00 a a o. U A � � U o U p�p�3 ..ti °°mow a 3 a a01 p° go $ n°Nn City of Kalispell Notes to Schedule of Expenditures of Federal Awards Year Ended June 30, 2025 Note 1- Basis of Presentation The accompanying schedule of expenditures of federal awards (the schedule) includes the federal award activity of the City of Kalispell under programs of the federal government for the year ended June 30, 2025. The information this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position, or cash flows of the City. Note 2 - Summary of Significant Accounting Policies Expenditures reported in the Schedule are reported on the accrual basis of accounting. When applicable, such expenditures are recognized following the cost principles contained in the Uniform Guidance, wherein certain types of expenditures are not allowable or are limited as to reimbursement. No federal financial assistance has been provided to a subrecipient. Note 3 - Indirect Cost Rate The City has not elected to use the 10% de minimis indirect cost rate. 01VA City of Kalispell Schedule of Findings and Questioned Costs Year Ended June 30, 2025 Section I — Summary of Auditor's Results FINANCIAL STATEMENTS Type of auditors' report issued Internal control over financial reporting: Material weaknesses identified Significant deficiencies identified not considered to be material weaknesses Noncompliance material to financial statements noted? FEDERAL AWARDS Internal control over major program: Material weaknesses identified Significant deficiencies identified not considered to be material weaknesses Type of auditor's report issued on compliance for major programs: Any audit findings disclosed that are required to be reported in accordance with Uniform Guidance 2 CFR 200.516(a)? Identification of major programs: Name of Federal Program or Cluster Emerging Contaminants Drinking Water State Revolving Fund Cluster Dollar threshold used to distinguish between Type A and Type B programs: Auditee qualified as low -risk auditee? Unmodified No Yes No No None reported Unmodified No Federal Financial Assistance Listing 66.442 66.468 $750,000 R7 01&7E City of Kalispell Schedule of Findings and Questioned Costs Year Ended June 30, 2025 Section II — Financial Statement Findings 2025-001: Restatement to financial statements for material reclassification Significant Deficiency Criteria: Governmental fund financial statements are prepared using the current financial resources measurement focus and modified accrual basis of accounting. Under this framework, amounts that are unavailable to finance current period expenditures — such as loan and assessment receivables that are not available —should be reported as deferred inflows of resources, not as fund balance. This presentation ensures that only resources available in the current period are reported as spendable. Condition: During fiscal year 2025, we identified a prior -period classification error in the reporting of certain loan and assessment receivables within governmental funds. Amounts in the Westside Tax Increment Financing (TIF) Fund and the Community Development Fund were previously reported as fund balance rather than deferred inflows of resources in the financial statements issued for prior periods. Cause: The City's financial reporting process lacked sufficient review and reconciliation procedures to ensure accurate classification of these deferred balances, which were reported correctly in the City's trial balance. Effect: Beginning fund balance as of July 1, 2024 was misstated in the previously issued financial statements. In fiscal year 2025, the City restated beginning fund balance to correctly present these amounts as deferred inflows of resources. The reclassification decreased beginning fund balance and increased deferred inflows of resources in the respective funds. Recommendation: We recommend the City implement enhanced review and reconciliation procedures as part of the ACFR preparation process to ensure that balances within the City's trial balance are appropriately mapped to the corresponding line items in the final report. Views of Responsible Officials: Agree 09R City of Kalispell Schedule of Findings and Questioned Costs Year Ended June 30, 2025 Section III — Federal Award Findings and Questioned Costs No current year findings reported. NO, City of Kalispell Summary Schedule of Prior Audit Findings Year Ended June 30, 2025 Summarized below is the current status of all audit findings reported in the prior year audit's schedule of audit findings and questioned costs. Finding No. Program Name/Description CFDA No. Compliance Requirement Status of Corrective Action N/A N/A N/A N/A N/A 0414