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HomeMy WebLinkAboutCAFR-June-30-2021CITY OF PADUCAH, KENTUCKY COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 FINANCE DEPARTMENT CITY OF PADUCAH, KENTUCKY City of Paducah Paducah, Kentucky Comprehensive Annual Financial Report Year Ended June 30, 2021 Issued by the Finance Department CITY OF PADUCAH, KENTUCKY COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 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 13-28 Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 29-30 Statement of Activities 2 31-32 Fund Financial Statements: Governmental Funds: Balance Sheet 3 33-34 Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Position 4 35-36 Statement of Revenues, Expenditures and Changes in Fund Balances 5 37-38 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 39-40 Statement of Revenues, Expenditures and Changes - Budget and Actual - General Fund 7 41-44 Statement of Revenues, Expenditures and Changes - Budget and Actual - Special Revenue Investment Fund 8 45 Statement of Revenues, Expenditures and Changes - Budget and Actual - Special Revenue Bond Fund 9 46 Proprietary Funds: Statement of Net Position 10 47 Statement of Revenues, Expenses and Changes in Net Position 11 48 Statement of Cash Flows 12 49 Fiduciary Funds: Statement of Net Position 13 50 Statement of Changes in Net Position 14 51 Notes to Financial Statements 52-101 Required Supplementary Information: Schedule of Changes in the Police and Firefighters’ Pension Trust Fund’s Net Pension Liability and Related Ratios A-1 102 Schedule of Changes in the Appointive Employees’ Pension Trust Fund’s Net Pension Liability and Related Ratios A-2 103 Schedule of Police and Firefighters’ Pension Trust Fund Contributions and Investment Returns A-3 104 Schedule of Changes in the Appointive Employees’ Pension Trust Fund Contributions and Investment Returns A-4 105 Schedule of City’s Proportionate Share of the Net Pension Liability County Employees’ Retirement System A-5 106 Exhibit No. Page No. Schedule of City’s Contributions - Pensions County Employees’ Retirement System A-6 107 Schedule of City’s Proportionate Share of the Net Medical Insurance Plan Liability - County Employees’ Retirement System A-7 108 Schedule of City’s Contributions – Medical Insurance Plan County Employees’ Retirement System A-8 109 Supplementary Information: General Capital Improvements Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-1 110 Debt Service Fund Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-2 111 Nonmajor Governmental Funds: Combining Balance Sheet B-3 112-113 Combining Statement of Revenues, Expenditures and Changes in Fund Balances B-4 114-115 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Municipal Aid Fund B-5 116 Emergency Communication Service Fund B-6 117 Court Awards Fund B-7 118 CDBG Grant Fund B-8 119 Bed Tax Fund B-9 120 Nonmajor Enterprise Funds: Combining Statement of Net Position C-1 121 Combining Statement of Revenues, Expenses and Changes in Fund Net Position C-2 122 Combining Statement of Cash Flows C-3 123 Internal Service Funds: Combining Statement of Net Position D-1 124 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position D-2 125 Combining Statement of Cash Flows D-3 126 Fiduciary Funds: Combining Statement of Net Position - Private-purpose Trust Funds E-1 127 Combining Statement of Changes in Net Position - Private-purpose Trust Funds E-2 128 Table No. Page No. Statistical Section: Net Position by Component 1 129 Changes in Net Position 2 130-131 Fund Balances, Governmental Funds 3 132 Changes in Fund Balances, Governmental Funds 4 133 Assessed and Estimated Actual Value of Taxable Property 5 134 Governments 6 135 Principal Taxpayers 7 136 Secured Tax Levies and Collections 8 137 Employee License Tax Collections 9 138 Table No. Page No. Statistical Section: Principal Employee License Taxpayers 10 139 Ratio of Outstanding Debt by Type 11 140 Ratio of Net General Bonded Debt Outstanding 12 141 Direct and Overlapping Governmental Activities Debt 13 142 Legal Debt Margin Information 14 143 Demographic and Economic Statistics 15 144 Principal Employers 16 145 City Full-Time Employees by Function 17 146 Operating Indicators by Function 18 147 Capital Asset Statistics by Function 19 148 Single Audit Section: Schedule of Expenditures of Federal Awards 149 Notes to the Schedule of Expenditures of Federal Awards 150 Independent Auditor’s Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 151-152 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance 153-154 Schedule of Findings and Questioned Costs 155 Schedule of Prior Audit Findings 156 CITY OF PADUCAH, KENTUCKY INTRODUCTORY SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 -1 - December 20, 2021 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, 2021. 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, 2021, 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 . 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 and cultural center. 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. CITY OF PADUCAH Finance Department P.O. Box 2267 Paducah, KY 42002-2267 270-444-8512 - 2 - Economic Development Activities Greater Paducah Economic Development (GPED) coordinates the City’s efforts in strengthening and building economic development activities. The board of directors is comprised of elected candidates from GPED’s Investor Council based upon their unique gifts and abilities and their capacity to appropriately apply them to the organization and community. In existence since 1987, GPED assumes and carries out the responsibility of working with existing industry and business, as well as identifying and recruiting new companies to the City of Paducah. Additionally, GPED is responsible for development of long-term strategy for economic development activities and coordinates local entities in the accomplishment of those strategies. In the early 1990s, the City of Paducah, the State of Kentucky and several federal agencies, in conjunction with business, developed a 650-acre Commerce Park (formerly known as the Information Age Park.) This park was designed to appeal to firms needing advanced telecommunications and computing capabilities. In 1997, the City of Paducah jointly with the County of McCracken acquired the ‘Industrial Park West of Paducah and McCracken County’. This park contains 218 acres with immediate access to two major railroad lines, Paducah and Louisville and Paducah and Illinois (formerly Illinois Central). The park is located within the southwest quadrant of the I-24/Cairo Road interchange. In 2007, GPED began assembling property to establish a ‘Triple Rail Site’ in western McCracken County. The site is an industrial park served by two Class I railroad companies, Burlington Northern Santa Fe and Norfolk Southern, and a short line railroad company, Paducah and Louisville. The site has river docking service within 1.5 miles, is within 3 miles of Interstate 24, and 5 miles from Barkley Regional Airport. GPED owns 229 acres and has option and brokerage agreements on additional surrounding properties. Churches and Schools A relatively strong religious base is evident in the community, as demonstrated by the many churches in Paducah. Numerous churches, representing many of the major denominations, are located within the City. Several area churches offer televised activities as a convenience to those who do not attend church. Elementary and secondary education in Paducah is provided by the Paducah Independent School System, McCracken County School System, Community Christian Academy, and St. Mary’s Parochial School System. The availability of higher education in the area is continuing to flourish. West Kentucky Community and Technical College (WKCTC), formerly known as Paducah Community College, is a two-year institution affiliated with the University of Kentucky’s community college system. WKCTC also serves as a site for the University of Kentucky extended campus graduate programs, in addition to a four-year engineering college in conjunction with the University of Kentucky. In 2008, WKCTC opened a Paducah School of Art. In 2010, a new 65,000 square feet Emergency Technology Center was opened, offering industrial and manufacturing technologies, engineering technology, as well as business and industry training and information technology programs. This is the first state supported new building to be constructed on the WKCTC campus in over 20 years. In 2011, Murray State University entered into an agreement with the City, McCracken County, and Paducah Economic Development to construct an approximately 40,000 square foot educational building to serve as their Paducah campus. Classes began at the Paducah campus in 2014. -3 - Medical Facilities Paducah serves as the regional medical center for much of the Jackson Purchase Area of Western Kentucky, a large portion of Southern Illinois, and Northwestern Tennessee. Paducah’s medical industry has almost every major medical specialty represented in the physician population. The medical industry, represented by Mercy Health and Baptist Health, provides over 650 beds for medical needs. The two largest hospitals, together, employ approximately 3,000 persons. Recreation and Culture Citizens have available a wide range of recreational and cultural activities which cater to diverse tastes. Area residents may choose from fishing on nearby Kentucky and Barkley Lakes to enjoying the performing arts. City parks provide areas for baseball, softball, golf, football, tennis, disc golf, footgolf, skate boarding, soccer, hiking 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 180-year- old historic neighborhood. The LowerTown Art and Music Festival is an outdoor-juried show that the work of local artists and includes jazz, salsa, zydeco and blues music, as well as food from area restaurants. Paducah is the site of the Museum of the American Quilter’s Society. In May 2008, a congressional designation was passed naming the museum as the National Quilt Museum of the United States. The museum, dedicated in 1991, is the centerpiece for the quilters’ annual convention held in April. The convention attracts an estimated 30,000 visitors to Paducah annually. One of Paducah’s oldest celebrations is the 8th of August Emancipation Celebration, which features African American family reunions, or a homecoming. It is a time for African Americans to pay tribute to their heritage and roots, and a time of reconciliation. The Barbecue on the River event was started in 1995, as a way for local charities to raise funds. It attracts in excess of 40,000 participants to Paducah’s riverfront during the last weekend in September. 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 seventeenth year for the event. Although the event is free, volunteers collect more than $40,000 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 Luther F. Carson Four Rivers Center for the Performing Arts 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. - 4 - The McCracken County Public Library offers a large selection of literature, special collections and programs. The West Kentucky Community and Technical College Library supplement this community resource. THE GOVERNMENT Paducah operates under a City Manager plan of government. The Paducah Board of Commissioners is made up of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. The Mayor is elected for a four-year term and Commissioners for a two-year term. The Mayor and Commissioners have equal voting powers. The Board of Commissioners sets the policies that govern the City. It appoints advisory citizens groups that help in the decision-making process. The City Manager is appointed by the Board and assists it in formulating objectives, policies and programs. The City Manager is responsible for the day-to-day operation of the City’s 335 full-time employees as of June 30, 2021. 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 City has one component unit that has been presented as a discrete unit to emphasize that it is legally separate from the City. Paducah Water Works is included in the City’s financial statements because of its financial relationship with the City. The City provides a full range of municipal services, including police and fire protection; maintenance of streets and infrastructure; sanitation services; cultural events and recreation activities. Accounting System The City’s accounting system is organized on the basis of separate funds, each of which is considered to be a separate accounting entity. The financial activities of each fund generate a separate set of self-balancing accounts, which comprise its assets, liabilities, fund equity, revenues, and expenditures/expenses. Municipal resources are allocated to and accounted for in individual funds based upon the purposes for which they are to be spent and the means by which spending activities are controlled. The City’s accounting records for the governmental funds and agency funds are maintained on a modified accrual basis, with revenues being recorded when “measurable and available” and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City’s proprietary funds and trust funds are maintained on the accrual basis, with revenues recognized when earned and expenses recorded when the liability is incurred or economic asset used. - 5 - Internal Control In developing and evaluating the City’s accounting system, consideration is given to the adequacy of internal controls. Because the cost of a control should not exceed the benefits to be derived, the objective of these internal controls is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. Internal controls were designed for Paducah’s accounting system to reasonably safeguard its assets against loss from unauthorized use or disposition, check the accuracy of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. Budgetary Control Paducah’s budget process provides for input from department managers, top management, elected officials and the public to determine what programs and services will be provided for during the upcoming year. Budgetary control is maintained at the departmental level by comparing budgeted expenditures with actual expenditures on a periodic and year-to-date basis. An expenditure, which would result in an overrun of department appropriation, cannot be made until additional funds are appropriated 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. 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 FY2021, one of the City’s financial policies did have a significant impact on the financial statements: Pension Obligation Costs. In FY2006, the City issued general obligation bonds of $6,100,000 to finance the police and firefighters’ pension fund actuary liability. Since the issuance of these bonds, the City has made it policy to contribute the normal cost as well as the minimum actuarially sound contribution annually that would arise from the fund being in a deficit position as of the actuarial date. For FY2021 this contribution was $332 thousand. This amount was $315 thousand in FY2020. LONG-TERM FINANCIAL PLANNING On October 1, 2005, the City’s payroll tax was increased ½ cent. As a result of the payroll tax increase, the City Commission created the Investment Fund. The Investment Fund is funded with the ½ cent increase and is dedicated to the following purposes: community redevelopment, economic development, infrastructure capital investment, and property tax relief. During the FY2021 budget process, the Commission reviewed numerous decision packages proposed for the Investment Fund Budget; expenditures totaling approximately $5.3 million were appropriated. The City has numerous infrastructure/capital items that will affect the long-term financial planning process. The following projects are examples of future considerations facing the City: Better Utilizing Investments to Leverage Development (BUILD) Grant. The City has been awarded a $10.4 million BUILD grant which will be used to create new opportunities for tourism, recreation and commerce along the Ohio riverfront in support of good jobs and economic growth. The grant will be used to construct the following riverfront projects: Riverboat excursion pier and plaza construction; bike, pedestrian, and - 6 - broadband linkages from the Convention Center to the riverfront; and, improvements to the landing near the City’s transient boat dock. The project is currently in the environmental assessment phase. Tax Increment Financing District (TIF). The City has received approval from the Kentucky Economic Development Financing Authority (KEDFA) for a TIF District. The District includes approximately 315 acres of Paducah downtown riverfront which will be used to promote public and private development. It is anticipated that mixed-use development will include the construction of hotels, residential units, restaurant/entertainment space, retail space, manufacturing space, public buildings, and public infrastructure improvements. Once activated, it’s anticipated that tax revenue in excess of a prescribed baseline will be reinvested in the area with funds from state sales tax, property tax, individual income tax, and corporate income tax in addition to local property and payroll taxes. 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 slightly in comparison to the prior year, with 26,071 persons employed (McCracken County) as of June 30, 2021. The June 2021 unemployment rate was 5.9% (McCracken County), which is an increase from 5.4% in the prior year, and equal to the June 2021 federal unemployment rate of 5.9%. INDEPENDENT AUDIT Kentucky Revised Statute 91A-040 requires an annual audit of each fund of the City by an auditor of public accounts or a certified public accountant. The independent certified public accounting firm of Kemper CPA Group, LLP, has conducted this audit and their opinion has been included in this report. The City is also subject to the Single Audit Act Amendments of 1996 reporting requirements. The Single Audit Report is included within this report. 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, 2020. This was the thirtieth consecutive year that the City achieved this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable and efficiently organized 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 Kemper CPA Group, LLP. We also thank the Mayor, City Manager, and City Commission for their interest - 7 - and support in planning and conducting the financial operations of the City in a responsible and progressive manner. CITY OF PADUCAH, KENTUCKY ORGANIZATIONAL CHART CITIZENS OF PADUCAH CITIZENS OF PADUCAH Mayor and Commissioners Advisory Board and Committees City Manager City Clerk / Customer Experience Parks and Recreation Fire Department Police Department Engineering Department -8- Information Systems Human Resources / Risk Management Finance Department Planning Department E911 Public Works Department Assistant City Manager CITY OF PADUCAH, KENTUCKY PRINCIPAL OFFICIALS BOARD OF COMMISSIONERS Mayor George P. Bray Mayor Pro tem Sandra Wilson Commissioner Raynarldo Henderson Commissioner David Guess Commissioner Carol C. Gault CITY MANAGER Daron Jordan Assistant City Manager Michelle Smolen Finance Jonathan Perkins, CPA Police Chief Brian Laird Fire Chief Steve Kyle City Engineer Rick Murphy Public Works Chris Yarber Planning Nicholas Hutchison Parks Services Amie Clark Information Services Stephen Chino City Clerk Lindsay Parish Human Resources/Risk Manager Stefanie Suazo Public Information Pam Spencer -9- -10- CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 INDEPENDENT AUDITOR’S REPORT Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky, as of and for the year ended June 30, 2021, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the following component unit: Paducah Water Works, which is presented as a discretely presented component unit in the statement of net position and statement of activities. These financial statements were audited by another auditor whose report has been furnished to us, and our opinions, insofar as it relates to the amounts included for Paducah Water Works, discretely presented component unit, is based solely on the reports of the other 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 financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky, as of June 30, 2021, and the respective changes in financial position, and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund and the Special Revenue Investment Fund for the year then ended in accordance with accounting principles generally accepted in the United States of America. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and pension and other post-employment benefits trust fund schedules on pages 13-28 and 102-109 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management’s responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Paducah, Kentucky’s basic financial statements. The introductory section on pages 1-10; budgetary comparison schedules, combining and individual nonmajor fund, budgetary comparison schedules for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements on pages 110-128; and statistical section on pages 129-148, are presented for purposes of additional analysis and are not a required part of the basic financial statements. The schedule of expenditures of federal awards on pages 149-150 is presented for purposes of additional analysis as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , and is also not a required part of the basic financial statements. The budgetary comparison schedules, combining and individual nonmajor fund financial statements, budgetary comparison schedules for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements and the schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary comparison schedules, combining and individual nonmajor fund, budgetary comparison for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements and the schedule of expenditures of federal awards are fairly stated in all material respects in relation to the basic financial statements as a whole. 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 do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 22, 2021, on our consideration of the City of Paducah, Kentucky’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering City of Paducah, Kentucky’s internal control over financial reporting and compliance. Certified Public Accountants and Consultants Paducah, Kentucky December 22, 2021 -12- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 - 13 - CITY OF PADUCAH, KENTUCKY MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2021 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, 2021. 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 29-101) 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 The City’s assets and deferred outflows exceeded liabilities and deferred inflows at the close of the fiscal year by $15.0 million (net position). This amount includes $865 thousand restricted to specific projects by laws, regulations or contractual agreements. A deficit total of ($45.5) million was unrestricted as a result of GASB No. 68, Accounting and Financial Reporting for Pensions, which was implemented in the fiscal year ended 6/30/2015 and GASB No. 75, Accounting and Financial Reporting for Postemployment Benefits other than Pensions (OPEB), which was implemented in the fiscal year ended 6/30/18. The City’s total net position decreased ($2.4) million this year, primarily due to changes in the net pension and OPEB liabilities and the related deferred outflows and inflows. Net position of governmental activities decreased by ($2.0) million and business-type activities decreased by ($340) thousand. At fiscal year end, City governmental funds reported a combined ending fund balance of $55.0 million. Approximately 44% of this total amount, $24.0 million, is restricted or committed for highways/streets and capital improvements. Assigned fund balance comprises 15% of total fund balance; the majority of which is set aside for capital improvements. At the end of the current fiscal year, unassigned General Fund fund balance was $21.5 million and is available for spending at the City’s discretion. Cash makes up approximately $18.5 million. When compared to final total appropriations, the General Fund cash balance is 46%. II. Overview of Financial Statements This discussion and analysis serves as an introduction to the City’s basic financial statements, which consist of four components: 1) government-wide financial statements, 2) fund financial statements, 3) component unit financial statements, and 4) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. A. Government-Wide Financial Statements Government-wide financial statements are designed to provide readers with a broad overview of City finances in a manner similar to private-sector business. The Statement of Net Position presents information on all City assets, deferred outflows of resources, and liabilities, and deferred inflows of resources with the difference between these reported as net position. Monitoring increases and/or decreases in net position over time may serve as a useful indicator of whether the financial position of the City is improving, stagnating, or deteriorating. The Statement of Activities presents information showing how the City’s net position changed during the fiscal year. All net position changes are reported as soon as the underlying event giving rise to the change occurs regardless of the timing of related cash flows. Revenues and expenses are - 14 - reported in the Statement of Activities for some items that will only result in cash flows in the future. Both of the government-wide financial statements distinguish City functions that are primarily supported by taxes and intergovernmental revenues (governmental activities) from other City functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). City governmental activities include general government, public safety, public service, park and recreation, planning and development, and interest on long-term debt. Business-type activities of the City include Solid Waste, Section Eight Housing, Civic Center, and the Transient Boat Dock. Government-wide financial statements include not only the City (the primary government), but also a legally separate Paducah Water Works (component unit) for which the City is financially accountable. Financial information for the component unit is reported separately from the financial information presented for the primary government itself. The government-wide financial statements can be found on pages 29-32 of this report. B. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over segregated resources for specific activities or objectives. The City of Paducah, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. City funds can be divided into three categories: 1) Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. Unlike government-wide financial statements, 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 ten (10) individual governmental funds. Information is presented separately in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the General, General Capital Improvements, Special Revenue Investment, Bond Fund and Debt Service Funds, all of which are considered to be major funds. Data from the other five (5) 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 112-120. 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 35-36) and Exhibit 6 (pages 39-40) 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 33-40 of this report. 2) Proprietary Funds. The City maintains two types of proprietary funds: a. Enterprise Funds. Enterprise funds are used to report the same functions presented as business-type activities in the government-wide financial statements and are used to account for operations: That are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs of providing goods and services to the - 15 - 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 Transient Boat Dock. The Civic Center and Transient Boat Dock receive subsidies from the General Fund. The City’s component unit enterprise is the Paducah Water Works. This component unit, which has its own board of directors, is also an enterprise fund and is shown on pages 29-32. 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 121-123 of this report. Individual data for the internal service funds is likewise presented in the form of combining statements on pages 124- 126 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 two of the City’s three fiduciary funds (Appointive Employees’ Pension and Police and Firefighters’ Retirement) is presented in the notes to the financial statements on pages 90-91. Individual data for the Cemetery and Parks Trusts Fund is presented on pages 127-128 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 52-101 of this report. D. Other Information In addition to basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning City funding of its pension obligation to its employees. Additional budgetary comparison schedules, as well as the combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor proprietary funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information on pensions. Additional budgetary comparison schedules and combining fund statements and schedules can be found on pages 110-128 of this report. III. Government-Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the City’s financial position. City assets and deferred outflows exceeded liabilities and deferred inflows by $15.0 million, a decrease of $2.4 million from prior year. - 16 - For FY2021, the largest portion of the City’s net position ($59.7 million) reflects its investment in capital assets (i.e., land, buildings, machinery, equipment and infrastructure) less outstanding related debt used to acquire those assets. The City uses these capital assets to provide service to citizens and, as a result, these assets are not available for future spending. The City’s capital assets investment is reported net of related debt, but the resources to pay this debt must be provided from other sources since the capital assets cannot be used to liquidate the liabilities. An additional portion of City net position ($865 thousand) represents resources that are subject to external restrictions on how they may be used. In FY2015 the City implemented Government Accounting Standards Board (GASB) Statement No. 68. It requires that the City report and fully disclose its share of net pension liability, which is $72.7 million as of June 30, 2021. In FY2018 the City implemented GASB 75, which requires that the City report and fully disclose its share of other post-employment benefit (OPEB) liabilities. This generated a $21.8 million liability as of June 30, 2021. Disclosing the City’s participation in the County Employee Retirement System (CERS) for pension and other post-employment benefits has been the primary factor in driving the City’s unrestricted net position to a negative $45.5 million in FY2021. As of June 30, 2021, the City reports positive balances of total net position, both for the government as a whole, as well as for its separate governmental and business-type activities. City of Paducah, Kentucky Net Position June 30 Governmental Activities Business-Type Activities Total Primary Government 2021 2020 2021 2020 2021 2020 Current Assets $ 74,147,534 $67,987,539 $ 5,577,059 $ 5,295,447 $79,724,593 $ 73,282,986 Capital Assets 66,224,431 67,922,569 2,094,123 2,465,553 68,318,554 70,388,122 Other noncurrent assets 3,791,311 4,914,272 - - 3,791,311 4,914,272 Total Assets 144,163,276 140,824,380 7,671,182 7,761,000 151,834,458 148,585,380 Deferred Outflows of Resources 18,328,954 19,111,875 941,529 921,265 19,270,483 20,033,140 Current Liabilities 8,666,472 7,866,306 421,837 415,008 9,088,309 8,281,314 Noncurrent liabilities 130,008,089 123,382,854 6,258,651 5,851,946 136,266,740 129,234,800 Total liabilities 138,674,561 131,249,160 6,680,488 6,266,954 145,355,049 137,516,114 Deferred Inflows of Resources 10,502,689 13,332,719 197,789 343,695 10,700,478 13,676,414 Net position: Net Invested in Capital Assets 57,608,864 57,368,777 2,094,123 2,465,553 59,702,987 59,834,330 Restricted 759,959 941,141 105,322 - 865,281 941,141 Unrestricted (45,053,843)(42,955,542)(465,011)(393,937)(45,518,854)(43,349,479) TOTAL NET POSITION $ 13,314,980 $ 15,354,376 $ 1,734,434 $ 2,071,616 $ 15,049,414 $ 17,425,992 - 17 - The exhibit below charts the City’s total net position for the past ten years (as previously mentioned, prior years have not been restated for implementation of GASB 68 and 75 in this discussion). After several years of keeping a level net position, the City has experienced significant fluctuations over the past six years. Substantial increases occurred in fiscal years 2013, 2014, 2016, and 2017, which resulted from heavy capital development that was funded primarily with grant funding. Projects during these fiscal years included the completion of the boat launch, Riverfront Development Phases 1A & 1B, the Olivet Church Road project, and Phase 1 of the Jim & Pat Brockenborough Rotary Health Park. The City’s net position decreased significantly in FY2015 due to the implementation of GASB 68. The City’s participation in the County Employee Retirement System (CERS) led to the inclusion of an initial noncurrent liability in excess of $30 million. Net position took another hit in FY2018 due to the implementation of GASB 75. The City’s participation in the Kentucky Retirement Systems Insurance Fund generated a noncurrent liability for other post-employment benefits in the amount of $20 million FY2018. Annual adjustments to these liabilities have continued to drive net position down from FY2019 through FY2021. A. Analysis of the City’s Operations The following table provides a summary of the City’s operations for the years ended June 30, 2021 and 2020. Governmental activities decreased the City’s net position by $2,039,396 and business- type activities decreased the City’s net position by $337,182. - 18 - City of Paducah, Kentucky Changes in Net Position June 30 Governmental Activities Business-Type Activities Total Primary Government Revenues:2021 2020 2021 2020 2021 2020 Program revenues: Charges for services $ 2,652,919 $ 3,326,669 $ 4,599,835 $ 4,826,918 $ 7,252,754 8,153,587 Operating grants/contributions 5,036,389 3,000,719 2,118,215 1,903,339 7,154,604 4,904,058 Capital grants/contributions 1,662,014 2,192,974 -- 1,662,014 2,192,974 General Revenues: Property taxes 5,915,288 5,670,956 -- 5,915,288 5,670,956 Franchise taxes 334,487 135,383 --334,487 135,383 Telecommunications tax 629,429 711,289 - - 629,429 711,289 Insurance premium tax 5,819,896 4,712,859 -- 5,819,896 4,712,859 Vehicle tax 867,472 706,928 - - 867,472 706,928 Bank tax 391,897 344,841 --391,897 344,841 Gross receipts license tax 4,530,125 4,307,270 --4,530,125 4,307,270 Employee license tax 22,064,353 21,490,918 -- 22,064,353 21,490,918 Transient room tax 1,211,819 790,534 -- 1,211,819 790,534 Other taxes 383,814 371,387 --383,814 371,387 Unrestricted investment earnings 368,425 610,727 27,226 68,177 395,651 678,904 Gain on sale of capital assets --59,348 72,986 59,348 72,986 Miscellaneous -- - - -- Total revenues 51,868,327 48,373,454 6,804,624 6,871,420 58,672,951 55,244,874 Expenses: General Government 12,846,090 10,574,490 --12,846,09010,574,490 Public safety 28,084,323 27,623,826 -- 28,084,323 27,623,826 Public service 6,761,258 7,491,652 -- 6,761,258 7,491,652 Park & recreation 3,477,584 3,597,301 -- 3,477,584 3,597,301 Planning & development 2,284,229 2,049,447 --2,284,229 2,049,447 Interest on long-term debt 694,776 1,026,449 --694,776 1,026,449 Solid Waste -- 4,849,815 5,302,783 4,849,815 5,302,783 Section Eight Housing --1,913,079 1,620,623 1,913,079 1,620,623 Civic Center --30,00457,990 30,004 57,990 Transient Boat Dock --108,371 83,834 108,371 83,834 Total expenses 54,148,260 52,363,165 6,901,269 7,065,230 61,049,529 59,428,395 Increase (decrease) in Net position before transfers (2,279,933)(3,989,711)(96,645)(193,810)(2,376,578 )(4,183,521) Transfers 240,537 466,050 (240,537)(466,050)-- Change in net position (2,039,396)(3,523,661)(337,182)(659,860)(2,376,578)(4,183,521) Net position, July 115,354,376 18,878,037 2,071,616 2,731,476 17,425,992 21,609,513 NET POSITION, JUNE 30 $ 13,314,980 $ 15,354,376 $ 1,734,434 $ 2,071,616 $ 15,049,414 $ 17,425,992 - 19 - B. Governmental Activities As with most municipalities, the City’s governmental activities are heavily subsidized by taxes, with little or no program revenue for each function. The chart below demonstrates the importance of tax revenue to essential functions of the City. The graph below depicts the breakdown of revenue by source for fiscal year 2021. In fiscal year 2021, the City derived approximately 81% of its revenue from taxes/licenses. Occupational licenses, which include payroll withholding tax, business licenses, and insurance premium tax is the largest source of income to the City, totaling $32.4 million. This category of revenue increased $1.9 million, or 6.24% from the prior year. Insurance premium tax experienced the largest growth in this area, increasing by $1.1 million. This is primarily due to a rate increase of 1% that was effective on July 1, 2020. Business licenses and payroll tax increased by 5.2% and 2.7%, respectively. No changes in these revenues appear to be the result of one significant taxpayer’s activity, but the result of multiple entities having modest increases/decreases, some of - 20 - which could be fluctuations caused by the pandemic. Property taxes continue to be a stable source of revenue, comprising 11% of total revenue in FY2021. This was the first full year of collections of the City’s Transient Room Tax of 4% that was enacted in August 2019. Total revenue collected in FY2021 was $1.2 million. Operating grants/contributions was also a revenue category of note for FY2021, increasing by $2.0 million, or 68% from the prior year. This was due to the receipt of Covid-19 Relief Funds in the amount of $2.3 million, which were utilized for reimbursement of public safety personnel expenses during the pandemic. C.Business-Type Activities The chart below shows the year’s revenues and expenses for each of the City’s business-type activities. These activities should break-even; that is, the charges for services should be large enough to sustain operations. Only one of the business-type activities reflected these results for FY2021 – the Section 8 Housing Fund, with income before contributions and transfers of $142,916. Typically, the Solid Waste Fund has positive operating results. However, this fund had a loss for the last two years. In FY2020, in an effort to provide Covid-19 relief, commercial customers were given a credit of one- half of their bill amount for two consecutive months, causing a decrease in revenue of approximately $200,000. For both fiscal years, increased pension contributions, as well as pension and OPEB liability adjustments, were the primary reasons for the losses. Beginning in FY2012, an annual transfer is made from Solid Waste to the General Fund. The Phase II Storm Water Act requires that the City make an effort to curb solid waste from the landfill/sewer system. As a result, three full time street sweepers and eighteen right of way maintenance employees (one day a week) have been assigned to this program. Because these are General Fund employees, the Solid Waste Fund is making monthly interfund transfers to the General Fund to compensate for their use. The total amount transferred for this purpose in FY2021 was $320,000. Analysis of the remaining business-type activities is included in Section IV-B of this report. - 21 - 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 $55.0 million. In FY2011, the City implemented GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. The redefined categories of fund balance are described below: Nonspendable fund balance includes amounts that are not in a spendable form or are required to be maintained intact indefinitely. For example, at the end of the fiscal year, the City had $376,339 of real property held in inventory for urban development. Restricted fund balance has external limitations on use that may be imposed by creditors, grantors, contributors, or laws and regulations. At the end of the fiscal year, the City had $20,539,113 restricted for paving, public safety and capital improvements. Committed fund balance has self-imposed limitations enacted by the highest level of decision making that requires formal action at the same level to remove the limitations. At the end of the fiscal year, the City had $4,325,486 in fund balance committed for capital improvements and pension reserve. Assigned fund balance has limitations resulting from intended use; formal action is not required. Approximately 15% of the City’s fund balance is assigned for various purposes, including capital improvements, public safety, and debt service. Unassigned fund balance is the total fund balance in the General Fund in excess of the other fund balance categories. Approximately 39% of total fund balance, $21.5 million is unassigned General Fund fund balance, which is available for spending at the government’s discretion but only up to the amount represented by cash. At year-end there was $18.5 million available as General Fund cash; the balance is tied up in other assets including accounts receivable and property taxes collectible. City fiscal policy (Ordinance 2020-06-8641) requires that an amount not less than 12% of the General Fund’s - 22 - budgeted expenditures remain undesignated in the fund balance, or $4.8 million, which leaves $13.7 million as unreserved for fiscal year 2021. As a measure of General Fund liquidity, readers may compare unassigned (formerly reported as “unreserved”) fund balance to total General Fund expenditures. Unassigned General Fund fund balance ($21.5 million) represents 54% of expenditures and transfers out ($39.9 million). The chart above shows that this ratio has remained very stable over the last ten years. However, there was a significant increase in FY2018. The four primary sources of revenue for the City exceeded budgeted amounts by close to $1 million that year, driving up fund balance. There was also a large transfer out ($900 thousand) budgeted for FY2018 for an E911 capital project that was delayed until the following year and funded by a debt issue, lowering expenditures. The last few years have had less significant changes, each representative of a typical financially healthy year with some positive variances in both revenues and expenditures. The FY2021 budget is discussed further in the General Fund budgetary highlights in Section V of this report. The Investment Fund had a fund balance of $3.7 million, all of which is committed for capital projects. The Investment Fund was authorized by the City Commission in fiscal year 2005-2006 as a special revenue fund whose use is restricted to property tax reduction, economic development, community redevelopment and capital and infrastructure projects. The Investment Fund captures all manner of financial activities related to revenue from the ½ cent payroll tax increase, effective October 1, 2005. The fund balance for this fund increased $721 thousand over the previous year. This was primarily due to conservative budget estimates as a result of the Covid-19 pandemic and the uncertainty of the impact it would have on FY2021 revenues. Fortunately, revenue exceeded budget by nearly $615 thousand. - 23 - B. Proprietary Funds The City’s proprietary funds provide the same information found in the government-wide financial statements but in more detail. Net position of the respective proprietary funds are: Solid Waste $ 945,823 Section Eight Housing 105,322 Civic Center 76,672 Transient Boat Dock 11,813 Combined total net position change for the four funds was a decrease of $302 thousand, broken down as follows: Solid Waste ($424 thousand decrease), Section Eight Housing ($143 thousand increase), and Civic Center and Transient Boat Dock (Approximately $20 thousand decrease combined). The largest proprietary fund, Solid Waste, was discussed under Business Type Activities (Section III-C). Due to the Covid-19 pandemic, a memo of FY2020 4th quarter financial mitigation directives were issued by the City Manager in April 2020. These directives included shutting down the transient boat dock and disconnecting any nonessential utilities, as well as shutting down the Cherry Civic Center and disconnecting any nonessential utilities. While the transient dock has since reopened, the Civic Center still remains closed as of the date of this report. General Fund transfers were made into both funds to cover essential activities and because of those transfers, both funds ended the year with near break-even results. V. General Fund Budgetary Highlights Differences between the original budget and the final budget resulted in a $3.0 million increase in appropriations. A $2.9 million transfer was made to the Capital Improvements Fund from unreserved fund balance as a portion of local match for the City’s multi-year floodwall rehabilitation project with the U.S. Army Corp of Engineers. Final appropriations (including operating transfers out) exceeded total actual expenditures by less than $100 thousand. Departmental appropriations (excluding intergovernmental and other) exceeded actual by approximately $1.5 million. Almost 47% of that ($697 thousand) was due to salary and related benefit slippage in various departments from unfilled positions. As discussed earlier in this report, the Covid-19 pandemic resulted in the enactment of several financial mitigation factors in April 2020. One of those was a city-wide hiring freeze that was put into place on all full- time, part-time, and seasonal labor. Some positions remained frozen throughout FY2021, while some were released for hiring. The City also experienced some of the labor market issues discussed across the nation. Vacancies for many open positions were difficult to fill, leading to additional salary slippage across the General Fund. The remaining areas of positive budget variance within operations appear to be scattered across many areas and not limited to a particular department. Intergovernmental Expense almost completely closed the budget gap with actual expenditures exceeding appropriations by $1.3 million. In December 2020, the City forgave a $911 thousand note with the Greater Paducah Economic Development Council (GPEDC). Also included in intergovernmental expenses was $397 thousand for the pass-through of property taxes to the Paducah Junior College. The College is technically not a taxing district, and the City levies this tax on their behalf. The City does not include this account in its budgeting process. - 24 - 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, 2021, is $59.7 million (net of accumulated depreciation and related debt). This investment in capital assets includes land, buildings and improvements, vehicles and equipment, park facilities, roads, highways, and bridges, and construction in progress. Capital improvements are included in each department budget until improvements are completed. At the end of the fiscal year, completed projects are capitalized in the Government-wide Statements. During fiscal year 2021, project and equipment additions totaled over $6.5 million, with $2.3 million of that attributed to Construction in Progress at year-end. Some of the largest capital-type project additions, in terms of dollars in fiscal year 2021, are shown in the following table: Platform Fire Truck $1,200,000 Floodwall Pump #2 Rehab (Construction in Progress) 605,992 Greenway Trail Phase V 592,433 EOD Tactical Robot 442,064 Buckner Lane Bridge 338,156 Floodwall Rehab – USACE Match (Construction in Progress) 321,827 Bob Leeper Bridge 316,508 Noble Park Peck Addition 304,024 In the upcoming years, several street, economic development, riverfront development, and drainage projects will continue and are estimated to cost several million dollars. Capital improvement projects including infrastructure, City-owned facility improvements, continued neighborhood revitalization, and street and sidewalk rehabilitation are among the projects to be addressed. City of Paducah, Kentucky Capital Assets (Net of Accumulated Depreciation) June 30 Governmental Activities Business-Type Activities Total Primary Government 2021 2020 2021 2020 2021 2020 Land $ 10,423,688 $ 10,385,388 $ 68,886 $ 68,886 $ 10,492,574 $ 10,454,274 Land improvements 14,776,273 14,595,049 -- 14,776,273 14,595,049 Construction in progress 5,878,560 6,015,403 -- 5,878,560 6,015,403 Buildings and improvements 7,819,330 10,202,350 189,689 206,016 8,009,019 10,408,366 Infrastructure 20,165,168 20,528,696 -- 20,165,168 20,528,696 Equipment 3,419,823 3,166,891 534,536 624,587 3,954,359 3,791,478 Furnishings and fixtures 57,030 73,588 - - 57,030 73,588 Vehicles 3,684,559 2,955,204 1,301,012 1,566,064 4,985,571 4,521,268 TOTALS $ 66,224,431 $ 67,922,569 $ 2,094,123 $ 2,465,553 $ 68,318,554 $70,388,122 Additional information on City capital assets can be found in Note 3 in the notes to financial statements on pages 70-72. - 25 - B. Long-Term Debt At year-end, the City had $40,894,867 in outstanding bonds and notes payable, compared to $44,407,723 at June 30, 2020 with maturities extending through 2040. Governmental Activities 2021 2020 Convention Center Renovation – 2008 $1,301,646 $1,455,949 Refinanced Convention Center – 2010 - 3,140,000 Refinanced Rental Building – 2011 - 1,265,000 Murray State University Agreement – 2011 1,624,534 1,749,410 Public Pool Renovations – 2013 650,000 720,000 Economic Development – 2013 1,445,000 1,600,000 Refinanced Public Projects – 2014 3,240,000 3,560,000 Refinanced Police/Firefighter Pension Fund Liability - 2014 1,985,000 2,420,000 CFSB Agreement - 2017 2,814,627 2,862,122 Riverfront and 911 Equipment – 2018 2,400,000 2,555,000 Kentucky Infrastructure Authority – 2018 322,622 298,504 Refinanced KLC and Floodwall Rehabilitation – 2018 1,715,000 2,045,000 Recreation Facility - 2020 20,520,000 20,520,000 Refinanced Convention Center – 2020 2,525,000 - Net Premiums/Discounts 351,438 216,738 TOTALS $40,894,867 $44,407,723 The City had one new debt issue during FY2021. Refinanced Convention and Performing Arts Center. In October 2020, the City issued general obligation refunding bonds of $3,020,000 (2020B) to advance refund $3,140,000 of outstanding 2010B series bonds issued to refinance the original 2001 issue. Debt issues prior to July 1, 2020 are described below: Municipal Sports and Recreational Facility. In February 2020, the City issued general obligation bonds of $20,520,000 to finance the construction of a municipal sports and recreation facility. Riverfront and 911 Equipment. In August 2018, the City issued general obligation bonds of $2,700,000 to finance 911 equipment ($1.045 million) and riverfront development ($1.655 million). Refinanced KLC and Floodwall Rehabilitation. In August 2018, the City issued general obligation bonds of $2,670,000 to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 lease agreements issued to finance several public improvement projects. Kentucky Infrastructure Authority (KIA). In July 2018, the City entered into an agreement with KIA to obtain up to $4,610,667 for rehabilitation of Pump Station #2. Julian Carroll Convention Center Improvements. In January 2017, the City entered into an agreement with Community Financial Services Bank in the amount of $3 million on behalf of McCracken County to finance improvements to the Julian Carroll Convention Center. Police/Firefighter Pension Fund Liability – Refinance. In November 2014, a $4.225 million general obligation was issued to advance refund $3.845 of outstanding 2005 series bonds. The 2005 bonds were issued to finance the police and firefighters’ pension fund estimated pension liability. - 26 - Public Improvement Projects – Refinance. In May 2014, a $5.46 million general obligation was issued to refund $5.545 million of outstanding 2010 series bonds. The 2010 bonds were issued to finance several public improvement projects including a major park parking lot renovation and several resurfacing projects, sports park property acquisition, pavilion acquisition, greenway trail development, and the public portion of a hotel purchase. Economic Development. In September 2013, $2.475 million in general obligation taxable bonds were issued to finance a portion of construction of 1) improvements to a speculative building and 2) an approximately 30,000 square foot building (TeleTech). Each of these buildings are being utilized for separate economic development projects. Public Pool Renovations. In September 2013, $1.12 million in general obligation bonds were issued to finance Noble Park’s pool renovation project. Murray State University (MSU) Agreement. In November 2011, the City entered into a general obligation note in the amount of $2,674,093 with McCracken County and MSU to finance the construction of an educational facility to be occupied by Murray State University. Rental Building – Refinance. In August 2011, a $3.91 million bond obligation was issued to advance refund $3.78 million of outstanding 2004 series bonds. The 2004 bonds were issued to finance the construction of a rental building in the Paducah Industrial Park West. The previous agreement with McCracken County was renewed: 50% of the principal amount of the bonds was issued on behalf of McCracken County, Kentucky. The outstanding bonds were called in August 2020 from the sale of the property. Convention and Performing Arts Center – Refinance. In August 2010, a $7.165 million general obligation was issued to advance refund $6.725 million of outstanding 2001 series bonds. The 2001 bonds were issued to finance construction of the Luther F. Carson Four Rivers Center for the Performing Arts and the expansion of the Julian Carroll Convention Center. The previous agreement with McCracken County was renewed: 50% of the principal amount of the bond was issued on behalf of McCracken County, Kentucky, and the County has issued the City a general obligation note in a principal amount equal to 50% of the principal amount of the bonds. Convention Center Renovation. In March 2009, McCracken County entered into an agreement in the amount $5,000,000 with the Kentucky Association of Counties to finance renovations to the Julian Carroll Convention Center. The note was issued by McCracken County; however, the City is obligated for 50% of the principal amount through an Interlocal Cooperative Agreement between the City and McCracken County. The City’s legal debt limit under §158 of the Kentucky Constitution is 10% of total assessed value of taxable property in Paducah; therefore, the debt limit is $275,884,749. The City’s latest bond rating by Standard & Poor’s is AA-. The City has a relatively low amount of general obligation debt, which explains our large legal debt margin. The City of Paducah, Kentucky, issues and incurs debt in order to fund capital improvement projects, purchase major capital equipment and facilities, and respond to other special funding needs. In fiscal year 2021, just under 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 74-78. - 27 - VII. Other Potentially Significant Matters. A. Post-employment Benefits. Over the years, the City’s contribution to the Kentucky Retirement System (CERS) has seen a substantial rise in costs that has significantly impacted the City’s operating budget. The table and graph below show the actual cost of the City’s contributions to CERS for both Non-Hazardous and Hazardous employees for selected fiscal years 2001, 2011, and 2021 CERS Employer Contributions Non-Hazardous Hazardous FY Rate Amount % Chg Rate Amount % Chg 20017.17% $401,380 16,78% $971,009 2011 16.93%$1,283,108 220%33.25%$2,599,817 168% 2021 24.06%$2,189,315 71% 39.58% $3,985,840 53% In early spring 2013, the State of Kentucky passed a pension reform bill (Senate Bill 2) to prevent pension costs from escalating even higher. This legislation established a hybrid cash balance plan for participants entering the plan after January 1, 2014, that provides a retirement benefit based on an individual’s accumulated account balance. It also reset the amortization period to a new 30-year period beginning with FY2015. Other highlights include the elimination of automatic cost of living increases for retirees and provisions for retirement “spiking.” However, employer contribution rates will not differ for employees beginning participation after January 1, 2014. The contribution rates will be determined based on all CERS membership, and any excess funds contributed on new employees will be used to pay down the system’s unfunded liability. During the 2018 Regular Session of the General Assembly, Senate Bill 151 was passed in an attempt to further reduce the State’s pension liability. Some of the changes include adjusting retirement formulas, creating an optional 401(a) defined contribution plan for future employees, and implementing additional anti-spiking provisions. Because SB 151 did not include the strong measures necessary to bring the retirement system to a healthy position, the rates set by KRS remained unchanged, and participants in the plan were faced with substantial budget crises – for some smaller entities it even presented going concern issues. In order to provide rate relief for the employers participating in CERS, House Bill 362 was passed. This Bill states that the employer - 28 - contribution rates established by the board for CERS payable on or after July 1, 2018 and until June 30, 2028, for the pension and health insurance funds shall not increase more than 12% per year. This resulted in 12% increases in contribution rates for each year subsequent to that, with exception to FY2020, in which rates remained frozen at 24.06% and 39.58% for non-hazardous and hazardous employees, respectively, due to financial concerns to local governments resulting from the Covid-19 pandemic. In spite of the passage of the legislation described above, the future of the plan and long-term effects on the City’s operations are of utmost concern. As indicated in the chart above, the City paid $6.2 million in contributions for FY2021 B. Police & 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 Fund still remains in an unfunded position due to these events. The July 2021 actuary study shows that the PFPF unfunded pension liability is approximately $2.1 million as the following chart displays. Since the 2009 drop, the City has contributed approximately $300,000 - $400,000 annually to meet the actuary’s recommended amount toward the unfunded pension liability. The valuation as of July 1, 2021, indicates the minimum actuarially sound contribution for FY2022 will be $262,036. VIII. Requests for Information This financial report is designed to provide a general financial overview for those interested in the City of Paducah government finances. Questions or requests for additional financial information may be addressed to Jonathan Perkins, Finance Director, City of Paducah, 300 South 5th Street, Paducah, KY 42003. CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 Exhibit 1 Component Unit Paducah Governmental Business-type Water Works Current Assets:Activities Activities Total Authority Cash and cash equivalents 27,595,946$ 2,874,060$ 30,470,006$ 1,906,566$ Investments 30,249,987 1,500,000 31,749,987 - Receivables, net: Notes 285,816 - 285,816 - Accounts 8,478,992 587,985 9,066,977 1,563,739 Grants 708,572 - 708,572 - Interest 91,367 7,551 98,918 - Property tax 6,377,702 - 6,377,702 - Other - - - 713,998 Internal balances (594,804) 594,804 - - Inventory 438,596 12,659 451,255 1,350,336 Prepaid expenses 515,360 - 515,360 86,722 Other current assets - - - 65,967 Total current assets 74,147,534 5,577,059 79,724,593 5,687,328 Noncurrent Assets: Notes receivable 3,791,311 - 3,791,311 - Capital assets: Land and construction in progress 16,302,248 68,886 16,371,134 2,326,577 Depreciable capital assets 49,922,183 2,025,237 51,947,420 58,505,826 Cash, designated - - - 8,062,024 Other assets - - - 232,300 Total noncurrent assets 70,015,742 2,094,123 72,109,865 69,126,727 Total assets 144,163,276 7,671,182 151,834,458 74,814,055 Deferred Outflows of Resources: Deferred pension related outflows 10,694,443 486,795 11,181,238 1,766,017 Deferred OPEB related outflows 7,461,097 454,734 7,915,831 1,420,457 Deferred charges on refunding 173,414 - 173,414 - Total deferred outflows of resources 18,328,954 941,529 19,270,483 3,186,474 See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION JUNE 30, 2021 ASSETS -29- Primary Government Component Unit Paducah Governmental Business-type Water Works Current Liabilities:Activities Activities Total Authority Voucher and accounts payable 2,451,804 200,676 2,652,480 750,226 Accrued payables 2,159,458 43,349 2,202,807 1,001,669 Unearned revenue 28,453 64,814 93,267 - Accrued compensated absences 1,295,448 112,998 1,408,446 362,981 Accrued interest 399,645 - 399,645 - Notes payable due within one year 336,664 - 336,664 471,709 Bonds payable due within one year 1,995,000 - 1,995,000 - Replacement reserve - - - 232,300 Other current liabilities - - - 108,785 Total current liabilities 8,666,472 421,837 9,088,309 2,927,670 Noncurrent Liabilities: Accrued compensated absences 1,008,222 30,931 1,039,153 - Landfill post-closure costs - 2,062,500 2,062,500 - Net pension liability 69,595,312 3,168,088 72,763,400 9,325,623 Net other post employment benefits liability 20,841,352 997,132 21,838,484 2,935,112 Notes payable 5,726,765 - 5,726,765 5,292,712 Bonds payable 32,836,438 - 32,836,438 - Total noncurrent liabilities 130,008,089 6,258,651 136,266,740 17,553,447 Total liabilities 138,674,561 6,680,488 145,355,049 20,481,117 Deferred Inflows of Resources Deferred revenues - property taxes 6,118,973 - 6,118,973 - Deferred pension related inflows 1,355,805 13,548 1,369,353 170,872 Deferred OPEB related inflows 3,027,911 184,241 3,212,152 556,138 Total deferred inflows of resources 10,502,689 197,789 10,700,478 727,010 Net invested in capital assets 57,608,864 2,094,123 59,702,987 55,067,982 Restricted for: Housing and development projects - 105,322 105,322 - Capital projects & infrastructure 563,002 - 563,002 - Public safety 196,957 - 196,957 - Unrestricted (45,053,843) (465,011) (45,518,854) 1,724,420 TOTAL NET POSITION 13,314,980$ 1,734,434$ 15,049,414$ 56,792,402$ -30- LIABILITIES NET POSITION Primary Government Exhibit 2 FUNCTIONS/PROGRAMS Operating Charges for Grants and Primary Government:Expenses Services Contributions Governmental activities: General government 12,846,090$ 1,268,310$ 498,955$ 110,640$ Public safety 28,084,323 363,503 3,155,814 1,018,171 Public service 6,761,258 985,735 701,409 207,146 Parks and recreation 3,477,584 35,371 - 302,557 Planning and development 2,284,229 - 566,606 23,500 Interest on long-term debt 694,776 - 113,605 - Total governmental activities (See Note 1) 54,148,260 2,652,919 5,036,389 1,662,014 Business-type activities: Solid Waste 4,849,815 4,561,051 62,715 - Section Eight Housing 1,913,079 466 2,055,500 - Civic Center 30,004 (2,750) - - Transient Boat Dock 108,371 41,068 - - Total business-type activities 6,901,269 4,599,835 2,118,215 - TOTAL PRIMARY GOVERNMENT 61,049,529$ 7,252,754$ 7,154,604$ 1,662,014$ Component Unit: Paducah Water Works Authority 11,762,195$ 12,560,675$ -$ 1,221,505$ TOTAL COMPONENT UNITS 11,762,195$ 12,560,675$ -$ 1,221,505$ General revenues: Taxes and licenses: Property taxes, levied for general purposes Insurance premium tax Gross receipts license tax Employee license tax Franchise tax Telecommunications tax Vehicle tax Bank tax Transient room tax Other taxes Unrestricted investment earnings Sale of assets Total general revenues Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY Grants and Contributions FOR THE YEAR ENDED JUNE 30, 2021 STATEMENT OF ACTIVITIES Program Revenues Capital -31- Component Unit Governmental Business-type Paducah Water Activities Activities Total Works Authority (10,968,185)$ -$ (10,968,185)$ -$ (23,546,835) - (23,546,835) - (4,866,968) - (4,866,968) - (3,139,656) - (3,139,656) - (1,694,123) - (1,694,123) - (581,171) - (581,171) - (44,796,938) - (44,796,938) - - (226,049) (226,049) - - 142,887 142,887 - - (32,754) (32,754) - - (67,303) (67,303) - - (183,219) (183,219) - (44,796,938) (183,219) (44,980,157) - - - - 2,019,985 - - - 2,019,985 5,915,288 - 5,915,288 - 5,819,896 - 5,819,896 - 4,530,125 - 4,530,125 - 22,064,353 - 22,064,353 - 334,487 - 334,487 - 629,429 - 629,429 - 867,472 - 867,472 - 391,897 - 391,897 - 1,211,819 - 1,211,819 - 383,814 - 383,814 - 368,425 27,226 395,651 40,884 - 59,348 59,348 13,604 42,517,005 86,574 42,603,579 54,488 240,537 (240,537) - - 42,757,542 (153,963) 42,603,579 54,488 (2,039,396) (337,182) (2,376,578) 2,074,473 15,354,376 2,071,616 17,425,992 54,717,929 13,314,980$ 1,734,434$ 15,049,414$ 56,792,402$ Net (Expense) Revenue and Changes in Net Position Primary Government -32- CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 Exhibit 3 General Bond Fund Fund Assets Cash and cash equivalents 12,976,943$ 2,405,266$ 29,167$ Investments 5,500,000 - 19,749,987 Receivables: Accounts 7,777,816 - Grants 258,978 - Interest 49,001 - Property taxes (net of allowances for uncollectibles)6,417,702 - Inventory - - Prepaid items - - Due from other funds - 1,403,855 Total Assets 32,980,440$ 3,809,121$ 19,779,154$ Liabilities Voucher and accounts payable 736,310$ 154,000$ -$ Accrued payroll and payroll taxes 1,544,153 - - Due to other funds 1,403,855 - - Due to other taxing agencies 542,320 - - Unearned revenue - other 5,010 - - Accrued compensated absences 171,458 - - Total liabilities 4,403,106 154,000 - Deferred Inflows of Resources Unavailable revenue-property taxes 6,368,341 - - Fund Balances: Nonspendable Inventory - - - Restricted for: Highways and streets - - - Public safety - - Capital improvements - - 19,779,154 Committed for:Capital improvements - 3,655,121 - Pension reserve 670,365 - - Assigned for: Public safety - - - Debt service - - - Capital improvements - - - Unassigned: General Fund 21,538,628 - - Total fund balances 22,208,993 3,655,121 19,779,154 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES 32,980,440$ 3,809,121$ 19,779,154$ See accompanying notes to the basic financial statements. -33- Special Revenue Fund Investment CITY OF PADUCAH, KENTUCKY BALANCE SHEET GOVERNMENTAL FUNDS JUNE 30, 2021 General Debt Capital Service Improvements Fund 5,218,673$ 1,005,449$ 1,044,194$ 22,679,692$ 1,500,000 500,000 - 27,249,987 291,946 - 336,495 8,406,257 449,594 - - 708,572 - 3,158 - 52,159 - - - 6,417,702 376,339 - - 376,339 - - - - - - 1,403,855 7,836,552$ 1,508,607$ 1,380,689$ 67,294,563$ 1,088,563$ -$ 237,702$ 2,216,575$ - - 55,912 1,600,065 - - - 1,403,855 - - - 542,320 800 - - 5,810 - - - 171,458 1,089,363 - 293,614 5,940,083 - - - 6,368,341 376,339 - - 376,339 - - 563,002 563,002 - - 196,957 196,957 - - - 19,779,154 - - - 3,655,121 - - - 670,365 - - 327,116 327,116 - 1,508,607 - 1,508,607 6,370,850 - - 6,370,850 - - - 21,538,628 6,747,189 1,508,607 1,087,075 54,986,139 7,836,552$ 1,508,607$ 1,380,689$ 67,294,563$ -34- Nonmajor Governmental Governmental Total FundsFunds Exhibit 4 Total fund balance - total governmental funds 54,986,139$ Amounts reported for governmental activities in the Statement of Net Position are different because: 209,368 4,077,127 27,126 66,224,431 173,414 (3,027,911) 7,461,097 (1,355,805) 10,694,443 13,945,238 See accompanying notes to the basic financial statements. (Continued) -35- Deferred refunding costs and deferred pension activity in governmental activities are not current financial resources or payables and,therefore, are not reported in the governmental funds balance sheet: Capital assets used in governmental activities are not current financial resources and,therefore, are not reported in the governmental funds balance sheet.This amount includes capital assets of Internal Service Funds. Deferred refunding costs Deferred pension related inflows Deferred OPEB related inflows Deferred OPEB related outflows Deferred pension related outflows CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION Delinquent property taxes receivable are not reported in the governmental funds balance sheet since they are not considered "available" revenues. Interest receivable on the long-term notes receivable is not reported on the governmental funds balance sheet since neither the note receivable nor the interest is available to pay current period expenditures. JUNE 30, 2021 The long-term notes receivable are not reported in the governmental funds balance sheet since they are not available to pay current period expenditures. Exhibit 4 (Continued) (2,071,977)$ (399,645) $ 2,331,664 128,999,868 (131,331,532) 8,578,686$ (335,177) (594,804) 7,648,705 NET POSITION OF GOVERNMENTAL ACTIVITIES 13,314,980$ See accompanying notes to the basic financial statements. JUNE 30, 2021 Long-term pensions,OPEB,bonds and notes of ($131,331,532)are not due and payable in the current period and,therefore,they are not reported in the governmental funds balance sheet.The long-term pensions, OPEB, bonds and notes are: CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION The portion of accrued compensated absences that are not due and payable in the current period, and therefore,not reported in the governmental funds balance sheet. Accrued interest payments on debt are not due and payable in the current period and,therefore, are not reported in the governmental funds balance sheet. -36- Due within one year Due after one year Current assets Net amount allocated to Internal service funds are used by management to charge the costs of certain activities,such as insurance and fleet management,to individual funds. The assets and liabilities of the Internal Service Funds (net of amount allocated to business-type activities)not included in other reconciling items are: Current liabilities business-type activities Exhibit 5 General Investment Bond Revenues:Fund Fund Fund Taxes 8,219,381$ -$ -$ Licenses 27,457,182 5,414,682 - Charges for services 599,199 - - Intergovernmental - - - Grants 3,298,308 - - Interest 164,745 - 125,240 Property upkeep, rentals, sales and other 1,108,053 - - Total revenues 40,846,868 5,414,682 125,240 Expenditures: Current operations: General government 5,448,505 - - Public safety 19,681,771 - - Public service 4,988,813 - - Parks and recreation 2,945,053 - - Planning and development - 1,073,622 - Intergovernmental and other 1,393,692 - - Capital outlay - - - Debt service: Principal requirement - - - Debt issuance costs - - 49,076 Interest requirement - - 3,944 Total expenditures 34,457,834 1,073,622 53,020 Excess (deficiency) of revenues over expenditures 6,389,034 4,341,060 72,220 Other Financing Sources (Uses): Refunding debt issued - - 3,020,000 Issuance of notes payable - - Payment to refunded bond escrow agent - - (3,187,734) Premium on debt issued - - 232,710 Discount on debt issued - - (11,955) Transfers in 1,498,177 154,000 - Transfers out (5,322,851) (3,774,226) (323,229) Total other financing sources (uses)(3,824,674) (3,620,226) (270,208) Net change in fund balances 2,564,360 720,834 (197,988) Fund balances - beginning 19,644,633 2,934,287 19,977,142 Fund balances - ending 22,208,993$ 3,655,121$ 19,779,154$ See accompanying notes to the basic financial statements. -37- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 Special Revenue General Debt Capital Service Improvements Fund -$ -$ 1,555,520$ 9,774,901$ - - - 32,871,864 - - 323,756 922,955 26,250 1,286,147 494,042 1,806,439 1,041,306 - 225,734 4,565,348 - 16,160 6,787 312,932 512,623 1,937,723 591,984 4,150,383 1,580,179 3,240,030 3,197,823 54,404,822 - - - 5,448,505 - - 2,060,063 21,741,834 - - 1,018,158 6,006,971 - - - 2,945,053 - - 1,409,319 2,482,941 - - - 1,393,692 4,499,609 - - 4,499,609 - 3,575,792 - 3,575,792 - - - 49,076 - 1,180,978 - 1,184,922 4,499,609 4,756,770 4,487,540 49,328,395 (2,919,430) (1,516,740) (1,289,717) 5,076,427 - - - 3,020,000 48,236 - - 48,236 - - - (3,187,734) - - - 232,710 - - - (11,955) 5,019,015 2,807,092 1,504,211 10,982,495 (38,336) (1,054,000) (395,676) (10,908,318) 5,028,915 1,753,092 1,108,535 175,434 2,109,485 236,352 (181,182) 5,251,861 4,637,704 1,272,255 1,268,257 49,734,278 6,747,189$ 1,508,607$ 1,087,075$ 54,986,139$ -38- Governmental Total FundsFunds Nonmajor Governmental Exhibit 6 Net change in fund balances - total governmental funds 5,251,861$ Amounts reported for governmental activities in the Statement of Activities are different because: 4,056,766 (965,824) (1,038) (7,371,945) (3,068,236) (2,098,436) (3,663,104) See accompanying notes to the basic financial statements.(Continued) -39- The payments of pension and OPEB contributions require the use of current financial resources and,therefore, are reported as expenditures in governmental funds.However,the current year payments are deferred outflows of resources in the government-wide statements and accrued pension and OPEB expenses are recorded when incurred. Proceeds of the issuance of debt provides current financial resources and is reported as an other financing source in governmental funds. Payments on property taxes recognized as revenues when received in the governmental funds and as levied in the government-wide statements.This is the amount of cash collections that exceeded accrued property tax revenues. Only the loss on the disposal of capital assets is reported in the Statement of Activities,whereas in the governmental funds, the proceeds from the sale increases financial resources.Thus, the change in net position differs by the net book value of capital assets disposed. CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2021 Collections on long-term notes receivables and related interest receivable are revenues in the government funds when collected. Governmental funds report capital outlays as expenditures.However,in the Statement of Activities,the cost of those assets is allocated over their estimated useful lives as depreciation expense.This is the capitalized amount of capital outlays in the current period. This amount includes Internal Service Fund's capital outlays of $1,611,439. Depreciation expense on capital assets is reported in the government-wide Statement of Activities and Changes in Net Position, but does not require the use of current financial resources. Therefore, depreciation expense is not reported as an expenditure in governmental funds. This amount includes Internal Service Funds' depreciation expense of $964,295. Exhibit 6 (Continued) 6,715,792$ (70,247) (121,071) (150,404) 58,337$ 35,297 Capital Outlays (1,611,439) 964,295 (553,510) CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES (2,039,396)$ See accompanying notes to the basic financial statements. RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND Governmental funds report the effect of bond premiums,discounts and refunding costs when debt is issued, whereas these amounts are deferred and amortized in the Statement of Activities. TO THE STATEMENT OF ACTIVITIES Long-term accrued compensated absences do not require the use of current financial resources and,therefore, are not reported as expenditures in governmental funds. Principal payments of debt and payment to escrow agent for refunding require the use of current financial resources and,therefore, are reported as expenditures in governmental funds.However,these payments of debt do not affect net position in the government-wide Statement of Activities. Accrued interest payments on debt do not require the use of current financial resources. Interest expense is reported net of the change in accrued interest payable in the government-wide Statement of Activities. CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY -40- Internal service funds are used by management to charge the costs of certain activities,such as insurance and fleet management,to individual funds. The net revenue of the Internal Service Funds is reported with governmental activities net of the amount allocated to business-type activities and depreciation expense. These amounts are as follows: Change in net position business-type activities Depreciation expense Net of amount allocated to Exhibit 7 Variance with Final Budget Positive Original Final (Negative) Revenues: Taxes: Real and personal, current year 6,398,000$ 6,398,000$ 6,683,748$ 285,748$ Real and personal, prior year 0 0 28,953 28,953 Franchise 170,000 170,000 334,487 164,487 Bank taxes 355,000 355,000 391,897 36,897 In lieu of tax payment 314,000 314,000 315,187 1,187 Penalty, interest and advertising 55,000 55,000 68,251 13,251 Paducah Junior College tax collections - - 396,858 396,858 Total taxes 7,292,000 7,292,000 8,219,381 927,381 Licenses: Business licenses 3,800,000 3,800,000 4,530,125 730,125 Employee earnings 14,400,000 14,400,000 16,649,670 2,249,670 Cable franchise fees 306,000 306,000 345,696 39,696 Penalties 215,000 215,000 139,705 (75,295) Alcoholic beverages 157,000 157,000 80,105 (76,895) Insurance premium tax 4,800,000 4,800,000 5,819,896 1,019,896 Building permits 165,000 165,000 134,662 (30,338) Electrical permits 40,000 40,000 49,155 9,155 Zoning change fees 7,000 7,000 9,984 2,984 Miscellaneous building and electrical fees 5,000 5,000 4,620 (380) Payroll tax sharing with County (329,000) (329,000) (306,436) 22,564 Total licenses 23,566,000 23,566,000 27,457,182 3,891,182 Charges for services: Tax collection fee 202,500 202,500 222,099 19,599 Administrative charge 315,000 315,000 317,500 2,500 Base court revenue 35,000 35,000 24,230 (10,770) Recreation fees 115,000 115,000 35,370 (79,630) Total charges for services 667,500 667,500 599,199 (68,301) See accompanying notes to the basic financial statements.(Continued) ActualBudgeted Amounts -41- CITY OF PADUCAH, KENTUCKY GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2021 Amounts STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit 7 (Continued) Variance with Final Budget Actual Positive Original Final Amounts (Negative) Grants: Police State Incentive 415,000$ 415,000$ 377,961$ (37,039)$ Fire State Incentive 398,000 398,000 359,106 (38,894) Police supplemental grants 30,000 30,000 2,354,960 2,324,960 Other grants - - 206,281 206,281 Total grants 843,000 843,000 3,298,308 2,455,308 Interest 163,000 163,000 164,745 1,745 Other: Property rent and sales 722,162 722,162 713,015 (9,147) Property upkeep and maintenance 120,965 120,965 86,728 (34,237) E911 - GIS 33,060 33,060 33,060 - Miscellaneous 145,000 154,855 275,250 120,395 Total other 1,021,187 1,031,042 1,108,053 77,011 Total revenues 33,552,687 33,562,542 40,846,868 7,284,326 Expenditures: General government: General administration: Mayor and Commissioners 258,440 255,100 221,124 33,976 City Manager 831,545 881,585 778,027 103,558 City Clerk 429,745 436,140 432,595 3,545 Corporate Counsel 173,090 162,960 157,986 4,974 Non-departmental 1,067,460 861,163 898,078 (36,915) Memberships and contingency 6,000 5,865 4,139 1,726 Civic beautification - 3,000 1,177 1,823 Total general administration 2,766,280 2,605,813 2,493,126 112,687 Finance: Finance administration 264,650 247,620 242,006 5,614 Accounting and payroll 412,280 427,495 406,889 20,606 Revenue collection 463,375 465,190 444,753 20,437 Total finance 1,140,305 1,140,305 1,093,648 46,657 See accompanying notes to the basic financial statements.(Continued) CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN Budgeted Amounts GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2021 FUND BALANCE - BUDGET AND ACTUAL -42- Exhibit 7 (Continued) Variance with Final Budget Actual Positive General government:Original Final Amounts (Negative) Planning: Administration 234,350$ 228,655$ 226,188$ 2,467$ Planning 382,280 426,270 423,257 3,013 Total planning 616,630 654,925 649,445 5,480 Radio and rental property 193,565 193,565 87,658 105,907 Human rights 17,025 17,025 11,276 5,749 Information systems 705,020 751,975 746,921 5,054 Human resources/risk management 356,360 371,105 366,431 4,674 Total general government 5,795,185 5,734,713 5,448,505 286,208 Public safety: Police: Police administration 1,254,190 1,215,895 1,149,608 66,287 Patrol 7,391,730 7,241,945 7,239,306 2,639 Investigations 2,155,455 2,171,990 2,106,219 65,771 Total police 10,801,375 10,629,830 10,495,133 134,697 Fire: Fire administration 584,355 601,920 589,634 12,286 Suppression 7,405,390 7,396,310 7,315,891 80,419 Prevention and inspection 1,146,630 1,114,720 1,091,271 23,449 Training 176,870 189,950 189,842 108 Total fire 9,313,245 9,302,900 9,186,638 116,262 Total public safety 20,114,620 19,932,730 19,681,771 250,959 Public service: Public works: Street maintenance 2,356,395 2,332,910 2,092,109 240,801 Street lighting 795,000 795,000 732,008 62,992 Facility maintenance 1,095,815 1,089,580 952,704 136,876 Total public works 4,247,210 4,217,490 3,776,821 440,669 See accompanying notes to the basic financial statements.(Continued) STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CITY OF PADUCAH, KENTUCKY Budgeted Amounts GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2021 -43- Exhibit 7 (Continued) Variance with Final Budget Actual Positive Public service:Original Final Amounts (Negative) Engineering services: Engineering services 558,370$ 583,305$ 574,528$ 8,777$ Flood control 899,920 874,985 637,465 237,520 Total engineering services 1,458,290 1,458,290 1,211,993 246,297 Total public service 5,705,500 5,675,780 4,988,814 686,966 Parks and recreation: Parks and recreation administration 756,660 824,440 806,752 17,688 Grounds maintenance 1,261,800 1,387,700 1,326,268 61,432 Pools and recreation programs 1,278,495 1,023,970 812,033 211,937 Total parks and recreation 3,296,955 3,236,110 2,945,053 291,057 Intergovernmental and other: Cable authority 88,570 88,570 85,459 3,111 Intergovernmental expense - - 396,858 (396,858) Donated assets - - 911,375 (911,375) Total intergovernmental and other 88,570 88,570 1,393,692 (1,305,122) Total expenditures 35,000,830 34,667,903 34,457,835 210,068 Excess (deficiency) of revenues over expenditures (1,448,143) (1,105,361) 6,389,033 7,494,394 Other financing sources (uses): Transfers in 1,005,000 1,998,338 1,498,177 (500,161) Transfers out (1,868,855) (5,204,975) (5,322,850) (117,875) Total other financing sources (uses)(863,855) (3,206,637) (3,824,673) (618,036) Net change in fund balance (2,311,998) (4,311,998) 2,564,360 6,876,358 Fund balance - beginning 19,644,633 19,644,633 19,644,633 - Fund balance - ending 17,332,635$ 15,332,635$ 22,208,993$ 6,876,358$ See accompanying notes to the basic financial statements. STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL -44- CITY OF PADUCAH, KENTUCKY Budgeted Amounts GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2021 Exhibit 8 Variance with Final Budget Positive Original Final (Negative) Revenues: Licenses: Employee earnings 4,800,000$ 4,800,000$ 5,414,682$ 614,682$ Total licenses 4,800,000 4,800,000 5,414,682 614,682 Total revenues 4,800,000 4,800,000 5,414,682 614,682 Expenditures: General government: Planning and development: Economic development 989,250 1,088,250 1,073,622 14,628 Total expenditures 989,250 1,088,250 1,073,622 14,628 Excess (deficiency) of revenues over expenditures 3,810,750 3,711,750 4,341,060 629,310 Other financing sources (uses): Transfers in - - 154,000 154,000 Transfers out (4,124,310) (4,179,310) (3,774,226) 405,084 Total other financing sources (uses)(4,124,310) (4,179,310) (3,620,226) 559,084 Net change in fund balance (313,560) (467,560) 720,834 1,188,394 Fund balance - beginning 2,934,287 2,934,287 2,934,287 - Fund balance - ending 2,620,727$ 2,466,727$ 3,655,121$ 1,188,394$ See accompanying notes to the basic financial statements. ActualBudgeted Amounts -45- Amounts CITY OF PADUCAH, KENTUCKY SPECIAL REVENUE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2021 STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit 9 Variance with Final Budget Positive Original Final Actual (Negative) Revenues: Grants -$ -$ -$ -$ Interest 110,500 110,500 125,240 14,740 Total revenues 110,500 110,500 125,240 14,740 Expenditures: Debt issuance costs - - 49,076 (49,076) Interest and fiscal requirement - - 3,944 (3,944) Capital outlay 51,000 51,000 - 51,000 Total expenditures 51,000 51,000 53,020 (2,020) Excess (deficiency) of revenues over expenditures 59,500 59,500 72,220 12,720 Other Financing Sources (Uses): Refunding debt issued - - 3,020,000 3,020,000 Payment to refunded bond escrow agent - - (3,187,734) (3,187,734) Premium on debt issued - - 232,710 232,710 Discount on debt issued - - (11,955) (11,955) Transfers in - - - - Transfers out (19,705,000) (50,000) (323,229) (273,229) Total other financing sources (uses)(19,705,000) (50,000) (270,208) (220,208) Net change in fund balance (19,645,500)$ 9,500$ (197,988) (207,488)$ Fund balance, July 1, 2020 19,977,142 FUND BALANCE, JUNE 30, 2021 19,779,154$ See accompanying notes to the basic financial statements. -46- FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY SPECIAL REVENUE BOND FUND STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Budgeted Amounts Exhibit 10 Nonmajor Solid Enterprise Current Assets:Waste Funds Totals Cash and cash equivalents 2,448,674$ 425,386$ 2,874,060$ 4,916,253$ Investments 1,500,000 - 1,500,000 3,000,000 Accounts receivable 587,985 - 587,985 84,817 Interest receivable 7,551 - 7,551 - Prepaid expenses - - - 515,360 Inventory - 12,659 12,659 62,256 Total current assets 4,544,210 438,045 4,982,255 8,578,686 Noncurrent Assets: Net capital assets: Land 68,886 - 68,886 - Depreciable capital assets 1,945,811 79,426 2,025,237 3,917,723 Total noncurrent assets 2,014,697 79,426 2,094,123 3,917,723 Total assets 6,558,907 517,471 7,076,378 12,496,409 Deferred Outflows of Resources: Deferred pension related outflows 465,938 20,857 486,795 148,145 Deferred OPEB related outflows 430,299 24,435 454,734 135,171 Total deferred outflows of resources 896,237 45,292 941,529 283,316 Current Liabilities: Voucher and accounts payable 138,805 61,871 200,676 235,229 Accrued payroll and payroll taxes 42,758 591 43,349 17,071 Accrued compensated absences 112,275 723 112,998 25,129 Unearned revenue - 64,814 64,814 22,643 Due to other funds - - - - Total current liabilities 293,838 127,999 421,837 300,072 Noncurrent Liabilities: Net pension liability 2,997,846 170,242 3,168,088 941,723 Net other post employment benefits liability 943,550 53,582 997,132 296,400 Landfill post-closure costs 2,062,500 - 2,062,500 - Accrued compensated absences 24,426 6,505 30,931 35,105 Total noncurrent liabilities 6,028,322 230,329 6,258,651 1,273,228 Total liabilities 6,322,160 358,328 6,680,488 1,573,300 Deferred Inflows of Resources Deferred pension related inflows 12,820 728 13,548 4,027 Deferred OPEB related inflows 174,341 9,900 184,241 54,768 Total deferred inflows of resources 187,161 10,628 197,789 58,795 Net invested in capital assets 2,014,697 79,426 2,094,123 3,917,723 Restricted - Housing - 105,322 105,322 - Unrestricted (1,068,874) 9,059 (1,059,815) 7,229,907 TOTAL NET POSITION 945,823$ 193,807$ 1,139,630 11,147,630$ Reconciliation to government-wide statements of net position: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds 594,804 NET POSITION OF BUSINESS-TYPE ACTIVITIES 1,734,434$ See accompanying notes to the basic financial statements. -47- Business-type Activities ASSETS LIABILITIES NET POSITION Funds Service Internal Governmental Activities CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2021 Exhibit 11 Nonmajor Solid Enterprise Operating Revenues:Waste Funds Totals Charges for services - internal -$ 41,068$ 41,068$ 5,971,425$ Charges for services - external 4,560,891 - 4,560,891 278,495 Miscellaneous 160 550 710 - Total operating revenues 4,561,051 41,618 4,602,669 6,249,920 Operating Expenses: Cost of sales and service 4,107,684 2,044,266 6,151,950 5,538,831 Depreciation and amortization 662,975 10,021 672,996 964,295 Total operating expenses 4,770,659 2,054,287 6,824,946 6,503,126 Operating income (loss)(209,608) (2,012,669) (2,222,277) (253,206) Nonoperating Revenues (Expenses): Grants - program purpose 62,715 2,055,500 2,118,215 - Interest and investment income 27,164 61 27,225 55,491 Gain (loss) on disposal of property and equipment 59,348 - 59,348 45,835 Total nonoperating revenues (expenses)149,227 2,055,561 2,204,788 101,326 Income (loss) before contributions and transfers (60,381) 42,892 (17,489) (151,880) Contributions and Transfers: Transfers in - 94,283 94,283 275,217 Transfers out (363,859) (14,820) (378,679) (65,000) Total contributions and transfers (363,859) 79,463 (284,396) 210,217 Change in net position (424,240) 122,355 (301,885) 58,337 Net position - beginning 1,370,063 71,452 11,089,293 Net position - ending 945,823$ 193,807$ 11,147,630$ Reconciliation to government-wide statements of net position: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds (35,297) CHANGE IN NET POSITION OF BUSINESS-TYPE ACTIVITIES (337,182)$ See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2021 Governmental Internal Service Funds -48- ActivitiesBusiness-type Activities Exhibit 12 Nonmajor Solid Enterprise Cash Flows from Operating Activities:Waste Funds Totals Cash received from customers 4,512,375$ 41,152$ 4,553,527$ -$ Cash received from interfund services provided - - - 6,610,173 Payments to suppliers (2,598,125) - (2,598,125) 338,574 Payments to employees (739,941) (56,464) (796,405) (208,901) Claims paid - - - (3,959,959) Payments to internal service funds (483,562) (3,252) (486,814) - Other receipts 160 466 626 - Other payments - (2,045,371) (2,045,371) (811,068) Net cash provided (used) by operating activities 690,907 (2,063,469) (1,372,562) 1,968,819 Cash Flows from Noncapital Financing Activities: Grants - program purpose 62,715 2,078,828 2,141,543 - Transfers from other funds - 94,283 94,283 275,217 Transfers to other funds (363,859) (14,820) (378,679) (65,000) Net cash provided (used) by noncapital financing activities (301,144) 2,158,291 1,857,147 210,217 Cash Flows from Capital and Related Financing Activities: Purchase of capital assets (301,567) - (301,567) (1,618,077) Proceeds from sale of capital assets 59,348 - 59,348 45,835 Net cash provided (used) by capital and related financing activities (242,219) - (242,219) (1,572,242) Cash Flows from Investing Activities: Interest on cash and investments 21,066 61 21,127 55,491 Purchase of investments - - - - Net cash provided (used) by investing activities 21,066 61 21,127 55,491 Net increase (decrease) in cash and cash equivalents 168,610 94,883 263,493 662,285 Cash and cash equivalents, July 1, 2020 2,280,064 330,503 2,610,567 4,253,968 CASH AND CASH EQUIVALENTS, JUNE 30, 2021 2,448,674$ 425,386$ 2,874,060$ 4,916,253$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) (209,608)$ (2,012,669)$ (2,222,277)$ (253,206)$ Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization 662,975 10,021 672,996 964,295 Change in assets and liabilities: Receivables (48,516) - (48,516) 361,383 Prepaid expenses - - - 684,640 Inventories - 1,198 1,198 (9,433) Unearned revenues - 23,328 23,328 - OPEB obligation and related deferrals 229,769 (4,371) 225,398 19,190 Pension obligation and related deferrals 30,255 (16,618) 13,637 104,083 Account and accrued payables 26,032 (64,358) (38,326) 97,867 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 690,907$ (2,063,469)$ (1,372,562)$ 1,968,819$ See accompanying notes to the basic financial statements. CITY OF PADUCAH, KENTUCKY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2021 -49- Governmental Activities Internal Service Business-type Activities Funds Exhibit 13 Private- Pension purpose Funds Trusts Cash and cash equivalents 220$ 45,642$ Receivables: Interest 2,066 - Other - - Investments at fair value Money market funds 111,724 - Common stock 2,109,063 - Mutual funds 2,963,923 1,308,348 Total assets 5,186,996 1,353,990 Voucher and accounts payable 48 - Payroll taxes and withholdings payable - - Total liabilities 48 - Net position restricted for pensions 5,186,948$ Held in trust for other purposes 1,353,990$ See accompanying notes to the basic financial statements NET POSITION Primary Government -50- ASSETS LIABILITIES CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION FIDUCIARY FUNDS JUNE 30, 2021 Exhibit 14 Private- Pension purpose Additions:Funds Trusts Contributions: Employer 362,475$ -$ Plan members - - Private donations - 4,080 Total contributions 362,475 4,080 Investment income: Net increase (decrease) in fair value of investments 1,095,790 162,022 Interest and dividends 69,462 141,580 Net investment income 1,165,252 303,602 Total additions 1,527,727 307,682 Deductions: Benefits 990,862 - Capital outlay - 97,762 Administrative expenses 46,053 15,341 Total deductions 1,036,915 113,103 Change in net position 490,812 194,579 Net position - beginning 4,696,136 1,159,411 Net position - ending 5,186,948$ 1,353,990$ See accompanying notes to the basic financial statements. -51- STATEMENT OF CHANGES IN NET POSITION CITY OF PADUCAH, KENTUCKY FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY NOTES TO THE FINANCIAL STATEMENTS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 - 52 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: General Statement The City of Paducah (City) complies with generally accepted accounting principles (GAAP) as applied to governmental units. This requires the use of the accrual basis of accounting for government-wide financial statements and proprietary funds financial statements and a modified accrual basis of accounting for the governmental funds financial statements. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The financial reporting entity, basis of accounting, and other significant policies employed by the City are summarized as follows: Financial Reporting Entity The City operates under a City Manager form of government. The Board of Commissioners consists of a Mayor and four Commissioners elected at large by the citizens on a non-partisan basis. As required by generally accepted accounting principles, the financial statements of the reporting entity include those of the City of Paducah (the primary government) and its component units. The component units discussed below are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Units Police and Firefighters’ Pension Fund – This retirement fund was established for the benefit of the police and firemen of the City. It is administered by a Board of Trustees consisting of the Mayor, City Finance Director and representatives of the Police and Fire Departments. The Board is authorized to establish benefit levels and to approve actuarial assumptions used in the determination of contribution levels. The pension fund is reported as a fiduciary fund and does not issue separate financial statements. Discretely Presented Component Units The component unit column in the government-wide financial statements includes the financial data of the City’s other component unit. It is reported in a separate column to emphasize that it is legally separate from the City. The following component unit is included in the reporting entity because of its financial relationship with the City; and, the City is able to impose its will on the organization. Paducah Water Works – The City of Paducah Water Works Commission is appointed by the Mayor and City Commission. The rates for user charges and bond issuance authorizations are subject to approval by the City Commission of the City of Paducah. Complete financial statements of the individual component unit can be obtained from its respective administrative office at the following location: Paducah Water Works 1801 N. 8th Street Paducah, Kentucky 42003 (Continued) - 53 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Related Organizations City officials are also responsible for appointing the members of boards of other organizations; but, the City’s accountability for these organizations do not extend beyond appointing authority. The organizations listed below are notable related organizations which have not been included as component units in the City’s report. Transit Authority of the City of Paducah – The Transit Authority is a legally separate entity that provides for transit operations both within and outside the City. The Transit Authority is not financially accountable to the City. Paducah Housing Authority – The Paducah Housing Authority (PHA) is a legally separate entity that provides for construction, operation, and management of low-income housing projects within the City. PHA is a legally separate entity and is not financially accountable to the City. Paducah Power System – The Paducah Power System (PPS) is a legally separate entity that provides electric utilities to residents in the Paducah area. PPS is not financially accountable to the City. Joint Sewer Agency – As of July 1, 1999, the assets and liabilities of the Wastewater/Stormwater Fund were transferred to the Paducah-McCracken County Joint Sewer Agency pursuant to a municipal order dated June 29, 1999. The Paducah-McCracken County Joint Sewer Agency is a legally separate entity and is not financially accountable to the City. Forest Hills Village, Inc. – The Corporation’s purpose is to manage City of Paducah properties known as “Forest Hills Housing Development”. The City and Corporation have a lease agreement detailing the terms and conditions of operations. Forest Hills Village, Inc. is a legally separate entity and is not financially accountable to the City. Paducah Junior College, Incorporated (PJC) – The College is a part of the University of Kentucky’s Community College System which is now administered by the Kentucky Community and Technical College System. The Community College System receives student tuition, fees and other related income that provides the financing for the operational budget of the College. A tax levied and collected by the City is a primary revenue source for the College. These funds, as well as gifts and grants made to the College, may be used for the acquisition or improvement of property or to finance programs beyond the level of those normally provided by community colleges in the University of Kentucky system. PJC is a legally separate entity and is not financially accountable to the City. 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. (Continued) - 54 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Account Policies: Basis of Presentation Government-wide Financial Statements The Statement of Net Position and Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditure or expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding total for all governmental and enterprise funds combined. The funds of the financial reporting entity are described below: Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balance of current financial resources. The City has presented the following major governmental funds: General Fund – To account for resources traditionally associated with governments which are not required to be accounted for in another fund. Special Revenue Investment Fund – To account for restricted funds from employee license fee used for economic development, community redevelopment and infrastructure capital investments within Paducah. Special Revenue Bond Fund – To account for restricted funds from bond issues used for infrastructure capital investments within Paducah. General Capital Improvements – To account for the acquisition or construction of major capital projects other than those financed by proprietary fund operations and special assessments. Debt Service Fund – To account for the accumulation of resources and payment of bond and note principal and interest, and capital lease activity. The City has presented the following major proprietary fund: Solid Waste Fund – To account for the provision of refuse services to the residents of the City. (Continued) - 55 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Account Policies: Basis of Presentation Fund Financial Statements Additionally, the City reports the internal service funds which are used to account for the fleet management services, property and casualty insurance, and self-funded health insurance provided to departments of the City. Fiduciary funds report resources held in trust. 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 Employees' 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 in accordance with maintenance trust agreements. Measurement Focus Measurement focus is a term used to describe “which” transactions are recorded within the various financial statements. Basis of accounting refers to “when” transactions are recorded regardless of the measurement focus applied. On the government-wide Statement of Net Position and the Statement of Activities, both governmental and business-like activities are presented using the economic resources measurement focus as defined in item b. below. In the fund financial statements, the “current financial resources” measurement focus or the “economic resources” measurement focus is used as appropriate: a. All governmental funds utilize a “current financial resources” measurement focus. Only current financial assets and liabilities are generally included on their balance sheets. Their operating statements present sources and uses of available spendable financial resources during a given period. These funds use fund balance as their measure of available spendable financial resources at the end of the period. b. The proprietary, pension, and private-purpose trust funds and financial statements of City component units utilize an "economic resources" measurement focus. The accounting objectives of this measurement focus are the determination of operating income, changes in net position (or cost recovery), financial position, and cash flows. All assets and liabilities (whether current or noncurrent) associated with their activities are reported. Proprietary, pension, and private-purpose trust fund equity is classified as net position. c. Custodial funds are not involved in the measurement of results of operations; therefore, measurement focus is not applicable to them. Basis of Accounting In the government-wide Statement of Net Position and Statement of Activities, both governmental and business-type activities are presented using the accrual basis of accounting generally including the reclassification or elimination of internal activity (between or within funds). Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. (Continued) - 56 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Account Policies: Basis of Accounting In the fund financial statements, governmental funds are presented on the modified accrual basis of accounting. Under this modified accrual basis of accounting, revenues are recognized when “measurable and available.” Measurable means knowing or being able to reasonably estimate the amount. Available means collectible within the current period or within sixty days after year end. Expenditures (including capital outlay) are recorded when the related fund liability is incurred, except for general obligation bond principal and interest which are reported when due. Custodial funds are presented using the accrual basis of accounting. All proprietary, pension, and private-purpose funds utilize the accrual basis of accounting. Under the accrual basis of accounting, revenues are recognized when earned and expenses are recorded when the liability is incurred or economic asset used. Revenues – Exchange and Non-Exchange Transactions Revenue resulting from exchange transactions, in which each party gives and receives essentially equal value, is recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenue is recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the City, available means expected to be received within sixty days of year end. Non-exchange transactions, in which the City receives value without directly giving equal value in return, include employee license taxes, property taxes, grants, entitlements, and donations. The City considers property taxes as available if they are collected within sixty days after year end. Revenue from grants, entitlements, and donations is recognized in the year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the year when use is first permitted, matching requirements, in which the City must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the City on a reimbursement basis. On a modified accrual basis, revenue from non-exchange transactions must also be available before it can be recognized. The revenues susceptible to accrual are taxes, intergovernmental, employer and employees’ contributions to trust funds, interest revenue, and charges for services. Permit revenues are not susceptible to accrual because generally they are not measurable until received in cash. Unearned revenue The City reports unearned revenue on its government-wide statement of net position and the fund financial statements. Unearned revenues arise when potential revenue does not meet both the "measurable” and “available” criteria for recognition in the current period. Unearned revenues also arise when resources are received by the City before it has a legal claim to them, as when grant monies are received prior to the incurrence of qualifying expenditures. In subsequent periods, when both revenue recognition criteria are met, or when the City has a legal claim to the resources, the liability for unearned revenue is removed and revenue is recognized. Allocation of Indirect Expenses The City allocates indirect expenses primarily comprised of fleet management services and various self- funded insurance coverage provided to departments and employees of the City. Allocations are charged to functions based on use by weighted-average methodology. (Continued) - 57 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Budgets and Budgetary Accounting The City legally adopts annual budgets for all governmental and proprietary funds except for Section Eight Housing Fund. The City follows these procedures in establishing the budgetary data reflected in these financial statements: 1. Prior to July, the City Manager submits to the City Commission a proposed operating budget for the fiscal year commencing on July 1. The operating budget includes proposed expenditures and the means of financing those. 2. Public hearings are conducted by the City to obtain taxpayer comments. 3. Prior to July, the budget is legally enacted through passage of an ordinance. 4. The City Manager is authorized to transfer budgeted amounts between departments and their line items; however, any revisions that alter the total expenditures must be approved by the City Commission. 5. Formal budgetary integration is employed as a management control device during the year; and, the budget is legally adopted. Budget amendments are also legally adopted. 6. The budget is adopted on the modified accrued basis of accounting. Encumbrance accounting, under which purchase orders, contracts, and other commitments for expenditures are recorded in order to reserve that portion of the applicable appropriation, is employed as an extension of formal budgetary integration in the General Fund, Special Revenue Funds, Debt Service Fund, and Capital Projects Funds. In accordance with generally accepted accounting principles (GAAP), encumbrances outstanding at year end are reported as reservations of fund balances since they do not constitute expenditures or liabilities. There are no encumbrances at June 30, 2021. Cash and Investments The City Commission adopted formal deposit and investment policies in January 2001. These policies apply to all City funds not contained in public trusts. The pension trust fund has investment policies separately approved by their oversight board. The private purpose trust has not adopted a deposit and investment policy. For the purpose of the Statement of Net Position, “cash and cash equivalents” includes all demand and savings accounts of the City. For the purpose of the proprietary fund Statement of Cash Flows, “cash and cash equivalents” include all demand and savings accounts and certificates of deposit with an original maturity of three months or less. Investments are reported at fair value which is determined using selected bases. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Managed funds, related to the pension and private purpose trust funds not listed on an established market, are reported at estimated fair value as determined by the respective fund managers based on quoted sales prices of the underlying securities. Cash deposits and certificates of deposit are reported at carrying amount which reasonably estimates fair value. Additional cash and investment disclosures are presented in Note 3. (Continued) - 58 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Receivables Major receivable balances for the governmental activities include property taxes, employee earnings taxes, business licenses, insurance premiums taxes, franchise taxes, grant revenue, and interlocal note receivables. Business-type activities report utilities and interest earnings as their major receivables. The government-wide statements also include general obligation notes receivable related to the general obligation bonds outstanding as described in Note 3. In the fund financial statements, receivables in governmental funds include revenue accruals such as franchise tax, employee earnings taxes, business licenses, insurance and grants, and other similar intergovernmental revenues since they are usually both measurable and available. Nonexchange transactions collectible but not available are deferred. Interest and investment earnings are recorded when earned only if paid within sixty days since they would be considered both measurable and available. Proprietary fund receivables include revenues earned at year end and not yet received. Utility accounts receivable and interest earnings compose the majority of proprietary fund receivables. Allowances for uncollectible accounts receivable are based upon historical trends and the periodic aging of accounts receivable. Interfund Receivables and Payables During the course of operations, numerous transactions occur between individual funds that may result in amounts owed between funds. Those related to goods and services type transactions are classified as “due to and from other funds.” Short-term interfund loans are reported as “interfund receivables and payables.” Long-term interfund loans (noncurrent portion) are reported as “advances from and to other funds.” Interfund receivables and payables between funds within governmental activities are eliminated in the Statement of Net Position. See Note 3 for details of interfund transactions, including receivables and payables, at year end. Inventories Inventory consists of expendable supplies and fuel of $62,256 held for consumption and re-sell and real property of $376,339 held for urban development. Inventory supplies are stated at cost on a first-in, first- out basis. Inventory property held for development are stated at the lower of cost or market. The cost is recorded as an expenditure at the time individual items are consumed or sold for urban development rather than when purchased. Capital Assets The accounting treatment of property, plant and equipment (capital assets) depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. (Continued) - 59 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Capital Assets Government-wide Statement In the government-wide financial statements, property, plant and equipment are accounted for as capital assets. All capital assets are valued at historical cost or estimated historical cost if actual is unavailable, except for donated capital assets and work of art capital assets received in a service concession arrangement which are recorded at their acquisition value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to June 30, 2004. Assets capitalized have an original cost of $500 or more prior to July 1, 1999, $2,500 or more after July 1, 1999, $3,000 or more after June 24, 2009 and $5,000 or more after June 30, 2016. Prior to July 1, 2002, governmental funds’ infrastructure assets were not capitalized. These assets have been valued at estimated historical cost. Capital assets of the primary government are depreciated over the estimated useful lives using the straight- line method. The estimated useful lives are as follows: Land improvements 10-30 Years Buildings 30 Years Building improvements 10-30 Years Infrastructure 10-30 Years Equipment 3-10 Years Furnishings and fixtures 5-7 Years Vehicles 7-10 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government-wide statements. Deferred Outflows/Inflows of Resources Government-wide Statement In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents the consumption of net position that applies to a future period(s) and will not be recognized as an outflow of resources (expense/expenditure) until then. The government has two items that qualify for reporting in the category. These are the deferred charge on refunding and deferred pension and other post- employment benefits (OPEB) related outflows reported in the statements of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred pension and OPEB related outflows result from pension and OPEB contributions subsequent to the measurement date of the pension and OPEB plans and various changes resulting from actuarial pension and OPEB measurement. The pension and OPEB contribution amounts are deferred and recognized as a component of the change in pension plan liability in the next measurement period. The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. (Continued) - 60 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Deferred Outflows/Inflows of Resources In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and will not be recognized as an inflow of resources (revenue) until that time. The City has two type of items reported in this category. These are property taxes levied during the fiscal year for the next fiscal year and inflows related to the City’s pension and OPEB plans that qualify for reporting in this category – deferred pension and OPEB related inflows. The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. A summary of change in deferred outflows/inflows of resources is as follows: Balance July 1, 2020 Additions Reductions Balance June 30, 2021 Governmental Activities Deferred outflows of resources Deferred charge on refunding $ 189,117 $ 47,734 $ (63,437)$ 173,414 Pensions: Deferred pension contributions $ 4,065,425 $ 4,342,499 $(4,065,425)$4,342,499 Differences between employer contributions and proportionate share of contributions 334,136 - (98,678) 235,458 Differences between expected and actual experience 2,295,528 1,609,423 (1,942,066)1,962,885 Change of assumptions 6,079,054 -(3,497,576)2,581,478 Difference between projected and actuarial earnings -3,110,798 (1,538,675)1,572,123 Pension related deferred outflows $ 12,774,143 $ 9,062,720 $(11,142,420)$ 10,694,443 Deferred inflows of resources Differences between employer contributions and proportionate share of contributions $ 1,248,009 $ - $ (600,414) $ 647,595 Differences between expected and actual experience 82,243 -(82,243)- Difference between projected and actuarial earnings 1,079,257 663,243 (1,034,290)708,210 Pension related deferred inflows $ 2,409,509 $ 663,243 $(1,716,947)$1,355,805 Other post-employment benefits (OPEB): Deferred outflows of resources Deferred OPEB contributions $1,299,562 $ 1,500,977 $ (1,299,562) $ 1,500,977 Differences between employer contributions and proportionate share of contributions 45,669 -(8,463)37,206 Differences between expected and actual experience - 1,973,995 (373,916) 1,600,079 Change of assumptions 4,803,384 885,177 (2,216,540)3,472,021 Difference between projected and actuarial earnings -1,660,571 (809,757)850,814 OPEB related deferred outflows $ 6,148,615 $ 6,020,720 $(4,708,238)$ 7,461,097 Deferred inflows of resources Differences between expected and actual experience $ 3,513,428 $ - $(983,303)$ 2,530,125 Change of assumptions 30,677 - (10,563) 20,114 Difference between projected and actuarial earnings 858,302 -(858,302)- Differences between employer contributions and proportionate share of contributions 599,018 -(121,346)477,672 OPEB related deferred inflows $ 5,001,425 $-$(1,973,514)$ 3,027,911 Deferred inflows of resources Unavailable revenues –property taxes $ 5,921,785 $ 6,118,977 $(5,921,785)$ 6,118,977 (Continued) - 61 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Deferred Outflows/Inflows of Resources A summary of change in deferred outflows/inflows of resources is as follows (continued): Business-Type Activities Pensions: Deferred outflows of resources Deferred pension contributions $ 204,993 $ 187,814 $(204,993)$ 187,814 Differences between employer contributions and proportionate share of contributions 43,714 -(26,722)16,992 Differences between expected and actual experience 77,479 71,601 (70,078)79,002 Change of assumptions 307,121 - (183,412) 123,709 Difference between projected and actuarial earnings -159,199 (79,921)79,278 Pension related deferred outflows $ 633,307 $ 418,614 $(565,126)$ 486,795 Deferred inflows of resources Differences between expected and actual experience $ 12,821 -(12,821)- Differences between employer contributions and proportionate share of contributions 16,296 - (2,748) 13,548 Difference between projected and actuarial earnings 48,916 -(48,916)- Pension related deferred inflows $78,033 $-$(64,485)$ 13,548 Other post-employment benefits (OPEB) Deferred outflows of resources Deferred OPEB contributions $ 66,137 $ 75,984 $(66,137)$ 75,984 Change of assumptions 214,701 25,774 (67,033) 173,442 Differences between expected and actual experience - 216,486 (49,887)166,599 Differences between employer contributions and proportionate share of contributions 7,120 - (1,554) 5,566 Difference between projected and actuarial earnings -64,850 (31,707)33,143 OPEB related deferred outflows $ 287,958 $ 383,094 $(216,318)$ 454,734 Deferred inflows of resources Differences between expected and actual experience $ 218,919 $ - $(52,190)$ 166,729 Change of assumptions 1,436 -(381)1,055 Difference between projected and actuarial earnings 32,481 - (32,481) - Differences between employer contributions and proportionate share of contributions 12,826 3,631 -16,457 OPEB related deferred inflows $ 265,662 $3,631$(85,052)$ 184,241 Fund Financial Statements The government has only one type of item, which arises only under a modified accrual basis of account, which qualifies for reporting as deferred inflows of resources. Accordingly, the item, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues for one source: property taxes. This amount is deferred and recognized as an inflow of resources in the period that the amount becomes available. (Continued) - 62 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Accrued Leave Accumulated unpaid vacation, sick pay, and other employee benefit amounts are recorded as long-term debt in the government-wide statements. The current portion of accrued compensated absences is estimated based on historical trends. In the fund financial statements, governmental funds report only the matured compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred. Accumulations for vacation pay are restricted to a maximum of 50 days and provide vesting rights upon completion of six months service. Accumulations for sick pay are restricted to a maximum of 150 days and provide payment to employees or beneficiaries for accumulations in excess of 50 days and up to 120 days upon death or retirement from City service. Qualified participants in the County Employees’ Retirement System, under certain circumstances, are eligible to convert accrued sick pay benefits into additional credit for years of service upon retirement. Long-Term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. All long-term debt to be repaid from governmental and business-type resources is reported as liabilities in the government-wide statements. The long-term debt consists primarily of bonds payable, notes payable, and accrued compensated absences. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principal and interest as expenditures. The accounting for proprietary funds is the same in the fund statements as it is in the government-wide statements. Equity Classifications Government-wide Statements Equity is classified as net position and displayed in three components: a. Net invested in capital assets – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net assets that do not meet the definition of “restricted” or “net invested in capital assets.” (Continued) - 63 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Fund Statements Governmental fund equity is classified as fund balance and displayed in five components: a. Nonspendable fund balance includes amounts that are not in a spendable form or are required to be maintained intact indefinitely. b. Restricted fund balance includes amounts that can be spent only for the specific purpose stipulated by creditors, grantors, contributors, or laws or regulations of other governments. c. Committed fund balance includes amounts that can be used only for the specific purposes determined by the City Commissioners through the approval of City ordinances. Commitments may be changed or lifted only by the City Commissioners making the same formal action that imposed the constraint originally. d. Assigned fund balance comprises the amounts intended to be used for a specific purpose. Intent can be expressed by the City Commissioners or the City Finance Officer, as stated in the Finance Department Accounting Policy (FIN-20). No formal action is required. e. Unassigned fund balance includes amounts that have not been assigned to other funds or restricted, committed, or assigned to a specific purpose within the General Fund. The General Fund is the only fund which may report a positive unassigned fund balance. In other governmental funds, it is not appropriate to report a positive unassigned fund balance if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When both restricted and unrestricted fund balances are available for use, it is the City's policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used. Proprietary fund equity is classified the same as in the government-wide statements. Interfund Transactions Interfund services provided and used are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. Program Revenues Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. (Continued) - 64 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Operating and Non-Operating Revenues and Expenses – Proprietary Funds Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. Operating expenses for the enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Expenditures/Expenses In the government-wide financial statements, expenses are classified by function for both governmental and business-type activities. In the fund financial statements, expenditures are classified as follows: Governmental Funds – by function: Current (further classified by character) Debt Service Capital Outlay Proprietary 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 laws and regulations and demonstration of its stewardship over City resources follows. Fund Accounting Requirements The City complies with all state and local laws and regulations requiring the use of separate funds. (Continued) - 65 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Revenue Restrictions The City has various restrictions placed over certain revenue sources from state or local requirements or contractual agreements. The primary restricted revenue sources include: Revenue Source Legal Restrictions of Use Section Eight Housing Choice Voucher Program Subsidize Rental Costs for Low- Income Families FEMA - Disaster Grants Debris Removal and Disaster Recovery Emergency Communication Revenue E-911 Emergency Services Transient Room Tax Debt Obligations Homeland Security Grant Program Homeland Security Enhancement Bond Proceeds Defeasance of debt and Capital Projects 25% of Employee Earning Tax Economic, Community and Capital Development For the year ended June 30, 2021, the City complied in all material respects with these revenue restrictions. Debt Restrictions and Covenants The City may not incur any indebtedness that would require payment from resources beyond the current fiscal year revenue without first obtaining voter approval. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the County Employees Retirement System (CERS) and additions to/deductions from fiduciary net position have been determined on the same basis as they are reported by the pensions. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Post-employment Benefits (OPEB) For purposes of measuring the liability, deferred outflows of resources and deferred inflows of resources related to OPEB, and OPEB expense, information about the fiduciary net position of the County Employees Retirement System (CERS) and additions to/deductions from CERS’s fiduciary net position have been determined on the same basis as they are reported by CERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value, except for money market investments and participating interest-earning investment contracts that have a maturity at the time of purchase of one year or less, which are reported at cost. (Continued) - 66 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Summary of Significant Accounting Policies: Subsequent Events In preparing these financial statements, management has evaluated events and transactions for potential recognition or disclosure through December 22, 2021, the date financial statements were available to be issued. Effect of COVID-19 Pandemic On March 11, 2020, the World Health Organization ("WHO") recognized COVID-19 as a global pandemic, prompting many national, regional, and local governments to implement preventative or protective measures, such as travel and business restrictions, temporary store closures, and wide-sweeping quarantines and stay-at-home orders. As a result, COVID-19 and the related restrictive measures have had a significant adverse impact upon many sectors of the economy. We believe the ultimate financial impact of the COVID-19 pandemic on the City is likely to be determined by factors which are uncertain, unpredictable and outside of the control of the City. The situation surrounding COVID-19 remains fluid, and if disruptions do arise, they could materially adversely affect future revenues. 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, 2021, are as follows: Description Date Assessment and enforceable lien January 1, 2020 Levy September 22, 2020 Face value amount payment dates 1st half by November 1, 2020 2nd half by February 1, 2021 Delinquent date - 10% penalty plus 1/2% per month 1st half - November 30, 2020 2nd half - February 28, 2021 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. (Continued) - 67 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: 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. 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, 2021, the City's only cash and cash equivalents were demand deposits. At year end, the carrying amount and the bank balance of the City's cash and cash equivalents were $30,515,868 and $31,270,607, respectively. Investment Policies City Policy Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Generally, the City's investing activities are managed under the custody of the City's Finance Director. Investing is performed in accordance with investment policies adopted by the City Commission complying with State Statutes. In accordance with the City's investment policy and the State Statutes, the City may invest funds temporarily in excess of operating needs in the following: Kentucky Revised Statutes (KRS 66.480) authorize the City to invest in: 1. Obligations of the U.S. Treasury, agencies, and instrumentalities, including obligations subject to repurchase agreements, provided delivery of obligations subject to repurchase agreements are held by the City or through an authorized agent; 2. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency; 3. Obligations of any corporation of the United States government; 4. Bonds or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and instrumentalities; 5. Certificates of deposit or other interest-bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized, to the extent uninsured, by any obligations permitted by section 41.240(4) of the Kentucky Revised Statutes; 6. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a national recognized rating agency. (Continued) - 68 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The three levels of the fair value hierarchy are as follows: Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities’ relationship to benchmark quoted prices. Level 3: Unobservable inputs – market data are not available and are developed using the best information available about the assumptions that market participants would use when pricing an asset or liability. The asset’s or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The City has the following fair value measurements as of June 30, 2021 : Weighted Fair Value/ Average Average Carrying Credit Quality/ Fair Value Maturity Types of Investments Amount Rating (1) Level 1 Level 2 Level 3 Years (2) Governmental and Business Funds Certificates of deposits $ 12,000,000 NR - $12,000,000 - 0.40 Money market 19,749,987 NR $19,749,987 - - NA TOTAL GOVERNMENTAL AND BUSINESS FUNDS $ 31,749,987 Fiduciary and Private Purpose Trust Funds Cash equivalents $ 111,724 NR $ 111,724 $ - $ - NA Common stock 2,109,062 NR 2,109,062 - - NA Mutual funds Bond 1,798,368 NR 1,798,368 - - 6.80 Equity 1,950,722 NR 1,950,722 - - NA International 523,181 NR 523,181 - NA TOTAL FIDUCIARY AND PRIVATE PURPOSE TRUST FUNDS $ 6,493,058 (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. (Continued) - 69 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: 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. 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. Pension Trust Policy Asset allocation guideline for the plan is as follows: PFPF Retirement Plan Minimum Target Maximum Equities 45% 55% 65% Fixed income 35% 45% 55% The retirement plan addresses credit risk and concentration of credit risk with a policy that prohibits investment of more than 5% of its assets in the securities of any one issuer with the exception of U.S. government. Policy further prohibits investment of more than 20% in any one market sector. No more than 10% of corporate debt securities in the fixed income portfolio may be rated below-investment grade. Commercial paper must be rated A1, P1. Interest rate risk is addressed by the policy requiring the plan manager(s) to maintain both diversification and a predictable and dependent source of current income. Fixed income investments are flexibly allocated among maturities of different lengths. Private Purpose Trust The private purpose trust does not have a formal investment policy. The City established the trust in accordance with Kentucky Revised Statutes. The trust provides for an investment manager who has full discretion of assets allocated to him subject to the provisions of the trust agreement. The trust invests in domestic and international mutual funds, fixed income securities, U.S. treasury securities, and cash and equivalents. (Continued) - 70 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Capital asset activity for the year ended June 30, 2021, was as follows: Balance Balance Primary Government: July 1, 2020 Additions Deductions June 30, 2021 Capital assets, not being depreciated: Land $10,385,388 $ 75,000 $ 36,700 $10,423,688 Construction-in-progress 6,015,403 2,286,170 2,423,013 5,878,560 Total capital assets, not being depreciated 16,400,791 2,361,170 2,459,713 16,302,248 Capital assets, being depreciated: Land improvements 21,329,478 1,245,438 - 22,574,916 Buildings and improvements 24,817,804 13,409 2,549,012 22,282,201 Infrastructure 54,820,719 338,156 - 55,158,875 Equipment 10,732,465 914,382 151,552 11,495,295 Furnishings and fixtures 291,072 - 2,324 288,748 Vehicles 9,863,277 1,643,140 199,975 11,306,442 Totals at historical cost 121,854,815 4,154,525 2,902,863 123,106,477 Less accumulated depreciation: Land improvements 6,734,429 1,064,214 - 7,798,643 Buildings and improvements 14,615,454 343,058 495,641 14,462,871 Infrastructure 34,292,023 701,684 - 34,993,707 Equipment 7,565,574 652,864 142,966 8,075,472 Furnishings and fixtures 217,484 16,558 2,324 231,718 Vehicles 6,908,073 913,785 199,975 7,621,883 Total accumulated depreciation 70,333,037 3,692,163 840,906 73,184,294 Total capital assets, being depreciated, net 51,521,778 462,362 2,061,957 49,922,183 PRIMARY GOVERNMENT ACTIVITIES CAPITAL ASSETS, NET $67,922,569 $ 2,823,532 $ 4,521,670 $66,224,431 Current year additions of capital assets being depreciated include assets transferred from business type funds with historical cost of $35,917 and accumulated depreciation of $29,059. In addition, deductions of construction-in-progress include an abandoned project with accumulated costs of $675,351. (Continued) - 71 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Depreciation expense was charged to governmental activities as follows: General government: General administration $ 309,631 Finance 1,081 Planning 19,137 Information systems 15,572 Fleet maintenance 5,130 Total general government 350,551 Public safety: Police 220,271 Fire 111,334 Emergency 911 193,901 Court awards 3,168 Fleet Lease Trust 959,165 Total public safety 1,487,839 Public service: Public works 10,910 Engineering 47,064 Total public service 57,974 Parks and recreation 1,064,825 Planning and development: Infrastructure 701,265 Grants 650 Total planning and development 701,915 TOTAL DEPRECIATION EXPENSE – GOVERNMENTAL ACTIVITIES $3,663,104 Depreciation expense was charged to business-type activities as follows: Solid Waste Fund $ 662,975 Section Eight Housing - Civic Center 10,021 TOTAL DEPRECIATION EXPENSE – BUSINESS-TYPE ACTIVITIES $ 672,996 (Continued) - 72 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Balance Balance Business-type Activities: July 1, 2020 Increases Decreases June 30, 2021 Capital assets, not being depreciated: Land $ 68,886 $ - $ - $ 68,886 Total capital assets, not being depreciated 68,886 - - 68,886 Capital assets, being depreciated: Buildings and improvements 563,965 - - 563,965 Equipment 1,997,944 138,955 88,551 2,048,348 Vehicles 3,546,942 169,249 165,944 3,550,247 Totals at historical cost 6,108,851 308,204 254,495 6,162,560 Less accumulated depreciation: Buildings and improvements 357,949 16,327 - 374,276 Equipment 1,373,357 229,006 88,551 1,513,812 Vehicles 1,980,878 427,663 159,306 2,249,235 Total accumulated depreciation 3,712,184 672,996 247,857 4,137,323 Total capital assets, being depreciated, net 2,396,667 (364,792) 6,638 2,025,237 BUSINESS-TYPE ACTIVITIES CAPITAL ASSETS, NET $ 2,465,553 $ (364,792) $ 6,638 $ 2,094,123 Current year deductions of capital assets being depreciated include assets transferred to government type funds with historical cost of $35,917 and accumulated depreciation of $29,059. Balance Balance Discretely Presented July 1, 2020 Increases Decreases June 30, 2021 Component Units: Capital assets, not being depreciated: Land & construction in progress $ 1,333,061 $ 993,516 $ - $ 2,326,577 Capital assets, being depreciated: Utility plant 100,768,181 4,067,666 315,001 104,520,846 Less accumulated depreciation: Utility plant 43,776,750 2,534,855 296,585 46,015,020 Total capital assets, being depreciated, net 56,991,431 1,532,811 18,416 58,505,826 COMPONENT UNIT CAPITAL ASSETS, NET $ 58,324,492 $ 2,526,327 $ 18,416 $ 60,832,403 Depreciation expense, charged to functions/programs of discretely presented major component units as follows: Paducah Water Works $ 2,534,855 (Continued) - 73 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Accounts Payable Payables in the governmental and proprietary funds are composed of payables to vendors and accrued expenditures. Long-Term Liabilities The City’s long-term liabilities are segregated between the amounts to be repaid from governmental activities and amounts to be repaid from business-type activities. Governmental Activities As of June 30, 2021, the governmental long-term liabilities consisted of the following: General obligation bonds: Current portion $ 1,995,000 Noncurrent portion 32,836,438 TOTAL GENERAL OBLIGATION BOND COSTS, NET OF PREMIUMS AND DISCOUNTS $ 34,831,438 Note payable: Current portion $ 336,664 Noncurrent portion 5,726,765 TOTAL NOTE PAYABLE PAYMENTS $ 6,063,429 Accrued compensated absences: Current portion $ 1,295,448 Noncurrent portion 1,008,222 TOTAL ACCRUED COMPENSATED ABSENCES $ 2,303,670 Business-type Activities As of June 30, 2021, the long-term liabilities payable from proprietary fund resources consisted of the following: Accrued compensated absences: Current portion $ 112,998 Noncurrent portion 30,931 TOTAL ACCRUED COMPENSATED ABSENCES $ 143,929 (Continued) - 74 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities General Obligation Bonds Series 2010B Bond Issue – The City of Paducah issued general obligation bonds of $7,165,000 in August 2010 with interest rates ranging between 1% and 3.25%, to advance refund $6,725,000 of outstanding 2001 series bonds with interest rates ranging between 4.5% and 5%. The 2001 series bonds were issued to finance construction of the Performing Arts Center and Convention Center expansion. These bonds are required to be fully paid within 16 years from the date of issue and are backed by the full faith and credit of the City. While these 2010B series 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 Position. The outstanding bonds were called on November 27, 2020 with the issuance of Series 2020B Bond Issue. Series 2011 Bond Issue – The City of Paducah issued general obligation taxable refunding bonds of $3,910,000 in August 2011 with an interest rate of 3.68%, to refund $3,780,000 of outstanding 2004 series bonds issued for an economic development project in the Industrial Park West with interest rates ranging from 2.25% to 6%. These bonds are required to be fully paid within 13 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 and has guaranteed 50% of the principal amount of the bonds. This note receivable is reflected in the government-wide Statement of Net Position. The outstanding bonds were called on August 17, 2020 from the sale of the property. Series 2013A Bond Issue – The City of Paducah issued general obligation bonds of $1,120,000 in September 2013, to finance the municipality pool renovations. Interest rates range from 0.70% to 3.60%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2013B Bond Issue – The City of Paducah issued general obligation taxable bonds of $2,475,000 in September 2013, to finance a portion of the costs of the construction of improvements to an industrial/distribution facility and a portion of the costs of the acquisition, construction, installation and equipping of an approximately 30,000 square foot building for the economic development. Interest rates range from 0.60% to 4.00%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2014A Bond Issue – The City of Paducah issued general obligation refunding bonds of $5,460,000 in May 2014 with interest rates ranging from 2.00% to 3.50%, to refund $5,545,000 of outstanding 2010 series bonds issued to finance several public improvement projects with interest rates ranging from 1.00% to 5.50%. These bonds are required to be fully paid within 16 years from the date of issue and are backed by the full faith and credit of the City. (Continued) - 75 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities General Obligation Bonds Series 2014B Bond Issue – The City of Paducah issued general obligation refunding bonds of $4,225,000 in November 2014 with interest rate of 2.55%, to advance refund $3,845,000 of outstanding 2005 series bonds issued to finance the police and firefighter's pension fund estimated actuary liability. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2018A Bond Issue – The City of Paducah issued general obligation bonds of $2,700,000 in August 2018, to finance 911 Equipment and Riverfront development. Interest rates are fixed ranging from 3.125% to 5.0%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2018B Bond Issue – The City of Paducah issued general obligation bonds of $2,670,000 in August 2018, to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 Lease agreements issued to finance several public improvement projects. Interest rates are fixed ranging from 4.0% to 5.0%. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2020A Bond Issue – The City of Paducah issued general obligation bonds of $20,520,000 in February 2020, to finance Municipal Sports and Recreational Facility. Interest rates are fixed ranging from 2.125% to 4.0%. These bonds are required to be fully paid within 20 years from the date of issue and are backed by the full faith and credit of the City. Series 2020B Bond Issue – The City of Paducah issued general obligation refunding bonds of $3,020,000 in October 2020 with interest rate of 3.00%, to advance refund $3,140,000 of outstanding 2010B series bonds issued to refinance 2001 Bond Issue. These bonds are required to be fully paid within 6 years from the date of issue and are backed by the full faith and credit of the City. The reacquisition price exceeded the net carrying amount of the old debt by $47,734. This amount was deferred and amortized over the remaining life of the refunded debt. This advance refunding was undertaken to reduce future total debt service payments over the next 6 years by $190,533 with a resulting net economic gain of $167,772. Notes Payable Kentucky Association of Counties – The County of McCracken, Kentucky entered into an agreement in the amount of $5,000,000 in March 2009, with the Kentucky Association of Counties to assist with the Julian Carroll Convention Center. The interest rate is variable. The note is required to be fully paid within 20 years from the date of issue and is backed jointly by the full faith and credit of the City and the County. While the note is issued by the County, 50% of the principal amount of the note was issued on behalf of the City which intends to participate on an equal basis with the County in accordance with an Interlocal Cooperation Agreement between the City and McCracken County, Kentucky on February 23, 2009 and are backed by the full faith and credit of the City. Murray State University Paducah Agreement – On November 22, 2011, the City entered into a general obligation note in the amount of $2,674,093 with McCracken County to finance the construction of an educational facility to be occupied by Murray State University. The note matures on December 1, 2031 and has interest rates ranging from 1.0% to 3.5% and are backed by the full faith and credit of the City. (Continued) - 76 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Notes Payable Community Financial Services Bank – On January 24, 2017, the City entered into an agreement in the amount of $3,000,000 on behalf of the County of McCracken, Kentucky to finance improvements to the Julian Carroll Convention Center. The agreement matures on January 24, 2032 with interest rate of 1.98% and are backed by the full faith and credit of the City. Kentucky Infrastructure Authority (KIA) – On July 1, 2018, the City entered into an agreement with KIA to obtain up to $4,610,667 for rehabilitation of Pump Station #2. The agreement contains principal forgiveness in the amount of 50% but not to exceed $1,300,000. Interest rate is fixed at 0.50%. This agreement is required to be fully paid within 20 years from the date of initiation of operation for the project and are backed by the full faith and credit of the City. Changes in Long-Term Liabilities The following is a summary of changes in long-term debt for the year ended June 30, 2021: Beginning Ending Due within Type of Liability: Balance Additions Reductions Balance One Year Governmental activities: General obligation bonds: Recreation Facility $20,520,000 $ - $ - $ 20,520,000 $ - Refinanced Pension 2,420,000 - (435,000) 1,985,000 445,000 Refinanced Convention Center 3,140,000 - (3,140,000) - - Refinanced Convention Center - 3,020,000 (495,000) 2,525,000 475,000 Refinanced Rental Building 1,265,000 - (1,265,000) - - Public Pool Renovations 720,000 - (70,000) 650,000 75,000 Economic Development 1,600,000 - (155,000) 1,445,000 155,000 Refinancing Public Projects 3,560,000 - (320,000) 3,240,000 330,000 Riverfront and 911 Equipment 2,555,000 - (155,000) 2,400,000 165,000 Refunding Floodwall issue 2,045,000 - (330,000) 1,715,000 350,000 Premiums 318,910 232,710 (108,215) 443,405 - Discounts (102,172) (11,955) 22,160 (91,967) - Total bonds payable 38,041,738 3,240,755 (6,451,055) 34,831,438 1,995,000 Notes payable: Kentucky Infrastructure Authority 298,504 48,236 (24,118) 322,622 - Kentucky Association of Counties 1,455,949 - (154,303) 1,301,646 160,550 Murray State University Agreement 1,749,410 - (124,876) 1,624,534 127,798 CFSB Agreement 2,862,122 - (47,495) 2,814,627 48,316 Total notes payable 6,365,985 48,236 (350,792) 6,063,429 336,664 Accrued Compensated Absences 2,136,275 1,476,669 (1,309,274) 2,303,670 1,295,448 TOTAL GENERAL LONG- TERM LIABILITIES $46,543,998 $ 4,765,660 $ (8,111,121) $ 43,198,537 $ 3,627,112 (Continued) - 77 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Changes in Long-Term Liabilities Beginning Ending Due within Type of Liability: Balance Additions Reductions Balance One Year Business-type activities: Accrued compensated Absences $ 132,284 $ 130,872 $ (119,228) $ 143,928 $ 112,998 TOTAL BUSINESS LONG- TERM LIABILITIES $ 132,284 $ 130,872 $ (119,228) $ 143,928 $ 112,998 Changes in Long-Term Liabilities (1) The calculation to reconcile amounts in this schedule to the "net investment in capital assets" for governmental activities is: Net Capital Assets $66,224,431 Less: 19.75% of the outstanding 2020B General obligation bonds $ (498,688) Net of the County's portion 249,344 (249,344) 78% of the outstanding 2014A General obligation bonds (2,527,200) 100% of the outstanding 2013A General obligation bonds (650,000) 52% of the outstanding 2013B General obligation bonds (751,400) 100% of the outstanding 2018A General obligation bonds (2,400,000) 100% of the outstanding 2018B General obligation bonds (1,715,000) 100% of the outstanding KY Infrastructure Authority (322,623) Net investment in capital assets $57,608,864 (Continued) - 78 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Long-Term Liabilities Annual Debt Service Requirements The annual debt service requirements to maturity for bonds and notes as of June 30, 2021, are as follows: Year Ending June 30 Principal Interest 2022 $ 2,434,282 $ 1,129,132 2023 2,486,947 1,051,380 2024 2,612,972 975,112 2025 2,775,561 892,480 2026 3,170,336 804,482 2027-2031 13,207,048 2,668,023 2032-2036 7,726,466 1,149,195 2037-2040 6,481,255 618,968 TOTALS $40,894,867 $ 9,288,772 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, 2021, are as follows: Governmental Business-type Activities Activities Accrued sick leave $ 686,372 $ 80,523 Accrued vacation leave 1,617,298 63,406 Totals 2,303,670 143,929 Less current portion 1,295,448 112,998 LONG-TERM PORTION $1,008,222 $ 30,931 Termination Benefits Twelve employees, through employment contracts, are entitled to certain termination benefits upon involuntary termination of employment by the City Commission. These benefits include provision for salary payments for three to six months, as well as, certain health, life, dental, and disability insurance coverage for same period of time. As these benefits are only provided for involuntary termination of employment, no provision has been made for these benefits. The City funds these benefits on a pay-as- you-go basis in the period incurred. Termination benefits of $23,098 were paid for the year ended June 30, 2021. (Continued) - 79 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: 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 an application for retirement benefits. Accordingly, no provision has been made for these benefits; and the City funds these benefits in the period of notification for payment by the CERS. For the year ended June 30, 2021, $172,151 of payments was made for these benefits. Landfill Closure and Post-Closure Costs The County of McCracken, Kentucky (County) closed the local landfill to the public on June 30, 1995. The County must comply with established state and federal landfill closure procedures and must perform maintenance and monitoring procedures at the site for thirty years after closure. The 30-year period will begin upon approval from the Commonwealth of Kentucky regarding the environmental condition of the landfill site. As of June 30, 2021, 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, 2021, were as follows: Interfund Interfund Governmental Funds: Transfers In Transfers Out General Fund $1,498,177 $5,322,850 Special Revenue Investment Fund 154,000 3,774,225 Special Revenue Bond Fund - 323,229 Capital Project Fund 5,019,015 38,336 Debt Service Fund 2,807,092 1,054,000 Nonmajor Governmental Funds 1,504,211 395,676 Internal Service Funds 275,217 65,000 Proprietary Funds: Solid Waste - 363,859 Nonmajor Proprietary Funds 94,283 14,820 TOTALS $11,351,995 $11,351,995 Transfers are used to (a) move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them and to (b) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. Significant transfers from the general fund transfers includes $114,836 for E911 support; $757,036 for debt service; and $3,335,961 for capital projects. Significant transfers from the special revenue investment fund includes $600,000 for municipal aid street resurfacing program; $1,631,152 for debt service; and $1,368,075 for capital projects. Significant transfers from solid waste fund include $320,000 for general fund operations support. (Continued) - 80 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 3 - Detail Notes on Transaction Classes/Accounts: Due To/From Balances Due to/from balances used to cover current operating expenses were as follows as of June 30, 2021: Due To Due From General Fund $ - $1,403,855 Special Revenue Investment Fund 1,403,855 - TOTALS $1,403,855 $1,403,855 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 Employees’ 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 three deferred compensation plans. Information regarding these plans follows: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Plan description - The City is a participant in the County Employees Retirement System (CERS), a cost-sharing multiple-employer defined benefit pension plan administered by the Kentucky Retirement System, an agency of the Commonwealth of Kentucky. Under the provisions of the Kentucky Revised Statute (“KRS”) Section 61.645, the Board of Trustees of the Kentucky Retirement System administers CERS and has the authority to establish and amend benefit provisions. The Kentucky Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained from http://kyret.ky.gov/. Benefits provided - CERS provides retirement, health insurance, death and disability benefits to Plan employees and beneficiaries. Employees are vested in the plan after five years’ service. For retirement purposes, non-hazardous and hazardous employees are grouped into three tiers, based on hire date: Non-hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 27 years of service or 65 years old Reduced retirement Minimum 5 years of service and 55 years old Minimum 25 years of service and any age Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Minimum 10 years of service and 60 years old (Continued) - 81 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Non-hazardous members: Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Not available Hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 20 years of service and any age Minimum 5 years of service and 55 years old Reduced retirement Minimum 15 years of service and 50 years old Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Minimum 15 years of service and 50 years old Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Not available Cost of living adjustments are provided at the discretion of the General Assembly. Retirements is based on a factor of the number of years’ service and hire date multiplied by the average of the highest five years’ earnings. Reduced benefits are based on factors of both of these components. Participating employees become eligible to receive the health insurance benefit after at least 180 months of service. Death benefits are provided for both death after retirement and death prior to retirement. Death benefits after retirement are $5,000 in lump sum. Five years’ service is required for death benefits prior to retirement and the employee must have suffered a duty-related death. The decedent’s beneficiary will receive the higher of the normal death benefit and $10,000 plus 25% of the decedent’s monthly final rate of pay and any dependent child will receive 10% of the decedent’s monthly final rate of pay up to 40% for all dependent children. Five years’ service is required for non-service related disability benefits. Plan Funding – State statute requires active members to contribute % of creditable compensation based on the tier: Non-hazardous Hazardous Required Contribution Required Contribution Tier 15%Tier 1 8% Tier 2 5% plus 1% for insurance Tier 2 8% plus 1% for insurance Tier 3 5% plus 1% for insurance Tier 3 8% plus 1% for insurance Employers contribute at the rate determined by the CERS Board to be necessary for the actuarial soundness of the system, as required by KRS 61.565 and 61.752. The City’s required contribution rate was 19.30% for non-hazardous employees and 30.06% for hazardous employees for the year ended June 30, 2021. Non-hazardous and hazardous employee plans are administered separately. (Continued) - 82 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2021, the City reported a liability for its proportionate share of the net pension liability for CERS. The amount recognized by the City as its proportionate share of the net pension liability that was associated with the City was as follows: City’s non-hazardous proportionate share of the CERS net pension liability $ 24,344,624 City’s hazardous proportionate share of the CERS net pension liability 46,263,440 Total CERS net pension liability associated with the City $ 70,608,064 The net pension liability for each plan was measured as of June 30, 2020, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. The City’s proportion of the net pension liability for CERS was based on the actual liability of the employees and former employees relative to the total liability of the System as determined by the actuary. At June 30, 2021, the City’s non-hazardous proportion was 0.317404% percent and hazardous proportion was 1.534428% percent. For the year ended June 30, 2021, the City recognized pension expense of $10,868,258 ($3,818,643 for non-hazardous and $7,049,615 for hazardous) related to CERS pension plans. At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to the CERS pension plans from the following sources: Non-hazardous Hazardous Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $ 607,078 $ - $ 1,434,809 $ - Changes in assumptions 950,616 - 1,754,570 - Net difference between projected and actual earnings on pension plan investments 609,194 - 1,042,206 - Changes in proportion and differences between City contributions and proportionate share of contributions 130,572 104,111 121,880 557,032 2,297,460 104,111 4,353,465557,032 City contributions subsequent to the measurement date 1,604,948 -2,925,365 - Total $ 3,902,408 $ 104,111 $ 7,278,830 $557,032 (Continued) - 83 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System The City reported $4,530,313 as deferred outflows of resources related to pensions resulting from City’s non-hazardous and hazardous contributions subsequent to the measurement date that will be recognized as a reduction of the net pension liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in pension expense as follows: Fiscal Year Ending June 30 Non- Hazardous Hazardous 2022 $ 1,005,928 $ 1,526,042 2023 652,346 1,005,496 2024 290,407 741,079 2025 244,668 523,816 Actuarial assumptions - The total pension liability in the June 30, 2021 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Non-Hazardous Hazardous Inflation 2.30%2.30% Projected salary increases 3.30%-10.30%3.55%-19.05% Investment rate of return, net of investment expense & inflation 6.25%6.25% For CERS, Mortality rates for the period after service retirement are according to the MP-2014 mortality improvement scale using a base year of 2020 for all active and retired employees and beneficiaries. The MP-2014 mortality improvement scale using a base year of 2019 set back four years for male and female is used for the period after disability retirement. The actuarial assumptions used were based on the results of an actuarial experience study for the period July 1, 2013 – June 30, 2018. For CERS, the long-term expected return on plan assets is reviewed as part of the regular experience studies prepared every five years. The most recent analysis, performed for the period covering fiscal years 2013 through 2018, is outlined in a report dated April 18, 2019. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed by the investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The capital market assumptions developed by the investment consultant are intended for use over a 10-year horizon and may not be useful in setting the long-term rate of return for funding pension plans which covers a longer timeframe. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years. (Continued) - 84 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System The target allocation and best estimates of arithmetic real rates of return for each major asset class, as provided by CERS’s investment consultant, are summarized in the following table: Asset Class Target Allocation Long-Term Expected Real Rate of Return US Equity 18.75%4.30% Non-US Equity 18.75%5.25% Private Equity 10.00%6.65% Specialty Credit/High Yield 15.00% 3.90% Core Bonds 13.50% (0.25)% Real Estate 5.00%5.30% Opportunistic 3.00%2.25% Real Return 15.00%3.95% Cash 1.00%(0.75)% Total 100.0% Discount rate - The discount rate used to measure the total pension liability was 6.25%. The projection of cash flows used to determine the discount rate assumed that contributions from plan employees and employers will be made at statutory contribution rates. Projected inflows from investment earnings were calculated using the long-term assumed investment return of 6.25%. The long-term investment rate of return was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of CERS proportionate share of net pension liability to changes in the discount rate - The following table presents the net pension liability of the City, calculated using the discount rates selected by the pension system, as well as what the City’s net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower or 1-percentage-point higher than the current rate: 1% Decrease Current Discount Rate 1% Increase CERS 5.25%6.25% 7.25% Non-hazardous’ proportionate share of net pension liability $30,022,219 $24,344,624 $19,643,360 Hazardous’ proportionate share of net pension liability $57,175,023 $46,263,440 $37,356,704 (Continued) - 85 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Cost-Sharing Multiple-Employer Defined Benefit Plan County Employees’ Retirement System Pension plan fiduciary net position - Detailed information about the pension plan’s fiduciary net position is available in the separately issued financial report of the CERS. Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) Basis of Accounting – The financial statements are prepared using the accrual basis of accounting. Plan member and employer contributions are recognized in the period in which the contributions are due, pursuant to formal commitments. Benefits and refunds are recognized when due and payable in accordance with the terms of each plan. Administration – The Appointive Employees’ Pension Fund Board and the City of Paducah Police and Firefighters’ 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. See investment policies in Note 3 for the pension trusts. Plan Administration – Management of the PFPF, as authorized by Kentucky Revised Statute 95.869, is vested in the PFPF Board of Trustees, which consist of the Mayor, City Treasurer, a retired firefighter and a retired police officer. Management of the AEPF, as authorized by Kentucky Revised Statute 90.400, is vested in the AEPF Board of Trustees, which consists of the Mayor, City Manager and an elected retired employee. Plan Description: PFPF is a single-employer defined benefit plan. On August 1, 1988, the plan was closed to new entrants and current active duty police and firemen of the City were given a choice of remaining in this plan or transferring into the CERS. Effective August 1, 1988, the PFPF covered 21 active duty members. There are no active participants in the plan at June 30, 2021. All other active duty members elected coverage under CERS. PFPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. 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, 2021. AEPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. (Continued) - 86 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) Membership Information: Membership of each plan consisted of the following at June 30, 2021: PFPF AEPF Active participants 0 0 Beneficiaries 23 1 Retired participants 16 0 TOTAL PARTICIPANTS 39 1 These plans are closed to new members. Benefits provided: PFPF provides retirement, disability, and death benefits. These benefits are determined by Kentucky Revised Statutes (KRS) sections 95.851 to 95.884. Retirement benefits for general plan members are 2½% of average salary times years of service up to and including 30 years. The maximum is 75% of average salary. Average salary is the highest average salary of the member for any 3 consecutive years of service. Retirement allowed any time after attainment of age 50, provided that at least 20 years of service have been completed. Occupational disability benefits equal to 70% of the members’ final rate of pay. Non-occupational disability benefits are available after completing 10 years of service and are determined in a similar manner as retirement benefits subject to a maximum of 50% of average salary. Surviving beneficiaries may receive death benefits per the terms of the plan. Benefit terms provide for an annual cost-of-living adjustment up to 5% a year provided the adjustment is supportable on an actuarially sound basis. Kentucky Revised Statute 95.859(2) provides that the widow’s minimum benefit shall be increased by the same percentage as the increase in Social Security benefits, not to exceed 5%. AEPF provides retirement, disability, and death benefits. Retirement allowed any time after attainment of age 60, provided that at least 20 years of service have been completed. Retirement benefits for general plan members are 50% of monthly salary at the time of retirement. Occupational disability benefits equal to 50% of the members’ final rate of pay. Surviving beneficiaries may receive death benefits per the terms of the plan. Effective January 1, 1998, all persons receiving benefits received a one-time increase of 10%. Funding policy: PFPF - 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. AEPF - 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. (Continued) - 87 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) Changes in PFPF and AEPF’s Net Pension Liability is as follows : PFPF Total Pension Liability Plan Net Position Net Pension Liability (a)(b)(a) – (b) Balance – June 30, 2020 7,526,025 $ 4,696,136 $2,829,889 Service cost - - - Interest expense 457,312 - 457,312 Experience losses (gains) 301,216 - 301,216 Change in assumptions--- Contributions – City - 349,548 (349,548) Contributions – Members - - - Investment income - 1,165,249 (1,165,249) Benefits paid (980,922) (980,922) - Plan administrative expenses -(43,063)43,063 Net change (222,394)490,812 (713,206) Balance – June 30, 2021 $ 7,303,631 $ 5,186,948 $2,116,683 AEPF Total Pension Liability Plan Net Position Net Pension Liability (a)(b)(a) – (b) Balance – June 30, 2019 $ 64,385 $ - $ 64,385 Service cost - - - Interest expense 3,565 -3,565 Experience losses (gains) (19,357) - (19,357) Change in assumptions - - - Contributions – City - 12,927 (12,927) Contributions – Members - - - Investment income--- Benefits paid (9,940) (9,940)- Plan administrative expenses -(2,987)2,987 Net change (25,732)-(25,732) Balance – June 30, 2020 $ 38,653 $-$ 38,653 For the year ended June 30, 2021, the City recognized pension expense of $165,356 ($178,161 expense for PFPF and ($12,805) gain for AEPF) for these pension plans. (Continued) - 88 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to the PFPF and AEPF pension plans from the following sources: PFPF AEPF Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $-$-$-$- Changes in assumptions - - - - Net difference between projected and actual earnings on pension plan investments -708,210 -- Total $ -$ 708,210 $-$- Amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in pension expense as follows: Fiscal Year Ending June 30 PFPF AEPF 2022 $ (207,823)$ - 2023 (179,819)- 2024 (154,758) - 2025 (165,810) - The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing relative to the actuarial accrued liability for benefits. Actuarial assumption PFPF AEPF Valuation date 7/1/21 7/1/21 Actuarial cost method Entry age normal Aggregate (1) Amortization method Level dollar closed Level dollar closed Remaining amortization period 12 Years 10 Years Asset valuation method Fair value Fair value (Continued) - 89 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) Actuarial assumptions: Investment rate of return 6.50% (3) 6.00% Projected salary increases (2) (2) Inflation rates adjustments (2) (2) (1) The Aggregate Method does not identify or separately amortize the unfunded actuarial liabilities. Information about funded status and funding progress is presented using the entry age actuarial cost method for that purpose; and, that information presented is intended to serve as a surrogate for the funding progress of the plan. (2) The plan has no active participants. The pension cost for each year is determined as an amortization of the unfunded actuarial accrued liability over the lesser of 10 years or the weighted average of expected term of payment of plan benefits. (3) 6.50% Effective July 1, 2020 Post-retirement mortality – The mortality rates for the plans were based as follows: PFPF 1971 Group annuity mortality (GAM) table UP-1984 table set forward 5 years for participants retiring due to disability AEPF GAM 1983 Male GAM 1983 Female Rate of return – Investment return is anticipated to be the major source of additional funds for payment of benefits. The assumed rate of return is a long-term average. The fund’s rate of return is determined primarily by the asset allocation – the classes in which it is invested, and the performance of the associated markets. For the July 1, 2021 PFPF plan year, the assumed rate of return was 6.50%. For the AEPF July 1, 2021 plan year, the assumed rate of return was 6%. Discount Rate – The projection of cash flows used to determine the discount rate assumed that the plan member contributions will be made at the current contribution rate and that City contributions will be made equal to the difference between actuarially determined contribution and the member contribution. The pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plans investment was applied to all periods of projected benefit payments to determine the total pension liability. The discount rate used to measure the total pension liability as of July 1, 2021 was as follows: PFPF 6.50% AEPF 6.00% (Continued) - 90 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) Sensitivity of the net pension liability to changes in the discount rate – The following presents the net pension liability of the City’s plans would be if it were calculated using a discount rate that is 1% point lower or 1% point higher than the current rate: 1% Current 1% Decrease Rate Increase PFPF Net Pension Liability $ 2,608,135 $ 2,116,683 $ 1,682,998 AEPF Net Pension Liability $ 40,853 $ 38,653 $ 36,662 Financial Reports The Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) plans do not issue stand-alone financial reports. The Plans financial statements are as follows: COMBINING STATEMENT OF FIDUCIARY NET POSITION PENSION TRUST FUNDS JUNE 30, 2021 PFPF AEPF Total Assets Cash and cash equivalents $ 220 $ - $ 220 Receivables: Interest 2,066 -2,066 Other --- Investments at fair value Money market accounts 111,724 - 111,724 Common stock 2,109,063 - 2,109,063 Mutual funds 2,963,923 -2,963,923 Total assets 5,186,996 -5,186,996 Liabilities Vouchers and accounts payable 48 -48 Net Position Held in trust for pension benefits $ 5,186,948 $-$ 5,186,948 (Continued) - 91 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 4 - Pension Plans - City of Paducah: Single Employer Defined Benefit Funds - Police and Firefighters' Pension Fund (PFPF) and Appointive Employees’ Pension Fund (AEPF) COMBINING STATEMENT OF CHANGES IN NET POSITION PENSION TRUST FUNDS JUNE 30, 2021 PFPF AEPF Total Additions: Contributions Employer $ 349,548 $ 12,927 $ 362,475 Plan members --- Total contributions 349,548 12,927 362,475 Investments earnings: Net change in fair value of investments 1,095,790 - 1,095,790 Interest and dividends 69,462 -69,462 Net investment earnings 1,165,252 -1,165,252 Total additions 1,514,800 12,927 1,527,727 Deductions: Benefits 980,922 9,940 990,862 Administrative expenses 43,066 2,987 46,053 Total deductions 1,023,988 12,927 1,036,915 Change in net position 490,812 - 490,812 Net position - beginning 4,696,136 -4,696,136 Net position - ending $ 5,186,948 $-$ 5,186,948 Summary of Pension Expense: As of June 30, 2021, the City’s pension expense associated with the three pension plans are summarized as follows: Governmental Activities Business-Type Activities Total CERS –Non-hazardous $ 3,321,703 $496,940$ 3,818,643 CERS – Hazardous 7,049,615 - 7,049,615 PFPF 178,161 178,161 AEPF (12,805)(12,805) Total $ 10,536,674 $496,940$11,033,614 (Continued) - 92 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 5 – Other Postemployment Benefits (OPEB): CERS Medical Insurance Plan Plan description – the City contributes to the Kentucky Retirement Systems Insurance fund (Insurance Fund), a cost-sharing multiple-employer defined benefit post-employment health care plan administered by the Kentucky Retirement Systems (KRS). The Insurance Fund was established to provide hospital and medical insurance for members for receiving benefits from the Kentucky Employees Retirement Systems (KERS), the County Employees Retirement System (CERS), and the State Police Retirement System (SPRS). The City participates in the County Employees Retirement System (CERS). CERS non-hazardous and hazardous employee plans are administered separately. Benefits provided – the Insurance Fund pays a prescribed contribution for whole or partial payments of required premiums to purchase hospital and medical insurance, based on years of service, for retirees and certain eligible beneficiaries. The authority to establish and amend benefit provisions rests with the Kentucky General Assembly. KRS issues a publicly available financial report that can obtained at www.kyret.ky.gov. OPEB Liabilities, OPEB Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEBs Contributions – per Kentucky Revised Statues 78.545 (33), contribution requirements are established and may be amended by the KRS Board. The City was required to contribute at actuarially determined rates of 4.76% of non-hazardous covered payroll and 9.52% of hazardous covered payroll for the fiscal years ended June 30, 2021. At June 30, 2021, the City reported a liability for its proportionate share of the net OPEB liability for the CERS Insurance Trust. The collective net OPEB liability was measured as of June 30, 2020, and the total OPEB liability used to calculate the collective net OPEB liability was based on a projection of the City’s long-term share of contributions to the OPEB plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2020, the City’s non-hazardous proportion was 0.319847 percent and hazardous proportion was 1.532405 percent. The amount recognized by the City as its proportionate share of the OPEB liability that was associated with the District was as follows: City’s non-hazardous proportionate share of the CERS medical insurance liability $7,662,289 City’s hazardous proportionate share of the CERS medical insurance liability 14,176,195 Total CERS medical insurance liability associated with the City $ 21,838,484 (Continued) - 93 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 5 – Other Postemployment Benefits (OPEB): For the year ended June 30, 2021, the City recognized an OPEB expense of $3,225,271 ($1,011,259 non- hazardous and $2,214,012 hazardous, respectively). At June 30, 2021, the City reported deferred outflows of resources and deferred inflows of resources related to OPEBs from the following sources: Non-hazardous Hazardous Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience $ 1,280,207 $ 1,281,206$ 486,471 $ 1,415,648 Changes in assumptions 1,332,785 8,106 2,312,678 13,062 Net difference between projected and actual earnings on pension plan investments 254,678 - 629,279 - Changes in proportion and differences between City contributions and proportionate share of contributions 42,772 126,480 -367,650 2,910,442 1,415,792 3,428,428 1,796,360 City contributions subsequent to the measurement date 583,881 -993,080 - Total $ 3,494,323 $1,415,792 $4,421,508 $ 1,796,360 The City reported $1,576,961, including implicit subsidies of $254,666, as deferred outflows of resources related to OPEB resulting from City non-hazardous and hazardous contributions subsequent to the measurement date that will be recognized as a reduction of the net OPEB liability in the year ended June 30, 2022. Other amounts reported as deferred outflows of resources and deferred inflows related to pensions will be recognized in OPEB expense as follows: Fiscal Year Ending June 30 Non- Hazardous Hazardous 2022 $ 393,542 $ 413,334 2023 468,911 95,045 2024 324,576 460,028 2025323,424 199,227 2026 (15,803) (Continued) - 94 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 5 – Other Postemployment Benefits (OPEB): Actuarial assumptions – The total OPEB liability in the June 30, 2020 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Investment rate of return 6.25% Projected salary increases 3.30% - 19.05%, varies by service Inflation rate 2.30% Real Wage Growth 2.00% Healthcare cost trend rates Under 65 7.00% at January 1, 2020 decreasing to an ultimate rate of 4.05% over a period of 12 years Ages 65 and Older 5.00% at January 1, 2020 decreasing to an ultimate rate of 4.05% over a period of 10 years Municipal Bond Index Rate 2.45% Discount Rate 5.34% and 5.30% for non-hazardous and hazardous Mortality rates used for active members is PUB-2010 General (non-hazardous) and Public Safety (hazardous) Mortality Tables projected with ultimate rates from the MP-2014 mortality scale using a base year of 2010. For healthy retired members and beneficiaries, System-specific mortality table based on mortality experience from 2013-2018 projected with the ultimate rates from MP-2014 mortality improvement scale using a base year of 2019. The PUB-2010 Disabled Mortality Table projected with a 4-year set-forward for both males and females with ultimate rates from the MP-2014 mortality scale using a base year of 2010 is used for the period after disability retirement. The long-term expected rate of return on OPEB plan investments was determined using a log-normal distribution analysis in which best-estimate ranges of expected future real rates of return (expected returns, net of OPEB plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. The target allocation and best estimates of arithmetic real rates of return for each major asset class, as provided by TRS’s investment consultant, are summarized in the following table: Asset Class Target Allocation Long-Term Expected Real Rate of Return US Equity 18.75%4.50% Non-US Equity 18.75%5.25% Private Equity 10.00%6.65% Specialty Credit/High Yield 15.00%3.90% Core Bonds 13.50%(0.25)% Real Estate 5.00%5.30% Opportunistic 3.00%2.25% Real Return 15.00%3.95% Cash 1.0%(0.75)% Total 100.0% (Continued) - 95 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 5 – Other Postemployment Benefits (OPEB): Discount rate - The discount rate used to measure the total OPEB liability was 5.34% for non-hazardous and 5.30% for hazardous. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rates and the employer contributions will be made at statutorily required rates. Based on those assumptions, the OPEB plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on OPEB plan investments was applied to all periods of projected benefit payments to determine the total OPEB liability. The following table presents the City’s proportionate share of the collective net OPEB liability of the System, calculated using the discount rate of 5.34% for non-hazardous and 5.30% for hazardous, as well as what the City’s proportionate share of the collective net OPEB liability would be if it were calculated using a discount rate that is 1-percentage-point lower (4.34% for non-hazardous and 4.30% for hazardous) or 1-percentage-point higher (6.34% for non-hazardous and 6.30% for hazardous) than the current rate: 1% Decrease Current Discount Rate 1% Increase CERS Non-hazardous’ proportionate share of net OPEB liability $ 7,206,561 $ 7,662,289 $ 5,870,548 Hazardous’ proportionate share of net pension liability $19,243,815 $14,176,195 $10,092,721 Sensitivity of the City’s proportionate share of the collective net OPEB liability to changes in the healthcare cost trend rates – The following presents the City’s proportionate share of the collective net OPEB liability, as well as what the City’s proportionate share of the collective net OPEB liability would be if it were calculated using healthcare cost trend rates that were 1-percentage-point lower or 1- percentage-point higher than the current healthcare cost trend rates: 1% Decrease Current Discount Rate 1% Increase Non-hazardous’ proportionate share of net OPEB liability $ 5,932,527 $ 7,662,289 $ 9,761,396 Hazardous’ proportionate share of net pension liability $10,130,726 $14,176,195 $19,149,752 (Continued) - 96 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 6 - Component Unit Long-Term Liabilities: Long-term liabilities of the discretely presented component units consist of the following at June 30, 2021: Note Payable, Kentucky Infrastructure Authority (KIA) – Paducah Water Works In connection with a merger with Reidland Water District, Paducah Water Works (PWW) assumed a loan from the KIA with interest rate of 1.00%, with a .25% annual service fee. In addition, PWW has a note with KIA for a 24” Water Main with interest rate of 1.75% and a .25% annual service fee. The annual requirements to amortize the outstanding notes as of June 30, 2021, are as follows: .25% Year Ending Service R & M June 30 Principal Interest Fee Reserve Total 2022 $ 471,709 $ 70,793 $ 14,117 $ 11,200 $ 567,819 2023 477,236 65,266 12,934 11,200 566,636 2024 482,835 59,668 11,737 11,200 565,440 2025 488,503 53,998 10,526 11,200 564,227 2026 494,242 48,260 9,302 11,200 563,004 2027-2031 2,559,868 152,639 27,629 11,200 2,751,336 2032-2036 652,554 43,844 6,265 - 702,663 2037 137,474 1,807 258 - 139,539 TOTALS $5,764,421 $496,275 $ 92,768 $ 67,200 $6,420,664 Note 7 - Appropriations Deficit: No departments that adopted budgets annually had excess expenditures over appropriations for the fiscal year ended June 30, 2021. Note 8 - Commitments and Contingencies: Grant Contingencies Amounts received from grantor agencies are subject to audit and adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. Construction Commitments The City has various on-going contracts for construction, renovations, paving materials, equipment, and labor. As of June 30, 2021, the most significant construction commitment were as follows: Cumulative Estimated Costs Incurred Total Costs Comprehensive Stormwater Master Plan Study $ 975,891 $ 1,047,040 Floodwall Rehab 2,528,497 6,775,887 Dredging - Permitting 82,133 266,250 $ 3,586,521 $ 8,089,177 (Continued) - 97 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 9 - Risk Management and Litigation: The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. The City obtains coverage from commercial insurance companies to handle the risk of loss. There have been no decreases in insurance coverage from the prior year. There have been no settlements in excess of insurance coverage during the prior three years. An analysis of claims activity is presented below: Current Year Beginning of Claims and Actual Balance at Fiscal Year Changes in Claim Fiscal Liability Estimates Payments Year End 2018 - 2019 $ - $ 101,030 $ 101,030 $ - 2019 - 2020 - 108,994 108,994 - 2020 - 2021 - 140,231 140,231 - During fiscal year 1999, the City established the Health Insurance Fund (an internal service fund) to account for and finance employee medical costs relating to the City’s employee self-insured medical benefit plan that went into effect as of July 1, 1999. The health insurance provides coverage for up to $175,000 for each covered individual. The City purchases commercial insurance (reinsurance) for claims in excess of the coverage provided per individual or in excess of the maximum aggregate limit, which is based on a formula that considers group census and anticipated claims. As of June 30, 2021, that amount was $2,315,795. 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 $230,715 at June 30, 2021. 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 2018 - 2019 $ 108,812 $ 2,114,691 $2,130,206 $ 93,297 2019 - 2020 93,297 1,639,610 1,624,455 108,452 2020 - 2021 108,452 2,131,217 2,008,954 230,715 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 10 - 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 collected from this lease. The rental for the primary term of the lease is for the construction and use of the performing arts center. The building is deemed the property of the City; however, for financial reporting, the building is reported with the Luther F. Carson Four Rivers Center financial records. In December 2003, with the authorization of the City, the Center secured financing of $6.5 million subject to a mortgage against the leasehold and real property on which the performing arts center is located. The City also consented to an assignment of the lease as security for the loan. (Continued) - 98 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 10 - Lease Agreements: Operating Leases The City also leases certain other property to various lessees under non-cancelable agreements that have various expiration dates through June 30, 2024. Rental revenue received from leased property during 2021 totaled $596,396. The following is an analysis of property leased under these leases at June 30, 2021: Land $ 270,000 Buildings 873,250 Equipment 110,126 Total 1,253,376 Less: accumulated depreciation (983,376) NET BOOK VALUE $ 270,000 Depreciation expense for the year ended June 30, 2021, on leased property was $60,691. The following is a schedule of future minimum rental income from operating leases at June 30, 2021: Lease Income 2022 $ 482,791 2023 440,861 2024 425,830 2025 425,830 2026 217,499 Thereafter - TOTAL MINIMUM LEASE RECEIPTS $1,992,811 Note 11 – Tax Abatements: Developer Residential Property Tax Abatements – The City of Paducah is authorized by Kentucky Revised Statues Chapter 81A and City Ordinance 2002- 10-6989 to enter into property tax abatement agreements for the purpose of subsidizing developers for their cost of infrastructure improvements associated with residential infill and annexation development. Tax reimbursements cannot exceed the cost of City-approved infrastructure associated with the development over the life of the agreement. The abatement is limited to the actual City of Paducah real estate property taxes collected in any given year attributed to a specific development area as outlined in the individual agreement with the City. (Continued) - 99 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 11 – Tax Abatements: For the year ended June 30, 2021, the City abated property taxes totaling $71,473 under this program, including the following tax abatement agreements: Recipient Development Agreement Ordinance Abatement Amount Current Year Inception to Date Signature Homes of Paducah, LLC Westwood Subdivision In-fill 2010-12-7768 $27,520 $148,469 Greenway Village, LLC Greenway Village In- fill, phase 1 2011-2-7789 $15,929 $99,532 Higdon Development Ridgewood In-fill, phase 1 2019-4-8573 $17,065 $29,867 Greenway Village, LLC Greenway Village In- fill, phase 2 2019-4-8572 $10,959 $20,092 Kentucky Business Investment (KBI) Program, KRS 154.32 – The KBI Program provides income tax credits and wage assessments to new and existing manufacturing companies, and non-retail service companies that locate or expand operations in Kentucky. The Program can be set to last up to 10 years. For the year ended June 30, 2021, the City rebated employee local payroll taxes totaling $9,539 under this program, including the following resolutions: Recipient Start Date Term Authority Payroll Tax Rebate Amount Current Year Inception to Date Dippin’ Dots, LLC 12-11-2016 10 yrs. Resolution - 2014 $9,539 $48,416 Industrial Park West (IPW) – Ordinance 1997-2-5642 authorized the joint development of the IPW, for economic development purposes, as well as an inter-local agreement authorizing the city to share 50% of payroll tax revenue generated in the Park. This agreement is good for 10 years after 97% of the park property is developed or 25 years (March 6, 2022), whichever is first. For the year ended June 30, 2021, the City shared payroll tax revenue totaling $116,752 under this agreement with McCracken County (“County”), as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Current Year Inception to Date Coca Cola September 2005 $11,734 $334,550 Genova September 2014 -0- $144,693 Plastic Services Products October 2020 $ 8,353 $8,353 H.T. Hackney March 2012 $34,446 $230,977 Whitehall December 2014 $62,219 $365,433 (Continued) - 100 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 11 – Tax Abatements: Information Age Park (IAP) – Ordinance 2005-11-7046 authorized an inter-local agreement between the City and County relating to payroll tax revenue generated in the Park. If the City invites the County to participate in the cost of an economic development project, the City will share 50% of payroll tax revenue generated through the term of the agreement which expired February 13, 2021. For the year ended June 30, 2021, the City shared payroll tax revenue totaling $171,330 under this agreement with the County, as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Current Year Inception to Date Lynx March 2006 $32,936 $831,088 Ulrich March 2006 $11,298 $207,506 Pepsi December 2007 $ 4,382 $85,949 Marquette March 2008 $93,761 $1,105,459 Teletech December 2014 $28,953 $283,852 AAA (Pebco) – Ordinance 2004-6-6824 authorized an inter-local agreement between the City and County relating to payroll tax revenue generated by the AAA Company on Coleman Road. The City and County partnered on an economic development project which calls for the City to share 50% of payroll tax revenue generated at the AAA facility on Coleman Road for 25 years, through 2029. For the year ended June 30, 2021, the City shared payroll tax revenue totaling $8,814 under this agreement with the County, as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Current Year Inception to Date AAA (Pebco) July 2005 $8,814 $184,059 Other Local Economic Development Programs – In order to attract certain companies to the Paducah area, the City and County partnered together to construct facilities to house corporate operations in the Information Age Park (IAP) and the Industrial Park West (IPW). For the year ended June 30, 2021, the City and County provided reduced rent for the following corporate recipient, totaling $110,556: Recipient Location Bldg. Size Agreement Ordinance FMV Rent Rent Paid Teletech 2301 McCracken Blvd. 30,000 sf 2012-11-7986 $330,000 $219,444 (Continued) - 101 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2021 Note 12 – Implementation of GASB Pronouncements Future Implementation of GASB Pronouncements In addition to the pronouncements discussed previously, GASB has issued additional guidance for state and local governments that are not yet effective. The City is currently reviewing the provisions of the following pronouncements to determine the impact of implementation in future periods. Statement No. 87 – Leases (FY2022) Statement No 89 – Accounting for Interest Costs Incurred before the End of a Construction Period (FY2022) Statement No 91 – Conduit Debt Obligations (FY2022) Statement No. 92 – Omnibus 2020 (FY2022) Statement No. 93 – Replacement of Interbank Offered Rates (FY2022) Statement No. 97 – Certain Component Unit Criteria, and Accounting and Financial Reporting for Internal Revenue Code Section 457 Deferred Compensation Plans – an amendment of GASB Statements No. 14 and No. 84, and a supersession of GASB Statement No. 32. (FY2022) CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 2021 2020 2019 2018 2017 2016 2015 2014 Total pension liability Service cost -$ 10,901$ 10,267$ 7,678$ 7,038$ 7,183$ 5,576$ 4,871$ Interest 457,312 472,881 527,900 560,538 626,531 686,614 744,910 792,267 Changes in benefit terms - - - - - - - - Differences between expected and actual experience 301,216 249,805 (384,990) (2,758) (278,063) (111,824) (43,965) 150,977 Changes in assumptions - - - - 148,359 156,880 166,753 175,893 Benefit payments/refunds (980,992) (965,299) (1,033,958) (1,101,201) (1,223,078) (1,308,290) (1,386,273) (1,445,080) Net change in total pension liability (222,464) (231,712) (880,781) (535,743) (719,213) (569,437) (512,999) (321,072) Total pension liability - beginning 7,526,025 7,757,737 8,638,518 9,174,261 9,893,474 10,462,911 10,975,910 11,296,982 Total pension liability - ending (a)7,303,561$ 7,526,025$ 7,757,737$ 8,638,518$ 9,174,261$ 9,893,474$ 10,462,911$ 10,975,910$ Plan fiduciary net position Contributions - employer 349,548$ 345,049$ 366,129$ 380,168$ 436,575$ 420,352$ 391,468$ 420,834$ Contributions - member - 4,394 6,448 6,325 4,001 4,494 6,088 5,354 Net investment income 1,165,249 280,927 461,503 492,276 766,509 165,489 310,681 1,057,726 Benefit payments/refunds (980,922) (965,299) (1,033,958) (1,101,201) (1,223,078) (1,308,290) (1,386,273) (1,445,080) Administrative expenses (43,063) (42,185) (43,503) (44,419) (44,786) (46,422) (49,115) (48,406) Other - - - - - - - - Net change in plan fiduciary net position 490,812 (377,114) (243,381) (266,851) (60,779) (764,377) (727,151) (9,572) Plan fiduciary net position - beginning 4,696,136 5,073,250 5,316,631 5,583,482 5,644,261 6,408,638 7,135,789 7,145,361 Plan fiduciary net position - ending (b)5,186,948$ 4,696,136$ 5,073,250$ 5,316,631$ 5,583,482$ 5,644,261$ 6,408,638$ 7,135,789$ Net pension liability ending (a) - (b)2,116,613$ 2,829,889$ 2,684,487$ 3,321,887$ 3,590,779$ 4,249,213$ 4,054,273$ 3,840,121$ Plan fiduciary net position as a percentage of total pension 71%62%65%62%61%57%61%65% Covered payroll n/a 54,921$ 80,600$ 79,064$ 50,009$ 56,175$ 76,102$ 66,928$ Net pension liability as a percentage of covered payroll n/a 5153%3331%4202%7180%7564%5327%5738% -102- Exhibit A-1 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE POLICE AND FIREFIGHTERS' PENSION Last Eight Fiscal Years Ending June 30 (1) TRUST FUND'S NET PENSION LIABILITY AND RELATED RATIOS Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available.(1) 2021 2020 2019 2018 2017 2016 2015 2014 Total pension liability -$ -$ -$ -$ -$ -$ -$ -$ Interest 3,565 3,728 3,906 4,084 5,308 5,400 5,687 8,258 Changes in benefit terms - - - - - - - - Differences between expected and actual experience (19,357) 3,710 3,506 3,308 (13,742) 9,751 9,391 (30,605) Changes in assumptions - - - - - - - - Benefit payments/refunds (9,940) (10,372) (10,372) (10,372) (13,533) (19,856) (19,856) (21,152) Net change in total pension liability (25,732) (2,934) (2,960) (2,980) (21,967) (4,705) (4,778) (43,499) Total pension liability - beginning 64,385 67,319 70,279 73,259 95,226 99,931 104,709 148,208 Total pension liability - ending (a)38,653$ 64,385$ 67,319$ 70,279$ 73,259$ 95,226$ 99,931$ 104,709$ Plan fiduciary net position Contributions - employer 12,927$ 13,386$ 13,459$ 14,012$ 21,062$ 6,599$ -$ -$ Contributions - member - - - - - - - - Net investment income - - - - - 53 264 598 Benefit payments/refunds (9,940) (10,372) (10,372) (10,372) (13,533) (19,856) (19,856) (21,152) Administrative expenses (2,987) (3,014) (3,087) (3,640) (7,529) (7,539) (7,533) (7,483) Other - - - - - - - - Net change in plan fiduciary net position - - - - - (20,743) (27,125) (28,037) Plan fiduciary net position - beginning - - - - - 20,743 47,868 75,905 Plan fiduciary net position - ending (b)-$ -$ -$ -$ -$ -$ 20,743$ 47,868$ Net pension liability ending (a) - (b)38,653$ 64,385$ 67,319$ 70,279$ 73,259$ 95,226$ 79,188$ 56,841$ Plan fiduciary net position as a percentage of total pension l 0.0%0.0%0.0%0.0%0.0%0.0%20.8%45.7% Covered payroll n/a n/a n/a n/a n/a n/a n/a n/a Net pension liability as a percentage of covered payroll n/a n/a n/a n/a n/a n/a n/a n/a (1) -103- Exhibit A-2 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CHANGES IN THE APPOINTIVE EMPLOYEES' PENSION TRUST FUND'S NET PENSION LIABILITY AND RELATED RATIOS Last Seven Fiscal Years Ending June 30 (1) Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. Service cost 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contribution 332,386$ 315,257$ 368,373$ 380,168$ 434,758$ 416,844$ 391,468$ 421,933$ Contributions in relation to the actuarially determined contribution 349,548 345,049 366,129 376,148 436,575 420,352 391,468 420,834 Contribution deficiency (excess)(17,162)$ (29,792)$ 2,244$ 4,020$ (1,817)$ (3,508)$ -$ 1,099$ Covered payroll n/a 54,921$ 80,600$ 79,064$ 50,009$ 56,175$ 76,102$ 66,928$ Contributions as a percentage of covered payroll n/a 628%454%476%873%748%514%629% 2021 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 26.61%5.92%9.28%9.44%14.61%2.78%4.69%15.95% (1) Exhibit A-3 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF POLICE AND FIREFIGHTERS' PENSION TRUST FUND CONTRIBUTIONS AND INVESTMENT RETURNS Last Eight Fiscal Years Ending June 30 (1) Schedule of Contributions Schedule of Investment Returns -104- Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contribution 10,372$ 10,372$ 10,372$ 10,372$ 19,856$ 19,856$ 15,734$ 10,779$ Contributions in relation to the actuarially determined contribution 12,927 13,386 13,459 14,012 21,062 6,599 - - Contribution deficiency (excess)(2,555)$ (3,014)$ (3,087)$ (3,640)$ (1,206)$ 13,257$ 15,734$ 10,779$ Covered payroll n/a n/a n/a n/a n/a n/a n/a n/a Contributions as a percentage of covered payroll n/a n/a n/a n/a n/a n/a n/a n/a 2020 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 0.00%0.00%0.00%0.00%0.00%0.47%0.75%0.97% (1) Last Eight Fiscal Years Ending June 30 (1) Exhibit A-4 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF APPOINTIVE EMPLOYEES' PENSION TRUST FUNDS CONTRIBUTIONS AND INVESTMENT RETURNS -105- Schedule of Contributions Schedule of Investment Returns Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. Year Ended June 30 City's proportion of the net pension liability City's proportionate share of the net pension liability (asset) City's covered payroll City's share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability CERS Nonhazardous 2021 0.3174%24,344,624$ 8,161,809$ 298.2749%47.8139% 2020 0.3199%22,498,921$ 8,163,051$ 275.6190%50.4470% 2019 0.3150%19,185,252$ 7,880,115$ 243.4641%53.5420% 2018 0.3210%18,788,122$ 7,861,744$ 238.9816%53.3249% 2017 0.3047%14,999,862$ 7,266,510$ 206.4246%55.5028% 2016 0.3150%13,543,354$ 7,349,249$ 184.2821%59.9684% 2015 0.3261%10,579,475$ 7,477,608$ 141.4821%66.8010% 2014 0.3261%11,970,884$ 7,466,979$ 160.3176%61.2209% CERS Hazardous 2021 1.5344%46,263,440$ 8,966,031$ 515.9857%44.1116% 2020 1.5325%42,330,934$ 8,765,379$ 482.9333%46.6327% 2019 1.5888%38,425,266$ 8,850,650$ 434.1519%49.2645% 2018 1.6403%36,697,162$ 9,004,106$ 407.5603%50.2164% 2017 1.6165%27,738,524$ 8,404,139$ 330.0579%53.9483% 2016 1.6428%25,218,200$ 8,402,943$ 300.1115%57.5152% 2015 1.6323%19,617,569$ 8,267,598$ 237.2826%63.4574% 2014 1.6323%21,907,757$ 8,016,505$ 273.2831%65.7178% *The amounts presented were determined as of the measurement date June 30 of the prior year. * Exhibit A-5 -106- CITY OF PADUCAH, KENTUCKY SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST EIGHT FISCAL YEARS* Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. REQUIRED SUPPLEMENTARY INFORMATION Year Ended June 30 Contractually required penson contribution Contributions relative to contractually required contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll CERS Nonhazardous 2021 1,604,948$ 1,604,948$ -$ 8,315,793$ 19.3000% 2020 1,575,229$ 1,575,229$ -$ 8,161,809$ 19.3000% 2019 1,324,047$ 1,324,047$ -$ 8,163,051$ 16.2200% 2018 1,141,041$ 1,141,041$ -$ 7,880,115$ 14.4800% 2017 1,098,317$ 1,098,317$ -$ 7,861,744$ 13.9704% 2016 902,501$ 902,501$ -$ 7,266,510$ 12.4200% 2015 937,029$ 937,029$ -$ 7,349,249$ 12.7500% 2014 1,027,423$ 1,027,423$ -$ 7,477,608$ 13.7400% CERS Hazardous 2021 2,925,365$ 2,925,365$ -$ 9,731,752$ 30.0600% 2020 2,695,189$ 2,695,189$ -$ 8,966,031$ 30.0600% 2019 2,179,073$ 2,179,073$ -$ 8,765,379$ 24.8600% 2018 1,964,844$ 1,964,844$ -$ 8,850,650$ 22.2000% 2017 1,954,791$ 1,954,791$ -$ 9,004,106$ 21.7100% 2016 1,702,679$ 1,702,679$ -$ 8,404,139$ 20.2600% 2015 1,741,930$ 1,741,930$ -$ 8,402,943$ 20.7300% 2014 1,799,856$ 1,799,856$ -$ 8,267,598$ 21.7700% * Changes of Benefit Terms: None Methods and assumptions used in the actuarially determined contributions: The assumptions were updated as of result of an experience study for the five year period ending June 30, 2018. The investment rate of return remained unchanged from at 6.25% from the prior measurement date. The discount rate remained unchanged at 6.25% from the prior measurement date. The inflation rate remained unchanged at 2.30% from the prior measurment date. Projected salary increases 3.30% to 11.50% - non-hazardous and 3.05% to 18.55% - hazardous. Exhibit A-6 -107- Notes to Required Supplementary Information For the Year Ended June 30, 2021 The amortization period of the unfunded accrued liability was reset to a closed 30 year period for the year ended June 30, 2019. Schedule is intended to show information for 10 years.Additional years of supplementary information will be provided as this information becomes available. CITY OF PADUCAH, KENTUCKY SCHEDULE OF CITY'S CONTRIBUTIONS COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST EIGHT FISCAL YEARS* REQUIRED SUPPLEMENTARY INFORMATION The actuarially determined contribution rates, as a percentage of payroll,used to determine the actuarially determined contribution amounts in the Schedule of Employer contributions are calculated as of the indicated valuation date.The following actuarial methods and assumptions (from the indicated actuarial valuations)were used to determine contribution rates reported in that schedule for the year ending June 30, 2020: Year Ended June 30 City's proportion of the net pension liability City's proportionate share of the net pension liability (asset) City's covered payroll City's share of the net pension liability (asset) as a percentage of its covered payroll Plan fiduciary net position as a percentage of the total pension liability CERS Nonhazardous 2021 0.3173%7,662,289$ 8,161,809$ 93.8798%51.6704% 2020 0.3198%5,379,682$ 8,163,051$ 65.9028%60.4382% 2019 0.3150%5,592,780$ 7,880,115$ 70.9733%57.6218% 2018 0.3210%6,452,856$ 7,861,744$ 82.0792%52.3940% CERS Hazardous 2021 1.5341%14,176,195$ 8,966,031$ 158.1100%58.8413% 2020 1.5324%11,337,649$ 8,765,379$ 129.3458%64.4396% 2019 1.5888%11,328,384$ 8,850,650$ 127.9949%64.2437% 2018 1.6403%13,559,555$ 9,004,106$ 150.5930%58.9878% *The amounts presented were determined as of the measurement date June 30 of the prior year. *Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. -108- Exhibit A-7 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET MEDICAL INSURANCE LIABILITY COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST FOUR FISCAL YEARS* Year Ended June 30 Contractually required pension contribution Contributions relative to contractually required contribution Contribution deficiency (excess) City's covered payroll Contributions as a percentage of covered payroll CERS Nonhazardous 2021 395,832$ 395,832$ -$ 8,315,793$ 4.7600% 2020 388,502$ 388,502$ -$ 8,161,809$ 4.7600% 2019 429,376$ 429,376$ -$ 8,163,051$ 5.2600% 2018 370,365$ 370,365$ -$ 7,880,115$ 4.7000% 2017 371,860$ 371,860$ -$ 7,861,744$ 4.7300% CERS Hazardous 2021 926,463$ 926,463$ -$ 9,731,752$ 9.5200% 2020 918,612$ 918,612$ -$ 8,966,031$ 10.2455% 2019 918,612$ 918,612$ -$ 8,765,379$ 10.4800% 2018 827,536$ 827,536$ -$ 8,850,650$ 9.3500% 2017 841,884$ 841,884$ -$ 9,004,106$ 9.3500% * Changes of Benefit Terms: None Changes of assumptions: Valuation date Actuarial cost method Amortization method Amortization period Asset valuation method Payroll growth rate Investment Return Inflation Single discount rate Mortality Healthcare trend rates (Pre-65) Healthcare trend rates (Post-65) LAST FIVE FISCAL YEARS* Exhibit A-8 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S CONTRIBUTIONS - MEDICAL INSURANCE PLAN COUNTY EMPLOYEES' RETIREMENT SYSTEM Schedule is intended to show information for 10 years.Additional years of supplementary information will be provided as this information becomes available. Notes to Required Supplementary Information For the Year Ended June 30, 2021 -109- The actuarially determined contribution rates,as a percentage of payroll,used to determine the actuarially determined contribution amounts in the Schedule of Employer Contributions are calculated as the of the indicated valuation date. The following actuarial methods and assumptions (from the indicated actuarial valuations) were used to determine contribution rates reported in that schedule for the year ending June 30, 2020: June 30, 2018 Entry Age Normal Level Percent of Payroll 25 years, Closed 20%of the difference between the value of assets and the expected actuarial value of assets is recognized. 2.00% 6.25% 2.30% 5.34% and 5.30% for non-hazardous and hazardous; decrease from 5.68% and 5.69%. RP-2000 Combined Mortality Table,projected to 2013 with Scale BB (set back 1 year for females). Initial trend starting at 7.00%at January 1,2020,and gradually decreasing to an ultimate trend rate of 4.05% over a period of 12 years. Initial trend starting at 5.00%at January 1,2020,and gradually decreasing to an ultimate trend rate of 4.05% over a period of 10 years. CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 Exhibit B-1 Variance with Final Budget Final Positive Budget (Negative) Revenues: Intergovernmental and grants Intergovernmental 26,250$ 26,250$ -$ Grants 2,596,961 1,041,306 (1,555,655) Interest (1,430) - 1,430 Property upkeep, rentals, sales and other 1,712,617 512,623 (1,199,994) Total revenues 4,334,398 1,580,179 (2,754,219) Expenditures: Capital outlay 16,769,781 4,499,608 12,270,173 Excess (deficiency) of revenues over expenditures (12,435,383) (2,919,429) 9,515,954 Other Financing Sources (Uses): Long-term debt issued 4,002,989 48,236 (3,954,753) Transfers in 5,019,011 5,019,015 4 Transfers out (38,342) (38,336) 6 Total other financing sources 8,983,658 5,028,915 (3,954,743) Net change in fund balance (3,451,725)$ 2,109,486 5,561,211$ Fund balance, July 1, 2020 4,637,704 FUND BALANCE, JUNE 30, 2021 6,747,190$ See auditors report on pages 11-12. -110- Actual CITY OF PADUCAH, KENTUCKY DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND GENERAL CAPITAL IMPROVEMENTS FUND FOR THE YEAR ENDED JUNE 30, 2021 CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-2 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Intergovernmental 737,990$ 1,286,147$ 548,157$ Interest 13,000 16,160 3,160 Property upkeep, rentals, sales and other 289,000 1,937,723 1,648,723 Total revenues 1,039,990 3,240,030 2,200,040 Expenditures: Debt service: Principal requirement 2,826,830 3,575,792 (748,962) Interest and fiscal requirement 1,144,115 1,180,978 (36,863) Total expenditures 3,970,945 4,756,770 (785,825) Excess (deficiency) of revenues over expenditures (2,930,955) (1,516,740) 1,414,215 Other Financing Sources (Uses): Transfers in 2,943,945 2,807,092 (136,853) Transfers out (1,554,000)(1,054,000) 500,000 Total other financing sources 1,389,945 1,753,092 363,147 Net change in fund balance (1,541,010)$ 236,352 1,777,362$ Fund balance, July 1, 2020 1,272,255 FUND BALANCE, JUNE 30, 2021 1,508,607$ See auditors report on pages 11-12. CITY OF PADUCAH, KENTUCKY DEBT SERVICE FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 -111- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR GOVERNMENTAL FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 COMBINING FINANCIAL STATEMENTS NONMAJOR GOVERNMENTAL FUNDS Special Revenue Funds Municipal Aid Program – to account for revenues and expenditures of Kentucky gas tax refunds. Emergency Communication Service Fund - to account for revenues associated with 911 program. Court Awards Fund - to account for revenues associated with judicial system confiscations. Grants - to account for the grant programs awarded to the City of Paducah from agencies of the Federal Government and the Commonwealth of Kentucky. Bed Tax Fund – to account for revenues associated with bed tax collections. Exhibit B-3 Court Awards Fund Cash and cash equivalents 582,119$ 97,558$ 364,517$ Investments - - - Receivables, net: Accounts 46,769 289,726 - TOTAL ASSETS 628,888$ 387,284$ 364,517$ Liabilities: Voucher and accounts payable 65,886$ 4,256$ 167,560$ Accrued payroll and payroll taxes - 55,912 - Total liabilities 65,886 60,168 167,560 Fund Balances: Restricted for: Highway and streets 563,002 - - Public safety - - 196,957 Capital Improvements - - - Assigned for: Public safety - 327,116 - Total fund balances 563,002 327,116 196,957 TOTAL LIABILITIES AND FUND BALANCES 628,888$ 387,284$ 364,517$ See auditors report on pages 11-12. LIABILITIES Service Fund Communication CITY OF PADUCAH, KENTUCKY COMBINING BALANCE SHEET ASSETS -112- Emergency AND NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2021 FUND BALANCES Municipal Aid Program Special Revenue Funds CDBG Bed Grant Tax Fund Fund -$ -$ 1,044,194$ - - - - - 336,495 -$ -$ 1,380,689$ -$ -$ 237,702$ - - 55,912 - - 293,614 - - 563,002 - - 196,957 - - - - - 327,116 - - 1,087,075 -$ -$ 1,380,689$ Governmental -113- Funds Total Nonmajor Special Revenue Funds Exhibit B-4 Court Awards Revenues:Fund Taxes -$ 343,701$ -$ Charges for services - 323,756 - Intergovernmental 494,042 - - Grants - - 28,234 Interest 4,502 263 2,022 Miscellaneous - 591,984 - Total revenues 498,544 1,259,704 30,256 Expenditures: Current operations: Public safety - 2,018,239 41,824 Public service 1,018,158 - - Planning and development - - - Capital Outlay - - - Debt Service: Principal requirement - - - Debt issuance costs - - - Interest and fiscal requirement - - - Total expenditures 1,018,158 2,018,239 41,824 Excess (deficiency) of revenues over expenditures (519,614) (758,535) (11,568) Other Financing Sources (Uses): Transfers in 600,000 904,211 - Transfers out (250,000) (145,676) - Total other financing sources (uses)350,000 758,535 - Net change in fund balances (169,614) - (11,568) Fund balances, July 1, 2020 732,616 327,116 208,525 FUND BALANCES, JUNE 30, 2021 563,002$ 327,116$ 196,957$ See auditors report on pages 11-12. CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES Special Revenue Funds Communication -114- Aid Program Municipal NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2021 Emergency Service Fund Special Revenue Funds CDBG Bed Grant Tax Fund Fund -$ 1,211,819$ 1,555,520$ - - 323,756 - - 494,042 197,500 - 225,734 - - 6,787 - - 591,984 197,500 1,211,819 3,197,823 - - 2,060,063 - - 1,018,158 197,500 1,211,819 1,409,319 - - - - - - - - - - - - - 197,500 1,211,819 4,487,540 - - (1,289,717) - - 1,504,211 - - (395,676) - - 1,108,535 - - (181,182) - - 1,268,257 -$ -$ 1,087,075$ Governmental Funds -115- Total Nonmajor Exhibit B-5 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Intergovernmental 480,000$ 494,042$ 14,042$ Interest 3,000 4,502 1,502 Total revenues 483,000 498,544 15,544 Expenditures: Public service 1,221,000 1,018,158 202,842 Excess (deficiency) of revenues over expenditures (738,000) (519,614) 218,386 Other Financing Sources (Uses): Transfers in 600,000 600,000 - Transfers out (250,000) (250,000) - Total other financing sources (uses)350,000 350,000 - Net change in fund balance (388,000)$ (169,614) 218,386$ Fund balance, July 1, 2020 732,616 FUND BALANCE, JUNE 30, 2021 563,002$ See auditors report on pages 11-12. -116- FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY MUNICIPAL AID PROGRAM FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-6 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Local contributions 395,000$ 343,701$ (51,299)$ Telephone surcharges 325,000 323,756 (1,244) Interest 1,000 263 (737) Miscellaneous 695,290 591,984 (103,306) Total revenues 1,416,290 1,259,704 (156,586) Expenditures: Public safety 2,045,240 2,018,239 27,001 Excess (deficiency) of revenues over expenditures (628,950) (758,535) (129,585) Other Financing Sources (Uses): Transfers in 789,375 904,211 114,836 Transfers out (160,425) (145,676) 14,749 Total other financing sources (uses)628,950 758,535 129,585 Net change in fund balance -$ - -$ Fund balance, July 1, 2020 327,116 FUND BALANCE, JUNE 30, 2021 327,116$ See auditors report on pages 11-12. -117- FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY EMERGENCY COMMUNICATION SERVICE FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-7 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Grants 30,000$ 28,234$ (1,766)$ Interest 1,200 2,022 822 Total revenues 31,200 30,256 (944) Expenditures: Public safety 70,750 41,824 28,926 Excess (deficiency) of revenues over expenditures (39,550) (11,568) 27,982 Net change in fund balance (39,550)$ (11,568) 27,982$ Fund balance, July 1, 2020 208,525 FUND BALANCE, JUNE 30, 2021 196,957$ See auditors report on pages 11-12. -118- CITY OF PADUCAH, KENTUCKY COURT AWARDS FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2021 Exhibit B-8 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Grants 197,500$ 197,500$ -$ Total revenues 197,500 197,500 - Expenditures: Planning and development 197,500 197,500 - Excess (deficiency) of revenues over expenditures - - - Other Financing Sources (Uses): Transfers in - - - Transfers out - - - Total other financing sources (uses)- - - Net change in fund balance -$ - -$ Fund balance, July 1, 2020 - FUND BALANCE, JUNE 30, 2021 -$ See auditors report on pages 11-12. -119- FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY CDBG FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL Exhibit B-9 Variance with Final Budget Final Positive Budget Actual (Negative) Revenues: Taxes -$ 1,211,819$ 1,211,819$ Grants - - - Other - - - Total revenues - 1,211,819 1,211,819 Expenditures: Planning and development - 1,211,819 (1,211,819) Excess (deficiency) of revenues over expenditures - - - Other Financing Sources (Uses): Operating transfers in - - - Operating transfers out - - - Net change in fund balance -$ - -$ Fund balance, July 1, 2020 - FUND BALANCE, JUNE 30, 2021 -$ See auditors report on pages 11-12. -120- FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY BED TAX FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR PROPRIETARY FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 COMBINING FINANCIAL STATEMENTS NONMAJOR PROPRIETARY FUNDS Section Eight Housing Fund – to account for the housing choice voucher program grant governed by the United States Department of Housing and Urban Development. Civic Center Fund – to account for the operation of the Civic Center. Transient Dock Fund – to account for the operation of the Transient Dock. Exhibit C-1 Civic Transient Center Dock Current Assets:Fund Fund Cash and cash equivalents 425,386$ -$ -$ 425,386$ Inventory - - 12,659 12,659 Total current assets 425,386 - 12,659 438,045 Noncurrent Assets: Net depreciable capital assets - 79,426 - 79,426 Total assets 425,386 79,426 12,659 517,471 Deferred Outflows of Resources: Deferred pension related outflows 20,857 - - 20,857 Deferred OPEB related outflows 24,435 - - 24,435 Total deferred outflows of resources 45,292 - - 45,292 Current Liabilities: Voucher and accounts payable 58,862 2,754 255 61,871 Accrued payroll - - 591 591 Accrued compensated absences 723 - - 723 Unearned revenues 64,814 - - 64,814 Due to other funds - - - - Total current liabilities 124,399 2,754 846 127,999 Noncurrent Liabilities: Net pension liability 170,242 - - 170,242 Net other post employment benefits liability 53,582 - - 53,582 Accrued compensated absences 6,505 - - 6,505 Total noncurrent liabilities 230,329 - - 230,329 Total liabilities 354,728 2,754 846 358,328 Deferred Inflows of Resources Deferred pension related inflows 728 - - 728 Deferred OPEB related inflows 9,900 - - 9,900 Total deferred inflows of resources 10,628 - - 10,628 Net invested in capital assets - 79,426 - 79,426 Restricted - Housing 105,322 - - 105,322 Unrestricted - (2,754) 11,813 9,059 TOTAL NET POSITION 105,322$ 76,672$ 11,813$ 193,807$ See auditors report on pages 11-12. CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS JUNE 30, 2021 ASSETS LIABILITIES NET POSITION -121- Total Nonmajor Enterprise Funds Section Eight Housing Exhibit C-2 Civic Transient Center Dock Operating Revenues:Fund Fund Charges for services -$ -$ 41,068$ 41,068$ Miscellaneous 466 - 84 550 Total operating income 466 - 41,152 41,618 Operating Expenses: Cost of sales and service 1,913,077 22,733 108,456 2,044,266 Depreciation and amortization - 10,021 - 10,021 Total operating expenses 1,913,077 32,754 108,456 2,054,287 Operating income (loss)(1,912,611) (32,754) (67,304) (2,012,669) Non-Operating Revenues (Expenses): Grants - program purpose 2,055,500 - - 2,055,500 Interest and investment income 27 - 34 61 Total nonoperating revenues (expenses)2,055,527 - 34 2,055,561 Income (loss) before contributions and transfers 142,916 (32,754) (67,270) 42,892 Contributions and Operating Transfers: Transfers in - 28,900 65,383 94,283 Transfers out - (14,820) - (14,820) Total contributions and operating transfers - 14,080 65,383 79,463 Change in net position 142,916 (18,674) (1,887) 122,355 Net position - beginning (37,594) 95,346 13,700 71,452 Net position - ending 105,322$ 76,672$ 11,813$ 193,807$ See auditors report on pages 11-12. COMBINING STATEMENT OF REVENUES, EXPENSES CITY OF PADUCAH, KENTUCKY Total Nonmajor Enterprise -122- FOR THE YEAR ENDED JUNE 30, 2021 NONMAJOR PROPRIETARY FUNDS AND CHANGES IN NET POSITION Funds Section Eight Housing Exhibit C-3 Civic Transient Center Dock Cash Flows from Operating Activities:Fund Fund Cash received from customers -$ -$ 41,152$ 41,152$ Payments to employees (37,968) - (18,496) (56,464) Payments to internal service funds (950) (2,302) - (3,252) Other receipts 466 - - 466 Housing assistance and other payments (1,939,230) (18,068) (88,073) (2,045,371) Net cash provided (used) by operating activities (1,977,682) (20,370) (65,417) (2,063,469) Cash Flows from Noncapital Financing Activities: Grants - program purpose 2,078,828 - - 2,078,828 Transfers from other funds - 28,900 65,383 94,283 Transfers to other funds - (14,820) - (14,820) Net cash provided (used) by noncapital financing activities 2,078,828 14,080 65,383 2,158,291 Cash Flows from Investing Activities: Interest on cash and investments 27 - 34 61 Net increase (decrease) in cash and cash equivalents 101,173 (6,290) - 94,883 Cash and cash equivalents, July 1, 2020 324,213 6,290 - 330,503 CASH AND CASH EQUIVALENTS, JUNE 30, 2021 425,386$ -$ -$ 425,386$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss)(1,912,611)$ (32,754)$ (67,304)$ (2,012,669)$ Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization - 10,021 - 10,021 Change in assets and liabilities: Inventory - - 1,198 1,198 Unearned revenues 23,328 - - 23,328 OPEB obligation and related deferrals (4,371) - - (4,371) Pension obligation and related deferrals (16,618) - - (16,618) Accounts payable and accrued expenses (67,410) 2,363 689 (64,358) NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (1,977,682)$ (20,370)$ (65,417)$ (2,063,469)$ See auditors report on pages 11-12. CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2021 -123- Section Eight Housing Total Nonmajor Enterprise Funds CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION INTERNAL SERVICE FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 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 Fleet Lease Insurance Insurance Combined Current Assets:Trust Fund Fund Total Cash and cash equivalents 8,997$ 2,327,497$ 504,847$ 2,074,912$ 4,916,253$ Investments - 1,000,000 250,000 1,750,000 3,000,000 Receivables, net 3,878 12,198 - 68,741 84,817 Prepaid expense - 515,360 - - 515,360 Inventories 62,256 - - - 62,256 Total current assets 75,131 3,855,055 754,847 3,893,653 8,578,686 Noncurrent Assets: Net depreciable capital assets 8,550 3,909,173 - - 3,917,723 Total assets 83,681 7,764,228 754,847 3,893,653 12,496,409 Deferred Outflows of Resources: Deferred pension related outflows 148,145 - - - 148,145 Deferred OPEB related outflows 135,171 - - - 135,171 Total deferred outflows of resources 283,316 - - - 283,316 Current Liabilities: Voucher and accounts payable 3,804 - 710 230,715 235,229 Accrued payroll and payroll taxes 17,071 - - - 17,071 Accrued compensated absences 25,129 - - - 25,129 Deferred revenue - - - 22,643 22,643 Total current liabilities 46,004 - 710 253,358 300,072 Noncurrent Liabilities: Pensions obligation 941,723 - - - 941,723 Other post employment benefits (OPEB)296,400 - - - 296,400 Accrued compensated absences 35,105 - - - 35,105 Total noncurrent liabilities 1,273,228 - - - 1,273,228 Total liabilities 1,319,232 - 710 253,358 1,573,300 Deferred Inflows of Resources Deferred pension related inflows 4,027 - - - 4,027 Deferred OPEB related inflows 54,768 - - - 54,768 Total deferred inflows of resources 58,795 - - - 58,795 Net invested in capital assets 8,550 3,909,173 - - 3,917,723 Unrestricted (1,019,580) 3,855,055 754,137 3,640,295 7,229,907 TOTAL NET POSITION (1,011,030)$ 7,764,228$ 754,137$ 3,640,295$ 11,147,630$ See auditors report on pages 11-12. -124- CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2021 LIABILITIES ASSETS NET POSITION Fleet Maintenance Exhibit D-2 Health Fleet Lease Insurance Insurance Combined Trust Fund Fund Total Operating Revenues: Charges for services - internal 409,322$ 1,003,323$ 1,341,492$ 3,217,288$ 5,971,425$ Charges for services - external - - - 278,495 278,495 Total operating revenues 409,322 1,003,323 1,341,492 3,495,783 6,249,920 Operating Expenses: Vehicle maintenance 680,690 140,651 - - 821,341 Administrative - 53,314 - 617,104 670,418 Insurance premium, claims and medical - -1,369,970 2,677,102 4,047,072 Depreciation 5,130 959,165 - - 964,295 Total operating expenses 685,820 1,153,130 1,369,970 3,294,206 6,503,126 Operating income (loss)(276,498) (149,807) (28,478) 201,577 (253,206) Nonoperating Revenues and (Expenses): Interest and investment income - 29,542 - 25,949 55,491 Gain (loss) on disposal of property and equipment 3,304 42,531 - - 45,835 Total nonoperating revenues (expenses)3,304 72,073 - 25,949 101,326 Income (loss) before transfers (273,194) (77,734) (28,478) 227,526 (151,880) Contributions and Transfers: Transfers in 128,348 6,638 140,231 - 275,217 Transfers out - - - (65,000) (65,000) Total contributions and operating transfers 128,348 6,638 140,231 (65,000) 210,217 Change in net position (144,846) (71,096) 111,753 162,526 58,337 Net position - beginning (866,184)7,835,324 642,384 3,477,769 11,089,293 Net position - ending (1,011,030)$ 7,764,228$ 754,137$ 3,640,295$ 11,147,630$ See auditors report on pages 11-12. -125- Fleet Maintenance CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 Exhibit D-3 Health Fleet Lease Insurance Insurance Combined Cash Flows from Operating Activities:Trust Fund Fund Total Receipts from other funds for services 410,773$ 1,334,182$ 1,341,834$ 3,523,384$ 6,610,173$ Payments to suppliers (346,066) 684,640 - - 338,574 Payments to employees (208,901) - - - (208,901) Insurance premium, claims and medical - - (1,405,119) (2,554,840) (3,959,959) Other payments - (193,965) - (617,103) (811,068) Net cash provided (used) by operating activities (144,194) 1,824,857 (63,285) 351,441 1,968,819 Cash Flows from Noncapital Financing Activities: Transfers from other funds 128,348 6,638 140,231 - 275,217 Transfers to other funds - - - (65,000) (65,000) Net cash provided (used) by noncapital financing activities 128,348 6,638 140,231 (65,000) 210,217 Cash Flows from Capital and Related Financing Activities: Proceeds from sale of capital assets 3,304 42,531 - - 45,835 Purchase of capital assets - (1,618,077) - - (1,618,077) Net cash used by capital and related financing 3,304 (1,575,546) - - (1,572,242) Cash Flows from Investing Activities: Interest and dividends - 29,542 - 25,949 55,491 Purchase of investments - - - - - Net cash used by investing activities - 29,542 - 25,949 55,491 Net increase (decrease) in cash and cash equivalents (12,542) 285,491 76,946 312,390 662,285 Cash and cash equivalents, July 1, 2020 21,539 2,042,006 427,901 1,762,522 4,253,968 CASH AND CASH EQUIVALENTS, JUNE 30, 2021 8,997$ 2,327,497$ 504,847$ 2,074,912$ 4,916,253$ Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss)(276,498)$ (149,807)$ (28,478)$ 201,577$ (253,206)$ Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization 5,130 959,165 - - 964,295 Change in assets and liabilities: Receivables 1,451 330,859 342 28,731 361,383 Prepaid expense - 684,640 - - 684,640 Inventories (9,433) - - - (9,433) OPEB obligation and related deferrals 19,190 - - - 19,190 Pension obligation and related deferrals 104,083 - - - 104,083 Accounts payable and accrued expenses 11,883 - (35,149) 121,133 97,867 NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES (144,194)$ 1,824,857$ (63,285)$ 351,441$ 1,968,819$ See auditors report on pages 11-12. -126- Fleet Maintenance CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2021 CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION FIDUCIARY FUNDS COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 COMBINING FINANCIAL STATEMENTS FIDUCIARY FUNDS Private-purpose Trust Funds Cemetery and Park Trusts - to account for assets held by the City in the capacity of trustee for specified purposes. Exhibit E-1 Cemetery and Park Trusts Cash and cash equivalents 45,642$ Investments at fair value Money market funds - Mutual funds 1,308,348 Total assets 1,353,990 Accounts payable - Held in trust for other purposes 1,353,990$ See auditors report on pages 11-12. STATEMENT OF NET POSITION CITY OF PADUCAH, KENTUCKY -127- ASSETS LIABILITIES NET POSITION JUNE 30, 2021 FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS Exhibit E-2 Cemetery and Park Additions:Trusts Contributions: Intergovernmental revenues -$ Private donations 4,080 Total contributions 4,080 Investment earnings: Change in fair value of investments 162,022 Interest and dividends 141,580 Net investment earnings 303,602 Total additions 307,682 Deductions: Capital outlay 97,762 Administrative expenses 15,341 Total deductions 113,103 Change in net position 194,579 Net position - beginning 1,159,411 Net position - ending 1,353,990$ See auditors report on pages 11-12. STATEMENT OF CHANGES IN NET POSITION CITY OF PADUCAH, KENTUCKY -128- FOR THE YEAR ENDED JUNE 30, 2021 FIDUCIARY FUNDS - PRIVATE-PURPOSE TRUST FUNDS CITY OF PADUCAH, KENTUCKY STATISTICAL SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 STATISTICAL SECTION Contents Page Financial Trends 129-133 Revenue Capacity 134-139 Debt Capacity 140-143 Economic and Demographic Information 144-145 Operating Information 146-148 These schedules offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. These schedules contain service and infrastructure data to help the reader understand how the information in the City's financial report relates to the services the City provides and the activities it performs. Sources:Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 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. These schedules contain trend information to help the reader understand how the City's financial performance and well-being changed over time. These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and employee taxes. These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 2021 2020 2019 2018 (1)2017 2016 2015 (2)2014 2013 2012 Governmental activities: Net Invested in Capital Assets 57,608,864$ 57,368,777$ 55,243,449$ 55,031,812$ 52,898,618$ 46,389,685$ 39,349,789$ 39,844,772$ 33,365,112$ 31,957,381$ Restricted for: Program purposes 196,957 208,525 213,379 128,699 131,055 147,218 144,857 205,979 284,760 897,942 Capital projects 563,002 732,616 964,320 1,959,953 2,137,650 1,148,789 2,427,218 2,168,201 1,301,421 4,105,639 Unrestricted (45,053,843) (42,955,542) (37,543,113) (34,235,978) (17,834,152) (23,323,077) (22,209,537) 13,382,066 13,539,204 5,913,997 Total governmental activities net position 13,314,980$ 15,354,376$ 18,878,035$ 22,884,486$ 37,333,171$ 24,362,615$ 19,712,327$ 55,601,018$ 48,490,497$ 42,874,959$ Business-type activities: Net Invested in Capital Assets 2,094,123 2,465,553 2,494,761 2,876,483 2,152,827 1,678,728 1,133,226 1,210,415 1,232,735 1,308,574 Restricted for: Program purposes 105,322 - -- -38,247 124,012 437,483 385,885 732,817 Unrestricted (465,011) (393,937) 256,715 159,847 1,513,281 3,194,228 3,033,822 3,837,034 3,428,267 3,246,320 Total business-type activities net postion 1,734,434$ 2,071,616$ 2,751,476$ 3,036,330$ 3,666,108$ 4,911,203$ 4,291,060$ 5,484,932$ 5,046,887$ 5,287,711$ Primary government: Net Invested in Capital Assets 59,702,987 59,834,330 57,738,210 57,908,295 55,051,445 48,068,413 40,483,015 41,055,187 34,597,847 33,265,955 Restricted for: Program purposes 302,279 208,525 213,379 128,699 131,055 185,465 268,869 643,462 670,645 1,630,759 Capital projects 563,002 732,616 964,320 1,959,953 2,137,650 1,148,789 2,427,218 2,168,201 1,301,421 4,105,639 Unrestricted (45,518,854) (43,349,479) (37,286,398) (34,076,131) (16,320,871) (20,128,849) (19,175,715) 17,219,100 16,967,471 9,160,317 Total primary government net position 15,049,414$ 17,425,992$ 21,629,511$ 25,920,816$ 40,999,279$ 29,273,818$ 24,003,387$ 61,085,950$ 53,537,384$ 48,162,670$ (1)Significant change in governmental and business-type net position due to implementation of GASB No. 75 - Accounting and Financial Reporting for Other Postemployment Benefits other than Pensions. (2)Significant change in governmental and business-type net position due to implementation of GASB No. 68 - Accounting and Financial Reporting for Pensions. Fiscal Year TABLE 1 CITY OF PADUCAH, KENTUCKY NET POSITION BY COMPONENT Last Ten Fiscal Years (accrual basis of accounting) -129- Pages 1 of 2 2021 2020 2019 2018 (1)2017 2016 2015 (2)2014 2013 2012 Expenses Governmental activities: General government 12,846,090$ 10,574,490$ 8,891,713$ 9,590,575$ 8,652,987$ 9,777,876$ 9,801,489$ 8,005,619$ 7,843,140$ 12,937,997$ Public safety 28,084,323 27,623,826 27,002,119 25,602,852 20,176,070 20,503,784 17,974,548 18,439,670 18,204,945 17,045,731 Public service 6,761,258 7,491,652 7,681,383 7,511,063 7,771,335 10,266,856 6,855,234 6,982,536 6,167,510 6,163,602 Parks and recreation 3,477,584 3,597,301 3,544,515 3,397,087 3,059,447 3,052,360 2,811,533 2,750,531 2,710,659 2,654,098 Planning and development 2,284,229 2,049,447 3,511,710 1,455,677 1,077,265 911,830 1,000,020 1,805,379 1,463,659 1,192,952 Interest on long-term debt 694,776 1,026,449 800,175 861,589 885,380 900,593 850,827 1,084,016 1,066,876 1,059,537 Total governmental activities expenses 54,148,260 52,363,165 51,431,615 48,418,843 41,622,484 45,413,299 39,293,651 39,067,751 37,456,789 41,053,917 Business-type activities: Solid Waste 4,849,815 5,302,783 4,512,447 4,096,022 3,902,907 3,815,476 3,843,081 3,985,233 3,967,490 3,900,264 Section Eight Housing 1,913,079 1,620,623 2,046,520 2,064,408 1,952,441 1,874,074 1,819,328 1,855,869 2,032,843 1,921,004 Civic Center 30,004 57,990 70,956 76,639 92,471 74,457 98,318 81,982 78,000 71,069 Transit Boat Dock 108,371 83,834 93,047 50,535 1,031 - - - - - TISA - - - - - - - - - 173,708 Total business-type activities expenses 6,901,269 7,065,230 6,722,970 6,287,604 5,948,850 5,764,007 5,760,727 5,923,084 6,078,333 6,066,045 Total primary government expenses 61,049,529$ 59,428,395$ 58,154,585$ 54,706,447$ 47,571,334$ 51,177,306$ 45,054,378$ 44,990,835$ 43,535,122$ 47,119,962$ Program Revenues Governmental activities: Charges for services: General government 1,268,310$ 1,946,225$ 1,347,624$ 1,276,959$ 1,650,034$ 1,128,785$ 185,745$ 1,672,552$ 1,525,212$ 1,488,845$ Public safety 363,503 348,524 523,209 571,427 340,705 237,641 237,222 264,143 354,829 509,297 Public service 985,735 981,243 994,610 962,822 967,518 1,065,010 945,471 960,271 963,893 1,032,953 Parks and recreation 35,371 50,677 126,473 125,996 121,929 132,909 108,307 105,248 106,183 97,896 Planning and development - - - - - - - - - - Operating grants and contributions 5,036,389 3,000,719 2,513,938 2,441,864 7,509,005 6,179,709 3,360,731 5,419,715 3,067,581 2,215,247 Capital grants and contributions 1,662,014 2,192,974 1,685,423 542,980 3,702,428 4,139,036 899,522 4,136,749 2,165,548 533,169 Total governmental activities program revenues 9,351,322 8,520,362 7,191,277 5,922,048 14,291,619 12,883,090 5,736,998 12,558,678 8,183,246 5,877,407 Business-type activities: Solid Waste 4,561,051$ 4,738,408$ 4,597,398$ 4,555,488$ 4,567,392$ 4,520,084$ 4,453,865$ 4,410,059$ 4,372,060$ 4,437,341$ Section Eight Housing 466 299 1,504 - - - - - - - Civic Center (2,750) 15,423 29,784 35,670 36,725 40,148 43,486 41,266 38,265 34,038 Transit Boat Dock 41,068 72,788 79,362 43,534 - - - - - - TISA - - - - - - - - - 99,603 Operating grants and contributions 2,118,215 1,903,339 2,057,051 1,965,868 1,962,125 1,845,549 1,744,364 1,956,995 1,727,238 1,647,981 Capital grants and contributions - - - - - - - - - 15,266 Total business-type activities program revenues 6,718,050 6,730,257 6,765,099 6,600,560 6,566,242 6,405,781 6,241,715 6,408,320 6,137,563 6,234,229 Total primary government program revenues 16,069,372$ 15,250,619$ 13,956,376$ 12,522,608$ 20,857,861$ 19,288,871$ 11,978,713$ 18,966,998$ 14,320,809$ 12,111,636$ Fiscal Year -130- TABLE 2 CITY OF PADUCAH, KENTUCKY CHANGES IN NET POSITION Last Ten Fiscal Years (accrual basis of accounting) Pages 2 of 2 2021 2020 2019 2018 (1)2017 2016 2015 (2)2014 2013 2012 Net (Expense)/Revenue Governmental activities (44,796,938)$ (43,842,803)$ (44,240,338)$ (42,496,795)$ (27,330,865)$ (32,530,209)$ (33,556,653)$ (26,509,073)$ (29,273,543)$ (35,176,510)$ Business-type activities (183,219) (334,973) 42,129 312,956 617,392 641,774 480,988 485,236 59,230 168,184 Total primary government net (expense)(44,980,157)$ (44,177,776)$ (44,198,209)$ (42,183,839)$ (26,713,473)$ (31,888,435)$ (33,075,665)$ (26,023,837)$ (29,214,313)$ (35,008,326)$ General Revenues and Other Changes in Net Position Governmental activities: Taxes and licenses: Property taxes, levied for general purpose 5,915,288 5,670,956 5,449,122 5,248,369 4,996,242 4,943,962 4,726,244 4,622,292 4,502,276 4,267,812 Insurance premium tax 5,819,896 4,712,859 4,486,038 4,592,834 4,331,956 4,170,381 3,786,514 3,831,792 3,863,464 3,690,806 Gross receipts license tax 4,530,125 4,307,270 4,367,410 4,631,352 4,721,657 4,711,708 4,397,888 4,444,440 4,391,352 4,359,835 Employee license tax 22,064,353 21,490,918 21,648,742 21,054,644 20,803,763 20,130,249 19,092,912 18,114,396 18,336,124 18,095,182 Other taxes 3,818,918 3,060,362 2,941,096 3,044,203 2,933,407 2,759,902 2,964,685 2,785,333 2,799,043 2,711,924 Intergovernmental revenue - - - - - - - - - - Unrestricted investment earnings 368,425 610,727 728,227 428,721 188,097 137,224 176,229 232,204 211,306 203,261 Miscellaneous - - 99,208 14,190 51,922 189,489 16,870 (482,137) 300,378 36,718 Insurance recoveries - - - - - - - - - 27,448 Litigation settlement - - - - - - - - - - Transfers in/out 240,537 466,050 514,046 390,048 2,274,377 137,582 194,014 212,128 485,138 270,620 Total governmental activities 42,757,542 40,319,142 40,233,889 39,404,361 40,301,421 37,180,497 35,355,356 33,760,448 34,889,081 33,663,606 Business-type activities: Unrestricted investment earnings 27,226 68,177 91,140 54,139 37,644 30,302 39,565 48,255 49,382 48,806 Miscellaneous 59,348 72,986 75,923 (13,063) 374,244 85,649 8,339 116,682 135,702 2,443 Transfers (240,527) (466,050) (514,046) (390,048) (2,274,377) (137,582) (194,014) (212,128) (485,138) (270,620) Total business-type activities (153,953) (324,887) (346,983) (348,972) (1,862,489) (21,631) (146,110) (47,191) (300,054) (219,371) Change in Net Position Governmental activities:(2,039,396) (3,523,661) (4,006,449) (3,092,434) 12,970,556 4,650,288 1,798,703 7,251,375 5,615,538 (1,512,904) Business-type activities:(337,172) (659,860) (304,854) (36,016) (1,245,097) 620,143 334,878 438,045 (240,824) (51,187) Total primary government (2,376,568)$ (4,183,521)$ (4,311,303)$ (3,128,450)$ 11,725,459$ 5,270,431$ 2,133,581$ 7,689,420$ 5,374,714$ (1,564,091)$ (1)Significant change in governmental and business-type net position due to implementation of GASB No. 75 - Accounting and Financial Reporting for Other Postemployment Benefits other than Pensions. (2)Significant change in governmental and business-type net position due to implementation of GASB No. 68 - Accounting and Financial Reporting for Pensions. (accrual basis of accounting) CHANGES IN NET POSITION -131- Fiscal Year CITY OF PADUCAH, KENTUCKY Last Ten Fiscal Years TABLE 2 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 General Fund Committed for: Pension reserve 670,365$ 670,365$ -$ -$ -$ -$ -$ -$ -$ -$ Unassigned 21,538,628 18,974,268 19,184,079 17,697,273 15,330,645 13,198,126 12,549,232 12,694,610 12,311,565 11,321,438 Total general fund 22,208,993$ 19,644,633$ 19,184,079$ 17,697,273$ 15,330,645$ 13,198,126$ 12,549,232$ 12,694,610$ 12,311,565$ 11,321,438$ All Other Governmental Funds Nonspendable: Inventory 376,339$ 453,398$ 474,816$ 471,135$ 525,732$ 623,735$ 828,419$ 1,497,659$ 1,336,234$ 1,098,304$ Restricted for: Program purposes 759,959 941,141 996,071 758,139 736,461 1,296,007 1,303,030 205,979 284,760 1,236,780 Capital improvements 19,779,154 19,977,142 181,628 1,330,513 1,532,244 - 1,269,045 2,168,201 1,301,421 286,276 Committed for: Capital improvements 3,655,121 2,934,287 2,352,368 2,310,621 2,387,922 2,018,581 1,814,834 1,758,934 2,589,099 2,631,233 Assigned for: Program purposes 1,835,723 1,599,371 1,491,921 1,323,941 1,325,941 1,049,802 951,296 802,692 752,691 472,235 Capital improvements 6,370,850 4,184,306 3,987,920 5,851,629 7,429,412 5,179,330 4,665,475 3,206,412 3,055,250 1,487,938 Total all other governmental funds 32,777,146$ 30,089,645$ 9,484,724$ 12,045,978$ 13,937,712$ 10,167,455$ 10,832,099$ 9,639,877$ 9,319,455$ 7,212,766$ -132- Fiscal Year TABLE 3 CITY OF PADUCAH, KENTUCKY Fund Balances, Governmental Funds Last Ten Fiscal Years (modified accrual basis of accounting) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Revenues: Taxes 9,774,901$ 8,652,093$ 7,803,520$ 7,741,994$ 7,310,257$ 6,976,933$ 6,987,173$ 6,713,889$ 6,583,690$ 6,343,608$ Licenses 32,871,864 30,962,169 30,987,476 30,817,507 30,360,825 29,606,552 27,804,759 26,987,110 27,197,290 26,753,432 Charges for services 922,955 918,894 980,827 1,037,668 964,766 884,259 848,971 851,080 815,791 817,607 Intergovernmental 1,806,439 1,305,247 1,246,666 1,243,856 1,140,622 1,132,852 1,244,417 2,624,363 1,240,312 1,191,835 Grants 4,565,348 2,832,657 2,580,700 1,056,687 6,476,765 8,892,529 2,496,329 5,923,651 3,737,402 1,699,399 Interest 312,932 495,449 594,569 364,975 144,079 115,922 148,411 199,583 175,371 162,580 Other 4,150,383 2,605,489 2,292,786 2,746,311 2,389,230 2,085,412 2,408,193 3,271,860 2,743,698 1,902,075 Total revenues 54,404,822 47,771,998 46,486,544 45,008,998 48,786,544 49,694,459 41,938,253 46,571,536 42,493,554 38,870,536 Expenditures: General government 5,448,505 5,083,231 4,776,778 5,282,385 4,881,298 4,526,828 4,484,105 4,311,103 4,481,485 5,117,194 Public safety 21,741,834 20,699,568 20,216,219 19,755,167 18,923,070 18,435,365 18,524,763 18,475,471 18,174,349 18,479,428 Public service 6,006,971 6,638,775 7,135,831 6,856,203 6,515,997 6,106,773 6,165,664 6,323,481 5,710,018 5,596,702 Parks and recreation 2,945,053 3,240,206 3,255,263 3,129,032 3,012,236 2,929,404 2,842,460 2,602,348 2,426,234 2,677,781 Planning and development 2,482,941 1,976,496 1,290,569 1,071,878 936,855 910,379 950,297 2,086,527 1,776,897 2,372,314 Other 1,393,692 431,505 430,441 441,674 393,812 441,742 247,878 640,452 766,847 516,534 Capital outlay 4,499,609 6,386,992 10,433,993 5,077,017 10,287,203 13,305,919 4,708,663 11,926,435 4,324,821 2,104,993 Debt service: Principal requirement 3,575,792 2,763,738 2,443,416 2,357,542 2,244,361 2,137,759 2,158,385 1,748,233 1,698,468 1,434,246 Debt issuance costs 49,076 182,105 86,283 - - - 51,461 109,292 - - Interest and fiscal requirement 1,184,922 812,040 787,368 804,620 810,917 845,609 817,191 1,086,866 1,089,447 1,114,852 Total expenditures 49,328,395 48,214,656 50,856,161 44,775,518 48,005,749 49,639,778 40,950,867 49,310,208 40,448,566 39,414,044 Other Financing Sources (Uses): Bonds issued 3,020,000 20,520,000 5,370,000 - - - 4,225,000 9,055,000 - - Payment to bond escrow agent (3,187,734) - (2,815,573) - - - (4,143,964) (5,627,447) - - Premium on debt issued 232,710 - 332,097 - - - - 220,683 - - Discount on debt issued (11,955) (64,666) - - - - (29,576) (53,529) - - Long-term debt draws/issued 48,236 463,262 133,749 - 3,000,000 - - - 308,112 101,983 Capital lease - - - - - - - - 405,796 405,796 Transfers in 10,982,495 9,681,148 10,644,129 6,330,766 10,377,609 10,034,851 7,785,410 9,148,761 7,462,944 5,888,847 Transfers out (10,908,318) (9,091,611) (10,369,233) (6,089,352) (8,255,627) (10,105,282) (7,780,785) (9,199,119) (7,125,024) (5,809,539) Total other financing sources (uses)175,434 21,508,133 3,295,169 241,414 5,121,982 (70,431) 56,085 3,544,349 1,051,828 587,087 Net change in fund balances 5,251,861$ 21,065,475$ (1,074,448)$ 474,894$ 5,902,777$ (15,750)$ 1,043,471$ 805,677$ 3,096,816$ 43,579$ Capital outlay (1)4,056,766$ 5,253,907$ 7,057,338$ 4,871,811$ 8,180,134$ 9,718,561$ 1,481,948$ 10,843,726$ 4,034,424$ 2,156,290$ Debt service as a percentage of noncapital expenditures 10.52%8.32%7.38%7.92%7.67%7.47%7.54%7.37%7.66%6.84% (1) Capital outlay is reported on the Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities. -133- Fiscal Year (modified accrual basis of accounting) TABLE 4 CITY OF PADUCAH, KENTUCKY Changes in Fund Balances, Governmental Funds Last Ten Fiscal Years Total Estimated Direct Fiscal Personal Actual Tax Year Commercial Residential Property Franchise Total Value Rate Exemptions 2012 781,685,815 685,984,380 524,400,400 48,227,212 2,040,297,807 2,108,802,723 0.287 96.8%68,504,916 2013 787,762,105 731,842,861 564,154,697 60,279,730 2,144,039,393 2,214,978,356 0.288 96.8%70,938,963 2014 826,805,152 743,249,074 585,142,381 41,487,586 2,196,684,193 2,270,597,754 0.292 96.7%73,913,561 2015 851,731,625 751,761,832 582,368,709 73,944,847 2,259,807,013 2,333,746,718 0.291 96.8%73,939,705 2016 902,687,182 783,886,570 573,896,954 57,561,993 2,318,032,699 2,394,834,871 0.289 96.8%76,802,172 2017 900,450,880 802,111,012 603,335,847 66,110,416 2,372,008,155 2,448,169,297 0.290 96.9%76,161,142 2018 945,354,526 842,349,240 746,891,857 81,951,770 2,616,547,393 2,697,740,881 0.295 97.0%81,193,488 2019 959,205,670 882,316,666 550,296,896 65,404,364 2,457,223,596 2,541,130,248 0.291 96.7%83,906,652 2020 988,724,688 903,643,347 518,116,004 40,179,286 2,450,663,325 2,539,860,943 0.293 96.5%89,197,618 2021 1,041,983,926 936,331,898 584,105,652 107,578,333 2,669,999,809 2,758,847,489 0.295 96.8%88,847,680 Source: McCracken County Property Valuation Administrator Notes: Property in McCracken county is reassessed once every four years on average. -134- TABLE 5 CITY OF PADUCAH, KENTUCKY ASSESSED AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS Estimated Value Percent Assessed ToAssessed Value Real Estate Total Fiscal Real Direct Real Real Real Real Year Estate Personal Rate Estate Personal Estate Personal Estate Personal Estate Personal 2012 0.250 0.390 0.287 0.504 0.504 0.747 0.747 0.018 0.018 0.098 0.119 2013 0.250 0.390 0.288 0.504 0.504 0.747 0.747 0.017 0.017 0.096 0.102 2014 0.255 0.390 0.292 0.504 0.504 0.767 0.767 0.017 0.017 0.095 0.101 2015 0.255 0.390 0.291 0.495 0.495 0.771 0.771 0.017 0.017 0.094 0.095 2016 0.255 0.390 0.289 0.524 0.524 0.800 0.800 0.017 0.017 0.098 0.102 2017 0.255 0.390 0.290 0.516 0.516 0.799 0.799 0.017 0.017 0.096 0.098 2018 0.255 0.390 0.295 0.520 0.530 0.797 0.797 0.016 0.016 0.094 0.094 2019 0.261 0.390 0.291 0.538 0.538 0.840 0.840 0.016 0.016 0.096 0.132 2020 0.267 0.390 0.293 0.538 0.538 0.864 0.864 0.016 0.016 0.101 0.142 2021 0.267 0.390 0.295 0.538 0.538 0.864 0.864 0.016 0.016 0.105 0.139 Source: McCracken County Property Valuation Administrator and City Tax Levy Ordinance. General Fund City Direct Rates McCracken Co.City of Paducah -135- McCracken Paducah School Districts School Districts Junior College County TABLE 6 CITY OF PADUCAH, KENTUCKY PROPERTY TAX RATES - DIRECT AND OVERLAPPING GOVERNMENTS (PER $100 OF ASSESSED VALUE) LAST TEN FISCAL YEARS (1)(2) (1)(2) Assessed Assessed Taxpayer Valuation Valuation Kentucky Oaks Mall 58,870,100$ 2.40%50,900,262$ 2.48% Cpark Paducah LLC 20,111,900 0.82% Paducah Medical Investors 13,440,090 0.55%13,440,090 0.65% Ducmall LLC 13,119,800 0.54%14,374,800 0.70% Woodstone Enterprises LP 12,429,000 0.51% Wal Mart Real Estate Business 10,646,400 0.43%10,646,400 0.52% Greenway Village LLC 10,070,624 0.41% Superior Care Homes Properties 10,040,000 0.41% S & R Investments 10,000,000 0.41% WKO Holdings LLC 9,939,200 0.41% Sams Real Estate Business Trust 9,222,955 0.45% Computer Services Inc 9,083,185 0.44% Wal-Mart Store 9,000,000 0.44% USF Propco I LLC 8,156,900 0.40% Lowes Home Centers, Inc.8,134,350 0.40%Brooks Properties, Inc.7,800,000 0.38% TOTALS 168,667,114$ 6.88%140,758,942$ 6.86% (1) Source - Property Valuation Administration; Assessed value as of January 1, 2020. (2) Source - Property Valuation Administration; Assessed value as of January 1, 2011. -136- Percentage of Percentage of Total Assessed Total Assessed Valuation Valuation TABLE 7 CITY OF PADUCAH, KENTUCKY PRINCIPAL TAXPAYERS - PROPERTY TAX CURRENT YEAR AND NINE YEARS PRIOR 2021 2012 Total Collections to Date (1) (1)Percent of Percent of Amount of Levy Total Levy Collections Collected Collections Collected 4,214,882 4,119,689 97.7%90,693 4,210,382 99.9% 4,427,258 4,334,698 97.9%87,432 4,422,130 99.9% 4,593,600 4,509,874 98.2%77,861 4,587,735 99.9% 4,718,003 4,644,522 98.4%65,746 4,710,268 99.8% 4,879,858 4,802,067 98.4%67,044 4,869,111 99.8% 4,989,629 4,888,303 98.0%86,873 4,975,176 99.7% 5,212,183 5,120,761 98.2%67,498 5,188,259 99.5% 5,454,811 5,323,669 97.6%97,379 5,421,048 99.4% 5,647,745 5,506,011 97.5%73,161 5,579,172 98.8% 5,686,508 5,563,728 97.8%- 5,563,728 97.8% (1) Includes current year real and personal property tax. * Source - City of Paducah Finance Department. 2014 Fiscal for the 2012 2013 TABLE 8 CITY OF PADUCAH, KENTUCKY SECURED TAX LEVIES AND COLLECTIONS* LAST TEN FISCAL YEARS June 30, Ended Year Fiscal Year Collections in Subsequent Years Collected within the Fiscal Year of the Levy Taxes Levied 2017 2015 2016 2019 -137- 2018 2020 2021 (1)Direct Fiscal Taxes Tax Year Collected Rate 2012 18,095,182 2.00% 2013 18,336,124 2.00% 2014 18,114,396 2.00% 2015 19,092,911 2.00% 2016 20,130,158 2.00% 2017 20,803,763 2.00% 2018 21,054,644 2.00% 2019 21,648,742 2.00% 2020 21,490,917 2.00% 2021 22,064,353 2.00% 200,831,190 (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -138- TABLE 9 CITY OF PADUCAH, KENTUCKY EMPLOYEE LICENSE TAX COLLECTIONS LAST TEN FISCAL YEARS (1)Percentage of Number of Percentage Taxes Total Employee Filers of Total Collected License Tax $0 - $50,000 2,231 97.64%10,515,193 47.66% $50,001 - $100,000 26 1.14%1,792,486 8.12% $100,001 - $500,000 23 1.01%4,258,719 19.30% Greater than $500,000 5 0.22%5,497,955 24.92% TOTALS 2,285 100.00%22,064,353$ 100.00% (1)Percentage of Number of Percentage Taxes Total Employee Filers of Total Collected License Tax $0 - $50,000 2,466 97.82%8,496,955 46.96% $50,001 - $100,000 31 1.23%2,198,285 12.15% $100,001 - $500,000 22 0.87%4,363,850 24.12% Greater than $500,000 2 0.08%3,036,092 16.78% TOTALS 2,521 100.00%18,095,182$ 100.00% (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -139- Taxpayers By Range Taxpayers By Range 2021 2012 TABLE 10 CITY OF PADUCAH, KENTUCKY PRINCIPAL EMPLOYEE LICENSE TAXPAYERS CURRENT YEAR AND NINE YEARS PRIOR (1) Ratio of (3) Reported Net Net Net Debt as (2) General Refunding Total Debt to Percentage Net Fiscal Obligation Capital Revenue Primary Actual of Personal Debt Per Year Bonds Lease Bonds Government Value Income Capita 2012 23,651,493 7,320,328 - - - 30,971,821 1.47 6.16%1,238 2013 22,361,906 6,920,838 - - - 29,282,744 1.32 5.82%1,170 2014 24,706,291 6,519,356 - - - 31,225,647 1.38 6.21%1,248 2015 23,320,347 6,101,064 - - - 29,421,411 1.26 5.85%1,176 2016 21,595,096 5,686,435 - - - 27,281,531 1.14 5.42%1,090 2017 19,815,809 8,218,304 - - - 28,034,113 1.15 5.57%1,120 2018 17,992,494 7,806,701 - - - 25,799,195 0.96 5.13%1,031 2019 19,863,092 6,451,453 - - - 26,314,545 1.04 5.23%1,052 2020 38,041,738 6,365,985 - - - 44,407,723 1.75 8.83%1,775 2021 34,831,438 6,063,429 - - - 40,894,867 1.48 8.13%1,507 Notes: Details regarding the City's outstanding debt can be found in the notes to the financial statements. (1) See Table 5 for estimated actual property value. This ratio is calculated using estimated property value for the prior year. (2) See Table 16 for population data. (3) See Table 16 for personal income data TABLE 11 CITY OF PADUCAH, KENTUCKY RATIO OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS Public -140- Improvement Debt Net Public Debt Improvement (1) Ratio of Public Net Convention &Rental Floodwall Improvement Public Pool Economic Riverfront Recreation Bonds to Fiscal Art Center Building Rehabilitation Project Renovation Development and E911 Facility Actual Year Bonds Bonds Bonds Bonds Bonds Bonds Equipment Bonds Total Value 2012 6,630,000 4,895,000 3,630,000 2,455,210 6,100,000 - - - - (58,717) 23,651,493 1.12 945 2013 6,220,000 4,655,000 3,370,000 2,341,790 5,825,000 - - - - (49,884) 22,361,906 1.01 894 2014 5,805,000 4,400,000 3,100,000 2,224,863 5,460,000 1,120,000 2,475,000 - - 121,428 24,706,291 1.09 987 2015 5,385,000 4,435,000 2,820,000 2,104,212 5,100,000 1,055,000 2,330,000 - - 91,135 23,320,347 1.00 932 2016 4,955,000 4,055,000 2,530,000 1,990,271 4,805,000 990,000 2,185,000 - - 84,825 21,595,096 0.90 863 2017 4,515,000 3,660,000 2,230,000 1,862,123 4,505,000 925,000 2,040,000 - - 78,686 19,815,809 0.81 792 2018 4,065,000 3,255,000 1,920,000 1,729,992 4,195,000 860,000 1,895,000 - - 72,502 17,992,494 0.67 719 2019 3,610,000 2,845,000 1,600,000 2,355,000 3,870,000 790,000 1,750,000 2,700,000 - 343,092 19,863,092 0.78 794 2020 3,140,000 2,420,000 1,265,000 2,045,000 3,560,000 720,000 1,600,000 2,555,000 20,520,000 216,738 38,041,738 1.50 1,520 2021 2,525,000 1,985,000 - 1,715,000 3,240,000 650,000 1,445,000 2,400,000 20,520,000 351,438 34,831,438 1.26 1,284 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 12 CITY OF PADUCAH, KENTUCKY RATIO OF NET GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS Police and Fire Pension Fund Bonds -141- Capita Amortization of Discounts and Premiums (2) Net Bonds Per Estimated (1)Share of Reported Percentage Direct and Debt Applicable Overlapping Outstanding to the City Debt City of Paducah 40,894,867$ 100.00%40,894,867$ Paducah Independent School District 58,597,000 *100.00%58,597,000 McCracken County 19,663,685 *45.70%8,986,304 McCracken County Board of Education 80,525,000 *32.40%26,090,100 Overlapping debt 158,785,685 93,673,404 TOTAL DIRECT AND OVERLAPPING DEBT 199,680,552$ 134,568,271$ (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. -142- TABLE 13 CITY OF PADUCAH, KENTUCKY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2021 Net assessed value 2,669,999,809$ Add exemption 88,847,680 Total assessed value 2,758,847,489$ Debt limit - 10% of total assessed (1)275,884,749$ Debt outstanding: General obligation bonds outstanding 34,831,438$ Note payable 6,063,429 Less debt not subject to limit - Gross bonded debt 40,894,867 Less amount available in debt service funds 1,505,449 Net bonded indebtedness subject to limit 39,389,418 LEGAL DEBT MARGIN 236,495,331$ 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Debt limit 275,884,749$ 253,986,094$ 254,113,025$ 244,995,800$ 244,792,901$ 239,483,487$ 233,374,672$ 227,059,775$ 221,497,836$ 212,207,634$ Total net debt applicable to limit 39,389,418 43,136,434 25,136,858 24,778,288 27,011,206 26,489,770 28,769,092 30,721,830 28,966,286 30,936,733 LEGAL DEBT MARGIN 236,495,331$ 210,849,660$ 228,976,167$ 220,217,512$ 217,781,695$ 212,993,717$ 204,605,580$ 196,337,945$ 192,531,550$ 181,270,901$ Total net debt applicable to the limited as a percentage of debt limit 14.28%16.98%9.89%11.03%11.06%12.33%13.08%14.58%14.13%15.11% (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." -143- Fiscal Year TABLE 14 CITY OF PADUCAH, KENTUCKY LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (1)(2) Personal Income 25,024 503,179,300 20,430 41.4 2,682 8.0% 25,024 503,179,300 20,430 41.4 2,744 8.4% 25,024 503,179,300 20,430 41.4 3,138 8.2% 25,024 503,179,300 20,430 41.4 2,843 5.6% 25,024 503,179,300 20,430 41.4 3,139 6.2% 25,024 503,179,300 20,430 41.4 3,132 6.8% 25,024 503,179,300 20,430 41.4 2,835 6.4% 25,024 503,179,300 20,430 41.4 2,980 5.5% 25,024 503,179,300 20,430 41.4 3,232 5.4% 27,137 503,179,300 32,097 41.4 2,832 5.9% Sources: (1)Bureau of the Census Count - 2020 (2)Bureau of the Census Count - 2010 (3)Board of Education; represents elementary and secondary public schools. (4)Kentucky Cabinet for Human Resources, Department for Employment Services. -144- TABLE 15 CITY OF PADUCAH, KENTUCKY DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (1)(2)(3)(4) Per Capita Median School Unemployment Enrollment RateAgeIncome 2011-2012 2012-2013 2013-2014 2014-2015 Fiscal Year Population 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 Percentage of Percentage of Total Total Employees (1)Employment (2)Employees (1)Employment (2) Baptist Healthcare Systems 1,474 5.65% Bon Secours Mercy Health, Inc 1,448 5.55% Wal-Mart Associates, Inc.993 3.81%1,098 3.69% Paducah Board of Education 589 2.26%554 1.86% Lowes of Paducah #465 396 1.52% Kentucky Community & Technical College 375 1.44%507 1.70% Baptist Health Medical Group 367 1.41% Vi Wintech Window & Door 358 1.37% City of Paducah 337 1.29%391 1.31% Commonwealth of Kentucky 310 1.19%322 1.08% Computer Services Inc 237 0.80% Western Baptist Hospital 1,794 6.03% Lourdes Hospital, Inc.1,541 5.18% Paxton Media Group 249 0.84% LYNX Services 266 0.89% TOTALS 6,647 25.51%6,959 23.38% (1) Source - City of Paducah Finance Department (2) State of Kentucky - Office of Employment and Training. Ratio based on employment within County of McCracken. -145- Employer TABLE 16 CITY OF PADUCAH, KENTUCKY PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS PRIOR 20122021 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Governmental Activities General government General administration 11 10 12 12 12 11 11 11 12 12 Finance 11 12 11 11 11 11 11 11 11 11 Inspection 0 0 0 0 0 0 0 0 0 11 Information systems 4 4 6 5 5 5 5 5 6 6 Clerk/Customer Experience 5 5 0 0 0 0 0 0 0 0 Risk/Human resources 4 3 3 3 4 3 3 3 3 3 Public safety Police 87 87 87 87 87 87 87 87 88 90 Fire 75 74 76 77 76 76 76 76 74 64.5 Public service Streets 23.75 21.2 21.2 21.2 21.2 21 21 20 20 23 Facilities 14.25 12.8 12.8 12.8 12.8 12.5 12.5 13.5 13.5 11.5 Engineering 6.0 5.2 5.3 5.3 5.8 6.6 6.6 6.6 7.6 7.6 E911**23 23 22 22 22 0 0 0 0 0 Other 5 5 5 5 5 5 5 5 5 5 Parks and recreation 25.7 27.7 27 27 25 25 25 24 24 24 Planning and development 8 8 12 11 11 10 10 9 9 9 Other Paducah Riverfront Dev. Authority 0 0 0 0 0 1 1 1 1 1 Renaissance 0 0 0 0 0 0 0 3 3 4 Boat dock 0.3 0.3 0 0 0 0 0 0 0 0 Fleet maintenance 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 6.5 Business-type Activities Solid waste 25.5 25.3 26.2 26.2 25.7 25.4 25.4 25.4 25.4 25.4 TOTAL PRIMARY GOVERNMENT 335 330 333 332 330 306 306 307 309 314.5 * Employee budget census. ** E911 became a City department effective 7/1/16. -146- Fiscal Year TABLE 17 CITY OF PADUCAH, KENTUCKY CITY FULL-TIME EMPLOYEES BY FUNCTION* Last Ten Fiscal Years 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 General government Building and electrical permits issued 946 972 1,130 1,179 1,285 1,344 1,175 1,251 1,202 1,232 Business licenses issued 3,263 3,787 3,401 4,240 4,234 3,826 3,729 3,717 3,966 3,956 Public safety Police Adult arrests 1,944 1,859 2,371 2,443 2,259 2,174 2,293 2,546 2,508 2,753 Murder 4 3 - 6 1 2 2 3 - 3 Rape 20 18 18 24 13 11 10 17 16 14 Robberies 13 16 29 17 29 42 41 36 38 14 Burglary 114 105 144 178 130 185 138 127 142 123 Auto theft 97 64 70 101 89 59 49 60 41 47 Larceny 824 833 1,115 1,064 1,027 1,173 1,138 1,090 1,110 1,005 Arson 8 11 9 10 6 7 2 3 5 7 Traffic accidents 1,791 1,706 1,901 1,770 1,826 1,936 1,722 1,664 1,573 1,666 Traffic violations 1,765 2,085 2,168 3,723 4,663 4,231 5,501 6,821 10,168 8,573 Fire Emergency responses 3,010 3,300 3,235 3,320 3,275 3,201 2,956 2,935 3,054 3,164 Fires extinguished 178 154 108 118 135 124 118 115 105 138 Structure fires 77 60 35 39 36 42 42 35 33 53 Incidents with reported losses 178 157 136 119 138 72 73 56 55 89 Medical/rescue 2,010 2,113 2,244 2,295 2,308 2,259 2,150 2,080 2,151 2,270 Tours/in-services/car seats 142 229 276 229 262 305 400 378 570 524 Training man hours 11,651 10,755 9,372 10,755 8,378 10,589 10,860 8,959 9,155 7,232 Inspections 91 893 1,060 709 2,126 2,060 1,324 1,710 1,157 1,417 Refuse collection Residential Refuse collected (tons 45 38 37 36 36 41 34 36 36 34 per day) Customers served 10,129 9,734 9,895 9,889 9,806 9,801 9,639 9,600 9,478 9,488 Commercial Refuse collected (tons 66 65 69 70 70 61 64 61 65 71 per day) Customers served 943 943 950 930 858 854 861 927 805 803 Public service 911 dispatches 81,504 90,603 90,191 94,187 94,053 85,380 83,465 83,614 92,786 79,333 Police 46,307 53,399 47,719 53,522 53,896 46,660 44,337 43,877 51,131 43,686 Fire 3,298 3,225 3,296 3,351 3,314 3,230 3,152 3,517 4,747 3,189 Other 31,899 33,979 39,176 37,314 36,843 35,490 35,976 36,220 36,908 32,458 * Information not available. ** Information from city departments. -147- TABLE 18 CITY OF PADUCAH, KENTUCKY OPERATING INDICATORS BY FUNCTION** Last Ten Fiscal Years Fiscal Year 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 Public safety Police Stations 1 1 1 1 1 1 1 1 1 1 Fire Stations 5 5 5 5 5 5 5 5 5 5 Refuse collection Collection trucks Residential 10 10 10 10 10 10 10 10 10 10 Commercial 4 4 4 4 4 4 4 4 4 4 Other public works Streets (miles paved)218 218 218 218 218 218 218 218 218 218 Sidewalks (miles)47 47 47 47 47 47 47 47 47 47 Traffic signals 10 13 13 13 13 13 13 13 13 13 Parks and recreation Parks 29 29 29 29 29 29 28 28 27 27 Acreage 960 960 960 960 960 960 960 960 960 1125 Community centers 2 2 2 2 2 2 2 2 2 2 Swimming pools 1 1 1 1 1 1 1 1 1 1 Public tennis courts 7 7 7 6 6 6 6 6 6 6 Public golf/disk golf courses 4 4 4 4 4 4 4 4 3 3 * Information from city departments. -148- Fiscal Year TABLE 19 CITY OF PADUCAH, KENTUCKY CAPITAL ASSET STATISTICS BY FUNCTION* Last Ten Fiscal Years CITY OF PADUCAH, KENTUCKY SINGLE AUDIT SECTION COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2021 Federal CFDA Pass-Through Pass-Through Program Title:Number Grantor Number To Subrecipients Expenditures Department of Housing and Urban Development: Direct Programs: Section 8 Housing Choice Vouchers 14.871 N/A -$ 2,028,004$ COVID-19 Section 8 Housing Choice Vouchers 14.871 N/A - 27,496 Passed-through Kentucky Governors Office for Local Development: Community Development Block Grants 14.228 N/A 197,500 200,000 Total Department of Housing and Urban Development 197,500 2,255,500 Department of Justice: Direct Programs: Bulletproof Vest Partnership Program 16.607 N/A - 2,268 Edward Byrne Memorial Justice Assistance Grant Program 16.738 N/A - 11,236 Total Department of Justice - 13,504 Department of Transportation: Passed-through Kentucky Transportation Cabinet: State and Community Highway Safety 20.600 PT-20-58 - 2,800 State and Community Highway Safety 20.600 PT-21-63 - 5,464 Highway Planning and Construction 20.205 N/A - 202,557 Highway Planning and Construction 20.205 N/A - 100,000 Total Department of Transportation - 310,821 U.S. Department of the Treasury Direct Programs: Equitable Sharing 21.016 N/A - 15,187 Passed-through Kentucky Department for Local Government: COVID-19 Coronavirus Relief Fund for States 20.019 C257-01 1,786,875 COVID-19 Coronavirus Relief Fund for States 20.019 C2-085-01 - 559,821 Total U.S. Department of the Treasury - 2,361,883 Department of National Endowment for the Humanities: Direct Programs: Promotion of the Arts Grants to Organizations and Individuals 45.024 N/A - 1,525 Total Department of National Endowment for the Humanities - 1,525 Department of the Interior Passed-through Kentucky Heritage Council: Historic Preservation Fund Grants-In-Aid 15.904 N/A - 10,000 Historic Preservation Fund Grants-In-Aid 15.904 KY-20-10018 - 13,500 Total Department of the Interior - 23,500 Department of Homeland Security: Passed-through Kentucky Division of Emergency Management: Disaster Grants - Public Assistance 97.036 N/A - 177,828 Disaster Grants - Public Assistance 97.036 N/A - 83,794 Disaster Grants - Public Assistance 97.036 N/A - 61,310 Homeland Security Grant Program 97.067 N/A - 442,064 Total Department of Homeland Security - 764,996 TOTAL EXPENDITURES OF FEDERAL AWARDS 197,500$ 5,731,729$ See accompanying notes to schedule of expenditures of federal awards. -149- CITY OF PADUCAH, KENTUCKY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2021 Federal Grantor/Pass-Through Grantor/ CITY OF PADUCAH, KENTUCKY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2021 Note 1 - Basis of Presentation: The accompanying schedule of expenditures of federal awards includes the federal grant activity of the City of Paducah and is presented on the accrual basis of accounting. The information in this schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the financial statements. Note 2 - Subrecipients: The City of Paducah provided federal awards to subrecipients as follows: Federal CFDA Amount Program Title Number Provided Four Rivers Recovery Center 14.228 $197,500 Note 3 – Indirect Cost Rate: The City of Paducah has not elected to use the 10% de minimis indirect cost rate as allowed under the Uniform Guidance. Note 4 – Reconciliation of Federal Awards to the Financial Statements: Total Federal Awards $ 5,731,729 Federal Awards by Fund General Fund $ 2,610,818 Capital Improvement Fund 852,724 Special Revenue Fund 212,687 Proprietary Fund 2,055,500 Total Federal Awards $ 5,731,729 -150- INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky We have audited, in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States, the financial statements of the governmental activities, the business-type activities, the 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, 2021, and the related notes to the financial statements, which collectively comprise City of Paducah, Kentucky’s basic financial statements, and have issued our report thereon dated December 22, 2021. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements, we considered City of Paducah, Kentucky’s internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of City of Paducah, Kentucky’s internal control. Accordingly, we do not express an opinion on the effectiveness of City of Paducah, Kentucky’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented, or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or, significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that have not been identified. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. Compliance and Other Matters As part of obtaining reasonable assurance about whether City of Paducah, Kentucky’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that is required to be reported under Government Auditing Standards. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity’s internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. Certified Public Accountants and Consultants Paducah, Kentucky December 22, 2021 -152- INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on Compliance for Each Major Federal Program We have audited City of Paducah, Kentucky’s compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on each of City of Paducah, Kentucky’s major federal programs for the year ended June 30, 2021. 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. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of City of Paducah, Kentucky’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and Uniform Guidance 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 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 on compliance for each major federal program. However, our audit does not provide a legal determination of City of Paducah, Kentucky’s compliance. Opinion on Each Major Federal Program In our opinion, City of Paducah, Kentucky, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2021. Report on Internal Control Over Compliance Management of City of Paducah, Kentucky, is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered City of Paducah, Kentucky’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of City of Paducah, Kentucky’s internal control over compliance. 100 South 4th Street Suite 300 Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. Certified Public Accountants and Consultants Paducah, Kentucky December 22, 2021 -154- CITY OF PADUCAH, KENTUCKY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2021 Section I – Summary of Auditor’s Results 1. The independent auditor’s report expresses an unmodified opinion on whether the financial statements of the City of Paducah, Kentucky were prepared in accordance with generally accepted accounting principles. 2. No significant deficiencies relating to the audit of the financial statements are reported. No material weaknesses relating to the audit of the financial statements are reported. 3. No instances of noncompliance material to the financial statements of the City of Paducah, Kentucky, which would be required to be reported in accordance with Government Auditing Standards, were disclosed during the audit. 4. No deficiencies relating to the audit of major federal award programs are reported. No material weaknesses relating to the audit of major federal award programs are reported. 5. The auditor’s report on compliance for the major federal award programs for the City of Paducah, Kentucky expresses an unmodified opinion on all major federal programs. 6. There are no findings to be reported in accordance with 2 CFR Section 200.516(a) in this schedule. 7. The programs tested as major programs included: Name CFDA COVID-19 Coronavirus Relief Fund for States 20.019 8. The threshold used for distinguishing Types A and B programs was $750,000. 9. The City of Paducah, Kentucky did qualify to be audited as a low-risk auditee. Section II – Findings – Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III – Findings and Questioned Costs – Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -155- CITY OF PADUCAH, KENTUCKY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2020 Section II – Findings – Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III – Findings and Questioned Costs – Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -156-