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HomeMy WebLinkAboutCAFR-June-30-2009CITY OF PADUCAH, KENTUCKY COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 FINANCE DEPARTMENT CITY OF PADUCAH, KENTUCKY City of Paducah Paducah, Kentucky Comprehensive Annual Financial Report Year Ended June 30, 2009 Issued by the Finance Department CITY OF PADUCAH, KENTUCKY COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 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 11-12 Required Supplementary Information: Management’s Discussion and Analysis 13-27 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Assets 1 28-29 Statement of Activities 2 30-31 Fund Financial Statements: Governmental Funds: Balance Sheet 3 32-33 Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Assets 4 34-35 Statement of Revenues, Expenditures and Changes in Fund Balances 5 36-37 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 38-40 Budgetary Comparison Statement (Budgetary Basis ) - General Fund 7 41-44 Budgetary Comparison Statement - Note to RSI - General Fund 8 45 Budgetary Comparison Statement (Budgetary Basis) - Special Revenue Investment Fund 9 46 Budgetary Comparison Statement - Note to RSI - Special Revenue Investment Fund 10 47 Proprietary Funds: Statement of Net Assets 11 48 Statement of Revenues, Expenses and Changes in Fund Net Assets 12 49 Statement of Cash Flows 13 50 Fiduciary Funds: Statement of Net Assets 14 51 Statement of Changes in Net Assets 15 52 Component Units Financial Statements: Statement of Net Assets 16 53-54 Statement of Activities 17 55-56 Notes to Financial Statements 57-89 Required Supplementary Information: Pension Trust Fund Schedules A-1 90 Exhibit No. Page No. Supplementary Information: Nonmajor Governmental Funds: General Capital Improvements Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-1 91 Debt Service Fund Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-2 92 Combining Balance Sheet B-3 93-94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances B-4 95-96 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual: Municipal Aid Program Fund B-5 97 Emergency Communication Service Fund B-6 98 Court Awards Fund B-7 99 Small Grant Fund B-8 100 CDBG Grant Fund B-9 101 Home Grant Fund B-10 102 HUD Revolving Grant Fund B-11 103 PRA Fund B-12 104 Nonmajor Proprietary Funds: Nonmajor Enterprise Funds: Combining Statement of Net Assets C-1 105 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets C-2 106 Combining Statement of Cash Flows C-3 107 Internal Service Funds: Combining Statement of Net Assets D-1 108 Combining Statement of Revenues, Expenses, and Changes in Fund Net Assets D-2 109 Combining Statement of Cash Flows D-3 110 Fiduciary Funds: Combining Statement of Net Assets – Pension Trust Funds E-1 111 Combining Statement of Changes in Net Assets – Pension Trust Funds E-2 112 Combining Statement of Net Assets – Private-purpose Trust Funds E-3 113 Combining Statement of Changes in Net Assets – Private-purpose Trust Funds E-4 114 Statement of Changes in Assets and Liabilities – Agency Funds E-5 115 Table No. Page No. Statistical Section: Net Assets by Component 1 116 Changes in Net Assets 2 117-119 Fund Balances, Governmental Funds 3 120 Changes in Fund Balances, Governmental Funds 4 121 Assessed and Estimated Actual Value of Taxable Property 5 122 Table No. Page No. Statistical Section: Property Tax Rates - Direct and Overlapping Governments 6 123 Principal Taxpayers 7 124 Secured Tax Levies and Collections 8 125 Employee License Tax Collections 9 126 Principal Employee License Taxpayers 10 127 Ratio of Outstanding Debt by Type 11 128 Ratio of Net General Bonded Debt Outstanding 12 129 Direct and Overlapping Governmental Activities Debt 13 130 Legal Debt Margin Information 14 131 Demographic and Economic Statistics 15 132 Principal Employers 16 133 City Full-Time Employees by Function 17 134 Operating Indicators by Function 18 135 Capital Asset Statistics by Function 19 136 Single Audit Section: Schedule of Expenditures of Federal Awards 137-138 Notes to the Schedule of Expenditures of Federal Awards 139 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 140-141 Report on Compliance with Requirements Applicable to each Major Program and On Internal Control Over Compliance in Accordance with OMB Circular A-133 142-143 Schedule of Findings and Questioned Costs 144 CITY OF PADUCAH, KENTUCKY INTRODUCTORY SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH Finance Department P.O. Box 2267 Paducah, KY 42002-2267 270-444-8512 December 22, 2009 Honorable Mayor and Commissioners City of Paducah Paducah, Kentucky We are pleased to submit Paducah's Comprehensive Annual Financial Report for the year ended June 30, 2009. 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, 2009, 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 CAFR. 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 The Paducah area has moved from the traditional “manufacturing industry” to a “service industry” economy. Multi-state computer services, significant banking corporations, wholesale and retail trade, river-related services, the health care industry and related services are the major employment centers. Traditional manufacturing employment is heavily concentrated in the categories of chemicals, petroleum, coal and rubber, and enriched uranium. Economic Development Activities The Greater Paducah Economic Development Council (GPEDC) coordinates the City’s efforts in strengthening and building economic development activities. Representatives of financial institutions, utilities, local government, education and the business community serve as the Board of Directors. In existence since 1987, GPEDC 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, GPEDC 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 ‘Information Age’ Park. This park is designed to appeal to firms needing advanced telecommunications and computing capabilities. The Info Park’s focal point was centered on the Resource Center, which was designed to coordinate resources of government, business and education. 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, GPEDC began assembling property to establish Riverport West, a 1,000-acre industrial park with rail and river access in western McCracken County. In FY2009, as the following table indicates, there were 483 jobs created and retained, and $4 million capital invested not to mention the added fiscal impact from the jobs created and capital invested. Additionally, numerous other retail shops opened, creating several dozen more service industry jobs, further strengthening Paducah’s retail market. Summary of Capital Investment and New/Retained Jobs FY2009 Jobs Company Capital Investment In Millions New Retained AEP River Operations $4.00 75 13 LYNX (temp jobs) $0 30 250 America’s Assisted Living Pharmacy N/A 15 25 Thoroughbred Opinion Research N/A 75 0 Total $4.00 195 288 Source: Greater Paducah Economic Development Council 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. Higher education is available locally from West Kentucky Community and Technical College (WKCTC), formerly known as Paducah Community College, 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, which held classes this fall in its temporary location, while the permanent facility is under construction. 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 Lourdes Hospital and Western Baptist Hospital, provides over 640 beds for medical needs. The two largest hospitals, together, employ approximately 2,900 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. -2- City parks provide areas for baseball, softball, golf, football, tennis, disc golf, skate boarding, soccer and picnicking. 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 140-year-old historic neighborhood. The LowerTown Art and Music Festival is an outdoor-juried show in its 7th year. The weekend includes jazz, salsa, zydeco and blues music, as well as food from area restaurants. Over 8,000 people attended in 2009. Started in 2004, the ‘Rivers Edge International Film Festival’ is a four-day event built around the showing of independent films from around the world. The festival is held in multiple venues including Maiden Alley Cinema, Market House Theatre, and Yeiser Art Center. In addition to appealing to the film lover, the festival also provides filmmakers opportunities for exhibition, education, and networking. 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. The ‘After Dinner Downtown Program’, which began in May 1997, started out as an experiment to draw people to Paducah's downtown district. From May to September, businesses remain open late on Saturday night, while street corner musicians of all types entertain. The ‘Paducah Summer Festival’, started in 1967, is an annual celebration held during the last week in July. Some of the Festival’s activities include skydiving, hot air balloon races, a variety of music concerts, and usually concludes with a spectacular riverfront fireworks display. 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 70,000 participants to Paducah’s riverfront during the last weekend in September. Over time, this annual event has grown to incorporate other events, including ‘Marine Industry Day’ and ‘Old Market Days’. 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. This is the eleventh year for the event. Although the event is free, volunteers collect more than $30,000 in cash 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 most recent addition to the City’s cultural lineup is the ‘Luther F. Carson Four Rivers Center for the Performing Arts’. The Center opened in February 2004, as a regional, multiple-purpose facility, with a 1,800- seat main hall designed to accommodate a wide variety of cultural and educational programs. The McCracken County Public Library offers a large selection of literature, special collections and programs. The West Kentucky Community and Technical College Library supplements this community resource. The combined inventories of the two libraries yield nearly 121,000 titles, not counting numerous periodicals and newspapers. -3- THE GOVERNMENT Paducah operates under a Council-City Manager form 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’s 343 full-time employees as of June 30, 2009. 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 Comprehensive Annual 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 following component units have been presented as discrete units to emphasize that they are legally separate from the City. Paducah Water Works and Transit Authority of the City of Paducah are all included in the City’s financial statements because of their 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; storm sewer 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. Internal Control In developing and evaluating the City’s accounting system, consideration is given to the adequacy of internal controls. 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 -4- 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 and a budget amendment is approved. Purchase orders which result in an overrun of department appropriations cannot be honored until additional appropriations are made available. Open encumbrances at fiscal year end, if any, are reported as reservations of fund balance. 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 FY2009, some 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 its policy to contribute the normal cost annually as well as make the necessary contribution to eliminate any unfunded liability that would arise from the fund being in a deficit position as of the actuarial date. For FY2009, the required contribution was $230,530. This amount is up from $54,816 in FY2008 and is expected to double to $460,000 for FY2010. FEMA Reimbursements. In FY2009, the City experienced two separate storms that qualified for FEMA reimbursement. This is the first time the City has received federal disaster assistance since severe flooding in 1993. Neither the expenses nor the related revenues were anticipated and, therefore, were not included in the City’s budget. In September 2008, the City and surrounding area experienced extensive wind damage due to Hurricane Ike. The City incurred over $450 thousand in clean-up costs, with the federal share being $342 thousand. In late January 2009, the region experienced a historical ice storm, with nearly 2 inches of catastrophic icing in the Paducah/McCracken County area. By the evening of January 27, over 90 percent of southwestern Kentucky was without power. Trees fell on many homes and cars, numerous trees and power lines blocked roads and caused major travel hazards in the days following the storm, and communication outages impacted many homes and businesses. As a result of the storm, the City incurred clean-up costs of over $3 million dollars, with $2.6 million dollars in federally reimbursable expenses through FEMA. Fund Balance Reserve. The City’s operating budget policy states that the General Fund’s minimum undesignated cash balance shall be 8% of the General Fund’s budgeted expenditures. Any year-end operating surpluses in excess of the required reserve may be kept as additional reserve or made available for capital projects and/or “one-time only” General Fund expenditures as determined by the Board of Commissioners. In the fall of 2008, the Commission approved $1.082 million in additional appropriations. The most significant of these included vehicle acquisitions, mobile data terminal replacement, and installation of efficiency improvements as a result of the City’s energy audit. As part of the City’s annual budget process, financial policies are reviewed and amended as necessary. In FY2009, there were no changes in policy that would have a significant impact on the financial statements of the City. 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: economic development, neighborhood redevelopment, infrastructure capital investment, and property tax relief. During the FY 2010 budget process, the Commission reviewed -5- numerous decision packages proposed for the Investment Fund Budget; expenditures totaling $4.58 million were appropriated. The City has numerous infrastructure/capital items that will affect the long-term financial planning process. The following projects are two examples of future considerations facing the City: Floodwall Restoration. The 12.5-mile long floodwall system protecting a large portion of the Paducah- McCracken area is approaching 60 years of age. It is still in good condition long beyond its design life; however, it is in need of necessary repairs. The estimated cost of this restoration project is approximately $6 million. Anticipated grant funds will cover 65% of the project. In FY2009, the City proceeded with making the most seriously needed repairs by borrowing around $2 million. This phase of repairs should be completed during FY2010. Riverfront Redevelopment Plan. The City’s Riverfront Redevelopment Plan includes proposed improvements that will provide public amenities, recreational facilities and public spaces that will tie the City’s downtown to the Ohio River. The plan includes a public marina, boat ramp, recreational trails and shoreline enhancements, and a steamboat landing, just to name a few. Completion of Phase I and Phase II of the entire riverfront redevelopment plan will cost an estimated $46.2 million. In FY2007, the City was allocated $5.3 million in federal funds for construction of Phase 1 and the Ohio River Boat Launch Project. Environmental assessment and remediation procedures required by the permitting process have temporarily stalled the construction of this phase of the project. Once all permits are secured, construction will be able to begin. Operating costs will be a long-term planning consideration. Sports Park. The City is in negotiations for a land purchase that will be used to develop a sports park. If the purchase goes through, a plan will be developed which will likely include soccer fields, softball/baseball fields, trails, shelters, and ancillary buildings. Depending on possible partnerships and construction phasing, development costs may range between $2 million and $6 million dollars. Operating costs of the facility will be a long-term planning consideration and is estimated at build-out to be $150,000 to $200,000 annually. 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 decreased only slightly with 29,254 persons employed (McCracken County) as of June 30, 2009. The June 2009 unemployment rate was 9.3% (McCracken County), which is almost equal to the federal rate of 9.7%. Both local and federal unemployment rates increased, compared to 6.1 and 5.5 in the prior year, respectively. The number of active electric and water meters was nearly the same as the prior year. The number of building and electric permits obtained was 1,179 for fiscal year 2009 valued at $37.7 million, which is $10 million down from fiscal year 2008. INDEPENDENT AUDIT Kentucky Revised Statute 91 A-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 Williams, Williams & Lentz, 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. CERTIFICATE OF ACHIEVEMENT 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 comprehensive annual financial report for the fiscal year ended June 30, 2008. This was the eighteenth consecutive year that the City achieved this prestigious award. -6- In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable and efficiently organized comprehensive annual financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe our current comprehensive annual 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. ACKNOWLEDGMENTS 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 Williams, Williams & Lentz, LLP. We also thank the Mayor and City Commission for their interest and support in planning and conducting the financial operations of the City in a responsible and progressive manner. -7- CITY OF PADUCAH, KENTUCKY ORGANIZATIONAL CHART CITIZENS OF PADUCAH Mayor and Commissioners Advisory Board and Committees City Manager City Attorney Finance Department/ Human Resources City Clerk Inspection Parks Department Fire Department Public Works Department Police Department Planning Department Engineering Department CITIZENS OF PADUCAH -8- Engineering Division Flood Control Division Street Division Solid Waste Fleet Maintenance DivisionFacility Maintenance Division CITY OF PADUCAH, KENTUCKY PRINCIPAL OFFICIALS BOARD OF COMMISSIONERS Mayor William F. Paxton Mayor Pro tem Gayle Kaler Commissioner Gerald Watkins Commissioner Carol Gault Commissioner Richard Abraham CITY MANAGER James Zumwalt Finance/Human Resources Jonathan Perkins, C.P.A. Police Chief James Berry Fire Chief Steve Kyle City Engineer/Public Works Richard Murphy Planning Stephen Ervin Parks Services Mark Thompson Inspections Joel Scarbrough Information Services Greg Mueller City Clerk Tammy Brock Risk Manager Cindy Medford Public Information Pam Spencer Paducah Renaissance Alliance Steve Doolittle -9- Certificate of Achievement for Excellence in Financial Reporting Presented to City of Paducah Kentucky For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2008 A Certificate of Achievement for Excellence in Financial Reporting is presented by the Government Finance Officers Association of the United States and Canada to government units and public employee retirement systems whose comprehensive annual financial reports (CAFRs) achieve the highest standards in government accounting and fmancial reporting. President Executive Director -10­ CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 WILLIAMS, WILLIAMS & LENTZ, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON PADUCAH, KENTUCKY 42001 J. RICHARD WALKER ROBERT R. ROBERTSON C. SUZETTE CRONCH MICHAEL F. KARNES MARK A. THOMAS ROGER G. HARRIS J. DAVID BAILEY, III G. LEON WILLIAMS, 1926-2004 H. WILLIAM LENTZ, 1925-2007 JERRY G. SEVERNS MAILING ADDRESS POST OFFICE BOX 2500 PADUCAH, KY 42002-2500 TELEPHONE 270-443-3643 FAX 270-444-0652 WEBSITE wwlcpa.com Independent Auditor’s Report Honorable William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky (the City), as of and for the year ended June 30, 2009, which collectively comprise the City’s basic financial statements as listed in the table of contents. These financial statements are the responsibility of the City of Paducah, Kentucky’s management. Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Transit Authority of the City of Paducah, a component unit, which represents eight percent of the assets and revenues of the Component Units column. Those financial statements were audited by another auditor whose reports have been furnished to us, and our opinion on the basic financial statements, insofar as it relates to the amounts included for the Transit Authority of the City of Paducah, a discretely presented component unit, is based on the report of another auditor. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the basic financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall basic financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, based on our audit and the report of another auditor, 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 aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the General Fund and Special Revenue Investment Fund, for the year then ended in conformity with accounting principles generally accepted in the United States of America. In addition, in our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial positions of each nonmajor governmental, nonmajor enterprise, internal service, and fiduciary fund, which collectively comprise the City's combining and individual fund statements and schedules as listed in the table of contents as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof and the respective budgetary comparisons for the General Capital Improvements, Debt Service Fund and the non-major governmental funds, for the year then ended in conformity with accounting principles generally accepted in the United States of America. -11- In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2009, on our consideration of the City’s internal control over financial reporting and 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 internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and important for assessing the results of our audit. The Management’s Discussion and Analysis, Pension Trust Fund Schedules on pages 13 through 27 and 90, are not a required part of the basic financial statements but are supplementary information required by accounting principles generally accepted in the United States of America. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the supplementary information. However, we did not audit the information and express no opinion on it. 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 introductory section and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations, and is also not a required part of the basic financial statements of the City of Paducah, Kentucky. The schedule of expenditures of federal awards has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated in all material respects in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. December 22, 2009 -12- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2009 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, 2009. 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 28-89) provided in this document. The City first implemented Government Accounting Standards Board Statement 34, Basic Financial Statements—and Management’s Discussion and Analysis—for State and Local Governments, for fiscal year 2003. I. Financial Highlights Assets exceeded liabilities by $49.5 million at the close of the 2008-2009 fiscal year. Of this amount, $9.7 million (unrestricted net assets) may be used to meet City government’s ongoing obligations to citizens and creditors. Total net assets decreased $965,199. At fiscal year end, City governmental funds reported a combined ending fund balance of $16.3 million. Approximately 70% of this total amount, $11.5 million, is unreserved and available for spending at the City’s discretion. Of the $11.5 million, $1.1 is in various special funds, which are earmarked for specific purposes. At the end of the current fiscal year, unreserved General Fund fund balance was $10.3 million, of which cash makes up approximately $4.2 million. When compared to actual total appropriations, the General Fund cash balance is 14%. 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 Assets presents information on all City assets and liabilities, with the difference between assets and liabilities reported as net assets. Monitoring increases and/or decreases in net assets 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 assets changed during the fiscal year. All net asset 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 (e.g., uncollected taxes and earned but unused vacation leave). 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 -13- debt. Business-type activities of the City include Solid Waste, Section Eight Housing, Civic Center and Telecommunication Information System Authority (TISA). Government-wide financial statements include not only the City (the primary government), but also a legally separate Paducah Water Works and Transit Authority of the City of Paducah (component units) for which the City is financially accountable. Financial information for the component units is reported separately from the financial information presented for the primary government itself. It should be noted that Paducah Power System was not included as a component unit of the City for FY2009. The Electric Plant Board of the City of Paducah (Paducah Power) was established under Kentucky Revised Statutes; which provide for the establishment of municipal electric plants to own and operate electric utilities in Kentucky. Paducah Power is a political and corporate body with perpetual succession and may contract and be contracted within and by its corporate name. The operations of Paducah Power are governed by their four-member board that is independent of the City Commission of the City of Paducah. The City of Paducah is not legally bound by any of the actions of Paducah Power and has no financial interest in Paducah Power. Based on these facts, Paducah Power is not deemed to be a component unit of the City of Paducah and has been excluded from the financial statements. The government-wide financial statements can be found on pages 28-31 of this report. B. Fund Financial Statements A fund is a grouping of related accounts that are 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, however, 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, Investment, and Debt Service Funds, all of which are considered to be major funds. Data from the other eight (8) 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 91-104. 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 34-35) and Exhibit 6 (pages 38-40) 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 32-40 of this report. -14- 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 four enterprise funds to account for Solid Waste, Section Eight Housing, Civic Center and TISA, as well as certain component units that provide water and public transit. TISA and Civic Center receive subsidy from the General Fund. The City’s component unit enterprises include the Paducah Water Works and Paducah Transit Authority, which provide water and public transportation. These component units, each of which has their own board of directors, are also enterprise funds and are shown on pages 53-56. 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 105-107 of this report. Individual data for the internal service funds is likewise presented in the form of combining statements on pages 108-110 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 the City’s four (4) fiduciary funds (Appointive Employees’ Pension, Police and Firefighters’ Retirement, Other Trust Funds, and Maintenance and Rehabilitation Trust) are presented in the form of combining statements on pages 111-115 of this report. C. Notes to the Financial Statements The notes provide additional information that is essential to fully understanding data provided in the government-wide and fund financial statements. Notes to the financial statements can be found on pages 57-89 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 obligation to provide pension benefits to its employees and budgetary comparison schedules for the general and major special revenue funds. -15- 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 and budgetary comparisons. Combining fund statements and schedules can be found on pages 93-115 of this report. III. Government-Wide Financial Analysis As noted earlier, net assets may serve over time as a useful indicator of the City’s financial position. City assets exceeded liabilities by $49.5 million as of June 30, 2009. For FY2009, the largest portion of the City’s net assets (67%) 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. An additional portion of City net assets (14%) represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted net assets (19%) may be used to meet the City’s ongoing obligations to citizens and creditors. As of June 30, 2009, the City reports positive balances of net assets, both for the government as a whole, as well as for its separate governmental and business-type activities. City of Paducah, Kentucky Net Assets June 30 Governmental Activities Business-Type Activities Total Primary Government 2009 2008 2009 2008 2009 2008 Restated Restated Current assets $40,118,092 $32,855,949 $3,769,371 $2,989,156 $43,887,463 $35,845,105 Capital assets 34,407,092 35,123,258 1,721,419 1,906,168 36,128,511 37,029,426 Other noncurrent assets 8,093,792 8,620,763 - - 8,093,792 8,620,763 Total assets 82,618,976 76,599,970 5,490,790 4,895,324 88,109,766 81,495,294 ` Current liabilities 11,410,186 8,082,282 287,449 351,399 11,697,635 8,433,681 Noncurrent liabilities 24,824,989 20,507,471 2,076,461 2,078,262 26,901,450 22,585,733 Total liabilities 36,235,175 28,589,753 2,363,910 2,429,661 38,599,085 31,019,414 Net assets: Invested in capital assets, net of related debt 31,215,252 31,766,783 1,721,419 1,906,168 32,936,671 33,672,951 Restricted 6,547,472 6,810,671 369,367 579,460 6,916,839 7,390,131 Unrestricted 8,621,077 9,432,763 1,036,094 (19,965) 9,657,171 9,412,798 TOTAL NET ASSETS $46,383,801 $48,010,217 $3,126,880 $2,465,663 $49,510,681 $50,475,880 -16- The exhibit below charts the City’s total net assets from the implementation of GASB 34 through the present. Government Wide Analysis Total Net Assets 0 10 20 30 40 50 60 2003 2004 2005 2006 2007 2008 2009In Millions Annual increases to total net assets began in FY2005 primarily due to the increase of the City’s payroll tax and the creation of the Investment Fund. The additional tax generates an additional $4 million in revenue each year, which is used mostly for capital investment. Increases have leveled off for the past few years due to mid-year appropriations made by the Commission, reducing the City’s unreserved cash balance at June 30 to the minimum requirement of 8% each time. Additionally, several categories of revenue were either flat or decreased due to the economic downturn. A. Analysis of the City’s Operations The following table provides a summary of the City’s operations for the years ended June 30, 2009 and 2008. Governmental activities decreased the City’s net assets by $1,626,416. Business-type activities increased the City’s net assets by $661,217. -17- Ci y Changes in Net Assets June 30 e al ty of Paducah, Kentuck Governm nt Activities Business- y e Activitie T p s Total Primary Government 009 009 2009 2008 2 2008 2 2008 Revenues: (Restated) (Restated) (Restated) s $ 3,308,948 $ 2,951,203 $4,734,827 $4,341,859 $ 8,043,775 $ 7,293,062 2,119,845 1,340,261 1,965,936 1,785,809 4,085,781 3,126,070 contributions 4,889,520 1,297,900 129,032 9,480 5,018,552 1,307,380 um tax se tax 529,083 1,401,400 - - 529,083 1,401,400 vestment 336,960 540,620 52,961 73,985 389,921 614,605 ale of capital assets 68,530 Program revenues: Charges for service Operating grants/ contributions Capital grants/ General revenues: Property taxes 3,986,760 4,221,957 - - 3,986,760 4,221,957 Franchise taxes 134,552 137,816 - - 134,552 137,816 Telecommunications tax 815,859 826,379 - - 815,859 826,379 Insurance premi 4,055,228 4,699,458 - - 4,055,228 4,699,458 Vehicle tax 576,876 597,239 - - 576,876 597,239 Bank tax 186,531 177,011 - - 186,531 177,011 Gross receipts license tax 4,320,850 4,061,587 - - 4,320,850 4,061,587 Employee licen 16,584,636 16,520,523 - - 16,584,636 16,520,523 Other taxes 533,506 521,511 - - 533,506 521,511 Intergovernmental revenue Unrestricted in earnings Gain on s 119,200 98,369 127,131 166,899 246,331 Total revenues 42,447,684 39,414,065 6,981,125 6,338,264 49,428,809 45,752,329 ent 1 term debt using ter TISA - Expenses: General governm 12,148,118 10,709,641 - - 12,148,118 10,709,641 Public safety 15,734,557 15,938,831 - - 15,734,557 15,938,831 Public service 2,849,566 9,543,714 - - 12,849,566 9,543,714 Parks and recreation 1,492,306 1,286,955 - - 1,492,306 1,286,955 Planning and development 708,827 282,042 - - 708,827 282,042 Interest on long- 1,029,888 1,066,067 - - 1,029,888 1,066,067 Solid Waste - - 4,037,845 4,086,747 4,037,845 4,086,747 Section Eight Ho - - 2,154,360 1,949,899 2,154,360 1,949,899 Civic Cen - - 75,692 84,908 75,692 84,908 - 162,849 156,388 162,849 156,388 Total expenses 43,963,262 38,827,250 6,430,746 6,277,942 50,394,008 45,105,192 et assets before transfers (1,515,578) 586,815 550,379 60,322 (965,199) 647,137 ransfers (110,838 Increase (decrease) in n T ) (96,609) 110,838 96,609 - - hange in net assets (1,626,416) 490,206 661,217 156,931 (965,199) 647,137 et assets, July 1, restated 48,010,217 C N 47,520,011 2,465,663 2,308,732 50,475,880 49,828,743 NET ASSETS, JUNE 30 $46,383,801 $48,010,217 $3,126,880 $2,465,663 $49,510,681 $50,475,880 -18- 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. Governmental Activities Expenses and Program Revenues $0 $2 $4 $6 $8 $10 $12 $14 $16 $18 General Government Public safety Public service Park & recreation Planning & development Interest on long-term debtMillionsExpenses Revenues The graph below depicts the breakdown of revenue by source for fiscal year 2009. Governmental Activities Revenue by Source Intergovernmental revenue 1% Occupational Licenses 59% Other Taxes 5% Operating grants/ contributions 5% Capital grants/ contributions 12% Property taxes 9% Charges for services 8% Unrestricted investment earnings 1% -19- In fiscal year 2009, the City derived 73% of its revenue from taxes/licenses. Occupational licenses, which includes payroll withholding tax, business licenses, and insurance premium tax, is the largest source of income to the City totaling approximately $25 million. This category of revenue decreased 1.3% from fiscal year 2008. Insurance premium tax collections have been extremely unpredictable over the past few years. This tax experienced a 14% increase from FY06 to FY07, a 7% increase from FY07 to FY08, and a 14% decrease from FY08 to FY09. Fluctuations similar to this have occurred in other areas across Kentucky partially due to a lack of regulation. Legislation was passed during the 2008 session which imposes new requirements on insurance companies with regard to risk allocation methods, strengthens penalties against insurance companies who don’t comply with the law, and imposes new requirements on insurance companies to inform policy- holders/citizens of tax rates and jurisdictions. In addition, City staff conducted its own research and found that there were several significant “one-time” life insurance policies that the City had received tax revenue for in the past few years. The large decrease in this tax along with the relatively flat collections in other areas of occupational licenses (due to economic downturn) contributed heavily to the overall decrease in general revenues from the prior year. Another noteworthy comment regarding revenue is the increase in capital grants/contributions from prior year. This category of revenue increased from $1.3 million in fiscal year 2008 to $4.9 million in fiscal year 2009. This is due to federal disaster assistance received as a result of the Hurricane Ike Windstorm and the 2009 Ice Storm. C. Business-Type Activities Business-type activities increased the City’s net assets by $661,217. The chart below shows the operating results 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. For fiscal year 2009, business-type activities as a whole had an increase in net assets of $661,217. This was primarily due to the performance of the Solid Waste Fund. Business-Type Activities Expenses and Revenues - 0.50 1.00 1.50 2.00 2.50 3.00 3.50 4.00 4.50 5.00 Solid Waste Section Eight Housing Civic Center TISAMillions Expenses Revenues -20- The Solid Waste Fund, a major fund of the organization, experienced a positive change in net assets for the first time in fiscal year 2008 since fiscal year 2004. During 2008, efforts were made to improve the performance of this function, including a rate increase as well as efficiency measures through equipment and route reorganization. In 2009, another rate increase was implemented. In addition, the entire Public Works department was reorganized, which led to the selling off of unnecessary equipment and reduced spending. 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. Unreserved 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 the fiscal year, the City governmental funds reported combined ending fund balances of $16.3 million. Approximately 70% of this total amount, $11.5 million, is unreserved fund balance, which is available for spending at the government’s discretion but only up to the amount represented by cash. Of the $11.5 million, $1.2 million is in the Debt Service Fund and various special revenue funds which are earmarked for specific purposes. The remaining $4.8 million of fund balance is reserved for specific future uses. The allocation of fund balances among the categories (shown below) is fairly consistent with prior years. There was a slight decrease in reserved fund balance. At the end of fiscal year 2008, there was $2.9 million in reserved fund balance for capital improvements. Several capital projects funded in 2008 were completed or in progress at the end of fiscal year 2009, including various community development/housing projects, floodwall repairs, and riverfront development work. This brought the balance to $1.7 million. Governmental Funds Ending Fund Balance Unreserved - other funds 7% Reserved 30%Unreserved - general fund 63% The General Fund is the chief operating fund of the City. At the end of the 2008-2009 fiscal year, the General Fund unreserved fund balance was $10.3 million. City fiscal policy (ordinance 2008-6- 7431) required that an amount not less than 8% of the General Fund’s budgeted expenditures remain -21- undesignated in the fund balance, or $2.4 million, which leaves $7.9 million as unreserved for fiscal year 2009. While $7.9 million represents unreserved fund balance, it is worth noting here that at year end there was only $4.2 million available as cash, the balance is tied up in other assets including accounts receivable and property taxes collectible. As a measure of General Fund liquidity, readers may compare unreserved fund balance to total General Fund expenditures. Unreserved General Fund fund balance represents approximately 35% of expenditures and transfers out ($29 million). This has remained stable since the implementation of GASB 34, staying between approximately 30 and 35% since fiscal year 2003. General Fund Fund Balance as a % of Expenditures 0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00% 35.00% 40.00% 2003 2004 2005 2006 2007 2008 2009 The General Fund fund balance increased by $895 thousand during the 2008-2009 fiscal year. Revenues and expenditures were flat from 2008 to 2009. However, there were significant transfers made out of the General Fund in fiscal year 2008 that did not repeat in 2009. In 2008, a transfer in the amount of $550,000 was made out of the General Fund to subsidize the Health Insurance Fund. Also, a transfer was made to the Capital Improvements Fund in the amount of approximately 580,000 to fund design work on the riverfront redevelopment project. $ The Investment Fund had a fund balance of $2.6 million, all of which is reserved for capital projects. The Investment Fund’s fund balance increased $537 thousand. The Investment Fund was authorized by the City Commission in fiscal year 2005-2006 as a special revenue fund whose use is restricted to 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. Payroll tax revenue was virtually flat from fiscal year 2008 to 2009. The increase in fund balance is due to a few projects that were put on hold or ancelled altogether because of the economic downturn. c B. Proprietary Funds The City’s proprietary funds provide the same information found in the government-wide financial tatements but in more detail. s -22- Net assets of the respective proprietary funds are: Solid Waste $1,970,974 Section Eight Housing 391,361 Civic Center 198,921 TISA 362,375 Combined total net asset change for the four funds was an increase of $578 thousand, broken down as follows: Solid Waste ($673 thousand increase), Section Eight Housing ($188 thousand decrease), Civic Center ($12 thousand decrease), and TISA ($105 thousand increase). The most significant change, Solid Waste, was discussed under Business Type Activities (Section III-C). Section Eight experienced a decrease in fund balance of over 20% for the second year in a row in fiscal year 2009. Annual HUD grant funding is based on expected rentals for the year. During fiscal year 2008 and 2009, rental costs exceeded what had been projected. For fiscal year 2010, the Section Eight department has implemented a plan to reduce program expenditures so that reserves may be replenished. Expenditures equaled funding received for the first time in November 2009, indicating that the plan may be working and a loss will not be experienced for fiscal year 2010. V. General Fund Budgetary Highlights Differences between the original budget and the final actual amounts resulted in a $759 thousand decrease in appropriations and can be briefly summarized as follows: Appropriations Department Increase Decrease (In Thousands) General administration $ - $ 150 Finance 300 - Planning - 79 Human rights 91 - Human resources - 366 Inspection - 274 Information systems 9 - Risk management - 14 Police - 391 Fire - 439 Public works - 338 Engineering services - 49 Recreation - 38 Other 979 - Transfers out increased by almost $1 million. This is due to the mid-year budget appropriation designating just over $1 million for capital projects. The Finance Department’s budget increased by $300,000 because of its absorption of the Human Resources Department. This increase is countered by the decrease in the Human Resources Department of $366,000. Many of the other large departments within the City experienced a decrease in their appropriations. This typically happens for departments such as Fire and Police due to salary slippage. However, more departments than usual had significant decreases due to the economic downturn. Budgetary analysis tools were used throughout the year to monitor each department’s spending. Some positions were not filled as they were vacated, departmental projects were put on hold, and a general sense of frugalness was applied throughout much of the year. -23- 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, 2009, is $36.0 million (net of accumulated depreciation). 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 2009, projects and equipment expenditures totaled nearly $8.6 million. Some of the largest capital-type projects, in terms of dollars in fiscal year 2009, are shown in the following table: Floodwall Rehabilitation $1,108,329 Neighborhood Redevelopment 716,282 J. Carroll Convention Center Rehab 670,670 Fire Truck Purchase 279,907 Riverfront Redevelopment 238,053 In the upcoming years, several street, economic development, riverfront development, quality of life and drainage projects will continue and are estimated to cost several million dollars. Capital improvement projects including infrastructure, recreational 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 2009 2008 2009 2008 2009 2008 Land $ 6,239,585 $ 6,236,574 $ 65,908 $ 65,908 $ 6,305,493 $ 6,302,482 Land improvements 1,814,848 1,909,420 - - 1,814,848 1,909,420 Construction in progress 3,610,527 2,511,350 - - 3,610,527 2,511,350 Buildings and improvements 4,034,368 3,894,226 227,378 240,292 4,261,746 4,134,518 Infrastructure 15,185,098 17,023,648 - - 15,185,098 17,023,648 Equipment 1,675,022 1,587,880 408,977 343,176 2,083,999 1,931,056 Furnishings and fixtures 5,605 7,130 - - 5,605 7,130 Vehicles 1,842,039 1,953,030 1,019,156 1,214,599 2,861,195 3,167,629 TOTALS $34,407,092 $35,123,258 $1,721,419 $1,863,975 $36,128,511 $ 36,987,233 Additional information on City capital assets can be found in Note 3 in the notes to financial statements on pages 71-73. -24- B. Long-Term Debt At year end, the City had $26,849,142 in outstanding bonds, accrued compensated absences, and notes payable, compared to $22,432,196 at June 30, 2008, with maturities extending through 2029. Governmental Activities 2009 2008 Convention and Performing Arts Center – 2001 $ 7,320,000 $ 7,600,000 Kentucky League of Cities – 2003 2,672,649 2,822,970 Infiniti Media Building – 2004 4,160,000 4,340,000 General Fund accrued compensated absences 1,862,242 1,805,893 Police/Firefighter Pension Fund Liability – 2006 5,545,000 5,740,000 Floodwall Rehabilitation – 2008 2,774,638 - Convention Center Renovation – 2008 2,500,000 - HOME grant – 2009 14,613 - Jones Agreement (Art School) – 2007 - 123,333 TOTALS $26,849,142 $22,432,196 During the year, the City had two major new debt issues: Floodwall Rehabilitation. In March 2009, a $2.8 million general obligation was issued to finance significant repairs to the City’s 60 year-old floodwall. The first stage of a $6 million project, this money was used to fund the relining of the pipes, which have deteriorated with age. 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. Convention Center Renovation. In March 2009, the City 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 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. Debt issues prior to July 1, 2008, are described below: Convention and Performing Arts Center. In June 2001, a $9.29 million general obligation bond was added to the City’s debt obligation to finance construction of the Luther F. Carson Four Rivers Center for the Performing Arts (approximately $3.0 million) and the expansion of the Julian Carroll Convention Center (approximately $6.0 million). These bonds are required to be fully paid within 25 years from the date of issue and are backed by the full faith and credit of the City. While the City issued these bonds, 50% of the principal amount of the bonds is being issued on behalf of the County of McCracken, Kentucky. McCracken County has issued the City a general obligation note in a principal amount equal to 50% of the principal amount of the bonds. Kentucky League of Cities. In fiscal year 2003, the City borrowed $3.5 million to fund a variety of capital projects, including park improvements ($1.0 million), downtown infrastructure improvements in conjunction with the FRC ($1.5 million), and City Hall, Police and other City-owned facility improvements ($1.0 million). Infiniti Media Building. In fiscal year 2004, the City sold $5.0 million in bonds to construct the Infiniti Media Building in the Paducah Industrial Park West, an economic development project. By interlocal agreement, McCracken County is obligated to an amount equal to 50% of the principal amount of the bonds. After the third year of the life of the bond, the Infiniti Media Company is obligated to make monthly lease payments to the City in an amount nearly equal to the debt service obligation. -25- Police/Firefighter Pension Fund Liability. In fiscal year 2006, the City issued $6.1 million in general obligation bonds to finance the police and firefighter’s pension fund estimated pension liability. These bonds are to be fully paid within 20 years and are backed by the full faith and credit of the City. 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 $206,945,061. The City’s latest bond rating by Moody is A2. The City has a 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 2009, less than 6.2% of the General Fund budget was expended for debt service and; thus, has minimal impact on current and future operations. Additional information on the City’s long-term debt can be found in Note 3 in the notes to financial statements on pages 74-77. VII. Other Potentially Significant Matters. A. Post-employment Benefits. Personal service costs make up over two-thirds of the City’s annual operating budget, and that number increases annually partially due to rising retirement costs. In the past five years, the City’s combined hazardous and non-hazardous retirement contribution has increased by 57%, from approximately $2.1 million in fiscal year 2005 to $3.3 million in fiscal year 2009. The rates for FY2010 have increased, causing budgeted figures for the upcoming year to increase another $400,000 compared to what was incurred in FY2009. Based on trends and projections provided by the Retirement System, the long-term outlook on funding requirements is of utmost concern. B. Infrastructure. Recently completed and upcoming major road/infrastructure projects have and will continue to increase the flow of commerce, tourism and traffic flow in the City. During fiscal 2008, the Pecan Drive Improvements project was completed, an investment of nearly $5.5 million. The City continues to work on the $6.5 million Olivet Church Road Project. This project will relieve traffic congestion and improve traffic safety for Interstate 24 at Exit 3 and 4. During fiscal year 2010, the City plans to complete right-of-way acquisition and begin construction. The onset of construction will be determined by the availability of state funding. An appropriation of $4.5 million is included in the state’s 6-year plan; however, we are unsure when the funds will be released. C. Operating Efficiency Plan. In the spring of 2009, the City Commission adopted an “Operational Efficiency Plan” in response to the national economic crisis. This plan assumed that the full impact of the recession had not yet been felt in Paducah and that recovery would take two years. The total impact of the Plan is an annual cost reduction of about $2 million. There were several organizational changes including: Public Works and Engineering Departments were merged; Finance and Human Resources Departments were merged; and GIS was moved from Engineering to Information Services. Fourteen employees were laid off (including two directors), and 19 additional positions were eliminated either by leaving vacant positions unfilled or by attrition. Other changes were made during annual budget discussions to meet the City’s goal of reducing General Fund expenditures by at least 10% or $3 million. Even though positions were cut and reorganization began in April 2009, severance pay and transition time lead to most of the effects of the Plan not being realized until fiscal year 2010. D. Upcoming Debt Issue. The City plans to issue general obligation bonds in January 2010 in order to acquire and raze a former hotel complex in downtown Paducah, purchase a pavilion, and acquire real estate for the future development of a sports park. The bond issue will likely range from $5.5 million to $6.0 million. -26- E. Police and Fire Pension Fund (PFPF) Unfunded Liability. In fiscal year 2006, the City issued $6.1 million in general obligation bonds to eliminate the unfunded pension liability. With the sharp decline in value of the national stock market in 2009, the PFPF’s equity investment dropped accordingly. PFPF net assets dropped in 2009 by nearly $3.5 million or 28.5% of the beginning net assets (July 1, 2008). The City will contribute $460,000 in fiscal year 2010, the actuary’s recommended amount, toward the PFPF unfunded pension liability. VIII. Requests for Information This financial report is designed to provide a general financial overview for those interested in the City of Paducah government finances. Questions or requests for additional financial information may be addressed to Jonathan Perkins, Finance Director, City of Paducah, 500 South 5th Street, Paducah, KY 42001. -27- CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS GOVERNMENT-WIDE FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 THIS PAGE INTENTIONALLY LEFT BLANK Exhibit 1 Component Current Assets: Total Units Cash and cash equivalents 3,789,629$ 1,566,792$ 5,356,421$ 804,926$ Investments 9,096,239 1,250,000 10,346,239 - Receivables, net: Notes 1,228,176 - 1,228,176 - Lease 1,819,597 - 1,819,597 - Accounts 6,411,244 598,480 7,009,724 420,305 Grants 4,019,630 98,247 4,117,877 82,439 Interest 186,282 24,891 211,173 - Property tax 4,590,937 - 4,590,937 - Other - - - 753,293 Internal balances (203,249) 203,249 - - Inventory 2,093,235 - 2,093,235 411,688 Prepaid pension obligation 5,779,263 - 5,779,263 - Prepaid expenses 1,281,647 27,712 1,309,359 10,658 Other current assets 25,462 - 25,462 824,903 Total current assets 40,118,092 3,769,371 43,887,463 3,308,212 Noncurrent Assets: Notes receivable 3,676,034 - 3,676,034 - Lease receivable 3,812,932 - 3,812,932 - Bond issuance costs, net 203,661 - 203,661 - Net capital assets: Land and construction in progress 9,850,112 65,908 9,916,020 1,278,859 Depreciable capital assets 24,556,980 1,655,511 26,212,491 36,472,403 Other assets 401,165 - 401,165 2,153,849 Total noncurrent assets 42,500,884 1,721,419 44,222,303 39,905,111 Total assets 82,618,976 5,490,790 88,109,766 43,213,323 Governmental Activities Business-type Activities -28- CITY OF PADUCAH, KENTUCKY STATEMENT OF NET ASSETS JUNE 30, 2009 ASSETS Primary Government Component Current Liabilities: Total Units Voucher and accounts payable 4,252,240$ 144,603$ 4,396,843$ 752,812$ Accrued payables 684,308 39,562 723,870 92,100 Due to other taxing agencies 63,397 - 63,397 - Unearned revenue 4,285,917 - 4,285,917 - Accrued compensated absences 988,956 77,822 1,066,778 - Accrued interest 100,171 - 100,171 - Notes payable due within one year 251,999 - 251,999 104,912 Bonds payable due within one year 783,198 - 783,198 - Other current liabilities - 25,462 25,462 1,022,289 Total current liabilities 11,410,186 287,449 11,697,635 1,972,113 Noncurrent Liabilities: Accrued compensated absences 873,286 13,961 887,247 - Landfill post-closure costs - 2,062,500 2,062,500 - Notes payable 4,935,263 - 4,935,263 275,592 Bonds payable 19,016,440 - 19,016,440 - Total noncurrent liabilities 24,824,989 2,076,461 26,901,450 275,592 Total liabilities 36,235,175 2,363,910 38,599,085 2,247,705 Invested in capital assets, net of related debt 31,215,252 1,721,419 32,936,671 37,228,686 Restricted for: Housing and development projects 1,914,679 369,368 2,284,047 - Other program purposes 268,880 - 268,880 - Capital projects 4,363,913 - 4,363,913 - Unrestricted 8,621,077 1,036,093 9,657,170 3,736,932 TOTAL NET ASSETS 46,383,801$ 3,126,880$ 49,510,681$ 40,965,618$ See accompanying notes to the basic financial statements. -29- LIABILITIES NET ASSETS Governmental Activities Business-type Activities Primary Government Exhibit 2 FUNCTIONS/PROGRAMS Primary Government: Expenses Governmental activities: General government 12,148,118$ 1,303,667$ 441,561$ -$ Public safety 15,734,557 602,262 605,284 4,331,804 Public service 12,849,566 1,220,999 471,865 557,716 Parks and recreation 1,492,306 180,420 - - Planning and development 708,827 1,600 375,123 - Interest on long-term debt 1,029,888 - 226,012 - Total governmental activities (See Note 1) 43,963,262 3,308,948 2,119,845 4,889,520 Business-type activities: Solid Waste 4,037,845 4,547,959 - 95,569 Section Eight Housing 2,154,360 - 1,965,936 - Civic Center 75,692 38,577 - - TISA 162,849 148,291 - 33,463 Total business-type activities 6,430,746 4,734,827 1,965,936 129,032 TOTAL PRIMARY GOVERNMENT 50,394,008$ 8,043,775$ 4,085,781$ 5,018,552$ Component Units: Authorities: Paducah Water Works 7,308,857$ 7,425,085$-$ 734,919$ Paducah Transit Authority 3,946,609 1,367,303 1,738,389 142,394 TOTAL COMPONENT UNITS 11,255,466$ 8,792,388$ 1,738,389$ 877,313$ General revenues: Taxes and licenses: Property taxes, levied for general purposes Franchise tax Telecommunications tax Insurance premium tax Vehicle tax Bank tax Gross receipts license tax Employee license tax Other taxes Transient room tax Unrestricted investment earnings Gain (loss) on sale of capital assets Miscellaneous Total general revenues Transfers Total general revenues and transfers Change in net assets Net assets, July 1, 2008 Adjustment to beginning net assets (See Note 10) NET ASSETS, JUNE 30,2009 See accompanying notes to the basic financial statements. Grants and Contributions CITY OF PADUCAH, KENTUCKY FOR THE YEAR ENDED JUNE 30, 2009 STATEMENT OF ACTIVITIES Program Revenues Capital -30- Grants and Contributions Charges for Services Operating Component Total Units (10,402,890)$ -$ (10,402,890)$ -$ (10,195,207) - (10,195,207) - (10,598,986) - (10,598,986) - (1,311,886) - (1,311,886) - (332,104) - (332,104) - (803,876) - (803,876) - (33,644,949) - (33,644,949) - - 605,683 605,683 - - (188,424) (188,424) - (37,115) (37,115) - - 18,905 18,905 - - 399,049 399,049 - (33,644,949) 399,049 (33,245,900) - - - - 851,147 - - - (698,523) - - - 152,624 3,986,760 - 3,986,760 - 134,552 - 134,552 - 815,859 - 815,859 - 4,055,228 - 4,055,228 - 576,876 - 576,876 - 186,531 - 186,531 - 4,320,850 - 4,320,850 - 16,584,636 - 16,584,636 - 533,506 - 533,506 - 529,083 - 529,083 - 336,960 52,961 389,921 38,834 68,530 98,369 166,899 12,938 - - - 137,442 32,129,371 151,330 32,280,701 189,214 (110,838) 110,838 - - 32,018,533 262,168 32,280,701 189,214 (1,626,416) 661,217 (965,199) 341,838 48,010,217 2,423,470 50,433,687 40,623,780 - 42,193 42,193 - 46,383,801$ 3,126,880$ 49,510,681$ 40,965,618$ Primary Government Governmental Activities Business-type Activities Net (Expense) Revenue and Changes in Net Assets -31- Exhibit 3 Special Revenue General Investment Fund Fund Cash and cash equivalents 841,001$ 282$ 915,861$ Investments 3,350,000 1,550,000 500,000 Accounts receivable: Accounts 6,342,036 652,893 240,000 Grants 875,509 3,110,453 - Interest 21,410 55,475 116 Property taxes (net of allowances for uncollectibles) 4,381,303 - - Due from other funds 1,160,818 - 985,860 TOTAL ASSETS 16,972,077$ 5,369,103$ 2,641,837$ Liabilities: Voucher and accounts payable 497,465$ 3,470,337$ -$ Accrued payroll and payroll taxes 629,257 - - Due to other funds 985,859 153,000 23,690 Due to other taxing agencies 63,397 - - Deferred revenue 4,285,917 - - Accrued compensated absences 198,692 - - Total liabilities 6,660,587 3,623,337 23,690 Fund Balances: Reserved for: Program purposes - - - Capital improvements - 1,745,766 2,618,147 Unreserved: General Fund 10,311,490 - - Special Revenue Funds - - - Debt Service Fund - - - Total fund balances 10,311,490 1,745,766 2,618,147 TOTAL LIABILITIES AND FUND BALANCES 16,972,077$ 5,369,103$ 2,641,837$ See accompanying notes to the basic financial statements. -32- LIABILITIES AND FUND BALANCES ASSETS Improvements General Capital CITY OF PADUCAH, KENTUCKY JUNE 30, 2009 GOVERNMENTAL FUNDS BALANCE SHEET Debt Service Fund 93,244$ 1,115,980$ 2,966,368$ - 496,239 5,896,239 - 299,059 7,533,988 - 33,667 4,019,629 - 7,359 84,360 - - 4,381,303 - - 2,146,678 93,244$ 1,952,304$ 27,028,565$ -$ 207,316$ 4,175,118$ - 45,235 674,492 - 157,667 1,320,216 - - 63,397 - - 4,285,917 - 783 199,475 - 411,001 10,718,615 - 479,362 479,362 - - 4,363,913 - - 10,311,490 - 1,061,941 1,061,941 93,244 - 93,244 93,244 1,541,303 16,309,950 93,244$ 1,952,304$ 27,028,565$ -33- Nonmajor Governmental Funds Total Funds Governmental Exhibit 4 Total fund balance - total governmental funds 16,309,950$ Amounts reported for governmental activities in the Statement of Net Assets are different because: 209,634 3,744,270 33,712 2,019,630 5,779,263 34,407,092 401,165 203,661 (Continued) JUNE 30, 2009 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. CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS Inventory is not a current financial resource and, therefore, is not reported in the governmental funds balance sheet. Delinquent property taxes receivable are not reported in the governmental funds balance sheet since they are not considered "available" revenues. The long-term notes receivable are not reported in the governmental funds balance sheet since they are not available to pay current period expenditures. A prepaid pension obligation is not a current financial resource, and therefore, is not reported in the governmental funds balance sheet. -34- 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. Governmental funds report losses on direct financing leases when incurred, whereas the loss of direct financing leases are deferred and amortized over the life of the lease in the Statement of Net Assets. Bond issuance costs used in governmental activities are not current financial resources and, therefore, are not reported in the governmental funds balance sheet. Exhibit 4 (Continued) 5,632,529$ (100,171) (1,629,404) $ 1,035,197 23,951,703 (24,986,900) 5,483,923$ (921,304) (203,249) 4,359,370 NET ASSETS OF GOVERNMENTAL ACTIVITIES 46,383,801$ See accompanying notes to the basic financial statements. JUNE 30, 2009 Receivables from direct financing leases are not available in the current period and, therefore, are deferred in the governmental funds balance sheet. Due after one year -35- 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: Current liabilities The portion of accrued compensated absences 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. business-type activities CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET ASSETS Long-term debts of ($24,986,899) are not due and payable in the current period and, therefore, they are not reported in the governmental funds balance sheet. See Note 3 for detail. The long- term debts are: Due within one year Exhibit 5 Special Revenue General Investment Revenues: Fund Fund Taxes 5,334,311$ -$ -$ Licenses 21,351,093 - 4,060,019 Charges for services 629,592 - - Intergovernmental - 9,543 - Grants 1,704,929 3,473,552 - Interest 144,032 60,490 116 Miscellaneous 1,100,067 432,205 - Total revenues 30,264,024 3,975,790 4,060,135 Expenditures: Current operations: General government 4,726,435 - - Public safety 14,174,470 - - Public service 6,775,013 - - Parks and recreation 1,490,732 - - Planning and development - - 637,958 Other 514,488 - - Capital outlay - 8,580,910 - Debt service: Principal requirement - - - Interest and fiscal requirement - - - Total expenditures 27,681,138 8,580,910 637,958 Excess (deficiency) of revenues over expenditures 2,582,886 (4,605,120) 3,422,177 Other Financing Sources (Uses): Capital lease - - - Long-term debt issued - 1,718,605 54,419 Transfers in 408,678 2,450,548 316,710 Transfers out (2,096,501) (765,407) (3,256,439) Total other financing sources (uses) (1,687,823) 3,403,746 (2,885,310) Net change in fund balances 895,063 (1,201,374) 536,867 Fund balances, July 1, 2008 9,416,427 2,947,140 2,081,280 FUND BALANCES, JUNE 30, 2009 10,311,490$ 1,745,766$ 2,618,147$ See accompanying notes to the basic financial statements. Capital -36- FOR THE YEAR ENDED JUNE 30, 2009 Improvements General CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS Debt Service Fund -$ 533,471$ 5,867,782$ - - 25,411,112 - 237,096 866,688 614,132 462,702 1,086,377 - 227,329 5,405,810 - 20,613 225,251 - 718,072 2,250,344 614,132 2,199,283 41,113,364 - - 4,726,435 - 1,425,143 15,599,613 - 1,080,833 7,855,846 - - 1,490,732 - 1,173,125 1,811,083 - - 514,488 - - 8,580,910 830,682 - 830,682 1,003,439 - 1,003,439 1,834,121 3,679,101 42,413,228 (1,219,989) (1,479,818) (1,299,864) 405,796 - 405,796 - 14,613 1,787,637 842,389 1,910,088 5,928,413 - (32,500) (6,150,847) 1,248,185 1,892,201 1,970,999 28,196 412,383 671,135 65,048 1,128,920 15,638,815 93,244$ 1,541,303$ 16,309,950$ Funds -37- Funds Governmental TotalNonmajor Governmental Exhibit 6 Net change in fund balances - total governmental funds 671,135$ Amounts reported for governmental activities in the Statement of Activities are different because: 1,128,387 (317,505) 2,850,717 (4,409) (125,131) 25,416 1,480,223 (18,370) (Continued) FOR THE YEAR ENDED JUNE 30, 2009 Collections on long-term notes receivable and related interest receivable are revenues in the governmental 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 amount of capital outlays in the current period. This amount includes Internal Service Fund's capital outlays of $438,960. Delinquent property taxes receivable are not considered "available" revenues in the governmental funds. -38- Inventory purchases require the use of current financial resources and, therefore, are reported as expenditures in governmental funds. Inventory sales provide current financial resources and are reported as revenues in governmental funds. CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Direct financing leases receivable are not considered "available" revenues in the governmental funds. Proceeds from the disposal of capital assets are reported gross in the governmental funds because the related assets were recorded as expenditures when purchased. However, the proceeds are netted with the book value in the government-wide statement of activities. This amount includes Internal Service Fund's book value of $4,409. The prepayment of a pension obligation requires the use of current financial resources and, therefore, is reported as an expenditure in governmental funds. However, the prepayment does not affect net assets in the government-wide Statement of Activities. Exhibit 6 (Continued) (3,562,476)$ (1,787,637) (2,500,000) (1,026,974) 830,682 123,332 (27,248) 16,214 (13,313) (Continued) Proceeds from the issuance of debt provides current financial resources and is reported as an other financing source in governmental funds. CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND Accrued interest payments on debt do not require the use of current financial resources. Accrued interest is reported as an expenditure in the government-wide Statement of Activities. Principal payments of debt require the use of current financial resources and, therefore, are reported as expenditures in governmental funds. However, principal payments of debt do not affect net assets in the government-wide Statement of Activities. CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2009 Repayment of debt incurred to finance intergovernmental grants is reported as an expenditure in the governmental funds. However, debt repayment does not affect net assets in the government-wide Statement of Activities. Debt of other governments which is assumed by the City decreases the net assets in the government-wide Statement of Activities. However, the amount of the debt assumed has no effect on the fund balance of the governmental funds. Depreciation expense on capital assets is reported in the government-wide Statement of Activities and Changes in Net Assets, 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 $475,802. Governmental funds report the effect of bond issuance costs when debt is issued, whereas these amounts are deferred and amortized in the Statement of Activities. New debt obligations of the City for which proceeds have not yet been received are not reported as changes in fund balances. However, the amount of new debt obligations incurred does decrease the net assets in the government-wide Statement of Activities. -39- Long-term accrued compensated absences do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. Exhibit 6 (Continued) 672,686$ (83,396) Capital Outlays (438,960) Book value of disposals 4,409 475,802 630,541$ CHANGE IN NET ASSETS OF GOVERNMENTAL ACTIVITIES (1,626,416)$ See accompanying notes to the basic financial statements. -40- Change in net assets business-type activities Depreciation expense FOR THE YEAR ENDED JUNE 30, 2009 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: Net of amount allocated to CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES Exhibit 7 Original Final Beginning budgetary fund balance 10,033,304$ 9,413,650$ 9,416,427$ 2,777$ Resources (Inflows): Taxes: Real and personal, current year 4,748,000 4,550,435 4,550,445 10 Real and personal, prior year (net of refunds) 108,000 (109,295) (109,292) 3 Franchise 213,000 172,295 172,298 3 Bank taxes 178,000 186,530 186,531 1 In lieu of tax payment 185,500 201,785 201,787 2 Penalty, interest and advertising 52,000 48,405 48,410 5 Paducah Junior College tax collections - 284,130 284,132 2 Total taxes 5,484,500 5,334,285 5,334,311 26 Licenses: Business licenses 4,017,000 4,320,850 4,320,850 - Employee earnings 12,875,500 12,524,595 12,524,617 22 Comcast fees 307,000 307,385 307,527 142 Penalties 60,000 148,640 148,644 4 Alcoholic beverages 118,000 117,105 117,105 - Insurance premium tax 5,000,000 4,055,225 4,055,228 3 Building permits 125,000 96,615 96,617 2 Electrical permits 30,500 23,570 23,571 1 Zoning change fees 7,500 8,070 8,074 4 Miscellaneous building and electrical fees 500 420 423 3 KJDA payroll rebate (220,000) (251,565) (251,563) 2 Total licenses 22,321,000 21,350,910 21,351,093 183 Charges for services: Tax collection fee 118,000 134,515 134,516 1 Administrative charge 252,900 252,900 252,900 - Base court revenue 80,000 61,755 61,756 1 Recreation fees 111,000 180,400 180,420 20 Total charges for services 561,900 629,570 629,592 22 (Continued) Final Budget Variance with -41- CITY OF PADUCAH, KENTUCKY BUDGETARY COMPARISON STATEMENT (BUDGETARY BASIS) GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2009 Actual PositiveBudgeted Amounts Amounts (Negative) Exhibit 7 (Continued) Actual Grants:Original Final Amounts Police State Incentive 323,000$ 274,405$ 274,405$ -$ FEMA Disaster grants - 1,078,205 1,078,212 7 Fire State Incentive 274,000 258,595 258,599 4 Kentucky League of Counties grants - 2,980 2,985 5 Waste management grants - 16,335 16,337 2 Paducah Housing Authority - after school program 37,200 35,130 35,134 4 Police supplemental grants - 39,255 39,257 2 Total grants 634,200 1,704,905 1,704,929 24 Interest 357,500 144,020 144,032 12 Other: Property rent and sales 657,310 714,540 714,644 104 Property upkeep and maintenance 186,900 189,820 189,828 8 Contractual programs 5,000 7,805 7,808 3 E911 - GIS 23,190 23,190 23,190 - Miscellaneous 250,415 164,580 164,597 17 Total other 1,122,815 1,099,935 1,100,067 132 Other financing sources: Operating transfers in 126,345 408,665 408,678 13 Amounts available for appropriation 40,641,564 40,085,940 40,089,129 3,189 Charges to Appropriations (Outflows): General government: General administration: Mayor and Commissioners 221,960 212,790 212,700 90 City Manager 375,310 342,065 341,646 419 City Clerk 188,820 177,135 176,652 483 Corporate Counsel 179,020 98,640 98,605 35 Non-departmental 271,240 598,310 598,285 25 Memberships and contingency 379,750 38,260 38,255 5 Civic beautification 4,010 3,320 3,303 17 Total general administration 1,620,110 1,470,520 1,469,446 1,074 (Continued) CITY OF PADUCAH, KENTUCKY BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS) GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2009 Variance with Budgeted Amounts Final Budget Positive (Negative) -42- Exhibit 7 (Continued) Actual General government:Original Final Amounts Finance: Finance administration 268,155$ 248,560$ 248,289$ 271$ Accounting and payroll 360,455 346,320 346,056 264 Budget and human resources - 353,990 353,544 446 Revenue collection 389,080 368,635 367,710 925 Total finance 1,017,690 1,317,505 1,315,599 1,906 Planning: Administration 274,755 244,275 243,637 638 Planning 185,600 135,555 135,439 116 Grants 136,245 137,985 137,713 272 Total planning 596,600 517,815 516,789 1,026 Human rights 10,000 100,510 99,623 887 Human resources 365,870 - - - Inspection: Inspection administration 177,650 157,395 157,058 337 Construction 359,545 283,270 282,853 417 Code enforcement 503,185 377,445 376,745 700 Neighborhood redevelopment 81,130 29,515 29,017 498 Total inspection 1,121,510 847,625 845,673 1,952 Information technology 346,560 355,345 355,185 160 Risk management 138,350 124,455 124,119 336 Public safety: Police: Police administration 1,173,640 1,134,415 1,133,262 1,153 Patrol 5,958,625 5,788,755 5,787,834 921 Investigations 1,525,355 1,343,170 1,342,600 570 Total police 8,657,620 8,266,340 8,263,696 2,644 Fire: Fire administration 269,275 184,970 184,467 503 Suppression 5,610,310 5,387,355 5,386,966 389 Prevention 318,190 228,665 228,300 365 Training 153,300 111,330 111,041 289 Total fire 6,351,075 5,912,320 5,910,774 1,546 (Continued) CITY OF PADUCAH, KENTUCKY Budgeted Amounts Final Budget Positive GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2009 -43- Variance with (Negative) BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS) Exhibit 7 (Continued) Actual Public service:Original Final Amounts Public works: Public Works Administration 378,240$ 391,935$ 391,388$ 547$ Street maintenance 2,264,925 2,128,070 2,127,287 783 Street lighting 490,000 540,360 540,358 2 Maintenance 2,472,405 2,253,630 2,253,569 61 Downtown landscaping 332,350 314,760 314,477 283 Summer youth program 52,300 23,330 23,296 34 Total public works 5,990,220 5,652,085 5,650,375 1,710 Engineering services: Engineering services 521,620 466,870 466,367 503 GIS operation 185,700 175,380 175,143 237 Flood control 468,270 484,285 483,129 1,156 Total engineering services 1,175,590 1,126,535 1,124,639 1,896 Parks and recreation Parks administration 748,605 737,510 737,222 288 Pool 130,440 132,920 132,763 157 Recreation programs 650,910 621,020 620,747 273 Total recreation 1,529,955 1,491,450 1,490,732 718 Other: Cable authority 95,710 95,860 95,808 52 Leave expense - 52,700 52,698 2 Intergovernmental expense - 284,135 284,132 3 Miscellaneous property expense 218,950 82,015 81,850 165 Total other 314,660 514,710 514,488 222 Other financing uses: Operating transfers out 1,317,135 2,096,525 2,096,501 24 Total charges to appropriations 30,552,945 29,793,740 29,777,639 16,101 BUDGETARY FUND BALANCE, JUNE 30, 2009 10,088,619$ 10,292,200$ 10,311,490$ 19,290$ See accompanying notes to the basic financial statements. Variance with FOR THE YEAR ENDED JUNE 30, 2009 Budgeted Amounts GENERAL FUND -44- CITY OF PADUCAH, KENTUCKY (Negative) BUDGETARY COMPARISON SCHEDULE (BUDGETARY BASIS) Final Budget Positive Exhibit 8 Note A - Explanation of Differences Between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures General Sources/inflows of resources:Fund Actual amounts "available for appropriation" from the budgetary comparison schedule 40,089,129$ Differences - budget to GAAP: The beginning fund balance is a budgetary resource, but is not a current year revenue for financial reporting purposes (9,416,427) Transfers from other funds are inflows of budgetary resources, but are not revenues for financial reporting purposes (408,678) Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds 30,264,024$ Uses/outflows of resources: Actual amounts "total charges to appropriations" from the budgetary comparison schedule 29,777,639$ Differences - budget to GAAP: Transfers to other funds are outflows of budgetary resources, but are not expenditures for financial reporting purposes (2,096,501) Total expenditures as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds 27,681,138$ See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY -45- FOR THE YEAR ENDED JUNE 30, 2009 BUDGETARY COMPARISON STATEMENT GENERAL FUND Exhibit 9 Original Final Beginning budgetary fund balance 1,942,872$ 2,081,272$ 2,081,280$ 8$ Resources (Inflows): Licenses: Employee earnings 4,292,000 4,060,015 4,060,019 4 Interest - - 116 116 Total licenses 4,292,000 4,060,015 4,060,135 120 Other financing sources: Long-term debt issued - 54,415 54,419 4 Operating transfers in - 316,710 316,710 - Total licenses - 371,125 371,129 4 Amounts available for appropriation 6,234,872 6,512,412 6,512,544 132 Charges to Appropriations (Outflows): General government: Planning and development: Economic development 986,500 637,960 637,958 2 Other financing uses: Operating transfers out 3,374,420 3,256,445 3,256,439 6 Total charges to appropriations 4,360,920 3,894,405 3,894,397 8 BUDGETARY FUND BALANCE, JUNE 30, 2009 1,873,952$ 2,618,007$ 2,618,147$ 140$ See accompanying notes to the basic financial statements. -46- Actual PositiveBudgeted Amounts Amounts (Negative) Final Budget Variance with CITY OF PADUCAH, KENTUCKY BUDGETARY COMPARISON STATEMENT (BUDGETARY BASIS) SPECIAL REVENUE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2009 Exhibit 10 Note A - Explanation of Differences Between Budgetary Inflows and Outflows and GAAP Revenues and Expenditures Sources/inflows of resources: Actual amounts "available for appropriation" from the budgetary comparison schedule 6,512,544$ Differences - budget to GAAP: The beginning fund balance is a budgetary resource, but is not a current year revenue for financial reporting purposes (2,081,280) Proceeds from the issuance of debt are inflows of budgetary resources, but are not revenues for financial reporting purposes (54,419) Transfers from other funds are inflows of budgetary resources, but are not revenues for financial reporting purposes (316,710) Total revenues as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds 4,060,135$ Uses/outflows of resources: Actual amounts "total charges to appropriations" from the budgetary comparison schedule 3,894,397$ Differences - budget to GAAP: Transfers to other funds are outflows of budgetary resources, but are not expenditures for financial reporting purposes (3,256,439) Total expenditures as reported on the statement of revenues, expenditures, and changes in fund balances- governmental funds 637,958$ See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY -47- FOR THE YEAR ENDED JUNE 30, 2009 BUDGETARY COMPARISON STATEMENT SPECIAL REVENUE INVESTMENT FUND Nonmajor Solid Enterprise Current Assets: Waste Funds Totals Cash and cash equivalents 806,104$ 760,688$ 1,566,792$ 823,262$ Investments 1,250,000 - 1,250,000 3,200,000 Accounts receivable 580,993 17,487 598,480 - Grants receivable 95,569 2,678 98,247 - Interest receivable 24,891 - 24,891 105,409 Prepaid expenses - 27,712 27,712 1,281,647 Inventory - - - 73,605 Total current assets 2,757,557 808,565 3,566,122 5,483,923 Noncurrent Assets: Net capital assets: Land 65,908 - 65,908 - Depreciable capital assets 1,400,538 254,973 1,655,511 1,938,683 Total noncurrent assets 1,466,446 254,973 1,721,419 1,938,683 Total assets 4,224,003 1,063,538 5,287,541 7,422,606 Current Liabilities: Voucher and accounts payable 74,696 69,907 144,603 77,124 Accrued payroll and payroll taxes 39,562 - 39,562 9,817 Accrued compensated absences 76,271 1,551 77,822 - Deferred revenue - - - - Due to other funds - 25,462 25,462 801,000 Total current liabilities 190,529 96,920 287,449 887,941 Noncurrent Liabilities: Landfill post-closure costs 2,062,500 - 2,062,500 - Accrued compensated absences - 13,961 13,961 33,363 Total noncurrent liabilities 2,062,500 13,961 2,076,461 33,363 Total liabilities 2,253,029 110,881 2,363,910 921,304 Invested in capital assets, net of related debt 1,466,447 254,973 1,721,420 1,938,683 Restricted for: Housing development projects - 369,368 369,368 - Unrestricted 504,527 328,316 832,843 4,562,619 TOTAL NET ASSETS 1,970,974$ 952,657$ 2,923,631 6,501,302$ Reconciliation to government-wide statements of net assets: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds 203,249 NET ASSETS OF BUSINESS-TYPE ACTIVITIES 3,126,880$ See accompanying notes to the basic financial statements. Activities CITY OF PADUCAH, KENTUCKY STATEMENT OF NET ASSETS PROPRIETARY FUNDS JUNE 30, 2009 Exhibit 11 -48- Business-type Activities ASSETS LIABILITIES NET ASSETS Funds Service Internal Governmental Nonmajor Solid Enterprise Operating Revenues: Waste Funds Totals Charges for services - internal -$ 148,291$ 148,291$ 5,959,497$ Charges for services - external 4,448,274 2,002,824 6,451,098 279,479 Miscellaneous 111,857 1,689 113,546 - Total operating revenues 4,560,131 2,152,804 6,712,935 6,238,976 Operating Expenses: Cost of sales and service 3,660,219 2,363,408 6,023,627 5,385,567 Depreciation and amortization 377,626 29,492 407,118 475,802 Total operating expenses 4,037,845 2,392,900 6,430,745 5,861,369 Operating income (loss) 522,286 (240,096) 282,190 377,607 Nonoperating Revenues (Expenses): Interest and investment income 52,632 329 52,961 111,710 Gain (loss) on disposal of property and equipment 98,369 - 98,369 68,530 Total nonoperating revenues (expenses) 151,001 329 151,330 180,240 Income (loss) before contributions and transfers 673,287 (239,767) 433,520 557,847 Contributions and Transfers: Capital contributions - 33,463 33,463 - Transfers in - 110,838 110,838 114,839 Transfers out - - - - Total contributions and transfers - 144,301 144,301 114,839 Change in net assets 673,287 (95,466) 577,821 672,686 Total net assets, July 1, 2008 1,255,494 1,048,123 5,828,616 Adjustment to beginning net assets (See Note 10) 42,193 - - TOTAL NET ASSETS - JUNE 30, 2009 1,970,974$ 952,657$ 6,501,302$ Reconciliation to government-wide statements of net assets: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds 83,396 CHANGE IN NET ASSETS OF BUSINESS-TYPE ACTIVITIES 661,217$ See accompanying notes to the basic financial statements. -49- ActivitiesBusiness-type Activities CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Governmental Exhibit 12 Internal Service Funds Nonmajor Solid Enterprise Cash Flows from Operating Activities: Waste Funds Totals Cash received from customers 4,400,078$ 2,147,163$ 6,547,241$ -$ Cash received from interfund services provided - - - 6,217,301 Payments to suppliers (1,729,980) - (1,729,980) (146,526) Payments to employees (1,414,690) (153,854) (1,568,544) (318,788) Claims paid - - - (3,602,083) Payments to internal service funds (568,889) (4,268) (573,157) - Other receipts 16,288 1,689 17,977 - Other payments - (2,227,074) (2,227,074) (1,459,477) Net cash provided (used) by operating activities 702,807 (236,344) 466,463 690,427 Cash Flows from Noncapital Financing Activities: Transfers (to) from other funds - 110,838 110,838 114,839 Cash Flows from Capital and Related Financing Activities: Capital contributions - 33,463 33,463 - Purchase of capital assets (256,595) (27,230) (283,825) (438,960) Proceeds from sale of capital assets 159,825 - 159,825 72,937 Net cash provided (used) by capital and related financing activities (96,770) 6,233 (90,537) (366,023) Cash Flows from Investing Activities: Proceeds from sale of investment securities 770,036 - 770,036 1,850,000 Interest on cash and investments 52,632 329 52,961 111,710 Purchase of investments (770,000) - (770,000) (1,870,000) Net cash provided (used) by investing activities 52,668 329 52,997 91,710 Net increase (decrease) in cash and cash equivalents 658,705 (118,944) 539,761 530,953 Cash and cash equivalents, July 1, 2008 147,399 879,632 1,027,031 292,309 CASH AND CASH EQUIVALENTS, JUNE 30, 2009 806,104$ 760,688$ 1,566,792$ 823,262$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) 522,286$ (240,096)$ 282,190$ 377,607$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 377,626 29,492 407,118 475,802 Change in assets and liabilities: Receivables (143,765) (3,952) (147,717) (6,977) Prepaid expenses - (9,377) (9,377) (38,603) Inventories - - - 2,655 Accrued expenses 9,123 (2,001) - 6,714 Accounts payable (62,463) (10,410) (72,873) (126,771) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 702,807$ (236,344)$ 459,341$ 690,427$ See accompanying notes to the basic financial statements. STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Exhibit 13 CITY OF PADUCAH, KENTUCKY -50- Governmental Activities Internal Service Business-type Activities Funds Exhibit 14 Private- Pension purpose Agency Funds Trusts Funds Cash and cash equivalents 93,996$ 7,372$ 427,615$ Receivables: Interest 22,818 - - Prepaid expenses 296 - - Investments at fair value: Money market funds 526,994 4,092 - Certificates of deposit 200,000 - - Common stock 1,557,626 - - Corporate bonds 275,248 - - U.S. agencies bonds 1,162,128 - - Mutual funds 5,034,632 835,501 - Total assets 8,873,738 846,965 427,615 Voucher and accounts payable 203 - - Due to other funds - - - Payroll taxes and withholdings payable - - 427,615 Total liabilities 203 - 427,615$ Held in trust for pension benefits and other purposes 8,873,535$ 846,965$ See accompanying notes to the basic financial statements. Primary Government -51- LIABILITIES ASSETS NET ASSETS CITY OF PADUCAH, KENTUCKY STATEMENT OF NET ASSETS FIDUCIARY FUNDS JUNE 30, 2009 Exhibit 15 Private- Pension purpose Additions: Funds Trusts Contributions: Employer 226,057$ -$ Plan members 4,473 - Intergovernmental revenues - 13,205 Private donations - - Total contributions 230,530 13,205 Investment income: Net increase (decrease) in fair value of investments (2,105,252) (140,446) Loss on sale of investments - (49,009) Interest and dividends 291,032 30,012 Net investment income (1,814,220) (159,443) Total additions (1,583,690) (146,238) Deductions: Benefits 1,837,062 - Capital outlay - 450 Administrative expenses 74,468 13,683 Interfund transfers - 3,243 Total deductions 1,911,530 17,376 Change in net assets (3,495,220) (163,614) Net assets, July 1, 2008 12,368,755 1,010,579 NET ASSETS, JUNE 30, 2009 8,873,535$ 846,965$ See accompanying notes to the basic financial statements. -52- STATEMENT OF CHANGES IN NET ASSETS CITY OF PADUCAH, KENTUCKY FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS COMPONENT UNITS FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 THIS PAGE INTENTIONALLY LEFT BLANK Exhibit 16 All Paducah Paducah Component Water Transit Unit Current Assets: Works Authority Totals Cash and cash equivalents 628,163$ 176,763$ 804,926$ Receivables, net: Accounts 356,164 64,141 420,305 Grants - 82,439 82,439 Other 753,293 - 753,293 Inventories 396,688 15,000 411,688 Prepaid expenses - 10,658 10,658 Other current assets 824,903 - 824,903 Total current assets 2,959,211 349,001 3,308,212 Noncurrent Assets: Net capital assets: Land and construction in progress 792,545 486,314 1,278,859 Depreciable capital assets 33,449,940 3,022,463 36,472,403 Other assets 2,153,849 - 2,153,849 Total noncurrent assets 36,396,334 3,508,777 39,905,111 Total assets 39,355,545 3,857,778 43,213,323 ASSETS -53- CITY OF PADUCAH, KENTUCKY STATEMENT OF NET ASSETS COMPONENT UNITS JUNE 30, 2009 All Paducah Paducah Component Water Transit Unit Current Liabilities: Works Authority Totals Voucher and accounts payable 652,951$ 99,861$ 752,812$ Accrued payables - 92,100 92,100 Notes payable due within one year 25,000 79,912 104,912 Other current liabilities 1,022,289 - 1,022,289 Total current liabilities 1,700,240 271,873 1,972,113 Noncurrent Liabilities: Notes payable 90,000 185,592 275,592 Total noncurrent liabilities 90,000 185,592 275,592 Total liabilities 1,790,240 457,465 2,247,705 Net Assets: Invested in capital assets, net of related debt 34,137,566 3,091,120 37,228,686 Unrestricted 3,427,739 309,193 3,736,932 TOTAL NET ASSETS 37,565,305$ 3,400,313$ 40,965,618$ See accompanying notes to the basic financial statements -54- NET ASSETS LIABILITIES Charges for Authorities: Expenses Services Business-type activities: Paducah Water Works 7,308,857$ 7,425,085$-$ 734,919$ Paducah Transit Authority 3,946,609 1,367,303 1,738,389 142,394 TOTAL COMPONENT UNITS 11,255,466$ 8,792,388$ 1,738,389$ 877,313$ General Revenues: Unrestricted investment earnings Gain (loss) on disposal of assets Miscellaneous general Total general revenues and transfers Change in net assets Net assets, July 1, 2008 NET ASSETS, JUNE 30, 2009 See accompanying notes to the basic financial statements. FUNCTIONS/PROGRAMS Operating Grants and Contributions Capital -55- Grants and Contributions Exhibit 17 Program Revenues CITY OF PADUCAH, KENTUCKY STATEMENT OF ACTIVITIES COMPONENT UNITS FOR THE YEAR ENDED JUNE 30, 2009 Paducah Paducah Water Transit Works Authority Totals 851,147$ -$ 851,147$ - (698,523) (698,523) 851,147 (698,523) 152,624 33,948 4,886 38,834 10,000 2,938 12,938 62,343 75,099 137,442 106,291 82,923 189,214 957,438 (615,600) 341,838 36,607,867 4,015,913 40,623,780 37,565,305$ 3,400,313$ 40,965,618$ -56- Net (Expense) Revenue and Changes in Net Assets CITY OF PADUCAH, KENTUCKY NOTES TO THE FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: General Statement The City of Paducah (City) complies with generally accepted accounting principles (GAAP). GAAP includes all relevant Governmental Accounting Standards Board (GASB) pronouncements. In the government-wide financial statements and the fund financial statements for the proprietary funds, Financial Accounting Standards Board (FASB) pronouncements and Accounting Principles Board (APB) opinions issued on or before November 30, 1989, have been applied unless those pronouncements conflict with or contradict GASB pronouncements, in which case, GASB pronouncements prevails. For enterprise funds, GASB Statement Nos. 20 and 34 provide the City the option of electing to apply FASB pronouncements issued after November 30, 1989. The City has elected not to apply those pronouncements. The accounting and reporting framework and the more significant accounting policies are discussed in subsequent subsections of this Note. 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. Discretely Presented Component Units The component unit column in the basic financial statements includes the financial data of the City’s other component units. They are reported in a separate column to emphasize that they are legally separate from the City. The following component units are included in the reporting entity because of their financial relationship with the City and the City is able to impose its will on the organizations. Paducah Water Works - The City of Paducah Water Works Commission is appointed by the Mayor. The rates for user charges and bond issuance authorizations are subject to approval by the City Commission of the City of Paducah. Transit Authority of the City of Paducah - The Transit Authority’s governing board is appointed by the Mayor of the City of Paducah. The City is the grantee agency receiving, on behalf of the Transit Authority, its principal revenues. The City also contributes substantially to the operation of the Authority by providing cash subsidies and facilities. (Continued) -57- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: Complete financial statements of the individual component units can be obtained from their respective administrative offices in the following locations: Paducah Water Works Transit Authority of the 401 Washington Street City of Paducah Paducah, Kentucky 42003 850 Harrison Street Paducah, Kentucky 42001 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 in the City’s report. 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. This organization is not included as a component unit of 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. This organization is not included as a component unit of 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. This organization is not included as a component unit of 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. This organization is not included as a component unit of the City. Paducah Junior College, Incorporated (PJC) – The College is a part of the University of Kentucky Community College System which is now administered by the Kentucky Community and Technical College System. Under this system, the University of Kentucky receives the monies from student tuition, fees and other related income and 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. This organization is not included as a component unit of the City. Mainstreet – Mainstreet is a 501(c)3 established for the promotion of cultural and economic growth in Downtown Paducah. Mainstreet is a legally separate entity and is not financially accountable to the City. This organization is not included as a component unit of the City. (Continued) -58- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Account Policies: Basis of Presentation Government-wide Financial Statements The Statement of Net Assets 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. 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, liabilities, fund equity, revenues, and expenditure/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. 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. Special Revenue Investment Fund - To account for restricted funds from employee license fee used for economic development, neighborhood redevelopment and infrastructure capital investments within Paducah. 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. Additionally, the City reports the internal service funds which are used to account for the fleet management services, self funded property and casualty self insurance and self funded health and disability insurance provided to departments of the City. (Continued) -59- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Account Policies: Fiduciary funds report resources held in trust. Two of these funds are single-employer defined benefit funds and are administered by the City. These funds are Police and Firefighters' Pension Fund (PFPF) and Appointive Employee' Pension Fund (AEPF). 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 of in accordance with maintenance trust agreements. The Agency Fund accounts for the City's payroll wages, taxes and related withholdings. 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 Assets 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 assets (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 assets. c. Agency 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 Assets 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. 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. Agency funds are presented using the accrual basis of accounting. (Continued) -60- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Account Policies: All proprietary, pension 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. Deferred/unearned revenue The City reports unearned revenue on its government-wide statement of net assets and deferred revenue on the fund financial statements. Deferred/unearned revenues arise when potential revenue does not meet both the "measurable” and “available” criteria for recognition in the current period. Deferred/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 deferred/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 not directly allocated. Allocations are charged to functions based on use by weighted-average methodology. 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: (Continued) -61- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: 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 department line items; however, any revisions that alter the total expenditures of any department 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 a basis (budget basis), which differs from generally accepted accounting principles (GAAP basis). Encumbrance accounting, under which purchase orders, contracts, and other commitments for the expenditure of monies 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, 2009. Cash and Investments The City Council updated and adopted formal deposit and investment policies in January 2001. These policies apply to all City funds not contained in public trusts. Pension trust fund has investment policies separately approved by their oversight board. The private purpose trust has no adopted deposit and investment policy. For the purpose of the Statement of Net Assets, “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 or short-term investments 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. Receivables In the government-wide statements, receivables consist of all revenues earned at year end and not yet received. Major receivable balances for the governmental activities include property taxes, employee earnings taxes, business licenses, insurance premiums taxes, franchise taxes, grant revenue and interlocal note receivable. Business-type activities report utilities and interest earnings as their major receivables. (Continued) -62- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: 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, material 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 in the fund financial statements in accordance with modified accrual, but not deferred in the government-wide financial statements in accordance with the accrual basis. 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 material receivables consist of all 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 Assets. See Note 3 for details of interfund transactions, including receivables and payables at year end. Inventories Inventories are stated at cost on a first-in, first-out basis. Inventory consists of expendable supplies of $73,605 held for consumption and real property of $2,019,630 held for urban development. 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 which are recorded at their estimated fair value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to June 30, 2004. Assets capitalized have an original cost of $500 or more prior to July 1, 1999, and $2,500 or more after July 1, 1999. Prior to July 1, 2002, governmental funds’ infrastructure assets were not capitalized. These assets have been valued at estimated historical cost. (Continued) -63- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: 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 10-20 Years Buildings 30-60 Years Building improvements 3- 7 Years Infrastructure 15-20 Years Equipment 5-25 Years Furnishings and fixtures 3-10 Years Vehicles 3- 9 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. 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 to applicable bond covenants. Compensated Absences 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 Employee's 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) -64- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: Equity Classifications Government-wide Statements Equity is classified as net assets and displayed in three components: a. Invested in capital assets, net of related debt – 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 assets – 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 assets – All other net assets that do not meet the definition of “restricted” or “invested in capital assets, net of related debt.” Fund Statements Governmental fund equity is classified as fund balance. Fund balance is further classified as reserved and unreserved. Proprietary fund equity is classified the same as in the government-wide statements. 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. All other interfund transfers are reported as operating 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. (Continued) -65- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: 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 character: Current (further classified by function) Debt Service Capital Outlay Proprietary Fund - 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. 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 aws and regulations and demonstration of its stewardship over City resources follows. l 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. 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 Highway Planning and Construction Grant Construction of Transportation Museum HOME Investment Partnerships Grant Construction of Low-income Rental Units Emergency Communication Revenue E-911 Emergency Services County Bed Tax Debt Obligations Kentucky Transportation Cabinet Street Repairs and Maintenance Kentucky Housing Corporation Façade Loans Other Grants Grant Program Expenditures 25% of Employee Earning Tax Economic, Neighborhood and Capital Development (Continued) -66- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 1 - Summary of Significant Accounting Policies: For the year ended June 30, 2009, 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. 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, 2009, are as follows: Description Date Assessment and enforceable lien January 1, 2008 Levy September 25, 2008 Face value amount payment dates 1st half by November 1, 2008 2nd half by February 1, 2009 Delinquent date - 10% penalty plus 1/2% per month 1st half - November 30, 2008 2nd half - February 28, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: The following notes present detail 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 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) -67- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: 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, 2009, 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 was $5,885,404 and $6,476,710, respectively. Investments As of June 30, 2009, the City's reporting entity had the following investments: Fair Value/ Average Investment Maturities (In Years) (2) Carrying Credit Quality/ Less Greater Types of Investments Amount Rating (1) Than 1 1-5 6-10 Than 10 Primary Government Money market funds $ 96,239 NA $ 96,239 $ - $ - $ - Certificates of deposit (3) 10,250,000 NA 3,550,000 6,700,000 - - TOTAL PRIMARY GOVERNMENT $10,346,239 Fiduciary and Private Purpose Trust Funds Money market funds $ 531,086 NA $ 531,086 $ - $ - $ - Certificates of deposit (3) 200,000 NA - 200,000 - - Common stock 1,557,626 NA NA NA NA NA Corporate bonds 275,248 A/A- - - 275,248 - U.S. agencies (4) 1,162,128 AAA/A - - 1,162,128 - Mutual funds Equity 404,057 NA NA NA NA NA Bond 82,998 NR NA NA NA NA Fixed 1,300,506 NA NA NA NA NA Index 4,082,572 NA NA NA NA NA TOTAL FIDUCIARY AND PRIVATE PURPOSE TRUST FUNDS $ 9,596,221 (Continued) -68- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: (1) Ratings are provided where applicable to indicate associated Credit Risk. NA indicates not applicable. NR indicates that instrument is not rated. (2) Maturities are provided for debt instruments with maturity dates. NA indicates not applicable. (3) $200,000 of the fiduciary's certificates of deposit is pooled with the primary government's certificates of deposit. (4) Includes $249,550 of securities callable as of June 30, 2009. 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 issued by 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. 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) -69- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: 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 35% 50% 65% Fixed income 35% 50% 65% 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. Capital Assets Capital asset activity for the year ended June 30, 2009, was as follows: (Continued) -70- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: Balance Balance Primary Government: July 1, 2008 Additions Deductions June 30, 2009 Capital assets, not being depreciated: Land $ 6,236,574 $ 3,011 $ - $ 6,239,585 Construction-in-progress 2,511,350 1,314,748 215,571 3,610,527 Total capital assets, not being depreciated 8,747,924 1,317,759 215,571 9,850,112 Capital assets, being depreciated: Land improvements 3,061,972 - - 3,061,972 Buildings and improvements 15,020,460 424,796 - 15,445,256 Infrastructure 34,582,548 335,935 - 34,918,483 Equipment 7,684,213 605,865 - 8,290,078 Furnishings and fixtures 230,312 - - 230,312 Vehicles 7,435,585 381,935 234,794 7,582,726 Totals at historical cost 68,015,090 1,748,531 234,794 69,528,827 Less accumulated depreciation: Land improvements 1,152,552 94,572 - 1,247,124 Buildings and improvements 11,126,234 284,654 - 11,410,888 Infrastructure 17,558,900 2,174,485 - 19,733,385 Equipment 6,096,333 518,723 - 6,615,056 Furnishings and fixtures 223,182 1,525 - 224,707 Vehicles 5,482,555 488,517 230,385 5,740,687 Total accumulated depreciation 41,639,756 3,562,476 230,385 44,971,847 Total capital assets, being depreciated, net 26,375,334 (1,813,945) 4,409 24,556,980 PRIMARY GOVERNMENT ACTIVITIES CAPITAL ASSETS, NET $35,123,258 $ (496,186) $219,980 $34,407,092 Balance Balance Business-type Activities: July 1, 2008 Increases Decreases June 30, 2009 Capital assets, not being depreciated: Land $ 65,908 $ - $ - $ 65,908 Construction-in-progress 42,193 - 42,193 - Total capital assets, not being depreciated 108,101 - 42,193 65,908 Capital assets, being depreciated: Buildings and improvements 429,254 - 429,254 Equipment 1,278,241 127,228 - 1,405,469 Vehicles 2,720,490 198,790 360,187 2,559,093 Totals at historical cost 4,427,985 326,018 360,187 4,393,816 (Continued) -71- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: Balance Balance Business-type Activities: July 1, 2008 Increases Decreases June 30, 2009 Less accumulated depreciation: Buildings and improvements $ 188,962 $ 12,914 $ - $ 201,876 Equipment 935,065 61,427 - 996,492 Vehicles 1,505,891 332,777 298,731 1,539,937 Total accumulated depreciation 2,629,918 407,118 298,731 2,738,305 Total capital assets, being depreciated, net 1,798,067 (81,100) 61,456 1,655,511 BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET $ 1,906,168 $ (81,100) $103,649 $ 1,721,419 Depreciation expense was charged to governmental activities as follows: General government: General administration $ 141,458 Finance 2,748 Planning 2,943 Inspections 528 Personnel 1,294 Information systems - Fleet maintenance 6,612 Total general government 155,583 Public safety: Police 135,201 Fire 39,201 Grants 20,524 Emergency 911 65,500 Court awards 16,369 Fleet Lease Trust 469,190 Total public safety 745,985 Public service: Public works 91,671 Engineering 244,766 Total public service 336,437 (Continued) -72- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: Parks and recreation $ 148,115 Planning and development: Infrastructure 2,174,485 Grants 1,871 Total planning and development 2,176,356 TOTAL DEPRECIATION EXPENSE – GOVERNMENTAL ACTIVITIES $3,562,476 Depreciation expense was charged to business-type activities as follows: Solid Waste Fund $ 377,626 Section Eight Housing 4,895 Civic Center 10,790 TISA Fund 13,807 TOTAL DEPRECIATION EXPENSE – BUSINESS-TYPE ACTIVITIES $ 407,118 Balance Balance Discretely Presented July 1, 2008 Increases Decreases June 30, 2009 Component Units: Capital assets, not being depreciated: Land $ 486,314 $ - $ - $ 486,314 Construction-in-progress - 792,545 - 792,545 Total capital assets, not being depreciated 486,314 792,545 - 1,278,859 Capital assets, being depreciated: Buildings and improvements 1,672,826 8,166 - 1,680,992 Equipment 5,749,868 268,907 27,872 5,990,903 Utility plant 58,861,102 1,491,024 231,385 60,120,741 Total capital assets, being depreciated 66,283,796 1,768,097 259,257 67,792,636 Less accumulated depreciation: Buildings and improvements 647,689 107,385 - 755,074 Equipment 3,281,313 636,709 23,664 3,894,358 Utility plant 25,441,867 1,310,319 81,385 26,670,801 Total accumulated depreciation 29,370,869 2,054,413 105,049 31,320,233 Total capital assets, being depreciated, net 36,912,927 (286,316) 154,208 36,472,403 COMPONENT UNIT CAPITAL ASSETS, NET $37,399,241 $ 506,229 $ 154,208 $37,751,262 (Continued) -73- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: Depreciation expense, charged to functions/programs of discretely presented major component units as follows: Paducah Water Works $ 1,310,319 Paducah Transit Authority 744,094 TOTAL DEPRECIATION EXPENSE BY ACTIVITY $ 2,054,413 Accounts Payable Payables in the governmental and proprietary funds are composed of payables to vendors and accrued salaries and benefits. Long-Term Debt The City’s long-term debt is 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, 2009, the governmental long-term debt consisted of the following: General obligation bonds: Current portion $ 783,198 Noncurrent portion 19,016,440 TOTAL GENERAL OBLIGATION BOND COSTS $19,799,638 Note payable: Current portion $ 251,999 Noncurrent portion 4,935,263 TOTAL NOTE PAYABLE PAYMENTS $ 5,187,262 Accrued compensated absences: Current portion $ 988,956 Noncurrent portion 873,286 TOTAL ACCRUED COMPENSATED ABSENCES $ 1,862,242 Business-type Activities As of June 30, 2009, the long-term debt payable from proprietary fund resources consisted of the following: Accrued compensated absences: Current portion $ 77,822 Noncurrent portion 13,961 TOTAL ACCRUED COMPENSATED ABSENCES $ 91,783 (Continued) -74- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: General Obligation Bonds Series 2001 Bond Issue - The City of Paducah issued general obligation bonds of $9,290,000 in June 2001, to finance construction of the new Luther F. Carson Four Rivers Center for the Performing Arts and the expansion of the Julian Carroll Convention Center. Interest rates range from 3.5% to 5%. These bonds are required to be fully paid within 25 years from the date of issue and are backed by the full faith and credit of the City. While these bonds are issued by the City, 50% of the principal amount of the bonds was issued on behalf of the County of McCracken, Kentucky which intends to participate on an equal basis with the City in financing the projects and has issued the City a general obligation note in a principal amount equal to 50% of the principal amount of the bonds and bearing interest at the same rates as the City’s bonds in order to secure the County’s obligations to the City. This note receivable is reflected in the government-wide Statement of Net Assets. In accordance with an Interlocal Cooperation Agreement between the City, McCracken County, Kentucky (the County), and the Paducah-McCracken County Tourist and Convention Commission (the Bureau), principal and interest payments on the bonds are being made from an additional 2% transient room tax collected by the County with the remaining payments split evenly between the City, the County, and the Bureau. Series 2004 Bond Issue - The City of Paducah issued general obligation bonds of $5,000,000 in June 2004, to finance construction of the new Infiniti Media Building. Interest rates range from 2.25% to 6%. 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. While these bonds are issued by the City, 50% of the principal amount of the bonds was issued on behalf of the County of McCracken, Kentucky which intends to participate on an equal basis with the City in financing the projects and has issued the City a general obligation note in a principal amount equal to 50% of the principal amount of the bonds and bearing interest at the same rates as the City’s bonds in order to secure the County’s obligations to the City. This note receivable is reflected in the government-wide Statement of Net Assets. Principal and interest payments prior to September 1, 2007, on the bonds are being split evenly between the City and the County. After September 1, 2007, the City and County will pay 2.031% of the bond payments with the remaining amount being made from a sale-lease with Infiniti Plastic Technologies, Inc. Series 2005 Bond Issue - The City of Paducah issued general obligation bonds of $6,100,000 in November 2005, to finance the police and firefighter's pension fund estimated actuary liability. Interest rate is fixed at 5.35%. 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 2008 Bond Issue - The City of Paducah issued general obligation bonds of $2,800,000 in March 2009, to finance the Floodwall Rehabilitation. Interest rates are variable. 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. Notes Payable Kentucky League of Cities - On July 1, 2003, the City entered into an agreement in the amount of $3,500,000 with the Kentucky League of Cities to finance the acquisition and installation of various public capital projects. Interest is charged at a rate of approximately 2.98%. The note is required to be fully paid within 20 years from the date of issue and is backed by the full faith and credit of the City. (Continued) -75- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: 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. 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. Kentucky Association of Counties - The County of McCracken, Kentucky entered into an agreement in the amount of $250,000 in August 2004, with the Kentucky Association of Counties to assist the Paducah- McCracken County Industrial Development Authority finance construction of the new speculative building in Industrial Park West. Interest rate is 4.250%. This note is required to be fully paid within 5 years from the date of issue and is backed jointly by the full faith and credit of the City and the County. While this 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 June 1, 2004. F. Burnham and Cynthia Jones - On September 6, 2006, the City entered into an agreement in the amount of $375,000 with F. Burnham and Cynthia Jones to finance the acquisition of real property to be used for the development of an arts school in the community. Interest rate is New York prime, adjusted monthly. This note was fully paid on January 8, 2009. Community Financial Services Bank - On February 6, 2009, the City entered into a multiple draw agreement in the amount of $500,000 with Community Financial Service Bank (CFSB) to finance the program activities of the Home Grant Fund. As of June 30, 2009, $14,613 had been drawn on this agreement. Interest rate is 3.95%, fixed. The note matures on February 6, 2010. Changes in Long-Term Debt The following is a summary of changes in long-term debt for the year ended June 30, 2009: Amounts Beginning Ending Due within Type of Debt: Balance Additions Reductions Balance One Year Governmental activities: General obligation bonds: Convention and Arts Center $ 7,600,000 $ - $ 280,000 $ 7,320,000 $ 290,000 Infiniti Media Building 4,340,000 - 180,000 4,160,000 185,000 Pension 5,740,000 - 195,000 5,545,000 205,000 Floodwall Rehabilitation - 2,800,000 25,362 2,774,638 103,198 Notes payable: Kentucky League of Cities 2,822,970 - 150,321 2,672,649 154,886 Kentucky Association of Counties - 2,500,000 - 2,500,000 82,500 Jones Agreement 123,333 - 123,333 - - CFSB - 14,613 - 14,613 14,613 Accrued compensated absences 1,805,893 814,345 757,996 1,862,242 988,956 TOTAL GENERAL LONG- TERM DEBT $22,432,196 $6,128,958 $1,712,012 $26,849,142 $2,024,153 Business-type activities: Accrued compensated absences $ 89,850 $ 77,971 $ 76,038 $ 91,783 $ 77,822 (Continued) -76- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: (1) The calculation to reconcile amounts in this schedule to the "net assets invested in capital assets, net of related debt" is: Net Capital Assets $34,407,092 Less: 19.75% of the outstanding 2001 general obligation bonds $(1,445,704) Net of the County's portion 722,852 (722,852) 100% of the outstanding Kentucky League of Cities' note payable (2,672,649) Plus: Net assets invested in capital assets, net of related debt $31,215,252 Annual Debt Service Requirements The annual debt service requirements to maturity, excluding obligations associated with compensated absences, for long-term debt as of June 30, 2009, are as follows: Year Ending June 30 Principal Interest 2010 $ 1,035,197 $ 1,057,762 2011 1,066,083 1,016,472 2012 1,119,179 977,626 2013 1,160,357 932,275 2014 1,219,011 884,304 2015-2019 6,998,953 3,606,960 2020-2024 8,587,710 1,939,286 2025-2026 3,800,410 281,352 TOTALS $24,986,900 $10,696,037 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, 2009, are as follows: Governmental Business-type Activities Activities Accrued sick leave $ 753,820 $ 27,940 Accrued vacation leave 1,108,422 63,843 Totals 1,862,242 91,783 Less current portion 988,956 77,822 LONG-TERM PORTION $ 873,286 $ 13,961 (Continued) -77- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: Termination Benefits Seven 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. For the year ended June 30, 2009, no payments were made for termination benefits. 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 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, 2009, payments of $21,459 were 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, 2009, 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. Interfund Transactions and Balances Interfund transfers during the year ended June 30, 2009, were as follows: Interfund Interfund Governmental Funds: Transfers In Transfers Out General Fund $ 408,678 $2,096,501 Capital Project Fund 2,450,548 765,407 Special Revenue Investment Fund 316,710 3,256,439 Debt Service Fund 842,389 - Nonmajor Governmental Funds 1,910,088 32,500 Internal Service Funds 114,839 - Fiduciary Funds: Other trusts - 3,243 Proprietary Funds: Solid Waste Fund - - Nonmajor Proprietary Funds 110,838 - TOTALS $6,154,090 $6,154,090 (Continued) -78- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 3 - Detail Notes on Transaction Classes/Accounts: 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. Due To/From Balances Due to/from balances used to cover current operating expenses were as follows as of June 30, 2009: Due From Due To General Fund $1,160,818 $ 985,859 General Capital Improvements Fund - 153,000 Special Revenue Investment Fund 985,860 23,690 Nonmajor Governmental Funds - 157,667 Nonmajor Proprietary Funds - 25,462 Internal Service Funds - 801,000 TOTALS $2,146,678 $2,146,678 Note 4 - Pension Plans - City of Paducah: The City provides retirement benefits to its employees through three pension funds. Two of these funds are single-employer defined benefit funds and are administered by the City. These funds are Police and Firefighters’ Pension Fund (PFPF) and Appointive Employee’ Pension Fund (AEPF). 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 two deferred compensation plans. Information regarding these plans follows: Single Employer Defined Benefit Funds (Police and Firefighters' Pension Fund and Appointive Employees Pension Fund) 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. Funding - The Appointive Employee’s Pension Fund Board and the City of Paducah Police and Firefighter’s Pension Fund Board are responsible for establishing or amending contribution rates and requirements for their respective plans. 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. Police and Firefighters’ Pension Fund 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; all other active duty members elected coverage under CERS. PFPF provides retirement, disability and death benefits to plan members and their beneficiaries. These benefits are determined by Kentucky Revised Statutes (KRS) sections 95.851 to 95.884. PFPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. (Continued) -79- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 4 - Pension Plans - City of Paducah: Police and Firefighters' Pension Fund Contributions: Plan members are required to contribute 8% of their annual covered salary. A member reserve is established for member contributions, less amounts transferred to reserves for retirement and disability and amounts refunded to terminated employees. Funding: The schedule of funded status and funding progress can be found on page 90, which contains trend information about the changes in actuarial value of the plan assets relative to the actuarially determined liability for benefits over time. Components of annual pension cost for PFPF are as follows: Year Ended Year Ended Year Ended Component June 30, 2009 June 30, 2008 June 30, 2007 Beginning NPO balance $ (5,546,740) $ (5,552,551) $ (5,425,468) ARC 183,661 12,887 46,948 Interest on NPO (443,739) (444,204) (420,474) Unfunded ARC adjustment 481,122 481,626 455,664 Pension cost 221,044 50,309 82,138 Less actual contribution 226,057 44,498 209,221 Net change in NPO (5,013) 5,811 (127,083) ENDING NPO BALANCE $ (5,551,753) $ (5,546,740) $ (5,552,551) PERCENTAGE OF PENSION COST CONTRIBUTED 102% 88% 255% The financial statements for the Police and Firefighters’ Pension Fund are as follows: Statement of Fiduciary Net Assets Police and Firefighters’ Retirement Fund June 30, 2009 Assets: Cash and cash equivalents $ 69,196 Receivables 21,898 Investment at fair value 8,556,628 Total assets 8,647,722 Liabilities: Voucher and accounts payable 203 Net Assets: Held in trust for pension benefits and other purposes $ 8,647,519 (Continued) -80- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 4 - Pension Plans - City of Paducah: Police and Firefighters' Pension Fund Statement of Changes in Net Assets Police and Firefighters’ Retirement Fund For the Year Ended June 30, 2009 Additions: Employer contributions $ 226,057 Plan members’ contributions 4,473 Total contributions 230,530 Investment earnings: Net increase in fair value of investments (2,105,252) Interest and dividends 284,244 Net investment earnings (1,821,008) Total additions (1,590,478) Deductions: Benefits 1,793,820 Administrative expenses 65,237 Total deductions 1,859,057 Change in net assets 3,449,535 Net assets, July 1, 2008 12,097,054 NET ASSETS, JUNE 30, 2009 $ 8,647,519 Appointive Employees’ Pension Fund Plan Description: AEPF is a single-employer defined benefit plan which covers past appointed employees of the City. In 1975, the City froze admission of new entrants into the plan. There are no active participants in the plan at June 30, 2009. AEPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. Contributions: 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. Funding: The schedule of funded status and funding progress can be found on page 90, which contains trend information about the changes in actuarial value of the plan assets relative to the actuarially determined liability for benefits over time. Components of annual pension cost for AEPF are as follows: (Continued) -81- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 4 - Pension Plans - City of Paducah: Appointive Employees' Pension Fund Year Ended Year Ended Year Ended Component June 30, 2009 June 30, 2008 June 30, 2007 Beginning NPO balance $(250,893) $(278,827) $(287,297) ARC 6,278 8,925 13,883 Interest on NPO (15,054) (16,730) (17,238) Unfunded ARC adjustment 32,159 35,739 36,825 Pension cost 23,383 27,934 33,470 Less actual contribution - - 25,000 Net change in NPO 23,383 27,934 8,470 ENDING NPO BALANCE $(227,510) $(250,893) $(278,827) PERCENTAGE OF PENSION COST CONTRIBUTED 0% 0% 75% The financial statements for the Appointive Employees' Pension Fund are as follows: Statement of Fiduciary Net Assets Appointive Employees’ Pension Fund June 30, 2009 Assets: Cash and cash equivalents $ 24,800 Receivables 920 Prepaid expenses 296 Investment at fair value 200,000 Total assets 226,016 Liabilities: Voucher and accounts payable - Net Assets: Held in trust for pension benefits and other purposes $ 226,016 (Continued) -82- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 4 - Pension Plans - City of Paducah: Appointive Emloyees' Pension Fund Statement of Changes in Net Assets Appointive Employees’ Pension Fund For the Year Ended June 30, 2009 Additions: Interest and dividends $ 6,788 Employer contributions - Total additions 6,788 Deductions: Benefits 43,242 Administrative expenses 9,231 Total deductions 52,473 Change in net assets (45,685) Net assets, July 1, 2008 271,701 NET ASSETS, JUNE 30, 2009 $226,016 Single Employer Defined Benefit Funds (Police and Firefighters' Pension Fund and Appointive Employees Pension Fund) Contribution Information A summary of actuarial assumptions at June 30, 2009, the date of the latest actuarial valuation is as follows: PFPF AEPF Valuation date 7/1/09 7/1/09 Actuarial cost method Entry age normal Aggregate (1) Amortization method Level dollar closed Level dollar closed Remaining amortization period 25 Years 10 Years Asset valuation method Market value Market value Actuarial assumptions: Investment rate of return 8.00% 6.0% Projected salary increases 4.00% (2) Inflation rates adjustments 3.00% (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. (Continued) -83- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds (Police and Firefighters' Pension Fund and Appointive Employees Pension Fund) Contribution Information (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. Membership Information Membership of each plan consisted of the following at June 30, 2009: PFPF AEPF Active participants 1 0 Beneficiaries 47 4 Retired participants 36 3 TOTAL PARTICIPANTS 84 7 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, multi-employer public employee retirement system. CERS provides retirement, disability, and death benefits to plan members. Retirement benefits may be extended to beneficiaries of plan members under certain circumstances. Cost-of-living adjustments are provided at the discretion of the State legislature. Under the provisions of Kentucky Revised Statute 61.645, the Board of Trustees of Kentucky Retirement Systems administers the CERS. Kentucky Retirement Systems issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained by writing to Kentucky Retirement Systems, Perimeter Park West, 1260 Louisville Road, Frankfort, Kentucky 40601-6124 or by calling 1-502-564-4646. Funding Policy: Hazardous position employees are required to contribute 8% to the plan and nonhazardous position employees are required to contribute 5% of their creditable compensation by State statute. The City is required by the same statute to contribute the remaining amounts necessary to pay benefits when due. For the years ended June 30, 2009, 2008, and 2007, the City contributed 29.50%, 33.87%, and 28.21%, respectively, of each hazardous employee’s creditable compensation and 13.50%, 16.17%, and 13.19%, respectively, of each nonhazardous employee’s creditable compensation. These actuarially determined rates are set by the Board of Trustees of Kentucky Retirement Systems. The City’s contributions to CERS for the years ending June 30, 2008, 2007, and 2006, were $4,198,042, $4,533,944, and $3,849,611, respectively, equal to the required contributions for each year. Note 5 - Appropriations Deficit: No departments that adopted budgets annually had excess expenditures over appropriations for the fiscal year ended June 30, 2009. (Continued) -84- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 6 - Component Unit Long-Term Debt: Long-term debt of the discretely presented component units consists of the following at June 30, 2009: Note Payable, Kentucky Infrastructure Authority (KIA) – Paducah Water Works In connection with a merger with Reidland Water District, Paducah Water Works assumed a loan from the KIA. Interest rates range from 3.59% to 5.19%, with a .2% annual service fee. The annual requirements to amortize the outstanding debt as of June 30, 2009, are as follows: Year Ending June 30 Principal Interest Fee (0.2%) Total 2010 $ 25,000 $ 5,673 $ 230 $ 30,903 2011 30,000 4,521 180 34,071 2012 30,000 3,069 120 33,189 2013 30,000 1,557 60 31,617 TOTALS $115,000 $ 14,820 $ 590 $130,410 Notes Payable, Kentucky Association of Counties (KACO) - Paducah Transit Authority On February 13, 2004 and October 24, 2006, the Transit Authority of the City of Paducah entered into agreements with the KACO in connection with grant match projects. Interest rates on these agreements are 4.25%. As of June 30, 2009, the outstanding balance was $172,298 and $93,206, respectively. The following schedule summarizes the remaining debt service requirements for the Transit Authority of the City of Paducah notes payable: Total Debt Fiscal Year Principal Interest Service 2010 $ 79,912 $ 8,414 $ 88,326 2011 84,186 4,852 89,038 2012 37,078 3,295 40,373 2013 38,210 1,882 40,092 2014 26,118 450 26,568 TOTALS $ 265,504 $ 18,893 $ 284,397 (Continued) -85- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 7 - 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. Construction Commitments The City has various on-going contracts for construction, renovations, paving materials, equipment, and labor. As of June 30, 2009, the significant construction commitments were as follows: Cumulative Estimated Costs Incurred Total Costs Floodwall Survey Modification $ 132,591 $ 210,700 Floodwall Restoration Survey 126,320 223,943 Floodwall Pipe Rehabilitation 781,298 1,764,605 Olivet Church Road Improvement Project 1,234,593 1,234,593 Riverfront Development - Phase I 622,016 706,520 Riverfront - Other River Boat Launch Project 278,164 278,164 $3,174,982 $4,418,525 Note 8 - 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 2006 - 2007 $ - $ 57,168 $ 57,168 $ - 2007 - 2008 - 69,572 69,572 - 2008 - 2009 - 76,686 76,686 - 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 $150,000 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, 2009, that number was $2,572,801. 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 $53,586 at June 30, 2009. (Continued) -86- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 8 - Risk Management and Litigation: 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 2006 - 2007 $454,000 $2,601,505 $2,669,179 $386,326 2007 - 2008 386,326 2,726,811 3,006,773 106,364 2008 - 2009 106,364 2,650,054 2,702,832 53,586 During the fiscal year ended June 30, 2006, several current and former firefighters of the City of Paducah filed a lawsuit for unpaid compensation benefits and related pension obligations. The range of possible financial exposure for the City is zero to six million dollars. The City intends to vigorously defend the case. In addition, 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. Note 9 - Lease Agreements: Operating 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 being collected from this lease. The rental for the primary term of the lease is the construction 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 various expiration dates through June 30, 2011. Rental revenue received from leased property during 2009 totaled $437,943. The following is an analysis of property leased under these leases at June 30, 2009: Land $ 270,000 Buildings 873,250 Equipment 110,126 Total 1,253,376 Less: accumulated depreciation 775,740 NET BOOK VALUE $ 477,636 Depreciation expense for the year ended June 30, 2009, on leased property was $20,775. (Continued) -87- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 9 - Lease Agreements: The following is a schedule of future minimum rental income from operating leases at June 30, 2009: Lease Income 2010 $ 437,943 2011 268,519 TOTAL MINIMUM LEASE RECEIPTS $ 706,462 Direct Financing Lease The City is leasing land and a building to Infiniti Media, Incorporated for use by Infiniti Plastic Technologies, Incorporated for a primary term of 20 years. No rental revenue was required during the first three years of the lease term which resulted in a loss of $450,353. For the government-wide statement, the loss is amortized over the life of the lease. Rental payments commenced on September 1, 2007, at a monthly payment of $33,816 and end with the final payment due August 1, 2024. Infiniti Media may purchase the property during the term of lease by paying off the related indebtedness. In addition, at the end of the lease term, Infiniti Media may purchase the property for $1. Infiniti Media has the option to cancel this lease at any time after the sixth year of the lease term by providing written notice 18 months prior to the date of termination. The lease payments received coincide with debt service payments the City is required to make on bonds maturing annually through year ending June 30, 2024. Future minimum lease payments to be received under the lease agreement for the fiscal year ending June 30 are as follows: Lease Income 2010 $ 405,796 2011 405,796 2012 405,796 2013 405,796 2014 405,796 2015 through 2024 4,057,956 Net minimum lease payments 6,086,936 Less amount representing interest (2,095,475) PRESENT VALUE OF MINIMUM LEASE PAYMENTS $ 3,991,461 Note 10 - Restatement of Net Assets: As of June 30, 2008, the Solid Waste Fund had an unfinished capital project in the amount of $42,193. This project was not included in construction in progress account for the year then ended. The project was completed during fiscal year 2009 and has been reclassified to depreciable capital assets; the effect of this reclassification on fund balance and net assets are as follows: (Continued) -88- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2009 Note 10 - Restatement of Net Assets: Net Assets As Previously Net Assets Reported Restatement As Restated Proprietary Funds: Solid Waste Fund $1,255,494 $ 42,193 $1,297,687 Governmental-Wide Statement: Business Type Funds $2,423,470 $ 42,193 $2,465,663 -89- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 Exhibit A-1 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION PENSION TRUST FUNDS SCHEDULES Schedules of Funding Progress Actuarial Actuarial Unfunded Annual UAAL as a Actuarial Value of Accrued AAL Funded Covered Percentage of Valuation Assets Liability (AAL) (UAAL) Ratio Payroll Covered Payroll Date (a) (b) (b-a) (a/b) (c) ((b-a)/c) Police and Firefighters’ Pension Fund (PFPF) (Using Entry Age Normal Method) 7/1/2007 $ 14,470,016 $14,463,785 $ (6,231) 100.0 $100,986 $ (6.17) 7/1/2008 12,097,054 14,076,843 1,979,789 85.9 56,475 3,505.60 7/1/2009 8,647,519 13,476,007 4,828,488 64.2 55,475 8,641.74 Appointive Employees’ Pension Fund (AEPF) (Using Entry Age Actuarial Method) 7/1/2007 $ 317,575 $ 382,916 $ 65,341 82.9 n/a* n/a* 7/1/2008 271,701 317,849 46,148 85.5 n/a* n/a* 7/1/2009 226,016 306,287 80,271 73.8 n/a* n/a* * There are no active participants. Schedules of Employer Contributions PFPF Year Annual Percent Ending Ended Required ARC Net Pension June 30 Contribution (ARC) Contributed Obligation (NPO) 2007 $ 46,948 446 $ (5,552,551) 2008 12,887 345 (5,546,740) 2009 183,661 123 (5,551,753) AEPF Year Annual Percent Ending Ended Required ARC Net Pension June 30 Contribution (ARC) Contributed Obligation (NPO) 2007 $ 13,883 180 $ (278,827) 2008 8,925 0 (250,893) 2009 6,278 0 (227,510) -90- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR GOVERNMENTAL FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 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. Federal, State, and Local Grants - to account for the grant programs awarded to the City of Paducah from agencies of the Federal Government and the Commonwealth of Kentucky. PRA - Paducah Renaissance Alliance, to account for the expenditures related to the economic promotion of downtown Paducah, Kentucky. Exhibit B-1 CITY OF PADUCAH, KENTUCKY GENERAL CAPITAL IMPROVEMENTS DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 Variance with Final Budget Final Positive Revenues:Budget Actual (Negative) Grants 3,473,520$ 3,473,552$ 32$ Intergovernmental 9,540 9,543 3 Interest 60,490 60,490 - Miscellaneous 432,200 432,205 5 Total revenues 3,975,750 3,975,790 40 Expenditures: Capital outlay 8,580,935 8,580,910 25 Excess (deficiency) of revenues over expenditures (4,605,185) (4,605,120) 65 Other Financing Sources (Uses): Long-term debt issued 1,718,600 1,718,605 5 Operating transfers in 2,450,545 2,450,548 3 Operating transfers out (765,410) (765,407) 3 Total other financing sources (uses)3,403,735 3,403,746 11 Net change in fund balance (1,201,450)$ (1,201,374) 76$ Fund balance, July 1, 2008 2,947,140 FUND BALANCE, JUNE 30, 2009 1,745,766$ See auditors report on pages 11-12. -91- THIS PAGE INTENTIONALLY LEFT BLANK Exhibit B-2 Final Revenues: Budget Actual Intergovernmental 614,125$ 614,132$ 7$ Expenditures: Principal requirement 830,685 830,682 3 Interest and fiscal requirement 1,003,450 1,003,439 11 Total expenditures 1,834,135 1,834,121 14 Excess (deficiency) of revenues over expenditures (1,220,010) (1,219,989) 21 Other Financing Sources (Uses): Capital lease 405,795 405,796 1 Operating transfers in 842,385 842,389 4 Total other financing sources (uses) 1,248,180 1,248,185 5 Net change in fund balance 28,170$ 28,196 26$ Fund balance, July 1, 2008 65,048 FUND BALANCE, JUNE 30, 2009 93,244$ See auditors report on pages 11-12. Variance with -92- (Negative) Positive Final Budget FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY DEBT SERVICE FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-3 Court Small Awards Grant Fund Fund Cash and cash equivalents 497,043$ 259,648$ 42,571$ 16,503$ Investments - 100,000 50,000 250,000 Receivables, net: Accounts 22,324 193,398 - 3,333 Grants - - - - Interest - 460 1,921 4,978 TOTAL ASSETS 519,367$ 553,506$ 94,492$ 274,814$ Liabilities: Voucher and accounts payable 84,623$ 3,495$ 79,316$ 5,934$ Accrued payroll and payroll taxes - 35,763 - - Due to other funds - - - - Accrued compensated absences - - - - Total liabilities 84,623 39,258 79,316 5,934 Fund Balances: Reserved for: Program purposes - - - 268,880 Unreserved 434,744 514,248 15,176 - Total fund balances 434,744 514,248 15,176 268,880 TOTAL LIABILITIES AND FUND BALANCES 519,367$ 553,506$ 94,492$ 274,814$ See auditors report on pages 11-12. -93- ASSETS Municipal Communication LIABILITIES AND CITY OF PADUCAH, KENTUCKY COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2009 FUND BALANCES Special Revenue Funds Aid Program Service Fund Emergency CDBG Home Grant Grant Fund Fund -$ 58$ 211,022$ 89,135$ 1,115,980$ - - - 96,239 496,239 - 71,436 - 8,568 299,059 16,667 17,000 - - 33,667 - - - - 7,359 16,667$ 88,494$ 211,022$ 193,942$ 1,952,304$ -$ 20,739$ 540$ 12,669$ 207,316$ - - - 9,472 45,235 16,667 41,000 - 100,000 157,667 - - - 783 783 16,667 61,739 540 122,924 411,001 - - 210,482 - 479,362 - 26,755 - 71,018 1,061,941 - 26,755 210,482 71,018 1,541,303 16,667$ 88,494$ 211,022$ 193,942$ 1,952,304$ Revolving Grant Fund -94- GovernmentalPRA Fund Total Nonmajor Funds Special Revenue Funds HUD Exhibit B-4 Court Small Awards Grant Revenues:Fund Fund Taxes -$ 533,471$ -$ -$ Charges for services - 237,096 - - Intergovernmental 462,702 - - - Grants - - - 13,995 Interest 4,063 3,358 2,719 4,978 Miscellaneous - 355,439 30,039 42,353 Total revenues 466,765 1,129,364 32,758 61,326 Expenditures: Current operations: Public safety - 1,370,927 54,216 - Public service 1,080,833 - - - Planning and development - - - 68,360 Total expenditures 1,080,833 1,370,927 54,216 68,360 Excess (deficiency) of revenues over expenditures (614,068) (241,563) (21,458) (7,034) Other Financing Sources (Uses): Capital lease - - - - Long-term debt issued - - - - Transfers in 884,000 376,388 - 25,000 Transfers out - - - - Total other financing sources (uses) 884,000 376,388 - 25,000 Net change in fund balances 269,932 134,825 (21,458) 17,966 Fund balances, July 1, 2008 164,812 379,423 36,634 250,914 FUND BALANCES, JUNE 30, 2009 434,744$ 514,248$ 15,176$ 268,880$ See auditors report on pages 11-12. FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS -95- Emergency Municipal Aid Program Communication Service Fund Special Revenue Funds CDBG Home Grant Grant Fund Fund -$ -$ -$ -$ 533,471$ - - - - 237,096 - - - - 462,702 33,334 180,000 - - 227,329 - - 2,712 2,783 20,613 - 142,932 49,306 98,003 718,072 33,334 322,932 52,018 100,786 2,199,283 - - - - 1,425,143 - - - - 1,080,833 33,334 485,598 55,365 530,468 1,173,125 33,334 485,598 55,365 530,468 3,679,101 - (162,666) (3,347) (429,682) (1,479,818) - - - - - - 14,613 - - 14,613 - 124,000 - 500,700 1,910,088 - - (32,500) - (32,500) - 138,613 (32,500) 500,700 1,892,201 - (24,053) (35,847) 71,018 412,383 - 50,808 246,329 - 1,128,920 -$ 26,755$ 210,482$ 71,018$ 1,541,303$ -96- Total Nonmajor Governmental Funds Revolving Grant Fund PRA Fund Special Revenue Funds HUD Exhibit B-5 Final Revenues: Budget Actual Intergovernmental 462,700$ 462,702$ 2$ Interest 4,060 4,063 3 Total revenues 466,760 466,765 5 Expenditures: Public service 1,080,885 1,080,833 52 Excess (deficiency) of revenues over expenditures (614,125) (614,068) 57 Other Financing Sources (Uses): Operating transfers in 884,000 884,000 - Net change in fund balance 269,875$ 269,932 57$ Fund balance, July 1, 2008 164,812 FUND BALANCE, JUNE 30, 2009 434,744$ See auditors report on pages 11-12. FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY MUNICIPAL AID PROGRAM FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with -97- (Negative) Positive Final Budget Exhibit B-6 Final Revenues: Budget Actual Taxes 533,470$ 533,471$ 1$ Telephone surcharges 237,095 237,096 1 Interest 3,355 3,358 3 Miscellaneous 355,435 355,439 4 Total revenues 1,129,355 1,129,364 9 Expenditures: Public safety 1,371,195 1,370,927 268 Excess (deficiency) of revenues over expenditures (241,840) (241,563) 277 Other Financing Sources (Uses): Operating transfers in 376,385 376,388 3 Net change in fund balance 134,545$ 134,825 280$ Fund balance, July 1, 2008 379,423 FUND BALANCE, JUNE 30, 2009 514,248$ See auditors report on pages 11-12. -98- FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY EMERGENCY COMMUNICATION SERVICE FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with (Negative) Positive Final Budget Exhibit B-7 Final Revenues: Budget Actual Court awarded forfeitures 30,035$ 30,039$ 4$ Interest 2,715 2,719 4 Total revenues 32,750 32,758 8 Expenditures: Public safety 54,235 54,216 19 Excess (deficiency) of revenues over expenditures (21,485)$ (21,458) 27$ Fund balance, July 1, 2008 36,634 FUND BALANCE, JUNE 30, 2009 15,176$ See auditors report on pages 11-12. -99- CITY OF PADUCAH, KENTUCKY COURT AWARDS FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2009 (Negative) Positive Final Budget Variance with Exhibit B-8 Final Revenues: Budget Actual Grants 13,990$ 13,995$ 5$ Interest 4,975 4,978 3 Other 42,350 42,353 3 Total revenues 61,315 61,326 11 Expenditures: Planning and development 68,365 68,360 5 Excess (deficiency) of revenues over expenditures (7,050) (7,034) 16 Other Financing Sources (Uses): Operating transfers in 25,000 25,000 - Net change in fund balance 17,950$ 17,966 16$ Fund balance, July 1, 2008 250,914 FUND BALANCE, JUNE 30, 2009 268,880$ See auditors report on pages 11-12. -100- FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY SMALL GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with (Negative) Positive Final Budget Exhibit B-9 Final Revenues: Budget Actual Grants 33,330$ 33,334$ 4$ Miscellaneous - - - Total revenues 33,330 33,334 4 Expenditures: Planning and development 33,335 33,334 1 Excess (deficiency) of revenues over expenditures (5) - 5 Other Financing Sources (Uses): Operating transfers in - - - Operating transfers out - - - Total other financing sources (uses) - - - Net change in fund balance (5)$ - 5$ Fund balance, July 1, 2008 - FUND BALANCE, JUNE 30, 2009 -$ See auditors report on pages 11-12. FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY CDBG GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with -101- (Negative) Positive Final Budget Exhibit B-10 Final Revenues: Budget Actual Grants 180,000$ 180,000$ -$ Miscellaneous 142,930 142,932 2 Total revenues 322,930 322,932 2 Expenditures: Planning and development 485,600 485,598 2 Excess (deficiency) of revenues over expenditures (162,670) (162,666) 4 Other Financing Sources (Uses): Long-term debt issued 14,610 14,613 3 Operating transfers in 124,000 124,000 - Total other financing sources (uses) 138,610 138,613 3 Net change in fund balance (24,060)$ (24,053) 7$ Fund balance, July 1, 2008 50,808 FUND BALANCE, JUNE 30, 2009 26,755$ See auditors report on pages 11-12. Variance with -102- (Negative) Positive Final Budget FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY HOME GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-11 Final Revenues: Budget Actual Interest 2,710$ 2,712$ 2$ Other 49,305 49,306 1 Total revenues 52,015 52,018 3 Expenditures: Planning and development 55,365 55,365 - Excess (deficiency) of revenues over expenditures (3,350) (3,347) 3 Other Financing Sources (Uses): Operating transfers out (32,500) (32,500) - Total other financing sources (uses) (32,500) (32,500) - Net change in fund balance (35,850)$ (35,847) 3$ Fund balance, July 1, 2008 246,329 FUND BALANCE, JUNE 30, 2009 210,482$ See auditors report on pages 11-12. -103- FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY HUD REVOLVING GRANT FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with (Negative) Positive Final Budget Exhibit B-12 Final Revenues: Budget Actual Interest 2,750$ 2,783$ 33$ Other 98,000 98,003 3 Total revenues 100,750 100,786 36 Expenditures: Public safety 531,060 530,468 592 Excess (deficiency) of revenues over expenditures (430,310) (429,682) 628 Other Financing Sources (Uses): Operating transfers in 500,700 500,700 - Total other financing sources (uses) 500,700 500,700 - Net change in fund balance 70,390$ 71,018 628$ Fund balance, July 1, 2008 - FUND BALANCE, JUNE 30, 2009 71,018$ See auditors report on pages 11-12. -104- FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY PRA FUND DETAIL STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Variance with (Negative) Positive Final Budget CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR PROPRIETARY FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 COMBINING FINANCIAL STATEMENTS NONMAJOR ENTERPRISE 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. Civic Center Fund – to account for the operation of the Civic Center. TISA Fund – to account for revenues and expenses associated with the operation of the Paducah- McCracken County telecommunications and information systems. Exhibit C-1 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET ASSETS NONMAJOR ENTERPRISE FUNDS JUNE 30, 2009 ASSETS Section Civic Total Nonmajor Eight Center TISA Enterprise Current Assets:Housing Fund Fund Funds Cash and cash equivalents 470,990$3,841$ 285,857$ 760,688$ Accounts receivable - - 17,487 17,487 Grants receivable 2,678 - - 2,678 Prepaid expense - - 27,712 27,712 Total current assets 473,668 3,841 331,056 808,565 Noncurrent Assets: Net depreciable capital assets 21,993 200,720 32,260 254,973 Total assets 495,661 204,561 363,316 1,063,538 LIABILITIES Current Liabilities: Voucher and accounts payable 63,326 5,640 941 69,907 Accrued compensated absences 1,551 - - 1,551 Due to other funds 25,462 - - 25,462 Total current liabilities 90,339 5,640 941 96,920 Noncurrent Liabilities: Accrued compensated absences 13,961 - - 13,961 Total liabilities 104,300 5,640 941 110,881 NET ASSETS Invested in capital assets 21,993 200,720 32,260 254,973 Restricted for: Housing and development projects 369,368 - - 369,368 Unrestricted - (1,799) 330,115 328,316 TOTAL NET ASSETS 391,361$198,921$362,375$ 952,657$ See auditors report on pages 11-12. -105- Exhibit C-2 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET ASSETS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Section Civic Total Nonmajor Eight Center TISA Enterprise Operating Revenues:Housing Fund Fund Funds Charges for services 1,964,247$38,577$ 148,291$ 2,151,115$ Miscellaneous 1,689 - - 1,689 Total operating revenues 1,965,936 38,577 148,291 2,152,804 Operating Expenses: Cost of sales and service 2,149,465 64,900 149,043 2,363,408 Depreciation and amortization 4,895 10,790 13,807 29,492 Total operating expenses 2,154,360 75,690 162,850 2,392,900 Operating income (loss)(188,424) (37,113) (14,559) (240,096) Non-Operating Revenues (Expenses): Interest and investment income 325 4 - 329 Income (loss) before contributions and operating transfers (188,099) (37,109) (14,559) (239,767) Contributions and Operating Transfers: Capital contributions - - 33,463 33,463 Transfers in - 25,107 85,731 110,838 Transfers out - - - - Total contributions and operating transfers - 25,107 119,194 144,301 Change in net assets (188,099) (12,002) 104,635 (95,466) Net assets, July 1, 2008 579,460 210,923 257,740 1,048,123 NET ASSETS, JUNE 30, 2009 391,361$ 198,921$362,375$ 952,657$ See auditors report on pages 11-12. -106- Exhibit C-3 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS NONMAJOR ENTERPRISE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Section Civic Total Nonmajor Eight Center TISA Enterprise Cash Flows from Operating Activities:Housing Fund Fund Funds Cash received from customers 1,971,203$ 38,577$ 137,383$ 2,147,163$ Payments to employees (153,854) - - (153,854) Payments to internal service funds - (2,709) (1,559) (4,268) Other receipts 1,689 - - 1,689 Other payments (2,005,810) (61,119) (160,145) (2,227,074) Net cash provided (used) by operating activities (186,772) (25,251) (24,321) (236,344) Cash Flows from Noncapital Financing Activities: Transfers (to) from other funds - 25,107 85,731 110,838 Cash Flows from Capital and Related Financing Activities: Capital contributions - - 33,463 33,463 Acquisition and construction of capital assets (16,985) - (10,245) (27,230) Net cash used by capital and related financing activities (16,985) - 23,218 6,233 Cash Flows from Investing Activities: Interest on cash and investments 325 4 - 329 Net increase (decrease) in cash and cash equivalents (203,432) (140) 84,628 (118,944) Cash and cash equivalents, July 1, 2008 674,422 3,981 201,229 879,632 CASH AND CASH EQUIVALENTS, JUNE 30, 2009 470,990$ 3,841$ 285,857$ 760,688$ Reconciliation of Operating Income (Loss) to Net Cash Provided by Operating Activities: Operating income (loss)(188,424)$ (37,113)$ (14,559)$ (240,096)$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization 4,895 10,790 13,807 29,492 Change in assets and liabilities: Receivables 6,956 - (10,908) (3,952) Prepaid expense - - (9,377) (9,377) Accrued expenses (2,001) - - (2,001) Accounts payable (8,198) 1,072 (3,284) (10,410) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (186,772)$ (25,251)$ (24,321)$ (236,344)$ See auditors report on pages 11-12. -107- 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 Health Insurance Insurance Combined Current Assets: Fund Fund Total Cash and cash equivalents 177,712$ 372,914$ 27$ 272,609$ 823,262$ Investments - 3,200,000 - - 3,200,000 Receivables, net - 68,210 35,050 2,149 105,409 Prepaid expense - 297,907 927,377 56,363 1,281,647 Inventories 73,605 - - - 73,605 Total current assets 251,317 3,939,031 962,454 331,121 5,483,923 Noncurrent Assets: Net depreciable capital assets 39,764 1,898,919 - - 1,938,683 Total assets 291,081 5,837,950 962,454 331,121 7,422,606 Current Liabilities: Voucher and accounts payable 6,308 189 17,040 53,587 77,124 Accrued payroll and payroll taxes 9,817 - - - 9,817 Accrued compensated absences - - - - - Due to other funds - - 801,000 - 801,000 Total current liabilities 16,125 189 818,040 53,587 887,941 Noncurrent Liabilities: Accrued compensated absences 33,363 - - - 33,363 Total liabilities 49,488 189 818,040 53,587 921,304 Invested in capital assets, net of related debt 39,764 1,898,919 - - 1,938,683 Unrestricted 201,829 3,938,842 144,414 277,534 4,562,619 TOTAL NET ASSETS 241,593$ 5,837,761$ 144,414$ 277,534$ 6,501,302$ See auditors report on pages 11-12. Fleet Maintenance Fleet Lease Trust -108- CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET ASSETS INTERNAL SERVICE FUNDS JUNE 30, 2009 LIABILITIES ASSETS NET ASSETS Exhibit D-2 Health Fleet Lease Insurance Insurance Combined Operating Revenues: Trust Fund Fund Total Charges for services - internal 500,084$ 783,976$ 1,075,200$ 3,600,237$ 5,959,497$ Charges for services - external - - - 279,479 279,479 Total operating revenues 500,084 783,976 1,075,200 3,879,716 6,238,976 Operating Expenses: Vehicle maintenance 471,246 - - - 471,246 Administrative - 7,146 - 66,900 74,046 Insurance - - 1,061,096 3,760,097 4,821,193 Leave expense 19,082 - - - 19,082 Depreciation 6,612 469,190 - - 475,802 Total operating expenses 496,940 476,336 1,061,096 3,826,997 5,861,369 Operating income (loss) 3,144 307,640 14,104 52,719 377,607 Nonoperating Revenues and (Expenses): Interest and investment income 1,854 108,697 1,159 - 111,710 Gain (loss) on disposal of property and equipment 2,812 65,718 - - 68,530 Total nonoperating revenues (expenses) 4,666 174,415 1,159 - 180,240 Income (loss) before operating transfers 7,810 482,055 15,263 52,719 557,847 Contributions and Operating Transfers: Transfers in - 90,000 24,839 - 114,839 Change in net assets 7,810 572,055 40,102 52,719 672,686 Net assets, July 1, 2008 233,783 5,265,706 104,312 224,815 5,828,616 NET ASSETS, JUNE 30, 2009 241,593$ 5,837,761$ 144,414$ 277,534$ 6,501,302$ See auditors report on pages 11-12. -109- Fleet Maintenance CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN FUND NET ASSETS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Exhibit D-3 Health Fleet Lease Insurance Insurance Combined Cash Flows from Operating Activities: Trust Fund Fund Total Receipts from other funds for services 500,084$ 800,117$ 1,040,150$ 3,876,950$ 6,217,301$ Payments to suppliers (146,526) - - (146,526) Payments to employees (318,788) - - - (318,788) Claims paid - - - (3,602,083) (3,602,083) Other receipts - - - - - Other payments - (326,453) (1,066,124) (66,900) (1,459,477) Net cash provided (used) by operating activities 34,770 473,664 (25,974) 207,967 690,427 Cash Flows from Noncapital Financing Activities: Transfers from other funds - 90,000 24,839 - 114,839 Cash Flows from Capital and Related Financing Activities: Purchase of capital assets (8,165) (430,795) - - (438,960) Proceeds from sale of capital assets 6,000 66,937 - - 72,937 Net cash used by capital and related financing (2,165) (363,858) - - (366,023) Cash Flows from Investing Activities: Proceeds from sales and maturities of investments - 1,850,000 - - 1,850,000 Interest and dividends 1,854 108,697 1,159 - 111,710 Purchase of investments - (1,870,000) - - (1,870,000) Net cash provided (used) by investing activities 1,854 88,697 1,159 - 91,710 Net increase (decrease) in cash and cash equivalents 34,459 288,503 24 207,967 530,953 Cash and cash equivalents, July 1, 2008 143,253 84,411 3 64,642 292,309 CASH AND CASH EQUIVALENTS, JUNE 30, 2009 177,712$ 372,914$ 27$ 272,609$ 823,262$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) 3,144$ 307,640$ 14,104$ 52,719$ 377,607$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 6,612 469,190 - - 475,802 Change in assets and liabilities: Receivables - 16,141 (35,050) 11,932 (6,977) Prepaid expense - (297,907) 41,446 217,858 (38,603) Inventories 2,655 - - - 2,655 Accrued expenses 21,412 - - (14,698) 6,714 Accounts payable 947 (21,400) (46,474) (59,844) (126,771) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 34,770$ 473,664$ (25,974)$ 207,967$ 690,427$ See auditors report on pages 11-12. -110- Fleet Maintenance CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION FIDUCIARY FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS Pension Trust Funds Police and Firefighters’ Retirement Fund and Appointive Employees’ Pension Fund – to account for the accumulation of resources to be used for retirement payments at appropriate amounts and times in the future. Resources are contributed by employees and by the City at amounts determined by Kentucky Statutes and/or City Commission decisions. Exhibit E-1 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF FIDUCIARY NET ASSETS FIDUCIARY FUNDS - PENSION TRUST FUNDS JUNE 30, 2009 Police and Appointive ASSETS Firefighters'Employees' Retirement Fund Pension Fund Total Cash and cash equivalents 69,196$ 24,800$ 93,996$ Receivables: Interest 21,898 920 22,818 Prepaid expenses - 296 296 Investments at fair value Money market funds 526,994 - 526,994 Certificates of deposit - 200,000 200,000 Common stock 1,557,626 - 1,557,626 Corporate bonds 275,248 - 275,248 U.S. agencies bonds 1,162,128 - 1,162,128 Mortgage backed securities - - - Mutual funds 5,034,632 - 5,034,632 Total assets 8,647,722 226,016 8,873,738 LIABILITIES Voucher and accounts payable 203 - 203 NET ASSETS Held in trust for pension benefits and other purposes 8,647,519$226,016$ 8,873,535$ See auditors report on pages 11-12. -111- Exhibit E-2 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS - PENSION TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Police and Appointive Firefighters'Employees' Additions:Retirement Fund Pension Fund Totals Contributions: Employer 226,057$ -$ 226,057$ Plan members 4,473 - 4,473 Total contributions 230,530 - 230,530 Investment earnings: Net increase in fair value of investments (2,105,252) - (2,105,252) Interest and dividends 284,244 6,788 291,032 Net investment earnings (1,821,008) 6,788 (1,814,220) Total additions (1,590,478) 6,788 (1,583,690) Deductions: Benefits 1,793,820 43,242 1,837,062 Administrative expenses 65,237 9,231 74,468 Total deductions 1,859,057 52,473 1,911,530 Change in net assets (3,449,535) (45,685) (3,495,220) Net assets, July 1, 2008 12,097,054 271,701 12,368,755 NET ASSETS, JUNE 30, 2009 8,647,519$ 226,016$ 8,873,535$ See auditors report on pages 11-12. -112- COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS Private-purpose Trust Funds Other Trusts and Maintenance and Rehab Trust - to account for assets held by the City in the capacity of trustee for specified purposes. Exhibit E-3 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET ASSETS FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS JUNE 30, 2009 Maintenance ASSETS Other and Rehab Trusts Trust Total Cash and cash equivalents 2,015$ 5,357$ 7,372$ Investments at fair value Money market funds 4,092 - 4,092 Mutual funds 835,501 - 835,501 Total assets 841,608 5,357 846,965 NET ASSETS Held in trust for other purposes 841,608$5,357$ 846,965$ See auditors report on pages 11-12. -113- Exhibit E-4 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CHANGES IN NET ASSETS FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2009 Maintenance Other and Rehab Additions:Trusts Trust Totals Contributions: Intergovernmental revenues 5,205$ 8,000$ 13,205$ Private donations - - - Total contributions 5,205 8,000 13,205 Investment earnings: Net decrease in fair value of investments (140,446) - (140,446) Loss on sale of investments (49,009) - (49,009) Interest and dividends 30,012 - 30,012 Net investment earnings (159,443) - (159,443) Total additions (154,238) 8,000 (146,238) Deductions: Capital outlay - 449 449 Administrative expenses 8,941 4,742 13,683 Interfund transfers out - 3,244 3,244 Total deductions 8,941 8,435 17,376 Change in net assets (163,179) (435) (163,614) Net assets, July 1, 2008 1,004,787 5,792 1,010,579 NET ASSETS, JUNE 30, 2009 841,608$ 5,357$ 846,965$ See auditors report on pages 11-12. -114- COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS Agency Fund Payroll Agency Fund – to account for disbursements relative to the City payroll. The various City departments transfer amounts to this fund to cover routine payroll and the related benefits and taxes. All payroll disbursements are made from this fund. Exhibit E-5 CITY OF PADUCAH, KENTUCKY AGENCY FUND STATEMENT OF CHANGES IN ASSETS AND LIABILITIES FOR THE YEAR ENDED JUNE 30, 2009 Balance Balance Payroll Fund:July 1, 2008 Additions Deductions June 30, 2009 Assets: Cash and cash equivalents 459,094$16,622,559$16,654,038$ 427,615$ Liabilities: Payroll taxes and withholdings payable 459,094$16,622,559$16,654,038$ 427,615$ See auditors report on pages 11-12. -115- CITY OF PADUCAH, KENTUCKY STATISTICAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 STATISTICAL SECTION This part of the City of Paducah's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. Contents Page Financial Trends 116-121 These schedules contain trend information to help the reader understand how the City's financial performance and well-being changed over time. Revenue Capacity 122-127 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and employee taxes. Debt Capacity 128-131 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. Economic and Demographic Information 132-133 These schedules offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 134-136 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 comprehensive annual financial reports for the relevant year. The City implemented the new reporting model in the fiscal year ended June 30, 2003. Schedules presenting government-wide information include information beginning in that year. TABLE 1CITY OF PADUCAH, KENTUCKYNET ASSETS BY COMPONENTLast Seven Fiscal Years (1)(accrual basis of accounting)Fiscal Year20092008200720062005 (2)20042003Governmental Activities:Invested in capital assets, net of related debt31,215,252$31,766,783$32,557,572$30,664,671$ 29,492,197$27,826,117$27,955,839$Restricted for:Program purposes2,183,559 1,782,251 1,904,321 1,018,231 727,699 714,538 713,766 Capital projects4,363,913 5,028,420 4,618,923 2,689,804 940,323 4,031,802 3,583,589 Unrestricted8,621,077 9,432,763 9,057,641 7,718,198 7,419,037 (406,042) 1,571,120 TOTAL GOVERNMENTAL ACTIVITIESNET ASSETS46,383,801$48,010,217$48,138,457$42,090,904$ 38,579,256$32,166,415$33,824,314$Business-Type Activities:Invested in capital assets, net of related debt1,721,419$ 1,863,975$ 1,491,523$ 1,277,720$ 1,463,118$ 1,463,668$ 1,425,753$ Restricted for:Program purposes369,368 579,460 - - - - - -116-Unrestricted1,036,093 (19,965) (147,286) 132,090 (27,648) 1,979,494 1,565,100 TOTAL BUSINESS-TYPEACTIVITIES NET ASSETS3,126,880$ 2,423,470$ 1,344,237$ 1,409,810$ 1,435,470$ 3,443,162$ 2,990,853$ Primary Government:Invested in capital assets, net of related debt32,936,671$33,630,758$34,049,095$31,942,391$ 30,955,315$29,289,785$29,381,592$Restricted for:Program purposes2,552,927 2,361,711 1,904,321 1,018,231 727,699 714,538 713,766 Capital projects4,363,913 5,028,420 4,618,923 2,689,804 940,323 4,031,802 3,583,589 Unrestricted9,657,170 9,412,798 8,910,355 7,850,288 7,391,389 1,573,452 3,136,220 TOTAL PRIMARY GOVERNMENTNET ASSETS49,510,681$50,433,687$49,482,694$43,500,714$ 40,014,726$35,609,577$36,815,167$(1)The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. Therefore, ten years of data is not available buwill be accumulated over time.(2)Significant change in governmental and business-type net assets due to reclassification for prior year omitted receivables, capital assets and post-closurelandfill expenses. Pages 1 of 3TABLE 2CITY OF PADUCAH, KENTUCKYCHANGES IN NET ASSETSLast Seven Fiscal Years (1)(accrual basis of accounting)Fiscal YearExpenses:20092008 (3)200720062005 (2)20042003Governmental activities:General government12,148,118$ 10,709,641$ 9,462,543$ 9,057,295$ 8,431,994$ 7,969,027$ 7,396,882$ Public safety15,734,557 15,938,831 15,182,704 14,592,756 14,620,938 13,243,912 12,964,120 Public service12,849,566 9,543,714 8,299,658 8,486,662 6,249,860 8,618,901 7,376,791 Parks and recreation1,492,306 1,286,955 1,197,072 1,044,361 1,045,024 1,026,293 975,362 Planning and development708,827 282,042 1,891,725 2,404,636 2,521,412 5,330,393 3,108,192 Interest on long-term debt1,029,888 1,066,067 1,134,898 974,101 775,122 496,049 428,578 Total governmental activities expense43,963,262 38,827,250 37,168,600 36,559,811 33,644,350 36,684,575 32,249,925 Business-type activities:Solid Waste4,037,845 4,086,747 4,079,684 3,893,013 3,683,954 3,419,464 3,359,731 -117-Section Eight Housing2,154,360 1,949,899 - - - - - Civic Center75,692 84,908 54,562 45,894 39,008 33,181 46,509 TISA162,849 156,388 267,192 269,781 170,264 184,166 123,719 Total business-type activities expense6,430,746 6,277,942 4,401,438 4,208,688 3,893,226 3,636,811 3,529,959 TOTAL PRIMARY GOVERNMENT EXPENSES50,394,008$ 45,105,192$ 41,570,038$ 40,768,499$ 37,537,576$ 40,321,386$ 35,779,884$ Program Revenues:Governmental activities:Charges for services:General government1,303,667$ 1,415,943$ 1,730,046$ 1,618,903$ 1,485,005$ 1,601,414$ 1,445,383$ Public safety602,262 268,839 1,024,610 767,086 794,814 1,134,386 94,386 Public service1,220,999 1,111,188 1,150,507 942,355 895,155 986,618 683,119 Parks and recreation180,420 124,606 122,929 103,932 117,317 132,388 131,355 Planning and development1,600 30,627 10,810 20,602 13,501 12,893 15,867 Operating grants and contributions2,119,845 1,340,261 2,797,216 2,988,612 2,452,694 3,290,134 4,176,548 Capital grants and contributions4,889,520 1,297,900 3,681,490 3,302,568 1,100,064 3,221,637 2,213,757 Total governmental activities programrevenues10,318,313 5,589,364 10,517,608 9,744,058 6,858,550 10,379,470 8,760,415 Pages 2 of 3TABLE 2CITY OF PADUCAH, KENTUCKYCHANGES IN NET ASSETSLast Seven Fiscal Years (1)(accrual basis of accounting)Fiscal YearProgram Revenues:20092008 (3)200720062005 (2)20042003Business-type activities:Solid Waste4,547,959$ 4,165,094$ 3,928,140$ 3,696,609$ 3,583,417$ 3,790,132$ 3,298,964$ Section Eight Housing- - - - - - - Civic Center38,577 32,932 31,372 26,378 32,828 36,455 20,825 TISA148,291 143,833 193,713 106,697 104,087 100,778 93,383 Operating grants and contributions1,965,936 1,785,809 - - - - - Capital grants and contributions129,032 9,480 23,969 22,894 14,735 24,990 3,666 Total business-type activities programrevenues6,829,795 6,137,148 4,177,194 3,852,578 3,735,067 3,952,355 3,416,838 TOTAL PRIMARY GOVERNMENT PROGRAM REVENUES17,148,108$ 11,726,512$ 14,694,802$ 13,596,636$ 10,593,617$ 14,331,825$ 12,177,253$ -118-Net (Expense)/Revenue:Governmental activities(33,644,949) (33,237,886) (26,650,992) (26,815,753) (26,785,800) (26,305,105) (23,489,510) Business-type activities399,049 (140,794) (224,244) (356,110) (158,159) 315,544 (113,121) TOTAL PRIMARY GOVERNMENTNET (EXPENSE)(33,245,900)$ (33,378,680)$(26,875,236)$(27,171,863)$ (26,943,959)$(25,989,561)$(23,602,631)$General Revenues and Other Changesin Net Assets:Governmental activities:Taxes and licenses:Property taxes, levied for general purposes3,986,760 4,221,957 4,122,538 4,107,934 3,919,113 4,012,168 3,893,211 Insurance premium tax4,055,228 4,699,458 4,414,672 3,863,953 3,957,289 3,767,864 3,580,964 Gross receipts license tax4,320,850 4,061,587 4,050,057 3,899,432 3,720,784 3,496,438 3,404,338 Employee license tax16,584,636 16,520,523 16,273,966 14,794,217 11,192,445 10,616,223 10,301,231 Other taxes2,776,407 2,259,956 1,964,101 2,105,014 2,116,403 1,764,140 1,893,064 Intergovernmental revenue- 1,401,400 1,243,028 1,201,973 955,645 871,273 836,132 Unrestricted investment earnings336,960 540,620 639,702 462,292 290,647 220,992 325,811 Gain on sale of capital assets68,530 119,200 48,656 8,340 - (1,972) 125,714 Transfers(110,838) (96,609) (58,175) (115,754) (133,959) (68,964) 18,666 Total governmental activities32,018,533 33,728,092 32,698,545 30,327,401 26,018,367 24,678,162 24,379,131 Pages 3 of 3TABLE 2CITY OF PADUCAH, KENTUCKYCHANGES IN NET ASSETSLast Seven Fiscal Years (1)(accrual basis of accounting)Fiscal YearGeneral Revenues and Other Changes20092008 (3)200720062005 (2)20042003in Net Assets:Business-type activities:Unrestricted investment earnings52,961$ 73,985$ 83,854$ 85,786$ 51,508$ 32,826$ 39,530$ Gain on sale of capital assets98,369 127,131 16,641 55,337 27,500 34,975 24,238 Transfers110,838 96,609 58,176 115,754 133,959 68,964 (18,666) Total business-type activities262,168 297,725 158,671 256,877 212,967 136,765 45,102 Change in Net Assets:Governmental activities:(1,626,416) 490,206 6,047,553 3,511,648 (767,433) (1,626,943) 889,621 Business-type activities:661,217 156,931 (65,573) (99,233) 54,808 452,309 (68,019) -119-TOTAL PRIMARY GOVERNMENT(965,199)$ 647,137$ 5,981,980$ 3,412,415$ (712,625)$ (1,174,634)$ 821,602$ (1)The City began to report accrual information when it implemented GASB Statement 34 in fiscal year 2003. Therefore, ten years of data is not available but willbe accumulated over time.(2)Significant change in governmental and business-type net assets due to reclassification for prior year omitted receivables, capital assets and post-closure landfillexpenses.(3)The City began reporting Section Eight Housing fund as a business-type activity previously reported as a governmental fund. Prior years have not been restated. TABLE 3CITY OF PADUCAH, KENTUCKYFund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)Fiscal YearGeneral Fund:20092008 (3)200720062005 (1)2004200320022001 (2)2000Reserved for:Encumbrances-$ -$ -$ -$ -$ -$ -$ -$ -$ -$ Unreserved10,311,490 9,416,427 9,976,079 9,157,310 8,303,702 4,642,073 4,925,982 4,441,662 4,229,377 3,930,807 TOTAL GENERAL FUND10,311,490$ 9,416,427$ 9,976,079$9,157,310$8,303,702$4,642,073$ 4,925,982$4,441,662$4,229,377$ 3,930,807$All Other GovernmentalFunds:Reserved for:Program purposes479,362$ 497,243$ 1,009,522$783,596$ 498,423$ 483,423$ 695,213$ 567,096$ 604,021$ 327,925$ Capital improvements4,363,913 5,028,420 4,618,923 2,689,804 940,323 3,886,391 3,583,589 4,211,718 9,834,405 1,520,510 Encumbrances- - - - - - - - - - Unreserved, reported in:-120-Special revenue funds1,061,941 631,677 502,189 758,017 1,039,854 770,453 1,080,043 714,972 1,247,619 1,402,554 Debt service funds93,244 65,048 31,836 32,364 9,805 30,243 46,051 244,724 232,640 935,605 TOTAL ALL OTHERGOVERNMENTALFUNDS5,998,460$ 6,222,388$ 6,162,470$4,263,781$2,488,405$5,170,510$ 5,404,896$5,738,510$11,918,685$4,186,594$(1)Significant increase in general fund balance due to reclassification for prior year omitted license and tax receivables in the amount of $3,870,992.(2)Significant increase in capital improvements fund balance due to $9,290,000 bond issue for convention and arts center construction.(3)Significant decrease in reserve for program purpose due to converting governmental fund to proprietary fund. TABLE 4CITY OF PADUCAH, KENTUCKYChanges in Fund Balances, Governmental FundsLast Ten Fiscal Years(modified accrual basis of accounting)Fiscal YearRevenues:2009200820072006200520042003 (1)200220012000Taxes5,867,782$ 6,139,164$ 6,044,069$ 6,204,686$ 6,016,570$ 5,871,229$ 5,773,871$ 5,377,865$ 4,881,408$ 4,659,202$ Licenses25,411,112 25,924,562 25,140,615 23,432,565 19,368,765 18,423,244 17,900,739 17,299,400 16,705,030 15,970,996 Charges for services866,688 835,105 783,018 654,059 625,281 668,659 743,826 1,452,732 1,332,280 1,073,577 Intergovernmental1,086,377 1,565,348 1,676,783 1,529,879 1,192,724 1,029,307 1,186,306 590,372 450,412 428,698 Grants5,405,810 1,673,936 6,089,711 5,797,500 3,758,041 4,002,721 4,900,775 3,990,245 3,761,900 3,736,837 Interest225,251 419,103 540,204 402,943 251,302 190,350 316,794 541,277 515,299 485,883 Miscellaneous2,250,344 1,944,310 1,832,161 1,844,285 1,377,175 3,781,034 1,803,408 963,956 1,110,447 942,077 Total revenues41,113,364 38,501,528 42,106,561 39,865,917 32,589,858 33,966,544 32,625,719 30,215,847 28,756,776 27,297,270 Expenditures:General government4,726,435 5,051,374 4,763,839 4,286,431 4,171,662 3,891,251 3,943,031 3,446,408 3,386,330 3,436,701 Public safety15,599,613 15,696,728 14,759,735 14,366,846 14,376,161 12,963,685 12,535,382 12,293,481 11,579,654 11,499,408 Public service7,855,846 7,935,188 7,226,542 7,418,656 5,947,105 6,914,523 5,995,396 7,163,787 5,923,130 4,260,125 Parks and recreation1,490,732 1,298,329 1,192,727 1,044,299 1,045,024 1,026,297 975,361 897,060 738,401 1,661,562 Planning and development1,811,083 803,976 2,424,198 2,545,227 2,267,774 2,570,473 2,204,395 2,231,628 2,784,725 2,208,864 -121-Other514,488 520,611 526,238 481,690 462,099 2,343,844 645,653 323,844 99,657 95,082 Capital outlay8,580,910 4,826,983 6,504,491 5,003,091 4,870,136 10,987,184 4,172,978 7,579,179 3,850,565 2,785,069 Debt service:Principal requirement830,682 880,887 782,870 594,047 552,938 428,613 379,229 362,275 140,636 134,295 Interest and fiscal requirement1,003,439 1,051,008 1,108,385 949,537 745,676 471,625 428,578 413,364 25,752 30,536 Total expenditures42,413,228 38,065,084 39,289,025 36,689,824 34,438,575 41,597,495 31,280,003 34,711,026 28,528,850 26,111,642 Other Financing Sources(Uses):Bonds issued1,718,605 - - 6,100,000 - 5,000,000 - - 9,104,211 - Long-term debt issued69,032 - 246,667 - 275,000 3,500,000 - - - - Capital lease405,796 371,979 - - - - - - - Transfers in5,928,413 6,241,886 5,209,977 6,034,070 3,394,420 3,939,188 2,074,459 1,788,462 3,632,867 3,473,339 Transfers out(6,150,847) (7,086,517) (5,556,722) (12,681,180)(4,712,171) (5,295,576) (3,167,686) (3,062,056) (4,966,004) (4,064,491) Total other financingsources (uses)1,970,999 (472,652) (100,078) (547,110) (1,042,751) 7,143,612 (1,093,227) (1,273,594) 7,771,074 (591,152) NET CHANGE IN FUNDBALANCES671,135$ (36,208)$ 2,717,458$ 2,628,983$ (2,891,468)$(487,339)$ 252,489$ (5,768,773)$7,999,000$ 594,476$ Capital outlay (2)2,850,717$ 2,857,189$ 4,638,045$ 3,779,542$ 3,981,143$ 9,144,907$ 1,907,998$ -$ -$ -$ Debt service as a percentageof noncapital expenditures4.64%5.49%5.46%4.69%4.26%2.77%2.75%2.86%0.67%0.71%(1)The City implemented GASB 34, the new reporting standard, in fiscal year 2003(2)For reports after fiscal year 2002, capital outlay is reported on the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statements of Activities. TABLE 5CITY OF PADUCAH, KENTUCKYASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTYLAST TEN FISCAL YEARSPercentTotalAssessedAssessed ValueEstimatedDirectToFiscalReal EstatePersonalActualTax EstimatedYearCommercialResidentialPropertyFranchiseTotalValueRateValueExemptions2000522,210,835$ 418,704,093$ 429,763,712$ 66,465,568$ 1,437,144,208$ 1,497,446,385$ 0.328 95.9%59,328,314$ 2001558,387,762 435,879,813 479,928,323 69,737,433 1,543,933,331 1,603,816,189 0.329 96.3%58,908,995 2002575,900,884 448,383,787 466,849,195 71,286,784 1,562,420,650 1,623,844,461 0.328 96.2%60,449,948 -122-2003592,033,879 461,336,810 453,327,389 79,952,984 1,586,651,062 1,647,809,422 0.327 96.3%60,184,497 2004602,788,179 484,958,897 438,024,336 73,121,063 1,598,892,475 1,661,522,546 0.326 96.2%61,656,208 2005622,478,658 500,350,485 425,304,684 74,460,202 1,622,594,029 1,684,469,469 0.325 96.3%60,901,557 2006636,606,837 525,613,365 452,475,748 74,683,129 1,689,379,079 1,750,930,676 0.325 96.5%61,551,597 2007692,018,288 561,151,216 482,481,332 51,455,112 1,787,105,948 1,847,595,428 0.307 96.7%60,489,480 2008748,189,877 603,688,455 481,049,523 74,068,797 1,906,996,652 1,970,156,891 0.287 96.8%63,160,239 2009776,876,510 645,672,462 526,966,182 56,333,800 2,005,848,954 2,069,450,607 0.288 96.9%63,601,653 Source: McCracken County Property Valuation AdministratorNotes: Property in McCracken county is reassessed once every four years on average. TABLE 6CITY OF PADUCAH, KENTUCKYPROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS(PER $100 OF ASSESSED VALUE)LAST TEN FISCAL YEARSCity Direct RatesOverlapping RatesMcCracken Co.City of PaducahPaducahMcCracken General FundPublic LibrarySchool DistrictsSchool DistrictsJunior CollegeCountyTotalFiscalRealDirectRealRealRealRealRealYearEstatePersonalRateEstatePersonalEstatePersonalEstatePersonalEstatePersonalEstatePersonal20000.300 0.390 0.328 0.0400.050 0.3850.385 0.590 0.598 0.0290.034 0.1460.187 20010.300 0.390 0.329 --0.3850.385 0.597 0.599 0.0220.022 0.1950.223 -123-20020.300 0.390 0.328 --0.3850.385 0.600 0.597 0.0220.022 0.1960.237 20030.300 0.390 0.327 --0.3960.396 0.598 0.603 0.0220.022 0.1960.221 20040.300 0.390 0.326 --0.3940.394 0.617 0.605 0.0210.021 0.1900.199 20050.300 0.390 0.325 --0.4480.448 0.618 0.617 0.0210.021 0.1960.226 20060.300 0.390 0.325 --0.4330.433 0.631 0.619 0.0200.021 0.1970.236 20070.275 0.390 0.307 --0.4330.433 0.628 0.631 0.0190.019 0.1970.236 20080.250 0.390 0.287 --0.4880.488 0.672 0.635 0.0180.018 0.1890.219 20090.250 0.390 0.288 - - 0.4890.491 0.672 0.678 0.0210.023 0.0960.106 Source: McCracken County Property Valuation Administrator and City Tax Levy Ordinance. TABLE 7 CITY OF PADUCAH, KENTUCKY PRINCIPAL TAXPAYERS CURRENT YEAR AND NINE YEARS AGO 2009 2000 (1)(1)(2)(2) Percentage of Percentage of Assessed Total Assessed Assessed Total Assessed Taxpayer Valuation Valuation Valuation Valuation Kentucky Oaks Mall 50,900,262$ 2.54%45,570,900$ 3.42% South Central Bell 16,221,600 0.81% Olivet Church 1031 LLC 10,245,400 0.51% Ducmall LLC 14,374,800 0.72% Paducah Medical Investors 13,440,090 0.67% Wal-Mart Real Estate Trust 10,646,400 0.53% Sams Real Estate Bus Trust 9,222,955 0.46% Computer Services, Inc.9,083,185 0.45%12,903,910 0.97% Wal-Mart Store 9,000,000 0.45%36,007,674 2.70% Amerisource 29,949,886 1.49%59,145,330 4.44% Lowes 14,102,073 1.06% H.B. Fuller 14,169,888 1.06% Firstar Bank 13,577,853 1.02% Drury Inns, Inc.15,312,912 1.15% Duke & Long 17,953,784 1.35% VMV 6,700,900 0.50% Union Planters 5,859,726 0.44% TOTALS 173,084,578$ 8.63%241,304,950$ 18.11% (1) Source - Property Valuation Administration; Assessed value as of January 1, 2008. (2) Source - Property Valuation Administration; Assessed value as of January 1, 1999. -124- TABLE 8 CITY OF PADUCAH, KENTUCKY SECURED TAX LEVIES AND COLLECTIONS* LAST TEN FISCAL YEARS Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal (1) Year Taxes Levied (1)Percent of Collections Percent of Ended for the Amount of Levy in Subsequent Total Levy June 30,Fiscal Year Collections Collected Years Collections Collected 2000 3,258,913$ 3,113,110$ 95.5%**3,113,110$ 95.5% 2001 3,485,418 3,297,284 94.6%129,327 3,297,284 94.6% 2002 3,636,342 3,449,887 94.9%152,636 3,602,523 99.1% 2003 3,668,281 3,414,329 93.1%123,628 3,537,957 96.4% 2004 3,801,746 3,685,957 97.0%82,332 3,768,289 99.1% 2005 3,835,201 3,762,592 98.1%69,074 3,831,666 99.9% 2006 4,014,348 3,911,868 97.4%88,255 4,000,123 99.6% 2007 4,001,284 3,855,679 96.4%120,227 3,975,906 99.4% 2008 3,975,754 3,814,940 96.0%102,178 3,917,118 98.5% 2009 4,203,256 4,017,032 95.6%- 4,017,032 95.6% (1) Includes current year real and personal property tax, franchise, auto and bank shares. *Source - City of Paducah Finance Department. -125- TABLE 9 CITY OF PADUCAH, KENTUCKY EMPLOYEE LICENSE TAX COLLECTIONS LAST TEN FISCAL YEARS (1)Direct Fiscal Taxes Tax Year Collected Rate 2000 9,451,473$ 1.50% 2001 9,603,106 1.50% 2002 9,873,201 1.50% 2003 10,301,231 1.50% 2004 10,616,222 1.50% 2005 11,183,157 1.50% 2006 14,947,835 2.00%(2) 2007 16,258,946 2.00% 2008 16,535,542 2.00% 2009 16,584,618 125,355,331$ (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. (2) Effective October 1, 2005, employee license tax rate increased from 1.5% to 2.0%. -126- TABLE 10 CITY OF PADUCAH, KENTUCKY PRINCIPAL EMPLOYEE LICENSE TAXPAYERS CURRENT YEAR AND ONE YEAR AGO* 2009 (1)Percentage of Taxpayers Number of Percentage Taxes Total Employee By Range Filers of Total Collected License Tax $0 - $50,000 2,012 99.26%12,363,242 71.39% $50,001 - $100,000 11 0.54%1,843,411 10.65% $100,001 - $500,000 4 0.20%3,110,432 17.96% Greater than $500,000 0 0.00%- 0.00% TOTALS 2,027 100.00%17,317,085$ 100.00% 2008 (1)Percentage of Taxpayers Number of Percentage Taxes Total Employee By Range Filers of Total Collected License Tax $0 - $50,000 2,052 97.81%8,707,672 52.66% $50,001 - $100,000 27 1.29%1,791,822 10.84% $100,001 - $500,000 17 0.81%3,595,858 21.75% Greater than $500,000 2 0.10%2,440,190 14.76% TOTALS 2,098 100.00%16,535,542$ 100.00% (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. *Comparative taxpayers by range information is only available after fiscal year 2006. -127- TABLE 11CITY OF PADUCAH, KENTUCKYRATIO OF OUTSTANDING DEBT BY TYPELAST TEN FISCAL YEARS(1)Ratio of(3)NetNet Net NetNet Debt as(2)GeneralPublicPublicRefundingTotalDebt toPercentageNetFiscalObligationImprovementCapitalImprovementRevenuePrimaryActualof PersonalDebt PerYearBondsDebtLeaseDebtBondsGovernmentValueIncomeCapita2000-$ -$ -$ -$ -$ -$ - 0.00%-$ 20019,057,359 - 381,330 - - 9,438,689 0.592.91%359 20028,830,276 - 234,054 - - 9,064,330 0.561.87%345 20038,803,949 - 79,825 - - 8,883,774 0.541.83%338 -128-200413,589,757 3,428,855 - - - 17,018,612 1.023.51%647 200513,210,195 3,503,274 - - - 16,713,469 0.993.45%635 200618,877,636 3,319,227 - - - 22,196,863 1.274.58%844 200718,278,164 3,320,522 - - - 21,598,686 1.174.46%821 200817,614,952 2,946,303 - - - 20,561,255 1.044.24%782 200919,706,394 5,187,262 - - - 24,893,656 1.205.14%946 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.(3) See Table 15 for personal income data. TABLE 12CITY OF PADUCAH, KENTUCKYRATIO OF NET GENERAL BONDED DEBT OUTSTANDINGLAST TEN FISCAL YEARS(1)General Bonded Debt OutstandingRatio ofPolice andInfinitiLessNet(2)Convention andFire PensionMediaFloodwallResourcesBonds toNetFiscalArt CenterFundBuildingRehabilitationRestricted forActualBonds PerYearBondsBondsBondsBondsDebt ServiceTotalValueCapita2000-$ -$ -$ -$ -$ -$ - -$ 20019,290,000 - - - 232,641 9,057,359 0.56 344 20029,075,000 - - - 244,724 8,830,276 0.54 336 20038,850,000 - - - 46,051 8,803,949 0.53 335 -129-20048,620,000 - 5,000,000 - 30,246 13,589,754 0.82 517 20058,380,000 - 4,840,000 - 9,805 13,210,195 0.78 502 20068,130,000 6,100,000 4,680,000 - 32,364 18,877,636 1.08 718 20077,870,000 5,925,000 4,515,000 - 31,836 18,278,164 0.99 695 20087,600,000 5,740,000 4,340,000 - 65,048 17,614,952 0.89 670 20097,320,000 5,545,000 4,160,000 2,774,638 93,244 19,706,394 0.95 749 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. TABLE 13 CITY OF PADUCAH, KENTUCKY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2009 Estimated (1)Share of Percentage Direct and Net Debt Applicable Overlapping Outstanding to the City Debt City of Paducah 24,893,656$100.00%24,893,656$ Paducah Independent School District 18,636,803 *100.00%18,636,803 McCracken County 15,770,000 *46.70%7,364,590 McCracken County Board of Education 26,067,028 *31.60%8,237,181 Overlapping debt 60,473,831 34,238,574 TOTAL DIRECT AND OVERLAPPING DEBT 85,367,487$59,132,230$ (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. -130- TABLE 14CITY OF PADUCAH, KENTUCKYLEGAL DEBT MARGIN INFORMATIONLAST TEN FISCAL YEARSNet assessed value2,005,848,954$ Add exemption63,601,653 Total assessed value2,069,450,607$ Debt limit - 10% of total assessed (1)206,945,061$ Debt outstanding:General obligation bonds outstanding19,799,638$ Note payable5,187,262 Less debt not subject to limit- Gross bonded debt24,986,900 Less amount available in debt servicefunds93,244 Net bonded indebtedness subject tolimit24,893,656 -131-LEGAL DEBT MARGIN182,051,405$ Fiscal Year2009200820072006200520042003200220012000Debt limit206,945,061$ 197,015,689$ 182,759,543$ 175,093,068$ 168,349,559$ 166,054,868$ 164,683,556$ 162,287,060$ 160,284,233$ 149,647,252$ Total net debt applicable to limit24,893,656 20,561,255 21,598,686 22,196,863 16,713,469 17,018,612 8,883,774 9,064,330 9,438,689 - LEGAL DEBTMARGIN182,051,405$ 176,454,434$ 161,160,857$152,896,205$151,636,090$149,036,256$ 155,799,782$153,222,730$150,845,544$149,647,252$ Total net debtapplicable to thelimited as a percentage ofdebt limit12.03%10.44%11.82%12.68%9.93%10.25%5.39%5.59%5.89%0.00%(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." TABLE 15 CITY OF PADUCAH, KENTUCKY DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (1)(1)(1)(1)(2)(3) Personal Per Capita Median School Unemployment Fiscal Year Population Income Income Age Enrollment Rate 1999-2000 27,256 324,837,008$ 11,918$36.6 3,289 4.4% 2000-2001 26,307 324,837,008 11,918 39.9 3,037 5.0% 2001-2002 26,307 484,496,019 18,417 39.9 2,909 6.3% 2002-2003 26,307 484,496,019 18,417 39.9 2,887 7.2% 2003-2004 26,307 484,496,019 18,417 39.9 2,977 5.8% 2004-2005 26,307 484,496,019 18,417 39.9 2,819 6.4% 2005-2006 26,307 484,496,019 18,417 39.9 2,834 5.7% 2006-2007 26,307 484,496,019 18,417 39.9 2,804 5.6% 2007-2008 26,307 484,469,019 18,417 39.9 2,832 6.1% 2008-2009 26,307 484,469,019 18,417 39.9 2,774 9.3% Sources: (1)Bureau of the Census Count - 1990 and 2000. (2)Board of Education; represents elementary and secondary public schools. (3)Kentucky Cabinet for Human Resources, Department for Employment Services. -132- TABLE 16CITY OF PADUCAH, KENTUCKYPRINCIPAL EMPLOYERSCURRENT YEAR AND ONE YEAR AGO*20092008Percentage ofPercentage ofTotalTotalEmployerEmployees (1)Employment (2)Employees (1)Employment (2)Western Baptist Hospital17556.00%1,7005.66%Lourdes Hospital13654.67%1,4004.66%Wal-Mart11603.97%1,2004.00%Paducah Public Schools6002.05%6002.00%LYNX Services3601.23%3601.20%State of Kentucky3801.30%3901.30%City of Paducah3501.20%3401.13%-133-Paxton Media Group2900.99%2900.97%NRE Acquisitions1500.51%2200.73%West Kentucky Community and Technical College3751.28%3801.27%TOTALS678523.19%6,88022.92%(1) Source - City of Paducah Finance Department(2) State of Kentucky - Office of Employment and Training. Ratio based on unemployment within County of McCracken.*Comparative information was unavailable prior to fiscal year 2006. TABLE 17CITY OF PADUCAH, KENTUCKYCITY FULL-TIME EMPLOYEES BY FUNCTION**Last Ten Fiscal YearsFiscal Year2009200820072006200520042003200220012000Governmental ActivitiesGeneral Government:General administration12121212111111121313Finance17141414131313131312Human resources0333433344Inspection13131312121212131412Information systems4443333210Risk management1111Public Safety:Police93939393969495949494-134-Fire69697176757676778186Public Service:Streets29293031282828282929Facilities36343435383939383636Engineering8999988888Other6654422200Parks and recreation7777998875Planning and development10111111111111101012Other:Renaissance5000000000Fleet maintenance6777766667Business-type ActivitiesSolid waste27272729292929293029Sewer/wastewater**********TOTAL PRIMARY GOVERNMENT343339341347349344344343346347* This information is not applicable for fiscal years after 1999 as all assets and liabilities of the Wastewater/Stormwater Fund were transferred to the Paducah-McCracken County Joint Sewer Agency as of July 1, 1999.** Employee budget census. TABLE 18CITY OF PADUCAH, KENTUCKYOPERATING INDICATORS BY FUNCTION**Last Ten Fiscal Years2009200820072006200520042003200220012000General Government:Building and electrical pdermits issue1,179 1,203 1,411 1,362 1,376 *****Business licenses issued3,691 3,507 3,500 3,700 ******Public Safety:PoliceAdult arrests4,454 4,170 5,012 3,827 ******Murder5 - - - ******Rape20 15 18 15 ******Robberies41 49 42 35 ******Burglary169 203 208 211 ******Auto theft57 60 117 104 ******Arson7 8 16 7 ******Traffic accidents1,368 1,519 1,949 1,815 ******Traffic violations9,143 7,109 7,323 7,468 ******Fire-135-Emergency responses3,305 2,603 2,456 2,546 3,219 3,638 3,569 2,845 1,665 1,651 Fires extinguished136 102 163 181 176 189 198 194 177 247 Structure fires57 49 40 53 49 64 70 72 66 69 Incidents with reported losses85 70 80 91 97 106 111 129 102 94 Medical/rescue1,616 1,506 1,369 1,589 1,997 2,266 2,290 1,551 370 319 Tours/in-services/car seats907 699 485 485 485 485 485 468 558 430 Training man hours7,716 4,344 1,183 1,418 1,188 965 1,058 804 1,619 1,625 Inspections1,183 1,449 ********Refuse Collection:ResidentialRefuse collected (tons32 25 28 34 ******per day)Customers served9,435 9,446 9,388 9,368 ******CommercialRefuse collected (tons75 83 85 84 ******per day)Customers served810 821 832 801 ******Pubic Service:911 calls received81,525 144,290 122,340 167,847 168,712 168,427 173,536 164,661 **Police40,921 79,386 59,887 76,144 103,500 104,622 110,310 106,244 **Fire2,490 3,320 3,107 4,168 3,537 3,305 3,387 4,045 **Other38,114 61,584 59,346 87,535 61,675 60,500 59,839 54,372 *** Information not available.** Information from city departments. TABLE 19CITY OF PADUCAH, KENTUCKYCAPITAL ASSET STATISTICS BY FUNCTION**Last Ten Fiscal YearsFiscal Year2009200820072006200520042003200220012000Public Safety:PoliceStations1111111111FireStations5555555555Refuse Collection:Collection trucksResidential710988#####Commercial45544#####Other Public Works:Sanitary sewers (miles)**********-136-Combination sewers (miles)**********Storm sewers (miles)**********Streets (miles paved)216216216214214213209209209209Sidewalks (miles)45454545454545454545Traffic signals1211111111100000Parks and Recreation:Parks27272718181818181818Acreage960960960325325325325325325230Community centers1111111111Swimming pools1111113333Public tennis courts66666666610Public golf courses2222222222* This information is not applicable for fiscal years after 1999 as all assets and liabilities of the Wastewater/Stormwater Fund were transferred to the Paducah-McCracken County Joint Sewer Agency as of July 1, 1999.# Information not available.** Information from city departments. CITY OF PADUCAH, KENTUCKY SINGLE AUDIT SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2009 CITY OF PADUCAH, KENTUCKY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2009 Federal Federal Grantor/Pass-Through Grantor/CFDA Pass-Through Program Title:Number Grantor Number Expenditures Department of Housing and Urban Development: Direct Programs: Section 8 Housing Choice Vouchers 14.871 N/A 1,960,989$ Passed-through Kentucky Governors Office for Local Development Community Development Block Grant 14.228 KY20070109-0026 33,334 Passed-through Kentucky Housing Corporation: Home Investment Partnerships Program 14.239 N/A 180,000 Total Department of Housing and Urban Development 2,174,323 Department of Justice: Direct Programs: Bulletproof Vest Partnership Program 16.607 N/A 1,677 Edward Byrne Memorial Justice Assistance Grant Program 16.738 2007-DJ-BX-1012 4,573 Passed-through Kentucky Department of State Police: Enforcing Underage Drinking Laws Program 16.727 2008-AH-FX-0044 8,482 Total Department of Justice 14,732 Department of Agriculture: Passed-through Kentucky Department of Education: Summer Food Service Program for Children 10.559 N/A 10,313 Total Department of Agriculture 10,313 Department of Homeland Security: Direct Programs: Port Security Grant Program 97.056 2008GBT80131 19,137 Passed-through Kentucky Office of Homeland Security: Homeland Security Grant Program 97.067 PO2 094 0800020884 1 151,757 Passed-through Kentucky Emergency Management: Disaster Grants - Public Assistance (Presidentially Declared Disasters)97.036 FEMA-1802-DR-KY 342,337 Disaster Grants - Public Assistance (Presidentially Declared Disasters)97.036 FEMA-1818-DR-KY 2,623,351 Total Department of Homeland Security 3,136,582 (Continued) -137- CITY OF PADUCAH, KENTUCKY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2009 Federal Federal Grantor/Pass-Through Grantor/CFDA Pass-Through Program Title:Number Grantor Number Expenditures Department of Transportation: Passed-through Kentucky Department of State Police: State and Community Highway Safety 20.600 AL-09-33 12,313$ State and Community Highway Safety 20.600 AL-08-35 15,733 Passed-through to River Heritage Museum Highway Planning and Construction 20.205 C05024679 478,034 Total Department of Transportation 506,080 TOTAL EXPENDITURES OF FEDERAL AWARDS 5,842,030$ See accompanying notes to schedule of expenditures of federal awards. -138- CITY OF PADUCAH, KENTUCKY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2009 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 OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. 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: Federal CFDA Amount Program Title Number Provided Paducah Board of Education 10.559 $ 10,313 River Heritage Museum 20.205 478,034 $488,347 -139- THIS PAGE INTENTIONALLY LEFT BLANK WILLIAMS, WILLIAMS & LENTZ, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON PADUCAH, KENTUCKY 42001 J. RICHARD WALKER ROBERT R. ROBERTSON C. SUZETTE CRONCH ANNETTE T. RYAN MICHAEL F. KARNES MARK A. THOMAS ROGER G. HARRIS J. DAVID BAILEY, III G. LEON WILLIAMS, 1926-2004 H. WILLIAM LENTZ, 1925-2007 JERRY G. SEVERNS MAILING ADDRESS POST OFFICE BOX 2500 PADUCAH, KY 42002-2500 TELEPHONE 270-443-3643 FAX 270-444-0652 WEBSITE wwlcpa.com 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 William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky, as of and for the year ended June 30, 2009, which collectively comprise the City of Paducah, Kentucky’s basic financial statements and have issued our report thereon dated December 22, 2009. 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. Internal Control over Financial Reporting In planning and performing our audit, we considered the City of Paducah, Kentucky’s internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Paducah, Kentucky's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City of Paducah, Kentucky's internal control over financial reporting. A control deficiency 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 misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City of Paducah, Kentucky's ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City of Paducah, Kentucky 's financial statements that is more than inconsequential will not be prevented or detected by the City of Paducah, Kentucky's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the City of Paducah, Kentucky's internal control. Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. -140- Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Paducah, Kentucky’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended for the information and use of the Board of Commissioners of the City of Paducah, Kentucky, management, others within the organization, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. December 22, 2009 -141- WILLIAMS, WILLIAMS & LENTZ, LLP CERTIFIED PUBLIC ACCOUNTANTS 601 JEFFERSON PADUCAH, KENTUCKY 42001 J. RICHARD WALKER ROBERT R. ROBERTSON C. SUZETTE CRONCH ANNETTE T. RYAN MICHAEL F. KARNES MARK A. THOMAS ROGER G. HARRIS J. DAVID BAILEY, III G. LEON WILLIAMS, 1926-2004 H. WILLIAM LENTZ, 1925-2007 JERRY G. SEVERNS MAILING ADDRESS POST OFFICE BOX 2500 PADUCAH, KY 42002-2500 TELEPHONE 270-443-3643 FAX 270-444-0652 WEBSITE wwlcpa.com Report on Compliance with Requirements Applicable to Each Major Program and On Internal Control Over Compliance in Accordance with OMB Circular A-133 Honorable William F. Paxton, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Compliance We have audited the compliance of the City of Paducah, Kentucky, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009. The 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. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the City of Paducah, Kentucky’s management. Our responsibility is to express an opinion on the City of Paducah, Kentucky’s compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City of Paducah Kentucky’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination of the City of Paducah, Kentucky’s compliance with those requirements. In our opinion, the City of Paducah, Kentucky complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2009. Internal Control Over Compliance The management of the City of Paducah, Kentucky, is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Paducah, Kentucky’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of City of Paducah, Kentucky's internal control over compliance. -142- A control deficiency in an entity's internal control over compliance 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 noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. This report is intended solely for the information and use of the Board of Commissioners of the City of Paducah, Kentucky, management, others within the organization, and federal awarding agencies and pass- through entities and is not intended to be and should not be used by anyone other than these specified parties. December 22, 2009 -143- CITY OF PADUCAH, KENTUCKY SCHEDULE OF FINDINGS AND QUESTIONED COSTS FOR THE YEAR ENDED JUNE 30, 2009 A. Summary of Audit Results: 1. The auditor’s report expresses an unqualified opinion on the basic financial statements of the City of Paducah, Kentucky. 2. No instances of significant control deficiencies were disclosed during the audit of the basic financial statements of the City of Paducah, Kentucky. 3. No instances of noncompliance material to the basic financial statements of the City of Paducah, Kentucky were disclosed during the audit. 4. No instances of significant deficiencies were disclosed during the audit of the major federal award programs. 5. The auditor’s report on compliance for the major federal award programs for the City of Paducah, Kentucky expresses an unqualified opinion. 6. There are no audit findings relative to the major federal awards program to be reported. 7. The programs tested as major programs included: Name CFDA # Section 8 Housing Choice Vouchers 14.871 Highway Planning and Construction 20.205 Disaster Grants – Public Assistance (Presidentially Declared Disasters) 97.036 8. The threshold for distinguishing Types A and B programs was $300,000. 9. The City of Paducah, Kentucky was determined to be a low-risk auditee. B. Findings - Basic Financial Statements Audit: None C. Findings and Questioned Costs - Major Federal Award Programs: None -144-