Loading...
1. IntroductionCITY OF AUDITED ANNUAL FINANCIAL REPORT FISCAL YEAR 2010 July 1, 2009 - June 30, 2010 CITY OF KALISPELL ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Letterof Transmittal............................................................................................................................................ 3-6 OrganizationalChart........................................................................................................................................... 7 CityElected and Appointed Officials................................................................................................................. g IndependentAuditor's Report............................................................................................................................ 9-10 Management's Discussion and Analysis............................................................................................................. 11-21 Basic Financial Statements: Government -wide Financial Statements: Statementof Net Assets....................................................................................................................... 22 Statementof Activities......................................................................................................................... 23 Governmental Fund Financial Statements: BalanceSheet — Governmental Funds................................................................................................ 24 Reconciliation of the Balance Sheet — Governmental Funds to the Statement of Net Assets ........ 25 Statement of Revenues, Expenditures, and Changes in Fund Balances — Governmental Funds.. 26 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities..................................................................... 27 Proprietary Fund Financial Statements: BalanceSheet — Proprietary Funds.................................................................................................... 28 Statement of Revenues, Expenses, and Changes in Net Assets — Proprietary Funds ..................... 29 Statement of Cash Flows — Proprietary Funds.................................................................................. 30 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Assets — Fiduciary Funds...................................................................... 31 Dotesto the Financial Statements....................................................................................................................... 32-61 Required Supplementary Information other than Management Discussion and Analysis: Schedule of Funding Progress and Employer Contributions — Other Post -Employment HealthcareBenefits........................................................................................................................... 62 Budgetary Comparison Schedule — General and Major Special Revenue Funds ........................... 63 Supplemental Information: Combining and Individual Governmental Fund Statements and Schedules: Combining Balance Sheet — Nonmajor Governmental Funds......................................................... 64-69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances — NonmajorGovernmental Funds.................................................................................................... 70-77 Budgetary Comparison Schedule — MajorDebt Service Fund............................................................................................................... 78 Budgetary Comparison Schedule — NonmajorGovernmental Funds.................................................................................................... 79-98 Combining and Individual Proprietary Fund Statements: Combining Balance Sheet — Nonmajor Proprietary Funds............................................................ 99 Combining Statement of Revenues, Expenditures, and Changes in Net Assets — Nonmajor ProprietaryFunds......................................................................................................................... 100 Combining Statement of Cash Flows — Nonmajor Proprietary Funds .......................................... 101 Combining and Individual Agency Fund Statements: Combining Statement of Fiduciary Net Assets - Agency Funds ..................................................... 102 Combining Statement of Changes in Assets and Liabilities - Agency Funds .............................. 103 CITY 0PKALISP8LL ANNUAL FINANCIAL REPORT TABLE OF CONTENTS Financial Trends Net Assets by 104 Changes in Net Assets' 105 Fund Balances oCGovernmental Funds ................................................................................................. 106 ChangesimFund Balances, Governmental Funds ................................................................................ 107 Revenue Capacity Directand Overlapping Property Tax Rates ........................................................................................ 108 Property Tax Levies and Collwcdnmm.....,....,,,,....~....,,..,...~....-,.,,-..,..-...--..,..~...,..,..,~..,,....~.,..,... 109 WaterSold byType ofCustomer ........................................................................................................... 110 Demographics and Economics Operating Section Full-time Equivalent City Government Employees by Function/Program ......................................... 118 AWARDS AS REQUIRED BY OMB CIRCULAR A-133 Schedule ofExpenditures of Federal Awards.~. . ~~~.....~~_.~_. __,.~.~~ 120 Notesbothe Schedule ufExpenditures nYFederal Awards ............................................................................. 128 Independent Auditor's Report on Compliance and on Internal Control over Financial Reporting based omumAudit oyFinancial Statements Performed iaAccordance with Government AuditingStuodamdw..------------------..,,.-.-....-.----.-'..---------------------.~----' 122-123 Independent Auditor's Report on Compliance with Requirements Applicable to Each Major Program and Internal Control over Compliance inaccordance with OMB Circular A-133........... 124-125 Schedule of Findings and Questioned Costs ..................................................................................................... 126-129 Report oaother Compliance, Financial, and Internal Accounting Control Matters ..................................... 130 't� �' City of Kalispell Post Office Box 1997 - Kalispell, Montana 59903-1997 Telephone (406) 758-7701 Fax - (406) 758-7758 December 30, 2010 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. It is the belief of the City Council and the Executive staff that an annual audit assures a higher level of financial management and fiscal responsibility. Pursuant to this policy and these requirements, the audited annual financial report for the City of Kalispell, Montana for the fiscal year ended June 30, 2010, is submitted for your review. The Finance Office prepared this report. Responsibility for the accuracy and completeness of the presented data, including all disclosures, rests with the City. We believe the data, as presented, is accurate in all material aspects; that it is presented in a manner designed to fairly set forth the financial position and results of operations of the City as measured by the financial activity of its various funds; and that all disclosures necessary to enable the reader to gain an understanding of the City's financial affairs have been included. GAAP require 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). This 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 statement within this report. Reporting Entity and Services Provided The City of Kalispell, incorporated in 1892, is located in the western part of the state, which is considered to be one of the top growth areas in the state. The City of Kalispell is empowered to levy a property tax on both real and personal properties located within its boundaries. It also is empowered by state statute to extend its corporate limits by annexation, which occurs periodically when deemed appropriate by the governing council. The City of Kalispell is operated under the council-manager form of government. Policy -making and legislative authority are vested in a governing council consisting of the mayor and eight other members. The governing council is responsible, among other things, for passing 3 The City's accounting records for general governmental operations are maintained on a modified accrual basis. Under this method, revenues are recorded when measurable and available; expenditures are recorded when services or goods are received and the liabilities are incurred. Accounting records for enterprise funds are recorded on the accrual basis. Under this method, revenues are recorded when the services are performed; expenditures are recorded when the goods or services are received and the liabilities are incurred. In developing the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal controls are designed to provide reasonable assurance regarding the safeguarding of assets and the accuracy and reliability of accounting data used for preparing financial data and maintaining accountability for assets. Budgetary control is maintained by an annual appropriation system. The Mayor and Council evaluate the budget proposals of the various City departments to determine the appropriate level of the operating and public service programs. After giving due consideration to the inpej received from the citizens, the City Council adopts the budget. The budget is controlled through El an on line accounting system. The control is decentralized to the point that individual tepartment heads are responsible for expending within budgetary limits. The City's demand deposits are interest bearing money market accounts. The City also utilizes the Statewide Investment Pool (S.T.I.P), and obligations of the U.S. Treasury for cash temporarily idle during the year. Rates of return vary based on markets. The City invests all funds in accordance with State law. The City of Kalispell joined with over 100 other Montana cities and towns to form a self- insurance pool offering worker's compensation and liability coverage. Liability limits of $750,000 per person and $1.5 million per incident were obtained through the insurance pool, renamed Montana Municipal Interlocal Authority (MMIA). On October 1, 2004, MMIA established, and the City joined, the Employee Benefits Program for its members, providing a more affordable health and dental insurance option for members to offer their employees. The City of Kalispell provides pension benefits for substantially all of its full-time employees. These benefits are provided through the Montana Public Employees' Retirement System (PERS); Municipal Police Officer's Retirement System (MPORS): and the Firefighters' Unified Retirement System (FURS). The City of Kalispell has no obligation in connection with employee benefits offered through this plan beyond its matching contributions. Additional information on the City of Kalispell's pension arrangements can be found in the notes to the financial statements. 'fhe City of Kalispell has not been immune to the effects of the recent nation-wide economic downturn. Two of the Flathead Valley's core industries have been hit particularly hard. The logging industry is virtually shut down, which trickles down to closures in related industries. Construction is at a stand -still and the real estate market is filled with foreclosures. Columbia Falls Aluminum Company, which has been struggling to continue operations for years, has announced its closure. Since November 1986 and the passage of Initiative 105, which limited certain property taxes to the 1986 levels, the ability of the City to raise revenue for basic services is increasingly difficult. Then, the legislature, with SB184, lowered tax rates forcing the City to increase mill levies to maintain the same level of revenue. The City's cash reserves in most funds vary between 10% and 20% of appropriations. State law allows for reserves of 50%. Reserves provide for cash flow between tax revenue receipts to keep the City from having to borrow funds for operations. Additional revenues generated by *increased taxable valuation come with the additional costs of an increased service area. The City of Kalispell's Police and Fire Departments, Courts system, W Building Department, Public Works and Parks have felt the increased pressure from the influx of people to Flathead County. These pressures impact the budgets of all departments. The outlook for the City of Kalispell is to continue providing basic services while looking for additional ways to fund the increasing costs of those services. Acknowledgments In conclusion, overall the City of Kalispell is in good financial condition. The completion of the Annual Financial Report on a timely basis was made possible by the entire staff of the Finance Department and the cooperation of the administrative staff of all City departments. I would also like to give recognition to the mayor, governing council, and the city manager for their consistent support for maintaining the highest standards in the management of the City of Kalispell's finances. In accordance with Section 7-6-4111, MCA I hereby transmit the City of Kalispell Audited Annual Financial Report as of June 30, 2010 for the fiscal year then ended. Respectfully submitted, Amy Robertson Finance Director M rf Rick Wills Assistant Finance Director MUNICIPAL JUDGE Heidi Ulbricht CITY OF KALISPELL, MONTANA ORGANIZATIONAL CHART CITY COUNCIL CITY CLERK Theresa White�--1 CITY MANAGER Jane Howington AIRPORT FINANCE Fred Leistiko Amy Robertson HUMAN PUBLIC WORKS INFORMATION RESOURCES Jim Hansz TECHNOLOGY Terry Mitton Erika Hess PLANNING & PARKS & BUILDING RECREATION Tom Jentz Mike Baker PUBLIC SAFETY PUBLIC'SAFETY LEGAL FIRE POLICE Charlie Harball Dan Diehl Roger Nasset TERM ELECTED OFFICIALS EXPIRES Mayor Tammi E. Fisher 12/2013 Mari Gabriel Ward 1 12/2011 Jim Atkinson Ward 111 12/2013 Robert Hafferman and 1 12/2013 Randy Kenyon and 111 12/2011 Wayne Saverud and 11 12/2011 M. Duane Larson and IV 12/2011 JeffZauner and 11 12/2013 Tim Kluesner and IV 12/2013 Municipal Court Judge: Heidi Ulbricht 12/2013 City 711anager Jane Howington Attorney Charles Harball City Clerk Theresa White Police Chief Roger Nasset Fire Chief Dan Diehl Finance Director Amy Robertson Public Works Director James Hansz Parks Director Michael Baker Airport Manager Fred Leistiko Planning Director Tom Jentz Human Resource Director Terry Mitton City Treasurer Deb Diest Assistant Finance Director Rick Wills