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Home My WebLink AboutJune-30-2024 CITY OF PADUCAH, KENTUCKY ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 FINANCE DEPARTMENT CITY OF PADUCAH, KENTUCKY City of Paducah Paducah, Kentucky Annual Comprehensive Financial Report Year Ended June 30, 2024 Issued by the Finance Department CITY OF PADUCAH, KENTUCKY ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 TABLE OF CONTENTS Exhibit No. Page No. Introductory Section: Letter of Transmittal 1 - 7 Organizational Chart 8 Principal Officials 9 GFOA Certificate of Achievement 10 Financial Section: Independent Auditor’s Report 11-13 Required Supplementary Information: Management’s Discussion and Analysis 14-29 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 30-31 Statement of Activities 2 32-33 Fund Financial Statements: Governmental Funds: Balance Sheet 3 34-35 Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Position 4 36-37 Statement of Revenues, Expenditures and Changes in Fund Balances 5 38-39 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 40-41 Statement of Revenues, Expenditures and Changes - Budget and Actual - General Fund 7 42-45 Statement of Revenues, Expenditures and Changes - Budget and Actual - Special Revenue Investment Fund 8 46 Statement of Revenues, Expenditures and Changes - Budget and Actual - Special Revenue Opioid Settlement Fund 9 47 Proprietary Funds: Statement of Net Position 10 48 Statement of Revenues, Expenses and Changes in Net Position 11 49 Statement of Cash Flows 12 50 Fiduciary Funds: Statement of Net Position 13 51 Statement of Changes in Net Position 14 52 Notes to Financial Statements 53-103 Required Supplementary Information: Schedule of Changes in the Police and Firefighters’ Pension Trust Fund’s Net Pension Liability and Related Ratios A-1 104 Schedule of Police and Firefighters’ Pension Trust Fund Contributions and Investment Returns A-2 105 Schedule of City’s Proportionate Share of the Net Pension Liability County Employees’ Retirement System A-3 106 Exhibit No. Page No. Schedule of City’s Contributions - Pensions County Employees’ Retirement System A-4 107 Schedule of City’s Proportionate Share of the Net Medical Insurance Plan Liability - County Employees’ Retirement System A-5 108 Schedule of City’s Contributions – Medical Insurance Plan County Employees’ Retirement System A-6 109 Supplementary Information: Bond Fund Detail Schedule of Revenues, Expenditures and Changes - Budget and Actual B-1 110 General Capital Improvements Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-2 111 Debt Service Fund Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-3 112 Nonmajor Governmental Funds: Combining Balance Sheet B-4 113-114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances B-5 115-116 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Municipal Aid Fund B-6 117 Emergency Communication Service Fund B-7 118 Court Awards Fund B-8 119 CDBG Grant Fund B-9 120 Bed Tax Fund B-10 121 Tax Increment Financing Fund B-11 122 Nonmajor Enterprise Funds: Combining Statement of Net Position C-1 123 Combining Statement of Revenues, Expenses and Changes in Fund Net Position C-2 124 Combining Statement of Cash Flows C-3 125 Internal Service Funds: Combining Statement of Net Position D-1 126 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position D-2 127 Combining Statement of Cash Flows D-3 128 Fiduciary Funds: Combining Statement of Net Position - Private-purpose Trust Funds E-1 129 Combining Statement of Changes in Net Position - Private-purpose Trust Funds E-2 130 Table No. Page No. Statistical Section: Net Position by Component 1 131 Changes in Net Position 2 132-133 Fund Balances, Governmental Funds 3 134 Changes in Fund Balances, Governmental Funds 4 135 Assessed and Estimated Actual Value of Taxable Property 5 136 Governments 6 137 Principal Taxpayers 7 138 Secured Tax Levies and Collections 8 139 Employee License Tax Collections 9 140 Table No. Page No. Statistical Section: Principal Employee License Taxpayers 10 141 Ratio of Outstanding Debt by Type 11 142 Ratio of Net General Bonded Debt Outstanding 12 143 Direct and Overlapping Governmental Activities Debt 13 144 Legal Debt Margin Information 14 145 Demographic and Economic Statistics 15 146 Principal Employers 16 147 City Full-Time Employees by Function 17 148 Operating Indicators by Function 18 149 Capital Asset Statistics by Function 19 150 Single Audit Section: Schedule of Expenditures of Federal Awards 151 Notes to the Schedule of Expenditures of Federal Awards 152 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 153-154 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance 155-156 Schedule of Findings and Questioned Costs 157 Schedule of Prior Audit Findings 158 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY INTRODUCTORY SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 -1- December 11, 2024 Honorable Mayor and Commissioners City of Paducah Paducah, Kentucky We are pleased to submit Paducah's Annual Comprehensive Financial Report for the year ended June 30, 2024. Responsibility for the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. The major objective of this report is to describe the City’s financial condition and the financial results of its operation in a format designed to be useful to the general public, elected officials, investors and creditors. We believe the data, as presented, is accurate in all material aspects; that it is reported in a manner designed to present fairly the financial position and results of operations of the various funds. All disclosures necessary to enable the reader to gain maximum understanding of the City’s financial activities have been included. City management’s narrative on the financial activities of the City for the fiscal year ended June 30, 2024, is in the Management’s Discussion and Analysis (MD&A) section of this report, immediately following the Report of Independent Auditors. The letter of transmittal is written to complement the MD&A and the financial statements, and should be read from that perspective and in conjunction with all other sections of the ACFR. THE CITY Paducah was established in 1827 by explorer General William Clark. The City of Paducah is situated at the confluence of the Ohio and Tennessee Rivers in the north central portion of McCracken County. Paducah is the largest city both in the county and in the Jackson Purchase eight county region. The City has established itself as the cultural, economic, medical and transportation center for not only the Jackson Purchase region but for a large portion of Southern Illinois and portions of Western Tennessee and Southeastern Missouri. Industry Paducah has a mix of commercial, industrial, cultural, institutional, and hospitality-based businesses. Healthcare and education services are among the top employers. The accredited Paducah Area Chamber of Commerce is one of the largest in the state with approximately 1,000 business members. With Paducah’s easy river access and rail service, the City is the headquarters for several river industry giants including Ingram Barge, Marquette Transportation, James Marine, and Crounse Corporation. CITY OF PADUCAH Finance Department P.O. Box 2267 Paducah, KY 42002-2267 270-444-8512 -2- Paducah is at the center of inland waterways linking cities including Pittsburgh and Minneapolis/St. Paul to the Gulf of Mexico. The Paducah Riverport Authority is positioned for growth in the sector of intermodal river transportation through the purchase of the largest flat-top tower crane in North America. In 2015, the U.S. Department of Commerce Foreign Trade Zone Board approved the Riverport to establish a foreign- trade zone, an incredible business tool. Economic Development Activities Greater Paducah Economic Development (GPED) coordinates the City’s efforts in strengthening and building economic development activities. The board of directors is comprised of elected candidates from GPED’s Investor Council based upon their unique gifts and abilities and their capacity to appropriately apply them to the organization and community. In existence since 1987, GPED assumes and carries out the responsibility of working with existing industry and business, as well as identifying and recruiting new companies to the City of Paducah. Additionally, GPED is responsible for development of long-term strategy for economic development activities and coordinates local entities in the accomplishment of those strategies. In the early 1990s, the City of Paducah, the State of Kentucky and several federal agencies, in conjunction with business, developed a 650-acre Commerce Park (formerly known as the Information Age Park.) This park was designed to appeal to firms needing advanced telecommunications and computing capabilities. In 1997, the City of Paducah jointly with the County of McCracken acquired the ‘Industrial Park West of Paducah and McCracken County’. This park contains 218 acres with immediate access to two major railroad lines, Paducah and Louisville and Paducah and Illinois (formerly Illinois Central). The park is located within the southwest quadrant of the I-24/Cairo Road interchange. In 2007, GPED began assembling property to establish a ‘Triple Rail Site’ in western McCracken County. The site is an industrial park served by two Class I railroad companies, Burlington Northern Santa Fe and Norfolk Southern, and a short line railroad company, Paducah and Louisville. The site has river docking service within 1.5 miles, is within 3 miles of Interstate 24, and 5 miles from Barkley Regional Airport. GPED owns 485 acres and has option and brokerage agreements on additional surrounding properties. Churches and Schools A relatively strong religious base is evident in the community, as demonstrated by the many churches in Paducah. Numerous churches, representing many of the major denominations, are located within the City. Several area churches offer televised activities as a convenience to those who do not attend church. Elementary and secondary education in Paducah is provided by the Paducah Independent School System, the McCracken County School System, Community Christian Academy, and by the St. Mary’s Parochial School System. The availability of higher education in the area is continuing to flourish. West Kentucky Community and Technical College (WKCTC), formerly known as Paducah Community College, is a two-year institution affiliated with the University of Kentucky’s community college system. WKCTC also serves as a site for the University of Kentucky extended campus graduate programs, in addition to a four-year engineering college in conjunction with the University of Kentucky. In 2008, WKCTC opened a Paducah School of Art. In 2010, a new 65,000 square feet Emergency Technology Center was opened, offering industrial and manufacturing technologies, engineering technology, as well as business and industry training and information technology programs. This is the first state supported new building to be constructed on the -3- WKCTC campus in over 20 years. In 2011, Murray State University entered into an agreement with the City, McCracken County, and Paducah Economic Development to construct an approximately 40,000 square foot educational building to serve as their Paducah campus. Classes began at the Paducah campus in 2014. Medical Facilities Paducah serves as the regional medical center for much of the Jackson Purchase Area of Western Kentucky, a large portion of Southern Illinois, and Northwestern Tennessee. Paducah’s medical industry has almost every major medical specialty represented in the physician population. The medical industry, represented by Mercy Health and Baptist Health, provides over 650 beds for medical needs. The two largest hospitals, together, employ approximately 3,000 persons. Recreation and Culture Citizens have available a wide range of recreational and cultural activities which cater to diverse tastes. Area residents may choose from fishing on nearby Kentucky and Barkley Lakes to enjoying the performing arts. City parks provide areas for baseball, softball, golf, football, tennis, disc golf, pickle ball, skate boarding, soccer, hiking, picnicking, and music garden. The Parks Services Department offers a substantial number of activities for people of all ages. The Dogwood Festival, held in April, highlights the coming of spring in Paducah. Residents are encouraged to spotlight their trees to illuminate a driving tour to celebrate an abundance of dogwood trees. The LowerTown Art and Music Festival is uniquely showcased within the borders of Paducah’s 180-year- old historic neighborhood. The LowerTown Art and Music Festival is an outdoor-juried show that the work of local artists and includes jazz, salsa, zydeco and blues music, as well as food from area restaurants. Paducah is the site of the Museum of the American Quilter’s Society. In May 2008, a congressional designation was passed naming the museum as the National Quilt Museum of the United States. The museum, dedicated in 1991, is the centerpiece for the quilters’ annual convention held in April. The convention attracts an estimated 30,000 visitors to Paducah annually. One of Paducah’s oldest celebrations is the 8th of August Emancipation Celebration, which features African American family reunions, or a homecoming. It is a time for African Americans to pay tribute to their heritage and roots, and a time of reconciliation. The Barbecue on the River event was started in 1995, as a way for local charities to raise funds. It attracts in excess of 40,000 participants to Paducah’s riverfront during the last weekend in September. Paducah Power sponsors the annual Christmas in the Park lighting display at Noble Park. The public is invited to a special lighting ceremony the Friday after Thanksgiving. Although the event is free, volunteers collect cash donations and thousands of pounds of canned food annually. Paducah has an active symphony and several theater groups. The Paducah Symphony Orchestra stages concerts during the winter season, with the Market House Theater presenting several productions during the same time period. In addition, West Kentucky Community and Technical College’s Arts in Focus series sponsors a variety of professional productions. The Luther F. Carson Four Rivers Center for the Performing Arts opened in February 2004 as a regional, multiple-purpose facility, with an 1,800-seat main hall designed to accommodate a wide variety of cultural and educational programs. -4- The McCracken County Public Library offers a large selection of literature, special collections and programs. The West Kentucky Community and Technical College Library supplement this community resource. THE GOVERNMENT Paducah operates under a City Manager plan of government. The Paducah Board of Commissioners is made up of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. The Mayor is elected for a four-year term and Commissioners for a two-year term. The Mayor and Commissioners have equal voting powers. The Board of Commissioners sets the policies that govern the City. It appoints advisory citizens groups that help in the decision-making process. The City Manager is appointed by the Board and assists it in formulating objectives, policies and programs. The City Manager is responsible for the day-to-day operation of the City and its employees. Department managers are responsible for their respective departments and report directly to the City Manager. REPORTING ENTITY AND ITS SERVICES For financial statement purposes, as required by generally accepted accounting principles, the City’s Annual Comprehensive Financial Report includes all City of Paducah financial statements (primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City of Paducah. Blended units are presented as such because the units’ governing bodies are substantially the same as the governing body of the City, or provide services almost entirely to the City of Paducah. The City has only one blended unit: the Police and Firefighters’ Pension Fund, which was established for the benefit of police and firemen of the City. The City has one component unit that has been presented as a discrete unit to emphasize that it is legally separate from the City. Paducah Water Works is included in the City’s financial statements because of its financial relationship with the City. The City provides a full range of municipal services, including police and fire protection; maintenance of streets and infrastructure; sanitation services; cultural events and recreation activities. Accounting System The City’s accounting system is organized on the basis of separate funds, each of which is considered to be a separate accounting entity. The financial activities of each fund generate a separate set of self-balancing accounts, which comprise its assets, liabilities, fund equity, revenues, and expenditures/expenses. Municipal resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The City’s accounting records for the governmental funds and agency funds are maintained on a modified accrual basis, with revenues being recorded when “measurable and available” and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City’s proprietary funds and trust funds are maintained on the accrual basis, with revenues recognized when earned and expenses recorded when the liability is incurred or economic asset used. -5- Internal Control In developing and evaluating the City’s accounting system, consideration is given to the adequacy of internal controls. Because the cost of a control should not exceed the benefits to be derived, the objective of these internal controls is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. Internal controls were designed for Paducah’s accounting system to reasonably safeguard its assets against loss from unauthorized use or disposition, check the accuracy of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. Budgetary Control Paducah’s budget process provides for input from department managers, top management, elected officials and the public to determine what programs and services will be provided for during the upcoming year. Budgetary control is maintained at the departmental level by comparing budgeted expenditures with actual expenditures on a periodic and year-to-date basis. An expenditure, which would result in an overrun of department appropriation, cannot be made until additional funds are appropriated. Purchase orders which result in an overrun of department appropriations cannot be honored until additional appropriations are made available. Unencumbered funds at year-end roll into the fund balance. Financial Policies The City’s financial policies are shaped by state law and established by management and the City Commission. Financial policies include budgeting and financial planning, capital planning, revenue, investment, debt management, procurement, and accounting and auditing. During FY2024, one of the City’s financial policies did have a significant impact on the financial statements: Pension Obligation Costs. In FY2006, the City issued general obligation bonds of $6,100,000 to finance the police and firefighters’ pension fund actuary liability. Since the issuance of these bonds, the City has made it policy to contribute the normal cost as well as the minimum actuarially sound contribution annually that would arise from the fund being in a deficit position as of the actuarial date. For FY2024 this contribution was $352 thousand. This amount was $386 thousand in FY2023. LONG-TERM FINANCIAL PLANNING On October 1, 2005, the City’s payroll tax was increased ½ cent. As a result of the payroll tax increase, the City Commission created the Investment Fund. The Investment Fund is funded with the ½ cent increase and is dedicated to the following purposes: community redevelopment, economic development, infrastructure capital investment, and property tax relief. During the FY2024 budget process, the Commission reviewed numerous decision packages proposed for the Investment Fund Budget; expenditures totaling approximately $6.9 million were appropriated. The City has numerous infrastructure/capital items that will affect the long-term financial planning process. The following projects are examples of future considerations facing the City: Tax Increment Financing District (TIF). The City has received approval from the Kentucky Economic Development Financing Authority (KEDFA) for a TIF District. The District includes approximately 315 acres of Paducah downtown riverfront which will be used to promote public and private development. It is anticipated that mixed-use development will include the construction of hotels, residential units, restaurant/entertainment space, retail space, manufacturing space, public buildings, and public infrastructure improvements. Once activated, it’s anticipated that tax revenue in excess of a prescribed -6- baseline will be reinvested in the area with funds from state sales tax, property tax, individual income tax, and corporate income tax in addition to local property and payroll taxes. Paducah Sports Park. In September 2022, the City entered into an agreement with McCracken County and McCracken County Sports Tourism Commission for the development of the Paducah Sports Park. Construction contracts totaling $57 million were approved in June 2024, contributing to a total project cost of approximately $70 million. After the construction period, the goal is for the facility to open in fall 2025. The McCracken County Sports Tourism Commission estimates that, with an expectation of holding 35-40 tournaments per year, the facility could generate a local economic impact of approximately $130 million in its first five years of use. ECONOMIC CONDITION The City continues to be aggressive in promoting economic development, since new developmental job growth is necessary to ensure the continued stability of the City’s tax base. Economic indicators and trends reflect that the area’s economy has remained fairly steady considering the nation’s recent economic struggles. It is expected that the economy will continue to hold over the near-term. Area employment increased slightly in comparison to the prior year, with 30,592 persons employed (McCracken County) as of June 30, 2024. The June 2024 unemployment rate was 4.9% (McCracken County), which is an increase from 4.3% in the prior year, and slightly higher than the June 2023 federal unemployment rate of 3.6%. INDEPENDENT AUDIT Kentucky Revised Statute 91A-040 requires an annual audit of each fund of the City by an auditor of public accounts or a certified public accountant. The independent certified public accounting firm of Kemper CPA Group, LLP, has conducted this audit and their opinion has been included in this report. The City is also subject to the Single Audit Act Amendments of 1996 reporting requirements. The Single Audit Report is included within this report. AWARDS AND ACKNOWLEDGEMENTS The Government Finance Officers Association of the United States and Canada (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City of Paducah, Kentucky for its annual comprehensive financial report for the fiscal year ended June 30, 2023. This was the thirty-third consecutive year that the City achieved this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe our current annual comprehensive financial report continues to meet the Certificate of Achievement Program’s requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. The City also received its first GFOA Award for Outstanding Achievement in Popular Annual Financial Reporting for its Popular Annual Financial Report for the fiscal year ended June 30, 2023. The Award for Outstanding Achievement in Popular Annual Financial Reporting is a prestigious national award recognizing conformance with the highest standards for preparation of state and local government popular reports. In order to receive an Award for Outstanding Achievement in Popular Annual Financial Reporting, a government must publish a Popular Annual Financial Report whose contents conform to program standards of creativity, presentation, understandability, and reader appeal. -7- The Award for Outstanding Achievement in Popular Annual Financial Reporting is valid for a period of one year only. We believe our current reports continue to conform to the reporting requirements, and we will be submitting it to the GFOA to determine its eligibility for another award. The preparation of this report on a timely basis could not be accomplished without the efficient and dedicated services of the entire staff of the Finance Department. We wish to express our appreciation to all members of the Finance Department who assisted and contributed to its preparation, and special thanks to Kemper CPA Group, LLP. We also thank the Mayor, City Manager, and City Commission for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. CITY OF PADUCAH, KENTUCKY ORGANIZATIONAL CHART CITIZENS OF PADUCAH CITIZENS OF PADUCAH Mayor and Commissioners Advisory Board and Committees City Manager City Clerk / Customer Experience Parks and Recreation Fire Department Police Department Engineering Department -8- Information Systems Human Resources / Risk Management Finance Department Planning Department E911 Public Works Department Assistant City Manager CITY OF PADUCAH, KENTUCKY PRINCIPAL OFFICIALS BOARD OF COMMISSIONERS Mayor George P. Bray Mayor Pro Tem Sandra Wilson Commissioner Raynarldo Henderson Commissioner Buzz Smith Commissioner David Guess CITY MANAGER Daron Jordan Assistant City Manager Michelle Smolen Finance Director Jonathan W. Perkins, CPA City Controller Audra Kyle, CPA Police Chief Brian Laird Fire Chief Steve Kyle Interim City Engineer Greg Guebert Public Works Director Chris Yarber Assistant Public Works Director Randy Crouch Planning Director Carol Gault Parks & Recreation Director Amie Clark Technology Department Director Eric Stuber City Clerk Lindsay Parish Human Resources Director Stefanie Wilcox Communications Manager Pam Spencer -9- Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Paducah Kentucky For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2023 Executive Director/CEO CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 - 11 - INDEPENDENT AUDITOR’S REPORT Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise the City of Paducah, Kentucky’s basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky as of June 30, 2024, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund, Special Revenue Investment Fund, and Special Revenue Opioid Settlement Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. We did not audit the financial statements of Paducah Water Works, which represent 100 percent, 100 percent, and 100 percent, respectively, of the assets, net position, and revenues of the discretely presented component unit as of June 30, 2024. Those statements were audited by other auditors whose report has been furnished to us and our opinion, insofar as it relates to the amounts included for the discretely presented component unit, is based solely on the report of other auditors. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Paducah, Kentucky and to meet our 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. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Paducah, Kentucky’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. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com - 12 - Auditor’s Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards 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 judgement made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards, we: Exercise professional judgement and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Paducah, Kentucky’s internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Paducah, Kentucky’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, budgetary comparison schedules, schedules of net pension and OPEB liabilities and contributions on pages 14 through 29 and 104 through 109 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 auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Paducah, Kentucky’s basic financial statements. The accompanying budgetary comparison schedules, combining and individual nonmajor fund, budgetary comparison schedules for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements on pages 110 through 129; and the schedule of expenditures of federal awards on pages 150 through 151, as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for - 13 - Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund, budgetary comparison for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor’s report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 11, 2024, on our consideration of the City of Paducah, Kentucky’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City of Paducah, Kentucky’s internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Paducah, Kentucky’s internal control over financial reporting and compliance. Certified Public Accountants and Consultants Paducah, Kentucky December 11, 2024 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 - 14 - CITY OF PADUCAH, KENTUCKY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2024 The City of Paducah (“City”) offers Management’s Discussion and Analysis to provide a narrative overview and analysis of City financial activities for fiscal year ended June 30, 2024. To fully understand the entire scope of the City’s financial activities, this information should be read in conjunction with the letter of transmittal (pages 1-7) and the basic financial statements (pages 30-103) provided in this document. I. Financial Highlights The City’s assets and deferred outflows of resources exceeded liabilities and deferred inflows of resources by $46.4 million at the close of the 2023-2024 fiscal year. The City’s total net position increased $13.5 million this year. Net position of governmental activities increased by $13.3 million and business-type activities increased by $200 thousand. At fiscal year end, City governmental funds reported a combined ending fund balance of $62.0 million. Approximately 36.2% of this total amount, $22.4 million, is restricted or committed for highways/streets and capital improvements. Assigned fund balance comprises 12.4% of total fund balance; the majority of which is set aside for capital improvements. At the end of the current fiscal year, unassigned General Fund fund balance was $31.5 million and is available for spending at the City’s discretion. Cash and cash equivalents are approximately $26.5 million. When compared to final total appropriations, the General Fund cash balance is 56%, which translates to 204 days of total General Fund expenditures (including interfund transfers). II. Overview of Financial Statements This discussion and analysis serves as an introduction to the City’s basic financial statements, which consist of four components: 1) government-wide financial statements, 2) fund financial statements, 3) component unit financial statements, and 4) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. A. Government-Wide Financial Statements Government-wide financial statements are designed to provide readers with a broad overview of City finances in a manner similar to private-sector business. The Statement of Net Position presents information on all City assets, deferred outflows of resources, and liabilities, and deferred inflows of resources with the difference between these reported as net position. Monitoring increases and/or decreases in net position over time may serve as a useful indicator of whether the financial position of the City is improving, stagnating, or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the fiscal year. All net position changes are reported as soon as the underlying event giving rise to the change occurs regardless of the timing of related cash flows. Revenues and expenses are reported in the Statement of Activities for some items that will only result in cash flows in the future. Both of the government-wide financial statements distinguish City functions that are primarily supported by taxes and intergovernmental revenues (governmental activities) from other City functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). City governmental activities include general government, public safety, public service, parks and recreation, planning and development, and interest on long-term debt. Business-type activities of the City include Solid Waste, Section Eight Housing, and the Transient Boat Dock. - 15 - Government-wide financial statements include not only the City (the primary government), but also a legally separate Paducah Water Works (component unit) for which the City is financially accountable. Financial information for the component unit is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 30-33 of this report. B. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over segregated resources for specific activities or objectives. The City of Paducah, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. City funds can be divided into three categories: 1) Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Unlike government- wide financial statements, governmental fund financial statements focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. This information may be useful in evaluating a city’s near-term financing requirements. The City maintains twelve (12) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General, General Capital Improvements, Special Revenue Investment, Opioid Settlement Fund, Bond Fund and Debt Service Funds, all of which are considered to be major funds. Data from the other six (6) funds are combined into a single, aggregated presentation. Individual fund data for each of these non-major governmental funds is provided in the form of combining and individual fund statements elsewhere in this report on pages 113-122. Readers may better understand the long-term impact of the City’s near-term financing decisions by comparing the narrow-focus governmental funds financial statements with governmental activities in the government-wide financial statements. Exhibit 4 (pages 36-37) and Exhibit 6 (pages 40-41) provide a reconciliation to ease comparison between the fund financial statements and the government-wide statements. The basic governmental fund financial statements can be found on pages 34-41 of this report. 2) Proprietary Funds. The City maintains two types of proprietary funds: a. Enterprise Funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements and are used to account for operations: That are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges; or Where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability or other purposes. The City uses three enterprise funds to account for Solid Waste, Section Eight Housing, and Transient Boat Dock. Currently none of these funds receive subsidy from the General Fund. The City’s component unit enterprise is the Paducah Water Works. This component unit, which has its own board of directors, is also an enterprise fund and is shown on pages 30-33. - 16 - b. Internal Service Funds are used to accumulate and allocate costs internally among the City’s various functions. The City uses internal service funds to account for fleet services, fleet replacement, risk management (insurance) and employee health programs. Internal service funds have been allocated between governmental activities and business-type activities in the government-wide financial statements based on revenue earned. Proprietary funds provide the same kind of information as government-wide financial statements, but in greater detail. Individual data for the nonmajor proprietary funds is presented in the form of combining statements on pages 123-125 of this report. Individual data for the internal service funds is likewise presented in the form of combining statements on pages 126-128 of this report. 3) Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government and are not reflected in government-wide financial statements because those resources are not available to support City programs. Individual data for one of the City’s two fiduciary funds (Police and Firefighters’ Retirement) is presented in the notes to the financial statements on pages 90-91. Individual data for the Cemetery and Parks Trusts Fund is presented on pages 129-130 of this report. C. Notes to the Financial Statements The notes provide additional information that is essential to fully understand data provided in the government-wide and fund financial statements. Notes to the financial statements can be found on pages 52-103 of this report. D. Other Information In addition to basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning City funding of its pension obligation to its employees. Additional budgetary comparison schedules, as well as the combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor proprietary funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information on pensions. Combining fund statements and schedules can be found on pages 110-130 of this report. III. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. City assets and deferred outflows exceeded liabilities and deferred inflows by $46.4 million, an increase of $13.5 million from prior year. For FY2024, the largest portion of the City’s net position ($72.6 million) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure) less outstanding related debt used to acquire those assets. The City uses these capital assets to provide service to citizens and, as a result, these assets are not available for future spending. The City’s capital assets investment is reported net of related debt, but the resources to pay this debt must be provided from other sources since the capital assets cannot be used to liquidate the liabilities. As of June 30, 2024, the City reports positive balances of total net position, both for the government as a whole, as well as for its separate governmental and business-type activities. - 17 - City of Paducah, Kentucky Net Position June 30 Governmental Activities Business-Type Activities Total Primary Government 2024 2023 2024 2023 2024 2023 Current Assets $ 87,524,257 $89,199,169 $ 4,719,931 $ 4,652,494 $92,244,188 $ 93,851,663 Capital Assets 83,207,702 77,522,977 2,606,100 2,604,439 85,813,802 80,127,416 Other noncurrent assets 5,478,812 5,854,923 53,348 - 5,532,160 5,854,923 Total Assets 176,210,771 172,577,069 7,379,379 7,256,933 183,590,150 179,834,002 Deferred Outflows of Resources 14,157,378 17,920,396 577,989 724,940 14,735,367 18,645,336 Current Liabilities 10,891,480 9,505,960 1,033,095 566,015 11,924,575 10,071,975 Noncurrent liabilities 98,774,113 129,416,690 4,648,764 6,044,490 103,422,877 135,461,180 Total Liabilities 109,665,593 138,922,650 5,681,859 6,610,505 115,347,452 145,533,155 Deferred Inflows of Resources 35,446,822 19,454,783 1,150,373 432,892 36,597,195 19,887,675 Net position: Net Invested in Capital Assets 70,081,507 64,717,247 2,481,099 2,432,284 72,562,606 67,149,531 Restricted 5,727,883 3,762,148 49,510 7,527 5,777,393 3,769,675 Unrestricted (30,553,656) (36,359,363) (1,405,473) (1,501,335) (31,959,129) (37,860,698) TOTAL NET POSITION $ 45,255,734 $ 32,120,032 $ 1,125,136 $ 938,476 $ 46,380,870 $ 33,058,508 *Beginning net position as of July 1, 2023 was restated for the correction of an error (See Note 12). Prior year has not been restated on this chart. The exhibit below charts the City’s total net position for the past ten years (Prior years have not been restated for new standard implementation or error correction in this discussion). - 18 - Substantial increases to net position occurred in fiscal years 2016 and 2017, resulting from heavy capital development that was largely grant funded. Projects during those years included the completion of the Riverfront Development Phases 1A & 1B and Phase 1 of the Jim & Pat Brockenborough Rotary Health Park. In FY2018 the City implemented GASB 75, which requires that the City report and fully disclose its share of other post-employment benefit (OPEB) liabilities. The initial year generated a $20 million liability and thus the notable decrease in net position that year. Annual adjustments to these liabilities, as well as the liabilities related to the City’s participation in the County Employee Retirement System, (which was implemented in FY2015 under GASB 68), continued to drive net position down from FY2019 through FY2021. These liabilities have been the primary factor in generating negative unrestricted net position since their introduction to the financial statements. In FY2022 conservative revenue projections and holding flat on operational spending due to uncertainties surrounding the effects of the pandemic contributed to a nearly $6 million increase in net position that year. In addition, FY2022 was the year that ARPA funds as well as sizable FEMA mitigation grants that were received and utilized for storm water improvements, dredging and other future flood mitigation projects. The notable increase to net position in FY2023 was mostly the result of unanticipated revenues received during the year that were carried over for spending in future years. This included $3.7 million in major categories of taxes/licenses and $1.5 million in interest income received on the City’s operating account. In addition, the City had multiple capital projects that were grant funded, including $3.9 million in ARPA funds that were largely utilized for storm water improvements. In FY2024 net position increased significantly, by $13.5 million. In FY2024 the City had a large number of capital outlays; many of which were grant funded, including $2.2 million in ARPA funds which were utilized for renovation of the Civic Center and storm water improvements. In addition, CERS and OPEB had a favorable return on investments which lowered the City’s required pension expense and liability by approximately $4.5 million. A. Analysis of the City’s Operations The following table provides a summary of the City’s operations for the years ended June 30, 2024 and 2023. Governmental activities increased the City’s net position by $13,276,815 and business- type activities increased the City’s net position by $186,660. - 19 - City of Paducah, Kentucky Changes in Net Position June 30 Governmental Activities Business-Type Activities Total Primary Government Revenues: 2024 2023 2024 2023 2024 2023 Program revenues: Charges for services $ 3,592,106 $ 4,961,689 $ 5,017,009 $ 4,955,600 $ 8,609,115 9,917,289 Operating grants/contributions 7,594,357 9,181,984 2,557,918 2,160,230 10,152,275 11,342,214 Capital grants/contributions 2,777,103 2,619,851 - - 2,777,103 2,619,851 General revenues: Property taxes 6,778,826 6,575,885 - - 6,778,826 6,575,885 Franchise taxes 237,226 285,816 - - 237,226 285,816 Telecommunications tax 578,579 638,320 - - 578,579 638,320 Insurance premium tax 7,424,599 6,331,216 - - 7,424,599 6,331,216 Vehicle tax 965,620 996,544 - - 965,620 996,544 Bank tax 402,883 406,141 - - 402,883 406,141 Gross receipts license tax 5,137,856 5,375,589 - - 5,137,856 5,375,589 Employee license tax 24,835,738 25,904,591 - - 24,835,738 25,904,591 Transient room tax 1,802,253 1,839,464 - - 1,802,253 1,839,464 Other taxes 462,472 380,913 - - 462,472 380,913 Unrestricted investment earnings 2,866,207 2,667,976 169,462 136,363 3,035,669 2,804,339 Gain/(Loss) on sale of capital assets (270,959) 70,118 57,081 61,557 (213,878) 131,675 Miscellaneous - - - - - - Total revenues 65,184,866 68,236,097 7,801,470 7,313,750 72,986,336 75,549,847 Expenses: General Government 11,710,196 11,972,825 - - 11,710,196 11,972,825 Public safety 24,262,599 26,348,079 - - 24,262,599 26,348,079 Public service 6,965,473 7,431,587 - - 6,965,473 7,431,587 Park & recreation 4,295,705 3,503,495 - - 4,295,705 3,503,495 Planning & development 4,559,675 5,845,326 - - 4,559,675 5,845,326 Interest on long-term debt 434,403 483,950 - - 434,403 483,950 Solid Waste - - 4,705,558 5,482,827 4,705,558 5,482,827 Section Eight Housing - - 2,487,323 2,250,727 2,487,323 2,250,727 Civic Center - - - - - - Transient Boat Dock - - 101,929 122,652 101,929 122,652 Total expenses 52,228,051 55,585,262 7,294,810 7,856,206 59,522,861 63,441,468 Increase (decrease) in Net position before transfers 12,956,815 12,650,835 506,660 (542,456) 13,463,475 12,108,379 Transfers 320,000 389,039 (320,000) (389,039) - - Change in net position 13,276,815 13,039,874 186,660 (931,495) 13,463,475 12,108,379 Net position, July 1 31,978,919 19,080,158 938,476 1,869,971 32,917,395 20,950,129 NET POSITION, JUNE 30 $ 45,255,734 $ 32,120,032 $ 1,125,136 $ 938,476 $ 46,380,870 $ 33,058,508 *Beginning net position as of July 1, 2023 was restated for the correction of an error (See Note 12). Prior year has not been restated on this chart. - 20 - B. Governmental Activities As with most municipalities, the City’s governmental activities are heavily subsidized by taxes, with little or no program revenue for each function. The chart below demonstrates the importance of tax revenue to essential functions of the City. The graph below depicts the breakdown of revenue by source for fiscal year 2024. In fiscal year 2024, the City derived approximately 74% of its revenue from taxes/licenses. Occupational licenses, which include payroll withholding tax, business licenses, and insurance premium tax is the largest source of income to the City, totaling $37.4 million. This combined category of revenue remained fairly flat, decreasing by only $213 thousand, a little over .5% from the prior year. Within this category, the decreases in both gross receipts license and employee license tax, or $238 thousand and $1.1 million respectively, do not appear to be the result of one significant taxpayer’s activity, but the result of multiple entities having decreases from the prior year. The $1.1 - 21 - million, or 17.3%, increase in insurance premium tax did partially result from payment by two new accounts. Due to limitations in researching the origin of individual insurance premiums and related details, it is difficult to determine if these payments resulted from the purchase of one-time policies or if similar payments will be received on a continued basis. Because of research limitations such as the example described, this revenue is budgeted on a more conservative basis than the other major sources of revenue. Property taxes continue to be a stable source of revenue, comprising nearly 10% of total revenue in FY2024. This is the third year in a row that the City has taken the 4% maximum allowed, leading to an increase in real estate tax revenue. Capital and operating grants/contributions remained a revenue category of note for FY2024, as the City wraps up the utilization of ARPA funds and FEMA mitigation grants awarded in prior years. C. Business-Type Activities The chart below shows the year’s revenues and expenses for each of the City’s business-type activities. These activities should break-even; that is, the charges for services should be large enough to sustain operations. Both the Solid Waste Fund and Section Eight Housing Fund reflected positive results for FY2024. Solid Waste revenues have remained very stable over time, as there is a fairly constant number of customers with an established monthly rate for most of the services provided. However, the two primary operating expenses, personnel and transfer fees, continue to increase. As a result, there has been growing pressure for the fund to break even under the current collections rates, and a rate increase will be in effect on 7/1/2024. This will be the first rate increase for residential customers since 2009 and for commercial customers since 2017. In addition to approving a fee increase, allowance for future fee adjustments based on the Consumer Price Index were also put into place. Beginning in FY2012, an annual transfer is made from Solid Waste to the General Fund. The Phase II Storm Water Act requires that the City make an effort to curb solid waste from the landfill/sewer system. As a result, three full time street sweepers and eighteen right of way maintenance employees - 22 - (one day a week) have been assigned to this program. Because these are General Fund employees, the Solid Waste Fund is making monthly interfund transfers to the General Fund to compensate for their use. The total amount transferred for this purpose in FY2024 was $320,000. Analysis of the remaining business-type activities is included in Section IV-B of this report. IV. Financial Analysis of the City’s Funds A. Governmental Funds The focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in determining the City’s financing requirements. At the end of the fiscal year, the City governmental funds reported combined ending fund balances of $62.0 million. The categories of fund balance are described below: Nonspendable fund balance includes amounts that are not in a spendable form or are required to be maintained intact indefinitely. For example, at the end of the fiscal year, the City had $317,758 of real property held in inventory for urban development. Restricted fund balance has external limitations on use that may be imposed by creditors, grantors, contributors, or laws and regulations. For example, at the end of the fiscal year, the City had $1,219,311 of opioid settlement funds, which are restricted in use for combating the effects of opioid addiction in the Paducah area. Committed fund balance has self-imposed limitations enacted by the highest level of decision making that requires formal action at the same level to remove the limitations. The City had $4,383,754 in fund balance committed for capital improvements in the Investment Fund. Assigned fund balance has limitations resulting from intended use; formal action is not required. Approximately 12% of the City’s fund balance is assigned for various purposes, including capital improvements, public safety, and debt service. Unassigned fund balance is the total fund balance in the General Fund in excess of the other fund balance categories. The General Fund is the chief operating fund of the City, and unassigned fund balance serves as a useful measure of the City’s net resources available for spending at the end of the fiscal year. At the end of fiscal year 2024, approximately 51% of total fund balance ($31.5 million) is unassigned, which - 23 - means it is available for spending at the government’s discretion but only up to the amount represented by cash. At year-end there was $26.5 million available as General Fund cash. City fiscal policy (Ordinance 2023-06-8777) requires that an amount not less than 10% of the General Fund’s budgeted expenditures remain undesignated in the fund balance, or $4.7 million, which leaves $21.8 million available for fiscal year 2024. In comparing unassigned fund balance to total General Fund expenditures, unassigned General Fund fund balance ($31.5 million) represents 67% of expenditures and transfers out ($47.1 million). The General Fund balance increased by $2.1 million in fiscal year 2024. This increase is partially due to the continuance of favorable interest rates on cash/investments, and the reduction in subsidies required for other funds (E911 and Fleet Maintenance). In addition, revenue in excess of projections in various categories, along with unrealized payroll expense from open positions in multiple departments, resulted in an accumulation of unused funds that will be carried over and appropriated in future years. The Investment Fund had a fund balance of $4.4 million, all of which is committed for capital projects. The Investment Fund was authorized by the City Commission in fiscal year 2005-2006 as a special revenue fund whose use is restricted to property tax reduction, economic development, community redevelopment and capital and infrastructure projects. The Investment Fund captures all manner of financial activities related to revenue from the ½ cent payroll tax increase, effective October 1, 2005. Fund balance for this fund increased by $406 thousand in FY2024. This is due to funds ($500 thousand) that were appropriated/transferred from the General Fund and held in fund balance for reappropriation as matching funds on a cultural asset project in FY2025. The fund balance of the Opioid Settlement Fund at fiscal year-end is $1.2 million, all of which is restricted for opioid addiction reduction efforts. The balance of this newly formed fund continues to grow as the Commission formulates a plan on how to best utilize these monies. The Bond Fund had a fund balance of $15.4 million, all of which is committed for capital projects. This fund balance decreased by $2.7 million, as some of the large capital projects financed with this bond issue were either completed or entered into the heavy construction phase this fiscal year. These projects include: Dog Park Relocation, Public Safety Radio Communications System Replacement, and the Paducah Sports Park. The fund balance of the General Capital Improvements Fund at the end of fiscal 2024 is $6 million, a decrease of $2 million from the prior year. This fund balance decreased, as several projects funded in prior years had carryover balances in FY2023 and were utilized this year. These projects include various facility improvements, pickleball courts, City Block public space/parking lot, and flap gate construction in the wrapping up of Floodwall Rehab Phase 1. The Debt Service Fund had a fund balance of $1.7 million at fiscal year-end. There were no notable changes to this restricted fund balance, as transfers are typically made from other funds as required. Nonmajor governmental funds had a net increase of $205 thousand to fund balance. The notable increases for these funds were in the Municipal Aid Program Fund, which received gasoline tax in excess of projections, and the Tax Increment Financing Fund, which received a higher local increment than anticipated. This was the first year of the local increment, with the state increment expected to be activated in FY2025. B. Proprietary Funds The City’s proprietary funds provide the same information found in the government-wide financial statements but in more detail. Net position of the respective proprietary funds are: - 24 - Solid Waste $ 457,193 Section Eight Housing 50,264 Transient Boat Dock 41,490 Combined total net position change for the four funds was an increase of $200 thousand. The largest proprietary fund, Solid Waste, was discussed under Business Type Activities (Section III-C). The operations of the nonmajor enterprise funds this fiscal year went primarily as expected; however, it is noteworthy to mention that the Transient Dock Fund received no General Fund subsidy this fiscal year. V. General Fund Budgetary Highlights Total actual expenditures exceeded final appropriations (including operating transfers out) by $1.3 million. ARPA funds in the amount of $2.2 million were transferred out to the capital projects fund in FY2024. The budgetary appropriation for this was approved in FY2022, but for year-end financial statement presentation purposes the unspent funds in FY2022 were reclassed to deferred revenue and re-transferred to the Capital Projects Fund upon their use in subsequent years. All ARPA funds were expended at the end of FY2024. Other year-end adjustments had an impact on budgetary comparisons as well. Intergovernmental expense of $371,881 represents a tax levied and collected by the City for Paducah Junior College. The City does not budget for this expenditure. In addition, the City also does not budget for adjustments related to Subscription-Based Information Technology Arrangements (SBITA). For the fund statements/budgetary basis reporting, this resulted in principal and interest requirements of $720,543, as well as long-term debt issued of $617,169, which is reported in other financing sources and uses. Additional budgetary items of note include proceeds in the amount of $870,744 from the sale of a City-owned facility. These funds were subsequently transferred to the Debt Service Fund to pay off the remaining balance of the bonds used to finance construction of the building. Also, Ordinance 2024-05-8811 authorized an amendment to the budget to release fund balance in the amount of $670,365 that was committed for pension reserve in FY2020. This same ordinance appropriated those funds to purchase new radios that will be compatible with the Radio Communication Upgrade Project. Excluding these above-mentioned year-end accounting adjustments, final department appropriations exceeded actual by approximately $2.2 million or 5.2%. Salaries/wages and related benefit slippage from unfilled positions comprise the majority of this difference at $1.3 million. The remaining areas of positive budget variance within operations appear to be scattered across many areas and not limited to a particular department or line item. VI. Capital Asset and Debt Administration A. Capital Assets The City’s investment in capital assets for governmental and business-type activities as of June 30, 2024, is $72.6 million (net of accumulated depreciation and related debt). This investment in capital assets includes land, buildings and improvements, vehicles and equipment, park facilities, roads, highways, and bridges, and construction in progress. Capital improvements are included in each department budget until improvements are completed. At the end of the fiscal year, completed projects are capitalized in the Government-wide Statements. During fiscal year 2024, project and equipment additions totaled over $11.6 million (excludes $617 thousand in subscription-based information technology arrangements (SBITA)). Multiple projects totaling $9.5 million remained in construction in progress at year-end. - 25 - Some of the largest capital-type project additions, in terms of dollars in fiscal year 2024, are shown in the following table: City Block Public Space/Parking Lot $1,793,557 Civic Center Design/Construction 1,690,921 Radio Communication Upgrade (Construction in Progress) 1,149,769 Dog Park Relocation 710,061 Fleet vehicles (14) 676,736 Floodwall Flap Gates (Construction in Progress) 658,999 Fire Pumper Truck 613,206 Riverfront Infrastructure Improvements (Construction in Progress) 522,420 Pickleball Courts 376,038 In the upcoming years, several street, economic development, riverfront development, and drainage projects will continue and are estimated to cost several million dollars. Capital improvement projects including infrastructure, City-owned facility improvements, continued neighborhood revitalization, and street and sidewalk rehabilitation are among the projects to be addressed. City of Paducah, Kentucky Capital Assets (Net of Accumulated Depreciation) June 30 Governmental Activities Business-Type Activities Total Primary Government 2024 2023 2024 2023 2024 2023 Land $ 10,267,997 $ 10,241,330 $ 68,886 $ 68,886 $ 10,336,883 $ 10,310,216 Land improvements 24,023,963 20,972,740 - - 24,023,963 20,972,740 Construction in progress 9,486,147 8,421,941 - 6,330 9,486,147 8,428,271 Buildings and improvements 8,540,059 7,320,623 188,554 97,652 8,728,613 7,418,275 Infrastructure 21,629,664 21,854,816 - - 21,629,664 21,854,816 Equipment 3,302,314 3,293,838 1,107,309 956,292 4,409,623 4,250,130 Furnishings and fixtures 39,221 54,029 - - 39,221 54,029 Vehicles 3,583,008 2,995,308 1,120,613 1,306,246 4,703,621 4,301,554 SBITA 2,335,329 2,368,352 120,738 169,033 2,456,067 2,537,385 TOTALS $ 83,207,702 $ 77,522,977 $ 2,606,100 $ 2,604,439 $ 85,813,802 $80,127,416 Additional information on City capital assets can be found in Note 3 in the notes to financial statements on pages 69-71. B. Long-Term Debt At year-end, the City had $35,904,467 in outstanding bonds and notes payable, compared to $39,674,552 at June 30, 2023 with maturities extending through 2040. - 26 - Governmental Activities 2024 2023 Convention Center Renovation – 2008 $809,048 $976,837 Public Pool Renovations – 2013A 425,000 500,000 Economic Development – 2013B - 1,125,000 Refinanced Public Projects – 2014A 2,220,000 2,570,000 Refinanced Police/Firefighter Pension Fund Liability – 2014B 610,000 1,080,000 CFSB Agreement - 2017 2,666,440 2,716,997 Riverfront and 911 Equipment – 2018A 1,895,000 2,070,000 Kentucky Infrastructure Authority – 2018 3,827,800 4,019,377 Refinanced KLC and Floodwall Rehabilitation – 2018B 810,000 1,000,000 Recreation Facility – 2020A 20,260,000 20,520,000 Refinanced Convention Center – 2020B 1,055,000 1,560,000 Refinanced Murray State University Agreement – 2022A 1,105,289 1,220,205 Net Premiums/Discounts 220,890 316,136 TOTALS $35,904,467 $39,674,552 The City had no new debt issues during FY2024. Debt issues prior to July 1, 2023 are described below: Refinanced Murray State University (MSU) Agreement. In January 2022 (2022A), McCracken County issued general obligation refunding bonds to advance refund the original 2011 series bonds issued. The City’s portion of this amount was $1,330,614. Refinanced Convention and Performing Arts Center. In October 2020, the City issued general obligation refunding bonds of $3,020,000 (2020B) to advance refund $3,140,000 of outstanding 2010B series bonds issued to refinance the original 2001 issue. Municipal Sports and Recreational Facility. In February 2020 (2020A), the City issued general obligation bonds of $20,520,000 to finance the construction of a municipal sports and recreation facility. Riverfront and 911 Equipment. In August 2018 (2018A), the City issued general obligation bonds of $2,700,000 to finance 911 equipment ($1.045 million) and riverfront development ($1.655 million). Refinanced KLC and Floodwall Rehabilitation. In August 2018 (2018B), the City issued general obligation bonds of $2,670,000 to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 lease agreements issued to finance several public improvement projects. Kentucky Infrastructure Authority (KIA). In July 2018, the City entered into an agreement with KIA to obtain up to $4,610,667 for rehabilitation of Pump Station #2. Julian Carroll Convention Center Improvements. In January 2017, the City entered into an agreement with Community Financial Services Bank in the amount of $3 million on behalf of McCracken County to finance improvements to the Julian Carroll Convention Center. Police/Firefighter Pension Fund Liability – Refinance. In November 2014 (2014B), a $4.225 million general obligation was issued to advance refund $3.845 of outstanding 2005 series bonds. The 2005 bonds were issued to finance the police and firefighters’ pension fund estimated pension liability. - 27 - Public Improvement Projects – Refinance. In May 2014 (2014A), a $5.46 million general obligation was issued to refund $5.545 million of outstanding 2010 series bonds. The 2010 bonds were issued to finance several public improvement projects including a major park parking lot renovation and several resurfacing projects, sports park property acquisition, pavilion acquisition, greenway trail development, and the public portion of a hotel purchase. Public Pool Renovations. In September 2013 (2013A), $1.12 million in general obligation bonds were issued to finance Noble Park’s pool renovation project. Convention Center Renovation. In March 2009, McCracken County entered into an agreement in the amount $5,000,000 with the Kentucky Association of Counties to finance renovations to the Julian Carroll Convention Center. The note was issued by McCracken County; however, the City is obligated for 50% of the principal amount through an Interlocal Cooperative Agreement between the City and McCracken County. The City’s legal debt limit under §158 of the Kentucky Constitution is 10% of total assessed value of taxable property in Paducah; therefore, the debt limit is $332,669,165. The City’s latest bond rating by Standard & Poor’s is AA-. The City has a relatively low amount of general obligation debt, which explains our large legal debt margin. The City of Paducah, Kentucky, issues and incurs debt in order to fund capital improvement projects, purchase major capital equipment and facilities, and respond to other special funding needs. In fiscal year 2024, just over 4.5% of the General Fund budget was expended for debt service. In August 2023, GOB 2013B was paid off early in the amount of $1.15 million which had been used to construct an economic development asset. When sold, proceeds were applied toward the remaining outstanding debt. Removal of this one-time payment reduces the debt service payments to General Fund expenditures ratio to 2.1%, which more closely reflects historical trend ratios. Additional information on the City’s long-term debt can be found in Note 3 in the notes to financial statements on pages 74-78. VII. Other Potentially Significant Matters. A. Paducah Sports Park. In the interlocal agreement entered among the City, County and McCracken County Sports Tourism Commission (STC) for the development of the Paducah Sports Park, both the City and County commit to being equal partners, both financial and participatory, through the life of the agreement. The City and County have devoted existing land and facilities to the project, including the Bluegrass Downs property (owned by the County) and Stuart Nelson Park (owned by the City). Total project costs are estimated to be $70 million. The City will utilize $12.5 million of existing bond proceeds (Series 2020A GOB) for its half of the first tranche of funding for design and construction. The City and County’s remaining balance of construction costs ($22.5 million each) will be obtained through bond issues in FY2025. The agreement states that, starting 12 months before debt service payments begin, the STC will restrict 80% of transient room taxes received for debt service payments, and will continue to do so until the debt is paid in full. Any shortfalls during this time will be shared equally by the City and County. Although the City is hopeful that these restricted funds will cover a significant portion of debt service payments over the life of the bonds, the amount of shortfall is uncertain. Similarly, during subsequent operation of the facilities, if, in any fiscal year during the term of the agreement, the STC incurs a shortfall of operating revenue to cover expenses attributable to the operation of the athletic complex, the City and County shall each make up one-half of the shortfall. While the pro forma produced for this project indicates profitability early in the complex’s operations, the City does have this potential liability through the life of the agreement. The initial agreement period is 20 years. - 28 - B. City Facilities. In 2019 the City engaged an engineering firm to assist in the assessment of 14 City facilities. The assessment team began with touring each building and scoring the various components and systems in each facility from 1 to 5 (excellent to poor). The team then developed a list of needs and a 10-year plan for each building ranging from immediate needs that are recommended to be completed in one to three years and long-range that could by completed in years four through 10. The Facilities Survey and Plan was presented to the Commission in summer 2020. This survey revealed that the average score for all 14 buildings was 3.5, which is between average and below average. The facilities with the lowest scores were Fire Station No. 1, Fire Station No. 4, Parks & Recreation Building, Police Station, and the Robert Cherry Civic Center. The cost of all the assessed needs over ten years totaled $12.6 million. In FY2022 a city facility improvement project was created with an initial injection of $800 thousand. Subsequent appropriations have led to a total investment of nearly $3 million by the end of FY2024. The improvements are being prioritized for implementation by the facilities staff, department leadership, and the City Manager’s Office. Some of the projects initiated in FY2024 include structural repairs to Fire Station No. 2 & 3, renovations to Allie Morgan Information Technology building, as well as upgrades and improvements to the City Hall Commission Chambers. Because of the enormity of some of the problems identified, facility replacement will need to be a consideration, along with additional financing options in the future to supplement the funds currently being set-aside. C. Stormwater. Because of Paducah’s location on the Ohio River’s floodplain, nearly 204,000 square miles of land drain to Paducah. Paducah has 110 miles of storm sewer and 69 miles of combined sewer. Unfortunately, much of the City’s development occurred at a time when stormwater management was not a priority and the current development ordinances were not in place. The current system is aging, with the majority of Paducah’s storm sewers between 60 to 100 years old. In March 2017 the City contracted with an engineering firm to complete a Comprehensive Stormwater Master Plan for Paducah. The Master Plan’s first phase identified approximately $43 million in flood mitigation projects located within ten priority areas in the City. The Master Plan’s second phase included the development of annual operation and maintenance costs and the costs for repair and replacement of existing infrastructure, the projection of future funding needs, funding alternatives and rate options, billing system options, a rate comparison, and a storm water utility ordinance. The development of a stormwater utility, along with a stormwater infrastructure fee of $6.13 per month per Equivalent Residential Unit (ERU) was proposed in 2019. This has not been implemented. The lack of a dedicated funding source for the City to solve drainage problems, repair and maintain existing storm infrastructure, and comply with federal regulatory requirements associated with water quality, has led to the City tackling individual projects as funding allows. In recent years the City has received 3 FEMA Disaster Relief funded projects, one of which was utilized to partially fund the replacement of a dilapidated bridge that has been affected by flooding and severe weather events. The City also appropriated $4 million in ARPA funds to stormwater improvements. A portion of the ARPA funds were used for this bridge project, along with another project that involves the purchase of land by the City to create a 4-acre stormwater detention area to help reduce residential flooding along Cross Creek. Although progress has been made with current projects, funding sources for future projects are uncertain. D. Paducah Riverfront Infrastructure Improvement. In Fall 2024, the City approved a $20.4 million construction contract for a capital improvement project along the Paducah Riverfront to connect the Paducah-McCracken County Convention Center with the Downtown Riverfront. The project is partially funded ($10.4 million) through the Department of Transportation FY19 Better Utilizing Investment to Leverage Development (BUILD) grant program. This project includes the construction of a riverboat excursion pier and plaza, intersection improvements, expanded and enhanced green space, and a multimodal pathway connecting the existing Greenway Trail, Convention Center, Riverfront, and Downtown. Multiple additional funding sources have been allocated/set-aside to date, - 29 - including local funds and a $3.5 million appropriation from the State. It is anticipated that the balance of the funding requirement will be bonded in CY 2025. VIII. Requests for Information This financial report is designed to provide a general financial overview for those interested in the City of Paducah government finances. Questions or requests for additional financial information may be addressed to Jonathan Perkins, Finance Director, City of Paducah, 300 South 5th Street, Paducah, KY 42003. CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 THIS PAGE INTENTIONALLY LEFT BLANK Exhibit 1 ComponentUnitPaducahGovernmentalBusiness-type Water WorksCurrent Assets:Activities Activities Total Authority Cash and cash equivalents 47,172,715$ 3,542,566$ 50,715,281$ 2,771,225$ Investments 17,058,593 - 17,058,593 - Receivables, net:Notes 1,212,482 - 1,212,482 - Accounts 11,808,185 586,527 12,394,712 1,841,437 Leases 422,833 - 422,833 51,904 Grants 1,184,865 - 1,184,865 - Interest 24,091 - 24,091 - Property tax 7,371,909 - 7,371,909 - Other - - - 726,511 Internal balances (576,189) 576,189 - -Inventory 392,273 14,649 406,922 1,880,334 Prepaid expenses 1,452,500 - 1,452,500 78,248 Other current assets - - - 854,048 Total current assets 87,524,257 4,719,931 92,244,188 8,203,707 Noncurrent Assets:Notes receivable 2,881,458 - 2,881,458 - Lease receivable 2,210,845 - 2,210,845 - Prepaid OPEB obligation 386,509 53,348 439,857 162,721 Capital assets:Land and construction in progress 19,754,144 68,886 19,823,030 4,249,603 Depreciable capital assets 63,453,558 2,537,214 65,990,772 73,148,410 Cash, designated - - - 6,650,511 Other assets - - - 282,184 Total noncurrent assets 88,686,514 2,659,448 91,345,962 84,493,429 Total assets 176,210,771 7,379,379 183,590,150 92,697,136 Deferred Outflows of Resources:Deferred pension related outflows 10,642,075 408,185 11,050,260 2,061,307 Deferred OPEB related outflows 3,460,471 169,804 3,630,275 881,947 Deferred charges on refunding 54,832 - 54,832 - Total deferred outflows of resources 14,157,378 577,989 14,735,367 2,943,254 See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKYSTATEMENT OF NET POSITIONJUNE 30, 2024 ASSETS -30- Primary Government Component Unit Paducah Governmental Business-type Water Works Current Liabilities:Activities Activities Total Authority Voucher and accounts payable 2,901,995 206,865 3,108,860 1,534,056 Accrued payables 2,250,037 59,300 2,309,337 979,310 Unearned revenue 43,064 605,071 648,135 - Accrued compensated absences 1,900,810 113,106 2,013,916 378,269 Accrued interest 326,012 - 326,012 5,521 Notes payable due within one year 537,607 - 537,607 488,503 Bonds payable due within one year 2,190,000 - 2,190,000 - SBITA payable due within one year 741,955 48,753 790,708 15,249 Replacement reserve - - - 265,900 Other current liabilities - - - 206,639 Total current liabilities 10,891,480 1,033,095 11,924,575 3,873,447 Noncurrent Liabilities: Accrued compensated absences 946,137 30,639 976,776 - Landfill post-closure costs - 2,062,500 2,062,500 - Net pension liability 60,867,355 2,479,377 63,346,732 7,562,624 Net other post employment benefits liability 2,077,282 - 2,077,282 - SBITA payables 1,706,479 76,248 1,782,727 17,251 Notes payable 7,870,970 - 7,870,970 3,844,139 Bonds payable 25,305,890 - 25,305,890 - Total noncurrent liabilities 98,774,113 4,648,764 103,422,877 11,424,014 Total liabilities 109,665,593 5,681,859 115,347,452 15,297,461 Deferred Inflows of Resources Deferred revenues - leases 2,502,184 - 2,502,184 52,051 Deferred revenues - property taxes 7,181,165 - 7,181,165 - Deferred pension related inflows 7,765,672 289,428 8,055,100 2,091,156 Deferred OPEB related inflows 17,997,801 860,945 18,858,746 3,109,620 Total deferred inflows of resources 35,446,822 1,150,373 36,597,195 5,252,827 Net invested in capital assets 70,081,507 2,481,099 72,562,606 73,032,871 Restricted for: Housing and program projects 4,358,180 49,510 4,407,690 - Capital projects & infrastructure 1,147,177 - 1,147,177 - Public safety 222,526 - 222,526 - Unrestricted (30,553,656) (1,405,473) (31,959,129) 2,057,231 TOTAL NET POSITION 45,255,734$ 1,125,136$ 46,380,870$ 75,090,102$ See accompanying notes to the basic financial statements. -31- LIABILITIES NET POSITION Primary Government Exhibit 2 FUNCTIONS/PROGRAMS OperatingCharges for Grants andPrimary Government:Expenses Services ContributionsGovernmental activities: General government 11,710,196$ 1,872,740$ 617,594$ 18,550$ Public safety 24,262,599 484,612 1,100,402 1,137,834 Public service 6,965,473 1,076,634 1,040,993 1,000,667 Parks and recreation 4,295,705 158,120 - 59,184 Planning and development 4,559,675 - 4,822,164 560,868 Interest on long-term debt 434,403 - 13,204 - Total governmental activities (See Note 1) 52,228,051 3,592,106 7,594,357 2,777,103 Business-type activities: Solid Waste 4,705,558 4,935,112 29,401 - Section Eight Housing 2,487,323 186 2,528,517 - Transient Boat Dock 101,929 81,711 - - Total business-type activities 7,294,810 5,017,009 2,557,918 - TOTAL PRIMARY GOVERNMENT 59,522,861$ 8,609,115$ 10,152,275$ 2,777,103$ Component Unit: Paducah Water Works Authority 11,609,361$ 15,998,255$ -$ 2,361,729$ TOTAL COMPONENT UNITS 11,609,361$ 15,998,255$ -$ 2,361,729$ General revenues:Taxes and licenses:Property taxes, levied for general purposes Insurance premium tax Gross receipts license tax Employee license tax Franchise tax Telecommunications tax Vehicle tax Bank tax Transient room tax Other taxes Unrestricted investment earnings Sale of assets Total general revenues Transfers Total general revenues and transfers Change in net position Net position - beginning as restated (Note 12) Net position - ending See accompanying notes to the basic financial statements. Program Revenues Capital -32- Contributions CITY OF PADUCAH, KENTUCKY Grants and FOR THE YEAR ENDED JUNE 30, 2024STATEMENT OF ACTIVITIES Component UnitGovernmentalBusiness-type Paducah WaterActivitiesActivitiesTotalWorks Authority (9,201,312)$ -$ (9,201,312)$ -$ (21,539,751) - (21,539,751) - (3,847,179) - (3,847,179) - (4,078,401) - (4,078,401) - 823,357 - 823,357 - (421,199) - (421,199) - (38,264,485) - (38,264,485) - - 258,955 258,955 - - 41,380 41,380 - - (20,218) (20,218) - - 280,117 280,117 - (38,264,485) 280,117 (37,984,368) - - - - 6,750,623 - - - 6,750,623 6,778,826 - 6,778,826 - 7,424,599 - 7,424,599 - 5,137,856 - 5,137,856 - 24,835,738 - 24,835,738 - 237,226 - 237,226 - 578,579 - 578,579 - 965,620 - 965,620 - 402,883 - 402,883 - 1,802,253 - 1,802,253 - 462,472 - 462,472 - 2,866,207 169,462 3,035,669 479,372 (270,959) 57,081 (213,878) 81,664 51,221,300 226,543 51,447,843 561,036 320,000 (320,000) - - 51,541,300 (93,457) 51,447,843 561,036 13,276,815 186,660 13,463,475 7,311,659 31,978,919 938,476 32,917,395 67,778,443 45,255,734$ 1,125,136$ 46,380,870$ 75,090,102$ -33- Net (Expense) Revenue and Changes in Net PositionPrimary Government THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 THIS PAGE INTENTIONALLY LEFT BLANK Exhibit 3 OpioidGeneral Settlement BondFundFundFundAssets Cash and cash equivalents 26,484,862$ 3,028,763$ 1,040,335$ -$ Investments - - - 17,058,593 Receivables:Accounts 8,349,310 - 3,317,844 - Leases 2,633,678 - - - Grants 73,290 - - - Property taxes (net of allowances for uncollectibles)7,394,909 - - - Inventory - - - - Due from other funds 979,637 1,576,337 - - Total assets 45,915,686$ 4,605,100$ 4,358,179$ 17,058,593$ LiabilitiesVoucher and accounts payable 493,253$ 221,346$ -$ 799,509$ Accrued payroll and payroll taxes 1,353,195 - - - Due to other funds 1,576,337 - - 901,355 Due to other taxing agencies 792,466 - - - Unearned revenue - other - - - - Accrued compensated absences 299,452 - - - Total liabilities 4,514,703 221,346 - 1,700,864 Deferred Inflows of ResourcesUnavailable revenue - leases 2,502,184 - - - Unavailable revenue - opioid settlement - - 3,138,868 - Unavailable revenue - property taxes 7,361,592 - - - Total deferred inflows of resources 9,863,776 - 3,138,868 - Fund Balances:Nonspendable:Inventory - - - - Restricted for:Highways and streets - - - - Public safety - - - - Program purposes - - 1,219,311 - Capital improvements - - - 15,357,729 Committed for:Capital improvements - 4,383,754 - - Assigned for:Public safety - - - - Debt service - - - - Capital improvements - - - - Unassigned:General Fund 31,537,207 - - - Total fund balances 31,537,207 4,383,754 1,219,311 15,357,729 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES 45,915,686$ 4,605,100$ 4,358,179$ 17,058,593$ See accompanying notes to the basic financial statements.-34- FundInvestment CITY OF PADUCAH, KENTUCKYBALANCE SHEETGOVERNMENTAL FUNDSJUNE 30, 2024 Special Revenue General DebtCapitalService Improvements Fund 4,986,763$ 1,730,158$ 1,899,965$ 39,170,846$ - - - 17,058,593 293,340 - 553,532 12,514,026 - - - 2,633,678 1,111,575 - - 1,184,865 - - - 7,394,909 317,758 - - 317,758 - - - 2,555,974 6,709,436$ 1,730,158$ 2,453,497$ 82,830,649$ 688,919$ -$ 507,961$ 2,710,988$ - - 77,384 1,430,579 - - 78,282 2,555,974 - - - 792,466 43,064 - - 43,064 - - - 299,452 731,983 - 663,627 7,832,523 - - - 2,502,184 - - - 3,138,868 - - - 7,361,592 - - - 13,002,644 317,758 - - 317,758 - - 1,147,177 1,147,177 - - 222,526 222,526 - - 93,050 1,312,361 - - - 15,357,729 - - - 4,383,754 - - 327,117 327,117 - 1,730,158 - 1,730,158 5,659,695 - - 5,659,695 - - - 31,537,207 5,977,453 1,730,158 1,789,870 61,995,482 6,709,436$ 1,730,158$ 2,453,497$ 82,830,649$ -35- NonmajorGovernmental GovernmentalTotal FundsFunds Exhibit 4 Total fund balance - total governmental funds 61,995,482$ Amounts reported for governmental activities in the Statementof Net Position are different because: 157,427 3,193,940 24,091 83,207,702 386,509 $ 54,832 (17,997,801) 3,460,471 (7,765,672) 10,642,075 (11,606,095) See accompanying notes to the basic financial statements. (Continued) -36- Deferred refunding costs and deferred pension activity in governmental activities are not current financial resources or payables and,therefore,are not reported in the governmental funds balance sheet: Capital assets used in governmental activities are not current financial resources and,therefore,are not reported in the governmental funds balance sheet.This amount includes capital assets of Internal Service Funds. Deferred pension related outflows Deferred refunding costs Deferred pension related inflows Deferred OPEB related inflows Deferred OPEB related outflows Prepaid OPEB obligations are not reported in the governmental funds balance sheet since they are not available to pay current period expenditures. CITY OF PADUCAH, KENTUCKYRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION Delinquent property taxes receivable are not reported in the governmental funds balance sheet since they are not considered "available" revenues. Interest receivable on the long-term notes receivable is not reported on the governmental funds balance sheet since neither the note receivable nor the interest is available to pay current period expenditures. JUNE 30, 2024 The long-term notes receivable are not reported in the governmental funds balance sheet since they are not available to pay current period expenditures. Exhibit 4(Continued) 3,138,868$ (2,488,528) (326,012) $ 3,469,562 97,827,976 (101,297,538) 9,723,045$ Current liabilities (276,968) (576,189) 8,869,888 NET POSITION OF GOVERNMENTAL ACTIVITIES 45,255,734$ See accompanying notes to the basic financial statements. Long-term pensions,OPEB,SBITA,bonds and notes of ($131,190,375)are not due and payable in the current period and, therefore,they are not reported in the governmental funds balance sheet. The long-term pensions, OPEB, SBITA, bonds and notes are: CITY OF PADUCAH, KENTUCKYRECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION The portion of accrued compensated absences that are not due and payable in the current period,and therefore,not reported in the governmental funds balance sheet. Accrued interest payments on debt are not due and payable in the current period and,therefore,are not reported in the governmental funds balance sheet. JUNE 30, 2024 Unearned revenues from opioid settlement are not available in the current period and,therefore,are deferred in the governmental funds balance sheet. -37- Due within one year Due after one year Current assets Net amount allocated to Internal service funds are used by management to charge the costs of certain activities,such as insurance and fleet management,to individual funds.The assets and liabilities of the Internal Service Funds (net of amount allocated to business-type activities)not included in other reconciling items are: business-type activities Exhibit 5 OpioidGeneral Investment Settlement Revenues:Fund Fund Fund Taxes 9,128,820$ -$ -$ Licenses 32,198,775 6,208,935 - Charges for services 830,289 - - Intergovernmental - - - Grants 3,349,989 - - Interest 2,019,957 - - Property upkeep, rentals, sales and other 2,006,123 32,780 643,292 Total revenues 49,533,953 6,241,715 643,292 Expenditures: Current operations: General government 7,107,555 - - Public safety 23,944,988 - - Public service 5,981,229 - - Parks and recreation 3,436,053 - - Planning and development - 1,052,146 - Intergovernmental and other 457,221 - - Capital outlay - - - Debt service: Principal requirement 641,438 - - Interest requirement 79,105 - - Total expenditures 41,647,589 1,052,146 - Excess (deficiency) of revenues over expenditures 7,886,364 5,189,569 643,292 Other Financing Sources (Uses): Subscription-based information technology arrangements 617,169 - - Transfers in 444,671 553,178 - Transfers out (6,804,941) (5,336,563) - Total other financing sources (uses)(5,743,101) (4,783,385) - Net change in fund balances 2,143,263 406,184 643,292 Fund balances - beginning as restated (Note 12)29,393,944 3,977,570 576,019 Fund balances - ending 31,537,207$ 4,383,754$ 1,219,311$ See accompanying notes to the basic financial statements. Special Revenue -38- CITY OF PADUCAH, KENTUCKYSTATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCESGOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2024 General DebtBondCapitalService Fund Improvements Fund -$ -$ -$ 2,198,498$ 11,327,318$ - - - - 38,407,710 - - - 421,964 1,252,253 - 185,531 653,026 605,120 1,443,677 - 2,018,950 - 245,239 5,614,178 274,875 - 94,453 100,947 2,490,232 - 1,103,401 21,549 830,333 4,637,478 274,875 3,307,882 769,028 4,402,101 65,172,846 - - - - 7,107,555 - - - 2,365,946 26,310,934 - - - 2,168,205 8,149,434 - - - - 3,436,053 975,226 - - 1,999,753 4,027,125 - - - - 457,221 - 12,546,751 - - 12,546,751 - - 3,674,839 - 4,316,277 - - 991,354 - 1,070,459 975,226 12,546,751 4,666,193 6,533,904 67,421,809 (700,351) (9,238,869) (3,897,165) (2,131,803) (2,248,963) - - - - 617,169 - 7,754,054 3,824,923 2,488,985 15,065,811 (2,003,041) (557,849) - (152,294) (14,854,688) (2,003,041) 7,196,205 3,824,923 2,336,691 828,292 (2,703,392) (2,042,664) (72,242) 204,888 (1,420,671) 18,061,121 8,020,117 1,802,400 1,584,982 63,416,153 15,357,729$ 5,977,453$ 1,730,158$ 1,789,870$ 61,995,482$ -39- GovernmentalTotal FundsFunds NonmajorGovernmental Exhibit 6 Net change in fund balances - total governmental funds (1,420,671)$ Amounts reported for governmental activities in the Statementof Activities are different because: 1,210,604 11,520,913 (303,057) (51,941) 4,503,864 (617,169) (1,228,234) See accompanying notes to the basic financial statements.(Continued) FOR THE YEAR ENDED JUNE 30, 2024 Collections on long-term notes receivables and related interest receivable are revenues in the government funds when collected. 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 as depreciation expense.This is the capitalized amount of capital outlays in the current period.This amount includes Internal Service Fund's capital outlays of $1,352,231. Payments on property taxes recognized as revenues when received in the governmental funds and as levied in the government-wide statements.This is the amount of cash collections that exceeded accrued property tax revenues. Only the loss on the disposal of capital assets and abandoned capital projects are reported in the Statement of Activities,whereas in the governmental funds,the proceeds from the sale increases financial resources.Thus,the change in net position differs by the net book value of capital assets and projects disposed. CITY OF PADUCAH, KENTUCKYRECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Opioid settlement revenues are deferred in the governmental funds until available. The payments of pension and OPEB contributions require the use of current financial resources and,therefore,are reported as expenditures in governmental funds.However,the current year payments are deferred outflows of resources in the government-wide statements and accrued pension and OPEB expenses are recorded when incurred. Proceeds of the issuance of debt and subscription based information technology leases provides current financial resources and is reported as an other financing source in governmental funds. -40- Exhibit 6 (Continued) (4,600,754) 4,316,277 34,545 (12,864) 61,882 413,431$ 12,959 Capital Outlays (1,352,231) 789,261 (136,580) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES 13,276,815$ See accompanying notes to the basic financial statements. -41- Internal service funds are used by management to charge the costs of certain activities,such as insurance and fleet management,to individual funds.The net revenue of the Internal Service Funds is reported with governmental activities net of the amount allocated to business-type activities and depreciation expense. These amounts are as follows: Change in net position business-type activities Depreciation expense Net of amount allocated to Long-term accrued compensated absences do not require the use of current financial resources and,therefore,are not reported as expenditures in governmental funds. Depreciation expense on capital assets is reported in the government-wide Statement of Activities and Changes in Net Position,but does not require the use of current financial resources.Therefore,depreciation expense is not reported as an expenditure in governmental funds.This amount includes Internal Service Funds' depreciation expense of $789,261. Principal payments of debt and payment to escrow agent for refunding require the use of current financial resources and,therefore,are reported as expenditures in governmental funds.However,these payments of debt do not affect net position in the government-wide Statement of Activities. Accrued interest payments on debt do not require the use of current financial resources.Interest expense is reported net of the change in accrued interest payable in the government-wide Statement of Activities. CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKY Governmental funds report the effect of bond premiums,discounts and refunding costs when debt is issued,whereas these amounts are deferred and amortized in the Statement of Activities. TO THE STATEMENT OF ACTIVITIES RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND Exhibit 7 Variance withFinal BudgetPositiveOriginalFinal(Negative) Revenues: Taxes:Real and personal,current year 7,539,150$ 7,539,150$ 7,714,247$ 175,097$ Real and personal,prior year 30,000 30,000 33,161 3,161 Franchise 220,000 220,000 237,226 17,226 Bank taxes 416,000 416,000 402,883 (13,117) In lieu of tax payment 306,000 306,000 292,929 (13,071) Penalty, interest and advertising 55,000 55,000 76,493 21,493 Paducah Junior College tax collections - - 371,881 371,881 Total taxes 8,566,150 8,566,150 9,128,820 562,670 Licenses:Business licenses 5,400,000 5,400,000 5,137,856 (262,144) Employee earnings 19,000,000 19,000,000 18,626,803 (373,197) Cable franchise fees 371,000 371,000 321,803 (49,197) Penalties 225,000 225,000 276,480 51,480 Alcoholic beverages 180,000 180,000 182,893 2,893 Insurance premium tax 6,100,000 6,100,000 7,424,599 1,324,599 Building permits 135,000 135,000 169,822 34,822 Electrical permits 46,000 46,000 73,970 27,970 Zoning change fees 8,500 8,500 12,660 4,160 Miscellaneous buildingand electrical fees 4,000 4,000 3,000 (1,000) Payroll tax sharing with County (26,500) (26,500) (31,111) (4,611) Total licenses 31,443,000 31,443,000 32,198,775 755,775 Charges for services:Tax collection fee 228,000 228,000 269,891 41,891 Administrative charge 362,220 362,220 364,720 2,500 Base court revenue 35,000 35,000 37,558 2,558 Recreation fees 91,500 91,500 158,120 66,620 Total charges for services 716,720 716,720 830,289 113,569 See accompanying notes to the basic financial statements.(Continued) ActualBudgeted Amounts -42- CITY OF PADUCAH, KENTUCKY GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2024 Amounts STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL Exhibit 7(Continued) Variance withFinal BudgetActualPositiveOriginalFinalAmounts(Negative)Grants:Police State Incentive 455,000$ 455,000$ 482,945$ 27,945$ Fire State Incentive 382,000 382,000 392,195 10,195 Police supplemental grants 279,000 279,000 156,173 (122,827) Other grants - - 2,318,676 2,318,676 Total grants 1,116,000 1,116,000 3,349,989 2,233,989 Interest 900,500 900,500 2,019,957 1,119,457 Other:Property rent and sales 771,035 771,035 1,613,355 842,320 Property upkeep andmaintenance 72,180 72,180 113,716 41,536 E911 - GIS 36,120 36,120 36,128 8 Miscellaneous 180,500 196,050 242,924 46,874 Total other 1,059,835 1,075,385 2,006,123 930,738 Total revenues 43,802,205 43,817,755 49,533,953 5,716,198 Expenditures:General government:General administration:Mayor and Commissioners 290,847 300,293 294,201 6,092 City Manager 870,718 854,222 826,998 27,224 City Clerk 469,703 469,663 464,515 5,148 Corporate Counsel 225,000 394,400 394,398 2 Non-departmental 1,172,000 1,095,651 1,070,286 25,365 Memberships and contingency 5,775 5,775 5,287 488 Civic beautification 5,000 5,000 4,148 852 Total general administration 3,039,043 3,125,004 3,059,833 65,171 Finance:Finance administration 371,689 372,339 347,250 25,089 Accounting and payroll 485,820 499,050 487,265 11,785 Revenue collection 610,208 596,228 519,545 76,683 Total finance 1,467,717 1,467,617 1,354,060 113,557 See accompanying notes to the basic financial statements.(Continued)-43- STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN Budgeted Amounts GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2024 FUND BALANCE - BUDGET AND ACTUAL CITY OF PADUCAH, KENTUCKY Exhibit 7(Continued) Variance withFinal BudgetActualPositiveGeneral government:Original Final Amounts (Negative)Planning:Administration 268,571$ 299,636$ 296,859$ 2,777$ Planning 589,836 493,706 471,979 21,727 Total planning 858,407 793,342 768,838 24,504 Radio and rental property 254,440 114,440 89,263 25,177 Human rights 23,643 23,643 18,984 4,659 Information systems 1,517,982 1,466,521 1,201,205 265,316 Human resources/risk management 650,014 668,194 615,372 52,822 Total general government 7,811,246 7,658,761 7,107,555 551,206 Public safety:Police:Police administration 1,560,516 1,372,191 1,330,448 41,743 Patrol 8,754,819 8,820,609 8,553,096 267,513 Investigations 2,823,079 2,749,684 2,592,431 157,253 COPS Grants 353,143 355,988 341,395 14,593 Total police 13,491,557 13,298,472 12,817,370 481,102 Fire:Fire administration 781,595 905,715 848,888 56,827 Suppression 8,934,502 8,890,807 8,785,924 104,883 Prevention and inspection 1,456,757 1,343,747 1,299,383 44,364 Training 198,912 197,972 193,423 4,549 Total fire 11,371,766 11,338,241 11,127,618 210,623 Total public safety 24,863,323 24,636,713 23,944,988 691,725 Public service:Public works:Street maintenance 2,607,467 2,598,577 2,425,723 172,854 Street lighting 810,000 760,000 744,848 15,152 Facility maintenance 1,461,825 1,337,135 1,145,144 191,991 Total public works 4,879,292 4,695,712 4,315,715 379,997 See accompanying notes to the basic financial statements.(Continued) Budgeted Amounts GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2024 -44- STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL CITY OF PADUCAH, KENTUCKY Exhibit 7(Continued) Variance withFinal BudgetActualPositivePublic service:Original Final Amounts (Negative)Engineering services:Engineering services 940,979$ 980,064$ 944,333$ 35,731$ Flood control 966,046 951,846 721,181 230,665 Total engineering services 1,907,025 1,931,910 1,665,514 266,396 Total public service 6,786,317 6,627,622 5,981,229 646,393 Parks and recreation: Parks and recreation administration 791,706 782,931 704,892 78,039 Grounds maintenance 1,859,832 1,804,382 1,635,701 168,681 Pools and recreation programs 1,282,552 1,197,722 1,095,460 102,262 Total parks and recreation 3,934,090 3,785,035 3,436,053 348,982 Intergovernmental and other:Cable authority 85,355 85,355 85,340 15 Intergovernmental expense - - 371,881 (371,881) Total intergovernmental and other 85,355 85,355 457,221 (371,866) Debt servicePrincipal requirement - - 641,438 (641,438) Interest requirement - - 79,105 (79,105) Total debt service - - 720,543 (720,543) Total expenditures 43,480,331 42,793,486 41,647,589 1,145,897 Excess (deficiency) of revenues over expenditures 321,874 1,024,269 7,886,364 6,862,095 Other financing sources (uses):Long-term debt issued - - 617,169 617,169 Transfers in 519,700 520,756 444,671 (76,085) Transfers out (2,944,930) (4,318,746) (6,804,941) (2,486,195) Total other financing sources (uses)(2,425,230) (3,797,990) (5,743,101) (1,945,111) Net change in fund balance (2,103,356) (2,773,721) 2,143,263 4,916,984 Fund balance - beginning 29,393,944 29,393,944 29,393,944 - Fund balance - ending 27,290,588$ 26,620,223$ 31,537,207$ 4,916,984$ See accompanying notes to the basic financial statements.-45- CITY OF PADUCAH, KENTUCKY Budgeted Amounts GENERAL FUNDFOR THE YEAR ENDED JUNE 30, 2024 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL Exhibit 8 Variance withFinal BudgetPositiveOriginalFinal(Negative) Revenues:Licenses:Employee earnings 6,200,000$ 6,200,000$ 6,208,935$ 8,935$ Total licenses 6,200,000 6,200,000 6,208,935 8,935 Other:Miscellaneous - - 32,780 32,780 Total other - - 32,780 32,780 Total revenues 6,200,000 6,200,000 6,241,715 41,715 Expenditures:General government:Planning and development:Economic development 1,068,400 1,568,400 1,052,146 516,254 Total expenditures 1,068,400 1,568,400 1,052,146 516,254 Excess (deficiency) of revenues over expenditures 5,131,600 4,631,600 5,189,569 557,969 Other financing sources (uses):Transfers in - - 553,178 553,178 Transfers out (5,126,710) (5,126,710) (5,336,563) (209,853) Total other financing sources (uses)(5,126,710) (5,126,710) (4,783,385) 343,325 Net change in fund balance 4,890 (495,110) 406,184 901,294 Fund balance - beginning 3,977,570 3,977,570 3,977,570 - Fund balance - ending 3,982,460$ 3,482,460$ 4,383,754$ 901,294$ See accompanying notes to the basic financial statements. ActualBudgeted Amounts -46- Amounts CITY OF PADUCAH, KENTUCKY SPECIAL REVENUE INVESTMENT FUNDFOR THE YEAR ENDED JUNE 30, 2024 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL Exhibit 9 Variance withFinal BudgetPositive Original Final Actual (Negative)Revenues: Grants -$ -$ -$ -$ Interest - - - - Other - - 643,292 643,292 Total revenues - - 643,292 643,292 Expenditures:Planning and development - - - - Excess (deficiency) of revenues over expenditures - - 643,292 643,292 Other Financing Sources (Uses):Operating transfers in - - - - Operating transfers out - - - - Total other financing sources (uses)- - - - Net change in fund balance -$ -$ 643,292 643,292$ Fund balance - beginning 576,019 Fund balance - ending 1,219,311$ See accompanying notes to the basic financial statements. -47- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKY OPIOID SETTLEMENT FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES INFUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Exhibit 10 NonmajorSolidEnterpriseCurrent Assets:Waste Funds Totals Cash and cash equivalents 3,150,788$ 391,778$ 3,542,566$ 8,001,869$ Accounts receivable 586,527 - 586,527 194,161 Prepaid expenses - - - 1,452,500 Inventory - 14,649 14,649 74,515 Total current assets 3,737,315 406,427 4,143,742 9,723,045 Noncurrent Assets:Prepaid OPEB obligation 49,477 3,871 53,348 20,765 Net capital assets:Land and construction in progress 68,886 - 68,886 - Depreciable capital assets 2,536,460 754 2,537,214 3,716,407 Total noncurrent assets 2,654,823 4,625 2,659,448 3,737,172 Total assets 6,392,138 411,052 6,803,190 13,460,217 Deferred Outflows of Resources:Deferred pension related outflows 377,289 30,896 408,185 159,273 Deferred OPEB related outflows 157,485 12,319 169,804 66,094 Total deferred outflows of resources 534,774 43,215 577,989 225,367 Current Liabilities:Voucher and accounts payable 142,499 64,366 206,865 191,007 Accrued payroll and payroll taxes 58,479 821 59,300 26,991 Accrued compensated absences 109,702 3,404 113,106 58,970 Unearned revenue 605,071 - 605,071 - SBITA payable 48,753 - 48,753 - Total current liabilities 964,504 68,591 1,033,095 276,968 Noncurrent Liabilities:Net pension liability 2,299,481 179,896 2,479,377 965,081 Landfill post-closure costs 2,062,500 - 2,062,500 - SBITA liability 76,248 - 76,248 - Accrued compensated absences - 30,639 30,639 - Total noncurrent liabilities 4,438,229 210,535 4,648,764 965,081 Total liabilities 5,402,733 279,126 5,681,859 1,242,049 Deferred Inflows of ResourcesDeferred pension related inflows 268,427 21,001 289,428 112,657 Deferred OPEB related inflows 798,559 62,386 860,945 333,584 Total deferred inflows of resources 1,066,986 83,387 1,150,373 446,241 Net invested in capital assets 2,480,345 754 2,481,099 3,716,407 Restricted - Housing - 49,510 49,510 - Unrestricted (2,023,152) 41,490 (1,981,662) 8,280,887 TOTAL NET POSITION 457,193$ 91,754$ 548,947 11,997,294$ Reconciliation to government-wide statements of net position:Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds 576,189 NET POSITION OF BUSINESS-TYPE ACTIVITIES 1,125,136$ See accompanying notes to the basic financial statements.-48- Business-type ActivitiesASSETS LIABILITIES NET POSITION FundsServiceInternal Governmental Activities CITY OF PADUCAH, KENTUCKYSTATEMENT OF NET POSITIONPROPRIETARY FUNDSJUNE 30, 2024 Exhibit 11 Nonmajor Solid EnterpriseOperating Revenues:Waste Funds Totals Charges for services - internal -$ 81,711$ 81,711$ 6,395,845$ Charges for services - external 4,933,001 - 4,933,001 292,992 Miscellaneous 2,111 186 2,297 - Total operating revenues 4,935,112 81,897 5,017,009 6,688,837 Operating Expenses:Cost of sales and service 4,028,545 2,588,679 6,617,224 6,027,703 Depreciation and amortization 658,876 572 659,448 789,261 Total operating expenses 4,687,421 2,589,251 7,276,672 6,816,964 Operating income (loss)247,691 (2,507,354) (2,259,663) (128,127) Nonoperating Revenues (Expenses):Grants - program purpose 29,401 2,528,517 2,557,918 - Interest and investment income 167,195 2,267 169,462 375,973 Gain (loss) on disposal of propertyand equipment 57,081 - 57,081 56,708 Interest expense (5,179) - (5,179) - Total nonoperating revenues (expenses)248,498 2,530,784 2,779,282 432,681 Income (loss) before contributions and transfers 496,189 23,430 519,619 304,554 Contributions and Transfers:Transfers in - - - 108,877 Transfers out (320,000) - (320,000) - Total contributions and transfers (320,000) - (320,000) 108,877 Change in net position 176,189 23,430 199,619 413,431 Net position - beginning 281,004 68,324 11,583,863 Net position - ending 457,193$ 91,754$ 11,997,294$ Reconciliation to government-wide statements of net position:Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds (12,959) CHANGE IN NET POSITION OF BUSINESS-TYPE ACTIVITIES 186,660$ See accompanying notes to the basic financial statements. InternalServiceFunds -49- ActivitiesBusiness-type Activities Governmental CITY OF PADUCAH, KENTUCKYSTATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITIONPROPRIETARY FUNDSFOR THE YEAR ENDED JUNE 30, 2024 Exhibit 12 NonmajorSolidEnterprise Cash Flows from Operating Activities:Waste Funds Totals Cash received from customers 5,524,964$ 81,711$ 5,606,675$ -$ Cash received from interfund services provided - - - 6,602,110 Payments to suppliers (2,291,795) - (2,291,795) 98,549 Payments to employees (1,564,802) (106,265) (1,671,067) (262,919) Claims paid - - - (3,058,030) Payments to internal service funds (730,866) - (730,866) - Other receipts 2,111 - 2,111 - Other payments - (2,594,087) (2,594,087) (2,044,000) Net cash provided (used) by operating activities 939,612 (2,618,641) (1,679,029) 1,335,710 Cash Flows from Noncapital Financing Activities:Grants - program purpose 29,401 2,566,683 2,596,084 - Transfers from other funds - - - 108,877 Transfers to other funds (320,000) - (320,000) - Net cash provided (used) by noncapital financing activities (290,599) 2,566,683 2,276,084 108,877 Cash Flows from Capital and Related Financing Activities: Principal paid on debt (48,753) - (48,753) - Interest on SBITA (5,179) - (5,179) - Purchase of capital assets (661,111) - (661,111) (1,352,231) Proceeds from sale of capital assets 57,081 - 57,081 63,910 Net cash provided (used) by capital and related financing activities (657,962) - (657,962) (1,288,321) Cash Flows from Investing Activities: Interest on cash and investments 167,195 2,267 169,462 375,973 Net cash provided (used) by investing activities 167,195 2,267 169,462 375,973 Net increase (decrease) in cash and cashequivalents 158,246 (49,691) 108,555 532,239 Cash and cash equivalents, July 1, 2023 2,992,542 441,469 3,434,011 7,469,630 CASH AND CASH EQUIVALENTS, JUNE 30, 2024 3,150,788$ 391,778$ 3,542,566$ 8,001,869$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) 247,691$ (2,507,354)$ (2,259,663)$ (128,127)$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 658,876 572 659,448 789,261 Change in assets and liabilities: Receivables (13,108) - (13,108) (86,727) Prepaid expenses - - - 613,206 Inventories - 2,915 2,915 (3,838) Unearned revenues 605,071 - 605,071 - Pension obligation and related deferrals (359,606) (28,927) (388,533) 195,030 OPEB obligation and related deferrals (177,329) 7,124 (170,205) 23,866 Account and accrued payables (21,983) (92,971) (114,954) (66,961) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 939,612$ (2,618,641)$ (1,679,029)$ 1,335,710$ See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKYSTATEMENT OF CASH FLOWSPROPRIETARY FUNDSFOR THE YEAR ENDED JUNE 30, 2024 -50- GovernmentalActivitiesInternalService Business-type Activities Funds Exhibit 13 Private-Pension purposeFundsTrusts Cash and cash equivalents -$ 14,929$ Receivables:Interest 3,639 - Investments at fair valueMoney market funds 98,822 - Common stock 1,423,264 - Mutual funds 2,215,778 1,154,309 Total assets 3,741,503 1,169,238 Voucher and accounts payable 175 - Total liabilities 175 - Net position restricted for pensions 3,741,328$ Held in trust for other purposes 1,169,238$ See accompanying notes to the basic financial statements. -51- ASSETS LIABILITIES CITY OF PADUCAH, KENTUCKYSTATEMENT OF NET POSITIONFIDUCIARY FUNDSJUNE 30, 2024 NET POSITION Primary Government Exhibit 14 Private-Pension purposeAdditions:Funds TrustsContributions:Employer 427,908$ -$ Private donations - 6,217 Total contributions 427,908 6,217 Investment income:Net increase (decrease) infair value of investments 344,255 88,597 Interest and dividends 101,792 39,513 Net investment income 446,047 128,110 Total additions 873,955 134,327 Deductions:Benefits 774,453 - Capital outlay - 56,803 Administrative expenses 41,134 19,191 Total deductions 815,587 75,994 Change in net position 58,368 58,333 Net position - beginning 3,682,960 1,110,905 Net position - ending 3,741,328$ 1,169,238$ See accompanying notes to the basic financial statements. -52- STATEMENT OF CHANGES IN NET POSITIONCITY OF PADUCAH, KENTUCKY FIDUCIARY FUNDSFOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKY NOTES TO THE FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 - 53 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: General Statement The City of Paducah (City) complies with generally accepted accounting principles (GAAP) as applied to governmental units. This requires the use of the accrual basis of accounting for government-wide financial statements and proprietary funds financial statements and a modified accrual basis of accounting for the governmental funds financial statements. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The financial reporting entity, basis of accounting, and other significant policies employed by the City are summarized as follows: Financial Reporting Entity The City operates under a City Manager form of government. The Board of Commissioners consists of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Paducah (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Units Police and Firefighters’ Pension Fund – This retirement fund was established for the benefit of the police and firemen of the City. It is administered by a Board of Trustees consisting of the Mayor, City Finance Director and representatives of the Police and Fire Departments. The Board is authorized to establish benefit levels and to approve actuarial assumptions used in the determination of contribution levels. The pension fund is reported as a fiduciary fund and does not issue separate financial statements. Discretely Presented Component Units The component unit column in the government-wide financial statements includes the financial data of the City’s other component unit. It is reported in a separate column to emphasize that it is legally separate from the City. The following component unit is included in the reporting entity because of its financial relationship with the City; and the City is able to impose its will on the organization. Paducah Water Works – The City of Paducah Water Works Commission is appointed by the Mayor and City Commission. The rates for user charges and bond issuance authorizations are subject to approval by the City Commission of the City of Paducah. Complete financial statements of the individual component unit can be obtained from its respective administrative office at the following location: Paducah Water Works 1801 N. 8th Street Paducah, Kentucky 42003 (Continued) - 54 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Related Organizations City officials are also responsible for appointing the members of boards of other organizations; but, the City’s accountability for these organizations do not extend beyond appointing authority. The organizations listed below are notable related organizations which have not been included as component units in the City’s report. Transit Authority of the City of Paducah – The Transit Authority is a legally separate entity that provides for transit operations both within and outside the City. The Transit Authority is not financially accountable to the City. Paducah Housing Authority – The Paducah Housing Authority (PHA) is a legally separate entity that provides for construction, operation, and management of low-income housing projects within the City. PHA is a legally separate entity and is not financially accountable to the City. Paducah Power System – The Paducah Power System (PPS) is a legally separate entity that provides electric utilities to residents in the Paducah area. PPS is not financially accountable to the City. Joint Sewer Agency – As of July 1, 1999, the assets and liabilities of the Wastewater/Stormwater Fund were transferred to the Paducah-McCracken County Joint Sewer Agency pursuant to a municipal order dated June 29, 1999. The Paducah-McCracken County Joint Sewer Agency is a legally separate entity and is not financially accountable to the City. Forest Hills Village, Inc. – The Corporation’s purpose is to manage City of Paducah properties known as “Forest Hills Housing Development”. The City and Corporation have a lease agreement detailing the terms and conditions of operations. Forest Hills Village, Inc. is a legally separate entity and is not financially accountable to the City. Paducah Junior College, Incorporated (PJC) – The College is a part of the University of Kentucky’s Community College System which is now administered by the Kentucky Community and Technical College System. The Community College System receives student tuition, fees and other related income that provides the financing for the operational budget of the College. A tax levied and collected by the City is a primary revenue source for the College. These funds, as well as gifts and grants made to the College, may be used for the acquisition or improvement of property or to finance programs beyond the level of those normally provided by community colleges in the University of Kentucky system. PJC is a legally separate entity and is not financially accountable to the City. Basis of Presentation Government-wide Financial Statements The Statement of Net Position and Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. (Continued) - 55 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Account Policies: Basis of Presentation Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditure or expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding total for all governmental and enterprise funds combined. The funds of the financial reporting entity are described below: Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balance of current financial resources. The City has presented the following major governmental funds: General Fund – To account for resources traditionally associated with governments which are not required to be accounted for in another fund. Special Revenue Investment Fund – To account for restricted funds from employee license fee used for economic development, community redevelopment and infrastructure capital investments within Paducah. Special Revenue Opioid Settlement Fund – To account for restricted funds from opioid settlement for program purpose. Special Revenue Bond Fund – To account for restricted funds from bond issues used for infrastructure capital investments within the Paducah area. General Capital Improvements – To account for the acquisition or construction of major capital projects other than those financed by proprietary fund operations and special assessments. Debt Service Fund – To account for the accumulation of resources and payment of bond and note principal and interest, and capital lease activity. The City has presented the following major proprietary fund: Solid Waste Fund – To account for the provision of refuse services to the residents of the City. (Continued) - 56 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Account Policies: Basis of Presentation Fund Financial Statements Additionally, the City reports the internal service funds which are used to account for the fleet management services, property and casualty insurance, and self-funded health insurance provided to departments of the City. Fiduciary funds report resources held in trust. One of these funds, the Police and Firefighters’ Pension Fund (PFPF), is a single-employer defined benefit fund and is administered by the City. Pension trust funds report the receipt, investment, and distribution of retirement contributions. The remaining funds are private-purpose trust funds which report the receipt and distribution in accordance with maintenance trust agreements. Measurement Focus Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied. On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-like activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the “current financial resources” measurement focus or the “economic resources” measurement focus is used as appropriate: a. All governmental funds utilize a “current financial resources” measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary, pension, and private-purpose trust funds and financial statements of City component units utilize an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary, pension, and private-purpose trust fund equity is classified as net position. c. Custodial funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net Position and Statement of Activities, both governmental and business-type activities are presented using the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. (Continued) - 57 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Account Policies: Basis of Accounting In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported when due. Custodial funds are presented using the accrual basis of accounting. All proprietary, pension, custodial, and private-purpose funds utilize 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 or economic asset used. Revenues – Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the City, available means expected to be received within sixty days of year end. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include employee license taxes, property taxes, grants, entitlements, and donations. The City considers property taxes as available if they are collected within sixty days after year end. Revenue from grants, entitlements, and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. The revenues susceptible to accrual are taxes, intergovernmental, employer and employees’ contributions to trust funds, interest revenue, and charges for services. Permit revenues are not susceptible to accrual because generally they are not measurable until received in cash. Unearned Revenue The City reports unearned revenue on its government-wide statement of net position and the fund financial statements. Unearned revenues arise when potential revenue does not meet both the "measurable” and “available” criteria for recognition in the current period. Unearned revenues also arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for unearned revenue is removed and revenue is recognized. Allocation of Indirect Expenses The City allocates indirect expenses primarily comprised of fleet management services and various self-funded insurance coverage provided to departments and employees of the City. Allocations are charged to functions based on use by weighted-average methodology. (Continued) - 58 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Budgets and Budgetary Accounting The City legally adopts annual budgets for all governmental and proprietary funds except for Section Eight Housing Fund. The City follows these procedures in establishing the budgetary data reflected in these financial statements: 1. Prior to July, the City Manager submits to the City Commission a proposed operating budget for the fiscal year commencing on July 1. The operating budget includes proposed expenditures and the means of financing those. 2. Public hearings are conducted by the City to obtain taxpayer comments. 3. Prior to July, the budget is legally enacted through passage of an ordinance. 4. The City Manager is authorized to transfer budgeted amounts between departments and their line items; however, any revisions that alter the total expenditures must be approved by the City Commission. 5. Formal budgetary integration is employed as a management control device during the year; and the budget is legally adopted. Budget amendments are also legally adopted. 6. The budget is adopted on the modified accrued basis of accounting. Encumbrance accounting, under which purchase orders, contracts, and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds. In accordance with generally accepted accounting principles (GAAP), encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. There are no encumbrances at June 30, 2024. Cash and Investments The City Commission adopted formal deposit and investment policies in January 2001. These policies apply to all City funds not contained in public trusts. The pension trust fund has investment policies separately approved by their oversight board. The private purpose trust has not adopted a deposit and investment policy. For the purpose of the Statement of Net Position, “cash and cash equivalents” includes all demand and savings accounts of the City. For the purpose of the proprietary fund Statement of Cash Flows, “cash and cash equivalents” include all demand and savings accounts and certificates of deposit with an original maturity of three months or less. Investments are reported at fair value which is determined using selected bases. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Managed funds, related to the pension and private purpose trust funds not listed on an established market, are reported at estimated fair value as determined by the respective fund managers based on quoted sales prices of the underlying securities. Cash deposits and certificates of deposit are reported at carrying amount which reasonably estimates fair value. Additional cash and investment disclosures are presented in Note 3. (Continued) - 59 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Receivables Major receivable balances for the governmental activities include property taxes, employee earnings taxes, business licenses, insurance premiums taxes, franchise taxes, grant revenue, opioid settlement, and interlocal note receivables. Business-type activities report utilities and interest earnings as their major receivables. The government-wide statements also include general obligation notes receivable related to the general obligation bonds outstanding as described in Note 3. In the fund financial statements, receivables in governmental funds include revenue accruals such as franchise tax, employee earnings taxes, business licenses, insurance and grants, and other similar intergovernmental revenues since they are usually both measurable and available. Nonexchange transactions collectible but not available are deferred. Interest and investment earnings are recorded when earned only if paid within sixty days since they would be considered both measurable and available. Proprietary fund receivables include revenues earned at year end and not yet received. Utility accounts receivable and interest earnings compose the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as “due to and from other funds.” Short-term interfund loans are reported as “interfund receivables and payables.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Position. See Note 3 for details of interfund transactions, including receivables and payables, at year end. Inventories Inventory consists of expendable supplies and fuel of $74,515 held for consumption and re-sell, real property of $317,758 held for urban development, and $14,649 fuel inventory for boat dock. Inventory supplies are stated at cost on a first-in, first-out basis. Inventory property held for development are stated at the lower of cost or market. The cost is recorded as an expenditure at the time individual items are consumed or sold for urban development rather than when purchased. Capital Assets The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Government-wide Statement In the government-wide financial statements, property, plant and equipment are accounted for as capital assets. All capital assets are valued at historical cost or estimated historical cost if actual is unavailable, except for donated capital assets and work of art capital assets received in a service concession arrangement which are recorded at their acquisition value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to June 30, 2004. (Continued) - 60 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Capital Assets Assets capitalized have an original cost of $500 or more prior to July 1, 1999, $2,500 or more after July 1, 1999, $3,000 or more after June 24, 2009 and $5,000 or more after June 30, 2016. Prior to July 1, 2002, governmental funds’ infrastructure assets were not capitalized. These assets have been valued at estimated historical cost. Capital assets of the primary government are depreciated over the estimated useful lives using the straight-line method. The estimated useful lives are as follows: Land improvements 10-30 Years Buildings 30 Years Building improvements 10-30 Years Infrastructure 10-30 Years Equipment 3-10 Years Furnishings and fixtures 5-7 Years Vehicles 7-10 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government-wide statements. Deferred Outflows/Inflows of Resources Government-wide Statement In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represent a consumption of net assets that applies to future period and will not be recognized as an outflow of resources (expense/expenditure) until then. The government has two items that qualify for reporting in the category. These are the deferred charge on refunding and deferred pension and other post-employment benefits (OPEB) related outflows reported in the statements of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred pension and OPEB related outflows result from pension and OPEB contributions subsequent to the measurement date of the pension and OPEB plans and various changes resulting from actuarial pension and OPEB measurement. The pension and OPEB contribution amounts are deferred and recognized as a component of the change in pension plan liability in the next measurement period. The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has three types of items reported in this category. These are receipt of property taxes levied during the fiscal year for the next fiscal year, inflows related to the City’s pension and OPEB plans that qualify for reporting in this category – deferred pension and OPEB related inflows, and lessor of facilities and real property to other organizations. (Continued) - 61 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Deferred Outflows/Inflows of Resources The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. Future cash receipts under non-cancelable leases measured at present value are deferred inflow of resources and amortized in future periods as a component of operation income. Fund Financial Statements The government has three types of items, which arise only under a modified accrual basis of accounting, that qualify for reporting as deferred inflows of resources. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues for three sources: leases, opioid settlement, and property taxes. These amounts are deferred and recognized as an inflow of resources in the period that the amount becomes available. Restricted Assets Certain proceeds of 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. Accrued Leave Accumulated unpaid vacation, sick pay, and other employee benefit amounts are recorded as long-term debt in the government-wide statements. The current portion of accrued compensated absences is estimated based on historical trends. In the fund financial statements, governmental funds report only the matured compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred. Accumulations for vacation pay are restricted to a maximum of 50 days and provide vesting rights upon completion of six months service. Accumulations for sick pay are restricted to a maximum of 150 days and provide payment to employees or beneficiaries for accumulations in excess of 50 days and up to 120 days upon death or retirement from City service. Qualified participants in the County Employees’ Retirement System, under certain circumstances, are eligible to convert accrued sick pay benefits into additional credit for years of service upon retirement. Long-Term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. All long-term debt to be repaid from governmental and business-type resources is reported as liabilities in the government-wide statements. The long-term debt consists primarily of bonds payable, notes payable, and accrued compensated absences. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principal and interest as expenditures. The accounting for proprietary funds is the same in the fund statements as it is in the government-wide statements. (Continued) - 62 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Equity Classifications Government-wide Statements Equity is classified as net position and displayed in three components: a. Net invested in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net assets that do not meet the definition of “restricted” or “net invested in capital assets.” Fund Statements Governmental fund equity is classified as fund balance and displayed in five components: a. Nonspendable fund balance includes amounts that are not in a spendable form or are required to be maintained intact indefinitely. b. Restricted fund balance includes amounts that can be spent only for the specific purpose stipulated by creditors, grantors, contributors, or laws or regulations of other governments. c. Committed fund balance includes amounts that can be used only for the specific purposes determined by the City Commissioners through the approval of City ordinances. Commitments may be changed or lifted only by the City Commissioners making the same formal action that imposed the constraint originally. d. Assigned fund balance comprises the amounts intended to be used for a specific purpose. Intent can be expressed by the City Commissioners or the City Finance Officer, as stated in the Finance Department Accounting Policy (FIN-20). No formal action is required. e. Unassigned fund balance includes amounts that have not been assigned to other funds or restricted, committed, or assigned to a specific purpose within the General Fund. The General Fund is the only fund which may report a positive unassigned fund balance. In other governmental funds, it is not appropriate to report a positive unassigned fund balance if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When both restricted and unrestricted fund balances are available for use, it is the City's policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used. Proprietary fund equity is classified the same as in the government-wide statements. (Continued) - 63 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Interfund Transactions Interfund services provided and used are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. Program Revenues Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Operating and Non-Operating Revenues and Expenses – Proprietary Funds Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. Operating expenses for the enterprise and internal service 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 nonoperating revenues and expenses. Expenditures/Expenses In the government-wide financial statements, expenses are classified by function for both governmental and business-type activities. In the fund financial statements, expenditures are classified as follows: Governmental Funds – by function: Current (further classified by character) Debt Service Capital Outlay Proprietary Funds – by operating and nonoperating In the fund financial statements, governmental funds report expenditures of financial resources. Proprietary funds report expenses relating to use of economic resources. Interfund Transfers Permanent reallocation of resources between funds of the reporting entity are classified as interfund transfers. For the purposes of the Statement of Activities, all interfund transfers between individual governmental funds have been eliminated. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make assumptions that affect reported amounts and disclosures. Accordingly, actual results could differ from those estimates. (Continued) - 64 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Stewardship, Compliance, and Accountability By its nature as a local government unit, the City and its component units are subject to various federal, state, and local laws and contractual regulations. An analysis of the City’s compliance with significant laws and regulations and demonstration of its stewardship over City resources follows. Fund Accounting Requirements The City complies with all state and local laws and regulations requiring the use of separate funds. Revenue Restrictions The City has various restrictions placed over certain revenue sources from state or local requirements or contractual agreements. The primary restricted revenue sources include: Revenue Source Legal Restrictions of Use Section Eight Housing Choice Voucher Program Subsidize Rental Costs for Low- Income Families FEMA - Disaster Grants Debris Removal and Disaster Recovery Emergency Communication Revenue E-911 Emergency Services Transient Room Tax Debt Obligations and Tourism Activities Homeland Security Grant Program Homeland Security Enhancement Bond Proceeds Defeasance of debt and Capital Projects 25% of Employee Earning Tax Economic, Community and Capital Development For the year ended June 30, 2024, the City complied in all material respects with these revenue restrictions. Debt Restrictions and Covenants The City may not incur any indebtedness that would require payment from resources beyond the current fiscal year revenue without first obtaining voter approval. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the County Employees Retirement System (CERS) and additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by the pensions. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-Employment Benefits (OPEB) For purposes of measuring the liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the County Employees Retirement System (CERS) and additions to/deductions from CERS’s fiduciary net position have been determined on the same basis as they are reported by CERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. (Continued) - 65 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 – Summary of Significant Accounting Policies: Subsequent Events In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through December 11, 2024, the date financial statements were available to be issued. Note 2 – Property Taxes: The City bills and collects its own property taxes. The City elects to use the annual property assessment prepared by McCracken County as its base to apply the property tax rate. According to Kentucky Revised Statutes, the assessment date for the City must conform to the assessment date of McCracken County and the annual increase in the property tax levy cannot exceed 4%. City property tax revenues are recorded as a receivable when assessed because the City has an enforceable legal claim to the resources. At this time, the receivable is offset by unearned revenue. Property tax revenues are recognized during the period for which they are levied. The due dates and collection period for all property taxes, exclusive of vehicle taxes, for the fiscal year ended June 30, 2024, are as follows: Description Date Assessment and enforceable lien January 1, 2023 Levy September 27, 2023 Face value amount payment dates 1st half by November 1, 2023 2nd half by February 1, 2024 Delinquent date - 10% penalty plus 1/2% per month 1st half - November 30, 2023 2nd half - February 28, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: The following notes present detailed information to support the amounts reported in the basic financial statements for its various assets, liabilities, equity, revenues, and expenditures/expenses. Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City's investment policy requires all investments to be made in accordance with applicable legal requirements with consideration of investment safety. Accordingly, the City maintains collateral agreements with its financial institutions. Deposits are 101% secured with collateral valued at market or par, whichever is lower, less the amount of the Federal Deposit Insurance Corporation insurance (FDIC). The City Commission approves and designates a list of authorized depository institutions based on evaluation of solicited responses and certifications provided by financial institutions and recommendations of an evaluation committee and/or finance director. (Continued) - 66 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Deposits Deposits of the City's reporting entity are insured or collateralized with securities held by the City, its agent, or by the pledging financial institution's trust department or agent in the name of City. During the year ended June 30, 2024, the City's only cash and cash equivalents were demand deposits. At year end, the carrying amount and the bank balance of the City's cash and cash equivalents were $50,730,210 and $52,792,406, respectively. Investment Policies City Policy Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Generally, the City's investing activities are managed under the custody of the City's Finance Director. Investing is performed in accordance with investment policies adopted by the City Commission complying with State Statutes. In accordance with the City's investment policy and the State Statutes, the City may invest funds temporarily in excess of operating needs in the following: Kentucky Revised Statutes (KRS 66.480) authorize the City to invest in: 1. Obligations of the U.S. Treasury, agencies, and instrumentalities, including obligations subject to repurchase agreements, provided delivery of obligations subject to repurchase agreements are held by the City or through an authorized agent; 2. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency; 3. Obligations of any corporation of the United States government; 4. Bonds or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and instrumentalities; 5. Certificates of deposit or other interest-bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized, to the extent uninsured, by any obligations permitted by section 41.240(4) of the Kentucky Revised Statutes; 6. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a national recognized rating agency. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The three levels of the fair value hierarchy are as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Level 3: Unobservable inputs – market data are not available and are developed using the best information available about the assumptions that market participants would use when pricing an asset or liability. (Continued) - 67 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Investment Policies City Policy The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The City has the following fair value measurements as of June 30, 2024: Weighted Fair Value/ Average Average Carrying Credit Quality/ Fair Value Maturity Types of Investments Amount Rating (1) Level 1 Level 2 Level 3 Years (2) Governmental and Business Funds Certificates of deposits $ - NR $ - $ - $ - NA Money market 17,058,593 NR 17,058,593 - - NA TOTAL GOVERNMENTAL AND BUSINESS FUNDS $17,058,593 Fiduciary and Private Purpose Trust Funds Cash equivalents $ 98,822 NR $ 98,822 $ - $ - NA Common stock 1,423,264 NR 1,423,264 - - NA Mutual funds Bond 1,418,410 NR 1,418,410 - - 7.20 Equity 1,497,918 NR 1,497,918 - - NA International 453,759 NR 453,759 - NA TOTAL FIDUCIARY AND PRIVATE PURPOSE TRUST FUNDS $ 4,892,173 (1) Ratings are provided where applicable to indicate associated Credit Risk. NA indicates not applicable. NR indicates that the instrument is not rated. (2) Maturities are provided for debt instruments with maturity dates. NA indicates not applicable. Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The City policy provides that, to the extent practicable, investments are matched with anticipated cash flows. Investments are diversified to minimize the risk of loss resulting from overconcentration of assets in a specific maturity period, a single issuer, or an individual class of securities. Unless matched to a specific cash flow, investments are not, in general, made in securities maturing more than five years from the date of purchase. Surplus cash may be invested in securities exceeding five years if the maturity of such investments is made to coincide as nearly as practicable with the expected use of the investment. Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. The City policy does not specifically address concentration of credit risk. (Continued) - 68 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Investment Policies Pension Trust Policy The City's pension trust is the Police and Firefighters' Pension Fund (PFPF). Investment policy provides for investment manager(s) who have full discretion of assets allocated to them subject to the overall investment guidelines set out in the policy. Overall investment guidelines provide for diversification and allow investment in domestic and international common stocks, fixed income securities, and cash equivalents. Custodial credit risk is addressed by the policy providing for the engagement of a custodian who accepts possession of securities for safekeeping; collects and disburses income; collects principal of sold, matured, or called items; and provides periodic accounting to the pension board. Asset allocation guideline for the plan is as follows: PFPF Retirement Plan Minimum Target Maximum Equities 45% 55% 65% Fixed income 35% 45% 55% The retirement plan addresses credit risk and concentration of credit risk with a policy that prohibits investment of more than 5% of its assets in the securities of any one issuer with the exception of U.S. government. Policy further prohibits investment of more than 20% in any one market sector. No more than 10% of corporate debt securities in the fixed income portfolio may be rated below-investment grade. Commercial paper must be rated A1, P1. Interest rate risk is addressed by the policy requiring the plan manager(s) to maintain both diversification and a predictable and dependent source of current income. Fixed income investments are flexibly allocated among maturities of different lengths. Private Purpose Trust The private purpose trust does not have a formal investment policy. The City established the trust in accordance with Kentucky Revised Statutes. The trust provides for an investment manager who has full discretion of assets allocated to him subject to the provisions of the trust agreement. The trust invests in domestic and international mutual funds, fixed income securities, U.S. treasury securities, and cash and equivalents. (Continued) - 69 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Capital Assets Capital asset activity for the year ended June 30, 2024, was as follows: Balance Balance Primary Government: July 1, 2023 Additions Deductions June 30, 2024 Capital assets, not being depreciated: Land $10,241,330 $ 26,667 $ - $10,267,997 Construction in progress 8,421,941 7,449,744 6,385,538 9,486,147 Total capital assets, not being depreciated 18,663,271 7,476,411 6,385,538 19,754,144 Capital assets, being depreciated: Land improvements 31,000,590 4,476,785 - 35,477,375 Buildings and improvements 22,750,340 2,736,215 1,673,237 23,813,318 Infrastructure 58,390,919 602,188 - 58,993,107 Equipment 12,192,451 667,840 733,680 12,126,611 Furnishings and fixtures 295,262 - 2,000 293,262 Vehicles 12,134,800 1,355,900 630,207 12,860,493 Subscription-based information technology arrangements 2,921,340 617,169 - 3,538,509 Totals at historical cost 139,685,702 10,456,097 3,039,124 147,102,675 Less accumulated depreciation and amortization: Land improvements 10,027,850 1,425,562 - 11,453,412 Buildings and improvements 15,429,717 308,331 464,789 15,273,259 Infrastructure 36,536,103 827,340 - 37,363,443 Equipment 8,898,613 638,108 712,424 8,824,297 Furnishings and fixtures 241,233 14,808 2,000 254,041 Vehicles 9,139,492 736,413 598,420 9,277,485 Subscription-based information technology arrangements 552,988 650,192 - 1,203,180 Total accumulated depreciation and amortization 80,825,996 4,600,754 1,777,633 83,649,117 Total capital assets, being depreciated, net 58,859,706 5,855,343 1,261,491 63,453,558 PRIMARY GOVERNMENT ACTIVITIES CAPITAL ASSETS, NET $77,522,977 $13,331,754 $ 7,647,029 $83,207,702 Current year deductions of capital assets being depreciated include assets transferred to the business-type funds with historical cost of $26,058 and accumulated depreciation of $26,058. There were no abandoned projects included in deductions of construction-in-progress. (Continued) - 70 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Capital Assets Depreciation and amortization expense was charged to governmental activities as follows: General government: General administration $ 385,515 Cable authority 4,722 Finance 222,832 Planning 1,571 Information systems 82,918 Fleet maintenance 3,325 Total general government 700,883 Public safety: Police 493,009 Fire 122,023 Emergency 911 174,762 Court awards 735 Fleet lease trust 785,936 Total public safety 1,576,465 Public service: Public works 13,631 Engineering 338,125 Total public service 351,756 Parks and recreation 1,145,064 Planning and development 826,586 TOTAL DEPRECIATION AND AMORTIZATION EXPENSE – GOVERNMENTAL ACTIVITIES $4,600,754 Depreciation and amortization expense was charged to business-type activities as follows: Solid Waste Fund $ 658,876 Section Eight Housing 572 TOTAL DEPRECIATION AND AMORTIZATION EXPENSE – BUSINESS-TYPE ACTIVITIES $ 659,448 (Continued) - 71 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Capital Assets Balance Balance Business-type Activities: July 1, 2023 Additions Deductions June 30, 2024 Capital assets, not being depreciated: Land $ 68,886 $ - $ - $ 68,886 Construction in progress 6,330 - 6,330 - Total capital assets, not being depreciated 75,216 - 6,330 68,886 Capital assets, being depreciated: Buildings and improvements 204,063 97,480 - 301,543 Equipment 2,677,274 377,402 119,749 2,934,927 Vehicles 4,340,227 192,557 100,015 4,432,769 Subscription-based information technology arrangements 217,328 - - 217,328 Totals at historical cost 7,438,892 667,439 219,764 7,886,567 Less accumulated depreciation and amortization: Buildings and improvements 106,411 6,578 - 112,989 Equipment 1,720,982 226,385 119,749 1,827,618 Vehicles 3,033,981 378,190 100,015 3,312,156 Subscription-based information technology arrangements 48,295 48,295 - 96,590 Total accumulated depreciation and amortization 4,909,669 659,448 219,764 5,349,353 Total capital assets, being depreciated, net 2,529,223 7,991 - 2,537,214 BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET $ 2,604,439 $ 7,991 $ 6,330 $ 2,606,100 Balance Balance Discretely Presented July 1, 2023 Increases Decreases June 30, 2024 Component Units: Capital assets, not being depreciated: Land & construction in progress $ 1,565,236 $ 2,684,367 $ - $ 4,249,603 Capital assets, being depreciated: Utility plant 126,347,670 5,101,394 240,503 131,208,561 Subscription-based information technology arrangements 227,999 41,627 40,985 228,641 Totals at historical cost 126,575,669 5,143,021 281,488 131,437,202 Less accumulated depreciation and amortization: Utility plant 55,289,081 3,092,063 239,687 58,141,457 Subscription-based information technology arrangements 108,661 79,659 40,985 147,335 Total accumulated depreciation and amortization 55,397,742 3,171,722 280,672 58,288,792 Total capital assets, being depreciated, net 71,177,927 1,971,299 816 73,148,410 COMPONENT UNIT CAPITAL ASSETS, NET $ 72,743,163 $ 4,655,666 $ 816 $ 77,398,013 Depreciation and amortization expense, charged to functions/programs of discretely presented major component units as follows: Paducah Water Works $ 3,171,722 (Continued) - 72 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Deferred Outflows/Inflows of Resources A summary of change in deferred outflows/inflows of resources is as follows: Balance July 1, 2023 Additions Reductions Balance June 30, 2024 Governmental Activities Deferred outflows of resources Deferred charge on refunding $ 88,196 $ - $ (33,364) $ 54,832 Pensions: Deferred pension contributions $ 6,487,353 $ 6,894,413 $ (6,487,353) $ 6,894,413 Differences between employer contributions and proportionate share of contributions 1,686,527 - (741,172) 945,355 Differences between expected and actual experience 1,396,889 2,917,605 (1,512,187) 2,802,307 Difference between projected and actuarial earnings 1,737,255 - (1,737,255) - Pension related deferred outflows $ 11,308,024 $ 9,812,018 $ (10,477,967) $ 10,642,075 Deferred inflows of resources Differences between employer contributions and proportionate share of contributions $ 1,410,262 $ 2,171,312 $ (1,410,262) $ 2,171,312 Differences between expected and actual experience 176,479 - (127,668) 48,811 Change of assumptions - 6,728,246 (1,883,279) 4,844,967 Difference between projected and actuarial earnings - 2,525,291 (1,824,709) 700,582 Pension related deferred inflows $ 1,586,741 $ 11,424,849 $ (5,245,918) $ 7,765,672 Other post-employment benefits (OPEB): Deferred outflows of resources Deferred OPEB contributions $ 1,344,554 $ 408,610 $ (1,344,554) $ 408,610 Differences between employer contributions and proportionate share of contributions 540,765 - (125,245) 415,520 Differences between expected and actual experience 840,325 - (382,985) 457,340 Change of assumptions 3,090,335 332,052 (1,243,386) 2,179,001 Difference between projected and actuarial earnings 708,197 - (708,197) - OPEB related deferred outflows $ 6,524,176 $ 740,662 $ (3,804,367) $ 3,460,471 Deferred inflows of resources Differences between employer contributions and proportionate share of contributions $ 664,437 $ 875,545 $ (664,437) $ 875,545 Difference between expected and actual experience 2,033,428 15,707,092 (3,688,460) 14,052,060 Change of assumptions 3,008,496 458,029 (770,979) 2,695,546 Differences between projected and actuarial earnings - 1,202,727 (828,077) 374,650 OPEB related deferred inflows $ 5,706,361 $ 18,243,393 $ (5,951,953) $ 17,997,801 Other deferred inflows of resources Unavailable revenues – property taxes $ 6,788,049 $ 7,181,165 $ (6,788,049) $ 7,181,165 Unavailable revenues – grants $ 2,226,917 $ - $ (2,226,917) $ - Leases $ 3,146,715 $ - $ (644,531) $ 2,502,184 (Continued) - 73 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Deferred Outflows/Inflows of Resources A summary of change in deferred outflows/inflows of resources is as follows: Balance July 1, 2023 Additions Reductions Balance June 30, 2024 Business-Type Activities Pensions: Deferred outflows of resources Deferred pension contributions $ 243,473 $ 268,058 $ (243,473) $ 268,058 Differences between employer contributions and proportionate share of contributions 27,752 - (15,978) 11,774 Differences between expected and actual experience 3,233 197,732 (72,612) 128,353 Difference between projected and actuarial earnings 99,716 - (99,716) - Pension related deferred outflows $ 374,174 $ 465,790 $ (431,779) $ 408,185 Deferred inflows of resources Differences between employer contributions and proportionate share of contributions $ 50,424 $ - $ (28,790) $ 21,634 Differences between expected and actual contributions 49,125 - (42,388) 6,737 Change of assumptions - 350,067 (122,830) 227,237 Difference between projected and actuarial earnings - 120,014 (86,194) 33,820 Pension related deferred inflows $ 99,549 $ 470,081 $ (280,202) $ 289,428 Other post-employment benefits (OPEB) Deferred outflows of resources Deferred OPEB contributions $ 63,053 $ 17,424 $ (63,053) $ 17,424 Differences between expected and actual experience 83,086 - (45,895) 37,191 Differences between employer contributions and proportionate share of contributions 12,420 - (2,215) 10,205 Change of assumptions 130,546 50,666 (76,228) 104,984 Difference between projected and actuarial earnings 61,661 - (61,661) - OPEB related deferred outflows $ 350,766 $ 68,090 $ (249,052) $ 169,804 Deferred inflows of resources Differences between expected and actual experience $ 197,279 $ 900,137 $ (339,933) $ 757,483 Difference between employer contributions and proportionate share of contributions 28,495 - (11,711) 16,784 Change of assumptions 107,569 - (34,405) 73,164 Difference between projected and actuarial earnings - 52,107 (38,593) 13,514 OPEB related deferred inflows $ 333,343 $ 952,244 $ (424,642) $ 860,945 Arbitrage Rebate Liability The Tax Recovery Act of 1986 established regulations for the rebate of arbitrage earnings to the federal government on certain local government bonds. Issuing governments must calculate and remit annually any rebate due at least every five years. The arbitrage rebate liability is $479,485 as of June 30, 2024, and is included in the bond fund’s accounts payable. (Continued) - 74 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Accounts Payable Payables in the governmental and proprietary funds are composed of payables to vendors and accrued expenditures. Long-Term Liabilities The City’s long-term liabilities are segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. Governmental Activities As of June 30, 2024, the governmental long-term liabilities consisted of the following: General obligation bonds: Current portion $ 2,190,000 Noncurrent portion 25,305,890 TOTAL GENERAL OBLIGATION BOND COSTS, NET OF PREMIUMS AND DISCOUNTS $ 27,495,890 Note payable: Current portion $ 537,607 Noncurrent portion 7,870,970 TOTAL NOTE PAYABLE PAYMENTS $ 8,408,577 Subscription-based information technology arrangements: Current portion $ 741,955 Noncurrent portion 1,706,479 TOTAL SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS $ 2,448,434 Accrued compensated absences: Current portion $ 1,900,810 Noncurrent portion 946,137 TOTAL ACCRUED COMPENSATED ABSENCES $ 2,846,947 Business-type Activities As of June 30, 2024, the long-term liabilities payable from proprietary fund resources consisted of the following: Subscription-based information technology arrangements: Current portion $ 48,753 Noncurrent portion 76,248 TOTAL SUBSCRIPTION-BASED INFORMATION TECHNOLOGY ARRANGEMENTS $ 125,001 Accrued compensated absences: Current portion $ 113,106 Noncurrent portion 30,639 TOTAL ACCRUED COMPENSATED ABSENCES $ 143,745 (Continued) - 75 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities General Obligation Bonds Series 2013A Bond Issue – The City of Paducah issued general obligation bonds of $1,120,000 in September 2013, to finance the municipality pool renovations. Interest rates range from 0.70% to 3.60%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2013B Bond Issue – The City of Paducah issued general obligation taxable bonds of $2,475,000 in September 2013, to finance a portion of the costs of the construction of improvements to an industrial/distribution facility and a portion of the costs of the acquisition, construction, installation and equipping of an approximately 30,000 square foot building for the economic development. Interest rates range from 0.60% to 4.00%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2014A Bond Issue – The City of Paducah issued general obligation refunding bonds of $5,460,000 in May 2014 with interest rates ranging from 2.00% to 3.50%, to refund $5,545,000 of outstanding 2010 series bonds issued to finance several public improvement projects with interest rates ranging from 1.00% to 5.50%. These bonds are required to be fully paid within 16 years from the date of issue and are backed by the full faith and credit of the City. Series 2014B Bond Issue – The City of Paducah issued general obligation refunding bonds of $4,225,000 in November 2014 with interest rate of 2.55%, to advance refund $3,845,000 of outstanding 2005 series bonds issued to finance the police and firefighter's pension fund estimated actuary liability. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2018A Bond Issue – The City of Paducah issued general obligation bonds of $2,700,000 in August 2018, to finance 911 Equipment and Riverfront development. Interest rates are fixed ranging from 3.125% to 5.0%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2018B Bond Issue – The City of Paducah issued general obligation bonds of $2,670,000 in August 2018, to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 Lease agreements issued to finance several public improvement projects. Interest rates are fixed ranging from 4.0% to 5.0%. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2020A Bond Issue – The City of Paducah issued general obligation bonds of $20,520,000 in February 2020, to finance a Municipal Sports and Recreational Facility jointly with McCracken County, Kentucky. These assets will be donated to the McCracken County Sports Tourism Commission. Interest rates are fixed ranging from 2.125% to 4.0%. These bonds are required to be fully paid within 20 years from the date of issue and are backed by the full faith and credit of the City. Series 2020B Bond Issue – The City of Paducah issued general obligation refunding bonds of $3,020,000 in October 2020 with interest rate of 3.00%, to advance refund $3,140,000 of outstanding 2010B series bonds issued to refinance 2001 Bond Issue. These bonds are required to be fully paid within 6 years from the date of issue and are backed by the full faith and credit of the City. The reacquisition price exceeded the net carrying amount of the old debt by $47,734. This amount was deferred and amortized over the remaining life of the refunded debt. This advance refunding was undertaken to reduce future total debt service payments over the next 6 years by $190,533 with a resulting net economic gain of $167,772. (Continued) - 76 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Notes Payable – Direct Borrowing Kentucky Association of Counties – The County of McCracken, Kentucky entered into an agreement in the amount of $5,000,000 in March 2009, with the Kentucky Association of Counties to assist with the Julian Carroll Convention Center. The interest rate is variable. The note is required to be fully paid within 20 years from the date of issue and is backed jointly by the full faith and credit of the City and the County. While the note is issued by the County, 50% of the principal amount of the note was issued on behalf of the City which intends to participate on an equal basis with the County in accordance with an Interlocal Cooperation Agreement between the City and McCracken County, Kentucky on February 23, 2009 and are backed by the full faith and credit of the City. Murray State University Paducah Agreement – On November 22, 2011, the City entered into a general obligation note in the amount of $2,674,093 with McCracken County to finance the construction of an educational facility to be occupied by Murray State University. On January 22, 2022, McCracken County issued general obligation refunding bonds to advance refund the original 2011 series bonds issued. The City’s portion of this amount was $1,330,614. The reacquisition price exceeded the net carrying amount of the City’s old debt by $10,910. This amount was deferred and amortized over the remaining life of the refunded debt. This advance refunding reduced the City’s future total debt service payments to McCracken County over the next 10 years by $140,101 with a resulting net economic gain of $132,010. The note matures on December 1, 2031 and has interest rates of 4.0% and are backed by the full faith and credit of the City. Community Financial Services Bank – On January 24, 2017, the City entered into an agreement in the amount of $3,000,000 on behalf of the County of McCracken, Kentucky to finance improvements to the Julian Carroll Convention Center. The agreement matures on January 24, 2032 with an interest rate of 1.98% and is backed by the full faith and credit of the City. Kentucky Infrastructure Authority (KIA) – On July 1, 2018, the City entered into an agreement with KIA to obtain up to $4,610,667 for rehabilitation of Pump Station #2. The agreement contains principal forgiveness in the amount of 50% but not to exceed $1,300,000. The interest rate is fixed at 0.50%. This agreement is required to be fully paid within 20 years from the date of initiation of operation for the project and is backed by the full faith and credit of the City. (Continued) - 77 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Changes in Long-Term Liabilities The following is a summary of changes in long-term debt for the year ended June 30, 2024: Beginning Ending Due within Type of Liability: Balance Additions Reductions Balance One Year Governmental activities: General obligation bonds: Recreation Facility $20,520,000 $ - $ (260,000) $ 20,260,000 $ 475,000 Refinanced Pension 1,080,000 - (470,000) 610,000 430,000 Refinanced Convention Center 1,560,000 - (505,000) 1,055,000 520,000 Public Pool Renovations 500,000 - (75,000) 425,000 80,000 Economic Development 1,125,000 - (1,125,000) - - Refinancing Public Projects 2,570,000 - (350,000) 2,220,000 345,000 Riverfront and 911 Equipment 2,070,000 - (175,000) 1,895,000 185,000 Refunding Floodwall issue 1,000,000 - (190,000) 810,000 155,000 Premiums 389,306 - (107,723) 281,583 - Discounts (73,170) - 12,477 (60,693) - Total bonds payable 30,741,136 - (3,245,246) 27,495,890 2,190,000 Notes payable – direct borrowing: Kentucky Infrastructure Authority 4,019,377 - (191,577) 3,827,800 194,515 Kentucky Association of Counties 976,837 - (167,789) 809,048 171,004 Murray State University Agreement 1,220,205 - (114,916) 1,105,289 119,606 CFSB Agreement 2,716,997 - (50,557) 2,666,440 52,482 Total notes payable 8,933,416 - (524,839) 8,408,577 537,607 Subscription-based information technology arrangements 2,472,702 617,170 (641,438) 2,448,434 741,955 Accrued compensated absences 2,722,033 278,094 (153,180) 2,846,947 1,900,810 TOTAL GENERAL LONG- TERM LIABILITIES $44,869,287 $ 895,264 $ (4,564,703) $ 41,199,848 $ 5,370,372 Business-type activities: Subscription-based information technology arrangements $ 172,155 $ - $ (47,154) $ 125,001 $ 48,753 Accrued compensated absences 105,755 43,211 (5,221) 143,745 113,106 TOTAL BUSINESS LONG- TERM LIABILITIES $ 277,910 $ 43,211 $ (52,375) $ 268,746 $ 161,859 (Continued) - 78 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Changes in Long-Term Liabilities (1) The calculation to reconcile amounts in this schedule to the "net investment in capital assets" for governmental activities is: Net Capital Assets $83,207,702 Less: 19.75% of the outstanding 2020B General obligation bonds $ (208,362) Net of the County's portion 104,181 (104,181) 78% of the outstanding 2014A General obligation bonds (1,731,600) 100% of the outstanding 2013A General obligation bonds (425,000) 100% of the outstanding 2018A General obligation bonds (1,895,000) 100% of the outstanding 2018B General obligation bonds (810,000) 9.30% of the outstanding 2020A General obligation bonds (1,884,180) 100% of the outstanding KY Infrastructure Authority (3,827,800) 100% of the subscription-based information technology arrangements (2,448,434) Net investment in capital assets $70,081,507 Annual Debt Service Requirements The annual debt service requirements to maturity for bonds and notes as of June 30, 2024, are as follows: Year Ending June 30 Principal Interest 2025 $ 2,803,593 $ 889,563 2026 2,864,519 806,239 2027 2,738,815 713,209 2028 2,814,094 624,057 2029 2,884,925 535,448 2030-2034 10,468,222 1,834,224 2035-2039 8,845,132 768,115 2040-2044 2,485,167 149,556 TOTALS $35,904,467 $ 6,320,411 (Continued) - 79 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Net Pension/OPEB Liabilities Typically, the net pension and other post employment benefits liabilities have been paid by the General Fund, Section Eight Housing Fund, Solid Waste Fund, and Fleet Maintenance Fund. Accrued Compensated Absences Compensated absence obligations arise from amounts due to City employees for vested amounts of vacation pay and sick pay which will be payable in the future. Typically, the compensated absence obligations have been paid by the General Fund, Emergency Communication Service Fund, Section Eight Housing Fund, Solid Waste Fund, and Fleet Maintenance Fund. Amounts accrued at June 30, 2024 are as follows: Governmental Business-type Activities Activities Accrued sick leave $ 861,104 $ 95,391 Accrued vacation leave 1,985,843 48,354 Totals 2,846,947 143,745 Less current portion (1,900,810) (113,106) LONG-TERM PORTION $ 946,137 $ 30,639 Termination Benefits Eleven employees, through employment contracts, are entitled to certain termination benefits upon involuntary termination of employment by the City Commission. These benefits include provision for salary payments for three to six months, as well as certain health, life, dental, and disability insurance coverage for same period of time. As these benefits are only provided for involuntary termination of employment, no provision has been made for these benefits. The City funds these benefits on a pay-as-you-go basis in the period incurred. Termination benefits of $94,432 were paid for the year ended June 30, 2024. In addition, qualified participants in the County Employee's Retirement System (CERS), under certain circumstances are eligible to convert accrued sick pay benefits into additional credit for years of service upon retirement. Costs and notification of payment for these benefits are not calculated by the CERS actuary until a qualified participant submits an application for retirement benefits. Accordingly, no provision has been made for these benefits; and the City funds these benefits in the period of notification for payment by the CERS. For the year ended June 30, 2024, $170,620 of payments was made for these benefits. Landfill Closure and Post-Closure Costs The County of McCracken, Kentucky (County) closed the local landfill to the public on June 30, 1995. The County must comply with established state and federal landfill closure procedures and must perform maintenance and monitoring procedures at the site for thirty years after closure. The 30-year period will begin upon approval from the Commonwealth of Kentucky regarding the environmental condition of the landfill site. As of June 30, 2024, approval had not yet been granted. The County estimated post-closure care costs totaling $4,125,000 or $125,000 per year plus 10% for inflation. Actual costs may be higher due to inflation, changes in technology, or changes in regulations. In the year ending June 30, 2001, the City entered into an inter-local agreement to share equally the costs for post-closure costs and, accordingly, has recorded a long-term liability for 50% of the estimated closure expense. It is anticipated that post-closure costs will be paid out of the Solid Waste Fund to the extent that funds are available with any excess costs being funded using long-term borrowing. (Continued) - 80 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 3 – Detail Notes on Transaction Classes/Accounts: Interfund Transactions and Balances Interfund transfers during the year ended June 30, 2024, were as follows: Interfund Interfund Governmental Funds: Transfers In Transfers Out General Fund $ 444,671 $6,804,941 Special Revenue Investment Fund 553,178 5,336,563 Special Revenue Bond Fund - 2,003,041 Capital Project Fund 7,754,054 557,849 Debt Service Fund 3,824,923 - Nonmajor Governmental Funds 2,488,985 152,294 Internal Service Funds 108,877 - Proprietary Funds: Solid Waste - 320,000 Nonmajor Proprietary Funds - - TOTALS $15,174,688 $15,174,688 Transfers are used to (a) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to (b) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Significant transfers from the general fund transfers include $893,929 for E911 support; $2,159,792 for debt service; and $3,520,736 for capital projects. Significant transfers from the special revenue investment fund include $1,500,000 for municipal aid street resurfacing program; $1,522,838 for debt service; and $2,193,725 for capital projects. Significant transfers from the solid waste fund include $320,000 for general fund operations support. Due To/From Balances Due to/from balances used to cover current operating expenses were as follows as of June 30, 2024: Due To Due From General Fund $1,576,337 $ 979,637 Special Revenue Investment Fund - 1,576,337 Small Grant Fund 78,282 - Bond Fund 901,355 - TOTALS $2,555,974 $2,555,974 Note 4 – Pension Plans - City of Paducah: The City provides retirement benefits to its employees through two pension funds. One of the funds is a single-employer defined benefit funds and is administered by the City. This fund is a Police and Firefighters’ Pension Fund (PFPF). The other pension is a multi-employer public employee retirement fund administered by the Kentucky County Employees Retirement System (CERS). The City also participates in three deferred compensation plans. Information regarding these plans follows: (Continued) - 81 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Plan description - The City is a participant in the County Employees Retirement System (CERS), a cost-sharing multiple-employer defined benefit pension plan administered by the Kentucky Retirement System, an agency of the Commonwealth of Kentucky. Under the provisions of the Kentucky Revised Statute (“KRS”) Section 61.645, the Board of Trustees of the Kentucky Retirement System administers CERS and has the authority to establish and amend benefit provisions. The Kentucky Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained from http://kyret.ky.gov/. Benefits provided - CERS provides retirement, health insurance, death and disability benefits to Plan employees and beneficiaries. Employees are vested in the plan after five years’ service. For retirement purposes, non-hazardous and hazardous employees are grouped into three tiers, based on hire date: Non-hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 27 years of service or 65 years old Reduced retirement Minimum 5 years of service and 55 years old Minimum 25 years of service and any age Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Minimum 10 years of service and 60 years old Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Not available Hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 20 years of service and any age Minimum 5 years of service and 55 years old Reduced retirement Minimum 15 years of service and 50 years old Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Minimum 15 years of service and 50 years old Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Not available (Continued) - 82 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Cost of living adjustments are provided at the discretion of the General Assembly. Retirements is based on a factor of the number of years’ service and hire date multiplied by the average of the highest five years’ earnings. Reduced benefits are based on factors of both of these components. Participating employees become eligible to receive the health insurance benefit after at least 180 months of service. Death benefits are provided for both death after retirement and death prior to retirement. Death benefits after retirement are $5,000 in lump sum. Five years’ service is required for death benefits prior to retirement and the employee must have suffered a duty-related death. The decedent’s beneficiary will receive the higher of the normal death benefit and $10,000 plus 25% of the decedent’s monthly final rate of pay and any dependent child will receive 10% of the decedent’s monthly final rate of pay up to 40% for all dependent children. Five years’ service is required for non-service related disability benefits. Plan Funding – State statute requires active members to contribute % of creditable compensation based on the tier: Non-hazardous Hazardous Required Contribution Required Contribution Tier 1 5% Tier 1 8% Tier 2 5% plus 1% for insurance Tier 2 8% plus 1% for insurance Tier 3 5% plus 1% for insurance Tier 3 8% plus 1% for insurance Employers contribute at the rate determined by the CERS Board to be necessary for the actuarial soundness of the system, as required by KRS 61.565 and 61.752. The City’s required contribution rate was 23.34% for non-hazardous employees and 41.11% for hazardous employees for the year ended June 30, 2024. Non-hazardous and hazardous employee plans are administered separately. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2024, the City reported a liability for its proportionate share of the net pension liability for CERS. The amount recognized by the City as its proportionate share of the net pension liability that was associated with the City was as follows: City’s non-hazardous proportionate share of the CERS net pension liability $ 20,442,739 City’s hazardous proportionate share of the CERS net pension liability 40,956,850 Total CERS net pension liability associated with the City $ 61,399,589 The net pension liability for each plan was measured as of June 30, 2023, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. (Continued) - 83 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System The City’s proportion of the net pension liability for CERS was based on the actual liability of the employees and former employees relative to the total liability of the System as determined by the actuary. At June 30, 2024, the City’s non-hazardous proportion was 0.318596% percent and hazardous proportion was 1.5192% percent. For the year ended June 30, 2024, the City recognized pension expense of $4,571,257 ($1,232,310 for non-hazardous and $3,338,947 for hazardous) related to CERS pension plans. At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to the CERS pension plans from the following sources: Non-hazardous Hazardous Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $ 1,058,281 $ 55,549 $ 1,872,379 $ - Changes in assumptions - 1,873,591 - 3,198,613 Net difference between projected and actual earnings on pension plan investments - 278,850 - 410,874 Changes in proportion and differences between City contributions and proportionate share of contributions 97,084 178,374 860,046 2,014,572 1,155,365 2,386,364 2,732,425 5,624,059 City contributions subsequent to the measurement date 2,355,600 - 4,806,870 - Total $ 3,510,965 $ 2,386,364 $ 7,539,295 $ 5,624,059 The City reported $7,162,470 as deferred outflows of resources related to pensions resulting from City’s non-hazardous and hazardous contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in pension expense as follows: Fiscal Year Ending June 30 Non- Hazardous Hazardous 2025 $ (761,714) $ (520,858) 2026 (727,744) (1,492,903) 2027 456,365 (319,098) 2028 (197,906) (558,775) (Continued) - 84 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Actuarial assumptions - The total pension liability in the June 30, 2024 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Non-Hazardous Hazardous Inflation 2.30% 2.30% Projected salary increases 3.30%-10.30% 3.55%-19.05% Investment rate of return, net of investment expense & inflation 6.25% 6.25% For CERS, mortality rates for the period after service retirement are according to the MP-2014 mortality improvement scale using a base year of 2010 for all active and retired employees and beneficiaries. The MP-2014 mortality improvement scale using a base year of 2019 set forward four years for male and female is used for the period after disability retirement. The actuarial assumptions used were based on the results of an actuarial experience study for the period July 1, 2013 – June 30, 2018. For CERS, the long-term expected return on plan assets is reviewed as part of the regular experience studies prepared every five years. The most recent analysis, performed for the period covering fiscal years 2013 through 2018, is outlined in a report dated April 18, 2019. 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 a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed by the investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The capital market assumptions developed by the investment consultant are intended for use over a 10-year horizon and may not be useful in setting the long-term rate of return for funding pension plans which covers a longer timeframe. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years. (Continued) - 85 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System The target allocation and best estimates of arithmetic real rates of return for each major asset class, as provided by CERS’s investment consultant, are summarized in the following table: Asset Class Target Allocation Long-Term Expected Real Rate of Return Public Equity 50.00% 5.90% Private Equity 10.00% 11.73% Specialty Credit 10.00% 3.65% Core Fixed Income 10.00% 2.45% Real Estate 7.00% 4.99% Real Return 13.00% 5.15% Cash 0.00% 1.39% Total 100.00% Discount rate - The discount rate used to measure the total pension liability was 6.50%. The projection of cash flows used to determine the discount rate assumed that contributions from plan employees and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment return of 6.25%. The long-term investment rate of return was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of CERS proportionate share of net pension liability to changes in the discount rate - The following table presents the net pension liability of the City, calculated using the discount rates selected by the pension system, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: 1% Decrease Current Discount Rate 1% Increase CERS 5.50% 6.50% 7.50% Non-hazardous’ proportionate share of net pension liability $25,810,193 $20,442,739 $15,982,183 Hazardous’ proportionate share of net pension liability $51,717,799 $40,956,850 $32,167,597 (Continued) - 86 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Pension plan fiduciary net position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued financial report of the CERS. Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) Basis of Accounting – The financial statements are prepared using the accrual basis of accounting. Plan member and employer contributions are recognized in the period in which the contributions are due, pursuant to formal commitments. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Administration – The City of Paducah Police and Firefighters’ Pension Fund Board is responsible for establishing or amending contribution rates and requirements for their plan. Administrative Costs – Administrative costs are funded from investment earnings. Valuation of Investments – Investments are reported at fair value. Investments are composed of securities valued at current market prices. See investment policies in Note 3 for the pension trusts. Plan Administration – Management of the PFPF, as authorized by Kentucky Revised Statute 95.869, is vested in the PFPF Board of Trustees, which consist of the Mayor, City Treasurer, a retired firefighter and a retired police officer. Plan Description: PFPF is a single-employer defined benefit plan. On August 1, 1988, the plan was closed to new entrants and current active duty police and firemen of the City were given a choice of remaining in this plan or transferring into the CERS. Effective August 1, 1988, the PFPF covered 21 active-duty members. There are no active participants in the plan at June 30, 2024. All other active-duty members elected coverage under CERS. PFPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. Membership Information: Membership consisted of the following at June 30, 2024: PFPF Active participants 0 Beneficiaries 16 Retired participants 13 TOTAL PARTICIPANTS 29 The plan is closed to new members. (Continued) - 87 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) Benefits provided: PFPF provides retirement, disability, and death benefits. These benefits are determined by Kentucky Revised Statutes (KRS) sections 95.851 to 95.884. Retirement benefits for general plan members are 2½% of average salary times years of service up to and including 30 years. The maximum is 75% of average salary. Average salary is the highest average salary of the member for any 3 consecutive years of service. Retirement allowed any time after attainment of age 50, provided that at least 20 years of service have been completed. Occupational disability benefits equal to 70% of the members’ final rate of pay. Non-occupational disability benefits are available after completing 10 years of service and are determined in a similar manner as retirement benefits subject to a maximum of 50% of average salary. Surviving beneficiaries may receive death benefits per the terms of the plan. Benefit terms provide for an annual cost-of-living adjustment up to 5% a year provided the adjustment is supportable on an actuarially sound basis. Kentucky Revised Statute 95.859(2) provides that the widow’s minimum benefit shall be increased by the same percentage as the increase in Social Security benefits, not to exceed 5%. Funding policy: Since there are only retired employees and beneficiaries receiving benefits, the City expects little or no additional pension obligation. The City has pledged to maintain benefits and the financial soundness of the plan by appropriations from the General Fund, as necessary. Changes in PFPF’s Net Pension Liability is as follows: Total Pension Liability Plan Net Position Net Pension Liability (a) (b) (a) – (b) Balance – June 30, 2023 $ 6,130,885 $ 3,682,961 $ 2,447,924 Service cost - - - Interest expense 373,338 - 373,338 Experience losses (gains) (41,299) - (41,299) Change in assumptions - - - Contributions – City - 427,908 (427,908) Contributions – Members - - - Investment income - 446,047 (446,047) Benefits paid (774,453) (774,453) - Plan administrative expenses - (41,135) 41,135 Net change (442,414) 58,367 (500,781) Balance – June 30, 2024 $ 5,688,471 $ 3,741,328 $ 1,947,143 Plan net position as a percentage of the total pension liability 65.77% For the year ended June 30, 2024, the City recognized pension expense of $168,431 for PFPF. (Continued) - 88 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to the PFPF pension plan from the following sources: PFPF Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $ - $ - Changes in assumptions - - Net difference between projected and actual earnings on pension plan investments - 44,678 Total $ - $ 44,678 Amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in pension expense as follows: Year Ending June 30 PFPF 2025 $ (49,395) 2026 116,418 2027 (70,899) 2028 (40,802) The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits. Actuarial assumption PFPF Valuation date 7/1/24 Actuarial cost method Entry age normal Amortization method Level dollar closed Remaining amortization period 9 Years Asset valuation method Fair value (Continued) - 89 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) Actuarial assumptions: Investment rate of return 6.50% (3) Projected salary increases (2) Inflation rates adjustments (2) (1) The Aggregate Method does not identify or separately amortize the unfunded actuarial liabilities. Information about funded status and funding progress is presented using the entry age actuarial cost method for that purpose; and, that information presented is intended to serve as a surrogate for the funding progress of the plan. (2) The plan has no active participants. The pension cost for each year is determined as an amortization of the unfunded actuarial accrued liability over the lesser of 10 years or the weighted average of expected term of payment of plan benefits. (3) 6.50%, effective July 1, 2020 Post-retirement mortality – The mortality rates for the plans were based as follows: 1971 Group annuity mortality (GAM) table UP-1984 table set forward 5 years for participants retiring due to disability Rate of return – Investment return is anticipated to be the major source of additional funds for payment of benefits. The assumed rate of return is a long-term average. The fund’s rate of return is determined primarily by the asset allocation – the classes in which it is invested, and the performance of the associated markets. For the July 1, 2024 PFPF plan year, the assumed rate of return was 6.50%. Discount Rate – The projection of cash flows used to determine the discount rate assumed that the plan member contributions will be made at the current contribution rate and that City contributions will be made equal to the difference between actuarially determined contribution and the member contribution. The pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plans investment was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate used to measure the total pension liability as of July 1, 2024 was 6.50%. Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the City’s plans would be if it were calculated using a discount rate that is 1% point lower or 1% point higher than the current rate: 1% Current 1% Decrease Rate Increase PFPF Net Pension Liability $ 2,325,547 $ 1,947,143 $ 1,611,881 (Continued) - 90 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) Financial Reports: The Police and Firefighters' Pension Fund (PFPF) plan does not issue stand-alone financial reports. The Plan’s financial statements are as follows: STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUND JUNE 30, 2024 PFPF Assets Cash and cash equivalents $ - Receivables: Interest - Other 3,639 Investments at fair value Money market accounts 98,822 Common stock 1,423,264 Mutual funds 2,215,778 Total assets 3,741,503 Liabilities Vouchers and accounts payable 175 Net Position Held in trust for pension benefits $ 3,741,328 (Continued) - 91 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 4 – Pension Plans - City of Paducah: Single Employer Defined Benefit Fund - Police and Firefighters' Pension Fund (PFPF) STATEMENT OF CHANGES IN NET POSITION PENSION TRUST FUND JUNE 30, 2024 PFPF Additions: Contributions Employer $ 427,908 Plan members - Total contributions 427,908 Investments earnings: Net change in fair value of investments 344,255 Interest and dividends 101,792 Net investment earnings 446,047 Total additions 873,955 Deductions: Benefits 774,453 Administrative expenses 41,134 Total deductions 815,587 Change in net position 58,368 Net position - beginning 3,682,960 Net position - ending $ 3,741,328 Summary of Pension Expense: As of June 30, 2024, the City’s pension expense associated with the two pension plans are summarized as follows: Governmental Activities Business-Type Activities Total CERS – Non-hazardous $ 1,082,850 $ 149,460 $ 1,232,310 CERS – Hazardous 3,338,947 - 3,338,947 PFPF 168,431 - 168,431 Total $ 4,590,228 $ 149,460 $ 4,739,688 (Continued) - 92 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 5 – Other Postemployment Benefits (OPEB): CERS Medical Insurance Plan Plan description – the City contributes to the Kentucky Retirement Systems Insurance fund (Insurance Fund), a cost-sharing multiple-employer defined benefit post-employment health care plan administered by the Kentucky Retirement Systems (KRS). The Insurance Fund was established to provide hospital and medical insurance for members for receiving benefits from the Kentucky Employees Retirement Systems (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). The City participates in the County Employees Retirement System (CERS). CERS non-hazardous and hazardous employee plans are administered separately. Benefits provided – the Insurance Fund pays a prescribed contribution for whole or partial payments of required premiums to purchase hospital and medical insurance, based on years of service, for retirees and certain eligible beneficiaries. The authority to establish and amend benefit provisions rests with the Kentucky General Assembly. KRS issues a publicly available financial report that can obtained at www.kyret.ky.gov. OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs Contributions – per Kentucky Revised Statues 78.545 (33), contribution requirements are established and may be amended by the KRS Board. The City was required to contribute at actuarially determined rates of 0.00% of non-hazardous covered payroll and 2.58% of hazardous covered payroll for the fiscal year ended June 30, 2024. At June 30, 2024, the City reported a liability for its proportionate share of the net OPEB liability for the CERS Insurance Trust. The collective net OPEB liability was measured as of June 30, 2023, and the total OPEB liability used to calculate the collective net OPEB liability was based on a projection of the City’s long-term share of contributions to the OPEB plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2023, the City’s non-hazardous proportion was 0.38583 percent and hazardous proportion was 1.51823 percent. The amount recognized by the City as its proportionate share of the OPEB liability that was associated with the District was as follows: City’s non-hazardous proportionate share of the CERS medical insurance liability (asset) $ (439,857) City’s hazardous proportionate share of the CERS medical insurance liability (asset) 2,077,282 Total CERS medical insurance liability (asset) associated with the City $ 1,637,425 (Continued) - 93 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 5 – Other Postemployment Benefits (OPEB): For the year ended June 30, 2024, the City recognized an OPEB expense of $(1,756,627) ($882,153 non- hazardous and $874,474 hazardous, respectively). At June 30, 2024, the City reported deferred outflows of resources and deferred inflows of resources related to OPEBs from the following sources: Non-hazardous Hazardous Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $ 306,646 $ 6,245,530 $ 187,885 $ 8,564,013 Changes in assumptions 865,607 603,242 1,418,378 2,165,468 Net difference between projected and actual earnings on pension plan investments - 102,083 - 286,081 Changes in proportion and differences between City contributions and proportionate share of contributions 84,144 138,384 341,581 753,945 1,256,397 7,089,239 1,947,844 11,769,507 City contributions subsequent to the measurement date 143,667 - 282,367 - Total $ 1,400,064 $ 7,089,239 $ 2,230,211 $11,769,507 The City reported $426,034, including implicit subsidies of $130,385, as deferred outflows of resources related to OPEB resulting from City non-hazardous and hazardous contributions subsequent to the measurement date that will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2025. Other amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in OPEB expense as follows: Fiscal Year Ending June 30 Non- Hazardous Hazardous 2025 $ (1,447,728) $ (1,921,216) 2026 (1,787,301) (2,183,688) 2027 (1,399,973) (1,677,376) 2028 (1,197,840) (2,486,877) 2029 - (1,552,506) (Continued) - 94 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 5 – Other Postemployment Benefits (OPEB): Actuarial assumptions – The total OPEB liability in the June 30, 2023 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Investment rate of return 6.25% Projected salary increases 3.30% - 10.30%, varies by service for non-hazardous 3.55% - 19.05%, varies by service for hazardous Inflation rate 2.30% Real wage growth 2.00% Healthcare cost trend rates Under 65 6.30% at January 1, 2023 decreasing to an ultimate rate of 4.05% over a period of 13 years Ages 65 and Older 6.30% at January 1, 2023 decreasing to an ultimate rate of 4.05% over a period of 13 years Municipal Bond Index Rate 3.86% Discount Rate 5.93% and 5.97% for non-hazardous and hazardous Mortality rates used for active members is PUB-2010 General (non-hazardous) and Public Safety (hazardous) Mortality Tables projected with ultimate rates from the MP-2014 mortality scale using a base year of 2010. For healthy retired members and beneficiaries, system-specific mortality table based on mortality experience from 2013-2018 projected with the ultimate rates from MP-2014 mortality improvement scale using a base year of 2019. The PUB-2010 Disabled Mortality Table projected with a 4-year set-forward for both males and females with ultimate rates from the MP-2014 mortality scale using a base year of 2010 is used for the period after disability retirement. The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class, as provided by TRS’s investment consultant, are summarized in the following table: Asset Class Target Allocation Long-Term Expected Real Rate of Return Public Equity 50.00% 5.90% Private Equity 10.00% 11.73% Specialty Credit 10.00% 3.65% Core Fixed Income 10.00% 2.45% Real Estate 7.00% 4.99% Real Return 13.00% 5.15% Cash 0.00% 1.39% Total 100.00% (Continued) - 95 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 5 – Other Postemployment Benefits (OPEB): Discount rate - The discount rate used to measure the total OPEB liability was 5.93% for non-hazardous and 5.97% for hazardous. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rates and the employer contributions will be made at statutorily required rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. The following table presents the City’s proportionate share of the collective net OPEB liability (asset) of the System, calculated using the discount rate of 5.93% for non-hazardous and 5.97% for hazardous, as well as what the City’s proportionate share of the collective net OPEB liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (4.93% for non-hazardous and 4.97% for hazardous) or 1-percentage-point higher (6.93% for non-hazardous and 6.97% for hazardous) than the current rate: 1% Decrease Current Discount Rate 1% Increase CERS Non-hazardous’ proportionate share of net OPEB liability (asset) $ 825,443 $ (439,857) $(1,499,392) Hazardous’ proportionate share of net OPEB liability (asset) $ 5,253,479 $ 2,077,282 $ (569,337) Sensitivity of the City’s proportionate share of the collective net OPEB liability to changes in the healthcare cost trend rates – The following presents the City’s proportionate share of the collective net OPEB liability (asset), as well as what the City’s proportionate share of the collective net OPEB liability (asset) would be if it were calculated using healthcare cost trend rates that were 1-percentage-point lower or 1-percentage-point higher than the current healthcare cost trend rates: 1% Decrease Current Discount Rate 1% Increase Non-hazardous’ proportionate share of net OPEB liability (asset) $(1,409,818) $ (439,857) $ 751,649 Hazardous’ proportionate share of net OPEB liability (asset) $ 23,668 $ 2,077,282 $ 4,557,445 Note 6 – Appropriations Deficit: No departments that adopted budgets annually had excess expenditures over appropriations for the fiscal year ended June 30, 2024. (Continued) - 96 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 7 – Component Unit Long-Term Liabilities: Long-term liabilities of the discretely presented component units consist of the following at June 30, 2024: Bond Payable, Kentucky Rural Water Finance Corp – Paducah Water Works In connection with a merger with West McCracken Water District, Paducah Water Works assumed a bond with interest rates ranging from 2.3% to 4.8% with annual principal and semi-annual interest payments. Note Payable, Kentucky Infrastructure Authority (KIA) – Paducah Water Works In connection with a merger with Reidland Water District, Paducah Water Works (PWW) assumed a loan from the KIA with interest rate of 1.00%, with a .25% annual service fee. In addition, PWW has a note with KIA for a 24” Water Main with interest rate of 1.75% and a .25% annual service fee. The annual requirements to amortize the outstanding notes as of June 30, 2024, are as follows: .25% Year Ending Service R & M June 30 Principal Interest Fee Reserve Total 2025 $ 488,503 $ 53,998 $ 10,526 $ 11,200 $ 564,227 2026 494,242 48,260 9,302 11,200 563,004 2027 500,054 42,448 8,062 11,200 561,764 2028 505,939 36,563 6,810 - 549,312 2029 511,898 30,603 5,541 - 548,042 2030-2034 1,426,670 76,172 11,952 - 1,514,794 2035-2037 405,336 12,504 1,787 - 419,627 TOTALS $4,332,642 $300,548 $ 53,980 $ 33,600 $4,720,770 The calculation to reconcile amounts in this schedule to the “net investment in capital assets” for the discretely presented component units is: Net Capital Assets $77,398,013 Less: 100% of lease and subscription-based information technology liabilities (32,500) 100% of the outstanding KY Infrastructure Authority notes payable (4,332,642) Net investment in capital assets $73,032,871 Note 8 – Commitments and Contingencies: Grant Contingencies Amounts received from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. (Continued) - 97 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 8 – Commitments and Contingencies: Construction Commitments The City has various on-going contracts for construction, renovations, paving materials, equipment, and labor. As of June 30, 2024, the most significant construction commitments were as follows: Cumulative Estimated Costs Incurred Total Costs Comprehensive Stormwater Master Plan Study $ 975,891 $ 1,047,040 24th/25th Street Improvement 2,218,170 2,262,843 Floodwall Rehab 7,865,134 8,034,584 Riverfront Development 2,135,370 2,692,865 $13,194,565 $14,037,332 Note 9 – Risk Management and Litigation: The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage from commercial insurance companies to handle the risk of loss. There have been no decreases in insurance coverage from the prior year. There have been no settlements in excess of insurance coverage during the prior three years. An analysis of claims activity is presented below: Current Year Beginning of Claims and Actual Balance at Fiscal Year Changes in Claim Fiscal Liability Estimates Payments Year End 2021 - 2022 $ - $ 35,296 $ 35,296 $ - 2022 - 2023 - 23,777 23,777 - 2023 - 2024 - 87,077 87,077 - During fiscal year 1999, the City established the Health Insurance Fund (an internal service fund) to account for and finance employee medical costs relating to the City’s employee self-insured medical benefit plan that went into effect as of July 1, 1999. The health insurance provides coverage for up to $175,000 for each covered individual. The City purchases commercial insurance (reinsurance) for claims in excess of the coverage provided per individual or in excess of the maximum aggregate limit, which is based on a formula that considers group census and anticipated claims. As of June 30, 2024, that amount was $2,910,362. Self-insurance costs are accrued based on claims reported within 90 days of the balance sheet date as well as an estimated liability for claims incurred but not reported. The total accrued liability for self-insurance costs was $151,966 as of June 30, 2024. The analysis of claims activity is presented below: Current Year Beginning of Claims and Actual Balance at Fiscal Year Changes in Claim Fiscal Liability Estimates Payments Year End 2021 - 2022 $ 230,715 $ 2,494,591 $2,506,114 $ 219,192 2022 - 2023 219,192 2,617,451 2,567,677 268,966 2023 - 2024 268,966 2,419,599 2,536,599 151,966 Several lawsuits are pending involving citizens’ complaints and the City of Paducah. Various allegations have been made seeking damages which the legal counsel of the City, along with its management, has determined to be immaterial to the City’s financial position. (Continued) - 98 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 10 – Leases and Subscription-Based Information Technology Arrangements: Leases The City is leasing land and building to the Luther F. Carson Four Rivers Center for the Performing Arts (Center) for a primary term of 99 years. No rental revenue is collected from this lease. The rental for the primary term of the lease is for the construction and use of the performing arts center. The building is deemed the property of the City; however, for financial reporting, the building is reported with the Luther F. Carson Four Rivers Center financial records. In December 2003, with the authorization of the City, the Center secured financing of $6.5 million subject to a mortgage against the leasehold and real property on which the performing arts center is located. The City also consented to an assignment of the lease as security for the loan. The City also leases certain other property to various lessees under non-cancelable agreements that have 3 – 10 year terms with expiration dates through December 31, 2031. Each of the agreements provides an option for renewal for an additional 3 – 10 year term. During the year ended June 30, 2024, the City recognized lease income of $532,057 and interest income of $98,062. The following is an analysis of property leased under these leases at June 30, 2024: Land $ 270,000 Buildings 873,250 Equipment 110,126 Total 1,253,376 Less: accumulated depreciation (983,376) NET BOOK VALUE $ 270,000 Depreciation expense for the year ended June 30, 2024, on leased property was $-. The following is a schedule of future lease receivable principal and interest payments from leases as of June 30, 2024: Year Ending June 30 Principal Interest Total 2025 $ 422,833 $ 81,673 $ 504,506 2026 418,494 67,677 486,171 2027 387,132 53,947 441,079 2028 384,846 41,202 426,048 2029 397,939 28,109 426,048 2030-2034 622,434 16,638 639,072 Total $2,633,678 $ 289,246 $ 2,922,924 Subscription-Based Information Technology Arrangements The City has entered into subscription-based information technology arrangements (SBITAs) involving: Police document management software Police in-car video software Police interview video software Solid waste fleet tracking software Finance software Document management software E-mail/communication management software (Continued) - 99 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 10 – Leases and Subscription-Based Information Technology Arrangements: Subscription-Based Information Technology Arrangements The total of the City’s governmental subscription assets are recorded at a cost of $3,538,509, less accumulated amortization of $1,203,180. The total of the City’s business-type subscription assets are recorded at a cost of $217,328, less accumulated amortization of $96,590. For governmental activities, the future subscription payments under SBITA agreements are as follows: Year Ending June 30 Principal Interest Total 2025 $ 741,955 $ 78,166 $ 820,121 2026 826,940 53,179 880,119 2027 315,604 29,465 345,069 2028 277,322 18,892 296,214 2029 286,613 9,602 296,215 Total $2,448,434 $ 189,304 $ 2,637,738 For business-type activities, the future subscription payments under SBITA agreements are as follows: Year Ending June 30 Principal Interest Total 2025 $ 48,753 $ 3,579 $ 52,332 2026 50,407 1,925 52,332 2027 25,841 325 26,166 Total $ 125,001 $ 5,829 $ 130,830 In addition to the amounts presented above, the City also had outflows of resources during the fiscal year totaling $226,340 that were not included in the measurement of the subscription liability. This total consists of payments related to arrangements that either have interminable subscription terms or that are prepaid and otherwise meet SBITA recognition criteria but are below the City’s capitalization threshold. Note 11 – Tax Abatements: Developer Residential Property Tax Abatements – The City of Paducah is authorized by Kentucky Revised Statues Chapter 81A and City Ordinance 2002-10-6989 to enter into property tax abatement agreements for the purpose of subsidizing developers for their cost of infrastructure improvements associated with residential infill and annexation development. Tax reimbursements cannot exceed the cost of City-approved infrastructure associated with the development over the life of the agreement. The abatement is limited to the actual City of Paducah real estate property taxes collected in any given year attributed to a specific development area as outlined in the individual agreement with the City. (Continued) - 100 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 11 – Tax Abatements: Developer Residential Property Tax Abatements – For the year ended June 30, 2024, the City abated property taxes totaling $39,851 under this program, including the following tax abatement agreements: Recipient Development Agreement Ordinance Abatement Amount Current Year Inception to Date Signature Homes of Paducah, LLC Westwood Subdivision In-fill 2010-12-7768 $-0- $148,469 Higdon Development Ridgewood In-fill, phase 2 2019-4-8573 $9,726 $17,369 Greenway Village, LLC Greenway Village In- fill, phase 1 2011-2-7789 $-0- $193,892 Higdon Development Ridgewood In-fill, phase 1 2019-4-8573 $18,834 $85,969 Greenway Village, LLC Greenway Village In- fill, phase 2 2019-4-8572 $11,291 $54,195 Kentucky Business Investment (KBI) Program, KRS 154.32 – The KBI Program provides income tax credits and wage assessments to new and existing manufacturing companies and non-retail service companies that locate or expand operations in Kentucky. The Program can be set to last up to 10 years. For the year ended June 30, 2024, the City rebated employee local payroll taxes totaling $13,237 under this program, including the following resolutions: Recipient Start Date Term Authority Payroll Tax Rebate Amount Current Year Inception to Date Dippin’ Dots, LLC 12-11-2016 10 yrs. Resolution - 2014 $13,237 $96,359 Industrial Park West (IPW) – Ordinance 1997-2-5642 authorized the joint development of the IPW, for economic development purposes, as well as an inter-local agreement authorizing the city to share 50% of payroll tax revenue generated in the Park. This agreement is good for 10 years after 97% of the park property is developed or 25 years (March 6, 2022), whichever is first. (Continued) - 101 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 11 – Tax Abatements: Industrial Park West (IPW) – For the year ended June 30, 2024, the City shared payroll tax revenue totaling $-0- under this agreement with McCracken County (“County”), as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Current Year Inception to Date Coca Cola September 2005 $-0- $349,428 Plastic Services Products October 2020 $-0- $19,808 H.T. Hackney March 2012 $-0- $268,422 Whitehall December 2014 $-0- $443,046 AAA (Pebco) – Ordinance 2004-6-6824 authorized an inter-local agreement between the City and County relating to payroll tax revenue generated by the AAA (Pebco) Company on Coleman Road. The City and County partnered on an economic development project which calls for the City to share 50% of payroll tax revenue generated at the Pebco facility on Coleman Road for 25 years, through 2029. For the year ended June 30, 2024, the City shared payroll tax revenue totaling $17,873 under this agreement with the County, as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Current Year Inception to Date AAA (Pebco) July 2005 $17,873 $233,431 Remote Worker Incentive Program – Ordinance 2021-08-8700 authorized this program, with a goal of attracting full-time remote workers 100 miles or more outside Paducah, by offering to those that qualify relocation expense, internet access, community connections with memberships, and local payroll tax waiver for a 12-month period. For the year ended June 30, 2024, the City provided funding totaling $39,723 under this program, as follows: Various Recipients Start Date Program Expenditures Current Year Inception to Date Remote Workers July 2021 $39,723 $81,184 (Continued) - 102 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 11 – Tax Abatements: Annexation Incentives – The City of Paducah enacted Ordinance 2022-1-8719 to encourage residential, commercial, and industrial growth. To take advantage of this incentive program, real estate must be annexed consensually into the City, pursuant to KRS 81A.412. The incentive program may include any of the following incentives: a) property tax reimbursement – for up to 5 years, all City real estate property taxes may be reimbursed (abated) to the property owner; b) free sanitation service – the property owner may be eligible for free sanitation services for one year; and c) closing cost reimbursement - the property owner may be reimbursed for closing cost not to exceed $1,000. The City real estate property tax abatement is limited to the actual City of Paducah real estate property taxes collected in any given year as outlined in the individual memorandum of agreement with the City. For the year ended June 30, 2024, the City abated property taxes totaling $9,129 under this program, including the following tax abatement agreements: Recipient Development/Location Agreement Ordinance Abatement Amount Current Year Inception to Date Overland Group, LLC Taco John – West 60 2022-1-8719 $2,415 $3,665 Overland Group, LLC Sonic Drive-In – West 60 2022-1-8719 $5,490 $7,362 William Evans 1630 N. Friendship 2022-1-8719 $776 $776 J. A Bell Olivet Church Road 2022-1-8719 $448 $541 Other Local Economic Development Programs – In order to attract certain companies to the Paducah area, the City and County partnered together to construct facilities to house corporate operations in the Information Age Park (IAP). For the year ended June 30, 2024, the City and County provided reduced rent for the following corporate recipient, totaling $18,426: Recipient Location Bldg. Size Agreement Ordinance FMV Rent Rent Paid Teletech 2301 McCracken Blvd. 30,000 sf 2012-11-7986 $55,000 $36,574 (Continued) - 103 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2024 Note 12 – Restatement During fiscal year ending June 30, 2024, the City of Paducah, Kentucky determined that $141,113 of federal revenue for capital projects that was recorded as a grant receivable in fiscal year ended June 30, 2022 was not available until fiscal year ending June 30, 2024. Therefore, grants receivable and grants revenue were overstated by $141,113 for the fiscal year ended June 30, 2022. This error correction resulted in adjustments to and restatements of beginning net position and fund net position as follows: Capital Projects Fund Governmental Activities June 30, 2023, as previously reported $ 8,161,230 $ 32,120,032 Decrease due to error correction (141,113) (141,113) June 30, 2023, as restated $ 8,020,117 $ 31,978,919 Note 13 – Implementation of GASB Pronouncements Accounting Pronouncements Adopted during the Fiscal Year ended June 30, 2024 The financial statements of the City are prepared in conformity with GAAP as applied to government units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. During the current year, the City adopted the following GASB pronouncements: Statement No. 100 – Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62 The City adopted the provisions of GASB Statement No. 100, Accounting Changes and Error Corrections – an Amendment of GASB Statement No. 62. The primary objective of this Statement is to enhance accounting and financial reporting requirements for accounting changes and error corrections to provide more understandable, reliable, relevant, consistent, and comparable information for making decisions or assessing accountability. This pronouncement impacted the preparation of Note 12 of these financial statements. Future Implementation of GASB Pronouncements In addition to the pronouncements discussed previously, GASB has issued additional guidance for state and local governments that are not yet effective. The City is currently reviewing the provisions of the following pronouncements to determine the impact of implementation in future periods. Statement No. 101 – Compensated Absences (FY2025) Statement No. 102 – Certain Risk Disclosures (FY2025) Statement No. 103 – Financial Reporting Model Improvements (FY2026) THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Total pension liability Service cost -$ -$ -$ -$ 10,901$ 10,267$ 7,678$ 7,038$ 7,183$ 5,576$ Interest 373,338 414,475 444,380 457,312 472,881 527,900 560,538 626,531 686,614 744,910 Changes in benefit terms - - - - - - - - - - Differences between expected and actual experience (41,299) (238,809) (16,133) 301,216 249,805 (384,990) (2,758) (278,063) (111,824) (43,965) Changes in assumptions - - - - - - - 148,359 156,880 166,753 Benefit payments/refunds (774,453) (842,634) (934,025) (980,992) (965,299) (1,033,958) (1,101,201) (1,223,078) (1,308,290) (1,386,273) Net change in total pension liability (442,414) (666,968) (505,778) (222,464) (231,712) (880,781) (535,743) (719,213) (569,437) (512,999) Total pension liability - beginning 6,130,885 6,797,853 7,303,631 7,526,025 7,757,737 8,638,518 9,174,261 9,893,474 10,462,911 10,975,910 Total pension liability - ending (a)5,688,471$ 6,130,885$ 6,797,853$ 7,303,561$ 7,526,025$ 7,757,737$ 8,638,518$ 9,174,261$ 9,893,474$ 10,462,911$ Plan fiduciary net position Contributions - employer 427,908$ 263,595$ 310,000$ 349,548$ 345,049$ 366,129$ 380,168$ 436,575$ 420,352$ 391,468$ Contributions - member - - - - 4,394 6,448 6,325 4,001 4,494 6,088 Net investment income 446,047 394,308 (609,641) 1,165,249 280,927 461,503 492,276 766,509 165,489 310,681 Benefit payments/refunds (774,453) (842,634) (934,025) (980,922) (965,299) (1,033,958) (1,101,201) (1,223,078) (1,308,290) (1,386,273) Administrative expenses (41,135) (41,034) (44,556) (43,063) (42,185) (43,503) (44,419) (44,786) (46,422) (49,115) Other - - - - - - - - - - Net change in plan fiduciary net position 58,367 (225,765) (1,278,222) 490,812 (377,114) (243,381) (266,851) (60,779) (764,377) (727,151) Plan fiduciary net position - beginning 3,682,961 3,908,726 5,186,948 4,696,136 5,073,250 5,316,631 5,583,482 5,644,261 6,408,638 7,135,789 Plan fiduciary net position - ending (b)3,741,328$ 3,682,961$ 3,908,726$ 5,186,948$ 4,696,136$ 5,073,250$ 5,316,631$ 5,583,482$ 5,644,261$ 6,408,638$ Net pension liability ending (a) - (b)1,947,143$ 2,447,924$ 2,889,127$ 2,116,613$ 2,829,889$ 2,684,487$ 3,321,887$ 3,590,779$ 4,249,213$ 4,054,273$ Plan fiduciary net position as a percentage of total pension liability 66%60%57%71%62%65%62%61%57%61% Covered payroll n/a n/a n/a n/a 54,921$ 80,600$ 79,064$ 50,009$ 56,175$ 76,102$ Net pension liability as a percentage of covered payroll n/a n/a n/a n/a 5153%3331%4202%7180%7564%5327% -104- Exhibit A-1 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE POLICE AND FIREFIGHTERS' PENSION Last Ten Fiscal Years Ending June 30 TRUST FUND'S NET PENSION LIABILITY AND RELATED RATIOS 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Actuarially determined contribution 352,307$ 385,517$ 262,036$ 332,386$ 315,257$ 368,373$ 380,168$ 434,758$ 416,844$ 391,468$ Contributions in relation to the actuarially determined contribution 427,908 263,595 310,000 349,548 345,049 366,129 376,148 436,575 420,352 391,468 Contribution deficiency (excess)(75,601)$ 121,922$ (47,964)$ (17,162)$ (29,792)$ 2,244$ 4,020$ (1,817)$ (3,508)$ -$ Covered payroll n/a n/a n/a n/a 54,921$ 80,600$ 79,064$ 50,009$ 56,175$ 76,102$ Contributions as a percentage of covered payroll n/a n/a n/a n/a 628%454%476%873%748%514% 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Annual money-weighted rate of return, net of investment expense 12.76%10.93%-12.59%26.61%5.92%9.28%9.44%14.61%2.78%4.69% Exhibit A-2 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF POLICE AND FIREFIGHTERS' PENSION TRUST FUND CONTRIBUTIONS AND INVESTMENT RETURNS Last Ten Fiscal Years Ending June 30 Schedule of Contributions Schedule of Investment Returns -105- Year Ended June 30 City's proportion of the net pension liability City's proportionate share of the net pension liability (asset) City's covered payroll City's share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability CERS Nonhazardous 2024 0.3186%20,442,739$ 9,250,047$ 221.0015%57.4759% 2023 0.3159%22,840,791$ 8,742,004$ 261.2764%52.4175% 2022 0.3250%20,724,296$ 8,315,793$ 249.2161%57.3282% 2021 0.3174%24,344,624$ 8,161,809$ 298.2749%47.8139% 2020 0.3199%22,498,921$ 8,163,051$ 275.6190%50.4470% 2019 0.3150%19,185,252$ 7,880,115$ 243.4641%53.5420% 2018 0.3210%18,788,122$ 7,861,744$ 238.9816%53.3249% 2017 0.3047%14,999,862$ 7,266,510$ 206.4246%55.5028% 2016 0.3150%13,543,354$ 7,349,249$ 184.2821%59.9684% 2015 0.3261%10,579,475$ 7,477,608$ 141.4821%66.8010% CERS Hazardous 2024 1.5192%40,956,850$ 10,666,468$ 383.9776%52.9596% 2023 1.5724%47,981,053$ 10,240,852$ 468.5260%47.1123% 2022 1.6275%43,326,429$ 9,731,752$ 445.2069%52.2617% 2021 1.5344%46,263,440$ 8,966,031$ 515.9857%44.1116% 2020 1.5325%42,330,934$ 8,765,379$ 482.9333%46.6327% 2019 1.5888%38,425,266$ 8,850,650$ 434.1519%49.2645% 2018 1.6403%36,697,162$ 9,004,106$ 407.5603%50.2164% 2017 1.6165%27,738,524$ 8,404,139$ 330.0579%53.9483% 2016 1.6428%25,218,200$ 8,402,943$ 300.1115%57.5152% 2015 1.6323%19,617,569$ 8,267,598$ 237.2826%63.4574% *The amounts presented were determined as of the measurement date June 30 of the prior year. Exhibit A-3 -106- CITY OF PADUCAH, KENTUCKY SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST TEN FISCAL YEARS* REQUIRED SUPPLEMENTARY INFORMATION Year Ended June 30 Contractually required penson contribution Contributions relative to contractually required contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll CERS Nonhazardous 2024 2,355,600$ 2,355,600$ -$ 10,092,543$ 23.3400% 2023 2,164,511$ 2,164,511$ -$ 9,250,047$ 23.4000% 2022 1,991,428$ 1,991,428$ -$ 8,742,004$ 22.7800% 2021 1,604,948$ 1,604,948$ -$ 8,315,793$ 19.3000% 2020 1,575,229$ 1,575,229$ -$ 8,161,809$ 19.3000% 2019 1,324,047$ 1,324,047$ -$ 8,163,051$ 16.2200% 2018 1,141,041$ 1,141,041$ -$ 7,880,115$ 14.4800% 2017 1,098,317$ 1,098,317$ -$ 7,861,744$ 13.9704% 2016 902,501$ 902,501$ -$ 7,266,510$ 12.4200% 2015 937,029$ 937,029$ -$ 7,349,249$ 12.7500% CERS Hazardous 2024 4,806,871$ 4,806,871$ -$ 11,618,663$ 41.3720% 2023 4,566,315$ 4,566,315$ -$ 10,666,468$ 42.8100% 2022 3,645,743$ 3,645,743$ -$ 10,240,852$ 35.6000% 2021 2,925,365$ 2,925,365$ -$ 9,731,752$ 30.0600% 2020 2,695,189$ 2,695,189$ -$ 8,966,031$ 30.0600% 2019 2,179,073$ 2,179,073$ -$ 8,765,379$ 24.8600% 2018 1,964,844$ 1,964,844$ -$ 8,850,650$ 22.2000% 2017 1,954,791$ 1,954,791$ -$ 9,004,106$ 21.7100% 2016 1,702,679$ 1,702,679$ -$ 8,404,139$ 20.2600% 2015 1,741,930$ 1,741,930$ -$ 8,402,943$ 20.7300% Changes of benefit terms: None Methods and assumptions used in the actuarially determined contributions: The assumptions were updated as of result of an experience study for the five year period ending June 30, 2019. The amortization period of the unfunded accrued liability was reset to a closed 30 year period for the year ended June 30, 2019. The investment rate of return remained unchanged at 6.25% from the prior measurement date. The discount rate increased to 6.50% from 6.25% at the prior measurement date. The inflation rate remained unchanged at 2.30% from the prior measurment date. Projected salary increases remained unchanged at 3.30% to 10.30% for non-hazardous and 3.55% to 19.05% for hazardous. Exhibit A-4 -107- Notes to Required Supplementary Information For the Year Ended June 30, 2023 CITY OF PADUCAH, KENTUCKY SCHEDULE OF CITY'S CONTRIBUTIONS COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST TEN FISCAL YEARS REQUIRED SUPPLEMENTARY INFORMATION The actuarially determined contribution rates,as a percentage of payroll,used to determine the actuarially determined contribution amounts in the Schedule of Employer Contributions are calculated as of the indicated valuation date.The following actuarial methods and assumptions (from the indicated actuarial valuations)were used to determine contribution rates reported in that schedule for the year ending June 30, 2023: Year Ended June 30 City's proportion of the net pension liability City's proportionate share of the net pension liability (asset) City's covered payroll City's share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability CERS Nonhazardous 2024 0.3186%(439,857)$ 9,250,047$ -4.7552%104.2348% 2023 0.3159%6,235,001$ 8,742,004$ 71.3223%60.9476% 2022 0.3250%6,221,407$ 8,315,793$ 74.8144%62.9072% 2021 0.3173%7,662,289$ 8,161,809$ 93.8798%51.6704% 2020 0.3198%5,379,682$ 8,163,051$ 65.9028%60.4382% 2019 0.3150%5,592,780$ 7,880,115$ 70.9733%57.6218% 2018 0.3210%6,452,856$ 7,861,744$ 82.0792%52.3940% CERS Hazardous 2024 1.5182%2,077,282$ 10,666,468$ 19.4749%92.2743% 2023 1.5717%13,387,551$ 10,240,852$ 130.7269%64.1271% 2022 1.6275%13,159,206$ 9,731,752$ 135.2193%66.8131% 2021 1.5341%14,176,195$ 8,966,031$ 158.1100%58.8413% 2020 1.5324%11,337,649$ 8,765,379$ 129.3458%64.4396% 2019 1.5888%11,328,384$ 8,850,650$ 127.9949%64.2437% 2018 1.6403%13,559,555$ 9,004,106$ 150.5930%58.9878% *The amounts presented were determined as of the measurement date June 30 of the prior year. *Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. -108- Exhibit A-5 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET MEDICAL INSURANCE LIABILITY COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST SEVEN FISCAL YEARS* Year Ended June 30 Contractually required pension contribution Contributions relative to contractually required contribution Contribution deficiency (excess)City's covered payroll Contributions as a percentage of covered payroll CERS Nonhazardous 2024 -$ -$ -$ 10,092,543$ 0.0000% 2023 313,577$ 313,577$ -$ 9,250,047$ 3.3900% 2022 364,542$ 364,542$ -$ 8,742,004$ 4.1700% 2021 395,832$ 395,832$ -$ 8,315,793$ 4.7600% 2020 388,502$ 388,502$ -$ 8,161,809$ 4.7600% 2019 429,376$ 429,376$ -$ 8,163,051$ 5.2600% 2018 370,365$ 370,365$ -$ 7,880,115$ 4.7000% CERS Hazardous 2024 301,672$ 301,672$ -$ 11,618,663$ 2.5964% 2023 723,187$ 723,187$ -$ 10,666,468$ 6.7800% 2022 894,026$ 894,026$ -$ 10,240,852$ 8.7300% 2021 926,463$ 926,463$ -$ 9,731,752$ 9.5200% 2020 918,612$ 918,612$ -$ 8,966,031$ 10.2455% 2019 918,612$ 918,612$ -$ 8,765,379$ 10.4800% 2018 827,536$ 827,536$ -$ 8,850,650$ 9.3500% * Changes of benefit terms: None Changes of assumptions: Valuation date June 30, 2023 Actuarial cost method Entry Age Normal Amortization method Level Percent of Payroll Amortization period 30 years, closed Asset valuation method Payroll growth rate 2.00% Investment return 6.25% Inflation 2.30% Single discount rate 5.93% and 5.97% for non-hazardous and hazardous; increase from 5.70% and 5.61% Mortality Healthcare trend rates (Pre-65) Healthcare trend rates (Post-65) Schedule is intended to show information for 10 years.Additional years of supplementary information will be provided as this information becomes available. Notes to Required Supplementary Information For the Year Ended June 30, 2023 -109- Initial trend starting at 6.30%at January 1, 2023,gradually decreasing to an ultimate trend rate of 4.05% over a period of 13 years. System-specific mortality table based on mortality experience from 2013-2018,projected with the ultimate rates from MP-2014 mortality improvement scale using a base year of 2019. Initial trend starting at 6.30%at January 1, 2023,and gradually decreasing to an ultimate trend rate of 4.05% over a period of 13 years. 20%of the difference between the market value of assets and the expected actuarial value of assets is recognized The actuarially determined contribution rates, as a percentage of payroll, used to determine the actuarially determined contribution amounts in the Schedule of Employer Contributions are calculated as the of the indicated valuation date. The following actuarial methods and assumptions (from the indicated actuarial valuations) were used to determine contribution rates reported in that schedule for the year ending June 30, 2023: LAST SEVEN FISCAL YEARS* Exhibit A-6 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S CONTRIBUTIONS - MEDICAL INSURANCE PLAN COUNTY EMPLOYEES' RETIREMENT SYSTEM CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 Exhibit B-1 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Interest 300,000$ 274,875$ (25,125)$ Total revenues 300,000 274,875 (25,125) Expenditures: Planning and development 12,500,000 975,226 11,524,774 Total expenditures 12,500,000 975,226 11,524,774 Excess (deficiency) of revenues over expenditures (12,200,000) (700,351) 11,499,649 Other Financing Sources (Uses): Transfers in - - - Transfers out (5,000,000) (2,003,041) 2,996,959 Total other financing sources (uses)(5,000,000) (2,003,041) 2,996,959 Net change in fund balance (17,200,000)$ (2,703,392) 14,496,608$ Fund balance - beginning 18,061,121 Fund balance - ending 15,357,729$ See auditors report on pages 11-13. -110- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKY BOND FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-2 Variance withFinal BudgetFinalPositiveBudget(Negative)Revenues:Intergovernmental and grantsIntergovernmental 227,020$ 185,531$ (41,489)$ Grants 7,171,876 2,018,950 (5,152,926) Interest (1,430) - 1,430 Property upkeep, rentals, sales and other 459,824 1,103,401 643,577 Total revenues 7,857,290 3,307,882 (4,549,408) Expenditures: Capital outlay 27,222,215 12,546,751 14,675,464 Excess (deficiency) of revenues over expenditures (19,364,925) (9,238,869) 10,126,056 Other Financing Sources (Uses):Long-term debt issued 41,289 - (41,289) Transfers in 12,073,985 7,754,054 (4,319,931) Transfers out (557,845) (557,849) (4) Total other financing sources 11,557,429 7,196,205 (4,361,224) Net change in fund balance (7,807,496)$ (2,042,664) 5,764,832$ Fund balance - beginning as restated 8,020,117 Fund balance - ending 5,977,453$ See auditors report on pages 11-13. -111- Actual CITY OF PADUCAH, KENTUCKY DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND GENERAL CAPITAL IMPROVEMENTS FUND FOR THE YEAR ENDED JUNE 30, 2024 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-3 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues:Intergovernmental 655,875$ 653,026$ (2,849)$ Interest - 94,453 94,453 Property upkeep, rentals, sales and other 980,465 21,549 (958,916) Total revenues 1,636,340 769,028 (867,312) Expenditures:Debt service:Principal requirement 3,677,295 3,674,839 2,456 Interest and fiscal requirement 1,012,705 991,354 21,351 Total expenditures 4,690,000 4,666,193 23,807 Excess (deficiency) of revenues over expenditures (3,053,660) (3,897,165) (843,505) Other Financing Sources (Uses):Transfers in 2,967,460 3,824,923 857,463 Transfers out - - - Total other financing sources 2,967,460 3,824,923 857,463 Net change in fund balance (86,200)$ (72,242) 13,958$ Fund balance - beginning 1,802,400 Fund balance - ending 1,730,158$ See auditors report on pages 11-13. -112- CITY OF PADUCAH, KENTUCKYDEBT SERVICE FUNDDETAIL SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCE - BUDGET AND ACTUALFOR THE YEAR ENDED JUNE 30, 2024 THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR GOVERNMENTAL FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Municipal Aid Program – to account for revenues and expenditures of Kentucky gas tax refunds. Emergency Communication Service Fund – to account for revenues associated with 911 program. Court Awards Fund – to account for revenues associated with judicial system confiscations. Grants – to account for the grant programs awarded to the City of Paducah from agencies of the Federal Government and the Commonwealth of Kentucky. Bed Tax Fund – to account for revenues associated with bed tax collections. Tax Increment Financing Fund – to account for restricted revenues from taxes. Exhibit B-4 CourtAwardsFund Cash and cash equivalents 1,171,160$ 12,776$ 622,979$ Receivables, net:Accounts 57,045 496,487 - TOTAL ASSETS 1,228,205$ 509,263$ 622,979$ Liabilities:Voucher and accounts payable 81,028$ 26,480$ 400,453$ Accrued payroll and payroll taxes - 77,384 - Due to other funds - 78,282 - Total liabilities 81,028 182,146 400,453 Fund Balances:Restricted for:Highway and streets 1,147,177 - - Public safety - - 222,526 Program purposes - - - Assigned for:Public safety - 327,117 - Total fund balances 1,147,177 327,117 222,526 TOTAL LIABILITIES ANDFUND BALANCES 1,228,205$ 509,263$ 622,979$ See auditors report on pages 11-13. Municipal Service FundCommunication LIABILITIES CITY OF PADUCAH, KENTUCKY -113- FUND BALANCESAND Aid Program COMBINING BALANCE SHEETNONMAJOR GOVERNMENTAL FUNDSJUNE 30, 2024 Special Revenue Funds ASSETS Emergency CDBG Bed Tax IncrementGrantTaxFinancingFundFundFund -$ -$ 93,050$ 1,899,965$ - - - 553,532 -$ -$ 93,050$ 2,453,497$ -$ -$ -$ 507,961$ - - - 77,384 - - - 78,282 - - - 663,627 - - - 1,147,177 - - - 222,526 - - 93,050 93,050 - - - 327,117 - - 93,050 1,789,870 -$ -$ 93,050$ 2,453,497$ Funds -114- GovernmentalTotal NonmajorSpecial Revenue Funds Exhibit B-5 CourtAwardsRevenues:Fund Taxes -$ 303,195$ -$ Charges for services - 421,964 - Intergovernmental 605,120 - - Grants - - 47,739 Interest 58,275 7,969 34,703 Miscellaneous - 830,333 - Total revenues 663,395 1,563,461 82,442 Expenditures:Current operations:Public safety - 2,305,096 60,850 Public service 2,168,205 - - Planning and development - - - Total expenditures 2,168,205 2,305,096 60,850 Excess (deficiency) of revenues over expenditures (1,504,810) (741,635) 21,592 Other Financing Sources (Uses):Transfers in 1,595,056 893,929 - Transfers out - (152,294) - Total other financing sources (uses)1,595,056 741,635 - Net change in fund balances 90,246 - 21,592 Fund balances - beginning 1,056,931 327,117 200,934 Fund balances - ending 1,147,177$ 327,117$ 222,526$ See auditors report on pages 11-13. CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF REVENUES, EXPENDITURESAND CHANGES IN FUND BALANCES Communication -115- Aid ProgramMunicipal NONMAJOR GOVERNMENTAL FUNDSFOR THE YEAR ENDED JUNE 30, 2024 Emergency Service Fund Special Revenue Funds CDBG Bed Tax IncrementGrantTaxFinancingFundFundFund -$ 1,802,253$ 93,050$ 2,198,498$ - - - 421,964 - - - 605,120 197,500 - - 245,239 - - - 100,947 - - - 830,333 197,500 1,802,253 93,050 4,402,101 - - - 2,365,946 - - - 2,168,205 197,500 1,802,253 - 1,999,753 197,500 1,802,253 - 6,533,904 - - 93,050 (2,131,803) - - - 2,488,985 - - - (152,294) - - - 2,336,691 - - 93,050 204,888 - - - 1,584,982 -$ -$ 93,050$ 1,789,870$ Governmental Special Revenue Funds Funds -116- Total Nonmajor Exhibit B-6 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Intergovernmental 515,000$ 605,120$ 90,120$ Interest 53,210 58,275 5,065 Total revenues 568,210 663,395 95,185 Expenditures:Public service 2,168,210 2,168,205 5 Excess (deficiency) of revenues over expenditures (1,600,000) (1,504,810) 95,190 Other Financing Sources (Uses):Transfers in 1,600,000 1,595,056 (4,944) Transfers out - - - Total other financing sources (uses)1,600,000 1,595,056 (4,944) Net change in fund balance -$ 90,246 90,246$ Fund balance - beginning 1,056,931 Fund balance - ending 1,147,177$ See auditors report on pages 11-13. -117- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKYMUNICIPAL AID PROGRAM FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-7 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Local contributions 310,000$ 303,195$ (6,805)$ Telephone surcharges 385,000 421,964 36,964 Interest 750 7,969 7,219 Miscellaneous 805,375 830,333 24,958 Total revenues 1,501,125 1,563,461 62,336 Expenditures:Public safety 2,588,830 2,305,096 283,734 Excess (deficiency) of revenues over expenditures (1,087,705) (741,635) 346,070 Other Financing Sources (Uses):Transfers in 1,240,000 893,929 (346,071) Transfers out (152,295) (152,294) 1 Total other financing sources (uses)1,087,705 741,635 (346,070) Net change in fund balance -$ - -$ Fund balance - beginning 327,117 Fund balance - ending 327,117$ See auditors report on pages 11-13. -118- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKYEMERGENCY COMMUNICATION SERVICE FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-8 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Grants 30,000$ 47,739$ 17,739$ Interest 7,000 34,703 27,703 Total revenues 37,000 82,442 45,442 Expenditures:Public safety 90,800 60,850 29,950 Excess (deficiency) of revenues over expenditures (53,800) 21,592 75,392 Net change in fund balance (53,800)$ 21,592 75,392$ Fund balance - beginning 200,934 Fund balance - ending 222,526$ See auditors report on pages 11-13. -119- CITY OF PADUCAH, KENTUCKYCOURT AWARDS FUNDDETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2024 Exhibit B-9 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Grants 1,405,000$ 197,500$ (1,207,500)$ Total revenues 1,405,000 197,500 (1,207,500) Expenditures:Planning and development 1,397,500 197,500 1,200,000 Excess (deficiency) of revenues over expenditures 7,500 - (2,407,500) Other Financing Sources (Uses):Transfers in - - - Transfers out - - - Total other financing sources (uses)- - - Net change in fund balance 7,500$ - (2,407,500)$ Fund balance - beginning - Fund balance - ending -$ See auditors report on pages 11-13. -120- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKYCDBG FUNDDETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-10 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues:Taxes 1,850,000$ 1,802,253$ (47,747)$ Total revenues 1,850,000 1,802,253 (47,747) Expenditures: Planning and development 1,850,000 1,802,253 47,747 Excess (deficiency) of revenues over expenditures - - - Other Financing Sources (Uses):Operating transfers in - - - Operating transfers out - - - Net change in fund balance -$ - -$ Fund balance - beginning - Fund balance - ending -$ See auditors report on pages 11-13. -121- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKYBED TAX FUNDDETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-11 Variance withFinal BudgetFinalPositiveBudgetActual(Negative)Revenues: Taxes 21,000$ 93,050$ 72,050$ Total revenues 21,000 93,050 72,050 Expenditures:Planning and development - - - Excess (deficiency) of revenues over expenditures 21,000 93,050 72,050 Other Financing Sources (Uses):Operating transfers in - - - Operating transfers out - - - Total other financing sources (uses)- - - Net change in fund balance 21,000$ 93,050 72,050$ Fund balance - beginning - Fund balance - ending 93,050$ See auditors report on pages 11-13. -122- FOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKYTAX INCREMENT FINANCING FUNDDETAIL SCHEDULE OF REVENUES, EXPENDITURES, ANDCHANGES IN FUND BALANCE - BUDGET AND ACTUAL THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR PROPRIETARY FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 COMBINING FINANCIAL STATEMENTS NONMAJOR PROPRIETARY FUNDS Section Eight Housing Fund – to account for the housing choice voucher program grant governed by the United States Department of Housing and Urban Development. Transient Dock Fund – to account for the operation of the Transient Dock. Exhibit C-1 TransientDockCurrent Assets:Fund Cash and cash equivalents 362,020$ 29,758$ 391,778$ Inventory - 14,649 14,649 Total current assets 362,020 44,407 406,427 Noncurrent Assets:Prepaid OPEB obligation 3,871 - 3,871 Net depreciable capital assets 754 - 754 Total noncurrent assets 4,625 - 4,625 Total assets 366,645 44,407 411,052 Deferred Outflows of Resources:Deferred pension related outflows 30,896 - 30,896 Deferred OPEB related outflows 12,319 - 12,319 Total deferred outflows of resources 43,215 - 43,215 Current Liabilities:Voucher and accounts payable 62,270 2,096 64,366 Accrued payroll - 821 821 Accrued compensated absences 3,404 - 3,404 Total current liabilities 65,674 2,917 68,591 Noncurrent Liabilities:Net pension liability 179,896 - 179,896 Accrued compensated absences 30,639 - 30,639 Total noncurrent liabilities 210,535 - 210,535 Total liabilities 276,209 2,917 279,126 Deferred Inflows of ResourcesDeferred pension related inflows 21,001 - 21,001 Deferred OPEB related inflows 62,386 - 62,386 Total deferred inflows of resources 83,387 - 83,387 Net invested in capital assets 754 - 754 Restricted - Housing 49,510 - 49,510 Unrestricted - 41,490 41,490 TOTAL NET POSITION 50,264$ 41,490$ 91,754$ See auditors report on pages 11-13. CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF NET POSITIONNONMAJOR PROPRIETARY FUNDSJUNE 30, 2024 ASSETS LIABILITIES NET POSITION -123- Total NonmajorEnterpriseFunds SectionEightHousing Exhibit C-2 TransientDockOperating Revenues:Fund Charges for services -$ 81,711$ 81,711$ Miscellaneous 186 - 186 Total operating income 186 81,711 81,897 Operating Expenses:Cost of sales and service 2,486,751 101,928 2,588,679 Depreciation and amortization 572 - 572 Total operating expenses 2,487,323 101,928 2,589,251 Operating income (loss)(2,487,137) (20,217) (2,507,354) Non-Operating Revenues (Expenses): Grants - program purpose 2,528,517 - 2,528,517 Interest and investment income 30 2,237 2,267 Total nonoperating revenues(expenses)2,528,547 2,237 2,530,784 Income (loss) before contributions andtransfers 41,410 (17,980) 23,430 Contributions and Operating Transfers:Transfers in - - - Transfers out - - - Total contributions and operating transfers - - - Change in net position 41,410 (17,980) 23,430 Net position - beginning 8,854 59,470 68,324 Net position - ending 50,264$ 41,490$ 91,754$ See auditors report on pages 11-13. COMBINING STATEMENT OF REVENUES, EXPENSES CITY OF PADUCAH, KENTUCKY Total NonmajorEnterprise -124- FOR THE YEAR ENDED JUNE 30, 2024NONMAJOR PROPRIETARY FUNDSAND CHANGES IN NET POSITION Funds SectionEightHousing Exhibit C-3 TransientDockCash Flows from Operating Activities:Fund Cash received from customers -$ 81,711$ 81,711$ Payments to employees (85,923) (20,342) (106,265) Housing assistance and other payments (2,517,025) (77,062) (2,594,087) Net cash provided (used) by operating activities (2,602,948) (15,693) (2,618,641) Cash Flows from NoncapitalFinancing Activities:Grants - program purpose 2,566,683 - 2,566,683 Transfers from other funds - - - Transfers to other funds - - - Net cash provided (used) by noncapitalfinancing activities 2,566,683 - 2,566,683 Cash Flows from Capital and RelatedFinancing Activities: Proceeds from sale of assets - - - Acquisition and constructionof capital assets - - - Net cash provided (used) by capital andrelated financing activities - - - Cash Flows from Investing Activities:Interest on cash and investments 30 2,237 2,267 Net increase (decrease) in cash and cashequivalents (36,235) (13,456) (49,691) Cash and cash equivalents, July 1, 2023 398,255 43,214 441,469 CASH AND CASH EQUIVALENTS, JUNE 30, 2024 362,020$ 29,758$ 391,778$ Reconciliation of Operating Income (Loss) toNet Cash Provided (Used) by Operating Activities:Operating income (loss)(2,487,137)$ (20,217)$ (2,507,354)$ Adjustments to reconcile operating income (loss)to net cash provided by operating activities:Depreciation and amortization 572 - 572 Change in assets and liabilities:Inventory - 2,915 2,915 OPEB obligation and related deferrals 7,124 - 7,124 Pension obligation and related deferrals (28,927) - (28,927) Accounts payable and accrued expenses (94,580) 1,609 (92,971) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES (2,602,948)$ (15,693)$ (2,618,641)$ See auditors report on pages 11-13. CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF CASH FLOWSNONMAJOR PROPRIETARY FUNDSFOR THE YEAR ENDED JUNE 30, 2024 -125- SectionEightHousing Total NonmajorEnterpriseFunds CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION INTERNAL SERVICE FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 COMBINING FINANCIAL STATEMENTS INTERNAL SERVICE FUNDS Fleet Maintenance – to account for costs of operating a maintenance facility for automotive equipment used by other City departments. Fleet Lease Trust – to account for the financing of vehicle acquisitions provided by one department or agency to other departments or agencies of the government and to other governmental units, on a cost reimbursement basis. Insurance Fund – to account for the costs of obtaining insurance for other City departments. Health Insurance Fund – to account for the costs associated with the City’s health insurance activities. The intent of the City of Paducah is that the cost of providing insurance coverage on a continuing basis be financed primarily through user charges. Exhibit D-1 HealthFleet Lease Insurance Insurance CombinedCurrent Assets:Trust Fund Fund Total Cash and cash equivalents 5,036$ 3,582,974$ 969,290$ 3,444,569$ 8,001,869$ Receivables, net 90,150 - 59 103,952 194,161 Prepaid expense - 1,452,500 - - 1,452,500 Inventories 74,515 - - - 74,515 Total current assets 169,701 5,035,474 969,349 3,548,521 9,723,045 Noncurrent Assets:Prepaid OPEB obligations 20,765 - - - 20,765 Net depreciable capital assets 36,575 3,679,832 - - 3,716,407 Total noncurrent assets 57,340 3,679,832 - - 3,737,172 Total assets 227,041 8,715,306 969,349 3,548,521 13,460,217 Deferred Outflows of Resources:Deferred pension related outflows 159,273 - - - 159,273 Deferred OPEB related outflows 66,094 - - - 66,094 Total deferred outflows of resources 225,367 - - - 225,367 Current Liabilities:Voucher and accounts payable 1,137 - 37,904 151,966 191,007 Accrued payroll and payroll taxes 26,991 - - - 26,991 Accrued compensated absences 58,970 - - - 58,970 Total current liabilities 87,098 - 37,904 151,966 276,968 Noncurrent Liabilities:Pensions obligation 965,081 - - - 965,081 Total noncurrent liabilities 965,081 - - - 965,081 Total liabilities 1,052,179 - 37,904 151,966 1,242,049 Deferred Inflows of ResourcesDeferred pension related inflows 112,657 - - - 112,657 Deferred OPEB related inflows 333,584 - - - 333,584 Total deferred inflows of resources 446,241 - - - 446,241 Net invested in capital assets 36,575 3,679,832 - - 3,716,407 Unrestricted (1,082,587) 5,035,474 931,445 3,396,555 8,280,887 TOTAL NET POSITION (1,046,012)$ 8,715,306$ 931,445$ 3,396,555$ 11,997,294$ See auditors report on pages 11-13. -126- CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF NET POSITIONINTERNAL SERVICE FUNDSJUNE 30, 2024 LIABILITIES ASSETS NET POSITION FleetMaintenance Exhibit D-2 HealthFleet Lease Insurance Insurance CombinedTrustFundFundTotalOperating Revenues:Charges for services - internal 801,414$ 1,116,691$ 1,352,178$ 3,125,562$ 6,395,845$ Charges for services - external - - - 292,992 292,992 Total operating revenues 801,414 1,116,691 1,352,178 3,418,554 6,688,837 Operating Expenses:Vehicle maintenance 1,004,769 - - - 1,004,769 Administrative - 57,195 - 671,214 728,409 Insurance premium, claims and medical - - 1,353,496 2,941,029 4,294,525 Depreciation 3,325 785,936 - - 789,261 Total operating expenses 1,008,094 843,131 1,353,496 3,612,243 6,816,964 Operating income (loss)(206,680) 273,560 (1,318) (193,689) (128,127) Nonoperating Revenues and (Expenses):Interest and investment income 123 181,842 - 194,008 375,973 Gain (loss) on disposal of propertyand equipment 1,600 55,108 - - 56,708 Total nonoperating revenues(expenses)1,723 236,950 - 194,008 432,681 Income (loss) before transfers (204,957) 510,510 (1,318) 319 304,554 Contributions and Transfers:Transfers in - 21,800 87,077 - 108,877 Transfers out - - - - - Total contributions and operating transfers - 21,800 87,077 - 108,877 Change in net position (204,957) 532,310 85,759 319 413,431 Net position - beginning (841,055)8,182,996 845,686 3,396,236 11,583,863 Net position - ending (1,046,012)$ 8,715,306$ 931,445$ 3,396,555$ 11,997,294$ See auditors report on pages 11-13. -127- FleetMaintenance CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF REVENUES, EXPENSES,AND CHANGES IN NET POSITIONINTERNAL SERVICE FUNDSFOR THE YEAR ENDED JUNE 30, 2024 Exhibit D-3 HealthFleet Lease Insurance Insurance Combined Cash Flows from Operating Activities:Trust Fund Fund Total Receipts from other funds for services 743,410$ 1,116,691$ 1,352,119$ 3,389,890$ 6,602,110$ Payments to suppliers (514,657) 613,206 - - 98,549 Payments to employees (262,919) - - - (262,919) Insurance premium, claims and medical - - - (3,058,030) (3,058,030) Other payments - (57,195) (1,315,592) (671,213) (2,044,000) Net cash provided (used) by operating activities (34,166) 1,672,702 36,527 (339,353) 1,335,710 Cash Flows from Noncapital Financing Activities:Transfers from other funds - 21,800 87,077 - 108,877 Transfers to other funds - - - - - Net cash provided (used) by noncapitalfinancing activities - 21,800 87,077 - 108,877 Cash Flows from Capital and RelatedFinancing Activities:Proceeds from sale of capital assets 1,600 62,310 - - 63,910 Purchase of capital assets (39,900) (1,312,331) - - (1,352,231) Net cash provided (used) by capital andrelated financing activities (38,300) (1,250,021) - - (1,288,321) Cash Flows from Investing Activities:Interest and dividends 123 181,842 - 194,008 375,973 Net cash provided (used) by investing activities 123 181,842 - 194,008 375,973 Net increase (decrease) in cashand cash equivalents (72,343) 626,323 123,604 (145,345) 532,239 Cash and cash equivalents, July 1, 2023 77,379 2,956,651 845,686 3,589,914 7,469,630 CASH AND CASH EQUIVALENTS,JUNE 30, 2024 5,036$ 3,582,974$ 969,290$ 3,444,569$ 8,001,869$ Reconciliation of Operating Income (Loss) toNet Cash Provided (Used) by Operating Activities: Operating income (loss)(206,680)$ 273,560$ (1,318)$ (193,689)$ (128,127)$ Adjustments to reconcile operatingincome (loss) to net cash provided(used) by operating activities: Depreciation and amortization 3,325 785,936 - - 789,261 Change in assets and liabilities:Receivables (58,004) - (59) (28,664) (86,727) Prepaid expense - 613,206 - - 613,206 Inventories (3,838) - - - (3,838) OPEB obligation and related deferrals 23,866 - - - 23,866 Pension obligation and related deferrals 195,030 - - - 195,030 Accounts payable and accrued expenses 12,135 - 37,904 (117,000) (66,961) NET CASH PROVIDED (USED) BYOPERATING ACTIVITIES (34,166)$ 1,672,702$ 36,527$ (339,353)$ 1,335,710$ See auditors report on pages 11-13. -128- FleetMaintenance CITY OF PADUCAH, KENTUCKYCOMBINING STATEMENT OF CASH FLOWSINTERNAL SERVICE FUNDSFOR THE YEAR ENDED JUNE 30, 2024 CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION FIDUCIARY FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS Private-purpose Trust Funds Cemetery and Park Trusts – to account for assets held by the City in the capacity of trustee for specified purposes. Exhibit E-1 Cemetery andParkTrusts Cash and cash equivalents 14,929$ Investments at fair value Money market funds - Mutual funds 1,154,309 Total assets 1,169,238 Accounts payable - Held in trust for other purposes 1,169,238$ See auditors report on pages 11-13. STATEMENT OF NET POSITIONCITY OF PADUCAH, KENTUCKY FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS -129- ASSETS LIABILITIES NET POSITION JUNE 30, 2024 Exhibit E-2 Cemetery andParkAdditions:TrustsContributions:Private donations 6,217$ Total contributions 6,217 Investment earnings: Change in fair value of investments 88,597 Interest and dividends 39,513 Net investment earnings 128,110 Interfund transfers - Total additions 134,327 Deductions: Capital outlay 56,803 Administrative expenses 19,191 Total deductions 75,994 Change in net position 58,333 Net position - beginning 1,110,905 Net position - ending 1,169,238$ See auditors report on pages 11-13. STATEMENT OF CHANGES IN NET POSITIONCITY OF PADUCAH, KENTUCKY -130- FOR THE YEAR ENDED JUNE 30, 2024FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY STATISTICAL SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 STATISTICAL SECTION Contents Page Financial Trends 131-135 Revenue Capacity 136-141 Debt Capacity 142-145 Economic and Demographic Information 146-147 Operating Information 148-150 These schedules offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Sources:Unless otherwise noted,the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. This part of the City of Paducah's annual comprehensive financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures,and required supplementary information say about the City's overall financial health. These schedules contain trend information to help the reader understand how the City's financial performance and well-being changed over time. These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and employee taxes. These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 2024 2023 (3)2022 (3)2021 2020 2019 2018 (1)2017 2016 2015 (2) Governmental activities: Net Invested in Capital Assets 70,081,507$ 64,717,247$ 58,980,030$ 57,608,864$ 57,368,777$ 55,243,449$ 55,031,812$ 52,898,618$ 46,389,685$ 39,349,789$ Restricted for: Program purposes 4,580,706 2,705,217 793,091 196,957 208,525 213,379 128,699 131,055 147,218 144,857 Capital projects 1,147,177 1,056,931 203,051 563,002 732,616 964,320 1,959,953 2,137,650 1,148,789 2,427,218 Unrestricted (30,553,656) (36,500,476) (41,037,127) (45,053,843) (42,955,542) (37,543,113) (34,235,978) (17,834,152) (23,323,077) (22,209,537) Total governmental activities net position 45,255,734$ 31,978,919$ 18,939,045$ 13,314,980$ 15,354,376$ 18,878,035$ 22,884,486$ 37,333,171$ 24,362,615$ 19,712,327$ Business-type activities: Net Invested in Capital Assets 2,481,099 2,432,284 2,148,059 2,094,123 2,465,553 2,494,761 2,876,483 2,152,827 1,678,728 1,133,226 Restricted for: Program purposes 49,510 7,527 199,794 105,322 - - - - 38,247 124,012 Unrestricted (1,405,473) (1,501,335) (477,882) (465,011) (393,937) 256,715 159,847 1,513,281 3,194,228 3,033,822 Total business-type activities net postion 1,125,136$ 938,476$ 1,869,971$ 1,734,434$ 2,071,616$ 2,751,476$ 3,036,330$ 3,666,108$ 4,911,203$ 4,291,060$ Primary government: Net Invested in Capital Assets 72,562,606 67,149,531 61,128,089 59,702,987 59,834,330 57,738,210 57,908,295 55,051,445 48,068,413 40,483,015 Restricted for: Program purposes 4,630,216 2,712,744 992,885 302,279 208,525 213,379 128,699 131,055 185,465 268,869 Capital projects 1,147,177 1,056,931 203,051 563,002 732,616 964,320 1,959,953 2,137,650 1,148,789 2,427,218 Unrestricted (31,959,129) (38,001,811) (41,515,009) (45,518,854) (43,349,479) (37,286,398) (34,076,131) (16,320,871) (20,128,849) (19,175,715) Total primary government net position 46,380,870$ 32,917,395$ 20,809,016$ 15,049,414$ 17,425,992$ 21,629,511$ 25,920,816$ 40,999,279$ 29,273,818$ 24,003,387$ (1) Significant change in governmental and business-type net position due to implementation of GASB No. 75 - Accounting and Financial Reporting for Other Postemployment Benefits other than Pensions. (2) Significant change in governmental and business-type net position due to implementation of GASB No. 68 - Accounting and Financial Reporting for Pensions. (3) Fiscal years 2023 and 2022 have been restated for a correction of an error. Unassigned net position were overstated $141,113. -131- Fiscal Year TABLE 1 CITY OF PADUCAH, KENTUCKY NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) Pages 1 of 2 2024 2023 2022 (3)2021 2020 2019 2018 (1)2017 2016 2015 (2) Expenses Governmental activities: General government 11,710,196$ 11,972,825$ 11,686,115$ 12,846,090$ 10,574,490$ 8,891,713$ 9,590,575$ 8,652,987$ 9,777,876$ 9,801,489$ Public safety 24,262,599 26,348,079 25,631,674 28,084,323 27,623,826 27,002,119 25,602,852 20,176,070 20,503,784 17,974,548 Public service 6,965,473 7,431,587 7,057,855 6,761,258 7,491,652 7,681,383 7,511,063 7,771,335 10,266,856 6,855,234 Parks and recreation 4,295,705 3,503,495 3,423,465 3,477,584 3,597,301 3,544,515 3,397,087 3,059,447 3,052,360 2,811,533 Planning and development 4,559,675 5,845,326 2,348,101 2,284,229 2,049,447 3,511,710 1,455,677 1,077,265 911,830 1,000,020 Interest on long-term debt 434,403 483,950 513,885 694,776 1,026,449 800,175 861,589 885,380 900,593 850,827 Total governmental activities expenses 52,228,051 55,585,262 50,661,095 54,148,260 52,363,165 51,431,615 48,418,843 41,622,484 45,413,299 39,293,651 Business-type activities: Solid Waste 4,705,558 5,482,827 4,558,219 4,849,815 5,302,783 4,512,447 4,096,022 3,902,907 3,815,476 3,843,081 Section Eight Housing 2,487,323 2,250,727 2,052,670 1,913,079 1,620,623 2,046,520 2,064,408 1,952,441 1,874,074 1,819,328 Civic Center - - 35,544 30,004 57,990 70,956 76,639 92,471 74,457 98,318 Transient Boat Dock 101,929 122,652 120,100 108,371 83,834 93,047 50,535 1,031 - - Total business-type activities expenses 7,294,810 7,856,206 6,766,533 6,901,269 7,065,230 6,722,970 6,287,604 5,948,850 5,764,007 5,760,727 Total primary government expenses 59,522,861$ 63,441,468$ 57,427,628$ 61,049,529$ 59,428,395$ 58,154,585$ 54,706,447$ 47,571,334$ 51,177,306$ 45,054,378$ Program Revenues Governmental activities: Charges for services: General government 1,872,740$ 3,387,707$ 1,912,220$ 1,268,310$ 1,946,225$ 1,347,624$ 1,276,959$ 1,650,034$ 1,128,785$ 185,745$ Public safety 484,612 433,823 409,311 363,503 348,524 523,209 571,427 340,705 237,641 237,222 Public service 1,076,634 988,555 941,589 985,735 981,243 994,610 962,822 967,518 1,065,010 945,471 Parks and recreation 158,120 151,604 103,842 35,371 50,677 126,473 125,996 121,929 132,909 108,307 Operating grants and contributions 7,594,357 9,181,984 4,333,082 5,036,389 3,000,719 2,513,938 2,441,864 7,509,005 6,179,709 3,360,731 Capital grants and contributions 2,777,103 2,619,851 2,222,360 1,662,014 2,192,974 1,685,423 542,980 3,702,428 4,139,036 899,522 Total governmental activities program revenues 13,963,566 16,763,524 9,922,404 9,351,322 8,520,362 7,191,277 5,922,048 14,291,619 12,883,090 5,736,998 Business-type activities: Solid Waste 4,935,112$ 4,822,064$ 4,802,844$ 4,561,051$ 4,738,408$ 4,597,398$ 4,555,488$ 4,567,392$ 4,520,084$ 4,453,865$ Section Eight Housing 186 100 2,056 466 299 1,504 - - - - Civic Center - - - (2,750) 15,423 29,784 35,670 36,725 40,148 43,486 Transient Boat Dock 81,711 133,436 120,819 41,068 72,788 79,362 43,534 - - - Operating grants and contributions 2,557,918 2,160,230 2,204,532 2,118,215 1,903,339 2,057,051 1,965,868 1,962,125 1,845,549 1,744,364 Total business-type activities program revenues 7,574,927 7,115,830 7,130,251 6,718,050 6,730,257 6,765,099 6,600,560 6,566,242 6,405,781 6,241,715 Total primary government program revenues 21,538,493$ 23,879,354$ 17,052,655$ 16,069,372$ 15,250,619$ 13,956,376$ 12,522,608$ 20,857,861$ 19,288,871$ 11,978,713$ -132- TABLE 2 CITY OF PADUCAH, KENTUCKY CHANGES IN NET POSITION Last Ten Fiscal Years (accrual basis of accounting) Fiscal Year Pages 2 of 2 2024 2023 2022 (3)2021 2020 2019 2018 (1)2017 2016 2015 (2) Net (Expense)/Revenue Governmental activities (38,264,485)$ (38,821,738)$ (40,738,691)$ (44,796,938)$ (43,842,803)$ (44,240,338)$ (42,496,795)$ (27,330,865)$ (32,530,209)$ (33,556,653)$ Business-type activities 280,117 (740,376) 363,718 (183,219) (334,973) 42,129 312,956 617,392 641,774 480,988 Total primary government net (expense)(37,984,368)$ (39,562,114)$ (40,374,973)$ (44,980,157)$ (44,177,776)$ (44,198,209)$ (42,183,839)$ (26,713,473)$ (31,888,435)$ (33,075,665)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes and licenses: Property taxes, levied for general purposes 6,778,826 6,575,885 6,128,302 5,915,288 5,670,956 5,449,122 5,248,369 4,996,242 4,943,962 4,726,244 Insurance premium tax 7,424,599 6,331,216 5,834,013 5,819,896 4,712,859 4,486,038 4,592,834 4,331,956 4,170,381 3,786,514 Gross receipts license tax 5,137,856 5,375,589 5,297,560 4,530,125 4,307,270 4,367,410 4,631,352 4,721,657 4,711,708 4,397,888 Employee license tax 24,835,738 25,904,591 23,845,186 22,064,353 21,490,918 21,648,742 21,054,644 20,803,763 20,130,249 19,092,912 Other taxes 4,449,033 4,547,198 4,433,257 3,818,918 3,060,362 2,941,096 3,044,203 2,933,407 2,759,902 2,964,685 Unrestricted investment earnings 2,866,207 2,667,976 551,355 368,425 610,727 728,227 428,721 188,097 137,224 176,229 Miscellaneous (270,959) 70,118 14,710 - - 99,208 14,190 51,922 189,489 16,870 Transfers in/out 320,000 389,039 258,374 240,537 466,050 514,046 390,048 2,274,377 137,582 194,014 Total governmental activities 51,541,300 51,861,612 46,362,757 42,757,542 40,319,142 40,233,889 39,404,361 40,301,421 37,180,497 35,355,356 Business-type activities: Unrestricted investment earnings 169,462 136,363 28,613 27,226 68,177 91,140 54,139 37,644 30,302 39,565 Miscellaneous 57,081 61,557 1,580 59,348 72,986 75,923 (13,063) 374,244 85,649 8,339 Transfers (320,000) (389,039) (258,374) (240,527) (466,050) (514,046) (390,048) (2,274,377) (137,582) (194,014) Total business-type activities (93,457) (191,119) (228,181) (153,953) (324,887) (346,983) (348,972) (1,862,489) (21,631) (146,110) Change in Net Position Governmental activities:13,276,815 13,039,874 5,624,066 (2,039,396) (3,523,661) (4,006,449) (3,092,434) 12,970,556 4,650,288 1,798,703 Business-type activities:186,660 (931,495) 135,537 (337,172) (659,860) (304,854) (36,016) (1,245,097) 620,143 334,878 Total primary government 13,463,475$ 12,108,379$ 5,759,603$ (2,376,568)$ (4,183,521)$ (4,311,303)$ (3,128,450)$ 11,725,459$ 5,270,431$ 2,133,581$ (1)Significant change in governmental and business-type net position due to implementation of GASB No. 75 - Accounting and Financial Reporting for Other Postemployment Benefits other than Pensions. (2)Significant change in governmental and business-type net position due to implementation of GASB No. 68 - Accounting and Financial Reporting for Pensions. (3)Fiscal year 2022 has been restated for a correction of an error. Grant revenues were overstated $141,113. -133- CITY OF PADUCAH, KENTUCKY Last Ten Fiscal Years TABLE 2 (accrual basis of accounting) Fiscal Year CHANGES IN NET POSITION 2024 2023 (1)2022 (1)2021 2020 2019 2018 2017 2016 2015 General Fund Committed for: Pension reserve -$ 670,365$ 670,365$ 670,365$ 670,365$ -$ -$ -$ -$ -$ Unassigned 31,537,207 28,723,579 24,267,113 21,538,628 18,974,268 19,184,079 17,697,273 15,330,645 13,198,126 12,549,232 Total general fund 31,537,207$ 29,393,944$ 24,937,478$ 22,208,993$ 19,644,633$ 19,184,079$ 17,697,273$ 15,330,645$ 13,198,126$ 12,549,232$ All Other Governmental Funds Nonspendable: Inventory 317,758$ 295,989$ 341,539$ 376,339$ 453,398$ 474,816$ 471,135$ 525,732$ 623,735$ 828,419$ Restricted for: Program purposes 2,682,064 1,833,884 996,142 759,959 941,141 996,071 758,139 736,461 1,296,007 1,303,030 Capital improvements 15,357,729 18,061,121 19,887,997 19,779,154 19,977,142 181,628 1,330,513 1,532,244 - 1,269,045 Committed for: Capital improvements 4,383,754 3,977,570 4,130,122 3,655,121 2,934,287 2,352,368 2,310,621 2,387,922 2,018,581 1,814,834 Assigned for: Program purposes 2,057,275 2,129,517 1,953,881 1,835,723 1,599,371 1,491,921 1,323,941 1,325,941 1,049,802 951,296 Capital improvements 5,659,695 7,724,128 7,397,442 6,370,850 4,184,306 3,987,920 5,851,629 7,429,412 5,179,330 4,665,475 Total all other governmental funds 30,458,275$ 34,022,209$ 34,707,123$ 32,777,146$ 30,089,645$ 9,484,724$ 12,045,978$ 13,937,712$ 10,167,455$ 10,832,099$ (1)Fiscal years 2023 and 2022 have been restated for a correction of an error. Assigned capital improvement fund balance was overstated $141,113. -134- TABLE 3 CITY OF PADUCAH, KENTUCKYFund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) Fiscal Year 2024 2023 2022 (2)2021 2020 2019 2018 2017 2016 2015 Revenues: Taxes 11,327,318$ 11,058,652$ 10,565,908$ 9,774,901$ 8,652,093$ 7,803,520$ 7,741,994$ 7,310,257$ 6,976,933$ 6,987,173$ Licenses 38,407,710 38,749,289 35,949,346 32,871,864 30,962,169 30,987,476 30,817,507 30,360,825 29,606,552 27,804,759 Charges for services 1,252,253 1,183,490 1,077,278 922,955 918,894 980,827 1,037,668 964,766 884,259 848,971 Intergovernmental 1,443,677 1,230,753 1,165,253 1,806,439 1,305,247 1,246,666 1,243,856 1,140,622 1,132,852 1,244,417 Grants 5,614,178 7,321,192 3,759,769 4,565,348 2,832,657 2,580,700 1,056,687 6,476,765 8,892,529 2,496,329 Interest 2,490,232 2,383,331 501,653 312,932 495,449 594,569 364,975 144,079 115,922 148,411 Other 4,637,478 4,295,256 2,931,011 4,150,383 2,605,489 2,292,786 2,746,311 2,389,230 2,085,412 2,408,193 Total revenues 65,172,846 66,221,963 55,950,218 54,404,822 47,771,998 46,486,544 45,008,998 48,786,544 49,694,459 41,938,253 Expenditures: General government 7,107,555 8,800,786 5,970,330 5,448,505 5,083,231 4,776,778 5,282,385 4,881,298 4,526,828 4,484,105 Public safety 26,310,934 25,225,283 23,386,768 21,741,834 20,699,568 20,216,219 19,755,167 18,923,070 18,435,365 18,524,763 Public service 8,149,434 7,320,232 6,739,731 6,006,971 6,638,775 7,135,831 6,856,203 6,515,997 6,106,773 6,165,664 Parks and recreation 3,436,053 3,316,436 3,123,799 2,945,053 3,240,206 3,255,263 3,129,032 3,012,236 2,929,404 2,842,460 Planning and development 4,027,125 5,607,080 3,171,421 2,482,941 1,976,496 1,290,569 1,071,878 936,855 910,379 950,297 Other 457,221 454,096 493,736 1,393,692 431,505 430,441 441,674 393,812 441,742 247,878 Capital outlay 12,546,751 12,302,819 7,639,458 4,499,609 6,386,992 10,433,993 5,077,017 10,287,203 13,305,919 4,708,663 Debt service: Principal requirement 4,316,277 2,832,606 3,309,044 3,575,792 2,763,738 2,443,416 2,357,542 2,244,361 2,137,759 2,158,385 Debt issuance costs - - 17,486 49,076 182,105 86,283 - - - 51,461 Interest and fiscal requirement 1,070,459 1,112,096 1,134,620 1,184,922 812,040 787,368 804,620 810,917 845,609 817,191 Total expenditures 67,421,809 66,971,434 54,986,393 49,328,395 48,214,656 50,856,161 44,775,518 48,005,749 49,639,778 40,950,867 Other Financing Sources (Uses): Bonds issued - - 1,330,614 3,020,000 20,520,000 5,370,000 - - - 4,225,000 Payment to bond escrow agent - - (1,507,646) (3,187,734) - (2,815,573) - - - (4,143,964) Premium on debt issued - - 204,531 232,710 - 332,097 - - - - Discount on debt issued - - (10,013) (11,955) (64,666) - - - - (29,576) Long-term debt draws/issued - 1,213,469 3,460,662 48,236 463,262 133,749 - 3,000,000 - - Subscription-based information technology arrangements 617,169 2,921,340 - - - - - - - - Transfers in 15,065,811 13,076,213 8,485,383 10,982,495 9,681,148 10,644,129 6,330,766 10,377,609 10,034,851 7,785,410 Transfers out (14,854,688) (12,690,002) (8,268,894) (10,908,318) (9,091,611) (10,369,233) (6,089,352) (8,255,627) (10,105,282) (7,780,785) Total other financing sources (uses)828,292 4,521,020 3,694,637 175,434 21,508,133 3,295,169 241,414 5,121,982 (70,431) 56,085 Net change in fund balances (1,420,671)$ 3,771,549$ 4,658,462$ 5,251,861$ 21,065,475$ (1,074,448)$ 474,894$ 5,902,777$ (15,750)$ 1,043,471$ Capital outlay (1)11,520,913$ 12,790,865$ 6,960,055$ 4,056,766$ 5,253,907$ 7,057,338$ 4,871,811$ 8,180,134$ 9,718,561$ 1,481,948$ Debt service as a percentage of noncapital expenditures 9.64%7.28%9.25%10.52%8.32%7.38%7.92%7.67%7.47%7.54% (1) Capital outlay is reported on the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities. (2)Fiscal year 2022 has been restated for a correction of an error. Grant revenues were overstated $141,113. -135- (modified accrual basis of accounting) TABLE 4 CITY OF PADUCAH, KENTUCKY Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years Fiscal Year Total Estimated Direct Fiscal Personal Actual Tax Year Commercial Residential Property Franchise Total Value Rate Exemptions 2015 851,731,625 751,761,832 582,368,709 73,944,847 2,259,807,013 2,333,746,718 0.291 96.8%73,939,705 2016 902,687,182 783,886,570 573,896,954 57,561,993 2,318,032,699 2,394,834,871 0.289 96.8%76,802,172 2017 900,450,880 802,111,012 603,335,847 66,110,416 2,372,008,155 2,448,169,297 0.290 96.9%76,161,142 2018 945,354,526 842,349,240 746,891,857 81,951,770 2,616,547,393 2,697,740,881 0.295 97.0%81,193,488 2019 959,205,670 882,316,666 550,296,896 65,404,364 2,457,223,596 2,541,130,248 0.291 96.7%83,906,652 2020 988,724,688 903,643,347 518,116,004 40,179,286 2,450,663,325 2,539,860,943 0.293 96.5%89,197,618 2021 1,041,983,926 936,331,898 584,105,652 107,578,333 2,669,999,809 2,758,847,489 0.295 96.8%88,847,680 2022 1,089,161,125 951,835,958 554,605,247 106,115,378 2,701,717,708 2,792,306,325 0.296 96.8%90,588,617 2023 1,169,528,609 1,044,566,181 577,849,087 91,913,018 2,883,856,895 2,979,916,410 0.291 96.8%96,059,515 2024 1,236,115,573 1,187,796,499 679,269,847 111,217,773 3,214,399,692 3,326,691,653 0.282 96.6%112,291,961 Source: McCracken County Property Valuation Administrator Notes: Property in McCracken county is reassessed once every four years on average. -136- TABLE 5CITY OF PADUCAH, KENTUCKYASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARS Estimated Value Percent Assessed ToAssessed Value Real Estate Total Fiscal Real Direct Real Real Real Real Year Estate Personal Rate Estate Personal Estate Personal Estate Personal Estate Personal 2015 0.255 0.390 0.291 0.495 0.495 0.771 0.771 0.017 0.017 0.094 0.095 2016 0.255 0.390 0.289 0.524 0.524 0.800 0.800 0.017 0.017 0.098 0.102 2017 0.255 0.390 0.290 0.516 0.516 0.799 0.799 0.017 0.017 0.096 0.098 2018 0.255 0.390 0.295 0.520 0.530 0.797 0.797 0.016 0.016 0.094 0.094 2019 0.261 0.390 0.291 0.538 0.538 0.840 0.840 0.016 0.016 0.096 0.132 2020 0.267 0.390 0.293 0.538 0.538 0.864 0.864 0.016 0.016 0.101 0.142 2021 0.267 0.390 0.295 0.538 0.538 0.864 0.864 0.016 0.016 0.105 0.139 2022 0.271 0.390 0.296 0.538 0.538 0.864 0.864 0.016 0.016 0.107 0.161 2023 0.265 0.390 0.291 0.538 0.538 0.846 0.864 0.015 0.015 0.108 0.164 2024 0.256 0.373 0.282 0.530 0.530 0.846 0.864 0.014 0.014 0.105 0.158 Source: McCracken County Property Valuation Administrator and City Tax Levy Ordinance. TABLE 6CITY OF PADUCAH, KENTUCKYPROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS(PER $100 OF ASSESSED VALUE)LAST TEN FISCAL YEARS General Fund City Direct Rates McCracken Co.City of Paducah -137- McCracken Paducah School Districts School Districts Junior College County (1)(2)(1)(2)Assessed AssessedTaxpayerValuationValuation Kentucky Oaks Mall 45,465,000$ 1.58%50,900,262$ 2.25%Prosper Paducah LLC 25,680,000 0.89% Boyd Co FKA Whayne Supply Co 24,805,269 0.86%Computer Services Inc 20,962,623 0.73%9,083,185 0.40%LCP Paducah II LLC 15,674,484 0.54%Menard LLC 14,950,001 0.52% Hudson Technologies Co 14,944,434 0.52%Paducah Medical Investors 14,112,194 0.49%13,440,090 0.59%Ducmall LLC 13,300,852 0.46%13,119,800 0.58%Woodstone Enterprises LP 12,500,000 0.43%12,429,000 0.55%Wal Mart Real Estate Business 10,646,400 0.47%Paducah Hospitality Partners 9,600,000 0.42%Sams Real Estate Business Trust 9,222,955 0.41% Wal-Mart Store 9,000,000 0.40%USF Propco I LLC 8,156,900 0.36% TOTALS 202,394,857$ 7.02%145,598,592$ 6.43% (1) Source - Property Valuation Administration; Assessed value as of January 1, 2023.(2) Source - Property Valuation Administration; Assessed value as of January 1, 2014. TABLE 7CITY OF PADUCAH, KENTUCKYPRINCIPAL TAXPAYERS - PROPERTY TAXCURRENT YEAR AND NINE YEARS PRIOR 2024 2015 -138- Percentage of Percentage ofTotal Assessed Total AssessedValuationValuation Total Collections to Date(1)(1)Percent of Percent ofAmount of Levy Total LevyCollectionsCollectedCollectionsCollected 4,717,205 4,644,522 98.5%72,683 4,717,205 100.0% 4,878,798 4,802,067 98.4%76,731 4,878,798 100.0% 4,988,156 4,888,303 98.0%99,853 4,988,156 100.0% 5,210,619 5,120,761 98.3%80,696 5,201,457 99.8% 5,452,803 5,323,669 97.6%119,570 5,443,239 99.8% 5,647,154 5,506,011 97.5%129,859 5,635,870 99.8% 5,669,747 5,563,728 98.1%79,706 5,643,434 99.5% 6,107,712 5,970,967 97.8%116,271 6,087,238 99.7% 6,443,057 6,316,790 98.0%88,506 6,405,296 99.4% 6,782,406 6,694,929 98.7%- 6,694,929 98.7% (1) Includes current year real and personal property tax. * Source - City of Paducah Finance Department. -139- 2018 2020 2021 2022 2023 2024 2017 2015 2016 Fiscal 2019 June 30,Ended Year Fiscal Year Collectionsin SubsequentYears Taxes Leviedfor the TABLE 8CITY OF PADUCAH, KENTUCKYSECURED TAX LEVIES AND COLLECTIONS*LAST TEN FISCAL YEARS Collected within theFiscal Year of the Levy (1)DirectFiscalTaxesTax Year Collected Rate201519,092,911 2.00%2016 20,130,158 2.00% 2017 20,803,763 2.00%2018 21,054,644 2.00%2019 21,648,742 2.00% 2020 21,490,917 2.00%2021 22,064,353 2.00%2022 23,845,186 2.00%2023 25,904,591 2.00% 2024 26,131,614 2.00% 222,166,879 (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -140- TABLE 9CITY OF PADUCAH, KENTUCKYEMPLOYEE LICENSE TAX COLLECTIONSLAST TEN FISCAL YEARS (1)Percentage ofNumber of Percentage Taxes Total EmployeeFilersof Total Collected License Tax $0 - $50,000 2,417 96.88%10,175,482 38.93% $50,001 - $100,000 43 1.72%2,971,080 11.37% $100,001 - $500,000 29 1.16%5,418,392 20.74% Greater than $500,000 6 0.24%7,566,659 28.96% TOTALS 2,495 100.00%26,131,614$ 100.00% (1)Percentage ofNumber of Percentage Taxes Total EmployeeFilersof Total Collected License Tax $0 - $50,000 2,374 97.54%8,884,639 46.53% $50,001 - $100,000 29 1.19%2,023,158 10.60% $100,001 - $500,000 29 1.19%5,247,570 27.48% Greater than $500,000 2 0.08%2,937,544 15.39% TOTALS 2,434 100.00%19,092,911$ 100.00% (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. 2024 2015 TABLE 10CITY OF PADUCAH, KENTUCKYPRINCIPAL EMPLOYEE LICENSE TAXPAYERSCURRENT YEAR AND NINE YEARS PRIOR -141- TaxpayersBy Range TaxpayersBy Range (1) Ratio of (3) Reported Net Net Debt as (2) General Total Debt to Percentage Net Fiscal Obligation Governmental Business-Type Primary Actual of Personal Debt Per Year Bonds Activities Activities Government Value Income Capita 2015 23,320,347 6,101,064 - - 29,421,411 1.26 5.75%1,176 2016 21,595,096 5,686,435 - - 27,281,531 1.14 5.34%1,090 2017 19,815,809 8,218,304 - - 28,034,113 1.15 5.48%1,120 2018 17,992,494 7,806,701 - - 25,799,195 0.96 5.05%1,031 2019 19,863,092 6,451,453 - - 26,314,545 1.04 5.15%1,052 2020 38,041,738 6,365,985 - - 44,407,723 1.75 8.69%1,775 2021 34,831,438 6,063,429 - - 40,894,867 1.48 4.92%1,507 2022 32,916,439 8,043,925 - - 40,960,364 1.47 4.93%1,509 2023 30,741,136 8,933,416 - - 39,674,552 1.33 4.77%1,462 2024 27,495,890 8,408,577 2,448,434 125,001 38,477,902 1.16 4.63%1,418 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 5 for estimated actual property value. This ratio is calculated using estimated property value for the prior year. (2) See Table 16 for population data. (3) See Table 16 for personal income data -142- Improvement Debt TABLE 11 CITY OF PADUCAH, KENTUCKY RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Public Subscription-based Information Technology Arrangements (1)Ratio ofPublicNetConvention &Rental Floodwall Improvement Public Pool Economic Riverfront Recreation Bonds toFiscal Art Center Building Rehabilitation Project Renovation Development and E911 Facility ActualYearBondsBondsBondsBondsBondsBondsEquipmentBondsTotalValue 2015 5,385,000 4,435,000 2,820,000 2,104,212 5,100,000 1,055,000 2,330,000 - - 91,135 23,320,347 1.00 932 2016 4,955,000 4,055,000 2,530,000 1,990,271 4,805,000 990,000 2,185,000 - - 84,825 21,595,096 0.90 863 2017 4,515,000 3,660,000 2,230,000 1,862,123 4,505,000 925,000 2,040,000 - - 78,686 19,815,809 0.81 792 2018 4,065,000 3,255,000 1,920,000 1,729,992 4,195,000 860,000 1,895,000 - - 72,502 17,992,494 0.67 719 2019 3,610,000 2,845,000 1,600,000 2,355,000 3,870,000 790,000 1,750,000 2,700,000 - 343,092 19,863,092 0.78 794 2020 3,140,000 2,420,000 1,265,000 2,045,000 3,560,000 720,000 1,600,000 2,555,000 20,520,000 216,738 38,041,738 1.50 1,520 2021 2,525,000 1,985,000 - 1,715,000 3,240,000 650,000 1,445,000 2,400,000 20,520,000 351,438 34,831,438 1.26 1,284 2022 2,050,000 1,540,000 - 1,365,000 2,910,000 575,000 1,290,000 2,235,000 20,520,000 431,439 32,916,439 1.18 1,213 2023 1,560,000 1,080,000 - 1,000,000 2,570,000 500,000 1,125,000 2,070,000 20,520,000 316,136 30,741,136 1.03 1,133 2024 1,055,000 610,000 - 810,000 2,220,000 425,000 - 1,895,000 20,260,000 220,890 27,495,890 0.83 1,013 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements.(1) See Table 5 for estimated actual property value. This ratio is calculated using estimated property value for the prior year.(2) See Table 15 for population data. Police andFire PensionFundBonds -143- Capita Amortizationof Discountsand Premiums (2)NetBonds Per TABLE 12CITY OF PADUCAH, KENTUCKYRATIO OF NET GENERAL BONDED DEBT OUTSTANDINGLAST TEN FISCAL YEARS Estimated (1)Share of Reported Percentage Direct and Debt Applicable Overlapping Outstanding to the City Debt City of Paducah 38,477,902$ 100.00%38,477,902$ Paducah Independent School District 68,092,000 *100.00%68,092,000 McCracken County 12,677,360 *45.80%5,806,231 McCracken County Board of Education 91,510,000 *31.30%28,642,630 Overlapping debt 172,279,360 102,540,861 TOTAL DIRECT AND OVERLAPPING DEBT 210,757,262$ 141,018,763$ (1) Applicable percentage is determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. * Information from finance office at each location. -144- TABLE 13 CITY OF PADUCAH, KENTUCKY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2024 Net assessed value 3,214,399,692$ Add exemption 112,291,961 Total assessed value 3,326,691,653$ Debt limit - 10% of total assessed (1)332,669,165$ Debt outstanding:General obligation bonds outstanding 27,495,890$ Note payable 8,408,577 Less debt not subject to limit - Gross bonded debt 35,904,467 Less amount available in debt service funds 1,730,158 Net bonded indebtedness subject to limit 34,174,309 LEGAL DEBT MARGIN 298,494,856$ 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Debt limit 332,669,165$ 297,991,641$ 279,230,633$ 275,884,749$ 253,986,094$ 254,113,025$ 244,995,800$ 244,792,901$ 239,483,487$ 233,374,672$ Total net debt applicable to limit 34,174,309 37,876,511 39,337,478 39,389,418 43,136,434 25,136,858 24,778,288 27,011,206 26,489,770 28,769,092 LEGAL DEBTMARGIN 298,494,856$ 260,115,130$ 239,893,155$ 236,495,331$ 210,849,660$ 228,976,167$ 220,217,512$ 217,781,695$ 212,993,717$ 204,605,580$ Total net debt applicable to thelimited as a percentage of debt limit 10.27%12.71%14.09%14.28%16.98%9.89%10.11%11.03%11.06%12.33% (1) "Cities shall not be authorized or permitted to incur indebtedness to an amount, including existing indebtedness, in the aggregate exceeding the following names maximum percentages on the value of the taxable property therein, to be estimated by the assessment previous to the incurring of the indebtedness: Cities of the first and second classes, and of the third class having a population exceeding fifteen hundred, ten per centum." -145- Fiscal Year TABLE 14 CITY OF PADUCAH, KENTUCKY LEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARS (1)PersonalIncome 25,024 511,240,320 20,430 41.4 2,843 5.6% 25,024 511,240,320 20,430 41.4 3,139 6.2% 25,024 511,240,320 20,430 41.4 3,132 6.8% 25,024 511,240,320 20,430 41.4 2,835 6.4% 25,024 511,240,320 20,430 41.4 2,980 5.5% 25,024 511,240,320 20,430 41.4 3,232 5.4% 27,137 830,934,940 30,620 43.8 2,832 5.9% 27,137 830,934,940 30,620 43.8 2,832 4.6% 27,137 830,934,940 30,620 43.8 2,770 4.3% 27,137 830,934,940 30,620 43.8 2,784 4.9% Sources: (1)Latest available Bureau of the Census Count (2)Board of Education; represents elementary and secondary public schools. (3)Kentucky Cabinet for Human Resources, Department for Employment Services. Income 2014-2015 Fiscal Year Population 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 -146- TABLE 15CITY OF PADUCAH, KENTUCKYDEMOGRAPHIC AND ECONOMIC STATISTICSLAST TEN FISCAL YEARS (1)(1)(2)(3)Per Capita Median School UnemploymentEnrollmentRateAge Percentage of Percentage ofTotalTotalEmployees (1)Employment (2)Employees (1)Employment (2) Bon Secours Mercy Health, Inc 1,518 5.22%1,645 6.07%Baptist Healthcare Systems 1,480 5.09%1,713 6.32%Wal-Mart Associates, Inc.1,012 3.48%999 3.69%Paducah Board of Education 594 2.04%598 2.21%Baptist Health Medical Group 417 1.43%Vi Wintech Window & Door 397 1.36% Kentucky Community & Technical College 365 1.25%518 1.91%City of Paducah 339 1.16%471 1.74%Lowes of Paducah #465 321 1.10%G M R I 288 0.99% Commonwealth of Kentucky 347 1.28%LYNX Services 421 1.55%Parkview Convalescent Center 284 1.05% Computer Services Inc 255 0.94%Paxton Media Group 223 0.82% TOTALS 6,731 23.12%7,474 27.58% (1) Source - City of Paducah Finance Department (2) State of Kentucky - Office of Employment and Training. Ratio based on employment within County of McCracken. -147- Employer TABLE 16CITY OF PADUCAH, KENTUCKYPRINCIPAL EMPLOYERSCURRENT YEAR AND NINE YEARS PRIOR 20152024 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 Governmental ActivitiesGeneral governmentGeneral administration 10 12 12 11 10 12 12 12 11 11 Finance 12 11 11 11 12 11 11 11 11 11Information systems 8 6 5 4 4 6 5 5 5 5Clerk/Customer Experience 4 4 5 5 5 0 0 0 0 0Risk/Human resources 5 4 4 4 3 3 3 4 3 3 Public safetyPolice 90 90 90 87 87 87 87 87 87 87 Fire 75 75 75 75 74 76 77 76 76 76Public serviceStreets 23.00 23.00 24.75 23.75 21.2 21.2 21.2 21.2 21 21Facilities13.75 13.75 13.25 14.25 12.8 12.8 12.8 12.8 12.5 12.5 Engineering 6.0 6.0 6.0 6.0 5.2 5.3 5.3 5.8 6.6 6.6E911**23 23 23 23 23 22 22 22 0 0Other5555555555 Parks and recreation 23.7 25.7 25.7 25.7 27.7 27 27 25 25 25Planning and development 7 7 7 8 8 12 11 11 10 10OtherPaducah Riverfront Dev. Authority 0 0 0 0 0 0 0 0 1 1 Boat dock 0.3 0.3 0.3 0.3 0.3 0 0 0 0 0Fleet maintenance 8.3 8.3 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 Business-type ActivitiesSolid waste 25.0 25.0 25.5 25.5 25.3 26.2 26.2 25.7 25.4 25.4 TOTAL PRIMARY GOVERNMENT 339 339 339 335 330 333 332 330 306 306 * Employee budget census.** E911 became a City department effective 7/1/16. -148- Fiscal Year TABLE 17CITY OF PADUCAH, KENTUCKYCITY FULL-TIME EMPLOYEES BY FUNCTION*Last Ten Fiscal Years 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015General governmentBuilding and electrical permits issued 810 708 927 946 972 1,130 1,179 1,285 1,344 1,175 Business licenses issued 3,098 3,244 2,955 3,263 3,787 3,401 4,240 4,234 3,826 3,729 Public safety PoliceAdult arrests 2,997 3,247 2,468 1,944 1,859 2,371 2,443 2,259 2,174 2,293 Murder 4 3 5 4 3 - 6 1 2 2 Rape 21 16 30 20 18 18 24 13 11 10 Robberies 10 18 9 13 16 29 17 29 42 41 Burglary 71 74 79 114 105 144 178 130 185 138 Auto theft 79 59 97 97 64 70 101 89 59 49 Larceny 682 744 720 824 833 1,115 1,064 1,027 1,173 1,138 Arson 7 7 6 8 11 9 10 6 7 2 Traffic accidents 1,674 1,770 1,827 1,791 1,706 1,901 1,770 1,826 1,936 1,722 Traffic violations 4,392 2,360 2,248 1,765 2,085 2,168 3,723 4,663 4,231 5,501 FireEmergency responses 4,096 5,682 5,808 3,010 3,300 3,235 3,320 3,275 3,201 2,956 Fires extinguished 127 158 157 178 154 108 118 135 124 118 Structure fires 42 42 57 77 60 35 39 36 42 42 Incidents with reportedlosses 81 158 157 178 157 136 119 138 72 73 Medical/rescue 3,969 4,498 4,450 2,010 2,113 2,244 2,295 2,308 2,259 2,150 Tours/in-services/carseats 170 220 211 142 229 276 229 262 305 400 Training man hours 13,901 18,838 14,412 11,651 10,755 9,372 10,755 8,378 10,589 10,860 Inspections 1,300 375 865 91 893 1,060 709 2,126 2,060 1,324 Refuse collectionResidentialRefuse collected (tons 39 37 41 45 38 37 36 36 41 34 per day)Customers served 10,175 10,250 10,178 10,129 9,734 9,895 9,889 9,806 9,801 9,639 CommercialRefuse collected (tons 64 67 67 66 65 69 70 70 61 64per day) Customers served 982 960 953 943 943 950 930 858 854 861Public service911 dispatches 102,250 93,372 85,203 81,504 90,603 90,191 94,187 94,053 85,380 83,465 Police 51,989 49,240 45,759 46,307 53,399 47,719 53,522 53,896 46,660 44,337 Fire 4,128 5,724 5,795 3,298 3,225 3,296 3,351 3,314 3,230 3,152 Other 46,133 38,408 33,649 31,899 33,979 39,176 37,314 36,843 35,490 35,976 ** Information from city departments.-149- TABLE 18CITY OF PADUCAH, KENTUCKYOPERATING INDICATORS BY FUNCTION**Last Ten Fiscal Years Fiscal Year 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015Public safetyPolice Stations 1 1 1 1 1 1 1 1 1 1FireStations5555555555Refuse collectionCollection trucksResidential 12 12 10 10 10 10 10 10 10 10Commercial6544444444Other public worksStreets (miles paved)221 219 218 218 218 218 218 218 218 218Sidewalks (miles)50 49 47 47 47 47 47 47 47 47Traffic signals 8 8 10 10 13 13 13 13 13 13Parks and recreationParks 28 27 29 29 29 29 29 29 29 28Acreage1,095 949 960 960 960 960 960 960 960 960 Community centers 3 3 2 2 2 2 2 2 2 2Swimming pools 1 1 1 1 1 1 1 1 1 1Public tennis courts 7 7 7 7 7 7 6 6 6 6Public golf/disk golf courses 2 3 4 4 4 4 4 4 4 4 * Information from city departments. -150- TABLE 19CITY OF PADUCAH, KENTUCKYCAPITAL ASSET STATISTICS BY FUNCTION*Last Ten Fiscal Years Fiscal Year THIS PAGE INTENTIONALLY LEFT BLANK CITY OF PADUCAH, KENTUCKY SINGLE AUDIT SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2024 AssistanceListing Pass-Through Pass-ThroughProgram Title:Number Grantor Number To Subrecipients Expenditures Department of Housing and Urban Development:Direct Programs:Section 8 Housing Choice Vouchers 14.871 N/A -$ 2,528,517$ Passed-through Kentucky GovernorsOffice for Local Development:Community Development Block Grants 14.228 N/A 197,500 200,000 Total Department of Housing and Urban Development 197,500 2,728,517 Department of the InteriorPassed-through Kentucky Heritage Council:Historic Preservation Fund Grants-In-Aid 15.904 N/A - 45,128 Passed-through Kentucky GovernorsOffice for Local Development:Outdoor Recreation Acquisition,Development and Planning 15.916 KY-21-01655 - 59,184 Total Department of the Interior - 104,312 Department of Justice:Direct Programs:Bulletproof Vest Partnership Program 16.607 N/A - 4,907 Public Safety Partnership and Community Policing Grants 16.710 N/A - 42,781 Edward Byrne Memorial Justice Assistance Grant Program 16.738 N/A - 11,554 Total Department of Justice - 59,242 Department of Transportation:Direct Programs:National Infrastructure Investments 20.933 N/A - 429,709 Passed-through Kentucky Transportation Cabinet:Highway Safety Cluster:State and Community Highway Safety 20.600 PT-22-65 - 9,001 State and Community Highway Safety 20.600 PT-23-54 - 6,268 Total Highway Safety Cluster - 15,269 Total Department of Transportation - 444,978 U.S. Department of the TreasuryDirect Programs:Equitable Sharing 21.016 N/A - 7,673 Passed-through Kentucky Department forLocal Government:Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A - 2,226,920 Total U.S. Department of the Treasury - 2,234,593 Department of Environmental ProtectionAgency:Direct Programs:Brownfields Multipurpose, Assessment, RevolvingLoan Fund, and Cleanup Cooperative Agreements 66.818 N/A - 86,031 Total Department of Environmental Protection Agency - 86,031 Department of Homeland Security:Direct Programs:Assistance to Firefighters Grant 97.044 N/A - 32,701 Port Security Grant Program 97.056 N/A - 261,600 Port Security Grant Program 97.056 N/A - 23,739 Passed-through Kentucky Division ofHomeland SecurityHomeland Security Grant Program 97.067 N/A - 29,100 Staate and Local Cybersecurity Grant Program 97.137 N/A - 12,474 Passed-through Kentucky Division ofEmergency Management:Disaster Grants - Public Assistance 97.036 N/A - 950,000 Disaster Grants - Public Assistance 97.036 N/A - 79,099 Total Department of Homeland Security - 1,388,713 TOTAL EXPENDITURES OF FEDERAL AWARDS 197,500$ 7,046,386$ See accompanying notes to schedule of expenditures of federal awards.-151- CITY OF PADUCAH, KENTUCKYSCHEDULE OF EXPENDITURES OF FEDERAL AWARDSFOR THE YEAR ENDED JUNE 30, 2024 Federal Grantor/Pass-Through Grantor/ CITY OF PADUCAH, KENTUCKY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2024 Note 1 - Basis of Presentation: The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Paducah and is presented on the accrual basis of accounting. The information in 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 Award (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. Note 2 - Subrecipients: The City of Paducah provided federal awards to subrecipients as follows: Assistance Listing Amount Program Title Number Provided Four Rivers Recovery Center 14.228 $197,500 Note 3 – Indirect Cost Rate: The City of Paducah has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Note 4 – Reconciliation of Federal Awards to the Financial Statements: Total Federal Awards $ 7,046,386 Federal Awards by Fund General Fund $ 2,323,788 Capital Improvement Fund 1,988,908 Debt Service Fund - Special Revenue Fund 205,173 Proprietary Fund 2,528,517 Total Federal Awards $ 7,046,386 -152- - 153 - INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business- type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky, as of and for the year ended June 30, 2024, and the related notes to the financial statements, which collectively comprise City of Paducah, Kentucky’s basic financial statements, and have issued our report thereon dated December 11, 2024. Report on Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Paducah, Kentucky’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 City of Paducah, Kentucky’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Paducah, Kentucky’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. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses or significant deficiencies may exist that were not identified. Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Paducah, Kentucky’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. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com - 154 - 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. Certified Public Accountants and Consultants Paducah, Kentucky December 11, 2024 - 155 - INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the City of Paducah, Kentucky’s compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City of Paducah, Kentucky’s major federal programs for the year ended June 30, 2024. City of Paducah, Kentucky’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, City of Paducah, Kentucky complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2024. 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; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; 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 City of Paducah, Kentucky 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 City of Paducah, Kentucky’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 City of Paducah, Kentucky’s federal programs. 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 City of Paducah, Kentucky’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 generally accepted auditing standards, Governmental Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com - 156 - 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 City of Paducah, Kentucky’s compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with generally accepted auditing standards, Governmental 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 City of Paducah, Kentucky’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 City of Paducah, Kentucky’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 City of Paducah, Kentucky’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. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the 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 Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants and Consultants Paducah, Kentucky December 11, 2024 CITY OF PADUCAH, KENTUCKY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2024 Section I – Summary of Auditor’s Results 1. The independent auditor’s report expresses an unmodified opinion on whether the financial statements of the City of Paducah, Kentucky were prepared in accordance with generally accepted accounting principles. 2. No significant deficiencies relating to the audit of the financial statements are reported. No material weaknesses relating to the audit of the financial statements are reported. 3. No instances of noncompliance material to the financial statements of the City of Paducah, Kentucky, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. No deficiencies relating to the audit of major federal award programs are reported. No material weaknesses relating to the audit of major federal award programs are reported. 5. The auditor’s report on compliance for the major federal award programs for the City of Paducah, Kentucky expresses an unmodified opinion on all major federal programs. 6. There are no findings to be reported in accordance with 2 CFR Section 200.516(a) in this schedule. 7. The programs tested as major programs included: Name CFDA National Infrastructure Investments 20.933 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 8. The threshold used for distinguishing Types A and B programs was $750,000. 9. The City of Paducah, Kentucky did qualify to be audited as a low-risk auditee. Section II – Findings – Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III – Findings and Questioned Costs – Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -157- CITY OF PADUCAH, KENTUCKY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2023 Section II – Findings – Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III – Findings and Questioned Costs – Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -158-