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HomeMy WebLinkAboutJune-30-2022CITY OF PADUCAH, KENTUCKY ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 FINANCE DEPARTMENT CITY OF PADUCAH, KENTUCKY City of Paducah Paducah, Kentucky Annual Comprehensive Financial Report Year Ended June 30, 2022 Issued by the Finance Department CITY OF PADUCAH, KENTUCKY ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 TABLE OF CONTENTS Exhibit No. Page No. Introductory Section: Letter of Transmittal 1 - 7 Organizational Chart 8 Principal Officials 9 GFOA Certificate of Achievement 10 Financial Section: Independent Auditor's Report 11-13 Required Supplementary Information: Management's Discussion and Analysis 14-29 Basic Financial Statements: Government -wide Financial Statements: Statement of Net Position 1 30-31 Statement of Activities 2 32-33 Fund Financial Statements: Governmental Funds: Balance Sheet 3 34-35 Reconciliation of the Governmental Funds Balance Sheet to Statement of Net Position 4 36-37 Statement of Revenues, Expenditures and Changes in Fund Balances 5 38-39 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 6 40-41 Statement of Revenues, Expenditures and Changes - Budget and Actual - General Fund 7 42-45 Statement of Revenues, Expenditures and Changes - Budget and Actual - Special Revenue Investment Fund 8 46 Proprietary Funds: Statement of Net Position 9 47 Statement of Revenues, Expenses and Changes in Net Position 10 48 Statement of Cash Flows 11 49 Fiduciary Funds: Statement of Net Position 12 50 Statement of Changes in Net Position 13 51 Notes to Financial Statements 52-102 Required Supplementary Information: Schedule of Changes in the Police and Firefighters' Pension Trust Fund's Net Pension Liability and Related Ratios A-1 103 Schedule of Changes in the Appointive Employees' Pension Trust Fund's Net Pension Liability and Related Ratios A-2 104 Schedule of Police and Firefighters' Pension Trust Fund Contributions and Investment Returns A-3 105 Schedule of Changes in the Appointive Employees' Pension Trust Fund Contributions and Investment Returns A-4 106 Schedule of City's Proportionate Share of the Net Pension Liability County Employees' Retirement System A-5 107 Exhibit No. Page No. Schedule of City's Contributions - Pensions County Employees' Retirement System A-6 108 Schedule of City's Proportionate Share of the Net Medical Insurance Plan Liability - County Employees' Retirement System A-7 109 Schedule of City's Contributions — Medical Insurance Plan County Employees' Retirement System A-8 110 Supplementary Information: Bond Fund Detail Schedule of Revenues, Expenditures and Changes - Budget and Actual B-1 111 General Capital Improvements Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-2 112 Debt Service Fund Detail Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual B-3 113 Nonmajor Governmental Funds: Combining Balance Sheet B-4 114-115 Combining Statement of Revenues, Expenditures and Changes in Fund Balances B-5 116-117 Detail Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual: Municipal Aid Fund B-6 118 Emergency Communication Service Fund B-7 119 Court Awards Fund B-8 120 CDBG Grant Fund B-9 121 Bed Tax Fund B-10 122 Nonmajor Enterprise Funds: Combining Statement of Net Position C-1 123 Combining Statement of Revenues, Expenses and Changes in Fund Net Position C-2 124 Combining Statement of Cash Flows C-3 125 Internal Service Funds: Combining Statement of Net Position D-1 126 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position D-2 127 Combining Statement of Cash Flows D-3 128 Fiduciary Funds: Combining Statement of Net Position - Private -purpose Trust Funds E-1 129 Combining Statement of Changes in Net Position - Private -purpose Trust Funds E-2 130 Table No. Page No. Statistical Section: Net Position by Component 1 131 Changes in Net Position 2 132-133 Fund Balances, Governmental Funds 3 134 Changes in Fund Balances, Governmental Funds 4 135 Assessed and Estimated Actual Value of Taxable Property 5 136 Governments 6 137 Principal Taxpayers 7 138 Secured Tax Levies and Collections 8 139 Employee License Tax Collections 9 140 Single Audit Section: Schedule of Expenditures of Federal Awards 151 Notes to the Schedule of Expenditures of Federal Awards 152 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 153-154 Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance 155-156 Schedule of Findings and Questioned Costs 157 Schedule of Prior Audit Findings 158 Table No. Page No. Statistical Section: Principal Employee License Taxpayers 10 141 Ratio of Outstanding Debt by Type 11 142 Ratio of Net General Bonded Debt Outstanding 12 143 Direct and Overlapping Governmental Activities Debt 13 144 Legal Debt Margin Information 14 145 Demographic and Economic Statistics 15 146 Principal Employers 16 147 City Full -Time Employees by Function 17 148 Operating Indicators by Function 18 149 Capital Asset Statistics by Function 19 150 Single Audit Section: Schedule of Expenditures of Federal Awards 151 Notes to the Schedule of Expenditures of Federal Awards 152 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards 153-154 Independent Auditor's Report on Compliance for Each Major Program and on Internal Control Over Compliance Required by Uniform Guidance 155-156 Schedule of Findings and Questioned Costs 157 Schedule of Prior Audit Findings 158 Honorable Mayor and Commissioners City of Paducah Paducah, Kentucky CITY OF PADUCAH Finance Department P.O. Box 2267 Paducah, KY 42002-2267 270-444-8512 December 21, 2022 We are pleased to submit Paducah's Annual Comprehensive Financial Report for the year ended June 30, 2022. 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, 2022, is in the Management's Discussion and Analysis (MD&A) section of this report, immediately following the Report of Independent Auditors. The letter of transmittal is written to complement the MD&A and the financial statements, and should be read from that perspective and in conjunction with all other sections of the ACFR. THE CITY Paducah was established in 1827 by explorer General William Clark. The City of Paducah is situated at the confluence of the Ohio and Tennessee Rivers in the north central portion of McCracken County. Paducah is the largest city both in the county and in the Jackson Purchase eight county region. The City has established itself as the cultural, economic, medical and transportation center for not only the Jackson Purchase region but for a large portion of Southern Illinois and portions of Western Tennessee and Southeastern Missouri. Industry Paducah has a mix of commercial, industrial, cultural, institutional, and hospitality -based businesses. Healthcare and education services are among the top employers. The accredited Paducah Area Chamber of Commerce is one of the largest in the state with approximately 1,000 business members. With Paducah's easy river access and rail service, the City is the headquarters for several river industry giants including Ingram Barge, Marquette Transportation, James Marine, and Crounse Corporation. -1- Paducah is at the center of inland waterways linking cities including Pittsburgh and Minneapolis/St. Paul to the Gulf of Mexico. The Paducah Riverport Authority is positioned for growth in the sector of intermodal river transportation through the purchase of the largest flat -top tower crane in North America. In 2015, the U.S. Department of Commerce Foreign Trade Zone Board approved the Riverport to establish a foreign - trade zone, an incredible business tool. Economic Development Activities Greater Paducah Economic Development (GPED) coordinates the City's efforts in strengthening and building economic development activities. The board of directors is comprised of elected candidates from GPED's Investor Council based upon their unique gifts and abilities and their capacity to appropriately apply them to the organization and community. In existence since 1987, GPED assumes and carries out the responsibility of working with existing industry and business, as well as identifying and recruiting new companies to the City of Paducah. Additionally, GPED is responsible for development of long-term strategy for economic development activities and coordinates local entities in the accomplishment of those strategies. In the early 1990s, the City of Paducah, the State of Kentucky and several federal agencies, in conjunction with business, developed a 650 -acre Commerce Park (formerly known as the Information Age Park.) This park was designed to appeal to firms needing advanced telecommunications and computing capabilities. In 1997, the City of Paducah jointly with the County of McCracken acquired the `Industrial Park West of Paducah and McCracken County'. This park contains 218 acres with immediate access to two major railroad lines, Paducah and Louisville and Paducah and Illinois (formerly Illinois Central). The park is located within the southwest quadrant of the I-24/Cairo Road interchange. In 2007, GPED began assembling property to establish a `Triple Rail Site' in western McCracken County. The site is an industrial park served by two Class I railroad companies, Burlington Northern Santa Fe and Norfolk Southern, and a short line railroad company, Paducah and Louisville. The site has river docking service within 1.5 miles, is within 3 miles of Interstate 24, and 5 miles from Barkley Regional Airport. GPED owns 485 acres and has option and brokerage agreements on additional surrounding properties. Churches and Schools A relatively strong religious base is evident in the community, as demonstrated by the many churches in Paducah. Numerous churches, representing many of the major denominations, are located within the City. Several area churches offer televised activities as a convenience to those who do not attend church. Elementary and secondary education in Paducah is provided by the Paducah Independent School System, the McCracken County School System, Community Christian Academy, and by the St. Mary's Parochial School System. The availability of higher education in the area is continuing to flourish. West Kentucky Community and Technical College (WKCTC), formerly known as Paducah Community College, is a two-year institution affiliated with the University of Kentucky's community college system. WKCTC also serves as a site for the University of Kentucky extended campus graduate programs, in addition to a four-year engineering college in conjunction with the University of Kentucky. In 2008, WKCTC opened a Paducah School of Art. In 2010, a new 65,000 square feet Emergency Technology Center was opened, offering industrial and manufacturing technologies, engineering technology, as well as business and industry training and information technology programs. This is the first state supported new building to be constructed on the WKCTC campus in over 20 years. In 2011, Murray State University entered into an agreement with the -2- City, McCracken County, and Paducah Economic Development to construct an approximately 40,000 square foot educational building to serve as their Paducah campus. Classes began at the Paducah campus in 2014. Medical Facilities Paducah serves as the regional medical center for much of the Jackson Purchase Area of Western Kentucky, a large portion of Southern Illinois, and Northwestern Tennessee. Paducah's medical industry has almost every major medical specialty represented in the physician population. The medical industry, represented by Mercy Health and Baptist Health, provides over 650 beds for medical needs. The two largest hospitals, together, employ approximately 3,000 persons. Recreation and Culture Citizens have available a wide range of recreational and cultural activities which cater to diverse tastes. Area residents may choose from fishing on nearby Kentucky and Barkley Lakes to enjoying the performing arts. City parks provide areas for baseball, softball, golf, football, tennis, disc golf, pickle ball, skate boarding, soccer, hiking, picnicking, and music garden. The Parks Services Department offers a substantial number of activities for people of all ages. The Dogwood Festival, held in April, highlights the coming of spring in Paducah. Residents are encouraged to spotlight their trees to illuminate a driving tour to celebrate an abundance of dogwood trees. The LowerTown Art and Music Festival is uniquely showcased within the borders of Paducah's 180 -year- old historic neighborhood. The LowerTown Art and Music Festival is an outdoor juried show that the work of local artists and includes jazz, salsa, zydeco and blues music, as well as food from area restaurants. Paducah is the site of the Museum of the American Quilter's Society. In May 2008, a congressional designation was passed naming the museum as the National Quilt Museum of the United States. The museum, dedicated in 1991, is the centerpiece for the quilters' annual convention held in April. The convention attracts an estimated 30,000 visitors to Paducah annually. One of Paducah's oldest celebrations is the 8' of August Emancipation Celebration, which features African American family reunions, or a homecoming. It is a time for African Americans to pay tribute to their heritage and roots, and a time of reconciliation. The Barbecue on the River event was started in 1995, as a way for local charities to raise funds. It attracts in excess of 40,000 participants to Paducah's riverfront during the last weekend in September. Paducah Power sponsors the annual Christmas in the Park lighting display at Noble Park. The public is invited to a special lighting ceremony the Friday after Thanksgiving. This is the seventeenth year for the event. Although the event is free, volunteers collect cash donations and thousands of pounds of canned food annually. Paducah has an active symphony and several theater groups. The Paducah Symphony Orchestra stages concerts during the winter season, with the Market House Theater presenting several productions during the same time period. In addition, West Kentucky Community and Technical College's Arts in Focus series sponsors a variety of professional productions. The Luther F. Carson Four Rivers Center for the Performing Arts opened in February 2004 as a regional, multiple -purpose facility, with an 1,800 -seat main hall designed to accommodate a wide variety of cultural and educational programs. -3- 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 339 full-time employees as of June 30, 2022. Department managers are responsible for their respective departments and report directly to the City Manager. REPORTING ENTITY AND ITS SERVICES For financial statement purposes, as required by generally accepted accounting principles, the City's Annual Comprehensive Financial Report includes all City of Paducah financial statements (primary government) and its component units. The component units discussed below are included in the City's reporting entity because of the significance of their operational or financial relationships with the City of Paducah. Blended units are presented as such because the units' governing bodies are substantially the same as the governing body of the City, or provide services almost entirely to the City of Paducah. The City has only one blended unit: the Police and Firefighters' Pension Fund, which was established for the benefit of police and firemen of the City. The City has one component unit that has been presented as a discrete unit to emphasize that it is legally separate from the City. Paducah Water Works is included in the City's financial statements because of its financial relationship with the City. The City provides a full range of municipal services, including police and fire protection; maintenance of streets and infrastructure; sanitation services; cultural events and recreation activities. Accounting Svstem 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. -4- Internal Control In developing and evaluating the City's accounting system, consideration is given to the adequacy of internal controls. Because the cost of a control should not exceed the benefits to be derived, the objective of these internal controls is to provide reasonable, rather than absolute assurance that the financial statements are free of any material misstatements. Internal controls were designed for Paducah's accounting system to reasonably safeguard its assets against loss from unauthorized use or disposition, check the accuracy of accounting data, promote operational efficiency and encourage adherence to prescribed managerial policies. Budgetary Control Paducah's budget process provides for input from department managers, top management, elected officials and the public to determine what programs and services will be provided for during the upcoming year. Budgetary control is maintained at the departmental level by comparing budgeted expenditures with actual expenditures on a periodic and year-to-date basis. An expenditure, which would result in an overrun of department appropriation, cannot be made until additional funds are appropriated. Purchase orders which result in an overrun of department appropriations cannot be honored until additional appropriations are made available. Unencumbered funds at year-end roll into the fund balance. Financial Policies The City's financial policies are shaped by state law and established by management and the City Commission. Financial policies include budgeting and financial planning, capital planning, revenue, investment, debt management, procurement, and accounting and auditing. During FY2022, 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 FY2022 this contribution was $310 thousand. This amount was $343 thousand in FY2021. LONG-TERM FINANCIAL PLANNING On October 1, 2005, the City's payroll tax was increased %2 cent. As a result of the payroll tax increase, the City Commission created the Investment Fund. The Investment Fund is funded with the '/2 cent increase and is dedicated to the following purposes: community redevelopment, economic development, infrastructure capital investment, and property tax relief During the FY2022 budget process, the Commission reviewed numerous decision packages proposed for the Investment Fund Budget; expenditures totaling approximately $5.9 million were appropriated. The City has numerous infrastructure/capital items that will affect the long-term financial planning process. The following projects are examples of future considerations facing the City: 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. After the engineering design and construction bidding process, the approximately 18 -month construction period could begin in summer of 2023. The BUILD grant's transformative projects for Paducah's downtown and riverfront include: a new -5- dock structure and excursion landing plaza, improved bike and pedestrian linkages, and improvements near the transient boat dock to include green space and seating. 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 28,383 persons employed (McCracken County) as of June 30, 2022. The June 2022 unemployment rate was 4.6% (McCracken County), which is a decrease from 5.9% in the prior year, and slightly higher than the June 2022 federal unemployment rate of 3.6%. INDEPENDENT AUDIT Kentucky Revised Statute 91A-040 requires an annual audit of each fund of the City by an auditor of public accounts or a certified public accountant. The independent certified public accounting firm of Kemper CPA Group, LLP, has conducted this audit and their opinion has been included in this report. The City is also subject to the Single Audit Act Amendments of 1996 reporting requirements. The Single Audit Report is included within this report. 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 annual comprehensive financial report for the fiscal year ended June 30, 2021. This was the thirty-first consecutive year that the City achieved this prestigious award. In order to be awarded a Certificate of Achievement for Excellence in Financial Reporting, a government must publish an easily readable and efficiently organized annual comprehensive financial report. This report must satisfy both generally accepted accounting principles and applicable legal requirements. A Certificate of Achievement for Excellence in Financial Reporting is valid for a period of one year only. We believe our current annual comprehensive financial report continues to meet the Certificate of Achievement Program's requirements, and we are submitting it to GFOA to determine its eligibility for another certificate. 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 -6- and support in planning and conducting the financial operations of the City in a responsible and progressive manner. ;Refully submitted, W. Perkins, CPA Finance Director/Treasurer -7- -8- Mayor Mayor Pro Tem Commissioner Commissioner Commissioner Assistant City Manager Finance Director City Controller Police Chief Fire Chief City Engineer Public Works Director Assistant Public Works Director Planning Director Parks & Recreation Director Technology Department Director City Clerk Human Resources Director Risk Manager Communications Manager CITY OF PADUCAH, KENTUCKY PRINCIPAL OFFICIALS BOARD OF COMMISSIONERS CITY MANAGER Daron Jordan in George P. Bray Sandra Wilson Raynarldo Henderson David Guess Carol C. Gault Michelle Smolen Jonathan W. Perkins, CPA Audra Kyle, CPA Brian Laird Steve Kyle Rick Murphy Chris Yarber Randy Crouch Nicholas Hutchison Amie Clark Eric Stuber Lindsay Parish Stefanie Wilcox Braden Throgmorton Pam Spencer Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Paducah Kentucky For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2021 Executive Director/CEO -10- CITY OF PADUCAH, KENTUCKY FINANCIAL SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 KEMPER Vu. CPA GROUPLLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on the Audit of the Financial Statements Opinions We have audited the accompanying financial statements of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky as of and for the year ended June 30, 2022, and the related notes to the financial statements, which collectively comprise the City of Paducah, Kentucky's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business -type activities, each major fund, and the aggregate remaining fund information of the City of Paducah, Kentucky as of June 30, 2022, 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. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of City of Paducah, Kentucky and to meet our ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Paducah, Kentucky's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. 100 South 4't' Street • Suite 300 • Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com - 11 - Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher then for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgement made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards, we: • Exercise professional judgement and maintain professional skepticism throughout the audit • Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. • Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City of Paducah, Kentucky's internal control. Accordingly, no such opinion is expressed. • Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. • Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Paducah, Kentucky's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control -related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis, budgetary comparison schedules, schedules of net pension and OPEB liabilities and contributions on pages 14 through 29 and 103 through 110 be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City of Paducah, Kentucky's basic financial statements. The accompanying budgetary comparison schedules, combining and individual nonmajor fund, budgetary comparison schedules for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements on pages 111-130; and the schedule of expenditures of federal awards on pages 151-152 as required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of -12- management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual nonmajor fund, budgetary comparison for the nonmajor funds, nonmajor enterprise, internal service and fiduciary financial statements and the schedule of expenditures of federal awards are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information, and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements, our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work performed, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 21, 2022, 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. /�� CPdAr , 1-41010 Certified Public Accountants and Consultants Paducah, Kentucky December 21, 2022 - 13 - CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 CITY OF PADUCAH, KENTUCKY MANAGEMENT'S DISCUSSION AND ANALYSIS JUNE 30, 2022 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, 2022. To fully understand the entire scope of the City's financial activities, this information should be read in conjunction with the letter of transmittal (pages 1-7) and the basic financial statements (pages 30-102) 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 $21.0 million (net position). This amount includes $1.2 million restricted to specific projects by laws, regulations or contractual agreements. A deficit total of $41.4 million was unrestricted chiefly 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 increased $5.9 million this year. Net position of governmental activities increased by $5.8 million and business -type activities increased by $100 thousand. • At fiscal year end, City governmental funds reported a combined ending fund balance of $59.8 million. Approximately 35% of this total amount, $20.9 million, is restricted or committed for highways/streets and capital improvements. Assigned fund balance comprises 16% 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 $24.3 million and is available for spending at the City's discretion. Cash and cash equivalents are approximately $25.0 million. When compared to final total appropriations, the General Fund cash balance is 53%. II. Overview of Financial Statements This discussion and analysis serves as an introduction to the City's basic financial statements, which consist of four components: 1) government -wide financial statements, 2) fund financial statements, 3) component unit financial statements, and 4) notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements. A. Government -Wide Financial Statements Government -wide financial statements are designed to provide readers with a broad overview of City finances in a manner similar to private -sector business. The Statement of Net Position presents information on all City assets, deferred outflows of resources, and liabilities, and deferred inflows of resources with the difference between these reported as net position. Monitoring increases and/or decreases in net position over time may serve as a useful indicator of whether the financial position of the City is improving, stagnating, or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the fiscal year. All net position changes are reported as soon as the underlying event giving rise to the change occurs regardless of the timing of related cash flows. Revenues and expenses are reported in the Statement of Activities for some items that will only result in cash flows in the future. -14- Both of the government -wide financial statements distinguish City functions that are primarily supported by taxes and intergovernmental revenues (governmental activities) from other City functions that are intended to recover all or a significant portion of their costs through user fees and charges (business -type activities). City governmental activities include general government, public safety, public service, parks and recreation, planning and development, and interest on long-term debt. Business -type activities of the City include Solid Waste, Section Eight Housing, 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 30-33 of this report. B. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over segregated resources for specific activities or objectives. The City of Paducah, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. City funds can be divided into three categories: 1) Governmental Funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government -wide financial statements. Unlike government - wide financial statements, governmental fund financial statements focus on current sources and uses of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. This information may be useful in evaluating a city's near-term financing requirements. The City maintains 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 114-122. Readers may better understand the long-term impact of the City's near-term financing decisions by comparing the narrow -focus governmental funds financial statements with governmental activities in the government -wide financial statements. Exhibit 4 (pages 36-37) and Exhibit 6 (pages 40-41) provide a reconciliation to ease comparison between the fund financial statements and the government -wide statements. The basic governmental fund financial statements can be found on pages 34-41 of this report. 2) Proprietary Funds. The City maintains two types of proprietary funds: a. Enterprise Funds. Enterprise funds are used to report the same functions presented as business -type activities in the government -wide financial statements and are used to account for operations: • That are financed and operated in a manner similar to private business enterprises where the intent of the governing body is that the costs of providing goods and services to the general public on a continuing basis be financed or recovered primarily through user charges; or -15- 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 30-33. 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 fmancial statements based on revenue earned. Proprietary funds provide the same kind of information as government -wide financial statements, but in greater detail. Individual data for the nonmajor proprietary funds is presented in the form of combining statements on pages 123-125 of this report. Individual data for the internal service funds is likewise presented in the form of combining statements on pages 126-128 of this report. 3) Fiduciary Funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government and are not reflected in government -wide fmancial 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 129-130 of this report. C. Notes to the Financial Statements The notes provide additional information that is essential to fully understand data provided in the government -wide and fund financial statements. Notes to the financial statements can be found on pages 52-102 of this report. D. Other Information In addition to basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning City funding of its pension obligation to its employees. Additional budgetary comparison schedules, as well as the combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor proprietary funds, internal service funds and fiduciary funds are presented immediately following the required supplementary information on pensions. Combining fund statements and schedules can be found on pages 111-130 of this report. III. Government -Wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of the City's financial position. City assets and deferred outflows exceeded liabilities and deferred inflows by $21.0 million, an increase of $5.9 million from prior year. -16- For FY2022, the largest portion of the City's net position ($61.1 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. 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 $66.9 million as of June 30, 2022. In FY2018 the City implemented GASB 75, which requires that the City report and fully disclose its share of other post -employment benefit (OPEB) liabilities. The net OPEB liability as of June 30, 2022, is $19.4 million. 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 $41.4 million in FY2022. As of June 30, 2022, 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 2022 2021 2022 2021 2022 2021 Current Assets $ 85,937,475 $74,147,534 $ 5,292,732 $ 5,577,059 $ 91,230,207 $ 79,724,593 Capital Assets 69,103,975 66,224,431 2,148,059 2,094,123 71,252,034 68,318,554 Other noncurrent assets 6,499,058 3,791,311 - - 6,499,058 3,791,311 Total Assets 161,540,508 144,163,276 7,440,791 7,671,182 168,981,299 151,834,458 Deferred Outflows of Resources 18,713,567 18,328,954 749,841 941,529 19,463,408 19,270,483 Current Liabilities 8,124,088 8,666,472 390,932 421,837 8,515,020 9,088,309 Noncurrent liabilities 122,831,965 130,008,089 5,223,610 6,258,651 128,055,575 136,266,740 Total liabilities 130,956,053 138,674,561 5,614,542 6,680,488 136,570,595 145,355,049 Deferred Inflows of Resources 30,217,864 10,502,689 706,119 197,789 30,923,983 10,700,478 Net position: Net Invested in Capital Assets 58,980,030 57,608,864 2,148,059 2,094,123 61,128,089 59,702,987 Restricted 996,142 759,959 199,794 105,322 1,195,936 865,281 Unrestricted (40,896,014) (45,053,843) (477,882) (465,011) (41,373,896) (45,518,854) TOTAL NET POSITION $ 19,080,158 $ 13,314,980 $ 1,869,971 $ 1,734,434 $ 20,950,129 $ 15,049,414 -17- The exhibit below charts the City's total net position for the past ten years (Prior years have not been restated for implementation of GASB 68 and 75 in this discussion). Government Wide Analvsis Total Net Position $70 $60 $50 $40 S $30 $20 $10 $0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Substantial increases occurred in fiscal years 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 Riverfront Development Phases IA & 1B 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 in FY2018. Annual adjustments to these liabilities continued to drive net position down each year. For FY2022, the combined impact was a decrease to net position of over $2 million. Despite the CERS/OPEB adjustments discussed above, net position increased by almost $6 million in FY2022. In FY2022, the four primary sources of revenue for the City exceeded budgeted amounts by nearly $4 million. The uncertainties surrounding the effects of the pandemic during the time in which the FY2022 budget was developed led to conservative revenue projections, as well as holding operating expenses as flat as possible. However, actual results reflect that local economic activity has rebounded quite well. It is also likely that inflation has played a role in these revenues, as the majority are based on percentages of gross receipts, insurance premiums, and wages. In addition to the positive performance of general revenues, the City also had multiple capital projects that were grant funded. This includes $402 thousand in ABPA funds and almost $1 million in FEMA funds that were all utilized for storm water improvements, dredging, and other future flood mitigation projects. A. Analysis of the City's Operations The following table provides a summary of the City's operations for the years ended June 30, 2022 and 2021. Governmental activities increased the City's net position by $5,765,178 and business -type activities increased the City's net position by $135,537. -18- City of Paducah, Kentucky Changes in Net Position June 30 Expenses: General Government Governmental Activities Business -Type Activities Total Primary Government Revenues: 2022 2021 2022 2021 2022 2021 Program revenues: 25,631,674 28,084,323 Public service 7,057,855 Charges for services $ 3,366,962 $ 2,652,919 $ 4,925,719 $ 4,599,835 $ 8,292,681 7,252,754 Operating grants/contributions 4,333,082 5,036,389 2,204,532 2,118,215 6,537,614 7,154,604 Capital grants/contributions 2,363,472 1,662,014 - - 2,363,472 1,662,014 General Revenues: Interest on long-term debt 513,885 694,776 - - Property taxes 6,128,302 5,915,288 - 6,128,302 5,915,288 Franchise taxes 332,606 334,487 Section Eight Housing 332,606 334,487 Telecommunications tax 630,352 629,429 1,913,079 630,352 629,429 Insurance premium tax 5,834,013 5,819,896 35,544 5,834,013 5,819,896 Vehicle tax 913,410 867,472 108,371 913,410 867,472 Bank tax 403,997 391,897 403,997 391,897 Gross receipts license tax 5,297,560 4,530,125 6,766,533 5,297,560 4,530,125 Employee license tax 23,845,186 22,064,353 23,845,186 22,064,353 Transient room tax 1,788,776 1,211,819 1,788,776 1,211,819 Other taxes 364,116 383,814 - - 364,116 383,814 Unrestricted investment (2,376,578) Transfers 258,374 240,537 (258,374) earnings 551,355 368,425 28,613 27,226 579,968 395,651 Gain on sale of capital assets 14,710 - 1,580 59,348 16,290 59,348 Miscellaneous - - - - - - Total revenues 56,167,899 51,868,327 7,160,444 6,804,624 63,328,343 58,672,951 Expenses: General Government 11,686,115 12,846,090 11,686,115 12,846,090 Public safety 25,631,674 28,084,323 25,631,674 28,084,323 Public service 7,057,855 6,761,258 7,057,855 6,761,258 Park & recreation 3,423,465 3,477,584 3,423,465 3,477,584 Planning & development 2,348,101 2,284,229 2,348,101 2,284,229 Interest on long-term debt 513,885 694,776 - - 513,885 694,776 Solid Waste - - 4,558,219 4,849,815 4,558,219 4,849,815 Section Eight Housing 2,052,670 1,913,079 2,052,670 1,913,079 Civic Center 35,544 30,004 35,544 30,004 Transient Boat Dock - - 120,100 108,371 120,100 108,371 Total expenses 50,661,095 54,148,260 6,766,533 6,901,269 57,427,628 61,049,529 Increase (decrease) in Net position before transfers 5,506,804 (2,279,933) 393,911 (96,645) 5,900,715 (2,376,578) Transfers 258,374 240,537 (258,374) (240,537) - Change in net position 5,765,178 (2,039,396) 135,537 (337,182) 5,900,715 (2,376,578) Net position, July 1 13,314,980 15,354,376 1,734,434 2,071,616 15,049,414 17,425,992 NET POSITION, JUNE 30 $ 19,080,158 $ 13,314,980 $ 1,869,971 $ 1,734,434 $ 20,950,129 $ 15,049,414 -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 2022. Governmental Activities Revenue by Source Capital Grants/ Transient Room Tax Contributions 3% Other Income 4% 1% Other Taxes 5% Operating Grants/ Contributions 8% Occupational Licenses Charges for 6% Property Taxes 11% In fiscal year 2022, the City derived approximately 81% of its revenue from taxes/licenses. Occupational licenses, which include payroll withholding tax, business licenses, and insurance premium taxis the largest source of income to the City, totaling $35 million. This category of revenue increased $2.6 million, or nearly 8% from the prior year. Employee license tax experienced the largest growth in this area, increasing by $1.8 million. Business licenses increased by $767 thousand. No changes in these revenues appear to be the result of one significant taxpayer's activity, but the result of multiple entities having increases from the prior year. Transient room tax increased by $577 -20- thousand, or 48%. FY2021 was the first full year of collection of the City's transient room tax of 4%, so there is not a large amount of history to analyze; however, this substantial increase is believed to be a recovery of suppressed transient activity that occurred during the pandemic in the first half of FY2021. Property taxes continue to be a stable source of revenue, comprising 11 % of total revenue in FY2022. Capital grants/contributions was also a revenue category of note for FY2022, increasing by $701 thousand, or 42% from the prior year. The City currently has three active FEMA disaster grants that are being used to mitigate damage from future flooding; including dredging, storm water drainage improvements, and enhancements at the City's riverfront park. C. Business -Type Activities The chart below shows the year's revenues and expenses for each of the City's business -type activities. Business -Type Activities Expenses and Revenues (Excluding interfund transfers) 6.00 5.00 4.00 a 0 2E 3.00 u Expenses N Revenues 2.00 1.00 Solid Waste Section Eight Civic Center Transient Housing Boat Dock These activities should break-even; that is, the charges for services should be large enough to sustain operations. All of the business -type activities reflected these results for FY2022, with the exception of the Civic Center Fund. Solid Waste revenues remain very stable over time, as there is a fairly constant number of customers with an established monthly rate for most of the services provided. However, the two primary operating expenses, personnel and transfer fees, continue to increase. As it becomes more difficult for this fund to break even with current collection rates, it is anticipated that a rate increase will be brought forward in the near future. 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 FY2022 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 $59.8 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 $341,539 of real property held in inventory for urban development. • Restricted fund balance has external limitations on use that may be imposed by creditors, grantors, contributors, or laws and regulations. For example, at the end of the fiscal year, the City had $793,091 of municipal aid funds, which are restricted in use for paving by the State of Kentucky • Committed fund balance has self-imposed limitations enacted by the highest level of decision making that requires formal action at the same level to remove the limitations. The City had $4,130,122 in fund balance committed for capital improvements in the Investment Fund. • Assigned fund balance has limitations resulting from intended use; formal action is not required. Approximately 16% 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. Governmental Funds Ending Fund Balance Nonspendable <1% Restricted 35% il Committed Assigned 8% 16% Approximately 41% of total fund balance, $24.3 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 $25 million available as General Fund cash. City fiscal policy (Ordinance 2021-06-8692) requires that an amount not less than 10% of the General Fund's budgeted expenditures remain undesignated in the fund balance, or $4.8 million, which leaves $20.2 million as unreserved for fiscal year 2022. -22- 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 ($24.3 million) represents 61% of expenditures and transfers out ($39.9 million). 65% 60% 55% 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% General Fund Fund Balance as a % of Expenditures 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 The chart above demonstrates that this ratio has remained very stable over the last ten years. Most years reflect some positive variances in both revenue and expenditures. However, notable increases occurred in FY2018 and in FY2022. In FY2018, the four primary sources of revenue for the City exceeded budgeted amounts by close to $1 million that year. These revenue increases combined with a delayed interfund transfer ($900 thousand) to the Capital Improvement Fund drove up fund balance that year. In FY2022, as discussed under the government -wide analysis, revenue performance far surpassed any expectations had when projecting this budget during the period of economic uncertainties associated with the pandemic. This exceptional revenue performance, combined with the effort to hold expenditures as flat as possible, led to a sizable uptick in this ratio for FY2022. FY2022 budget is discussed further in the General Fund budgetary highlights in Section V of this report. The Investment Fund had a fund balance of $4.1 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 '/2 cent payroll tax increase, effective October 1, 2005. The fund balance for this fund increased $475 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 FY2022 revenues. Fortunately, revenue exceeded budget by nearly $900 thousand. B. Proprietary Funds The City's proprietary funds provide the same information found in the government -wide financial statements but in more detail. -23- Net position of the respective proprietary funds are: Solid Waste $ 947,920 Section Eight Housing 202,577 Civic Center 69,039 Transient Boat Dock 46,493 Combined total net position change for the four funds was an increase of $126 thousand. 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 4' 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. V. General Fund Budgetary Highlights Differences between the original budget and the final budget resulted in a $6.6 million increase in appropriations. The City received $6.55 million in ARPA funding, and a transfer out to the Capital Improvements Fund was budgeted in the same amount. Of the $6.55 million, $4 million was appropriated for storm water improvements. It is anticipated that $1.8 million will be used for renovations to the Civic Center, and the remaining balance will be used for other capital -related activities. Final appropriations (including operating transfers out) exceeded total actual expenditures by $7.7 million. The majority of this difference is because of the ABPA adjustment discussed above. Only $402 thousand of the ARPA funds were expended in FY2022, leaving the balance to be deferred until FY2023. All of the appropriated storm water projects were well -underway subsequent to fiscal year end, and the City is on track to have its allocation of funds expended by the December 2024 deadline. Departmental appropriations (excluding intergovernmental and other) exceeded actual by approximately $1.6 million. Almost 60% of that ($964 thousand) was due to salary and related benefit slippage in various departments from unfilled positions. Like most other employers across the nation, the City has felt the effects of the current labor market. Vacancies for many open positions were difficult to fill, leading to considerable 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. 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, 2022, is $61.1 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 2022, project and equipment additions totaled over $8.8 million, with $5.7 million of that attributed to Construction in Progress at year-end. -24- Some of the largest capital -type project additions, in terms of dollars in fiscal year 2022, are shown in the following table: Floodwall Pump 92 Rehab (Construction in Progress) $3,409,763 Storm Water Study 1,001,825 Floodwall Seal Closures (Construction in Progress) 583,058 Buckner Lane Bridge (Construction in Progress) 506,039 Riverfront Park Mitigation (Construction in Progress) 460,972 800 MHZ Radios & Accessories 378,597 S. 24th/25' Street Improvements (Construction in Progress) 377,538 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 Land $ 10,147,330 Land improvements 13,773,200 Construction in 2022 progress 10,549,864 Buildings and $ 68,886 improvements 7,519,260 Infrastructure 20,414,278 Equipment 3,350,194 Furnishings and 5,878,560 fixtures 42,005 Vehicles 3,307,844 2021 2022 2021 2022 2021 $ 10,423,688 $ 68,886 $ 68,886 $ 10,216,216 $ 10,492,574 14,776,273 - - 13,773,200 14,776,273 5,878,560 - - 10,549,864 5,878,560 7,819,330 173,363 189,689 7,692,623 8,009,019 20,165,168 - - 20,414,278 20,165,168 3,419,823 1,024,771 534,536 4,374,965 3,954,359 57,030 - - 42,005 57,030 3,684,559 881,039 1,301,012 4,188,883 4,985,571 TOTALS $ 69,103,975 $ 66,224,431 $ 2,148,059 $ 2,094,123 $ 71,252,034 $68,318,554 Additional information on City capital assets can be found in Note 3 in the notes to financial statements on pages 68-70. -25- B. Long -Term Debt At year-end, the City had $40,960,364 in outstanding bonds and notes payable, compared to $40,894,867 at June 30, 2021 with maturities extending through 2040. Governmental Activities 2022 2021 Convention Center Renovation — 2008 $1,141,096 $1,301,646 Murray State University Agreement — 2011 - 1,624,534 Public Pool Renovations — 2013A 575,000 650,000 Economic Development — 2013B 1,290,000 1,445,000 Refinanced Public Projects — 2014A 2,910,000 3,240,000 Refinanced Police/Firefighter Pension Fund Liability — 2014B 1,540,000 1,985,000 CFSB Agreement - 2017 2,766,307 2,814,627 Riverfront and 911 Equipment — 2018A 2,235,000 2,400,000 Kentucky Infrastructure Authority — 2018 2,805,908 322,622 Refinanced KLC and Floodwall Rehabilitation — 2018B 1,365,000 1,715,000 Recreation Facility — 2020A 20,520,000 20,520,000 Refinanced Convention Center — 2020B 2,050,000 2,525,000 Refinanced Murray State University Agreement — 2022A 1,330,614 - Net Premiums/Discounts 431.439 351.438 TOTALS40.960.364 40.894.867 The City had one new debt issue during FY2022. Refinanced Murray State University (MSU) Agreement. In January 2022 (2022A), McCracken County issued general obligation refunding bonds to advance refund the original 2011 series bonds issued. The City's portion of this amount was $1,330,614. Debt issues prior to July 1, 2021 are described below: Refinanced Convention and Performing Arts Center. In October 2020, the City issued general obligation refunding bonds of $3,020,000 (202013) to advance refund $3,140,000 of outstanding 2010B series bonds issued to refinance the original 2001 issue. Municipal Sports and Recreational Facility. In February 2020 (2020A), the City issued general obligation bonds of $20,520,000 to finance the construction of a municipal sports and recreation facility. Riverfront and 911 Equipment. In August 2018 (2018A), the City issued general obligation bonds of $2,700,000 to finance 911 equipment ($1.045 million) and riverfront development ($1.655 million). Refinanced KLC and Floodwall Rehabilitation. In August 2018 (2018B), the City issued general obligation bonds of $2,670,000 to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 lease agreements issued to finance several public improvement projects. Kentucky Infrastructure Authority (KIA). In July 2018, the City entered into an agreement with KIA to obtain up to $4,610,667 for rehabilitation of Pump Station 92. -26- Julian Carroll Convention Center Improvements. In January 2017, the City entered into an agreement with Community Financial Services Bank in the amount of $3 million on behalf of McCracken County to finance improvements to the Julian Carroll Convention Center. Police/Firefighter Pension Fund Liability — Refinance. In November 2014 (2014B), a $4.225 million general obligation was issued to advance refund $3.845 of outstanding 2005 series bonds. The 2005 bonds were issued to finance the police and firefighters' pension fund estimated pension liability. Public Improvement Projects — Refinance. In May 2014 (2014A), a $5.46 million general obligation was issued to refund $5.545 million of outstanding 2010 series bonds. The 2010 bonds were issued to finance several public improvement projects including a major park parking lot renovation and several resurfacing projects, sports park property acquisition, pavilion acquisition, greenway trail development, and the public portion of a hotel purchase. Economic Development. In September 2013 (2013B), $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 (2013A), $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. 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 $279,230,633. 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 2022, just over 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 73-78. VII. Other Potentially Significant Matters. A. Outdoor Sports Facilities. In September 2022, an interlocal agreement for a joint city/county sports plex was approved among the City, County, and McCracken County Sports Tourism Commission. In this agreement both the City and County commit to being equal partners, both financial and participatory, through the life of the agreement. The City and County will devote existing land and facilities to the project, including the Bluegrass Downs property (owned by the County) and Stuart Nelson Park (owned by the City). Total construction costs are estimated to be $42.5 million. The City will utilize $12.5 million of existing bond proceeds (Series 2020A GOB) for its half of the first -27- tranche of funding for design and construction. The City and County's remaining balance of construction costs will be obtained through future bond issues. The agreement states that, starting 12 months before debt service payments begin, the Sports Commission will restrict 80% of transient room taxes received for debt service payments, and will continue to do so until the debt is paid in full. Any shortfalls during this time will be shared equally by the City and County. Although the City is hopeful that these restricted funds will cover the majority of debt service payments over the life of the bonds, the amount of shortfall is uncertain and the source of payment for these potential shortfalls has not been identified. Similar to these concerns are those surrounding the subsequent operation of the facilities. If, in any fiscal year during the term of the agreement, the Sports Commission incurs a shortfall of operating revenue to cover expenses attributable to the operation of the athletic complex, the City and County shall each make up one-half of the shortfall. While the pro forma produced for this project indicates profitability early in the complex's operations, the City does have this potential liability through the life of the agreement. The initial agreement period is 20 years. B. City Facilities. In 2019 the City engaged an engineering firm to assist in the assessment of 14 City facilities. The assessment team began with touring each building and scoring the various components and systems in each facility from 1 to 5 (excellent to poor). The team then developed a list of needs and a 10 -year plan for each building ranging from immediate needs that are recommended to be completed in one to three years and long-range that could by completed in years four through 10. The Facilities Survey and Plan was presented to the Commission in summer 2020. This survey revealed that the average score for all 14 buildings was 3.5, which is between average and below average. The facilities with the lowest scores were Fire Station No. 1, Fire Station No. 4, Parks & Recreation Building, Police Station, and the Robert Cherry Civic Center. The cost of all the assessed needs over ten years totaled $12.6 million. In FY2022 a city facility improvement project was created with an initial injection of $800 thousand. An additional $300 thousand was appropriated in FY2023, achieving the goal of having $1.1 million available for FY2023 to begin facility improvements. The improvements are being prioritized for implementation by the facilities staff, department leadership, and the City Manager's Office. Some of the larger projects that have had some activity include: (1) property acquisition for a potential future Fire Station No. 4 replacement, (2) pending property acquisition by the Senior Center to relocate their operation, which is jointly housed with the Parks & Recreation Department at 1400 H. C. Mathis Drive, and (3) completed construction design documents for the Robert Cherry Civic Center renovation, that includes allocation of existing square footage to house the Parks & Recreation Department. Because of the enormity of some of the problems identified, additional financial planning may need to be considered in the future to supplement the funds currently being set-aside. C. Stormwater. Because of Paducah's location on the Ohio River's floodplain, nearly 204,000 square miles of land drain to Paducah. Paducah has 110 miles of storm sewer and 69 miles of combined sewer. Unfortunately, much of the City's development occurred at a time when stormwater management was not a priority and the current development ordinances were not in place. The current system is aging, with the majority of Paducah's storm sewers between 60 to 100 years old. In March 2017 the City contracted with an engineering firm to complete a Comprehensive Stormwater Master Plan for Paducah. The Master Plan's first phase identified approximately $43 million in flood mitigation projects located within ten priority areas in the City. The Master Plan's second phase included the development of annual operation and maintenance costs and the costs for repair and replacement of existing infrastructure, the projection of future funding needs, funding alternatives and rate options, billing system options, a rate comparison, and a storm water utility ordinance. The development of a stormwater utility, along with a stormwater infrastructure fee of $6.13 per month per Equivalent Residential Unit (ERU) was proposed in 2019. This has not been implemented. The lack of a dedicated funding source for the City to solve drainage problems, repair and maintain existing storm infrastructure, and comply with federal regulatory requirements associated with water -28- quality, has led to the City tackling individual projects as funding allows. As discussed earlier in this document, the City currently has 3 active FEMA Disaster Relief funded projects, one of which is being utilized to partially fund the replacement of a dilapidated bridge that has been affected by flooding and severe weather events. Also mentioned earlier in this discussion is the City's appropriation of $4 million in ARPA funds to stormwater improvements. A portion of the ABPA funds are being used for this bridge project, along with another project that involves the purchase of land by the City to create a 4 -acre stormwater detention area to help reduce residential flooding along Cross Creek. Although progress has been made with current projects, funding sources for future projects are uncertain. 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. -29- CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 ASSETS Current Assets: Cash and cash equivalents Investments Receivables, net: Notes Accounts Leases Grants Interest Property tax Other Internal balances Inventory Prepaid expenses Other current assets Total current assets Noncurrent Assets: Notes receivable Lease receivable Capital assets: Land and construction in progress Depreciable capital assets Cash, designated Other assets Total noncurrent assets Total assets Deferred Outflows of Resources: Deferred pension related outflows Deferred OPEB related outflows Deferred charges on refunding Total deferred outflows of resources Exhibit 1 CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION JUNE 30, 2022 3,497,033 - 3,497,033 3,002,025 - 3,002,025 20,697,194 68,886 20,766,080 Component Primary Government 50,485,954 Unit - - - Paducah Governmental Business -type - Water Works Activities Activities Total Authority $ 46,942,379 $ 4,119,043 $ 51,061,422 $ 1,587,206 19,895,793 - 19,895,793 - 1,194,278 - 1,194,278 - 8,434,085 556,536 8,990,621 1,570,294 556,846 - 556,846 85,651 1,708,239 - 1,708,239 - 26,533 - 26,533 - 6,764,193 - 6,764,193 - - - - 665,885 (603,942) 603,942 - - 405,865 13,211 419,076 1,566,545 613,206 - 613,206 198,998 - - - 146,427 85,937,475 5,292,732 91,230,207 5,821,006 3,497,033 - 3,497,033 3,002,025 - 3,002,025 20,697,194 68,886 20,766,080 5,668,351 48,406,781 2,079,173 50,485,954 63,200,645 - - - 6,273,506 - - - 278,639 75,603,033 2,148,059 77,751,092 75,421,141 161,540,508 7,440,791 168,981,299 81,242,147 10,070,346 340,938 10,411,284 1,806,478 8,511,321 408,903 8,920,224 1,674,067 131,900 - 131,900 895 18,713,567 749,841 19,463,408 3,481,440 See accompanying notes to the basic financial statements. -30- LIABILITIES Current Liabilities: Voucher and accounts payable Accrued payables Unearned revenue Accrued compensated absences Accrued interest Notes payable due within one year Bonds payable due within one year Replacement reserve Other current liabilities Total current liabilities Noncurrent Liabilities: Accrued compensated absences Landfill post -closure costs Net pension liability Net other post employment benefits liability Notes payable Bonds payable Total noncurrent liabilities Total liabilities Deferred Inflows of Resources Deferred revenues - leases Deferred revenues - grants Deferred revenues - property taxes Deferred pension related inflows Deferred OPEB related inflows Total deferred inflows of resources NET POSITION Net invested in capital assets Restricted for: Housing and development projects Capital projects & infrastructure Public safety Debt service Unrestricted TOTAL NET POSITION -31- Component Primary Government Unit Paducah Governmental Business -type Water Works Activities Activities Total Authority 2,786,563 190,080 2,976,643 782,021 1,243,381 64,409 1,307,790 836,028 50,300 34,686 84,986 - 1,279,861 101,757 1,381,618 338,780 380,037 - 380,037 - 323,946 - 323,946 477,237 2,060,000 - 2,060,000 55,000 - - - 243,500 - - - 145,044 8,124,088 390,932 8,515,020 2,877,610 1,088,322 7,869 1,096,191 - - 2,062,500 2,062,500 - 64,514,653 2,425,199 66,939,852 8,632,175 18,652,572 728,042 19,380,614 2,591,362 7,719,979 - 7,719,979 4,815,476 30,856,439 - 30,856,439 60,000 122,831,965 5,223,610 128,055,575 16,099,013 130,956,053 5,614,542 136,570,595 18,976,623 3,502,461 - 3,502,461 83,974 6,149,107 - 6,149,107 - 6,474,350 - 6,474,350 - 7,427,503 350,893 7,778,396 1,569,561 6,664,443 355,226 7,019,669 1,323,544 30,217,864 706,119 30,923,983 2,977,079 58,980,030 2,148,059 61,128,089 63,448,685 - 199,794 199,794 - 793,091 - 793,091 - 203,051 - 203,051 - - - - 35,139 (40,896,014) (477,882) (41,373,896) (713,939) $ 19,080,158 $ 1,869,971 $ 20,950,129 $ 62,769,885 -31- Exhibit 2 CITY OF PADUCAH, KENTUCKY STATEMENT OF ACTIVITIES FOR THE YEAR ENDED JUNE 30, 2022 Business -type activities: Solid Waste 4,558,219 4,802,844 56,682 - Program Revenues 2,052,670 FUNCTIONS/PROGRAMS Civic Center 35,544 Operating Capital 120,100 120,819 - - Charges for Grants and Grants and Primary Government: Expenses Services Contributions Contributions Governmental activities: Paducah Water Works Authority $ 11,808,148 $ 13,383,757 $ - $ 505,123 TOTAL COMPONENT UNITS General government $ 11,686,115 $ 1,912,220 $ 536,403 $ 15,000 Public safety 25,631,674 409,311 1,286,119 895,683 Public service 7,057,855 941,589 238,317 1,298,690 Parks and recreation 3,423,465 103,842 25,000 (6,014) Planning and development 2,348,101 - 1,384,742 160,113 Interest on long-term debt 513,885 - 862,501 - Total governmental activities (See Note 1) 50,661,095 3,366,962 4,333,082 2,363,472 Business -type activities: Solid Waste 4,558,219 4,802,844 56,682 - Section Eight Housing 2,052,670 2,056 2,147,850 - Civic Center 35,544 - - - Transient Boat Dock 120,100 120,819 - - Total business -type activities 6,766,533 4,925,719 2,204,532 - TOTAL PRIMARY GOVERNMENT $ 57,427,628 $ 8,292,681 $ 6,537,614 $ 2,363,472 Component Unit: Paducah Water Works Authority $ 11,808,148 $ 13,383,757 $ - $ 505,123 TOTAL COMPONENT UNITS $ 11,808,148 $ 13,383,757 $ - $ 505,123 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 See accompanying notes to the basic financial statements. -32- Total general revenues Transfers Total general revenues and transfers Change in net position Net position - beginning Net position - ending Net (Expense) Revenue and Changes in Net Position Governmental Business -type Paducah Water Activities Activities Total Works Authority $ (9,222,492) $ - $ (9,222,492) $ - (23,040,561) - (23,040,561) - (4,579,259) - (4,579,259) - (3,300,637) - (3,300,637) - (803,246) - (803,246) - 348,616 - 348,616 - (40,597,579) - (40,597,579) - - 301,307 301,307 - - 97,236 97,236 - - (35,544) (35,544) - - 719 719 - - 363,718 363,718 - (40,597,579) 363,718 (40,233,861) - - - - 2,080,732 - - - 2,080,732 6,128,302 - 6,128,302 - 5,834,013 - 5,834,013 - 5,297,560 - 5,297,560 - 23,845,186 - 23,845,186 - 332,606 - 332,606 - 630,352 - 630,352 - 913,410 - 913,410 - 403,997 - 403,997 - 1,788,776 - 1,788,776 - 364,116 - 364,116 - 551,355 28,613 579,968 45,307 14,710 1,580 16,290 39,732 46,104,383 30,193 46,134,576 85,039 258,374 (258,374) - - 46,362,757 (228,181) 46,134,576 85,039 5,765,178 135,537 5,900,715 2,165,771 13,314,980 1,734,434 15,049,414 60,604,114 $ 19,080,158 $ 1,869,971 $ 20,950,129 $ 62,769,885 -33- CITY OF PADUCAH, KENTUCKY BASIC FINANCIAL STATEMENTS FUND FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 Exhibit 3 CITY OF PADUCAH, KENTUCKY BALANCESHEET GOVERNMENTAL FUNDS JUNE 30, 2022 See accompanying notes to the basic financial statements. -34- Special Revenue General Investment Bond Fund Fund Fund Assets Cash and cash equivalents $ 25,017,711 $ 2,685,096 $ 28 Investments - - 19,895,793 Receivables: Accounts 8,922,257 - - Leases 3,321,393 - - Grants 180,927 - - Property taxes (net of allowances for uncollectibles) 6,804,193 - - Inventory - - - Prepaid items - - - Due from other funds 7,824 1,452,616 - Total Assets $ 44,254,305 $ 4,137,712 $ 19,895,821 Liabilities Voucher and accounts payable $ 396,474 $ 7,590 $ - Accrued payroll and payroll taxes 1,146,390 - - Due to other funds 1,452,616 - 7,824 Due to other taxing agencies 21,763 - - Unearned revenue - other - - - Accrued compensated absences 157,896 - - Total liabilities 3,175,139 7,590 7,824 Deferred Inflows of Resources Deferred inflow - leases 3,268,863 - - Unavailable revenue - grants 6,149,107 - - Unavailable revenue - property taxes 6,723,718 - - Total deferred inflows of resources 16,141,688 - - Fund Balances: Nonspendable Inventory - - - Restricted for: Highways and streets - - - Public safety - - Capital improvements - - 19,887,997 Committed for: Capital improvements - 4,130,122 - Pension reserve 670,365 - - Assigned for: Public safety - - - Debt service - - - Capital improvements - - - Unassigned: General Fund 24,267,113 - - Total fund balances 24,937,478 4,130,122 19,887,997 TOTAL LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES $ 44,254,305 $ 4,137,712 $ 19,895,821 See accompanying notes to the basic financial statements. -34- General Debt Nonmajor Total Capital Service Governmental Governmental Improvements Fund Funds Funds $ 7,925,202 $1,622,886 $ 1,367,580 $ 38,618,503 - - - 19,895,793 117 - 310,357 9,232,731 - 237,478 - 3,558,871 1,527,312 - - 1,708,239 - - - 6,804,193 341,539 - - 341,539 - - - 1,460,440 $ 9,794,170 $1,860,364 $ 1,677,937 $ 81,620,309 $ 1,863,776 $ - $ 298,595 $ 2,566,435 - - 56,084 1,202,474 - - - 1,460,440 - - - 21,763 50,300 - - 50,300 - - - 157,896 1,914,076 - 354,679 5,459,308 - 233,599 - 3,502,462 6,149,107 6,723,718 233,599 - 16,375,287 341,539 - - 341,539 - - 793,091 793,091 - - 203,051 203,051 - - - 19,887,997 - - - 4,130,122 - - - 670,365 - - 327,116 327,116 - 1,626,765 - 1,626,765 7,538,555 - - 7,538,555 - - - 24,267,113 7,880,094 1,626,765 1,323,258 59,785,714 $ 9,794,170 $1,860,364 $ 1,677,937 $ 81,620,309 -35- Exhibit 4 CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION JUNE 30, 2022 Total fund balance - total governmental funds $ 59,785,714 Amounts reported for governmental activities in the Statement of Net Position are different because: Delinquent property taxes receivable are not reported in the governmental funds balance sheet since they are not considered "available" revenues. 209,368 The long-term notes receivable are not reported in the governmental funds balance sheet since they are not available to pay current period expenditures. 3,791,311 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. 26,533 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. 69,103,975 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: Deferred refunding costs 131,900 Deferred OPEB related inflows (6,664,443) Deferred OPEB related outflows 8,511,321 Deferred pension related inflows (7,427,503) Deferred pension related outflows 10,070,346 4,621,621 See accompanying notes to the basic financial statements. (Continued) -36- CITY OF PADUCAH, KENTUCKY RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO STATEMENT OF NET POSITION JUNE 30, 2022 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. Long-term pensions, OPEB, bonds and notes of ($124,127,590) 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: Due within one year $ 2,383,946 Due after one year 121,743,643 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 assets $ 9,102,763 Current liabilities (261,655) Net amount allocated to business -type activities (603,942) NET POSITION OF GOVERNMENTAL ACTIVITIES See accompanying notes to the basic financial statements. -37- Exhibit 4 (Continued) $ (2,187,904) (380,037) (124,127,589) 8,237,166 $ 19,080,158 CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Taxes Licenses Charges for services Intergovernmental Grants Interest Property upkeep, rentals, sales and other Total revenues Expenditures: Current operations: General government Public safety Public service Parks and recreation Planning and development Intergovernmental and other Capital outlay Debt service: Principal requirement Debt issuance costs Interest requirement Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources (Uses): Refunding debt issued Issuance of notes payable Payment to refunded bond escrow agent Premium on debt issued Discount on debt issued Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fund balances - beginning Fund balances - ending See accompanying notes to the basic financial statements. -38- Exhibit 5 Special Revenue General Investment Bond U. -A U. -A r -A 'D U,'TJ V,'TGU y - y - 30,0625732 5,886,614 - 7105599 - - 1,5815482 - - 326,919 - 145,996 995,754 - - 42,133,914 558865614 145,996 5,970,330 - - 21,371,850 - - 5,535,635 - - 3,123,799 - - - 950,492 37,153 493,736 - - - - 17,486 5,638,564 4,936,122 91,357 - - 1,330,614 - - (1,507,646) - - 204,531 - - (10,013) 463,138 285,000 - (3,373,217) (4,746,121) - (2,910,079) (4,461,121) 17,486 2,728,485 475,001 108,843 22,208,993 3,655,121 19,779,154 $ 24,937,478 $4,130,122 $19,887,997 General Capital Improvements 1,886,547 275,950 2,162,497 w Debt Nonmajor Service Governmental Fund Funds 654,429 758,679 20,467 322,519 1,756,094 $ 2,109,480 366,679 510,824 432,853 8,271 578,109 4,006,216 Total Governmental Funds $ 10,565,908 35,949,346 1,077,278 1,165,253 4,659,561 501,653 2,172,332 56,091,331 5,970,330 - - 2,014,918 23,386,768 - - 1,204,096 6,739,731 - - - 3,123,799 - - 2,183,776 3,171,421 - - - 493,736 7,639,458 - - 7,639,458 /,VJ7,'TJV (5,476,961) 3,460,662 3,152,342 (3,138) t U. oil' .,M. 1,132,905 6,747,189 $ 7,880,094 3,309,044 1,134, 620 4,443,664 (2,687,570) 2,805,728 2,805,728 118,158 1,508,607 $ 1,626,765 J,'TVG, / 7V (1,396,574) 1,779,175 (146,418) 1,632,757 236,183 1,087,075 $ 1,323,258 -39- 3,309,044 17,486 1,134,620 54,986,393 1,104,938 1,330,614 3,460,662 (1,507,646) 204,531 (10,013) 8,485,383 (8,268,894) 3,694,637 4,799,575 54,986,139 $ 59,785,714 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, 2022 Net change in fund balances - total governmental funds Amounts reported for governmental activities in the Statement of Activities are different because: 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 $559,727. Collections on long-term notes receivables and related interest receivable are revenues in the government funds when collected. 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. 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. 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 $959,412. See accompanying notes to the basic financial statements. -40- Exhibit 6 4,799,575 6,960,055 (285,817) (2,041,441) (4,791,276) (336,350) (3,744,161) (Continued) Exhibit 6 (Continued) 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, 2022 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. Long-term accrued compensated absences do not require the use of current financial resources and, therefore, are not reported as expenditures in governmental funds. 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. 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 $ 208,162 Net of amount allocated to business -type activities (9,138) Capital Outlays (559,727) Depreciation expense 959,412 CHANGE IN NET POSITION OF GOVERNMENTAL ACTIVITIES See accompanying notes to the basic financial statements. -41- $ 4,805,780 19,016 (97,397) (121,515) 598,709 $ 5,765,178 CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2022 Budgeted Amounts Original Final Actual Amounts Exhibit 7 Variance with Final Budget Positive (Negative) Revenues: 202,500 202,500 227,163 24,663 Taxes: 340,000 340,000 345,000 5,000 Real and personal, 35,000 35,000 34,594 (406) current year $ 6,601,500 $ 6,601,500 $ 6,930,889 $ 329,389 Real and personal, 681,500 681,500 710,599 29,099 prior year 15,000 15,000 63,886 48,886 Franchise 170,000 170,000 332,606 162,606 Bank taxes 400,000 400,000 403,997 3,997 In lieu of tax payment 317,000 317,000 299,496 (17,504) Penalty, interest and advertising 55,000 55,000 64,430 9,430 Paducah Junior College tax collections - - 361,124 361,124 Total taxes 7,558,500 7,558,500 8,456,428 897,928 Licenses: Business licenses 3,900,000 3,900,000 5,297,560 1,397,560 Employee earnings 16,300,000 16,300,000 17,958,570 1,658,570 Cable franchise fees 377,000 377,000 365,385 (11,615) Penalties 200,000 200,000 413,107 213,107 Alcoholic beverages 157,000 157,000 164,976 7,976 Insurance premium tax 5,275,000 5,275,000 5,834,013 559,013 Building permits 150,000 150,000 125,107 (24,893) Electrical permits 40,000 40,000 62,553 22,553 Zoning change fees 7,000 7,000 8,290 1,290 Miscellaneous building and electrical fees 4,000 4,000 4,001 1 Payroll tax sharing with County (128,500) (128,500) (170,830) (42,330) Total licenses 26,281,500 26,281,500 30,062,732 3,781,232 Charges for services: Tax collection fee 202,500 202,500 227,163 24,663 Administrative charge 340,000 340,000 345,000 5,000 Base court revenue 35,000 35,000 34,594 (406) Recreation fees 104,000 104,000 103,842 (158) Total charges for services 681,500 681,500 710,599 29,099 See accompanying notes to the basic financial statements. (Continued) -42- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2022 Budgeted Amounts Original Final Grants: Police State Incentive $ 415,000 Fire State Incentive 375,000 Police supplemental grants 15,000 Other grants - Total grants Interest Other: Property rent and sales Property upkeep and maintenance E911 - GIS Miscellaneous Total other Total revenues Expenditures: General government: General administration: Mayor and Commissioners City Manager City Clerk Corporate Counsel Non -departmental Memberships and contingency Civic beautification Total general administration Finance: Finance administration Accounting and payroll Revenue collection Actual Amounts Exhibit 7 (Continued) Variance with Final Budget Positive (Negative) $ 415,000 $ 416,351 $ 1,351 375,000 361,305 (13,695) 15,000 401,395 386,395 6,551,535 402,431 (6,149,104) 805,000 7,356,535 1,581,482 (5,775,053) 140,500 140,500 326,919 186,419 486,290 729,035 729,035 683,307 (45,728) 112,505 112,505 90,984 (21,521) 34,055 34,055 34,055 - 155,800 192,040 187,408 (4,632) 1,031,395 1,067,635 995,754 (71,881) 36,498,395 43,086,170 42,133,914 (952,256) 264,825 314,700 306,460 8,240 903,140 904,375 874,621 29,754 486,290 459,370 448,853 10,517 160,000 230,000 223,710 6,290 1,018,665 826,290 757,921 68,369 4,400 5,435 5,426 9 3,000 3,000 2,933 67 2,840,320 2,743,170 2,619,924 123,246 337,105 307,340 297,590 9,750 449,905 464,590 452,394 12,196 497,740 513,005 495,534 17,471 Total finance 1,284,750 1,284,935 1,245,518 39,417 See accompanying notes to the basic financial statements. (Continued) -43- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2022 General government: Planning: Administration Planning Total planning Radio and rental property Human rights Information systems Budgeted Amounts Original Final Actual Amounts Exhibit 7 (Continued) Variance with Final Budget Positive (Negative) $ 234,570 $ 250,120 $ 242,213 $ 7,907 518,335 417,035 361,147 55,888 752,905 667,155 603,360 63,795 150,130 150,130 95,240 54,890 17,030 17,020 10,914 6,106 924,250 939,960 894,625 45,335 Human resources/risk management 499,915 515,375 500,749 14,626 Total general government Public safety: Police: Police administration Patrol Investigations COPS Grants Total police Fire: Fire administration Suppression Prevention and inspection Training Total fire Total public safety Public service: Public works: Street maintenance Street lighting Facility maintenance 6,469,300 6,317,745 5,970,330 347,415 1,422,530 1,336,125 1,295,756 40,369 7,757,105 7,894,505 7,825,845 68,660 2,376,475 2,357,520 2,262,004 95,516 296,150 277,965 258,745 19,220 11,852,260 11,866,115 11,642,350 223,765 653,270 745,875 722,343 23,532 7,885,625 7,869,620 7,782,275 87,345 1,330,750 1,191,145 1,137,241 53,904 206,855 105,455 87,641 17,814 10,076,500 9,912,095 9,729,500 182,595 21,928,760 21,778,210 21,371,850 406,360 2,526,080 2,504,180 2,186,167 318,013 810,000 810,000 795,996 14,004 1,312,930 1,249,670 1,006,072 243,598 Total public works 4,649,010 4,563,850 3,988,235 575,615 See accompanying notes to the basic financial statements. (Continued) -44- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL GENERAL FUND FOR THE YEAR ENDED JUNE 30, 2022 Public service: Engineering services: Engineering services Flood control Total engineering services Total public service Parks and recreation: Parks and recreation administration Grounds maintenance Pools and recreation programs Total parks and recreation Intergovernmental and other: Cable authority Intergovernmental expense Donated assets Total intergovernmental and other Total expenditures Excess (deficiency) of revenues over expenditures Other financing sources (uses): Transfers in Transfers out Budgeted Amounts Original Final Actual Amounts Exhibit 7 (Continued) Variance with Final Budget Positive (Negative) $ 742,960 $ 751,530 $ 744,060 $ 7,470 950,525 941,685 803,340 138,345 1,693,485 1,693,215 1,547,400 145,815 6,342,495 6,257,065 5,535,635 721,430 732,990 781,125 761,548 19,577 1,614,325 1,561,060 1,513,688 47,372 1,160,550 921,740 848,563 73,177 3,507,865 3,263,925 3,123,799 140,126 85,945 133,135 132,612 523 - - 361,124 (361,124) 85,945 133,135 493,736 (360,601) 38,334,365 37,750,080 36,495,350 1,254,730 (1,835,970) 5,336,090 5,638,564 302,474 460,000 463,135 463,138 3 (2,663,925) (9,839,120) (3,373,217) 6,465,903 Total other financing sources (uses) (2,203,925) (9,375,985) (2,910,079) 6,465,906 Net change in fund balance Fund balance - beginning Fund balance - ending (4,039,895) (4,039,895) 2,728,485 6,768,380 22,208,993 22,208,993 22,208,993 $ 18,169,098 $ 18,169,098 $ 24,937,478 $ 6,768,380 See accompanying notes to the basic financial statements. -45- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL SPECIAL REVENUE INVESTMENT FUND FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Licenses: Employee earnings Total licenses Total revenues Expenditures: General government: Planning and development: Economic development Total expenditures 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 - beginning Fund balance - ending Budgeted Amounts Original Final $ 5,000,000 5,000,000 5,000,000 $ 5,000,000 5,000,000 5,000,000 Actual Amounts $ 5,886,614 5,886,614 5,886,614 Exhibit 8 Variance with Final Budget Positive (Negative) $ 886,614 886,614 886,614 1,041,480 950,230 950,492 (262) 1,041,480 950,230 950,492 (262) 3,958,520 4,049,770 4,936,122 886,352 285,000 285,000 285,000 - (4,233,085) (4,924,335) (4,746,121) 178,214 (3,948,085) (4,639,335) (4,461,121) 178,214 10,435 (589,565) 475,001 1,064,566 3,655,121 3,655,121 3,655,121 - $ 3,665,556 $ 3,065,556 $ 4,130,122 $ 1,064,566 See accompanying notes to the basic financial statements. io ATL'T n/1C1r9r1r/lAT Net invested in capital assets 2,075,870 72,189 2,148,059 3,518,038 Restricted - Housing - Exhibit 9 199,794 - CITY OF PADUCAH, KENTUCKY (1,081,824) 7,837,754 TOTAL NET POSITION $ 947,920 $ 318,109 STATEMENT OF NET POSITION Adjustment to reflect the consolidation of Internal Service Funds' PROPRIETARY FUNDS activities related to Enterprise Funds 603,942 JUNE 30, 2022 $ 1,869,971 Governmental Business -type Activities Activities ASSETS Nonmajor Internal Solid Enterprise Service Current Assets: Waste Funds Totals Funds Cash and cash equivalents $ 3,723,104 $ 395,939 $ 4,119,043 $ 8,323,877 Investments - - - - Accounts receivable 556,536 - 556,536 101,354 Interest receivable - - - - Prepaid expenses - - 613,206 Inventory - 13,211 13,211 64,326 Total current assets 4,279,640 409,150 4,688,790 9,102,763 Noncurrent Assets: Net capital assets: Land 68,886 - 68,886 - Depreciable capital assets 2,006,984 72,189 2,079,173 3,518,038 Total noncurrent assets 2,075,870 72,189 2,148,059 3,518,038 Total assets 6,355,510 481,339 6,836,849 12,620,801 Deferred Outflows of Resources: Deferred pension related outflows 338,076 2,862 340,938 103,008 Deferred OPEB related outflows 400,066 8,837 408,903 127,791 Total deferred outflows of resources 738,142 11,699 749,841 230,799 LIABILITIES Current Liabilities: Voucher and accounts payable 129,341 60,739 190,080 220,129 Accrued payroll and payroll taxes 63,693 716 64,409 19,142 Accrued compensated absences 98,357 3,400 101,757 22,384 Unearned revenue 34,500 186 34,686 - Due to other funds - - - - Total current liabilities 325,891 65,041 390,932 261,655 Noncurrent Liabilities: Net pension liability 2,363,337 61,862 2,425,199 765,348 Net other post employment benefits liability 709,471 18,571 728,042 229,757 Landfill post -closure costs 2,062,500 - 2,062,500 - Accrued compensated absences - 7,869 7,869 18,529 Total noncurrent liabilities 5,135,308 88,302 5,223,610 1,013,634 Total liabilities 5,461,199 153,343 5,614,542 1,275,289 Deferred Inflows of Resources Deferred pension related inflows 341,943 8,950 350,893 110,736 Deferred OPEB related inflows 342,590 12,636 355,226 109,783 Total deferred inflows of resources 684,533 21,586 706,119 220,519 ATL'T n/1C1r9r1r/lAT Net invested in capital assets 2,075,870 72,189 2,148,059 3,518,038 Restricted - Housing - 199,794 199,794 - Unrestricted (1,127,950) 46,126 (1,081,824) 7,837,754 TOTAL NET POSITION $ 947,920 $ 318,109 1,266,029 $ 11,355,792 Reconciliation to government -wide statements of net position: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds 603,942 NET POSITION OF BUSINESS -TYPE ACTIVITIES $ 1,869,971 See accompanying notes to the basic financial statements. -47- CITY OF PADUCAH, KENTUCKY STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Operating Revenues: Charges for services - internal Charges for services - external Miscellaneous Total operating revenues Operating Expenses: Cost of sales and service Depreciation and amortization Total operating expenses Operating income (loss) Nonoperating Revenues (Expenses): Grants - program purpose Interest and investment income Gain (loss) on disposal of property and equipment Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Contributions and Transfers: Transfers in Transfers out Total contributions and transfers Change in net position Exhibit 10 Net position - beginning 945,823 193,807 Net position - ending $ 947,920 $ 318,109 Reconciliation to government -wide statements of net position: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds CHANGE IN NET POSITION OF BUSINESS -TYPE ACTIVITIES See accompanying notes to the basic financial statements. 9,138 $ 135,537 11,147,630 $11,355,792 Governmental Business -type Activities Activities Nonmajor Internal Solid Enterprise Service Waste Funds Totals Funds $ - $ 120,819 $ 120,819 $ 6,082,854 4,800,026 - 4,800,026 296,676 2,819 2,056 4,875 - 4,802,845 122,875 4,925,720 6,379,530 3,865,592 2,195,875 6,061,467 5,358,548 661,471 12,439 673,910 959,412 4,527,063 2,208,314 6,735,377 6,317,960 275,782 (2,085,439) (1,809,657) 61,570 56,682 2,147,850 2,204,532 - 28,349 265 28,614 49,701 1,580 - 1,580 14,710 86,611 2,148,115 2,234,726 64,411 362,393 62,676 425,069 125,981 - 61,626 61,626 152,181 (360,296) - (360,296) (70,000) (360,296) 61,626 (298,670) 82,181 2,097 124,302 126,399 208,162 Net position - beginning 945,823 193,807 Net position - ending $ 947,920 $ 318,109 Reconciliation to government -wide statements of net position: Adjustment to reflect the consolidation of Internal Service Funds' activities related to Enterprise Funds CHANGE IN NET POSITION OF BUSINESS -TYPE ACTIVITIES See accompanying notes to the basic financial statements. 9,138 $ 135,537 11,147,630 $11,355,792 CITY OF PADUCAH, KENTUCKY STATEMENT OF CASH FLOWS PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Cash Flows from Operating Activities: Cash received from customers Cash received from interfund services provided Payments to suppliers Payments to employees Claims paid Payments to internal service funds Other receipts Other payments Net cash provided (used) by operating activities Cash Flows from Noncapital Financing Activities: Grants - program purpose Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities Cash Flows from Capital and Related Financing Activities: Purchase of capital assets Proceeds from sale of capital assets Net cash provided (used) by capital and related financing activities Cash Flows from Investing Activities: Proceeds from sale of investment securities Interest on cash and investments Net cash provided (used) by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2021 CASH AND CASH EQUIVALENTS, JUNE 30, 2022 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation and amortization Change in assets and liabilities: Receivables Prepaid expenses Inventories Unearned revenues Pension obligation and related deferrals OPEB obligation and related deferrals Account and accrued payables NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See accompanying notes to the basic financial statements. -49- Exhibit 11 $3,723,104 $ 395,939 $ 4,119,043 $8,323,877 $ 275,782 $(2,085,439) $ (1,809,657) $ 61,570 661,471 12,439 673,910 Governmental Business -type Activities Activities (16,537) Nonmaj or - Internal Solid Enterprise (552) Service Waste Funds Totals Funds $4,865,975 $ 120,819 $ 4,986,794 $ - - - - 6,340,351 (2,330,600) - (2,330,600) (309,201) (1,238,682) (15,742) (1,254,424) (386,351) - - - (4,160,628) (536,304) (3,252) (539,556) - 2,819 2,056 4,875 - - (2,273,238) (2,273,238) (663,412) 763,208 (2,169,357) (1,406,149) 820,759 56,682 2,083,222 2,139,904 - - 61,626 61,626 152,181 (360,296) - (360,296) (70,000) (303,614) 2,144,848 1,841,234 82,181 (722,644) (5,203) (727,847) (559,727) 1,580 - 1,580 14,710 (721,064) (5,203) (726,267) (545,017) 1,500,000 - 1,500,000 3,000,000 35,900 265 36,165 49,701 1,535,900 265 1,536,165 3,049,701 1,274,430 (29,447) 1,244,983 3,407,624 2,448,674 425,386 2,874,060 4,916,253 $3,723,104 $ 395,939 $ 4,119,043 $8,323,877 $ 275,782 $(2,085,439) $ (1,809,657) $ 61,570 661,471 12,439 673,910 959,412 31,449 - 31,449 (16,537) - - - (97,846) - (552) (552) (2,070) 34,500 (64,628) (30,128) - (177,524) (87,649) (265,173) (24,529) (35,597) (11,191) (46,788) (4,248) (26,873) 67,663 40,790 (54,993) $ 763,208 $(2,169,357) $ (1,406,149) $ 820,759 Exhibit 12 CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION FIDUCIARY FUNDS JUNE 30, 2022 LIABILITIES Voucher and accounts payable 14 - Payroll taxes and withholdings payable - - Total liabilities 14 - NET POSITION Net position restricted for pensions Held in trust for other purposes $ 3,908,726 $ 1,065,188 See accompanying notes to the basic financial statements -50- Primary Government Private - ASSETS Pension purpose Funds Trusts Cash and cash equivalents $ 735 $ 15,889 Receivables: Interest 2,561 - Other - - Investments at fair value Money market funds 12,835 - Common stock 1,542,602 - Mutual funds 2,350,007 1,049,299 Total assets 3,908,740 1,065,188 LIABILITIES Voucher and accounts payable 14 - Payroll taxes and withholdings payable - - Total liabilities 14 - NET POSITION Net position restricted for pensions Held in trust for other purposes $ 3,908,726 $ 1,065,188 See accompanying notes to the basic financial statements -50- CITY OF PADUCAH, KENTUCKY STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Additions: Contributions: Employer Plan members Private donations Total contributions Investment income: Net increase (decrease) in fair value of investments Interest and dividends Net investment income Total additions Deductions: Benefits Capital outlay Administrative expenses Total deductions Change in net position Net position - beginning Net position - ending See accompanying notes to the basic financial statements. -51- Exhibit 13 Private - Pension purpose Funds Trusts $ 313,912 $ - - 5,115 313,912 5,115 (678,848) (266,912) 69,207 70,727 (609,641) (196,185) (295,729) (191,070) 937,050 - - 81,546 45,443 16,186 982,493 97,732 (1,278,222) (288,802) 5,186,948 1,353,990 $ 3,908,726 $ 1,065,188 CITY OF PADUCAH, KENTUCKY NOTES TO THE FINANCIAL STATEMENTS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 Firefiehters' 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. 8t' Street Paducah, Kentucky 42003 (Continued) -52- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 Aeency — 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. Basis of Presentation Government -wide Financial Statements The Statement of Net Position and Statement of Activities display information about the reporting government as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business -type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other nonexchange revenues. Business -type activities are financed in whole or in part by fees charged to external parties for goods or services. (Continued) -53- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 1- Summary of Significant Account Policies: Basis of Presentation Fund Financial Statements Fund financial statements of the reporting entity are organized into funds, each of which is considered to be separate accounting entities. Each fund is accounted for by providing a separate set of self -balancing accounts that constitute its assets, deferred outflows of resources, liabilities, deferred inflows of resources, fund equity, revenues, and expenditure or expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or meets the following criteria: a. Total assets, liabilities, revenues, or expenditures/expenses of that individual governmental or enterprise fund are at least ten percent of the corresponding total for all funds of that category or type; and b. Total assets, liabilities, revenues, or expenditures/expenses of the individual governmental fund or enterprise fund are at least five percent of the corresponding total for all governmental and enterprise funds combined. The funds of the financial reporting entity are described below: Governmental funds are those funds through which most governmental functions typically are financed. The measurement focus of governmental funds is on the sources, uses and balance of current financial resources. The City has presented the following major governmental funds: General Fund — To account for resources traditionally associated with governments which are not required to be accounted for in another fund. Special Revenue Investment Fund — To account for restricted funds from employee license fee used for economic development, community redevelopment and infrastructure capital investments within Paducah. Bond Fund — To account for restricted funds from bond issues used for infrastructure capital investments within the Paducah area. General Capital Improvements — To account for the acquisition or construction of major capital projects other than those financed by proprietary fund operations and special assessments. Debt Service Fund — To account for the accumulation of resources and payment of bond and note principal and interest, and capital lease activity. The City has presented the following major proprietary fund: Solid Waste Fund — To account for the provision of refuse services to the residents of the City. (Continued) -54- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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) -55- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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) -56- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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, 2022. 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) -57- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 $64,326 held for consumption and re -sell and real property of $341,539 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. Government -wide Statement In the government -wide financial statements, property, plant and equipment are accounted for as capital assets. All capital assets are valued at historical cost or estimated historical cost if actual is unavailable, except for donated capital assets and work of art capital assets received in a service concession arrangement which are recorded at their acquisition value at the date of donation. Estimated historical cost was used to value the majority of the assets acquired prior to June 30, 2004. (Continued) -58- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 1- Summary of Significant Accounting Policies: Capital Assets Assets capitalized have an original cost of $500 or more prior to July 1, 1999, $2,500 or more after July 1, 1999, $3,000 or more after June 24, 2009 and $5,000 or more after June 30, 2016. Prior to July 1, 2002, governmental funds' infrastructure assets were not capitalized. These assets have been valued at estimated historical cost. Capital assets of the primary government are depreciated over the estimated useful lives using the straight- line method. The estimated useful lives are as follows: Land improvements 10-30 Years Buildings 30 Years Building improvements 10-30 Years Infrastructure 10-30 Years Equipment 3-10 Years Furnishings and fixtures 5-7 Years Vehicles 7-10 Years Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for the same as in the government -wide statements. Deferred Outflows/Inflows of Resources Government -wide Statement In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred ou flows of resources, represent a consumption of net assets that applies to future period and will not be recognized as an outflow of resources (expense/expenditure) until then. The government has two items that qualify for reporting in the category. These are the deferred charge on refunding and deferred pension and other post -employment benefits (OPEB) related outflows reported in the statements of net position. A deferred charge on refunding results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The deferred pension and OPEB related outflows result from pension and OPEB contributions subsequent to the measurement date of the pension and OPEB plans and various changes resulting from actuarial pension and OPEB measurement. The pension and OPEB contribution amounts are deferred and recognized as a component of the change in pension plan liability in the next measurement period. The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represent an acquisition of net assets that applies to future periods and will not be recognized as an inflow of resources (revenue) until that time. The City has four type of items reported in this category. These are receipt of coronavirus recovery grant funding, property taxes levied during the fiscal year for the next fiscal year, inflows related to the City's pension and OPEB plans that qualify for reporting in this category — deferred pension and OPEB related inflows and lessor of facilities and real property to other organizations. (Continued) -59- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 1- Summary of Significant Accounting Policies: Deferred Outflows/Inflows of Resources Coronavirus recovery grant funds received are deferred and will be used in future periods. The various changes resulting from actuarial pension and OPEB measurements are deferred and amortized in future periods as a component of the pension and OPEB expense. Future cash receipts under non -cancelable leases measured at present value are deferred inflow of resources and amortized in future periods as a component of operation income. Fund Financial Statements The government has two types of items, 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 two sources: property taxes and coronavirus recovery grants. These amounts are deferred and recognized as an inflow of resources in the period that the amount becomes available. Restricted Assets Certain proceeds of enterprise fund revenue bonds, as well as certain resources set aside for their repayment, are classified as restricted assets on the balance sheet because their use is limited by applicable bond covenants. Accrued Leave Accumulated unpaid vacation, sick pay, and other employee benefit amounts are recorded as long-term debt in the government -wide statements. The current portion of accrued compensated absences is estimated based on historical trends. In the fund financial statements, governmental funds report only the matured compensated absence liability payable from expendable available financial resources, while the proprietary funds report the liability as it is incurred. Accumulations for vacation pay are restricted to a maximum of 50 days and provide vesting rights upon completion of six months service. Accumulations for sick pay are restricted to a maximum of 150 days and provide payment to employees or beneficiaries for accumulations in excess of 50 days and up to 120 days upon death or retirement from City service. Qualified participants in the County Employees' Retirement System, under certain circumstances, are eligible to convert accrued sick pay benefits into additional credit for years of service upon retirement. Long -Term Debt The accounting treatment of long-term debt depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government -wide or fund financial statements. All long-term debt to be repaid from governmental and business -type resources is reported as liabilities in the government -wide statements. The long-term debt consists primarily of bonds payable, notes payable, and accrued compensated absences. Long-term debt for governmental funds is not reported as liabilities in the fund financial statements. The debt proceeds are reported as other financing sources and payment of principal and interest as expenditures. The accounting for proprietary funds is the same in the fund statements as it is in the government -wide statements. (Continued) -60- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note I - Summary of Significant Accounting Policies: Equity Classifications Government -wide Statements Equity is classified as net position and displayed in three components: a. Net invested in capital assets — Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position — Consists of net assets with constraints placed on the use either by (1) external groups such as creditors, grantors, contributors, or laws or regulations of other governments; or (2) law through constitutional provisions or enabling legislation. c. Unrestricted net position — All other net assets that do not meet the definition of "restricted" or "net invested in capital assets." Fund Statements Governmental fund equity is classified as fund balance and displayed in five components: a. Nonspendable fund balance includes amounts that are not in a spendable form or are required to be maintained intact indefinitely. b. Restricted fund balance includes amounts that can be spent only for the specific purpose stipulated by creditors, grantors, contributors, or laws or regulations of other governments. c. Committed fund balance includes amounts that can be used only for the specific purposes determined by the City Commissioners through the approval of City ordinances. Commitments may be changed or lifted only by the City Commissioners making the same formal action that imposed the constraint originally. d. Assigned fund balance comprises the amounts intended to be used for a specific purpose. Intent can be expressed by the City Commissioners or the City Finance Officer, as stated in the Finance Department Accounting Policy (FIN -20). No formal action is required. e. Unassigned fund balance includes amounts that have not been assigned to other funds or restricted, committed, or assigned to a specific purpose within the General Fund. The General Fund is the only fund which may report a positive unassigned fund balance. In other governmental funds, it is not appropriate to report a positive unassigned fund balance if expenditures incurred for specific purposes exceed the amounts that are restricted, committed, or assigned to those purposes, it may be necessary to report a negative unassigned fund balance in that fund. When both restricted and unrestricted fund balances are available for use, it is the City's policy to use restricted fund balance first, then unrestricted fund balance. Furthermore, committed fund balances are reduced first, followed by assigned amounts, and then unassigned amounts when expenditures are incurred for purposes for which amounts in any of those unrestricted fund balance classifications can be used. Proprietary fund equity is classified the same as in the government -wide statements. (Continued) -61- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 1- Summary of Significant Accounting Policies: Interfund Transactions Interfund services provided and used are accounted for as revenues, expenditures, or expenses. Transactions that constitute reimbursements to a fund for expenditures/expenses initially made from it that are properly applicable to another fund, are recorded as expenditures/expenses in the reimbursing fund and as reductions of expenditures/expenses in the fund that is reimbursed. All other interfund transactions are reported as transfers. Program Revenues Amounts reported as program revenues include 1) charges to customers or applicants for goods, services, or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions, including special assessments. Internally dedicated resources are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Operating and Non -Operating Revenues and Expenses — Proprietary Funds Operating revenues and expenses for proprietary funds are those that result from providing services and producing and delivering goods and/or services. It also includes all revenue and expenses not related to capital and related financing, noncapital financing, or investing activities. Operating expenses for the enterprise and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Expenditures/Expenses In the government -wide financial statements, expenses are classified by function for both governmental and business -type activities. In the fund financial statements, expenditures are classified as follows: Governmental Funds — by function: Current (further classified by character) Debt Service Capital Outlay Proprietary 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. (Continued) -62- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 1- Summary of Significant Accounting Policies: Stewardship, Compliance, and Accountability By its nature as a local government unit, the City and its component units are subject to various federal, state, and local laws and contractual regulations. An analysis of the City's compliance with significant laws and regulations and demonstration of its stewardship over City resources follows. Fund Accounting Requirements The City complies with all state and local laws and regulations requiring the use of separate funds. Revenue Restrictions The City has various restrictions placed over certain revenue sources from state or local requirements or contractual agreements. The primary restricted revenue sources include: Revenue Source Section Eight Housing Choice Voucher Program FEMA - Disaster Grants Emergency Communication Revenue Transient Room Tax Homeland Security Grant Program Bond Proceeds 25% of Employee Earning Tax Legal Restrictions of Use Subsidize Rental Costs for Low - Income Families Debris Removal and Disaster Recovery E-911 Emergency Services Debt Obligations and Tourism Activities Homeland Security Enhancement Defeasance of debt and Capital Projects Economic, Community and Capital Development For the year ended June 30, 2022, 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) -63- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 21, 2022, the date financial statements were available to be issued. Note 2 - Property Taxes: The City bills and collects its own property taxes. The City elects to use the annual property assessment prepared by McCracken County as its base to apply the property tax rate. According to Kentucky Revised Statutes, the assessment date for the City must conform to the assessment date of McCracken County and the annual increase in the property tax levy cannot exceed 4%. City property tax revenues are recorded as a receivable when assessed because the City has an enforceable legal claim to the resources. At this time, the receivable is offset by unearned revenue. Property tax revenues are recognized during the period for which they are levied. The due dates and collection period for all property taxes, exclusive of vehicle taxes, for the fiscal year ended June 30, 2022, are as follows: Description Assessment and enforceable lien Levy Face value amount payment dates Delinquent date - 10% penalty plus 1/2% per month Note 3 - Detail Notes on Transaction Classes/Accounts: Date January 1, 2021 September 22, 2021 1 st half by November 1, 2021 2" d half by February 1, 2022 1St half - November 30, 2021 2" d half - February 28, 2022 The following notes present detail information to support the amounts reported in the basic financial statements for its various assets, liabilities, equity, revenues, and expenditures/expenses. Deposits Custodial credit risk for deposits is the risk that in the event of a bank failure, the City's deposits may not be returned or the City will not be able to recover collateral securities in the possession of an outside party. The City's investment policy requires all investments be made in accordance with applicable legal requirements with consideration of investment safety. Accordingly, the City maintains collateral agreements with its financial institutions. Deposits are 101% secured with collateral valued at market or par, whichever is lower, less the amount of the Federal Deposit Insurance Corporation insurance (FDIC). The City Commission approves and designates a list of authorized depository institutions based on evaluation of solicited responses and certifications provided by financial institutions and recommendations of an evaluation committee and/or Finance Director. 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, 2022, 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 $51,078,046 and $52,444,035, respectively. (Continued) -64- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Investment Policies City Policy Credit Risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. Generally, the City's investing activities are managed under the custody of the City's Finance Director. Investing is performed in accordance with investment policies adopted by the City Commission complying with State Statutes. In accordance with the City's investment policy and the State Statutes, the City may invest funds temporarily in excess of operating needs in the following: Kentucky Revised Statutes (KRS 66.480) authorize the City to invest in: 1. Obligations of the U.S. Treasury, agencies, and instrumentalities, including obligations subject to repurchase agreements, provided delivery of obligations subject to repurchase agreements are held by the City or through an authorized agent; 2. Obligations and contracts for future delivery or purchase of obligations backed by the full faith and credit of the United States or a United States government agency; 3. Obligations of any corporation of the United States government; 4. Bonds or certificates of indebtedness of the Commonwealth of Kentucky and of its agencies and instrumentalities; 5. Certificates of deposit or other interest-bearing accounts of any bank or savings and loan institution which are insured by the Federal Deposit Insurance Corporation or similar entity or which are collateralized, to the extent uninsured, by any obligations permitted by section 41.240(4) of the Kentucky Revised Statutes; 6. Securities issued by a state or local government, or any instrumentality or agency thereof, in the United States, and rated in one of the three highest categories by a national recognized rating agency. The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The three levels of the fair value hierarchy are as follows: • Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. • Level 2: Valued using a matrix pricing technique. Matrix pricing is used to value securities based on the securities' relationship to benchmark quoted prices. • Level 3: Unobservable inputs — market data are not available and are developed using the best information available about the assumptions that market participants would use when pricing an asset or liability. 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. (Continued) -65- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: The City has the following fair value measurements as of June 30, 2022: (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. 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. (Continued) -66- Weighted Fair Value/ Average Average Carrying Credit Quality/ Fair Value Maturity Types of Investments Amount Rating (1) Level l Level 2 Level 3 Years 2 Governmental and Business Funds Certificates of deposits $ - NR NA Money market 19,895,793 NR $19,895,793 NA TOTAL GOVERNMENTAL AND BUSINESS FUNDS $19,895,793 Fiduciary and Private Purpose Trust Funds Cash equivalents $ 12,835 NR $ 12,835 $ $ NA Common stock 1,542,602 NR 2,109,062 NA Mutual funds Bond 1,494,063 NR 1,798,368 8.46 Equity 1,519,911 NR 1,950,722 NA International 385,332 NR 523,181 NA TOTAL FIDUCIARY AND PRIVATE PURPOSE TRUST FUNDS L4,9 (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. 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. (Continued) -66- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Pension Trust Policy Asset allocation guideline for the plan is as follows: Equities Fixed income PFPF Retirement Plan Minimum Target Maximum 45% 55% 65% 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 Al, 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) -67- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Capital asset activity for the year ended June 30, 2022, was as follows: Primary Government: Capital assets, not being depreciated: Land Construction -in -progress Total capital assets, not being depreciated Capital assets, being depreciated: Land improvements Buildings and improvements Infrastructure Equipment Furnishings and fixtures Vehicles Totals at historical cost Less accumulated depreciation: Land improvements Buildings and improvements Infrastructure Equipment Furnishings and fixtures Vehicles Total accumulated depreciation Total capital assets, being depreciated, net PRIMARY GOVERNMENT ACTIVITIES CAPITAL ASSETS, NET Balance Balance July 1, 2021 Additions Deductions June 30, 2022 $10,423,688 $ 59,992 $ 336,350 $10,147,330 5,878,560 5,743,744 1,072,440 10,549,864 16,302.248 5.803.736 1.408.790 20.697.194 22,574,916 93,356 - 22,668,272 22,282,201 32,505 - 22,314,706 55,158,875 1,001,825 - 56,160,700 11,495,295 585,713 45,803 12,035,205 288,748 - 19,794 268,954 11,306.442 515,360 56,301 11.765.501 123,106,477 2,228,759 121,898 125,213,338 7,798,643 1,096,429 - 8,895,072 14,462,871 332,575 - 14,795,446 34,993,707 752,715 - 35,746,422 8,075,472 655,342 45,803 8,685,011 231,718 15,025 19,794 226,949 7,621,883 892,075 56,301 8,457,657 73,184,294 3,744,161 121,898 76,806,557 49,922,183 (1,515,402) - 48,406,781 66.224.431 4.288.334 1.408.79069.103.975 Deductions of construction -in -progress include an abandoned project with accumulated costs of $17,165. (Continued) -68- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Depreciation expense was charged to governmental activities as follows: General government: General administration $ 294,334 Cable authority 787 Finance 1,081 Planning 19,529 Information systems 16,912 Fleet maintenance 4.886 Total general government 337.529 Public safety: Police 251,716 Fire 101,383 Emergency 911 198,095 Court awards 888 Fleet Lease Trust 954.526 Total public safety 1.506.608 Public service: Public works 10,934 Engineering 42.903 Total public service 53.837 Parks and recreation 1.093.892 Planning and development: Infrastructure 752,295 Grants - Total planning and development 752,295 TOTAL DEPRECIATION EXPENSE — GOVERNMENTAL ACTIVITIES3 744 161 Depreciation expense was charged to business -type activities as follows: Solid Waste Fund $ 661,471 Section Eight Housing 2,418 Civic Center 10,021 TOTAL DEPRECIATION EXPENSE — BUSINESS -TYPE ACTIVITIES 673 910 (Continued) -69- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Capital Assets Balance Balance Business -type Activities: Julv 1, 2021 Increases Decreases June 30, 2022 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 2,048,348 727,847 36,390 2,739,805 Vehicles 3,550,246 - - 3,550,246 Totals at historical cost 6.162.559 727.847 36.690 6.854.016 Less accumulated depreciation: Buildings and improvements 374,276 16,326 - 390,602 Equipment 1,513,812 237,612 36,390 1,715,034 Vehicles 2,249,235 419,972 - 2,669,207 Total accumulated depreciation 4,137,323 673,910 36,390 4,774,843 Total capital assets, being depreciated, net 2,025,236 53,937 - 2,079,173 BUSINESS -TYPE ACTIVITIES CAPITAL ASSETS, NET 2.094.12253 937 $- 2.148.059 Balance Balance Discretely Presented July 1, 2021 Increases Decreases June 30, 2022 Component Units: Capital assets, not being depreciated: Land & construction in progress $ 2,326,577 $ 3,341,774 $ - $ 5,668,351 Capital assets, being depreciated: Utility plant 104,520,846 11,865,896 - 116,386,742 Less accumulated depreciation: Utility plant 46,015,020 7,171,077 - 53,186,097 Total capital assets, being depreciated, net 58,505,826 4,694,819 - 63,200,645 COMPONENT UNIT CAPITAL ASSETS, NET60.832.403 8,036,593 $ - 68.868.996 Depreciation expense, charged to functions/programs of discretely presented major component units as follows: Paducah Water Works 2.728266 Increases include $8,128,934 in capital assets received from West McCracken Water District as part of the merger. These assets had accumulated depreciation of $4,442,811. (Continued) -70- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Deferred Outflows/Inflows of Resources A summary of change in deferred outflows/inflows of resources is as follows: Balance Balance July 1, 2021 Additions Reductions June 30, 2022 Governmental Activities Deferred outflows of resources Deferred charge on refunding Pensions: Deferred pension contributions Differences between employer contributions and proportionate share of contributions Differences between expected and actual experience Change of assumptions Difference between projected and actuarial earnings Pension related deferred outflows Deferred inflows of resources Differences between employer contributions and proportionate share of contributions Differences between expected and actual experience Difference between projected and actuarial earnings Pension related deferred inflows Other post -employment benefits (OPEB): Deferred outflows of resources Deferred OPEB contributions Differences between employer contributions and proportionate share of contributions Differences between expected and actual experience Change of assumptions Difference between projected and actuarial earnings OPEB related deferred outflows Deferred inflows of resources Differences between expected and actual experience Change of assumptions Difference between projected and actuarial earnings Differences between employer contributions and proportionate share of contributions OPEB related deferred inflows Other Deferred inflows of resources Unavailable revenues —property taxes Unavailable revenues — grants Leases $ 173,414 $ 10,910 $ 4,342,499 $ 5,089,517 235,458 2,540,282 1,962,885 632,306 2,581,478 - 1,572,123 749,270 $ 10,694,443 $ 9,011,375 $ 647,595 $ 263,405 708,210 11,139,988 1.355.805 $ 11,403 393 $ 1,500,977 37,206 1,600,079 3,472,021 850.814 7.461.097 (52,424) $ 131,900 $ (4,342,499) $ 5,089,517 (235,458) 2,540,282 (1,190,262) 1,404,929 (1,794,744) 786,734 (2,072,509) 248,884 (9,635,472) $ 10,070,346 $ (487,845) $ 159,750 (85,800) 177,605 (4,758,050) 7,090,148 (5,331,695) 7.427.503 $ 1,789,528 $ (1,500,977) $ 1,789,528 690,331 (37,206) 690,331 - (325,042) 1,275,037 3,389,342 (2,104,938) 4,756,425 (850,814) 5.869.201 (4.818.977) 8.511.321 $ 2,530,125 $ 1,743,617 20,114 - - 5,345,909 477,672 - 3.027.911 7.089.526 $ (1,217,890) $ 3,055,852 (10,089) 10,025 (2,022,448) 3,323,461 (202,567) 275,105 (3.452.994) 6.664.443 6.118.9776.474.350 (6.118.977) 6.474.350 $ -6953.971 (804.864) 6.149.107 $ 4 097 404 $ - (594.943)3.502,461 -71- (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Deferred Outflows/Inflows of Resources A summary of change in deferred outflows/inflows of resources is as follows: Balance Balance July 1, 2021 Additions Reductions June 30, 2022 Business -Type Activities Pensions: Deferred outflows of resources Deferred pension contributions Differences between employer contributions and proportionate share of contributions Differences between expected and actual experience Change of assumptions Difference between projected and actuarial earnings Pension related deferred outflows Deferred inflows of resources Differences between expected and actual experience Differences between employer contributions and proportionate share of contributions Difference between projected and actuarial earnings Pension related deferred inflows Other post -employment benefits (OPEB) Deferred outflows of resources Deferred OPEB contributions Change of assumptions Differences between expected and actual experience Differences between employer contributions and proportionate share of contributions Difference between projected and actuarial earnings OPEB related deferred outflows Deferred inflows of resources Differences between expected and actual experience Change of assumptions Difference between projected and actuarial earnings Differences between employer contributions and proportionate share of contributions OPEB related deferred inflows $ 187,814 16,992 79,002 123,709 79,278 $ 486.795 $ 228,717 $ (187,814) $ 228,717 51,824 (16,992) 51,824 - (51,154) 27,848 - (91,160) 32,549 (79,278) $ 280,541 (426.398) $ 340,938 $ - 34,909 13,548 - - 506,108 $ 13,548 L541 017 $ 75,984 $ 86,402 173,442 119,671 166,599 - 5,566 15,000 33,143 - $ 454,734 $ 221,073 $ 166,729 $ 144,137 1,055 - - 202,562 16,457 $ 184,241 $ 346,699 (11,371) 23,538 (9,431) 4,117 (182,870) 323,238 (203,6721 $ 350,893 $ (75,984) $ 86,402 (100,096) 193,017 (52,115) 114,484 (5,566) 15,000 (33,143) (266.904) $ 408,903 $ (93,497) $ 217,369 (378) 677 (75,907) 126,655 (5,932) 10,525 (175.714) $ 355,226 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. (Continued) -72- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Long -Term Liabilities Governmental Activities As of June 30, 2022, the governmental long-term liabilities consisted of the following: General obligation bonds: Current portion $ 2,060,000 Noncurrent portion 30,856,439 TOTAL GENERAL OBLIGATION BOND COSTS, NET OF PREMIUMS AND DISCOUNTS 32.916.439 Note payable: Current portion $ 323,946 Noncurrent portion 7.719.979 TOTAL NOTE PAYABLE PAYMENTS8.043.925 Accrued compensated absences: Current portion $ 1,279,861 Noncurrent portion 1,088,322 TOTAL ACCRUED COMPENSATED ABSENCES 2.368.183 Business -type Activities As of June 30, 2022, the long-term liabilities payable from proprietary fund resources consisted of the following: Accrued compensated absences: Current portion $ 101,757 Noncurrent portion 7,869 TOTAL ACCRUED COMPENSATED ABSENCES $ 109,626 General Obligation Bonds Series 2013A Bond Issue — The City of Paducah issued general obligation bonds of $1,120,000 in September 2013, to finance the municipality pool renovations. Interest rates range from 0.70% to 3.60%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2013B Bond Issue — The City of Paducah issued general obligation taxable bonds of $2,475,000 in September 2013, to finance a portion of the costs of the construction of improvements to an industrial/distribution facility and a portion of the costs of the acquisition, construction, installation and equipping of an approximately 30,000 square foot building for the economic development. Interest rates range from 0.60% to 4.00%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. (Continued) -73- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Long -Term Liabilities General Obligation Bonds Series 2014A Bond Issue — The City of Paducah issued general obligation refunding bonds of $5,460,000 in May 2014 with interest rates ranging from 2.00% to 3.50%, to refund $5,545,000 of outstanding 2010 series bonds issued to finance several public improvement projects with interest rates ranging from 1.00% to 5.50%. These bonds are required to be fully paid within 16 years from the date of issue and are backed by the full faith and credit of the City. Series 2014B Bond Issue — The City of Paducah issued general obligation refunding bonds of $4,225,000 in November 2014 with interest rate of 2.55%, to advance refund $3,845,000 of outstanding 2005 series bonds issued to finance the police and firefighter's pension fund estimated actuary liability. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2018A Bond Issue — The City of Paducah issued general obligation bonds of $2,700,000 in August 2018, to finance 911 Equipment and Riverfront development. Interest rates are fixed ranging from 3.125% to 5.0%. These bonds are required to be fully paid within 15 years from the date of issue and are backed by the full faith and credit of the City. Series 2018B Bond Issue — The City of Paducah issued general obligation bonds of $2,670,000 in August 2018, to refund $2,815,573 of outstanding Kentucky League of Cities Funding Trust 2003 Lease and 2009 Lease agreements issued to finance several public improvement projects. Interest rates are fixed ranging from 4.0% to 5.0%. These bonds are required to be fully paid within 10 years from the date of issue and are backed by the full faith and credit of the City. Series 2020A Bond Issue — The City of Paducah issued general obligation bonds of $20,520,000 in February 2020, to finance 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. (Continued) -74- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Long -Term Liabilities 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. On January 22, 2022, McCracken County issued general obligation refunding bonds to advance refund the original 2011 series bonds issued. The City's portion of this amount was $1,330,614. The reacquisition price exceeded the net carrying amount of the City's old debt by $10,910. This amount was deferred and amortized over the remaining life of the refunded debt. This advance refunding reduced the City's future total debt service payments to McCracken County over the next 10 years by $140,101 with a resulting net economic gain of $132,010. The note matures on December 1, 2031 and has interest rates of 4.0% and are backed by the full faith and credit of the City. Community Financial Services Bank — On January 24, 2017, the City entered into an agreement in the amount of $3,000,000 on behalf of the County of McCracken, Kentucky to finance improvements to the Julian Carroll Convention Center. The agreement matures on January 24, 2032 with 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 92. 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. (Continued) -75- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Long -Term Liabilities Changes in Long -Term Liabilities The following is a summary of changes in long-term debt for the year ended June 30, 2022: Type of Liability: Governmental activities: General obligation bonds Beginning Ending Due within Balance Additions Reductions Balance One Year Recreation Facility $20,520,000 Refinanced Pension 1,985,000 Refinanced Convention Center 2,525,000 Public Pool Renovations 650,000 Economic Development 1,445,000 Refinancing Public Projects 3,240,000 Riverfront and 911 Equipment 2,400,000 Refunding Floodwall issue 1,715,000 Premiums 443,405 Discounts (91,967) Total bonds payable 34,831,438 Notes payable: Kentucky Infrastructure Authority 322,622 Kentucky Association of Counties 1,301,646 Murray State University Agreement 1,624,534 CFSB Agreement 2,814,627 Total notes payable 6,063,429 $ - $ - $ 20,520,000 - (445,000) 1,540,000 - (475,000) 2,050,000 - (75,000) 575,000 - (155,000) 1,290,000 - (330,000) 2,910,000 - (165,000) 2,235,000 - (350,000) 1,365,000 204,531 (129,130) 518,806 (10,013) 14,613 (87,367) 194,518 (2,109,517) 32,916,439 3,460,662 (977,376) 2,805,908 - (160,550) 1,141,096 1,330,614 (1,624,534) 1,330,614 - (48,320) 2,766,307 4,791,276 (2,810,780) 8,043,925 460,000 490,000 75,000 165,000 340,000 165,000 365,000 2,060,000 164,259 110,409 49,278 323,946 Accrued Compensated Absences 2,303,670 1,688,704 (1,624,191) 2,368,183 1,279,986 TOTAL GENERAL LONG- TERM LIABILITIES $43,198,537 $ 6.674.498 (6.544.4881 S43128 547 $ 3,663932 Business -type activities: Accrued compensated Absences $ 143,928 $ 89,982 $ (124,284) $ 109,626 $ 101,757 TOTAL BUSINESS LONG- TERM LIABILITIES $ 143,928 $ 89,982 11242841 $ 109,626 $ 101,757 (Continued) -76- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Long -Term Liabilities Changes in Long -Term Liabilities (1) The calculation to reconcile amounts in this schedule to the "net investment in capital assets" for governmental activities is: Net Capital Assets Less: 19.75% of the outstanding 2020B General obligation bonds Net of the County's portion 78% of the outstanding 2014A General obligation bonds 100% of the outstanding 2013A General obligation bonds 52% of the outstanding 2013B General obligation bonds 100% of the outstanding 2018A General obligation bonds 100% of the outstanding 2018B General obligation bonds 100% of the outstanding KY Infrastructure Authority Net investment in capital assets Annual Debt Service Requirements $69,103,975 $ (404,876) 202,438 (202,438) (2,269,800) (575,000) (670,500) (2,235,000) (1,365,000) (2.805 008) 58.980.030 The annual debt service requirements to maturity for bonds and notes as of June 30, 2022, are as follows: Year Ending June 30 Principal Interest 2023 $ 2,383,946 $ 1,058,350 2024 2,738,783 980,976 2025 2,784,078 897,314 2026 2,854,030 808,372 2027 5,538,256 709,212 2028-2032 12,292,879 2,308,830 2033-2037 7,450,758 1,008,444 2038-2040 4,917,634 418,525 TOTALS 40.960.364 8.190.023 (Continued) -77- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: 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, 2022, are as follows: Termination Benefits Thirteen 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 $12,944 were paid for the year ended June 30, 2022. 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, 2022, $167,035 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, 2022, 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 maybe higher due to inflation, changes in technology, or changes in regulations. In the year ending June 30, 2001, the City entered into an inter -local agreement to share equally the costs for post -closure costs and, accordingly, has recorded a long-term liability for 50% of the estimated closure expense. It is anticipated that post -closure costs will be paid out of the Solid Waste Fund to the extent that funds are available with any excess costs being funded using long-term borrowing. (Continued) -78- Governmental Business -type Activities Activities Accrued sick leave $ 691,153 $ 46,191 Accrued vacation leave 1,677,030 63,435 Totals 2,368,183 109,626 Less current portion 1,279,861 101,757 LONG-TERM PORTION 1 088 322 7 869 Termination Benefits Thirteen 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 $12,944 were paid for the year ended June 30, 2022. 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, 2022, $167,035 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, 2022, 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 maybe higher due to inflation, changes in technology, or changes in regulations. In the year ending June 30, 2001, the City entered into an inter -local agreement to share equally the costs for post -closure costs and, accordingly, has recorded a long-term liability for 50% of the estimated closure expense. It is anticipated that post -closure costs will be paid out of the Solid Waste Fund to the extent that funds are available with any excess costs being funded using long-term borrowing. (Continued) -78- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 3 - Detail Notes on Transaction Classes/Accounts: Interfund Transactions and Balances Interfund transfers during the year ended June 30, 2022, were as follows: TOTALS 8.699.190 Interfund Transfers Out $3,373,217 4,746,121 3,138 146,418 70,000 360,296 8.699.190 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 $861,175 for E911 support; $1,027,438 for debt service; and $1,026,092 for capital projects. Significant transfers from the special revenue investment fund includes $918,000 for municipal aid street resurfacing program; $1,631,872 for debt service; and $2,126,250 for capital projects. Significant transfers from solid waste fund include $320,000 for general fund operations support. Due To/From Balances Due to/from balances used to cover current operating expenses were as follows as of June 30, 2022: General Fund Bond Fund Special Revenue Investment Fund TOTALS Note 4 - Pension Plans - City of Paducah: Due To Due From $ 7,824 $1,452,616 - 7,824 1,452,616 1 460 440 SL460 440 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: (Continued) -79- Interfund Governmental Funds: Transfers In General Fund $ 463,138 Special Revenue Investment Fund 285,000 Special Revenue Bond Fund - Capital Project Fund 3,152,342 Debt Service Fund 2,805,728 Nonmajor Governmental Funds 1,779,175 Internal Service Funds 152,181 Proprietary Funds: Solid Waste - Nonmajor Proprietary Funds 61,626 TOTALS 8.699.190 Interfund Transfers Out $3,373,217 4,746,121 3,138 146,418 70,000 360,296 8.699.190 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 $861,175 for E911 support; $1,027,438 for debt service; and $1,026,092 for capital projects. Significant transfers from the special revenue investment fund includes $918,000 for municipal aid street resurfacing program; $1,631,872 for debt service; and $2,126,250 for capital projects. Significant transfers from solid waste fund include $320,000 for general fund operations support. Due To/From Balances Due to/from balances used to cover current operating expenses were as follows as of June 30, 2022: General Fund Bond Fund Special Revenue Investment Fund TOTALS Note 4 - Pension Plans - City of Paducah: Due To Due From $ 7,824 $1,452,616 - 7,824 1,452,616 1 460 440 SL460 440 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: (Continued) -79- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 4 - Pension Plans - City of Paducah: Cost -Sharing Multiple -Employer Defined Benefit Plan County Employees' Retirement System Plan description - The City is a participant in the County Employees Retirement System (CERS), a cost-sharing multiple -employer defined benefit pension plan administered by the Kentucky Retirement System, an agency of the Commonwealth of Kentucky. Under the provisions of the Kentucky Revised Statute ("KRS") Section 61.645, the Board of Trustees of the Kentucky Retirement System administers CERS and has the authority to establish and amend benefit provisions. The Kentucky Retirement System issues a publicly available financial report that includes financial statements and required supplementary information for CERS. That report may be obtained from http://kyret.ky.gov/. Benefits provided - CERS provides retirement, health insurance, death and disability benefits to Plan employees and beneficiaries. Employees are vested in the plan after five years' service. For retirement purposes, non -hazardous and hazardous employees are grouped into three tiers, based on hire date: Non -hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 27 years of service or 65 years old Reduced retirement Minimum 5 years of service and 55 years old Minimum 25 years of service and any age Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Minimum 10 years of service and 60 years old Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 65 years old Age of 57 or older and sum of service years plus age equal 87 Reduced retirement Not available Hazardous members: Tier 1 Participation date Prior to September 1, 2008 Unreduced retirement 20 years of service and any age Minimum 5 years of service and 55 years old Reduced retirement Minimum 15 years of service and 50 years old Tier 2 Participation date September 1, 2008 to December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Minimum 15 years of service and 50 years old Tier 3 Participation date After December 31, 2013 Unreduced retirement Minimum 5 years of service and 60 years old 25 years of service and any age Reduced retirement Not available (Continued) -80- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 4 - Pension Plans - City of Paducah: Cost -Sharing Multiple -Employer Defined Benefit Plan County Employees' Retirement System Cost of living adjustments are provided at the discretion of the General Assembly. Retirements is based on a factor of the number of years' service and hire date multiplied by the average of the highest five years' earnings. Reduced benefits are based on factors of both of these components. Participating employees become eligible to receive the health insurance benefit after at least 180 months of service. Death benefits are provided for both death after retirement and death prior to retirement. Death benefits after retirement are $5,000 in lump sum. Five years' service is required for death benefits prior to retirement and the employee must have suffered a duty -related death. The decedent's beneficiary will receive the higher of the normal death benefit and $10,000 plus 25% of the decedent's monthly final rate of pay and any dependent child will receive 10% of the decedent's monthly final rate of pay up to 40% for all dependent children. Five years' service is required for non -service related disability benefits. Plan Funding — State statute requires active members to contribute % of creditable compensation based on the tier: Non -hazardous Hazardous Required Contribution Required Contribution Tier 1 5% Tier 1 8% Tier 2 5% plus 1% for insurance Tier 2 8% plus 1% for insurance Tier 3 5% plus 1% for insurance Tier 3 8% plus 1% for insurance Employers contribute at the rate determined by the CERS Board to be necessary for the actuarial soundness of the system, as required by KRS 61.565 and 61.752. The City's required contribution rate was 21.17% for non -hazardous employees and 33.86% for hazardous employees for the year ended June 30, 2022. Non -hazardous and hazardous employee plans are administered separately. Pension Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2022, the City reported a liability for its proportionate share of the net pension liability for CERS. The amount recognized by the City as its proportionate share of the net pension liability that was associated with the City was as follows: City's non -hazardous proportionate share of the CERS net pension liability $ 20,724,296 City's hazardous proportionate share of the CERS net pension liability 43.326.429 Total CERS net pension liability associated with the City S 64.050.725 The net pension liability for each plan was measured as of June 30, 2021, and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of that date. (Continued) -81- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 4 - Pension Plans - City of Paducah: Cost -Sharing Multiple -Employer Defined Benefit Plan County Employees' Retirement System The City's proportion of the net pension liability for CERS was based on the actual liability of the employees and former employees relative to the total liability of the System as determined by the actuary. At June 30, 2022, the City's non -hazardous proportion was 0.32505% percent and hazardous proportion was 1.6275% percent. For the year ended June 30, 2022, the City recognized pension expense of $6,894,406 ($2,214,963 for non -hazardous and $4,679,443 for hazardous) related to CERS pension plans. At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to the CERS pension plans from the following sources: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Non -hazardous Hazardous Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources (1,170,694) $ 237,978 $ 201,143 $ 1,194,799 $ - 278,145 - 541,138 - 2,762,201 - 4,651,184 442,854 35,183 2,149,252 128,685 958,977 2,998,527 3,885,189 4,779,869 1,850,682 - 3,467,552 - $ 2,809,659 $ 2,998,527 L-1352 $ 4,779,869 The City reported $5,318,238 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, 2023. 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 2023 $ (98,334) $ 360,548 2024 (468,728) 72,289 2025 (607,509) (156,823) 2026 (864,979) (1,170,694) (Continued) -82- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 4 - Pension Plans - City of Paducah: Cost -Sharing Multiple -Employer Defined Benefit Plan County Employees' Retirement System Actuarial assumptions - The total pension liability in the June 30, 2022 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Non -Hazardous Hazardous Inflation 2.30% 2.30% Projected salary increases 3.30%-10.30% 3.55%-19.05% Investment rate of return, net of investment expense & inflation 6.25% 6.25% For CERS, Mortality rates for the period after service retirement are according to the MP -2014 mortality improvement scale using a base year of 2010 for all active and retired employees and beneficiaries. The MP -2014 mortality improvement scale using a base year of 2019 set forward four years for male and female is used for the period after disability retirement. The actuarial assumptions used were based on the results of an actuarial experience study for the period July 1, 2013 — June 30, 2018. For CERS, the long-term expected return on plan assets is reviewed as part of the regular experience studies prepared every five years. The most recent analysis, performed for the period covering fiscal years 2013 through 2018, is outlined in a report dated April 18, 2019. Several factors are considered in evaluating the long-term rate of return assumption including long-term historical data, estimates inherent in current market data, and a log -normal distribution analysis in which best -estimate ranges of expected future real rates of return (expected return, net of investment expense and inflation) were developed by the investment consultant for each major asset class. These ranges were combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and then adding expected inflation. The capital market assumptions developed by the investment consultant are intended for use over a 10 -year horizon and may not be useful in setting the long-term rate of return for funding pension plans which covers a longer timeframe. The assumption is intended to be a long-term assumption and is not expected to change absent a significant change in the asset allocation, a change in the inflation assumption, or a fundamental change in the market that alters expected returns in future years. (Continued) -83- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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: Total 100.00% 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: Target Long -Term Expected Asset Class Allocation Real Rate of Return US Equity 21.75% 5.70% Non -US Equity 21.75% 6.35% Private Equity 10.00% 9.70% Specialty Credit/High Yield 15.00% 2.80% Core Bonds 10.00% 0.00% Real Estate 10.00% 5.40% Opportunistic 0.00% 0.00% Real Return 10.00% 4.55% Cash 1.50% (0.60)% Total 100.00% 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: (Continued) -84- Current 1% Discount 1% Decrease Rate Increase CERS 5.25% 6.25% 7.25% Non -hazardous' proportionate share of net pension liability $26,579,893 $20,724,296 $15,878,927 Hazardous' proportionate share of net pension liability $55,225,546 $43,326,429 $33,628,697 (Continued) -84- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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, 2022. 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. As of June 30, 2022, there are no participants in the plan and the plan was closed. AEPF does not issue a separate, stand-alone report. Accordingly, the plan financial statements are included in this audit report. (Continued) -85- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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, 2022: PFPF AEPF Active participants 0 0 Beneficiaries 21 0 Retired participants 15 0 TOTAL PARTICIPANTS 36 0 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 2%2% 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 no 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) -86- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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: Balance — June 30, 2022 Plan net position as a percentage of the total pension liability 0.00% For the year ended June 30, 2022, the City recognized pension expense of $86,698 ($125,351 expense for PFPF and ($38,653) gain for AEPF) for these pension plans. (Continued) -87- Total Plan Net Pension Net Pension PFPF Liability Position Liability (a) (b) (a) — (b) Balance — June 30, 2021 7,303,631 $ 5,186,948 $ 2,116,683 Service cost - - - Interest expense 444,380 - 444,380 Experience losses (gains) (16,133) - (16,133) Change in assumptions - - - Contributions — City - 310,000 (310,000) Contributions — Members - - - Investment income - (609,641) 609,641 Benefits paid (934,025) (934,025) - Plan administrative expenses - (44.556) 44.556 Net change (505.778) (1.278.222) 772.444 Balance — June 30, 2022 6.797.853 S 3.908.726 S 2.889.127 Plan net position as a percentage of the total pension liability 57.50% Total Plan Net Pension Net Pension AEPF Liability Position Liability (a) (b) (a) — (b) Balance — June 30, 2021 $ 38,653 $ - $ 38,653 Service cost - - - Interest expense 2,319 - 2,319 Experience losses (gains) (37,947) - (37,947) Change in assumptions - - - Contributions — City - 3,912 (3,912) Contributions — Members - - - Investment income - - - Benefits paid (3,025) (3,025) - Plan administrative expenses - (887) 887 Net change (38,653) - (38,653) Balance — June 30, 2022 Plan net position as a percentage of the total pension liability 0.00% For the year ended June 30, 2022, the City recognized pension expense of $86,698 ($125,351 expense for PFPF and ($38,653) gain for AEPF) for these pension plans. (Continued) -87- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to the PFPF and AEPF pension plans from the following sources: 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 2023 $ 7,500 $ - 2024 32,558 - 2025 21,507 - 2026 187,319 - 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 Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method PFPF AEPF 7/1/22 7/1/22 Entry age normal Aggregate (1) Level dollar closed Level dollar closed 12 Years Fair value 10 Years Fair value (Continued) -88- PFPF AEPF Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources Difference between expected and actual experience - Changes in assumptions - - - Net difference between projected and actual earnings on pension plan investments 248.884 - - - Total $ 248,884 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 2023 $ 7,500 $ - 2024 32,558 - 2025 21,507 - 2026 187,319 - 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 Valuation date Actuarial cost method Amortization method Remaining amortization period Asset valuation method PFPF AEPF 7/1/22 7/1/22 Entry age normal Aggregate (1) Level dollar closed Level dollar closed 12 Years Fair value 10 Years Fair value (Continued) -88- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 Projected salary increases Inflation rates adjustments 6.50%(3) 6.00% (2) (2) (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, 2022 PFPF plan year, the assumed rate of return was 6.50%. For the AEPF July 1, 2022 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, 2022 was as follows: PFPF 6.50% AEPF 6.00% -89- (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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 I% point higher than the current rate: 1% Current 1% Decrease Rate Increase PFPF Net Pension Liability $ 3,343,625 $ 2,889,127 $ 2,487,470 AEPF Net Pension Liabilitv 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, 2022 (Continued) -90- PFPF AEPF Total Assets Cash and cash equivalents $ 735 $ - $ 735 Receivables: Interest 2,561 - 2,561 Other - - - Investments at fair value Money market accounts 12,835 - 12,835 Common stock 1,542,602 - 1,542,602 Mutual funds 2.350.007 - 2.350.007 Total assets 3.908.740 - 3.908.740 Liabilities Vouchers and accounts payable 14 - 14 Net Position Held in trust for pension benefits S 3.908.726 S - 3.908.726 (Continued) -90- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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, 2022 Additions: Contributions Employer Plan members Total contributions Investments earnings: Net change in fair value of investments Interest and dividends Net investment earnings Total additions Deductions: Benefits Administrative expenses Total deductions Change in net position Net position - beginning Net position - ending PFPF AEPF Total $ 310,000 $ 3,912 $ 313,912 1b,Wau►uV,0aA Iwa:A W4 (678,848) - (678,848) 69,207 - 69,207 (609,641) - (609,641) (299,641) 3,912 (295,729) 934,025 44.556 978,581 (1,278,222) 5,186,948 3.908.726 3,025 887 3,912 937,050 45.443 982,493 (1,278,222) 5,186,948 3.908.726 Summary of Pension Expense: As of June 30, 2022, the City's pension expense associated with the three pension plans are summarized as follows: Governmental Business -Type Activities Activities Total CERS— Non -hazardous $ 1,960,764 $ 259,199 $ 2,219,963 CERS — Hazardous 4,679,443 - 4,679,443 PFPF 125,351 125,351 AEPF (38,653) (38,653) Total S 6.726905 $ 259,199&-6_9_81104 (Continued) -91- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 5 — Other Postemnloyment 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.k. r�ky_ og_v. 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 5.78% of non -hazardous covered payroll and 10.47% of hazardous covered payroll for the fiscal years ended June 30, 2022. At June 30, 2022, 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, 2021, 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, 2021, the City's non -hazardous proportion was 0.324971 percent and hazardous proportion was 1.627488 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 $ 6,221,408 City's hazardous proportionate share of the CERS 13,159,206 medical insurance liability Total CERS medical insurance liability associated with the City S 19.380.614 (Continued) -92- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 5 — Other Postemplovment Benefits (OPEB): For the year ended June 30, 2022, the City recognized an OPEB expense of $3,225,271 ($1,011,259 non- hazardous and $2,214,012 hazardous, respectively). At June 30, 2022, the City reported deferred outflows of resources and deferred inflows of resources related to OPEBs from the following sources: Difference between expected and actual experience Changes in assumptions Net difference between projected and actual earnings on pension plan investments Changes in proportion and differences between City contributions and proportionate share of contributions City contributions subsequent to the measurement date Total Non -hazardous Hazardous Deferred Deferred Deferred Deferred Outflows of Inflows of Outflows of Inflows of Resources Resources Resources Resources $ 978,318 $ 1,857,505 $ 411,204 $ 1,415,716 1,649,413 5,785 3,300,029 4,917 973,253 2,476,861 128,177 89.944 577,153 195.688 2,755,908 2,926,487 4,288,386 4,093,182 709,998 - 1,165.932 - $ 3.465,906 $ 2,926,487 $ 5,454,318 $ 4,093,182 The City reported $1,875,930, including implicit subsidies of $298,425, 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 - (Continued) -93- Hazardous Hazardous 2023 $ 155,676 $ (263,792) 2024 7,812 118,297 2025 6,256 120,042 2026 (340,323) (161,339) 2027 - 381,996 (Continued) -93- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 5 — Other Postemplovment Benefits (OPEB): Actuarial assumptions — The total OPEB liability in the June 30, 2021 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 5.70% Under 65 6.25% at January 1, 2021 decreasing to an ultimate rate of 6.35% 4.05% over a period of 11 years Ages 65 and Older 5.50% at January 1, 2021 decreasing to an ultimate rate of Specialty Credit/High Yield 4.05% over a period of 14 years Municipal Bond Index Rate 1.92% Discount Rate 5.20% and 5.05% 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: (Continued) -94- Target Long -Term Expected Asset Class Allocation Real Rate of Return US Equity 21.75% 5.70% Non -US Equity 21.75% 6.35% Private Equity 10.00% 9.70% Specialty Credit/High Yield 15.00% 2.80% Core Bonds 10.00% 0.00% Real Estate 10.00% 5.00% Opportunistic 0.00% 0.00% Real Return 10.00% 4.55% Cash 1.50% (0.60)% Total 100.000% (Continued) -94- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 5 — Other Postemplovment Benefits (OPEB): Discount rate - The discount rate used to measure the total OPEB liability was 5.20% for non -hazardous and 5.05% 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 5.20% for non -hazardous and 5.05% 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 (4.20% for non -hazardous and 4.05% for hazardous) or 1 -percentage -point higher (6.20% for non -hazardous and 6.05% for hazardous) than the current rate: Current 1% Discount 1% Decrease Rate Increase CERS Non -hazardous' proportionate share of net OPEB liability $ 8,541,945 $ 6,221,408 $ 4,317,021 Hazardous' proportionate share of net pension liability $19,078,352 $13,159,206 $ 8,403,515 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: Current 1% Discount 1% Decrease Rate Increase Non -hazardous' proportionate share of net OPEB liability $ 4,478,674 $ 6,221,408 $ 8,324,914 Hazardous' proportionate share of net pension liability $ 8,622,629 $13,159,206 $18,715,432 Note 6 - Appropriations Deficit: No departments that adopted budgets annually had excess expenditures over appropriations for the fiscal year ended June 30, 2022. (Continued) -95- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 7 - Component Unit Long -Term Liabilities: Long-term liabilities of the discretely presented component units consist of the following at June 30, 2022: Bond Payable, Kentucky Rural Water Finance Corp - Paducah Water Works In connection with a merger with West McCracken Water District, Paducah Water Works assumed a bond with interest rates ranging from 2.3% to 4.8% with annual principal and semi-annual interest payments. Note Payable, Kentucky Infrastructure Authority (KIA) - Paducah Water Works In connection with a merger with Reidland Water District, Paducah Water Works (PWM 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, 2022, are as follows: 4,911,017 .25% 509,946 Year Ending Service R & M 7.419.282 June 30 Principal Interest Fee Reserve Total 2023 $ 532,236 $ 70,786 $ 13,384 $ 11,200 $ 627,606 2024 542,835 62,548 12,187 11,200 628,770 2025 488,503 53,998 10,526 11,200 564,227 2026 494,242 48,260 9,302 11,200 563,004 2027 500,054 42,448 8,062 11,200 561,764 2028-2032 2,185,817 123,468 21,464 - 2,330,749 2033-2037 664.026 32.374 4,626 - 701.026 TOTALS5 407 713 433 882 79 551 56 000 5 977 146 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, 2022, the most significant construction commitments were as follows: Cumulative Estimated Costs Incurred Total Costs Comprehensive Stormwater Master Plan Study Buckner Lane Bridge 24'/25' Street Improvement Floodwall Rehab Riverfront Development -96- $ 975,891 $ 1,047,040 619,502 2,213,895 402,926 2,193,308 4,911,017 6,231,764 509,946 2,566,665 7.419.282 14252.672 (Continued) CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 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: 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, 2022, that amount was $2,241,669. 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 $219,192 as of June 30, 2022. 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 2019-2020 $ - $ 108,994 $ 108,994 $ 2020-2021 - 140,231 140,231 230,715 2021-2022 - 35,296 35,296 - 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, 2022, that amount was $2,241,669. 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 $219,192 as of June 30, 2022. The analysis of claims activity is presented below: 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) -97- Current Year Beginning of Claims and Actual Balance at Fiscal Year Changes in Claim Fiscal Liability Estimates Payments Year End 2019-2020 $ 93,297 $ 1,639,610 $1,624,455 $ 108,452 2020-2021 108,452 2,131,217 2,008,954 230,715 2021-2022 230,715 2,494,591 2,506,114 219,192 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) -97- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 10 - Lease Agreements: Operating Leases The City also leases certain other property to various lessees under non -cancelable agreements that have 3 — 10 year terms with expiration dates through December 31, 2031. Each of the agreements provides an option for renewal for an additional 3 — 10 year term. During the year ended June 30, 2022, the City recognized lease income of $594,943 and interest income of $129,235. The following is an analysis of property leased under these leases at June 30, 2022: Land $ 270,000 Buildings 2,546,487 Equipment 110,126 Total 2,926,613 Less: accumulated depreciation (1.383.093) NET BOOK VALUE SL543 519 Depreciation expense for the year ended June 30, 2022, on leased property was $55,775. The following is a schedule of future lease receivable principal and interest payments from operating leases as of June 30, 2022: Year Ending June 30 Principal Interest 2023 $ 556,846 $ 110,921 2024 502,779 92,895 2025 427,462 76,754 2026 395,076 63,375 2027 362,917 50,442 2028-2032 1,313,791 80,357 Total 3 558 871 $474,744 Note 11— Tax Abatements: Developer Residential Property Tax Abatements — Total $ 667,767 595,674 504,216 458,451 413,359 1,394,148 4.033.615 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) -98- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 11— Tax Abatements: For the year ended June 30, 2022, the City abated property taxes totaling $47,126 under this program, including the following tax abatement agreements: 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, 2022, the City rebated employee local payroll taxes totaling $14,687 under this program, including the following resolutions: Agreement Abatement Amount Current Inception to Recipient Development Ordinance Rebate Amount Year Date Signature Homes of Westwood Subdivision 2010-12-7768 $-0- $148,469 Paducah, LLC In -fill Year Date Higdon Ridgewood In -fill, 2019-4-8573 $2,311 $2,311 Development phase 2 Greenway Village, Greenway Village In- 2011-2-7789 $16,168 $115,700 LLC fill, phase 1 Higdon Ridgewood In -fill, 2019-4-8573 $17,523 $47,390 Development phase 1 Greenway Village, Greenway Village In- 2019-4-8572 $11,124 $31,216 LLC fill, phase 2 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, 2022, the City rebated employee local payroll taxes totaling $14,687 under this program, including the following resolutions: Industrial Park West (IPW) — Ordinance 1997-2-5642 authorized the joint development of the IPW, for economic development purposes, as well as an inter -local agreement authorizing the city to share 50% of payroll tax revenue generated in the Park. This agreement is good for 10 years after 97% of the park property is developed or 25 years (March 6, 2022), whichever is first. (Continued) -99- Payroll Tax Recipient Start Date Term Authority Rebate Amount Current Inception to Year Date Dippin' Dots, LLC 12-11-2016 10 yrs. Resolution - 2014 $14,687 $63,102 Industrial Park West (IPW) — Ordinance 1997-2-5642 authorized the joint development of the IPW, for economic development purposes, as well as an inter -local agreement authorizing the city to share 50% of payroll tax revenue generated in the Park. This agreement is good for 10 years after 97% of the park property is developed or 25 years (March 6, 2022), whichever is first. (Continued) -99- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 11— Tax Abatements: For the year ended June 30, 2022, the City shared payroll tax revenue totaling $141,391 under this agreement with McCracken County ("County"), as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Inception to Current Year Date Coca Cola September 2005 $14,877 $349,428 Plastic Services Products October 2020 $ 11,455 $19,808 H.T. Hackney March 2012 $37,445 $268,422 Whitehall December 2014 $77,614 $443,046 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, 2022. For the year ended June 30, 2022, the City shared payroll tax revenue totaling $0 under this agreement with the County, as follows: Payroll Tax Remitter Start Date Payroll Tax Revenue Shared Inception to Current Year Date Lynx March 2006 $-0- $831,088 Ulrich March 2006 $-0- $207,506 Pepsi December 2007 $ -0- $85,949 Marquette March 2008 $-0- $1,105,459 Teletech December 2014 $-0- $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, 2022, the City shared payroll tax revenue totaling $14,752 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 $14,752 $198,810 Remote Worker Incentive Program — Ordinance 2021-08-8700 authorized this program, with a goal of attracting full-time remote workers 100 miles or more outside Paducah, by offering to those that qualify relocation expense, internet access, community connections with memberships and local payroll tax waiver for a 12 -month period. (Continued) _100- CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 11— Tax Abatements: For the year ended June 30, 2022, the City provided funding totaling $23,159 under this program, as follows: Various Recipients Start Date Program Expenditures Current Year Inception to Recipient Location Date Remote Workers July 2021 $23,159 $23,159 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, 2022, the City and County provided reduced rent for the following corporate recipient, totaling $110,556: Note 12 — Component Unit Merger and Restatement Paducah Water Works (PWW) assumed control of all West McCracken Water District's assets, deferred outflows and inflows of resources, and liabilities through a merger on February 4, 2022. The results of the merger increased PWW's assets $4,280,472, deferred outflow of resources $70,525, liabilities $468,993, deferred inflow of resources $70,292, and net position $3,811,712 for the year ended June 30, 2022. Note 13 — Implementation of GASB Pronouncements Accounting Pronouncements Adopted during the Fiscal Year ended June 30, 2022 The financial statements of the City are prepared in conformity with GAAP as applied to government units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. During the current year, the City adopted the following GASB pronouncements: Statement No. 87 — Leases (FY2022) The implementation of GASB Statement No. 87 required the City the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the lease agreement. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The impact of the statement increased accounts receivable — leases and deferred inflows of resources — leases $4,097,403 as of July 1, 2021, respectively, in the government -wide statement of net position and governmental fund balance sheet. There was no impact on net position or fund balance. (Continued) - 101 - Bldg. Agreement FMV Recipient Location Rent Paid Size Ordinance Rent Teletech 2301 McCracken Blvd. 30,000 sf 2012-11-7986 $330,000 $219,444 Note 12 — Component Unit Merger and Restatement Paducah Water Works (PWW) assumed control of all West McCracken Water District's assets, deferred outflows and inflows of resources, and liabilities through a merger on February 4, 2022. The results of the merger increased PWW's assets $4,280,472, deferred outflow of resources $70,525, liabilities $468,993, deferred inflow of resources $70,292, and net position $3,811,712 for the year ended June 30, 2022. Note 13 — Implementation of GASB Pronouncements Accounting Pronouncements Adopted during the Fiscal Year ended June 30, 2022 The financial statements of the City are prepared in conformity with GAAP as applied to government units. GASB is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. During the current year, the City adopted the following GASB pronouncements: Statement No. 87 — Leases (FY2022) The implementation of GASB Statement No. 87 required the City the recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the lease agreement. It establishes a single model for lease accounting based on the foundational principle that leases are financings of the right to use an underlying asset. The impact of the statement increased accounts receivable — leases and deferred inflows of resources — leases $4,097,403 as of July 1, 2021, respectively, in the government -wide statement of net position and governmental fund balance sheet. There was no impact on net position or fund balance. (Continued) - 101 - CITY OF PADUCAH, KENTUCKY NOTES TO FINANCIAL STATEMENTS FOR THE YEAR ENDED JUNE 30, 2022 Note 14 — 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. 94 — Public -Private and Public -Public Partnerships and Availability Payment Arrangements (FY2023) Statement No 96 — Subscription -Based Information Technology Arrangements (FY2023) Statement No 99 — Omnibus 2022 (FY2023) Statement No. 100 — Accounting Changes and Error Corrections an amendment of GASB Statement No. 62 (FY2024) Statement No. 101 — Compensated Absences (FY2024) -102- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 T A l-' r- M O N" O V V 'O O � N- O, l� 00 10 N r O� C, W 00 O r- O W 13 M W 'n N M l -v W O O 7 r- 'n \O M W O N r 'n W Oi - N � 7 �--� M - - 00 �D A EA fA FA b9 (f3 10 'nM m rn 00 0o m vi rn M o_ N o l� 'n _o Q\ \O C 'n I- r N C, C _o _ O, \O 7 W w O \O r- N 'n W �n vi ri �o 'o � vi " " 'o o 'o a; r v; v to `^ O l� w M Vl r- IO 7 M M W M V N r-- M O 7 V1 O r - N ,--� � O O � [� 'J 7 £A EA A EA b9 ff3 00 �O N o0 of cN 00 V � 7 M V V N V M lO N N 'n 7 �D „may l� 10 10 w O\ N M O V 'n w 10 V w 7 O1 �O O W,-� 10 'n O \O 10 O, N 7 V1 r- N 01 0 O1 0 M M 10 'n I- l� O O r w W l� CO N l� O O �y l� 10 10 V 10 M V O 7 M O O O N --� � Ol O, � A EH Vi A ff3 b4 cl M N O N 7 'n cl o0 7 M 'D o0 o0 N lD 10 O N O \O N V 10 N 'n 'n ,r. �O M V N M M r M \OO bN N O a, r- O� 7 a, C M r O \O 10 r- v, rn v r- rn 'n a O Ic a, y O C, W W O M Ic y G •--� V 10 s N 10 _M 7 O N 10 M Oi vi O M O O 10 �y 'n O o0 N N a Vi EA fA EA b9 ' O' M 'n 00 M O ' 'n N W Ic o 00 _M N l� M 'n O V N V1 N 7 N N_ l� N V \O V vi M O O\ 7 V o0 lO 01 �y N V V O O C, M N l� IO --� � Vi M N £A EA (A A Ff3 T Q N � O I Id y O b � � � O y > L b0 y C G v b b � C � �' •bA 'O N ctlbo G C cd � p � O N � d e O A � C b o o '9 ❑ ¢, y ,� � .^ii bb ba bb W vi O �n O\ O O vi oo M O � [� '? N � .--� V N l- V1 .--i V O of Qn 00 00 uj c1 a7 C oo C) M oo 7 --� o0 vi r- �D 7 .r..i 69 69 69 69 69 ' ' �O 00 01 ' ' V �O M V1 o0 M o0 0 If oo O� �O M Vl l— oo l� O M l� a, �O Vl M N oo vi �O V oo r- 00 x O p vi a; D; V Oi N O a\ N C C ~ .r..^i v 69 69 69 69 69 `p O 'n V r vi O W M N D\ v1 vi M V V N O O O O C C O, .r..^. rA ' oc N N O r .Ni Cl 69 69 69 69 69 oo ' N O Q\ N_ oo O l— oo vi l— r- V r C 69 69 69 69 69 M C M M O N Or- ti C ' oo ' O m M M M O M m O y 69 69 69 69 69 oc moc � O M O\ O\ N oo Ni v Omo v 69 69 69 (A 69 '� '� N_ 0o N M O� N O �D �O an N O ov O m cd �..i 69 � 69 69 69 In T p O N O .N O N N � O W � s. � O O u cd p � � as o "° "O aki � ° .o � � �' •% r o cO o _ cj 0 ° w a w o w w aoi46° o oaoi w a ee 4 U Ca U m z U U z W3� O z q q ❑ z W M le� I M M O N V i4 Lzi 69 V 00 kn O M N � 69 00 O � ~ O O 00 N M 69 V C, 00 0 O s. T O Y O N cUO 69 . 4. f O U 00 N ti O U N o sr i" c0 jj N N IS m N 5 O iO -d N 69 69 N 00 ! 0 u0 V1 O U 00 NO In O � N 69 64 00 O o r oo OIn N 69 69 00 O V o O O r- W N M 69 6'9 SO. Q\ rq V O o +O+ N�c W) N 000 C O N M 5969 m Q N '00' O N N O kn V N In .Ur O N M 69 6940 00 N M N 69 O V O O N � N 69 W kA O O s. T O Y O y cUO . 4. O O O U N ti O U O 'O sr i" c0 jj N N IS 5 O iO -d N u0 U U 0 W kA O sr W O a, o ss 604 v v o kn M M N ^ N 69 69 \p 00 N N O N 69 69 N N r r 69 69 7 N w .-. 69 69 a � w M N kn 0 o vl 00 � O � O l- 00 m O � W C w i ^O a ci W M Cl O � e4 O e4 N O y a a ds s9 � � o 0 N C r � N N O O n f, O s. T _ u v N O O y +O U O cUO W O w0 N U O O U M N O ti O O U b .�,:,' iO O j" b N -C a (.) u u u sr W O Exhibit A-5 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST NINE FISCAL YEARS* City's 0.3250% City's share of the Plan fiduciary proportion City's net pension net position as a of the net proportionate share liability (asset) as percentage of Year Ended pension of the net pension City's covered a percentage of its the total pension June 30 liability liability (asset) payroll covered payroll liability CERS Nonhazardous 2022 0.3250% $ 20,724,296 $ 8,315,793 249.2161% 57.3282% 2021 0.3174% $ 24,344,624 $ 8,161,809 298.2749% 515.9857% 47.8139% 44.1116% 2020 0.3199% $ 22,498,921 $ 8,163,051 275.6190% 482.9333% 50.4470% 46.6327% 2019 0.3150% $ 19,185,252 $ 7,880,115 243.4641% 434.1519% 53.5420% 49.2645% 2018 0.3210% $ 18,788,122 $ 7,861,744 238.9816% 407.5603% 53.3249% 50.2164% 2017 0.3047% $ 14,999,862 $ 7,266,510 206.4246% 330.0579% 55.5028% 53.9483% 2016 0.3150% $ 13,543,354 $ 7,349,249 184.2821% 300.1115% 59.9684% 57.5152% 2015 0.3261% $ 10,579,475 $ 7,477,608 141.4821% 237.2826% 66.8010% 63.4574% 2014 0.3261% $ 11,970,884 $ 7,466,979 160.3176% 273.2831% 61.2209% 65.7178% CERS Hazardous 2022 1.6275% $ 43,326,429 $ 9,731,752 445.2069% 52.2617% 2021 1.5344% $ 46,263,440 $ 8,966,031 515.9857% 44.1116% 2020 1.5325% $ 42,330,934 $ 8,765,379 482.9333% 46.6327% 2019 1.5888% $ 38,425,266 $ 8,850,650 434.1519% 49.2645% 2018 1.6403% $ 36,697,162 $ 9,004,106 407.5603% 50.2164% 2017 1.6165% $ 27,738,524 $ 8,404,139 330.0579% 53.9483% 2016 1.6428% $ 25,218,200 $ 8,402,943 300.1115% 57.5152% 2015 1.6323% $ 19,617,569 $ 8,267,598 237.2826% 63.4574% 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. * Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. -107- Exhibit A-6 Notes to Required Supplementary Information For the Year Ended June 30, 2022 Changes of Benefit Terms: None Methods and assumptions used in the actuarially determined contributions: 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, 2021: The assumptions were updated as of result of an experience study for the five year period ending June 30, 2018. The amortization period of the unfunded accrued liability was reset to a closed 30 year period for the year ended June 30, 2019. The investment rate of return remained unchanged 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 10.300% - non -hazardous and 3.55% to 19.05% - hazardous. -108- CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S CONTRIBUTIONS COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST NINE FISCAL YEARS* Contributions relative to Contributions Contractually contractually Contribution as a percentage Year Ended required penson required deficiency City's covered of covered June 30 contribution contribution (excess) payroll payroll CERS Nonhazardous 2022 $ 1,850,682 $ 1,850,682 $ - $ 8,742,004 21.1700% 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 2022 $ 3,467,552 $ 3,467,552 $ - $ 10,240,852 33.8600% 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% * 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, 2022 Changes of Benefit Terms: None Methods and assumptions used in the actuarially determined contributions: 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, 2021: The assumptions were updated as of result of an experience study for the five year period ending June 30, 2018. The amortization period of the unfunded accrued liability was reset to a closed 30 year period for the year ended June 30, 2019. The investment rate of return remained unchanged 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 10.300% - non -hazardous and 3.55% to 19.05% - hazardous. -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 FIVE FISCAL YEARS* City's 0.3250% City's share of the Plan fiduciary proportion City's net pension net position as a of the net proportionate share liability (asset) as percentage of Year Ended pension of the net pension City's covered a percentage of its the total pension June 30 liability liability (asset) payroll covered payroll liability CERS Nonhazardous 2022 0.3250% $ 6,221,407 $ 8,315,793 74.8144% 62.9072% 2021 0.3173% $ 7,662,289 $ 8,161,809 93.8798% 51.6704% 2020 0.3198% $ 5,379,682 $ 8,163,051 65.9028% 60.4382% 2019 0.3150% $ 5,592,780 $ 7,880,115 70.9733% 57.6218% 2018 0.3210% $ 6,452,856 $ 7,861,744 82.0792% 52.3940% CERS Hazardous 2022 1.6275% $ 13,159,206 $ 9,731,752 135.2193% 66.8131% 2021 1.5341% $ 14,176,195 $ 8,966,031 158.1100% 58.8413% 2020 1.5324% $ 11,337,649 $ 8,765,379 129.3458% 64.4396% 2019 1.5888% $ 11,328,384 $ 8,850,650 127.9949% 64.2437% 2018 1.6403% $ 13,559,555 $ 9,004,106 150.5930% 58.9878% * The amounts presented were determined as of the measurement date June 30 of the prior year. * Schedule is intended to show information for 10 years. Additional years of supplementary information will be provided as this information becomes available. -109- Notes to Required Supplementary Information For the Year Ended June 30, 2022 Changes ofBenefit Terms: None Changes of assumptions: 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, 2021: Valuation date June 30, 2019 Actuarial cost method Entry Age Normal Amortization method Level Percent of Payroll Amortization period 30 years, Closed Asset valuation method 20% of the difference between the fair value of assets and the expected actuarial value of assets is recognized. Payroll growth rate 2.00% Investment Return 6.25% Inflation 2.30% Single discount rate 5.20% and 5.05% for non -hazardous and hazardous; decrease from 5.34% and 5.30%. Mortality 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 Healthcare trend rates (Pre -65) Initial trend starting at 6.25% at January 1, 2021, and gradually decreasing to an ultimate trend rate of 4.05% over a period of 13 years. Healthcare trend rates (Post -65) Initial trend starting at 5.50% at January 1, 2021, and gradually decreasing to an ultimate trend rate of 4.05% over a period of 14 years. -110- Exhibit A-8 CITY OF PADUCAH, KENTUCKY REQUIRED SUPPLEMENTARY INFORMATION SCHEDULE OF CITY'S CONTRIBUTIONS - MEDICAL INSURANCE PLAN COUNTY EMPLOYEES' RETIREMENT SYSTEM LAST SIX FISCAL YEARS* Contributions relative to Contributions Contractually contractually Contribution as a percentage Year Ended required pension required deficiency City's covered of covered June 30 contribution contribution (excess) payroll payroll CERS Nonhazardous 2022 $ 505,288 $ 505,288 $ $ 8,742,004 5.7800% 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 2022 $ 1,072,217 $ 1,072,217 $ $ 10,240,852 10.4700% 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% * 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, 2022 Changes ofBenefit Terms: None Changes of assumptions: 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, 2021: Valuation date June 30, 2019 Actuarial cost method Entry Age Normal Amortization method Level Percent of Payroll Amortization period 30 years, Closed Asset valuation method 20% of the difference between the fair value of assets and the expected actuarial value of assets is recognized. Payroll growth rate 2.00% Investment Return 6.25% Inflation 2.30% Single discount rate 5.20% and 5.05% for non -hazardous and hazardous; decrease from 5.34% and 5.30%. Mortality 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 Healthcare trend rates (Pre -65) Initial trend starting at 6.25% at January 1, 2021, and gradually decreasing to an ultimate trend rate of 4.05% over a period of 13 years. Healthcare trend rates (Post -65) Initial trend starting at 5.50% at January 1, 2021, and gradually decreasing to an ultimate trend rate of 4.05% over a period of 14 years. -110- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 CITY OF PADUCAH, KENTUCKY BOND FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Grants Interest Total revenues Expenditures: Debt issuance costs Planning and development Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources (Uses): Refunding debt issued Payment to refunded bond escrow agent Premium on debt issued Discount on debt issued Transfers in Transfers out Total other financing sources (uses) Net change in fund balance Fund balance, beginning Fund balance - ending See auditors report on pages 11-13. Exhibit B-1 -111- Variance with Final Budget Budgeted Amounts Positive Original Final Actual (Negative) 120,100 120,100 145,996 25,896 120,100 120,100 145,996 25,896 - - 17,486 (17,486) - 100,000 37,153 62,847 - 100,000 54,639 45,361 120,100 20,100 91,357 71,257 - - 1,330,614 1,330,614 - - (1,507,646) (1,507,646) - - 204,531 204,531 - - (10,013) (10,013) - - 17,486 17,486 $ 120,100 $ 20,100 108,843 $ 88,743 19,779,154 $ 19,887,997 -111- CITY OF PADUCAH, KENTUCKY GENERAL CAPITAL IMPROVEMENTS FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Intergovernmental and grants Intergovernmental Grants Interest Property upkeep, rentals, sales and other Total revenues Expenditures: Capital outlay Excess (deficiency) of revenues over expenditures Other Financing Sources (Uses): Long-term debt issued Transfers in Transfers out Total other financing sources Net change in fund balance Fund balance, July 1, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. -112- Exhibit B-2 Variance with Final Budget Final Positive Budget Actual (Negative) $ 33,895 $ - $ (33,895) 9,481,253 1,886,547 (7,594,706) (1,430) - 1,430 1,475,939 275,950 (1,199,989) 10,989,657 2,162,497 (8,827,160) 30,154,579 7,639,458 22,515,121 (19,164,922) (5,476,961) 13,687,961 4,704,753 3,460,662 (1,244,091) 8,814,541 3,152,342 (5,662,199) (3,141) (3,138) 3 13,516,153 6,609,866 (6,906,287) $ (5,648,769) 1,132,905 $ 6,781,674 6,747,189 $ 7,880,094 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, 2022 Revenues: Intergovernmental Grants Interest Property upkeep, rentals, sales and other Total revenues Expenditures: Debt service: Principal requirement Interest and fiscal requirement Total expenditures Excess (deficiency) of revenues over expenditures Other Financing Sources (Uses): Transfers in Transfers out Total other financing sources Net change in fund balance Fund balance, July 1, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. Final Budget Actual $ 654,560 $ 654,429 - 758,679 4,500 20,467 - 322,519 659,060 1,756,094 2,497,205 1,143,435 3,309,044 1,134,620 3,640,640 4,443,664 (2,981,580) (2,687,570) 2,985,950 2,985,950 $ 4,370 -113- 2,805,728 2,805,728 118,158 1,508,607 $ 1,626,765 Exhibit B-3 Variance with Final Budget Positive (Negative) $ (131) 758,679 15,967 322,519 1,097,034 (811,839) 8,815 (803,024) 294,010 (180,222) (180,222) $ 113,788 Exhibit B-4 CITY OF PADUCAH, KENTUCKY COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2022 ASSETS Cash and cash equivalents Investments Receivables, net: Accounts TOTAL ASSETS LIABILITIES AND FUND BALANCES Liabilities: Voucher and accounts payable Accrued payroll and payroll taxes Total liabilities Fund Balances: Restricted for: Highway and streets Public safety Capital Improvements Assigned for: Public safety Total fund balances TOTAL LIABILITIES AND FUND BALANCES See auditors report on pages 11-13. Special Revenue Funds Emergency Court Municipal Communication Awards Aid Program Service Fund Fund $ 827,444 $ 145,170 $394,966 $ 873,352 $ 409,619 $394,966 $ 80,261 $ 26,419 $191,915 - 56,084 - 80,261 82,503 191,915 793,091 - - - - 203,051 - 327,116 - 793,091 327,116 203,051 $ 873,352 -114- $ 409,619 $394,966 Special Revenue Funds CDBG Bed Grant Tax Fund Fund -115- Total Nonmajor Governmental Funds $ 1,367,580 310,357 1,677,937 $ 298,595 56,084 354,679 793,091 203,051 327,116 1,323,258 $ 1,677,937 Exhibit B-5 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES NONMAJOR GOVERNMENTAL FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Expenditures: Current operations: Public safety - 1,980,739 34,179 Public service 1,204,096 - - Planning and development - - - Capital Outlay - - - Debt Service: Principal requirement - - - Interest and fiscal requirement - - - Total expenditures Special Revenue Funds 1,980,739 34,179 Excess (deficiency) of revenues Emergency Court Municipal Communication Awards Revenues: Aid Program Service Fund Fund Taxes $ - $ 320,704 $ - Charges for services - 366,679 - Intergovernmental 510,824 - - Grants - - 37,853 Interest 5,361 490 2,420 Miscellaneous - 578,109 - Total revenues 516,185 1,265,982 40,273 Expenditures: Current operations: Public safety - 1,980,739 34,179 Public service 1,204,096 - - Planning and development - - - Capital Outlay - - - Debt Service: Principal requirement - - - Interest and fiscal requirement - - - Total expenditures 1,204,096 1,980,739 34,179 Excess (deficiency) of revenues over expenditures (687,911) (714,757) 6,094 Other Financing Sources (Uses): Transfers in 918,000 861,175 - Transfers out - (146,418) - Total other financing sources (uses) 918,000 714,757 - Net change in fund balances 230,089 - 6,094 Fund balances, July 1, 2021 563,002 327,116 196,957 FUND BALANCES, JUNE 30, 2022 $ 793,091 $ 327,116 $ 203,051 See auditors report on pages 11-13. -116- Special Revenue Funds CDBG Bed Total Nonmajor Grant Tax Governmental Fund Fund Funds $ - $1,788,776 $ 2,109,480 - - 366,679 - - 510,824 395,000 - 432,853 - - 8,271 - - 578,109 395,000 1,788,776 4,006,216 2,014,918 - - 1,204,096 395,000 1,788,776 2,183,776 395,000 1,788,776 5,402,790 - (1,396,574) - - 1,779,175 - (146,418) - - 1,632,757 - - 236,183 - - 1,087,075 $ 1,323,258 -117- CITY OF PADUCAH, KENTUCKY MUNICIPAL AID PROGRAM FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: hitergovernmental Interest Total revenues Expenditures: Public service 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, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. -118- Exhibit B-6 Variance with Final Budget Final Positive Budget Actual (Negative) $ 481,000 $ 510,824 $ 29,824 3,000 5,361 2,361 484,000 516,185 32,185 1,402,000 1,204, 096 197,904 (918,000) (687,911) 230,089 918,000 918,000 918,000 918,000 $ - 230,089 563,002 $ 793,091 $ 230,089 CITY OF PADUCAH, KENTUCKY EMERGENCY COMMUNICATION SERVICE FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Local contributions Telephone surcharges Interest Miscellaneous Total revenues Expenditures: Public safety 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, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. -119- Final Budget $ 345,000 325,000 500 674,315 1,344,815 Actual $ 320,704 366,679 490 578,109 1,265,982 Exhibit B-7 Variance with Final Budget Positive (Negative) $ (24,296) 41,679 (10) (96,206) (78,833) 2,313,380 1,980,739 332,641 (968,565) (714,757) 253,808 1,114,985 (146,420) 968,565 861,175 (146,418) 714,757 327,116 $ 327,116 (253,810) 2 (253,808) 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, 2022 Revenues: Grants Interest Total revenues Expenditures: Public safety Excess (deficiency) of revenues over expenditures Net change in fund balance Fund balance, July 1, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. -120- Final Budget Actual $ 30,000 $ 37,853 2,000 2,420 32,000 40,273 Exhibit B-8 Variance with Final Budget Positive (Negative) $ 7,853 420 8,273 90,800 34,179 56,621 (58,800) $ (58,800) 6,094 64,894 6,094 $ 64,894 196,957 $ 203,051 CITY OF PADUCAH, KENTUCKY CDBG FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Grants Total revenues Expenditures: Planning and development 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, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. Final Budget Actual $ 400,000 $ 395,000 400,000 395,000 395,000 395,000 Exhibit B-9 Variance with Final Budget Positive (Negative) $ (5,000) (5,000) 5,000 - (5,000) $ 5,000 - $ (5,000) -121- CITY OF PADUCAH, KENTUCKY BED TAX FUND DETAIL SCHEDULE OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL FOR THE YEAR ENDED JUNE 30, 2022 Revenues: Taxes Grants Other Total revenues Expenditures: Planning and development 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, 2021 FUND BALANCE, JUNE 30, 2022 See auditors report on pages 11-13. Exhibit B-10 Variance with Final Budget Final Positive Budget Actual (Negative) $1,000,000 $1,788,776 $ 788,776 1,000,000 1,788,776 788,776 1,000,000 1,788,776 (788,776) -122- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION NONMAJOR PROPRIETARY FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 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 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET POSITION NONMAJOR PROPRIETARY FUNDS JUNE 30, 2022 ASSETS Section Civic Transient Total Nonmajor Total assets Eight Center Dock Enterprise Current Assets: Housing Fund Fund Funds Cash and cash equivalents $ 361,884 $ - $ 34,055 $ 395,939 Inventory - - 13,211 13,211 Total current assets 361,884 - 47,266 409,150 Noncurrent Assets: Net depreciable capital assets 2,783 69,406 - 72,189 Total assets 364,667 69,406 47,266 481,339 Deferred Outflows of Resources: Deferred pension related outflows 2,862 - - 2,862 Deferred OPEB related outflows 8,837 - - 8,837 Total deferred outflows of resources 11,699 - - 11,699 LIABILITIES Current Liabilities: Voucher and accounts payable 60,315 367 57 60,739 Accrued payroll - - 716 716 Accrued compensated absences 3,400 - - 3,400 Unearned revenues 186 - - 186 Due to other funds - - - - Total current liabilities 63,901 367 773 65,041 Noncurrent Liabilities: Net pension liability 61,862 - - 61,862 Net other post employment benefits liability 18,571 - - 18,571 Accrued compensated absences 7,869 - - 7,869 Total noncurrent liabilities 88,302 - - 88,302 Total liabilities 152,203 367 773 153,343 Deferred Inflows of Resources Deferred pension related inflows 8,950 - - 8,950 Deferred OPEB related inflows 12,636 - - 12,636 Total deferred inflows of resources 21,586 - - 21,586 NET POSITION Net invested in capital assets 2,783 69,406 - 72,189 Restricted - Housing 199,794 - - 199,794 Unrestricted - (367) 46,493 46,126 TOTAL NET POSITION $ 202,577 $ 69,039 $ 46,493 $ 318,109 See auditors report on pages 11-13. -123- CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Operating Revenues: Charges for services Miscellaneous Total operating income Operating Expenses: Cost of sales and service Depreciation and amortization Total operating expenses Operating income (loss) Non -Operating Revenues (Expenses): Grants - program purpose Interest and investment income Total nonoperating revenues (expenses) Income (loss) before contributions and transfers Contributions and Operating Transfers: Transfers in Transfers out Total contributions and operating transfers Change in net position Net position - beginning Net position - ending See auditors report on pages 11-13. Exhibit C-2 Section Civic Transient Total Nonmajor Eight Center Dock Enterprise Housing Fund Fund Funds $ - $ - $120,819 $ 120,819 2,056 - - 2,056 2,056 - 120,819 122,875 2,050,251 25,524 120,100 2,195,875 2,419 10,020 - 12,439 2,052,670 35,544 120,100 2,208,314 (2,050,614) (35,544) 719 (2,085,439) 2,147,850 - - 2,147,850 19 - 246 265 2,147, 869 - 246 2,148,115 97,255 (35,544) 965 62,676 - 27,911 33,715 61,626 - 27,911 33,715 61,626 97,255 (7,633) 34,680 124,302 105,322 76,672 11,813 193,807 $ 202,577 $ 69,039 $ 46,493 $ 318,109 -124- CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS NONMAJOR PROPRIETARY FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Cash Flows from Operating Activities: Cash received from customers Payments to employees Payments to internal service funds Other receipts Housing assistance and other payments Net cash provided (used) by operating activities Cash Flows from Noncapital Financing Activities: Grants - program purpose Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities Cash Flows from Capital and Related Financing Activities: Acquisition and construction of capital assets Net cash provided (used) by capital and related financing activities Cash Flows from Investing Activities: Interest on cash and investments Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2021 CASH AND CASH EQUIVALENTS, JUNE 30, 2022 Section Civic Transient Eight Center Dock Housing Fund Fund $ - $ - $ 120,819 4,041 - (19,783) (950) (2,302) - 2,056 - - (2,146,687) (25,609) (100,942) (2,141,540) (27,911) 94 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation and amortization Change in assets and liabilities: Inventory Unearned revenues OPEB obligation and related deferrals Pension obligation and related deferrals Accounts payable and accrued expenses NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See auditors report on pages 11-13. 2,083,222 - - - 27,911 33,715 Exhibit C-3 Total Nonmajor Enterprise Funds $ 120,819 (15,742) (3,252) 2,056 (2,273,238) (2,169,357) 2,083,222 61,626 2,083,222 27,911 33,715 2,144,848 (5,203) - - (5,203) (5,203) - - (5,203) 19 - 246 265 (63,502) - 34,055 (29,447) 425,386 - - 425,386 361,884 $ - $ 34,055 $ 395,939 $ (2,050,614) $ (35,544) $ 719 $ (2,085,439) 2,419 10,020 - 12,439 - - (552) (552) (64,628) - - (64,628) (11,191) - - (11,191) (87,649) - - (87,649) 70,123 (2,387) (73) 67,663 $ (2,141,540) $(27,911) $ 94 $(2,169,357) -125- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION INTERNAL SERVICE FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 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 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF NET POSITION INTERNAL SERVICE FUNDS JUNE 30, 2022 ASSETS Health Fleet Fleet Lease Insurance Insurance Combined Current Assets: Maintenance Trust Fund Fund Total Cash and cash equivalents $ 27,250 $3,693,949 $ 815,959 $ 3,786,719 $ 8,323,877 Investments - - - - - Receivables, net 27,893 - - 73,461 101,354 Prepaid expense - 613,206 - - 613,206 Inventories 64,326 - - - 64,326 Total current assets 119,469 4,307,155 815,959 3,860,180 9,102,763 Noncurrent Assets: Net depreciable capital assets 3,664 3,514,374 - - 3,518,038 Total assets 123,133 7,821,529 815,959 3,860,180 12,620,801 Deferred Outflows of Resources: Deferred pension related outflows 103,008 - - - 103,008 Deferred OPEB related outflows 127,791 - - 127,791 Total deferred outflows of resources 230,799 - - - 230,799 LIABILITIES Current Liabilities: Voucher and accounts payable 937 - - 219,192 220,129 Accrued payroll and payroll taxes 19,142 - - - 19,142 Accrued compensated absences 22,384 - - - 22,384 Total current liabilities 42,463 - - 219,192 261,655 Noncurrent Liabilities: Pensions obligation 765,348 - - - 765,348 Other post employment benefits (OPEB) 229,757 - - - 229,757 Accrued compensated absences 18,529 - - - 18,529 Total noncurrent liabilities 1,013,634 - - - 1,013,634 Total liabilities 1,056,097 - - 219,192 1,275,289 Deferred Inflows of Resources Deferred pension related inflows 110,736 - - - 110,736 Deferred OPEB related inflows 109,783 - - - 109,783 Total deferred inflows of resources 220,519 - - - 220,519 NET POSITION Net invested in capital assets 3,664 3,514,374 - - 3,518,038 Unrestricted (926,348) 4,307,155 815,959 3,640,988 7,837,754 TOTAL NET POSITION $ (922,684) $7,821,529 $ 815,959 $ 3,640,988 $11,355,792 See auditors report on pages 11-13_ -126- Exhibit D-2 CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2022 See auditors report on pages 11-13. -127- Health Fleet Fleet Lease Insurance Insurance Combined Maintenance Trust Fund Fund Total Operating Revenues: Charges for services - internal $ 500,713 $1,027,174 $1,267,992 $ 3,286,975 $ 6,082,854 Charges for services - external - - - 296,676 296,676 Total operating revenues 500,713 1,027,174 1,267,992 3,583,651 6,379,530 Operating Expenses: Vehicle maintenance 546,742 - - - 546,742 Administrative - 53,195 - 610,214 663,409 Insurance premium, claims and medical - - 1,219,400 2,928,997 4,148,397 Depreciation 4,886 954,526 - - 959,412 Total operating expenses 551,628 1,007,721 1,219,400 3,539,211 6,317,960 Operating income (loss) (50,915) 19,453 48,592 44,440 61,570 Nonoperating Revenues and (Expenses): Interest and investment income - 23,448 - 26,253 49,701 Gain (loss) on disposal of property and equipment 310 14,400 - - 14,710 Total nonoperating revenues (expenses) 310 37,848 - 26,253 64,411 Income (loss) before transfers (50,605) 57,301 48,592 70,693 125,981 Contributions and Transfers: Transfers in 138,951 - 13,230 - 152,181 Transfers out - - - (70,000) (70,000) Total contributions and operating transfers 138,951 - 13,230 (70,000) 82,181 Change in net position 88,346 57,301 61,822 693 208,162 Net position - beginning (1,011,030) 7,764,228 754,137 3,640,295 11,147,630 Net position - ending $ (922,684) $ 7,821,529 $ 815,959 $ 3,640,988 $11,355,792 See auditors report on pages 11-13. -127- CITY OF PADUCAH, KENTUCKY COMBINING STATEMENT OF CASH FLOWS INTERNAL SERVICE FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Cash Flows from Operating Activities: Receipts from other funds for services Payments to suppliers Payments to employees Insurance premium, claims and medical Other payments Net cash provided (used) by operating activities Cash Flows from Noncapital Financing Activities: Transfers from other funds Transfers to other funds Net cash provided (used) by noncapital financing activities Cash Flows from Capital and Related Financing Activities: Proceeds from sale of capital assets Purchase of capital assets Net cash used by capital and related financing Cash Flows from Investing Activities: Proceeds from sales and maturities of investments Interest and dividends Net cash used by investing activities Net increase (decrease) in cash and cash equivalents Cash and cash equivalents, July 1, 2021 CASH AND CASH EQUIVALENTS, JUNE 30, 2022 Exhibit D-3 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Change in assets and liabilities: Receivables Prepaid expense Inventories OPEB obligation and related deferrals Pension obligation and related deferrals Accounts payable and accrued expenses NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See auditors report on pages 11-13. $ (50,915) $ 19,453 $ 48,592 $ 44,440 $ 61,570 4,886 954,526 - - 959,412 (24,015) 12,198 - (4,720) (16,537) - (97,846) - - (97,846) (2,070) - - - (2,070) (4,248) - - - (4,248) (24,529) - - - (24,529) (20,117) - (710) (34,166) (54,993) $ (121,008) $ 888,331 $ 47,882 $ 5,554 $ 820,759 -128- Health Fleet Fleet Lease Insurance Insurance Combined Maintenance Trust Fund Fund Total $ 476,698 $ 1,039,372 $ 1,267,992 $ 3,556,289 $ 6,340,351 (211,355) (97,846) - - (309,201) (386,351) - - - (386,351) - - (1,220,110) (2,940,518) (4,160,628) - (53,195) - (610,217) (663,412) (121,008) 888,331 47,882 5,554 820,759 138,951 - 13,230 - 152,181 - - - (70,000) (70,000) 138,951 - 13,230 (70,000) 82,181 310 14,400 - - 14,710 - (559,727) - - (559,727) 310 (545,327) - - (545,017) - 1,000,000 250,000 1,750,000 3,000,000 - 23,448 - 26,253 49,701 - 1,023,448 250,000 1,776,253 3,049,701 18,253 1,366,452 311,112 1,711,807 3,407,624 8,997 2,327,497 504,847 2,074,912 4,916,253 $ 27,250 $ 3,693,949 $ 815,959 $ 3,786,719 $ 8,323,877 Reconciliation of Operating Income (Loss) to Net Cash Provided (Used) by Operating Activities: Operating income (loss) Adjustments to reconcile operating income (loss) to net cash provided (used) by operating activities: Depreciation and amortization Change in assets and liabilities: Receivables Prepaid expense Inventories OPEB obligation and related deferrals Pension obligation and related deferrals Accounts payable and accrued expenses NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES See auditors report on pages 11-13. $ (50,915) $ 19,453 $ 48,592 $ 44,440 $ 61,570 4,886 954,526 - - 959,412 (24,015) 12,198 - (4,720) (16,537) - (97,846) - - (97,846) (2,070) - - - (2,070) (4,248) - - - (4,248) (24,529) - - - (24,529) (20,117) - (710) (34,166) (54,993) $ (121,008) $ 888,331 $ 47,882 $ 5,554 $ 820,759 -128- CITY OF PADUCAH, KENTUCKY SUPPLEMENTARY INFORMATION FIDUCIARY FUNDS ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 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. CITY OF PADUCAH, KENTUCKY STATEMENT OF NET POSITION FIDUCIARY FUNDS - PRIVATE -PURPOSE TRUST FUNDS JUNE 30, 2022 ASSETS Cash and cash equivalents Investments at fair value Money market funds Mutual funds Total assets LIABILITIES Accounts payable NET POSITION Held in trust for other purposes See auditors report on pages 11-13. -129- Exhibit E-1 Cemetery and Park Trusts $ 15,889 1,049,299 1,065,188 $ 1,065,188 CITY OF PADUCAH, KENTUCKY STATEMENT OF CHANGES IN NET POSITION FIDUCIARY FUNDS - PRIVATE -PURPOSE TRUST FUNDS FOR THE YEAR ENDED JUNE 30, 2022 Additions: Contributions: Intergovernmental revenues Private donations Total contributions Investment earnings: Change in fair value of investments Interest and dividends Net investment earnings Total additions Deductions: Capital outlay Administrative expenses Total deductions Change in net position Net position - beginning Net position - ending See auditors report on pages 11-13. -130- Exhibit E-2 Cemetery and Park Trusts 5,115 5,115 (266,912) 70,727 (196,185) (191,070) 81,546 16,186 97,732 (288,802) 1,353,990 $ 1,065,188 CITY OF PADUCAH, KENTUCKY STATISTICAL SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 STATISTICAL SECTION This part of the City of Paducah's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information say about the City's overall financial health. Contents Page Financial Trends 131-135 These schedules contain trend information to help the reader understand how the City's financial performance and well-being changed over time. Revenue Capacity 136-141 These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property and employee taxes. Debt Capacity 142-145 These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. Economic and Demographic Information 146-147 These schedules offer economic and demographic indicators to help the reader understand the environment within which the City's financial activities take place. Operating Information 148-150 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. W 'n -It -; O, C N 'n o0 1` O ,; l� r �O o0 O O � M M � M 69 I 6911 I Efi II I EH N O, -; 'O L. 'n M C' N l— N --� O C r- O 1` O C � � O N O d' C' O O� V' - o0 N _O t` 1` V - M w O� Vi d' O �O w O M M W - V 01 00 69 I 6911 I 6911 I 69 69 I 6911 I 6911 1 69 69 I 6911 I 6911 I 69 N O� M o0 IO M h 69 I 6911 I 6911 I 69 69 I 6911 1 6911 1 69 O 0 O 7,-O� C4 O� l 00 M N 00 00 � O� 'n 00 V'� 00 00 M M .y .-. 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C O M O 69 69 EA O 10 10 O a, 10 M o0 ^ M o, ^ M 0 o\ N [� N 10 O 10 w O a, M Ni M �o M rrt CC M O 10 O M o1 O 00 W M W W ho1 M 10 01 r ll a m H. 1 vl N v ty ^ Ci ty v v M of m oo m -. �o M tli 0 0 [� O 69 69 69 M a, M a, a, W w 'n 10 10 'n N oo 'n O 10 O' ' �o N ' W •--� M r o o\ a, M 'n M o0 0\ M 10 O o, O o1 M O M 'n 10 M^ M r O N O ^ of N lO M M cl� N M 'n o\ r ^ O lO O to N 'n olot l0 M N N M O V M o0 rrt m �^ O O l� 00 a,m M M l� M o0 �o W ^ N �o �D a,O M Q, M 10 O 'n O nl W O N N l� vi O 10 M N o0 O Oi D; M M N M N N N M 69 69 69 ^ M 'n of W N M N 'n M ^ M ^ N 01 N \O O 10 'n M M M o0 Io �D N D\ of, clV M o\ M of vt W O D, to lc r OC� M ^ N 'o 'n N O V m^ 10 'n N M o1 'n o\ Mm l� l� N 010 'n O M M O M o0 0+ 01 M^ [� Oq o\ a0 h M^ M M O M M M M O^ N D\ D1 N O o, N ^ M M M 10 N N M Oi M M O O M M 'n v� 69 69 69 W 10 oO M N M^ 0 00 ^ al^ 10 m M 10 O M O M l� M W Nn ^ M M 10 M� N M h M W N ^ M M^ 10 w 01 M l� MM l- !` l- M [- M O M"� �o M'n O \0 M W Nn O^ 010 o1 M M o1 01 l M 10 O n M O O Vi o0 M O, O 'o M m M o\ M O ^ M o0 M O O ^ 10 00 \O o, Ol �D 'n D, O ^ � V'1 � O D, M l� ^ ^ c7• �o M °� M Vt N � M M N �o l� C M 69 69 69 C v a> �' Q °° °�' c°i o u h y 3 q a� Im bD °D b00 oo a � � � v cod v •�' � :� v cL4a $Fm— U�C�i�O yC7Pte.,P.,P.,P.0UC)vGgrL, .o.7UFF v a H w H o H z u A o i 00 0 0 tr) O N r- N 00 00 N Vn 00 — O lI- 00 .--� }, 00 M O\ N 00 DO M �O t- t- 00 ¢.i M — M O Obi 01 O C1 It 00 � O� O� cr o0 .--� .--� a M O0, V CD O M M �O to — M C\ 00 O N N N N r- � 00 00 00 00 Cn W O O O O 1p 00 N r- M 00 i 00 0 0 0 0 0 C- 0 0 00 l� DD 00 01 O l� kr) 00 DO tr) � O M � C� l I DO Obi � Obi Obi Obi Obi Obi � Obi Obi 0c N M O, C v) N M v) C l— oc ON O to ON 0� ON N N N N N N N N N N O C C C O O O O O O 1p 00 N r- M 00 M Ol, tr) tr) tr) — r- O\ 00 00 It 00 N M l- l- 00 N 00 N 01 M O� O C� It M O\ tr) r- 00 r- 00 00 M O M It Cl) M � Q1 N N M M ' lO V V r- r- N N N N N N N N N N rn 00 OM i � � Cli � N O O M •--� O lO M lr� M OO r- N 00 r- 00 It O �O o0o O O �O O� 00 N N N N N N N N N N CC M kn \O � 00 C\ O •--� N O O O O O O O O O O M — C\ It - C- \O It N r- CD �O 000 O C1 000 tr) � O M � C� l I DO � O N \O M M M h Q. O� r- M OHO M OHO N •--� 00 Vn Q l— 00 M 000 to to O l— r- .--� CD '7 00 N r- 00 M N 00 —CD M •--� M N N N M �O •--� h r- r r- 00 O 9 r- 000 r- OOi 000 00 00 O� O CC M kn \O � 00 C\ O •--� N O O O O O O O O O O l — C\ It r- r- \O It N r- r �O 00 O tr)O\ It tr) C� O � N C� � � DO � O N \O M � h Q. kr) M OHO M OHO N •--� � Q O M 000 to to O N 00 �O CD '7 00 N r- 00 M N 00 —CD M •--� M N N N M �O •--� CC M kn \O � 00 C\ O •--� N O O O O O O O O O O tr) N tr) O- O �c O 00 �O tr) r �O �n M 00 •--� -'t � 00 C1 � C� DO O DO � O N \O M DO 01 kr) — l— O It kr) M Q O M 000 to to O N 00 �O CD '7 00 N r- 00 M N 00 —CD M •--� M N N N M �O •--� h r- kr) r- 00 9 r- 000 r- OOi 000 000 00 O� D1 01 CC M kn \O � 00 C\ O •--� N O O O O O O O O O O tr) N tr) N O �c O 00 �O tr) CC O �n N 00 00 N l— 00 N N kr) — l— O It kr) M Q O M 00 to to O N 00 �O l- o0 r- \O M N c •--a O r- 000 000 OOi a1 a1 O O CC M kn \O � 00 C\ O •--� N O O O O O O O O O O V;. m 00 O N N O O N N O O O O O O ec CC N n V) N 00 00 N N o1 G O O 0 N 01 M M M M M y O C O O O O O O O O O U44s o C C C C C C C O O � y aO U U a A cG C O O O Li O O O O O O O � •� y l l l l l C� AO AO AC AO L� VO U y �O v1 00 `C IC o0 r - 00 00 U a W o 0 0 0 0 0 0 0 0 0 O O O O O O C O O O Cl La Vn v) n V) . t V;. m 00 O N N O O N N O O O O O O ec n �O O 00 00 00 00 G O O 0 N 01 M M M M M y O C O O O O O O O O O U44s o C C C C C C C O O � y aO U U a A cG C O O O O O O O O O O O � •� y l l l l l AO AO AO AC AO L� V;. m 00 O N N O O N N O O O O O O ec n �O O 00 00 00 00 C O O 0 N 01 M M M M M U44s o C C C C C C C O O � y aO A a A cG C O O O O O O O O O 4. "C O 00 DO DD DD � oo o0 00 00 00 U a W o 0 0 0 0 0 0 0 0 0 V;. m 00 O N N O O N N O O O O O O ec n �O O 00 00 00 00 C O O 0 N 01 M M M M M U44s o 0 0 0 0 0 0 0 0 0 � y a A U cG C O O O O O O O O O "C O 00 DO DD DD V;. m 00 O N N O O N N O O O O O O V � 00 d, Q\ 00 01 01 Q1 Q1 01 Q1 'O R cG C O O O O O O O O O � O.r Cl vn Vn v) n V) . t W) N Lr) N Lr) N Lr) N Lr) N V) N N N N N W O O O O O O O O O O V;. m 00 O N N O O N N O O O O O O TABLE 7 CITY OF PADUCAH, KENTUCKY PRINCIPAL TAXPAYERS - PROPERTY TAX CURRENT YEAR AND NINE YEARS PRIOR Taxpayer Kentucky Oaks Mall Cpark Paducah LLC Boyd Co FKA Whayne Supply Co Menard LLC Paducah Medical Investors Ducmall LLC Woodstone Enterprises LP Wal Mart Real Estate Business Computer Services Inc Greenway Village LLC Sams Real Estate Business Trust Wal-Mart Store USF Propco I LLC Lowes Home Centers, Inc. TOTALS 2022 2013 (1) (2) (1) Percentage of (2) Percentage of Assessed Total Assessed Assessed Total Assessed Valuation Valuation Valuation Valuation $ 58,870,100 2.18% $ 50,900,262 2.37% 20,111,900 0.74% 16,099,962 0.60% 14,950,001 0.55% 13,440,090 0.50% 13,440,090 0.63% 13,119,800 0.49% 13,119,800 0.61% 12,429,000 0.46% 12,429,000 0.58% 10,646,400 0.39% 10,646,400 0.50% 10,504,986 0.39% 9,083,185 0.42% 10,070,624 0.37% 9,222,955 0.43% 9,000,000 0.42% 8,156,900 0.38% 8,134,350 0.38% $ 180,242,863 6.67% $ 144,132,942 6.72% (1) Source - Property Valuation Administration; Assessed value as of January 1, 2021. (2) Source - Property Valuation Administration; Assessed value as of January 1, 2012. -138- TABLE 8 CITY OF PADUCAH, KENTUCKY SECURED TAX LEVIES AND COLLECTIONS* LAST TEN FISCAL YEARS (1) Includes current year real and personal property tax. * Source - City of Paducah Finance Department. -139- Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal (1) Year Taxes Levied (1) Percent of Collections Percent of Ended for the Amount of Levy in Subsequent Total Levy June 30, Fiscal Year Collections Collected Years Collections Collected 2013 4,427,063 4,334,698 97.9% 88,003 4,422,701 99.9% 2014 4,593,358 4,509,874 98.2% 78,696 4,588,570 99.9% 2015 4,717,785 4,644,522 98.4% 66,625 4,711,147 99.9% 2016 4,879,423 4,802,067 98.4% 68,962 4,871,029 99.8% 2017 4,988,841 4,888,303 98.0% 90,845 4,979,148 99.8% 2018 5,211,332 5,120,761 98.3% 73,624 5,194,385 99.7% 2019 5,454,040 5,323,669 97.6% 106,602 5,430,271 99.6% 2020 5,648,448 5,506,011 97.5% 101,127 5,607,138 99.3% 2021 5,662,133 5,563,728 98.3% 43,221 5,606,949 99.0% 2022 6,109,968 5,802,139 95.0% - 5,802,139 95.0% (1) Includes current year real and personal property tax. * Source - City of Paducah Finance Department. -139- TABLE 9 CITY OF PADUCAH, KENTUCKY EMPLOYEE LICENSE TAX COLLECTIONS LAST TEN FISCAL YEARS 206,581,194 (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -140- (1) Direct Fiscal Taxes Tax Year Collected Rate 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% 2022 23,845,186 2.00% 206,581,194 (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -140- TABLE 10 CITY OF PADUCAH, KENTUCKY PRINCIPAL EMPLOYEE LICENSE TAXPAYERS CURRENT YEAR AND NINE YEARS PRIOR (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -141- 2022 (1) Percentage of Taxpayers Number of Percentage Taxes Total Employee By Range Filers of Total Collected License Tax $0450,000 $50,000 2,282 97.15% 10,607,467 44.48% $50,001 - $100,000 36 1.53% 2,510,430 10.53% $100,001 - $500,000 26 1.11% 4,719,368 19.79% Greater than $500,000 5 0.21% 6,007,921 25.20% TOTALS 2,349 100.00% $ 23,845,186 100.00% 2013 (1) Percentage of Taxpayers Number of Percentage Taxes Total Employee By Range Filers of Total Collected License Tax $0450,000 $50,000 2,553 98.04% 8,895,868 48.52% $50,001 - $100,000 28 1.08% 2,069,371 11.29% $100,001 - $500,000 21 0.81% 4,412,746 24.07% Greater than $500,000 2 0.08% 2,958,139 16.13% TOTALS 2,604 100.00% $ 18,336,124 100.00% (1) Source - City of Paducah Finance Department - Actual collections during the fiscal year. -141- O 00 �c 0 0 N r- C, oll CA CD C) Cq AU 0 0 0 0 0 0 0 0 0 0 0: c to r- - r- rm)_ � o - � rn rn � � � � kri kfj kfj 00 A y cd a o 4 1.0 za N 00 V) �c V) 00 l— G ai A QI' z w as a� a U V) Q1 Nt V) (11 00 \O M C N Vi M N ,^ 00 M O 00 M O r- kr) 00 Q\ N Q\ y N N �--� N O Ile M V) OC M a C D\ - a1 00 00 V) IlO 4 O O a iOr A N M N N N N N 't T O z w as a� a U ; �. ani M k M N ,^ 00 M O O M O r- kr) 00 Q\ N Q\ � i O a, �--� Ile 00 Ile V) M M N - O 00 — O tf) �lc �lc � a iOr A a1 kn - I -C N oo � M O O �. Ilp 16 `p kr 00 r--� IlO Ile Ile 00 �I O rn M C� y W cq a1 N M ON O 00 O � M V) 00 O\ 00 O 00 01 M I N M M ; �. x z a z F F xo HW¢' zQw� Ncaaz a�F oW� Fra UW z w O O F O 01 Ol O ClCON1 M M M a1 N M O o0 7 O 'CO O Vt n N M \D 1p O N 01 01 TO M [� M l� M V1 00 01 00 O 00 01 N 7 M 01 l� 01 DD N N N O O O Y � w0 VN1 VNi VNi a w O O O N N N o C ' O O O O O O O O O a vi o o vi v, vi o 0 0 o N o yO •SO. O aN0 7 � 000 � � 0�0 v�1 N 01 c� iL Yr 01 of C' Ni O1 O O O O y0 0 _R •� l� D N N 01 3 D of O O O O vi vi vi vi � ; OO M N O1 000 CLQ Q�N N N N — — — �y U �y U pp O O O O O O O O 0 p i C O O O O O O O O w 'p O O O O O O O O y 0 0 0 0 0 o vi CG 07 m oNo vMi N rn lc b � G oA 7 0 O O O O O O O O O O O O O O O O O O O O u •� O .� O O O O O O O O O O O - - O Vi Vi O Vi O O M - 10 Vt 7 N DD 7 O y w pa �O 7 7 O lO N o0 7 O1 0 �' 7 7 7 M M N N cd = U U 00 N b ' it O O O O O O O O O O p y O O O O O O O O O O iC p O O O O O O O O O O OA d 'O O vi vi vi vi vi O O vi O .p p V C G b LL N o0o M Obi 'n O G, r. �D vi vi 7 7 7 M M N Nbbp W O 4 V ,5 i+ M 7 V1 \D l� DD 01 O N y y Q O O O O O O O O O O d V] V] N N N N N N N N N p� zzz�� W a o vn o M 7 N R O 0 l� 0 M 0 00 0 7 0 01 0 Vt 0 O 0 0 01 Q o C ' O O O O O O O O O a vi o o vi v, vi o 0 0 o N o yO •SO. O aN0 7 � 000 � � 0�0 v�1 N 01 c� iL Yr 01 of C' Ni O1 O O O O y0 0 _R •� l� D N N 01 3 D of O O O O vi vi vi vi � ; OO M N O1 000 CLQ Q�N N N N — — — �y U �y U pp O O O O O O O O 0 p i C O O O O O O O O w 'p O O O O O O O O y 0 0 0 0 0 o vi CG 07 m oNo vMi N rn lc b � G oA 7 0 O O O O O O O O O O O O O O O O O O O O u •� O .� O O O O O O O O O O O - - O Vi Vi O Vi O O M - 10 Vt 7 N DD 7 O y w pa �O 7 7 O lO N o0 7 O1 0 �' 7 7 7 M M N N cd = U U 00 N b ' it O O O O O O O O O O p y O O O O O O O O O O iC p O O O O O O O O O O OA d 'O O vi vi vi vi vi O O vi O .p p V C G b LL N o0o M Obi 'n O G, r. �D vi vi 7 7 7 M M N Nbbp W O 4 V ,5 i+ M 7 V1 \D l� DD 01 O N y y Q O O O O O O O O O O d V] V] N N N N N N N N N p� zzz�� TABLE 13 CITY OF PADUCAH, KENTUCKY DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30, 2022 * Information from finance office at each location. -144- Estimated (1) Share of Reported Percentage Direct and Debt Applicable Overlapping Outstanding to the City Debt City of Paducah $ 40,960,364 100.00% $ 40,960,364 Paducah Independent School District 72,082,000 * 100.00% 72,082,000 McCracken County 19,259,821 * 45.10% 8,686,179 McCracken County Board of Education 76,435,000 * 31.60% 24,153,460 Overlapping debt 167,776,821 104,921,639 TOTAL DIRECT AND OVERLAPPING DEBT $ 208,737,185 $145,882,003 (1) Applicable percentage is determined by ratio of assessed valuation of property subject to taxation in overlapping unit to valuation of property subject to taxation in reporting unit. * Information from finance office at each location. -144- 00 M � oc vi V1 �n DD O y y U v1 h �O M l0 00 N V h o0 O r M 00 l� V1 O M M N U O vi O M M 01 00 --� O N 01 ol� On 01 01 O a1 a1 r O y 4S, Q' M M N N CA a 69 69 6A M 0 69 69 69 . M N V a1 �c M 00 o0 O M O N 0 y O O a O a cq cq Rnff) N 0 O N M oc N O N N 69 y 6A W. C � M 0o .V. O V1 �n DD O y y U v1 00 N C. N 69 69 U O vi O vi o > p r ol� On W� Y � c�C U O N O O y 4S, Q' �07, a (5 Z � z� CA a W. M 0o DD N V1 �n DD O 00 N N 69 69 U O vi O vi o > p r ol� On W� Y � O O r M O O N M 0 C 69 69 . 0 y O O M -C. U Rnff) N M oc N O N N y 6A C. 'C 0 bp Oro � ,�. 1p O M Q7 Oi DD M 01 y O V V a1 W U N m N rq N_ U N 69 69 � b O V o U N U o N N N N bq O Cd 69 69 "U y O 00 N o O 00 00 cc o U O N Nrq C 94 69 tD U V 00 r o O O C O ao O N N N a N g U U 6q 69 O cO O � o cC i. O N M N O N ❑ 94 69 U U Z M V M 00�•+ N oc oc 00Ic N M V O N N CU F •G � 69 69 N Li M 00 V1 o Q" Ow Y+ U d N N Ort M O� oc M 'D T7 N N 69 69 U u p � GL y O A y b bOD . m 'O y y TABLE 15 CITY OF PADUCAH, KENTUCKY DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS Sources: (1) Latest available Bureau of the Census Count (2) Board of Education; represents elementary and secondary public schools. (3) Kentucky Cabinet for Human Resources, Department for Employment Services. -146- (3) Unemployment Rate 8.4% 8.2% 5.6% 6.2% 6.8% 6.4% 5.5% 5.4% 5.9% 4.6% (1) (1) (1) (2) Personal Per Capita Median School Fiscal Year Population Income Income Age Enrollment 2012-2013 25,024 511,240,320 20,430 41.4 2,744 2013-2014 25,024 511,240,320 20,430 41.4 3,138 2014-2015 25,024 511,240,320 20,430 41.4 2,843 2015-2016 25,024 511,240,320 20,430 41.4 3,139 2016-2017 25,024 511,240,320 20,430 41.4 3,132 2017-2018 25,024 511,240,320 20,430 41.4 2,835 2018-2019 25,024 511,240,320 20,430 41.4 2,980 2019-2020 25,024 511,240,320 20,430 41.4 3,232 2020-2021 27,137 830,934,940 30,620 43.8 2,832 2021-2022 27,137 830,934,940 30,620 43.8 2,832 Sources: (1) Latest available Bureau of the Census Count (2) Board of Education; represents elementary and secondary public schools. (3) Kentucky Cabinet for Human Resources, Department for Employment Services. -146- (3) Unemployment Rate 8.4% 8.2% 5.6% 6.2% 6.8% 6.4% 5.5% 5.4% 5.9% 4.6% M O N N N O N v bn 0 U cid N. U �O 8 y ::$ o s� Q O a U N V1 m O U Z N O U x v a v v, con cn cn O p N �l aaw°3wa w>Ut7UU3a4 " 4 w 0 H 0 r; o 0 0 0 0 0 0 0 0 0 0 GO O N V7 �lO N r` (71\ N o0 d\ E� o CL W i- M N O lfl M N O N r N110 O — �t O �t all O M N GO V1 N N O CL W 0 0 0 0 0 0 0 0 0 0 0 N00 w M M Q1 d' "t O � � N O ,7, E� O CL W N M M O'� r� N rl "t 0 c. W v bn 0 U cid N. U �O 8 y ::$ o s� Q O a U N V1 m O U Z N O U x v a v v, con cn cn O p N �l aaw°3wa w>Ut7UU3a4 " 4 w 0 H 0 r; 00 N �O O M 00 ' O W) I O kn ITC, M O S .--� •--� 00 r- N N O O N N to O M l 1.0 O k O kf)'t C� M O S l r--� •--� 00 r- O N N V7 O M l� �O kn O V1 V) O O O H 00 r- N N N O N V1 O M �� O O O O � .--� •--� DD � N N �O N •-- � � O N N .-. 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C CIA � N ,t ^- O 00 � M 00 .. •--� N C N O� N � _� O ^- O�t 00 r- M 00 O N 'T - N `O C N � N ^- v O d' 00 l� M (01 O N O .. - 't - N `p C N N t, V) O �t 00 � M O, O N O 'T �t - N `p N O� N 00 4-1 O�t 00 r- M S C N � N ^- V') O 00 l� M a', C N � N C r- O ct 00 l M S O N l "t N CIti -� N C N � N > 001-0 o,ON —r-te N N� •-- � O� 00 l O S O N -- l � N o o � � _� O Cl$ U CITY OF PADUCAH, KENTUCKY SINGLE AUDIT SECTION ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2022 CITY OF PADUCAH, KENTUCKY SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2022 Federal Federal Grantor/Pass-Through Grantor/ CFDA Pass -Through Pass -Through Program Title: Number Grantor Number To Subrecipients Expenditures Department of Housing and Urban Development: Direct Programs: Housing Voucher Cluster Section 8 Housing Choice Vouchers 14.871 N/A $ $ 2,083,221 COVID-19 Section 8 Housing Choice Vouchers 14.871 N/A 64,629 Total Housing Voucher Cluster - 2,147,850 Passed -through Kentucky Housing Corporation: Emergency Solutions Grant Program 14.231 N/A 25,579 Passed -through Kentucky Governors Office for Local Development: Community Development Block Grants 14.228 N/A 395,000 400,000 Total Department of Housing and Urban Development 395,000 2,573,429 Department of the Interior Passed -through Kentucky Heritage Council: Historic Preservation Fund Grants -In -Aid 15.904 KY -20-10018 - 9,000 Total Department of the Interior - 9,000 Department of Justice: Direct Programs: Bulletproof Vest Partnership Program 16.607 N/A 4,212 Coronavirus Emergency Supplemental Funding 16.034 N/A - 29,300 Public Safety Partnership and Community Policing Grants 16.710 N/A 139,917 Edward Byme Memorial Justice Assistance Grant Program 16.738 N/A 12,245 Total Department of Justice - 185,674 Department of Transportation: Direct Programs: National Infrastructure Investments 20.933 N/A - 141,113 Passed -through Kentucky Transportation Cabinet: Highway Planning and Construction (6,014) Highway Safety Cluster: State and Community Highway Safety 20.600 PT -21-63 8,105 State and Community Highway Safety 20.600 PT -22-65 17,451 Total Highway Safety Cluster 20.205 N/A 25,556 Total Department of Transportation - 160,655 U.S. Department of the Treasury Passed -through Kentucky Department for Local Government: Coronavirus State and Local Fiscal Recovery Funds 21.027 N/A 402,432 Total U.S. Department ofthe Treasury 402,432 Department of National Endowment for the Humanities: Direct Programs: Promotion of the Arts Partnership Agreements 45.025 N/A 10,000 Total Department of National Endowment for the Humanities - 10,000 Department of Environmental Protection Agency: Passed -through Kentucky Infrastructure Association: Clean Water State Revolving Fund (CWSRF) Cluster: Capitalization Grants for Clean Water State Revolving Funds 66.458 N/A 758,679 Total Department of Environmental Protection Agency - 758,679 Department of Homeland Security: Passed -through Kentucky Division of Emergency Management: Disaster Grants - Public Assistance 97.036 N/A 267,771 Disaster Grants - Public Assistance 97.036 N/A 273,901 Disaster Grants - Public Assistance 97.036 N/A 403,188 Homeland Security Grant Program 97.067 N/A 314,450 Homeland Security Grant Program 97.067 N/A 70,115 Total Department of Homeland Security - 1,329,425 TOTAL EXPENDITURES OF FEDERAL AWARDS S 395,000 $ 5,429,294 See accompanying notes to schedule of expenditures of federal awards. -151- CITY OF PADUCAH, KENTUCKY NOTES TO THE SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED JUNE 30, 2022 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 - Subreciyients: The City of Paducah provided federal awards to subrecipients as follows: Federal CFDA Amount Pro,aram Title Number Provided Four Rivers Recovery Center 14.228 $395,000 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 5.429294 Federal Awards by Fund General Fund $ 407,432 Capital Improvement Fund 1,720,333 Debt Service Fund 758,679 Special Revenue Fund 395,000 Proprietary Fund 2,147,850 Total Federal Awards 5.429294 -152- VKEMPER Vu. CPA GROUPLLP Certified Public Accountants and Consultants 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 GO VERNMENTA UDITING 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, 2022, 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 21, 2022. 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 4't' Street • Suite 300 • Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com -153- 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 21, 2022 -154- �'KEMPER 1i CPA GROUPLLP Certified Public Accountants and Consultants INDEPENDENT AUDITOR'S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY THE UNIFORM GUIDANCE Honorable George Bray, Mayor Members of the Board of Commissioners City of Paducah Paducah, Kentucky Report on Compliance for Each Major Federal Program Opinion on Each Major Federal Program We have audited the City of Paducah's compliance with the types of compliance requirements identified as subject to audit in the OMB Compliance Supplement that could have a direct and material effect on each of the City of Paducah's major federal programs for the year ended June 30, 2022. City of Paducah's major federal programs are identified in the summary of auditor's results section of the accompanying schedule of findings and questioned costs. In our opinion, City of Paducah 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, 2022. Basis for Opinion on Each Major Federal Program We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Our responsibilities under those standards and the Uniform Guidance are further described in the Auditor's Responsibilities for the Audit of Compliance section of our report. We are required to be independent of City of Paducah, Kentucky and to meet our other ethical responsibilities, in accordance with relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on compliance for each major federal program. Our audit does not provide a legal determination of City of Paducah, Kentucky's compliance with the compliance requirements referred to above. Responsibilities of Management for Compliance Management is responsible for compliance with the requirements referred to above and for the design, implementation, and maintenance of effective internal control over compliance with the requirements of laws, statutes, regulations, rules, and provisions of contracts or grant agreements applicable to City of Paducah, Kentucky's federal programs. Auditor's Responsibilities for the Audit of Compliance Our objectives are to obtain reasonable assurance about whether material noncompliance with the compliance requirements referred to above occurred, whether due to fraud or error, and express an opinion on City of Paducah, Kentucky's compliance based on our audit. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards, Governmental Auditing Standards, and the Uniform Guidance will always detect material noncompliance when it exists. 100 South 4th Street • Suite 300 • Paducah, KY 42001 Phone: (270)443-4400 Fax: (270)443-0963 kempercpa.com -155- The risk of not detecting material noncompliance resulting from fraud is higher than for that resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Noncompliance with the compliance requirements referred to above is considered material if there is a substantial likelihood that, individually or in the aggregate, it would influence the judgment made by a reasonable user of the report on compliance about City of Paducah, Kentucky's compliance with the requirements of each major federal program as a whole. In performing an audit in accordance with generally accepted auditing standards, Governmental Auditing Standards, and the Uniform Guidance, we: • Exercise professional judgment and maintain professional skepticism throughout the audit. • Identify and assess the risks of material noncompliance, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding City of Paducah, Kentucky's compliance with the compliance requirements referred to above and performing such other procedures as we considered necessary in the circumstances. • Obtain an understanding of City of Paducah, Kentucky's internal control over compliance relevant to the audit in order to design audit procedures that are appropriate in the circumstances and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of City of Paducah, Kentucky's internal control over compliance. Accordingly, no such opinion is expressed. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and any significant deficiencies and material weaknesses in internal control over compliance that we identified during the audit. Report on Internal Control Over Compliance A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of the internal control over compliance was for the limited purpose described in the Auditor's Responsibilities for the Audit of Compliance section above and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies in internal control over compliance. Given these limitations, during our audit we did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses, as defined above. However, material weaknesses or significant deficiencies in internal control over compliance may exist that were not identified. Our audit was not designed for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, no such opinion is expressed. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of Uniform Guidance. Accordingly, this report is not suitable for any other purpose. kms- o ,1-4p Certified Public Accountants and Consultants Paducah, Kentucky December 21, 2022 -156- CITY OF PADUCAH, KENTUCKY SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2022 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 Section 8 Housing Choice Vouchers 14.871 Capitalization Grants for Water State Revolving Funds 66.458 Disaster Grants — Public Assistance 97.036 8. The threshold used for distinguishing Types A and B programs was $750,000. 9. The City of Paducah, Kentucky did qualify to be audited as a low-risk auditee. Section II — Findings — Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III — Findings and Questioned Costs — Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -157- CITY OF PADUCAH, KENTUCKY SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS YEAR ENDED JUNE 30, 2021 Section II — Findings — Financial Statements Audit There are no findings related to the financial statements which are required to be reported in accordance with Government Auditing Standards. Section III — Findings and Questioned Costs — Major Federal Awards Programs There are no findings or questioned costs related to the major federal programs which are required to be reported in accordance with Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Award (Uniform Guidance). -158-