Document Douglas_doc_0d8b4f0518

CITY OF DOUGLAS, WYOMING Basic Financial Statements For the Year Ended June 30, 2023 (With Independent Auditors’ Report Thereon) ---PAGE BREAK--- TABLE OF CONTENTS INDEPENDENT AUDITORS’ REPORT 1-3 MANAGEMENT DISCUSSION AND ANALYSIS 4-11 BASIC FINANCIAL STATEMENTS: Government-Wide Financial Statements: Statement of Net Position 12 Statement of Activities 13 Governmental Financial Statements: Governmental Funds: Balance Sheet 14 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 15 Statement of Revenues, Expenditures, and Changes in Fund Balances 16 Reconciliation of the Governmental Funds Statement of Revenues, Expenditures, and Changes in Fund Balances to the Statement of Activities 17 Proprietary Funds: Statement of Net Position 18 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds 19 Statement of Cash Flows – Proprietary Funds 20 Fiduciary Funds: Statement of Fiduciary Net Position 21 Statement of Changes in Fiduciary Net Position 22 Notes to Basic Financial Statements 23-49 ---PAGE BREAK--- REQUIRED SUPPLEMENTAL INFORMATION SECTION: Statement of Revenues, Expenditures and Changes in Fund Balance, Budget and Actual – General Fund 50 Schedule of Proportionate Share of the Net Pension Liability Wyoming Retirement System 51 Schedule of Contributions Wyoming Retirement System 52 Schedule of City’s OPEB Liability 53 Schedule of Changes in City’s OPEB 54 SUPPLEMENTAL INFORMATION SECTION: Combining Balance Sheet – Nonmajor Governmental Funds 55-56 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds 57-58 OTHER INDEPENDENT AUDITORS’ REPORT: Report on Internal Control – Government Auditing Standards 59-60 ---PAGE BREAK--- INDEPENDENT AUDITORS’ REPORT ---PAGE BREAK--- CARVER FLOREK & JAMES, CPA’s CERTIFIED PUBLIC ACCOUNTANTS 2246 UNIVERSITY PARK BLVD. • LAYTON, UT 84041 • PHONE (801) 926-1177 • FAX (801) 926-1178 1201 KENSINGTON AVENUE • MISSOULA, MT 59806 • PHONE (406) 728-5539 • FAX (406) 728-5568 33 WEST BRUNDAGE • SUITE 201 • SHERIDAN, WY 82801 MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS' REPORT The Honorable Mayor and Members of the City Council City of Douglas, Wyoming 200 West Grant Street Douglas, Wyoming 82633 Report on the Audit of the Financial Statements Opinions We have audited the financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Douglas, Wyoming (the City), as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. In our opinion, the accompanying financial statements 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, as of June 30, 2023, and the respective changes in financial position and, where applicable, cash flows thereof 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 (GAAS) and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City and to meet our other 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 The City’s management is responsible for the preparation and fair presentation of the 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’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. ---PAGE BREAK--- 2 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 GAAS and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with GAAS and Government Auditing Standards, we:  Exercise professional judgment 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’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’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, pension related schedules, and other post-employment benefit (OPEB) related schedules as listed in the table of contents 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. ---PAGE BREAK--- 3 Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The nonmajor funds combining information is presented for purposes of additional analysis and are not a required part of the basic financial statements. The nonmajor funds combining information is the responsibility of management and were derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the nonmajor funds combining schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated December 31, 2023 on our consideration of the City’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 solely to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the effectiveness of 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 the City’s internal control over financial reporting and compliance. December 31, 2023 Sheridan, Wyoming ---PAGE BREAK--- MANAGEMENT DISCUSSION AND ANALYSIS ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG MANAGEMENT’S DISCUSSION AND ANALYSIS JUNE 30, 2023 As management of the City of Douglas (City), we present to readers of the City’s basic financial statements this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023. We encourage readers to consider the information presented here in conjunction with the City’s financial statements, notes to the financial statements and various supplementary information. FINANCIAL HIGHLIGHTS Government-Wide: The restricted and unrestricted assets of the City exceeded its liabilities at the close of the most recent fiscal year by $164,311,457 (net position). Of this amount, $85,674,675 may be used to meet the government’s ongoing General Fund, and other non-major governmental funds and business-type activity obligations to citizens and creditors. Specific expenditure restrictions are $183,329 for the Perpetual Care Fund and $38,360 for special police projects. The City also has $78,415,093 invested in capital assets, net of debt obligations. The City’s total net position, including all funds, increased by $11,030,509. The City’s total net long-term liabilities increased by $1,751,886 during the current fiscal year. The increase was primarily due to increase of pension and post-retirement liabilities. Fund Basis: As of June 30, 2023, unreserved fund balance for the General Fund was $42,842,224. As of June 30, 2023, the City’s other governmental funds reported combined ending fund balances of $29,968,539 of which all is assigned for equipment replacement or capital projects except for $221,689 which is restricted for police grants and cemetery perpetual care. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City’s basic financial statements. The City’s basic financial statements are comprised of three components: government-wide financial statements, fund financial statements, and notes to the basic financial statements. This report also contains other supplementary information in addition to the basic financial statements. Government-Wide Financial Statements The government-wide financial statements are designed to provide readers with a broad overview of the City’s finances, in a manner similar to a private-sector business. The statement of financial position presents information on all the City’s assets and liabilities, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the net position of the City is improving or deteriorating. ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG The statement of activities presents information showing how the government’s net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods such as revenues pertaining to uncollected taxes or expenses pertaining to earned but unused vacation and sick leave. The government-wide financial statements distinguish functions of the City that are principally supported by taxes and intergovernmental revenues, such as grant revenue (governmental activities), and from other functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). Governmental activities of the City include those related to legislative and legal, general government, public safety, public health, community and cultural, public works and direct assistance to other entities. Business-type activities of the City include those related to water, sewer, sanitation, and solid waste (landfill) utility services. Fund Financial Statements A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All funds of the City can be divided into three categories: governmental funds, proprietary funds and fiduciary funds. Governmental funds are used to account for essentially the same functions reported as governmental activities in the government-wide financial statements. However, unlike the government-wide financial statements, governmental fund financial statements focus on near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating the City’s near-term financing requirements. Because the focus of governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintains several 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 Fund, which is considered a major fund. Data from the remaining governmental 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 statements, located in the other supplementary information section of this report. ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG The City adopts an annual appropriated budget for its funds. A budgetary comparison is provided for each of the City’s major governmental funds to demonstrate compliance with this budget. The budgetary comparison statements for the major governmental funds are in the required supplementary information section of this report. Proprietary funds are generally used to account for operations that provide services to the public on a continuing basis or to internal City departments. Proprietary funds provide the same type of information contained in the business-type activities portion of the government-wide financial statements, only in more detail. The City maintains two different types of proprietary funds, enterprise, and internal service. Enterprise funds are used to report the same functions presented as business type activities in the government-wide financial statements. The City uses enterprise funds to account for its water, sewer, sanitation, and solid waste management (landfill) utility operations. The City reports enterprise operations for the water, sewer, sanitation, and solid waste management (landfill) utility operations. The water, sewer, and landfill funds are considered major funds. Internal Service funds are accounting mechanisms used to accumulate and allocate costs among the City’s various functions. The City uses an internal service fund to account for the operation of the City’s Employee Health Insurance function. Because these services predominantly benefit governmental rather than business- type functions, they are incorporated into governmental activities in the government-wide financial statements. The internal service fund is presented in the proprietary fund financial statements Fiduciary funds are used to account for resources held for the benefit of parties outside the government and consist of Perpetual Care, Deferred Compensation, Visible Memorials, Utility Deposits, and Historic Preservation. Fiduciary funds are not reflected in the accompanying government-wide financial statements because the resources of those funds are not available to support the City’s programs. The accounting used for fiduciary funds is much like that used for proprietary funds. The fiduciary fund financial statements can be found in the basic financial statements section of this report. NOTES TO THE BASIC FINANCIAL STATEMENTS The Notes to the Basic Financial Statements provide additional information and narrative disclosures that are essential to a full understanding of the data provided in the government-wide and fund financial statements. Other information: In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information concerning the City’s budgetary compliance of the General Fund. The combining statements referred to earlier in connection with governmental funds and fiduciary funds are presented immediately following the required supplementary information. ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG OVERVIEW OF FINANCIAL POSITION As noted earlier, financial position may serve over time as a useful indicator of a government’s financial position. In the case of the City, assets exceeded liabilities by $164,311,457 at the close of the most recent fiscal year. A large portion of the City’s financial position (47%) reflects its net investment of $78,415,093 in capital assets (for example, land, buildings, infrastructure, vehicles, and equipment), net of related debt used to acquire those assets and that is still outstanding. The City uses these capital assets to provide services to citizens; consequently, these assets are not available for future spending. Although the City’s investment in its capital ASSETS 2023 2022 2023 2022 Current and other assets 76,128,181 $ 66,725,195 $ 19,626,577 $ 19,634,709 $ Noncurrent assets 39,413,875 38,360,187 39,001,218 38,602,600 Total assets 115,542,056 105,085,382 58,627,795 58,237,309 DEFERRED OUTFLOWS OF RESOURCES Related to pension 1,617,309 747,450 255,264 83,763 Related to post employment 92,013 83,805 - - Total deferred outflows of resources 1,709,322 831,255 255,264 83,763 LIABILITIES Current liabilities 2,860,060 3,165,283 329,770 750,990 Noncurrent liabilities 5,676,877 4,944,514 2,215,306 1,001,314 Total liabilities 8,536,937 8,109,797 2,545,076 1,752,304 DEFERRED INFLOWS OF RESOURCES Related to pension 407,772 666,289 8,913 391,313 Related to post employment 324,282 37,058 - - Total deferred inflows of resources 732,054 703,347 8,913 391,313 NET POSITION Net invested in capital assets 39,413,875 38,360,187 39,001,218 38,052,804 Restricted 221,689 205,680 - - Unrestricted 68,346,823 58,537,626 17,327,852 18,124,651 Total Net Position 107,982,387 $ 97,103,493 $ 56,329,070 $ 56,177,455 $ STATEMENT OF NET POSITION Governmental Activities Business-type Activities ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG assets is reported net of related debt, it should be noted that the resources needed to repay this debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate these liabilities. An additional portion of the City’s financial position, $221,689, represents resources that are subject to external restrictions on how they may be used. The remaining balance of unrestricted financial position in all City funds of $85,674,675 may be used to meet the government’s ongoing obligations to citizens and creditors. Specific expenditure designations apply to the special revenue funds and to much of the capital project funds. At June 30, 2023, the City is able to report positive balances in all three categories of financial position, for the government as a whole and business-type activities. The City’s net position increased $11,030,509 during the current fiscal year. This increase is due to the change in net position of the Governmental Activities of $10,878,894 and an increase in net position of Business –Type activities of $151,615. Mineral taxes, sales taxes, property taxes, franchise fees and other taxes are general revenues used to support overall government functions; therefore, these are not shown as program revenues. Governmental activities increased the City’s net assets by $10,894,575. Key factors of this change in governmental activities is the sales tax revenue increase of $5,709,936 due to the continued strong economy from the energy related activities. The City’s business-type activities consisting of the water, sewer, sanitation, and landfill funds are mainly funded by fees for services. Business-type activities increased the City’s overall financial position by $496,851 for the fiscal year mainly due to a continued strong economy due to the energy related activities. The fund balances of the capital projects funds represent assigned funds to be used for payment of current in- process and future capital projects. The Internal Service Fund has an unrestricted financial position of $603,825 to cover the current costs related to employee health insurance premiums and operating costs. The City maintains agency funds for the assets of the Perpetual Care, Visible Memorials, Utility Deposits, and Historic Preservation. They also maintain a Pension Trust Fund to account for the activity of the Deferred Compensation Plan and the Retirement Health Savings Plan. The City’s investment in capital assets for its governmental and business-type activities for the current fiscal year amounts to $78,415,093 (net of debt obligation). This investment in capital assets includes land, buildings and related systems, improvements, machinery and equipment, park facilities, and infrastructure. Major capital projects in progress during the year included the various water, sewer & street projects, equipment purchases and replacements and building repairs and maintenance. At the end of the current fiscal year, the City had total net long-term obligations outstanding of $8,118,338. Of this amount, $657,952 relates to the Landfill post closure liability and $532,537 for accrued compensated absences. ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG REVENUES 2023 2022 2023 2022 Charges for services 872,778 $ 923,302 $ 6,773,977 $ 6,812,886 $ Operating grants and contributions 776,012 717,986 - - Capital grants and contributions 280,368 177,739 - - Property taxes 17,024,663 708,284 - - General sales and use taxes 846,574 12,100,112 - - Other taxes 1,311,863 1,307,467 - - Unrestricted investment earnings 1,131,122 344,267 279,202 (53,481) Miscellaneous - - 24,776 - Transfers - - - - Total revenues 22,243,380 16,279,157 7,077,955 6,759,405 EXPENSES General government 3,665,966 2,907,067 - - Public safety 2,846,351 2,477,480 - - Streets and public works 1,984,240 2,895,489 - - Culture and recreation 873,347 280,915 - - Cemetery 355,740 339,326 - - Community service 1,623,161 1,341,134 - - Water - - 2,319,049 1,889,355 Sewer - - 1,568,028 1,266,923 Sanitation - - 1,421,350 1,345,318 Landfill - - 1,272,677 1,092,495 Total expenses 11,348,805 10,241,411 6,581,104 5,594,091 Change in net position 10,894,575 6,037,746 496,851 1,165,314 Net position - beginning 97,103,493 91,782,949 56,177,455 55,012,141 Prior period adjustments (15,681) (717,202) (345,236) - Net position - beginning (restated) 97,087,812 91,065,747 55,832,219 55,012,141 Net position - ending 107,982,387 $ 97,103,493 $ 56,329,070 $ 56,177,455 $ STATEMENT OF ACTIVITIES Governmental Activities Business-type Activities ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG REVENUES BY SOURCE 96% 0% 0% 0% 0% 0%4%0% 0% Business-type Activies Charges for services Operating grants and contributions Capital grants and contributions Property taxes General sales and use taxes Other taxes Unrestricted investment earnings Miscellaneous Transfers ---PAGE BREAK--- HOME OF THE JACKALOPE. 101 N. 4 T H STREET I P.O. BOX 1030 I DOUGLAS, WY 82633 [PHONE REDACTED] – PHONE I [PHONE REDACTED] – FAX I WWW.CITYOFDOUGLAS.ORG Economic Factors and Next Year’s Budgets and Rates The City continues to maintain excellent reserve balances as we experience additional demands for services and volatile revenue streams. Additionally, current inflationary costs add to the challenge of funding ongoing expenses and continuing normal service operation. The City remains heavily reliant upon State revenue Sources and has limited opportunities to increase local revenues. Passage of the 1-cent general purpose tax sustains essential services for the city to meet demands and maintain our infrastructure. The City maintains reserves, whether restricted (legally mandated), designated (set by City policy), or unrestricted, in a several funds. The reserve policy for the General Fund is to maintain a 25% operating reserve as a percentage of expenditures; the Health Care Fund is six months of claims and expenses. The Water Fund is to maintain $2 million in reserves per City Ordinance 13.16.010. The Sewer Fund is to maintain $1 million in reserves per City Ordinance 13.44.070; Sanitation’s requirement is $250,000 per City Ordinance 13.64.040, and the Landfill Fund is required to keep $500,000 in reserve per City Ordinance 13.64.045. The City’s total anticipated expenditures for fiscal year 2024 will be approximately $38,556,000. General Fund expenditures are anticipated to be $10,501,185. Special Revenue expenditures are anticipated to be $232,222. Enterprise Funds anticipate expenditures to be $15,198,188 which includes capital expenditures including various water and sewer main replacements. Capital Project Funds anticipate expenditures of $11,068,747. REQUESTS FOR INFORMATION This financial report is designed to provide a general overview of the City of Douglas’s finances for all those with an interest in the government’s finances. Questions concerning any of the information should be addressed to the City Manager or the Administrative Services Director/Treasurer, 101 North 4th Street, PO Box 1030, Douglas, WY 82633. ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF NET POSITION As of June 30, 2023 Governmental Activities Business-type Activities Total ASSETS Current assets: Cash and cash equivalents 28,257,159 $ 6,399,938 $ 34,657,097 $ Investments 44,160,634 12,615,294 56,775,928 Receivables: Taxes 3,275,205 - 3,275,205 Accounts receivable, net 413,748 570,446 984,194 Internal balances (71,461) 27,901 (43,560) Accrued interest 57,042 12,998 70,040 Prepaid expense 35,854 - 35,854 Noncurrent assets: Land 4,835,983 153,290 4,989,273 Construction in progress 392,526 77,605 470,131 Other capital assets, net of accumulated depreciation 34,185,366 38,770,323 72,955,689 Total assets 115,542,056 58,627,795 174,169,851 DEFERRED OUTFLOWS OF RESOURCES Related to pension 1,617,309 255,264 1,872,573 Related to post employment health benefits 92,013 - 92,013 1,709,322 255,264 1,964,586 LIABILITIES Current liabilities: Accounts payable and accrued expenses 1,608,477 250,081 1,858,558 Unearned revenues 1,105,117 - 1,105,117 Current portion of long-term obligations 146,466 79,689 226,155 Long-term liabilities: Noncurrent portion of long-term obligations 219,699 809,348 1,029,047 Post employment health benefits 870,030 - 870,030 Net pension liability 4,587,148 1,405,958 5,993,106 Total liabilities 8,536,937 2,545,076 11,082,013 DEFERRED INFLOWS Related to pension 407,772 8,913 416,685 Related to post employment health benefits 324,282 - 324,282 Total deferred inflows 732,054 8,913 740,967 NET POSITION Invested in capital assets, net of related debt 39,413,875 39,001,218 78,415,093 Restricted for: Police grants 38,360 - 38,360 Cemetery care 183,329 - 183,329 Unrestricted 68,346,823 17,327,852 85,674,675 Total net position 107,982,387 $ 56,329,070 $ 164,311,457 $ Primary Government The notes to financial statements are an integral part of this statement. 12 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF ACTIVITIES Year Ended June 30, 2023 FUNCTIONS/PROGRAMS Expenses Charges for Services Operating Grants and Contributions Capital Grants and Contributions Governmental Activities Business-type Activities Total Governmental activities: General government 3,665,966 $ 695,316 $ 721,939 $ 2,460 $ (2,246,251) $ - $ (2,246,251) $ Public safety 2,846,351 122,897 54,073 93,047 (2,576,334) - (2,576,334) Streets and public works 1,984,240 - - 184,861 (1,799,379) - (1,799,379) Culture and recreation 873,347 26,590 - - (846,757) - (846,757) Cemetery 355,740 27,975 - - (327,765) - (327,765) Community service 1,623,161 - - - (1,623,161) - (1,623,161) Total governmental activities 11,348,805 872,778 776,012 280,368 (9,419,647) - (9,419,647) Business-type activities: Water 2,319,049 2,764,766 - - - 445,717 445,717 Sewer 1,568,028 1,499,083 - - - (68,945) (68,945) Sanitation 1,421,350 1,121,146 - - - (300,204) (300,204) Landfill 1,272,677 1,388,982 - - - 116,305 116,305 Total business-type activities 6,581,104 6,773,977 - - - 192,873 192,873 Total primary government 17,929,909 $ 7,646,755 $ 776,012 $ 280,368 $ (9,419,647) 192,873 (9,226,774) General revenues: Property taxes 17,024,663 - 17,024,663 General sales and use taxes 846,574 - 846,574 Franchise fees 288,706 - 288,706 Severance tax 228,573 - 228,573 Mineral royalties 315,958 - 315,958 Other taxes 478,626 - 478,626 Unrestricted investment earnings 1,131,122 279,202 1,410,324 Miscellaneous - 24,776 24,776 Total general revenues and transfers 20,314,222 303,978 3,593,537 Change in net position 10,894,575 496,851 (5,633,237) Net position - beginning (Restated, Note 16) 97,087,812 55,832,219 152,920,031 Net position - ending 107,982,387 $ 56,329,070 $ 164,311,457 $ Program Revenues Primary Government Net (Expense) Revenues and Changes in Net Position The notes to financial statements are an integral part of this statement. 13 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING BALANCE SHEET GOVERNMENTAL FUNDS As of June 30, 2023 General Fund Street Improvement Fund Other Nonmajor Governmental Funds Total Governmental Funds ASSETS Cash and cash equivalents 14,614,966 $ 7,589,311 $ 5,704,557 $ 27,908,834 $ Investments 26,410,582 11,651,946 5,691,873 43,754,401 Receivables, net General accounts receivable 257,295 - 24,755 282,050 Sales tax 3,219,895 - - 3,219,895 Property tax 55,310 - - 55,310 Due from other governments - - - - Due from other funds - - - - Accrued interest 20,227 24,195 11,052 55,474 Prepaid expense 35,854 - - 35,854 Total assets 44,614,129 $ 19,265,452 $ 11,432,237 $ 75,311,818 $ LIABILITIES Accounts payable 462,369 $ 343,641 $ 327,709 $ 1,133,719 $ Retainage payable - - 14,177 14,177 Accrued wages 176,581 - - 176,581 Due to other funds 27,838 - 43,623 71,461 Unearned revenue 1,105,117 - - 1,105,117 Total liabilities 1,771,905 343,641 385,509 2,501,055 FUND BALANCE Non-spendable 35,854 - - 35,854 Restricted for: Police grants - - 38,360 38,360 Cemetery care - - 183,329 183,329 Assigned for: 4th Street project - - 1,598,436 1,598,436 Equipment replacement - - 727,361 727,361 Capital projects 4,610,000 18,921,811 8,536,167 32,067,978 Unassigned 38,196,370 - (36,925) 38,159,445 Total fund balances 42,842,224 18,921,811 11,046,728 72,810,763 Total liabilities, deferred inflows of resources, and fund balances 44,614,129 $ 19,265,452 $ 11,432,237 $ 75,311,818 $ The notes to financial statements are an integral part of this statement. 14 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING RECONCILIATION OF THE BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION As of June 30, 2023 Total fund balance per Government Funds balance sheet 72,810,763 $ Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in governmental funds. Asset cost and accumulated depreciation is as follows: Asset cost 72,137,472 Accumulated depreciation (32,723,598) 39,413,874 An internal service fund is used by the City's management to charge the costs of employee's health benefits to the individual funds. The assets and liabilities of the internal service fund are included with governmental activities in the government-wide statements, but reported separate from the governmental fund balance sheet. 603,825 Deferred outflows and inflows are not available to pay for current period expenditures and therefore the underlying resources are not reported in the governmental funds. OPEB related - deferred outflows of resources 92,013 OPEB related - deferred inflows of resources (324,282) Pension related - deferred outflows of resources 1,617,309 Pension related - deferred inflows of resources (407,772) 977,268 Long-term liabilities, including bonds payable, are not due and payable in the current period and therefore are not reported as government fund liabilities. Long-term liabilities at year-end consist of: Accrued compensated absences (366,165) Net OPEB liability (870,030) Net pension liability (4,587,148) (5,823,343) Net position of governmental activities 107,982,387 $ The notes to financial statements are an integral part of this statement. 15 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS For the Year Ended June 30, 2023 General Fund Street Improvement Fund Other Nonmajor Governmental Funds Total Governmental Funds REVENUES Taxes 18,159,935 $ - $ - $ 18,159,935 $ Licenses and permits 59,211 - - 59,211 Intergovernmental 1,745,097 - 123,149 1,868,246 Charges for services 659,999 - 3,625 663,624 Fines and forfeitures 19,635 - - 19,635 Miscellaneous revenue 248,553 - 93,055 341,608 Investment earnings 780,386 229,445 121,291 1,131,122 Total revenues 21,672,816 229,445 341,120 22,243,381 EXPENDITURES Current: General government 2,324,066 - - 2,324,066 Public safety 2,295,766 - 95,140 2,390,906 Streets and public works 1,415,784 - - 1,415,784 Culture and recreation 786,974 - - 786,974 Cemetery 348,842 - - 348,842 Community service 1,623,161 - - 1,623,161 Interest - - - - Capital outlay - 1,979,970 1,389,198 3,369,168 Total expenditures 8,794,593 1,979,970 1,484,338 12,258,901 Excess of revenues over (under) expenditures 12,878,223 (1,750,525) (1,143,218) 9,984,480 Other financing sources (uses): Transfers in 4,754 3,000,000 1,719,752 4,724,506 Transfers out (4,819,752) - (4,754) (4,824,506) Total other financing sources (uses) (4,814,998) 3,000,000 1,714,998 (100,000) Net change in fund balance 8,063,225 1,249,475 571,780 9,884,480 Fund balance beginning of year (Restated, Note 16) 34,778,999 17,672,336 10,474,948 62,926,283 Fund balance end of year 42,842,224 $ 18,921,811 $ 11,046,728 $ 72,810,763 $ The notes to financial statements are an integral part of this statement. 16 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING 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, 2023 Net change in fund balances - total governmental funds 9,884,480 $ Amounts reported for governmental activities in the Statement of Activities are different because: Capital outlays are reported in governmental funds as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. This is the amount by which capital outlay exceeds depreciation expense in the period: Capital outlays 2,652,365 Depreciation expense (1,598,678) 1,053,687 An internal service fund is used by the City's management to charge the costs of workers' health insurance and claims to the individual funds. The change in net position of the internal service fund is reported with governmental activities and investment income. (162,558) Some expenses reported in the statement of activities do not require current financial resources and therefore are not reported as expenditures in governmental funds. Compensated absences 4,923 Pension related 115,607 OPEB related (1,564) 118,966 Change in net position of governmental activities 10,894,575 $ The notes to financial statements are an integral part of this statement. 17 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF NET POSITION PROPRIETARY FUNDS As of June 30, 2023 Water Fund Sewer Fund Landfill Fund Sanitation Collection Fund Total Enterprise Funds Internal Service Fund ASSETS Current assets Cash 4,895,498 $ 136,628 $ 637,821 $ 729,991 $ 6,399,938 $ 348,325 $ Investments 7,529,670 2,988,830 1,667,651 429,143 12,615,294 406,233 Receivables, net General accounts receivable 4,112 8,696 50,786 95 63,689 131,699 Utility billing 241,341 143,328 (6,270) 128,358 506,757 - Due from other funds 29,140 2,617 111,375 1,639 144,771 - Accrued interest 5,885 1,951 4,224 938 12,998 1,568 Total current assets 12,705,646 3,282,050 2,465,587 1,290,164 19,743,447 887,825 Noncurrent assets Construction in progress 35,193 42,412 - - 77,605 - Land - - 153,290 - 153,290 - Depreciable assets, net 24,995,991 11,640,956 1,906,742 226,634 38,770,323 - Total noncurrent assets 25,031,184 11,683,368 2,060,032 226,634 39,001,218 - Total assets 37,736,830 14,965,418 4,525,619 1,516,798 58,744,665 887,825 DEFERRED OUTFLOWS OF RESOURCES Pension related 89,268 70,964 57,557 37,475 255,264 - Total deferred outflows of resources 89,268 70,964 57,557 37,475 255,264 - LIABILITIES Current liabilities Accounts payable 108,208 39,153 73,222 7,006 227,589 284,000 Accrued wages 9,134 5,392 4,983 2,983 22,492 - Due to other funds 431 5,064 - 111,375 116,870 - Compensated absences 27,100 18,588 7,451 13,409 66,548 - Notes payable - - 13,141 - 13,141 - Total current liabilities 144,873 68,197 98,797 134,773 446,640 284,000 Noncurrent liabilities Compensated absences 40,650 27,883 11,177 20,114 99,824 - Notes payable - - 51,572 - 51,572 - Net pension liability 491,679 390,859 317,015 206,405 1,405,958 - Landfill liability - - 657,952 - 657,952 - Total noncurrent liabilities 532,329 418,742 1,037,716 226,519 2,215,306 - Total liabilities 677,202 486,939 1,136,513 361,292 2,661,946 284,000 DEFERRED INFLOWS OF RESOURCES Pension related 3,117 2,478 2,010 1,308 8,913 - Total deferred inflows of resources 3,117 2,478 2,010 1,308 8,913 - NET POSITION Net investment in capital assets 25,031,184 11,683,368 2,060,032 226,634 39,001,218 - Unrestricted 12,114,595 2,863,597 1,384,621 965,039 17,327,852 603,825 Total net position 37,145,779 $ 14,546,965 $ 3,444,653 $ 1,191,673 $ 56,329,070 $ 603,825 $ The notes to financial statements are an integral part of this statement. 18 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN NET POSITION PROPRIETARY FUNDS For the Year Ended June 30, 2023 Water Fund Sewer Fund Landfill Fund Sanitation Collection Fund Total Enterprise Funds Internal Service Fund OPERATING REVENUES Charges for services 2,731,543 $ 1,497,350 $ 1,111,853 $ 1,388,982 $ 6,729,728 $ 1,782,007 $ Tap fees 31,850 - - - 31,850 - Other 1,373 1,733 9,293 - 12,399 - Total operating revenues 2,764,766 1,499,083 1,121,146 1,388,982 6,773,977 1,782,007 OPERATING EXPENSES Cost of sales and services: Treatment 495,349 447,845 - - 943,194 - Collection and distribution 564,836 497,993 997,125 1,255,796 3,315,750 - Customer service 130,205 - - - 130,205 - Insurance claims and expenses - - - - - 2,062,437 Administration 285,707 144,308 104,857 104,857 639,729 - Professional services - 39,011 36,564 - 75,575 - Depreciation 842,952 438,871 134,131 60,697 1,476,651 - Total operating expenses 2,319,049 1,568,028 1,272,677 1,421,350 6,581,104 2,062,437 Operating income (loss) 445,717 (68,945) (151,531) (32,368) 192,873 (280,430) NONOPERATING REVENUE (EXPENSES) Investment earnings 154,907 59,938 46,330 18,027 279,202 17,872 Landfill closure costs - - 16,074 - 16,074 - Gain (loss) on disposal of asset 8,702 - - - 8,702 - Total nonoperating revenue (expenses) 163,609 59,938 62,404 18,027 303,978 17,872 Income (loss) before transfers 609,326 (9,007) (89,127) (14,341) 496,851 (262,558) Transfers in - - - - - 100,000 Change in net position 609,326 (9,007) (89,127) (14,341) 496,851 (162,558) Net position - beginning (restated, Note 16) 36,536,453 14,555,972 3,533,780 1,206,014 55,832,219 766,383 Net position - ending 37,145,779 $ 14,546,965 $ 3,444,653 $ 1,191,673 $ 56,329,070 $ 603,825 $ The notes to financial statements are an integral part of this statement. 19 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENTS OF CASH FLOWS - PROPRIETARY FUNDS For the Year Ended June 30, 2023 Water Fund Sewer Fund Landfill Fund Sanitation Collection Fund Total Enterprise Funds Internal Service Fund Cash flows from operating activities: Cash received from customers 2,818,011 $ 1,515,519 $ 1,084,141 $ 1,388,955 $ 6,806,626 $ 1,773,320 $ Cash paid for goods and services (634,539) (541,108) (535,016) (921,495) (2,632,158) (2,062,437) Cash paid for wages and benefits (597,488) (499,824) (395,320) (261,299) (1,753,931) - Cash paid for management fees (272,629) (136,314) (104,857) (104,857) (618,657) - Cash received from other sources 1,373 1,733 9,293 - 12,399 - Cash from interfund services provided - - - - - - Net cash provided (used) by operating activities 1,314,728 340,006 58,241 101,304 1,814,279 (289,117) Cash flow from noncapital financing activities: Cash received for capital grants - - - - - - Transfers from other funds 41,253 33,561 (10,576) 28,364 92,602 100,000 Net cash provided (used) by noncapital financing activities 41,253 33,561 (10,576) 28,364 92,602 100,000 Cash flow from capital financing activities: Principal paid on notes payable - - (13,141) - (13,141) - Interest paid on notes payable - - - - - - Cash provided by (used in) post closure activity - - 16,074 - 16,074 - Purchases of capital assets (1,125,434) (566,291) (183,545) - (1,875,270) - Net cash provided (used)by capital financing activities (1,125,434) (566,291) (180,612) - (1,872,337) - Cash flows from investing activities: Cash received from interest and dividends 154,712 30,931 44,924 17,863 248,430 17,177 Net proceeds (purchases) of investments (6,589) - 24,761 (1,908) 16,264 19,931 Net cash provided (used) by investing activities 148,123 30,931 69,685 15,955 264,694 37,108 Net increase (decrease) in cash and cash equivalents 378,670 (161,793) (63,262) 145,623 299,238 (152,009) Cash and cash equivalents - beginning 4,516,828 298,421 701,083 584,368 6,100,700 500,334 Cash and cash equivalents - ending 4,895,498 $ 136,628 $ 637,821 $ 729,991 $ 6,399,938 $ 348,325 $ Reconciliation of operating income (loss) to net cash provided (used) by operating activities: Operating income (loss) 445,717 $ (68,945) $ (151,531) $ (32,368) $ 192,873 $ (280,430) $ Adjustments to reconcile operating income to net cash provided (used) by operating activities: Depreciation expense 842,952 438,871 134,131 60,697 1,476,651 - Changes in assets and liabilities: Receivables 54,618 18,169 (27,712) (27) 45,048 (8,687) Accounts payable (186,368) (208,069) (16,813) (10,966) (422,216) - Accrued liabilities (9,485) (10,087) (6,366) (4,802) (30,740) - Compensated absences 32,622 18,727 (3,015) 10,143 58,477 - Landfill closure liability - - (1,107) - (1,107) - Pension related items 134,672 151,340 130,654 78,627 495,293 - Net cash provided (used) by operating activities 1,314,728 $ 340,006 $ 58,241 $ 101,304 $ 1,814,279 $ (289,117) $ The notes to financial statements are an integral part of this statement. 20 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS As of June 30, 2023 Pension Trust Funds Visible Memorial Fund Historic Preservation Fund Water Deposit Fund ASSETS Cash and cash equivalents 40 $ 104 $ 21,620 $ 10,289 $ Investments 5,878,207 - - 91,415 Total assets 5,878,247 104 21,620 101,704 LIABILITIES Due to others - 101 22,105 90,234 NET POSITION Restricted for: Pension benefits 5,878,247 - - - Memorials - 3 - - Preservation projects - - (485) - Water deposits - - - 11,470 Total net position 5,878,247 $ 3 $ (485) $ 11,470 $ Custodial Funds The notes to financial statements are an integral part of this statement. 21 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS For the Year Ended June 30, 2023 Pension Trust Funds Visible Memorial Fund Historic Preservation Fund Water Deposit Fund ADDITIONS Contributions 184,426 $ - $ - $ - $ Deposits collected - - - - Investment income (loss) 502,810 - - 2,059 Transfer from General Fund - - 3,650 - Total additions 687,236 - 3,650 2,059 DEDUCTIONS Benefits 749,433 - - - Contributions to projects - - 1,146 - Deposit refunds - - - - Total deductions 749,433 - 1,146 - Net change in net position (62,197) - 2,504 2,059 Net position beginning of year 5,940,444 3 (2,989) 9,411 Net position end of year 5,878,247 $ 3 $ (485) $ 11,470 $ Custodial Funds The notes to financial statements are an integral part of this statement. 22 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 23 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Financial Reporting Entity For financial reporting purposes, the City includes all funds of the City of Douglas, Wyoming. The reporting entity for the City consists of the primary government, organizations for which the primary government is financially accountable, and other organizations for which the nature and significance of its relationship with the primary government are such that its exclusion would cause the reporting entity’s financial statements to be misleading or incomplete. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The primary government is financially accountable if it appoints a voting majority of the organization’s governing body and it is able to impose its will on that organization or there is a potential for the organization to provide specific financial benefits to or burdens on the primary government. The primary government may be financially accountable if an organization is fiscally dependent on the primary government. Although the City has an interest in the Douglas Housing Authority, Douglas Volunteer Fire Department, and the Douglas Community Club, they do not fall within the financial accountability requirements above, and this report does not contain any component units. The City of Douglas, Wyoming provides services authorized by its charter to advance the welfare, health, comfort, safety, and convenience of its populace. The City provides for the public safety of its citizens by providing police and fire protection. The City also maintains the streets, provides water, sewer, sanitation, and landfill services as well as parking, parks, and recreation. The City operates under the Mayor-Council form of government. Basis of Presentation The City’s basic financial statements consist of government-wide statements, including a Statement of Net Position, Statement of Activities, and separate governmental fund financial statements. Government-Wide Financial Statements The statement of net position and the statement of activities display information about the City as a whole. Both the governmental and business-type activities are presented on a consolidated basis by column and are reflected on a full accrual, economic resource basis which incorporates long-term assets, receivables and long-term debt and obligations. These statements include the financial activities of the primary government, except fiduciary funds. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which generally rely on fees and charges for support. The statement of net position presents the financial condition of the governmental activities of the City at year- end. The statement of activities presents a comparison between direct expenses and program revenues for each program or function of the City’s governmental activities. Direct expenses are those specifically associated with a service, program, or department and therefore, are clearly identifiable to a particular function. Program revenues include charges paid by the recipient of the goods or services offered by the program, grants, and contributions that are restricted to meeting the operational or capital requirements of a particular program and interest earned on grants that is required to be used to support a particular program. Revenues, such as taxes, that are not classified as program revenues are presented as general revenues of the City. The comparison of direct expenses with program revenues identifies the extent to which each governmental function is self- financing or draws from general revenues of the City. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 24 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued) Fund Financial Statements Separate fund financial statements are provided for governmental funds and proprietary funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. The following is a brief description of the specific funds used by the City. Governmental Funds Governmental Funds are those through which most governmental functions typically are financed. Governmental fund reporting focuses on the sources, uses, and balances of current financial resources. Expendable assets are assigned to the various governmental funds according to the purpose for which they may be used. Current liabilities are assigned to the fund from which they will be paid. The difference between governmental fund assets and liabilities are reported as fund balance. The following are the City’s governmental funds. Major Governmental Funds: General Fund The General Fund is used to account for all financial transactions of the City not properly accounted for in other funds or account groups. The revenue of the fund is derived mainly from sales and use taxes, other taxes, intergovernmental sources and charges for services with expenditures relating to general government, public safety, public works, culture and recreation, debt payments and capital outlays. Street Improvement Capital Projects Fund The Street Improvement Capital Projects Fund accounts for various financial resources that are received and intended for expenditure of capital outlays. The revenue of the fund consists primarily of transfers from the general fund and federal, state, and local grants. Proprietary Utility Funds: Enterprise Funds The Proprietary Utility Funds record the City’s activities that are operated similar to private business enterprises, where determination of net income is necessary or useful for financial administration. The four proprietary funds of the City are the Water Fund which provides water to the residents of the City; the Sewer Fund which receives and treats wastewater; the Landfill fund which operates the landfill for the city; and the Sanitation Fund which collects garbage. Enterprise funds are accounted for using the accrual basis of accounting. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 25 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued) Internal Service Fund The Internal Service Fund is used to account for the financing of the self-funded health plan provided by the City on a cost reimbursement basis. The internal service fund is accounted for using the accrual basis of accounting. Fiduciary Funds: Fiduciary fund reporting focuses on net position and changes in net position. The agency funds are custodial in nature. The City’s agency funds account for utility deposits collected from customers and refunded at a period in time. The Visible Memorials Fund and Historic Preservation Commission Fund hold funds on behalf of donors of memorial funds and for the projects of the Commission. Pension Trust Fund The pension trust fund accounts for assets held in trust and the receipt, investment, and distribution of deferred compensation and retirement health savings on behalf of current and former employees. Measurement Focus, Basis of Accounting and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Major revenue types, which have been accrued, are revenues from taxes and investments, intergovernmental revenue and charges for services. Grants are recognized as revenue when all applicable eligibility requirements imposed by the provider are met. Governmental fund level financial statements are reported using current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. Measurable and available revenues include revenues expected to be received within 60 days after the fiscal year ends. Expenditures generally are recorded when a fund liability is incurred; however, expenditures related to compensated absences and claims and judgments, are recorded only when the liability has matured, and payment is due. The proprietary funds are accounted for using the accrual basis of accounting as follows: 1. Revenues are recognized when earned, and expenses are recognized when the liabilities are incurred. 2. Current year contributions, administrative expenses and benefit payments, which are not received or paid until the subsequent year, are accrued. Proprietary funds distinguish operating revenues and expenses from non-operating. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 26 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position Cash, Cash Equivalents, and Investments For purposes of the proprietary funds statements of cash flows, the City considers all highly liquid investments (including restricted assets) with a maturity of three months or less when purchased to be cash equivalents. The cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments. Receivables and Allowance for Doubtful Accounts Material receivables in governmental funds and governmental activities include revenue accruals such as sales and use tax, grants and other similar intergovernmental revenues since they are usually both measurable and available. Non-exchange transactions that are collectible but not available are deferred. Interest and investment earnings are recorded when earned only if paid within 60 days since they would be considered both measurable and available at the fund level. The policy of the City has been to retain bad debts on the books until they are proven to be uncollectible. Accounts due exceeding 60 days are sent to collection. Accounts are written off when the City is notified by the collection agency that all collection efforts have been exhausted. The allowance is an estimated percent of the accounts sent to collection. Utility fund customer accounts receivable and other miscellaneous accounts receivable in the proprietary fund are recorded at the amount the City expects to collect on balances outstanding. Receivables have been reported net of the allowance for uncollectible accounts. The allowance is estimated based on prior experience. The allowance for uncollectible accounts as of June 30, 2023 is $21,539. Prepaid Expenses Certain prepaid expenses exist year to year depending on the timing of payments to various contracts and services. Therefore, when payment is made and/or contracts overlapping fiscal year, a prepaid asset is created. The most common types of expenditures meeting this stipulation is the payment of insurance, technology services or maintenance contracts. Capital Assets and Depreciation Capital assets, which include property, plant, equipment and infrastructure assets roads, bridges, sidewalks and similar items) are reported in the applicable governmental or business type activity columns in the government-wide financial statements. All capital assets are recorded at cost if purchased, or at fair market value as of the date of the gift if received as a donation. The City maintains a capitalization threshold of $5,000 for buildings, site improvements, and equipment and vehicles. Improvements are capitalized; the costs of normal maintenance and repairs that do not add to the value of the asset or materially extend an asset’s life are not. Interest incurred during the construction of capital assets utilized by the enterprise funds is also capitalized. Starting July 1, 2003, the governmental funds began capitalizing infrastructure assets. Under the provisions of the Governmental Accounting Standards Board, the City estimated the value of infrastructure from the prior years. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 27 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued) Major outlays for capital assets and improvements are capitalized as projects are constructed. Street infrastructure assets are entered into the system on a network basis since these assets consist of several different components of road and street construction. Capital assets are defined by the City as assets with an estimated useful life in excess of one year with individual costs over $5,000. All property, plant and equipment of governmental or business type activities are depreciated using the straight- line method with the following estimated useful lives: Classes of Assets Useful Life Buildings and improvements 5-40 years Equipment and machinery 5-10 years Infrastructure 5-40 years Transportation equipment 5-10 years In the governmental fund financial statements, capital purchases are accounted for as capital outlay expenditures. Compensated Absences It is the City’s policy to permit employees to accumulate a limited amount of earned and unused vacation and sick leave, which will be paid to employees upon separation from the City’s service. In governmental funds, the cost of vacation and sick leave is recognized when payments are made to employees. The long-term obligation is recorded and expense recognized as the leave is earned in the governmental activities and proprietary funds. Accrued Liabilities and Long-Term Obligations All payables, accrued liabilities and long-term obligations are reported int the government-wide financial statements and all payables, accrued liabilities, and long-term obligations payable from enterprise funds are reported on the enterprise fund financial statements. In general, governmental fund payables and accrued liabilities that, once incurred, are paid in a timely manner and in full from current financial resources are reported as obligations of the funds. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 28 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued) Deferred Inflows/Outflows of Resources In addition to assets, the statement of financial position reports a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period and so will not be recognized as an expense or expenditure until then. In addition to liabilities, the statement of net position will report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period and so will not be recognized as an inflow of resources (revenue) until then. Both deferred inflows and outflows are reported in the statement of net position or fund balance sheet, but are not recognized in the financial statements as revenues, reduction of revenues, expenses, and reduction of liabilities or increase as assets until the period(s) to which they related. The City reports the following deferred inflows and outflows of resources: Unavailable revenues and advance collection of revenues – unavailable revenue and advance collection of revenues is reported in the governmental funds’ balance sheet. The government-wide statement of net position, property tax revenue is reported as a deferred inflow of resources in the year the taxes are levied. The government funds report excess taxes collected as an outflow of resources in the period that the amounts are determined. In the government-wide statement of net position, the amount of excess taxes collected is reported and due to others and in the government-wide statement of activities as a reduction of revenue. Pension and OPEB related amounts – In the government-wide and proprietary fund statements of net position, a deferred outflow or deferred inflow of resources is reported for the unrecognized items not yet charged to pension and OPEB expense related to the net pension and OPEB liabilities. This includes the unamortized portion of the net difference between projected and actual earnings on plan investments and other differences between expected and actual experience. Deferred outflows for the net difference between projected and actual investment earnings are recognized over time, while the deferred inflows or deferred outflows for the differences between expected and actual experience for economic/demographic assumptions are recognized over the remaining service life for all active and inactive members. (the remainder of the page was intentionally left blank) ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 29 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued) Equity Classifications 1. Government-Wide and Proprietary Fund Financial Statements: Equity is classified as net position and displayed in three components: a. Invested in capital assets, net of related debt – Consists of capital assets including restricted capital assets, net of accumulated depreciation and reduced by the outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. b. Restricted net position – Consists of net position with constraints placed on the use either by external groups such as creditors, grantors, contributors, or laws or regulations of other governments, or law through constitutional provisions or enabling legislation. c. Unrestricted net position – All other net positions that do not meet the definition of “restricted” or “invested in capital assets, net of related debt”. 2. Governmental Fund Financial Statements: Governmental fund equity is classified as fund balance. The City reports fund balance in the governmental fund financial statements in one of the following four categories: a. Non-Spendable Fund Balances – These fund balances are the net balance of assets and liabilities that are legally or contractually restricted and include items such as prepaid items, and other items that are not expected to be converted to cash. b. Restricted Fund Balances – These fund balances are the net balance of assets and liabilities that are externally imposed. These are grants or other funds that are restricted by the debt covenants, grantor, contributor, or by laws or regulations of external governments. In general, these include legally enforceable requirements that the resources be used only for specific purposes stipulated in the grant, debt covenant, or by law. c. Assigned Fund Balances – These fund balances are amounts that are intended to be used for a specific purpose. Intent can be expressed by the governing body or by an official or body to which the governing body delegates the authority. d. Unassigned Fund Balances – These fund balances represent amounts that have not been restricted, committed or assigned to a specific purpose. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 30 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Assets, Liabilities and Net Position (Continued) Internal and Inter-Fund Balances and Activities Exchange transactions between funds are reported as revenues in the seller funds and as expenditures/expenses in the purchaser funds. Flows of cash or goods from one fund to another without a requirement for repayment are reported as interfund transfers. Interfund transfers are reported as other financing sources/uses in governmental funds. Government-Wide Financial Statements: Inter-fund activity and balances, if any, are eliminated or reclassified in the government-wide financial statements as follows: a. Internal balances – Amounts reported in the fund financial statements as inter-fund receivables and payables are eliminated in the governmental and business-type activities columns of the statement of net assets, except for the net residual amounts due between governmental and business-type activities, which are reported as internal balances. b. Internal activities – Amounts reported as inter-fund transfers in the fund financial statements are eliminated in the government-wide statement of activities except for the net amount of transfers between governmental and business-type activities, which are reported as transfers. Property Taxes The City is permitted by Wyoming Statutes to levy up to eight mills of the assessed valuation in the City. The City has levied eight mills in the current year. The City levies taxes on assessed property through Converse County, who act as the agents to levy and collect property tax within the county. The taxes are levied on the assessed valuation of the prior year according to the tax calendar below. Collections are distributed after the end of each month. Consequently, the vast majority of taxes have been levied and collected within the City’s fiscal year. Assessed valuation and tax levies are subject to adjustment for prior years (rebates and supplemental), as controlled by the County or State. The City does not adjust or record estimates for these adjustments, as they are adjusted to current year tax receipts when they are approved. The tax calendar is as follows: August 10 Taxes are levied and become an enforceable lien on properties. September 1 First of two equal installment payments is due. November 10 First installment is delinquent. March 1 Second installment is due. May 10 Second installment is delinquent. Under GASB Standards, a receivable can be recorded at the earliest of the date of the assessment or the date a lien is placed on the property. Neither of these items were deemed to occur prior to June 30th for the upcoming 2023 levy; therefore, the levy of August 2022 included in the current fiscal year is the basis for the receivable. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 31 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Use of estimates The preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America (GAAP) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results may differ from those estimates. The estimate of pension liabilities is especially significant to the City. It is reasonably possible that this estimate will change within one year of the date of the financial statements due to one or more future events. The effect of the change could be material to the financial statements and could result in a loss. 2. STEWARDSHIP, COMPLIANCE, AND ACCOUNTABILITY Formal budgetary integration is employed as a management control device during the year for all funds and annual budgets are adopted on a basis consistent with accounting principles generally accepted in the United States of America. The City Manager submits an annual budget to the City Council in accordance with the City of Douglas Municipal Code and the Wyoming Municipal Fiscal Procedures Act. In June, the City Council adopts annual fiscal year appropriation budgets for all funds. All unencumbered appropriations lapse following the close of the budget year to the extent they are not expended. Encumbered appropriations are generally reappropriated in the ensuing year’s budget. Legal spending control for City monies is at the activity level within each department and individual fund. The City Council may amend the budget after it is approved. Management monitors expenditures at budgetary line item levels within each fund to enhance the accounting control system and may amend the budget at this level as long as the activity level budget is maintained. The City’s procedures for establishing the budget each year are as follows:  During March and April, the City’s Manager and Treasurer, compute, estimate, and review information to prepare the proposed budget.  The resolution appropriating money for the annual budget is submitted to the City Council at regular meetings in June of each year.  Final budget hearings are held no later than the third Tuesday of June’s council meeting, at which time the budget is legally enacted through the passage of the resolution for the fiscal year beginning July 1 each year.  During the year, the City monitors the budget and amends through a beget hearing when necessary. The City is reporting financial position, results of operations, and changes in fund balance/retained earnings on the basis of generally accepted accounting principles (GAAP). The City is in violation of Wyoming Statute 16-4-108 “No officer or employee of a municipality shall make any expenditure or encumbrance in excess of the total appropriation for any department. The budget officer shall report to the governing body any expenditure or encumbrance made in violation of this subsection.” While the City is in violation of this statute, the amount of the over expenditure is not material to the financial statements as a whole. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 32 3. INVESTMENTS Investments are carried at fair value. The City measures and records its investments using fair value measurement guidelines established by generally accepted accounting principles. These guidelines recognized a three-tiered fair value hierarch as follows: Level 1: Quoted prices for identical investments in active markets; Level 2: Observable inputs other than quoted market prices; and, Level 3: Unobservable inputs. The following table sets forth the weighted average maturities of each investment type as well as the respective credit risk rating of the investments: Investment Type Fair Value Fair Value Measurement Level Credit Risk Rating Weighted Average Maturity in Years Primary Government Certificates of Deposit - Peaks Investment Management 5,688,782 $ Level 2 Unrated 1.23 Certificates of Deposit - Converse County Bank 27,448,845 Level 2 Unrated 0.69 Certificates of Deposit - Points West Community Bank 13,284,492 Level 2 Unrated 1.31 Mortgaged Backed Securities 5,185,606 Level 1 AA+ 3.15 US Treasury Notes 1,129,401 Level 1 AAA 1.77 WyoStar 511,505 Level 1 Unrated N/A Wyoming Government Investment Fund 243,249 Level 1 Unrated N/A Wyoming Class 3,255,721 Level 1 Unrated N/A Money Market 28,327 Level 1 Unrated N/A Total 56,775,928 $ Fiduciary Funds Mutual Funds 5,782,128 $ Level 1 NA NA Money Market 132 Level 1 NA NA Guaranteed Interest Accounts 95,948 Level 2 Unrated N/A Certificates of Deposit - Points West Community Bank 91,414 Level 2 Unrated 1.31 Total 5,969,622 $ Credit Risk - Credit risk is the risk that an insurer or other counterparty to an investment will not fulfill its obligations. This risk is generally measured by the assignment of a rating by a nationally recognized statistical rating organization as shown in the table above. Interest Rate Risk - Interest rate risk is the risk that changes in interest rate will adversely affect the fair value of an instrument. The City’s policy is to review the portfolio on an ongoing basis for changes in effective yields and compare those yields to those of specific investments to ensure reasonable rates are being achieved. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 33 3. INVESTMENTS (Continued) Custodial Credit Risk - Custodial credit risk is the risk that, in the event of a failure of the counterparty to a transaction, the City will not be able to recover the value of the investments or collateral securities that are in possession of an outside party. The City’s policy for custodial credit risk is to have all funds on deposit collateralized at a level of 102 percent of deposits including accrued interest or higher if required by law. Investments are held in safekeeping by external custodians in the City’s name. 4. CAPITAL ASSETS Capital asset activity related to governmental and business-type activities for the year ended June 30, 2023 was as follows: Balance Balance June 30, 2022 Increase June 30, 2023 Governmental Activities: Capital assets not being depreciated: Construction in progress 2,118,433 $ 1,606,317 $ (3,332,224) $ 392,526 $ Land 4,835,983 - - 4,835,983 Total assets not being depreciated 6,954,416 1,606,317 (3,332,224) 5,228,509 Depreciable capital assets: Buildings and Improvements 22,106,315 190,970 - 22,297,285 Transportation Equipment 4,149,710 194,045 (23,854) 4,319,901 Infrastructure 32,245,002 3,872,740 (3,713) 36,114,029 Other Equipment 4,057,231 120,518 - 4,177,749 Total assets being depreciated 62,558,258 4,378,273 (27,567) 66,908,964 Accumulated depreciation for: Buildings and Improvements (3,248,905) (543,986) (3,792,891) Transportation Equipment (3,446,488) (254,065) 23,854 (3,676,699) Infrastructure (21,805,015) (473,257) 3,713 (22,274,559) Other Equipment (2,652,079) (327,370) (2,979,449) Total accumulated depreciation (31,152,487) (1,598,678) 27,567 (32,723,598) Capital assets being depreciated, net 31,405,771 2,779,595 - 34,185,366 Governmental activities capital assets, net 38,360,187 $ 39,413,875 $ Decrease (the remainder of the page was intentionally left blank) ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 34 4. CAPITAL ASSETS (Continued) Balance Balance June 30, 2022 Increase June 30, 2023 Business-Type Activities: Capital assets not being depreciated: Construction in Progress 2,473,120 $ 1,421,971 $ (3,817,486) $ 77,605 $ Land 153,290 - - 153,290 Total assets not being depreciated 2,626,410 1,421,971 (3,817,486) 230,895 Depreciable capital assets: Buildings and Improvements 17,564,321 102,544 - 17,666,865 Transportation Equipment 1,633,936 - - 1,633,936 Infrastructure 36,053,070 4,001,031 (58,557) 39,995,544 Other Equipment 3,061,251 167,210 - 3,228,461 Total assets being depreciated 58,312,578 4,270,785 (58,557) 62,524,806 Accumulated depreciation for: Buildings and Improvements (10,129,267) (359,367) - (10,488,634) Transportation Equipment (1,304,837) (79,157) (1,383,994) Infrastructure (8,678,715) (836,727) 58,557 (9,456,885) Other Equipment (2,223,569) (201,401) (2,424,970) Total accumulated depreciation (22,336,388) (1,476,652) 58,557 (23,754,483) Capital assets being depreciated, net 35,976,190 2,794,133 - 38,770,323 Business-type activities capital assets, net 38,602,600 $ 39,001,218 $ Decrease Depreciation expense for the fiscal year ended June 30, 2023, was charged to the following activities in the statement of activities. Governmental Activities: General government $ 1,002,146 Public safety 206,217 Public works 390,315 Culture and recreation - Total depreciation expense - governmental activities $ 1,598,678 Business-Type Activities Water $ 842,952 Sewer 438,871 Sanitation 60,697 Landfill 134,132 Total depreciation expense - business-type activities $ 1,476,652 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 35 5. INTERFUND TRANSFERS Transfers were used to move cash to the fund for which statute or budget requires the expenditure to be made and to use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The major governmental fund transfers to nonmajor government funds were for capital improvement projects. The primary government’s operating transfers for the year ended June 30, 2023, were as follows: Transfers from other funds Transfers to other funds Governmental funds: General fund 4,754 $ 4,819,752 $ Capital projects fund 3,000,000 - Non-major funds 1,719,752 4,754 Total governmental funds 4,724,506 4,824,506 Proprietary funds: Internal service fund 100,000 - Total proprietary funds 100,000 - Total interfund activity 4,824,506 $ 4,824,506 $ (the remainder of the page was intentionally left blank) ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 36 6. NOTES PAYABLE The following is a summary of long-term liability transactions for the City for the year ended June 30, 2023: Balance Balance Due Within June 30, 2022 Borrowings Repayments June 30, 2023 One Year Governmental Activities: General Fund Employee compensated absences 371,088 $ - $ 4,923 $ 366,165 $ 148,435 $ Other post-employment benefits 1,147,482 - 277,452 870,030 - Net pension liability 3,574,379 1,012,769 - 4,587,148 - Total governmental activities 5,092,949 $ 1,012,769 $ 282,375 $ 5,823,343 $ 148,435 $ Business-Type Activities: Employee compensated absences 179,826 $ 10,231 $ 23,685 $ 166,372 66,548 $ Note payable 77,854 - 13,141 64,713 13,141 Landfill liability 659,059 * - 1,107 657,952 - Net pension liability 356,764 1,049,194 - 1,405,958 - Total business-type activities 1,273,503 1,059,425 37,933 2,294,995 79,689 Total long-term obligations 6,366,452 $ 2,072,194 $ 320,308 $ 8,118,338 $ 228,124 $ * Restated, please see note 16 for further details Employee compensated absences Full time non-uniformed personnel are entitled to vacation leave depending on the length of service. Annual leave can be accumulated up to 320 hours. Vacation hours accumulated in excess of the maximum are forfeited. Full time uniformed personnel receive additional vacation hours in lieu of holidays at a rate of 3.08 hours per pay period. Annual leave can be accumulated up to 352 hours with any amounts accumulated in excess of the maximum being forfeited. Note payable The landfill closure loan through the Wyoming Office of State Lands and Investments originated September 20, 2018 with an original loan amount of $131,410. The maturity date of the loan is December 1, 2027. The loan has a 0% interest rate with required annual payments of $13,141. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 37 6. NOTES PAYABLE (Continued) Principal payments due on long-term debt for the years ending June 30, are as follows: Year Principal 2024 13,141 2025 13,141 2026 13,141 2027 13,141 2028 12,149 64,713 $ 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM The City employees participate in either the Public Employee Pension Plan, or the Law Enforcement Pension Plan within the Wyoming Retirement System (WRS or the Plan), which is a multiple employer cost sharing defined benefit plan. GASB standards require that the City recognize a liability for its proportionate share of the net pension liability. This proportion is required to be determined on a basis that is consistent with the manner in which contributions to the plan are determined. The City derived their portion of the net pension liability by applying the actual contribution as a percentage of total contributions to the Plan. In addition to reporting the City’s share of the net pension liability, deferred inflows and deferred outflows on the statement of net position and the related expense on the statement of activities, this standard requires the City to present two additional schedules in the required supplementary information section of this report. These two additional schedules are referred to as: Schedule of Proportionate Share of the Net Pension Liability and the Schedule of Contributions. Significant Accounting Policies For purposes of measuring the net pension liability, deferred outflows of resources and pension expense, this information has been determined using the same basis as reported by WRS. Benefit payments are recognized when due and payable in accordance with benefit terms and investments are reported at fair value. General Information about the Plans Public Employee Pension Plan - An actuarial valuation of the Plan’s assets and net pension liability is performed annually. At the date of the most recent actuarial valuation, January 1, 2023, the fiduciary net position as a percentage of total pension liability decreased from 86.03 percent on January 1, 2022 to 75.47 percent on January 1, 2023. The net pension liability as a percentage of covered payroll increased from 83.78 percent to 151.36 percent as of January 1, 2022, and 2023, respectively. The net pension liability was $2.73 billion as of January 1, 2023 compared to $1.52 billion as of January 1, 2022. This is an increase from the prior year. Law Enforcement Pension Plan – An actuarial valuation of the Plan’s assets and net pension liability is performed annually. At the date of the most recent actuarial valuation, January 1, 2023, the fiduciary net position as a percentage of total pension liability decreased from 75.62 percent on January 1, 2022 to 70.30 percent on January 1, 2023. The net pension liability as a percentage of covered payroll increased from 171.27 percent to 211.06 percent as of January 1, 2022, and 2023, respectively. The net pension liability was $340.65 million as of January 1, 2023 compared to $284.5 million as of January 1, 2022. This is an increase from the prior year. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 38 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM (Continued) Determination of Tier 1 versus Tier 2 Employees - Public Employee Plan Tier 1 employees are those whose first contribution to the Plan is before September 1, 2012; whereas, Tier 2 employees are those whose first contribution to the Plan is after September 1, 2012. Vesting Participants are fully vested within the Plan after the equivalent of four years of service for the Public Employee and Law Enforcement Plans. Contributions As a condition of participation in the Plan, employers and/or employees are required to contribute certain percentages of salary and wages as authorized by Wyoming State Statute and specified by the WRS Board. Contributions are actuarially determined as an amount that is expected to finance the cost of benefits earned by employees during the year, with an additional amount to finance any unfunded actuarial accrued liability. The statutorily required contribution rate for the year ended June 30, 2023 was 18.62 percent. The Law Enforcement Pension Plan requires a contribution of 17.2 percent of eligible wages. Benefits – Public Employee Pension Plan The Public Employees Plan provides retirement, disability and death benefits according to predetermined formulas and allows retirees to select one of seven optional methods for receiving benefits, including two joint and survivor forms of benefits: a 100 percent joint and survivor annuity, and a 50 percent joint and survivor annuity. The benefit amounts under these options are determined on an actuarially equivalent basis. Any cost of living adjustment (COLA) provided to retirees must be granted by the State Legislature. In addition, a cost of living adjustment will not be approved by the legislature unless the plan is 100 percent funded after the COLA is awarded. Employees terminating prior to normal retirement can elect to withdraw all employee contributions plus accumulated interest through date of termination or, if they are vested, they may elect to remain in the Plan and be eligible for unreduced retirement benefits at age 60 (Tier 1 employee) or 65 (Tier 2 employee). Tier 1, the Plan allows for normal retirement after four years of service and attainment of age 60. Early retirement is allowed provided the employee has completed four years of service and attained age 50 or 25 years of service but will result in a reduction of benefits based on the length of time remaining to age 60. Tier 2, the Plan allows for normal retirement after four years of service and attainment of age 65. Early retirement is allowed provided the employee has completed four years of service and attained age 55, or 25 or more years of service but will result in a reduction of benefits based on the length of time remaining to age 65. All employees may also retire upon normal retirement on the basis that the sum of the member’s age and service is at least 85. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 39 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM (Continued) Benefits – Law Enforcement Pension Plan The Plan statutorily provides retirement, disability and death benefits according to predetermined amounts determined by salary, age and years of service of the participant. Any cost of living adjustment provided to retirees must be granted by the State Legislature. In addition, a cost of living adjustment will not be approved by the legislature unless the plan is 100 percent funded after the COLA is awarded. Participants may withdraw from the Plan at any time and receive refunds of participant contributions plus accumulated interest. Actuarial Assumptions An actuarial valuation of each WRS defined benefit plan is performed annually. The funded status of each plan is shown in the Schedules of Funding Progress, which is located in the Actuarial section of the WRS ACFR. For all plans except the Paid Firemen’s Pension Plan A, beginning July 1, 2012 all future COLA’s must be granted by the State Legislators. In addition, the WRS board cannot recommend the COLA unless the plan is considered actuarially sound and the unfunded liability must not drop below 100% after the award of the COLA. The results of the actuarial valuation are dependent upon the actuarial assumptions used. Actual results can and almost certainly will differ, as actual experience deviates from the assumptions. Even seemingly minor changes in the assumptions can materially change the liabilities, calculated contributions rates and funding periods. The long-term expected rate of return on pension plan investments was determined using a building-block method in which expected future real rates of return (expected arithmetic returns, net of pension plan investment expense and inflation) are developed for each major asset class. These real rates of return 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. For each major asset class that is included in the Plan’s target asset allocation as of January 1, 2023 the best estimates are summarized in the following table: Asset Class Target Allocation Arithmetic Real Return Geometric Real Return Cash 0.50% 0.32% 0.30% Gold 1.50% 0.72% 2.34% Fixed income 20.00% 4.05% 3.59% Equity 51.50% 9.00% 7.09% Marketable alternatives 16.00% 6.02% 5.14% Private markets 10.50% 7.67% 6.05% Total 100.00% 7.23% 5.86% ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 40 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM (Continued) Pension Liabilities, Deferred Outflows and Deferred Inflows The net pension liability was measured as of December 31, 2022 and the total pension liability used to calculate the net pension liability was determined by an actuarial valuation as of January 1, 2023. The City’s proportion of the net pension liability was based on the City’s share of contributions to the Plan relative to the total contributions of all participating Plan members, the following table presents the changes in the City’s proportion as compared to the prior year: Plan Name 2023 2022 Increase (Decrease) Public Employee Pension Plan 0.142252% 0.145940% (0.000037) Wyoming Law Enforcement Pension Plan 0.618113% 0.599553% 0.000186 Proportionate Share of the Net Pension Liability (The City's Percentage of total Plan contributions) At June 30, 2023, the composition of the City’s net pension liability is as follows: Net Pension Liability Governmental Activities: Public Employee Plan 2,481,519 $ Law Enforcement Plan 2,105,629 Total 4,587,148 $ Business-Type Activities: Water, Public Employee Pension 491,679 $ Sewer, Public Employee Pension 390,859 Landfill, Public Employee Pension 317,015 Sanitation, Public Employee Pension 206,405 Total 1,405,958 $ (the remainder of the page was intentionally left blank) ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 41 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM (Continued) At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Public Employee Pension Plan Law Enforcement Pension Plan Total Pension expense (revenue) 309,405 $ 404,855 $ 714,260 $ Deferred outflows of resources Difference between expected and actual experience 19,495 $ 49,718 $ 69,213 $ Changes of assumptions 104,330 872,024 976,354 Net difference between projected and actual earning on pension plan investments 334,637 147,780 482,417 Contributions subsequent to the measurement date 247,343 97,246 344,589 Total deferred outflows of resources 705,805 $ 1,166,768 $ 1,872,573 $ Deferred inflows of resources Difference between expected and actual experience 24,644 $ 66,402 $ 91,046 $ Changes of assumptions - 325,639 325,639 Net difference between projected and actual earning on pension plan investments - Total deferred inflows of resources 24,644 $ 392,041 $ 416,685 $ The City reported $247,343 and $97,246 for the Public Employee Plan and Law Enforcement Plan respectively, as deferred outflows of resources related to the pension resulting from the City's 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 of resources related to the pension will be recognized in pension expense as follows: Deferred Outflows of Resources Deferred Inflows of Resources Deferred Outflows of Resources Deferred Inflows of Resources 2023 (93,062) $ (10,536) $ 369,472 $ (174,692) $ 2024 73,121 (10,536) 435,362 (113,730) 2025 116,641 (3,572) 116,195 (103,619) 2026 361,762 148,493 458,462 $ (24,644) $ 1,069,522 $ (392,041) $ Public Employee Plan Law Enforcement Plan ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 42 7. PARTICIPATION IN THE WYOMING RETIREMENT SYSTEM (Continued) Sensitivity of the Proportionate Share of the Net Pension Liability to Changes in the Discount Rate The following table sets forth the City’s proportionate share of the net pension liability calculated using the discount rate of 6.80 percent for the Public Employee Plan, and the Law Enforcement Plan. This table also presents what would be if it were calculated using a discount rate that is both 1 percentage point higher and lower than the current rate: Plan Name 1% Decrease Discount Rate 1% Increase Public Employee Plan 5,740,407 $ 3,887,477 $ 2,351,899 $ Law Enforcement Plan 3,169,092 2,105,629 1,250,826 Total 8,909,499 $ 5,993,106 $ 3,602,725 $ Other Detailed Information For more detailed information regarding the Plan see the separately issued 2022 Wyoming Retirement System Comprehensive Annual Financial Report which is available at http://retirement.state.wy.us/default.aspx . 8. POST EMPLOYMENT HEALTH BENEFITS (OPEB) PLAN To comply with the Governmental Accounting Standards Board, the City is required to have an actuarial valuation of the post-retirement benefit plan. The net result of which is to identify the actuarial accrued liability, the annual required contribution, and the net OPEB obligation. The retiree benefits offered by the City included in this actuarial valuation include the self-funded medical benefit plan. Currently, the retiree benefits are subsidized by the city based on age and years of service. Plan Description The City participate in a single-employer defined benefit postemployment healthcare plan, the Retirees Health Insurance Plan. The City Council has the authority for establishing and amending the plan. This plan does not issue a separate report. A retiree is eligible for coverage under the group insurance plan at premium rates established by the City provided the reitree has had medical coverage in effect under the group insurance plan at the time of retirement and has accumulated 75 points (service plus age) at retirement. The plan is considered an "Other Post - Employment Benefit" (OPEB). The plan is administered through a non-qualifying trust per paragraph 4, item of the Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Required Contributions. Contributions are required for both retiree and dependent coverage up to member age 65. The City is currently providing a subsidy to offset the retiree’s contribution for the medical insurance program. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 43 8. POST EMPLOYMENT HEALTH BENEFITS (OPEB) PLAN (Continued) The current contribution amounts are provided here: Points at Retirement % Paid by the Retiree 75 50% 76 45% 77 40% 78 35% 79 30% 80 25% 81 20% 82 15% 83 10% 84 5% 85+ 0% As of June 30, 2023, there were 55 fully eligible active participants and 2 retirees receiving benefit payments. The actuarial valuation assumes the use of the Entry Age method of valuation with amortization on a level dollar basis. The City finances the program on a “pay-as-you-go” basis. The City Council has the authority for establishing and amending the funding policy. The post-employment plan is considered an unfunded plan and is administered per Governmental Accounting Standards Board (GASB) Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. OPEB Liability and Deferred Outflows/Inflows Related to OPEB The City’s total OPEB liability of $870,030 was measured as of June 30, 2023, and was determined by an actuarial valuation as of that date. The table below shows the cumulative amounts to be shown as Deferred Outflows and Inflows of Resources. Changes in Total OPEB Liability related to the difference in actual and expected experience, or changes in assumptions regarding future events, are recognized in OPEB Expense over the expected remaining service life of all employees (active and retired) in the postretirement plan. Differences in projected and actual earnings over the measurement period are recognized over a 5-year period. Amounts not yet recognized are summarized below: Deferred Outflows of Resources Deferred Inflows of Resources Differences between expected and actual experience - $ (324,282) $ Changes in assumptions 92,013 - 92,013 $ (324,282) $ ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 44 8. POST EMPLOYMENT HEALTH BENEFITS (OPEB) PLAN (Continued) Contributions subsequent to the Measurement Date may be recognized as a reduction to the Net OPEB Liability. The amount is not known as of the date of this report. Subsequent to the Measurement Date, the following amounts will be recognized in OPEB Expense in the upcoming years: Year Ended June 30, Net Deferred Outflows/Inflows 2024 (39,624) $ 2025 (39,624) 2026 (39,624) 2027 (43,692) 2028 (49,787) Thereafter (19,918) (232,269) $ Actuarial Assumptions and Other Inputs The total OPEB liability in the July 1, 2022 actuarial valuation was determined using the following actuarial assumptions and other inputs, applied to all periods including in the measurements, unless otherwise specified: To select assumptions to be used in the valuation, a number of factors are considered. These factors include the level of benefits provided by the plan, the ages at which these benefits become available, recent experience of the group, experience of employees in the Wyoming Retirement System (WRS), the insights and observations of the administration, and the actuary's best estimate of the likelihood of certain events, given experience with other plans under similar circumstances. It was not possible to develop reasonable pre-retirement decrement assumptions for withdrawal, mortality and disability rates based on the experience of the City due to its size. To obtain more reliable experience, other sources were used. Mortality, withdrawal, and disability assumptions are from the Wyoming Retirement System January 1, 2023 actuarial valuation. Retirement assumptions are based on City experience. The discount assumption reflects the time value of money as of the valuation date. The Discount Rate was increased from 1.92% for the Fiscal Year-Ended June 30, 2022 to 3.86% to better reflect the current high-quality fixed income environment. The underlying index used is the High Quality 20-Tax-Exempt Bond G.O. Index. The rate has been updated to the current Fiscal Year-End based on changes in market conditions as reflected in the index. The rate selected is as of June 30, 2023, and is the most recent rate available prior to the Measurement Date. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 45 8. POST EMPLOYMENT HEALTH BENEFITS (OPEB) PLAN (Continued) Other significant assumptions are as follows: Valuation Date 1-Jul-22 Discount Rate, Beginning of Year 3.69% End of Year 3.86% Total Payroll Increases 2.50% Healthcare Cost Trend Rates Period Medical FY 23 to FY 24 6.00% FY 24 to FY 25 5.50% FY 25 to FY 26 5.25% FY 26 to FY 27 5.25% FY 27 to FY 28 5.25% Ultimate 5.00% The changes in the assumptions for the plan were made to better reflect the future anticipated experience in the plan. The changes in assumptions resulted in a net decrease in the Total OPEB Liability in the current year of approximately $31,000. Changes in the total OPEB liability for the year ended June 30, 2023 are as follows: Total OPEB Liability Balance at 6/30/2022 1,147,482 $ Changes for the year Service cost 41,587 Interest cost 32,090 Differences between expected and actual experience (349,961) Changes in assumptions/amortization 31,321 Benefit payments (32,489) Net changes (277,452) Balance at 6/30/2023 870,030 $ Sensitivity of the total OPEB liability to changes in the discount rate The following presents the total OPEB liability of the City, as well as what the City’s total OPEB liability would be if it were calculated using a discount rate that is one percentage point lower (2.86 percent) or one percentage point higher (4.86 percent) than the current discount rate: 1% Decrease Current Discount Rate 1% Increase (2.86%) (3.86%) (4.86%) Total OPEB Liability 964,206 $ 870,030 $ 785,619 $ ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 46 9. MUNICIPAL SOLID WASTE LANDFILL CLOSURE AND POSTCLOSURE CARE COSTS State and federal laws and regulations require that the City of Douglas place final cover on its landfill when closed and to perform certain maintenance and monitoring functions at the landfill site for thirty years after closure. In addition to operating expenses related to current activities of the landfill, a liability is being recognized based on the future closure and postclosure care costs that will be incurred near or after the date the landfill no longer accepts waste. The recognition of these landfill closure and postclosure care costs is based on the estimate of future costs to be incurred by the City. In June of 2015, the City began transferring most waste to Casper and began the process of closure of the main acreage in the landfill. The estimated liability for landfill closure and postclosure care costs of the main acreage is $657,952 as of June 30, 2023. The contract approved for closure was significantly lower than original engineering estimates. The State of Wyoming approved a grant in the amount of $1,440,000 to assist in covering costs of closure. The actual costs of closure and postclosure care may be higher due to inflation, changes in technology, or changes in landfill laws and regulations. It is reasonably possible that the City’s recorded estimate of its liability may change in the near term. The City of Douglas is required by state and federal laws and regulations to make annual contributions to finance closure and postclosure care. To comply with this requirement, the City of Douglas participates in the State of Wyoming Financial Assurance Program for Municipal Landfills. The Department of Environmental Quality had approved the City’s current landfill operating permit through 2014. As noted above, in June of 2015, the City began to transfer their waste to the Casper Landfill. 10. PARTIALLY SELF-FUNDED EMPLOYEE HEALTH CARE PLAN As an employee benefit, the City maintains a partially self-funded employee health care plan for all full time employees. The plan, accounted for in an internal service fund, provides extensive major medical, wellness, dental, and vision coverage. As of January 1, 2016, the plan requires single and family deductibles of $750 and $1,500 respectively, as well as an 80% co-insurance requirement for substantially all eligible health care expenses. The plan is funded on an impress basis by assessing each operating department a fixed charge per employee for stop loss coverage premiums and a variable proportional charge per employee for direct health care costs incurred below the stop loss limits. The City believes there are adequate resources available in the various operating funds to provide sufficient funding for the plan. The reported liability includes an amount for claims that have been incurred but not reported. The liability is management’s best estimate based on available information. Medical claims in excess of $35,000 per employee, and those exceeding an aggregate amount dependent upon the number of covered employees, are covered through a private insurance carrier to further protect the City. Ending claims liability balance was $284,000 there was no change from the prior year. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 47 11. SECTION 457 DEFERRED COMPENSATION PLAN The City maintains two deferred compensation plans created in accordance with Internal Revenue Code Section 457. Both plans are used by City employees with only ICMA being offered to new employees. Employees defer a portion of their salary until future years. Deferred compensation is not available until termination, retirement, death, or financial hardship. The plans are reported in the employee’s Deferred Compensation Fund. The plans’ assets are presented at fair value. All investments in deferred compensation plans are held in trust in the City’s accounts and recorded at market value as determined by the respective fund managers based on quoted sales prices of the underlying securities. Investments are in a combination of managed domestic stock funds, international stock funds, bond funds, and money market funds. The market value of the plans’ accounts at June 30, 2023 is as follows: Market Value ICMA Retirement Corporation Plan 5,085,589.00 $ EQUI-VEST Plan 287,814.00 5,373,403.00 $ 12. RETIREMENT HEALTH SAVINGS PLAN On June 27, 2005, the City created the City of Douglas Retirement Health Savings Plan. All full-time employees age 18 years old and above are eligible. Under the plan, the employee makes mandatory pre-tax contributions of sick leave. The health benefit is available upon separation of service, retirement, or death of the employee. The laws governing retirement health savings plans require the use of an integral part trust. The plan is reported in the Pension Trust Fund. The plan’s assets are specified interest instruments reported at fair value of $504,804. 13. FUND EQUITY The designations for future water, sewer, landfill, and sanitation costs were created to segregate a portion of retained earnings that is not available for expenses as it is designated for capital outlay or as a depreciation reserve as follows: Water Fund Sewer Fund Landfill Fund Sanitation Fund Replacement reserve 4,857,816 $ 4,075,882 $ 1,256,521 $ 861,985 $ Operating reserve 575,425 195,913 132,650 75,760 Specific capital outlay 894,000 470,000 - - Total designated retained earnings 6,327,241 $ 4,741,795 $ 1,389,171 $ 937,745 $ ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 48 14. CONTINGENCIES AND COMMITMENTS At various times, claims and lawsuits are pending against the City. The City is of the opinion that the liability, if any, arising from such claims will not have a material adverse effect on its financial statements. Under the terms of Federal and state grants, periodic audits are required, and certain costs may be questioned as not being appropriate expenditures under the terms of the grants. Such audits could lead to reimbursement to the grantor agencies. City management believes disallowances, if any, would not be significant to the City’s financial statements. Risk of loss The City is subject to risk of loss from various events, including torts, theft, damage to assets, business interruption, errors and omissions, and job-related injuries to employees, as well as acts of God. The City purchased commercial insurance and workers’ compensation coverage to minimize their risks of loss. No settlements occurred during the current year, and no significant reduction in coverage against losses from year to year has occurred. Employees of the City are covered by the City’s medical plan. The City’s costs for this plan are reflected in the funds paying the coverage, premiums and administrative costs. Construction and engineering commitments The City did not have any construction and engineering commitments at June 30, 2023. 15. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disasters; and employee health, dental, and accident benefits. The City’s general liability insurance is provided by participation in the Local Government Liability Pool (LGLP). LGLP manages risk by receiving an annual actuarial assessment of funding needs. The LGLP have never requested a reserve call on its members. All risk management activities are accounted for in each fund as appropriate. Settled claims resulting from these risks have not exceeded commercial insurance coverage in any of the past three fiscal years. The City also participates in the Wyoming workers compensation program. Wyoming Statute 27-14-101 created the Wyoming Worker’s Compensation Act (the Act), which is administered as an enterprise fund by the State of Wyoming. All employers within the State of Wyoming are participants of this plan unless the employer elects not to be covered under the plan. This Act requires the City to obtain liability coverage for payment of benefits to employees for job-related injuries and diseases through the Worker’s Compensation Fund. This Act provides general protection from suits filed by employees against the City. The City makes quarterly payments to the Department of Employment, State of Wyoming. ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING NOTES TO BASIC FINANCIAL STATEMENTS For the Year Ended June 30, 2023 49 16. PRIOR PERIOD ADJUSTMENTS In the prior period interfund activity was misstated, prior period adjustments decreased net position in the governmental funds by $15,681, decreased net position in the water fund by $191,577, decreased net position in the sanitation fund by $1,354, increased the internal service fund net position by $115,087, and increased the landfill fund net position by $34,812. There was also a change in the calculation of the closure and post closure liability associated with the landfill which resulted in a prior period adjustment of $187,117 which decreased the net position in the landfill fund. The net effect of the two adjustments associated with the landfill is to decrease net position by $152,305. 17. SUBSEQUENT EVENTS Subsequent events have been evaluated through December 31, 2023, the date the financial statements were available to be issued, and there were no matters that materially affect the carrying amounts of assets, liabilities, and fund balance as of June 30, 2023. ---PAGE BREAK--- REQUIRED SUPPLEMENTAL INFORMATION ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCE BUDGET AND ACTUAL - GENERAL FUND For the Year Ended June 30, 2023 Original Budget Final Budget Actual (Budget Basis) Variance with Final Budget Revenues: Taxes 9,441,000.00 9,441,000 $ 18,159,935 $ 8,718,935 $ Licenses and permits 67,000 67,000 59,211 (7,789) Intergovernmental 1,140,000 1,607,822 1,745,097 137,275 Charges for services 653,157 653,157 659,999 6,842 Fines and forfeitures 25,000 25,000 19,635 (5,365) Miscellaneous revenue 132,700 132,700 248,553 115,853 Investment earnings 350,000 350,000 780,386 430,386 Total revenues 11,808,857 12,276,679 21,672,816 9,396,137 Expenditures: General government 2,449,584 2,924,738 2,324,066 (600,672) Public safety 2,420,495 2,430,474 2,295,766 (134,708) Public works 1,416,042 1,447,316 1,415,784 (31,532) Culture and recreation 884,960 884,960 786,974 (97,986) Cemetery 366,991 366,991 348,842 (18,149) Community service 1,684,400 1,684,400 1,623,161 (61,239) Total expenditures 9,222,472 9,738,879 8,794,593 (944,286) Other financing sources (uses): Transfer in 750 4,988 4,754 (234) Transfer out (4,823,402) (4,823,402) (4,819,752) 3,650 Total other financing sources (uses) (4,822,652) (4,818,414) (4,814,998) 3,416 Excess of revenues over expenditures - budget basis (2,236,267) $ (2,280,614) $ 8,063,225 $ 10,343,839 $ The notes to financial statements are an integral part of this statement. 50 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING SCHEDULE OF PROPORTIONATE SHARE OF THE NET PENSION LIABILITY WYOMING RETIREMENT SYSTEM Last 10 Years Ended December 31, 2022 2021 2020 2019 2018 2017 2016 2015 2014 The City's proportionate share of net pension liability 0.1422517% 0.1459402% 0.1491078% 0.1482207% 0.1452961% 0.1384799% 0.1419099% 0.1331493% 0.1266809% The City's proportionate share of the net pension liability 3,887,477 $ 2,225,181 $ 3,240,649 $ 3,483,077 $ 4,424,689 $ 3,156,428 $ 3,430,672 $ 3,105,511 $ 2,235,528 $ Covered - employee payroll 2,672,056 $ 2,657,743 $ 2,645,504 $ 2,581,164 $ 2,457,906 $ 2,459,667 $ 2,522,831 $ 2,291,122 $ 2,110,653 $ Proportionate share of the net pension liability as percentage of covered-employee payroll 145.49% 83.72% 122.50% 134.94% 180.02% 128.33% 135.99% 135.55% 105.92% Plan fiduciary net position as a percentage of the total pension liability 75.47% 86.03% 79.24% 76.83% 69.17% 76.35% 73.42% 73.40% 79.08% Law Enforcement Pension Plan The City's proportionate share of net pension liability 0.6181126% 0.5995534% 0.5635212% 0.6397338% 0.7665577% 0.8869045% 0.8824789% 0.8575659% 0.7287711% The City's proportionate share of the net pension liability 2,105,629 $ 1,705,961 $ 383,883 $ 551,442 $ 1,855,623 $ 763,132 $ 666,200 $ 644,203 $ 214,723 $ Covered - employee payroll 1,165,526 $ 1,086,423 $ 975,273 $ 1,092,771 $ 1,340,654 $ 1,365,374 $ 1,381,970 $ 1,292,496 $ 1,038,568 $ Proportionate share of the net pension liability as percentage of covered-employee payroll 180.66% 157.03% 39.36% 50.46% 138.41% 55.89% 48.21% 49.84% 20.67% Plan fiduciary net position as a percentage of the total pension liability 70.30% 75.62% 91.82% 89.05% 71.22% 87.99% 88.11% 87.49% 94.76% The following schedule presents the City's share of the net pension liability from its participation in the Wyoming Retirement System. Eventually, employers will be required to disclose a 10-year history of their proportionate share of the "net pension liability". However, this schedule only presents available information since the effective date of GASB No. 68 for 2022, 2021, 2020, 2019, 2018, 2017, 2016, 2015 and 2014. Public Employee Pension Primary Government The notes to financial statements are an integral part of this statement. 51 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING SCHEDULE OF CONTRIBUTIONS WYOMING RETIREMENT SYSTEM Last 10 Years Ended June 30, 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Public Employee Pension Plan Contractually required contribution 518,494 $ 494,771 $ 476,880 $ 466,138 $ 439,421 $ 408,504 $ 408,797 $ 419,295 $ 363,601 $ 306,954 $ (518,494) $ (494,771) $ (476,880) $ (466,138) $ (439,421) $ (408,504) $ (408,797) $ (419,295) $ (363,601) $ (306,954) $ Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Covered employee payroll 2,784,607 $ 2,657,743 $ 2,631,791 $ 2,645,504 $ 2,581,164 $ 2,457,906 $ 2,459,667 $ 2,522,831 $ 2,291,122 $ 2,110,653 $ 18.62% 18.62% 18.12% 17.62% 17.02% 16.62% 16.62% 16.62% 15.87% 14.54% Law Enforcement Pension Plan Contractually required contribution 196,453 $ 166,579 $ 187,956 $ 230,592 $ 234,844 $ 237,699 $ 222,310 $ 178,634 $ 196,251 $ 196,251 $ (196,453) $ (166,579) $ (187,956) $ (230,592) $ (234,844) $ (237,699) $ (222,310) $ (178,634) $ (196,251) $ (196,251) $ Contribution deficiency (excess) - $ - $ - $ - $ - $ - $ - $ - $ - $ - $ Covered employee payroll 1,142,169 $ 968,483 $ 1,092,771 $ 1,340,654 $ 1,365,374 $ 1,381,970 $ 1,292,496 $ 1,038,568 $ 1,140,994 $ 1,140,994 $ 17.20% 17.20% 17.20% 17.20% 17.20% 17.20% 17.20% 17.20% 17.20% 17.20% Primary Government the contractually required contribution Contributions as a percentage of covered-employee payroll Actual contributions in relation to the contractually required contribution Contributions as a percentage of covered-employee payroll Actual contributions in relation to The notes to financial statements are an integral part of this statement. 52 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING SCHEDULE OF OPEB LIABILITY For the Year Ended June 30, 2023 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 June 30, City's OPEB liability 870,030 $ 1,147,481 $ 1,061,121 $ 944,827 $ 872,981 $ 912,033 $ 297,352 $ 216,634 $ 163,828 $ 101,996 $ Covered Employee Payroll 4,403,494 $ 3,897,305 $ 3,766,658 $ 3,673,935 $ 3,798,560 $ 3,825,041 $ 3,825,041 $ 3,904,801 $ 3,327,413 $ 3,149,222 $ Total OPEB Liability as a percentage of covered employee payroll 19.76% 29.44% 28.17% 25.72% 22.98% 23.84% 7.77% 5.55% 4.92% 3.24% Primary Government The notes to financial statements are an integral part of this statement. 53 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING SCHEDULE OF CHANGES IN OPEB LIABILITY For the Year Ended June 30, 2023 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Service cost 41,587 $ 62,120 $ 59,731 $ 46,575 $ 49,068 $ 57,926 $ 80,662 $ 85,582 $ 85,582 $ 42,650 $ Interest 32,090 24,240 24,735 25,271 27,468 29,839 8,665 6,554 4,080 3,740 Changes in assumptions/amortization (318,640) - 67,073 - (115,588) - 518,307 (6,182) (5,672) (5,199) Benefit payments (32,488) - (35,245) - - - - (33,148) (22,158) (32,695) Net change in total OPEB liability (277,451) 86,360 116,294 71,846 (39,052) 87,765 607,634 52,806 61,832 8,496 Total OPEB liability - beginning 1,147,481 1,061,121 944,827 872,981 912,033 824,268 216,634 163,828 101,996 93,500 Total OPEB liability - ending 870,030 $ 1,147,481 $ 1,061,121 $ 944,827 $ 872,981 $ 912,033 $ 824,268 $ 216,634 $ 163,828 $ 101,996 $ Primary Government The notes to financial statements are an integral part of this statement. 54 ---PAGE BREAK--- SUPPLEMENTAL INFORMATION ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS As of June 30, 2023 Special Revenue Fund Police Special Projects Impact Assistance CLG Projects Fire Equipment Capital Improvement Reserve General Fund Equipment Reserve Public Facilities ASSETS Cash 22,021 $ 566,636 $ 7,322 $ 661,786 $ 45,023 $ - $ 2,325,468 $ Investments - 1,028,285 - - 315,375 - 1,319,034 Accounts receivable 16,739 - - - - - - Due from other governments - - - - - - - Due from other funds - - - - - - - Accrued interest - 2,197 - - 1,032 - 2,371 Total assets 38,760 $ 1,597,118 $ 7,322 $ 661,786 $ 361,430 $ - $ 3,646,873 $ LIABILITIES Accounts payable 400 $ - $ - $ - $ - $ - $ 91,243 $ Due to other funds - - - - - 36,925 - Retainage payable - - - - - - - Total liabilities 400 - - - - 36,925 91,243 FUND BALANCE Restricted: Police grants 38,360 - - - - - - Cemetery care - - - - - - - Assigned: 4th Street project - 1,597,118 - - - - - Equipment replacement - - - 661,786 - - Capital projects - - 7,322 - 361,430 - 3,555,630 Unassigned - - - - - (36,925) - Total fund balances 38,360 1,597,118 7,322 661,786 361,430 (36,925) 3,555,630 Total liabilities and fund balances 38,760 $ 1,597,118 $ 7,322 $ 661,786 $ 361,430 $ - $ 3,646,873 $ Capital Projects Funds The notes to financial statements are an integral part of this statement. 55 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING COMBINING BALANCE SHEET NONMAJOR GOVERNMENTAL FUNDS As of June 30, 2023 Permanent Fund Park Improvement Fund Brownfield Grant Pool Renovation Train Car Restoration Economic Development Cemetery Care ASSETS Cash 1,613,080 $ - $ 167,134 $ 66,540 $ 221,096 $ 8,451 $ 5,704,557 $ Investments 2,420,961 - 245,051 - 188,365 174,802 5,691,873 Accounts receivable - 8,016 - - - - 24,755 Due from other governments - - - - - - - Due from other funds - - - - - - - Accrued interest 5,123 - 230 - 23 76 11,052 Total assets 4,039,164 $ 8,016 $ 412,415 $ 66,540 $ 409,484 $ 183,329 $ 11,432,237 $ LIABILITIES Accounts payable 192,169 $ - $ 5,910 $ 965 $ 37,022 $ - $ 327,709 Due to other funds - 6,698 - - - - 43,623 Retainage payable 14,177 - - - - - 14,177 Total liabilities 206,346 6,698 5,910 965 37,022 - 385,509 FUND BALANCE Restricted: Police grants - - - - - - 38,360 Cemetery care - - - - - 183,329 183,329 Assigned: 4th Street project - 1,318 - - - - 1,598,436 Equipment replacement - - - 65,575 - - 727,361 Capital projects 3,832,818 - 406,505 - 372,462 - 8,536,167 Unassigned - - - - - - (36,925) Total fund balances 3,832,818 1,318 406,505 65,575 372,462 183,329 11,046,728 Total liabilities and fund balances 4,039,164 $ 8,016 $ 412,415 $ 66,540 $ 409,484 $ 183,329 $ 11,432,237 $ Capital Projects Funds (Continued) Total Nonmajor Governmental Funds The notes to financial statements are an integral part of this statement. 56 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2023 Special Revenue Fund Police Special Projects Impact Assistance CLG Projects Fire Equipment Capital Improvement Reserve General Fund Equipment Reserve Public Facilities REVENUES Intergovernmental 80,734 $ - $ 2,460 $ - $ - $ - $ - $ Charges for services - - - - - - - Miscellaneous revenue - - - 93,055 - - - Investment earnings - 20,449 - 8,281 7,865 67 29,954 Total revenues 80,734 20,449 2,460 101,336 7,865 67 29,954 EXPENDITURES Public safety 95,141 - - - - - - Capital outlay - - 4,000 274,550 - 370,989 (23,800) Total expenditures 95,141 - 4,000 274,550 - 370,989 (23,800) Excess of revenues over (under) expenditures (14,407) 20,449 (1,540) (173,214) 7,865 (370,922) 53,754 Other financing sources (uses): Transfers in 26,743 - 3,010 250,000 - 300,000 - Transfers out - - - - - - - Total other financing sources (uses) 26,743 - 3,010 250,000 - 300,000 - Net change in fund balance 12,336 20,449 1,470 76,786 7,865 (70,922) 53,754 Fund balance beginning of year 26,024 1,576,669 5,852 585,000 353,565 33,997 3,501,876 Fund balance end of year 38,360 $ 1,597,118 $ 7,322 $ 661,786 $ 361,430 $ (36,925) $ 3,555,630 $ Capital Projects Funds The notes to financial statements are an integral part of this statement. 57 ---PAGE BREAK--- CITY OF DOUGLAS, WYOMING COMBINING STATEMENT OF REVENUES, EXPENDITURES, AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS For the Year Ended June 30, 2023 Permanent Fund Park Improvement Fund Brownfield Grant Pool Renovation Train Car Restoration Economic Development Cemetery Care REVENUES Intergovernmental - $ 39,955 $ - $ - $ - $ - $ 123,149 $ Charges for services - - - - - 3,625 3,625 Miscellaneous revenue - - - - - - 93,055 Investment earnings 38,891 - 5,395 - 5,587 4,802 121,291 Total revenues 38,891 39,955 5,395 - 5,587 8,427 341,120 EXPENDITURES Public safety - - - - - - 95,141 Capital outlay 610,565 38,637 69,689 7,545 37,023 - 1,389,198 Total expenditures 610,565 38,637 69,689 7,545 37,023 - 1,484,339 Excess of revenues over (under) expenditures (571,674) 1,318 (64,294) (7,545) (31,436) 8,427 (1,143,219) Other financing sources (uses): Transfers in 860,000 - 195,000 35,000 50,000 - 1,719,753 Transfers out - - - - - (4,754) (4,754) Total other financing sources (uses) 860,000 - 195,000 35,000 50,000 (4,754) 1,714,999 Net change in fund balance 288,326 1,318 130,706 27,455 18,564 3,673 571,780 Fund balance beginning of year 3,544,492 - 275,799 38,120 353,898 179,656 10,474,948 Fund balance end of year 3,832,818 $ 1,318 $ 406,505 $ 65,575 $ 372,462 $ 183,329 $ 11,046,728 $ Total Nonmajor Governmental Funds Capital Projects Funds (Continued) The notes to financial statements are an integral part of this statement. 58 ---PAGE BREAK--- OTHER INDEPENDENT AUDITORS’ REPORT ---PAGE BREAK--- CARVER FLOREK & JAMES, CPA’s CERTIFIED PUBLIC ACCOUNTANTS 2246 UNIVERSITY PARK BLVD. • LAYTON, UT 84041 • PHONE (801) 926-1177 • FAX (801) 926-1178 1201 KENSINGTON AVENUE • MISSOULA, MT 59801 • PHONE (406) 728-5539 • FAX (406) 728-5568 33 WEST BRUNDAGE • SUITE 201 • SHERIDAN, WY 82801 MEMBER OF AMERICAN INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS INDEPENDENT AUDITORS’ 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 The Honorable Mayor and Members of the City Council City of Douglas, Wyoming 200 West Grant Street Douglas, Wyoming 82633 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, each major fund, and the aggregate remaining fund information of the City of Douglas, Wyoming (the City) as of and for the year ended June 30, 2023, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated December 31, 2023. Report on Internal Control over Financial Reporting In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the 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 the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a combination of deficiencies, in internal control, such that there is a reasonable possibility that a material misstatement of the entity’s financial statements will not be prevented or detected and corrected on a timely basis. A significant deficiency is a deficiency, or a combination of deficiencies, in internal control that is less severe than a material weakness, yet important enough to merit attention by those charged with governance. Our consideration of internal control was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies. Given these limitations, during our audit we did not identify any deficiencies in internal control that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. ---PAGE BREAK--- 60 Report on Compliance and Other Matters As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit and, accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. 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. Sheridan, Wyoming December 31, 2023