Document Woodburn_doc_e5215a6087

CITY OF WOODBURN, OREGON Annual Financial Report Year Ended June 30, 2015 ---PAGE BREAK--- CITY OF WOODBURN, OREGON JUNE 30, 2015 MAYOR AND COUNCIL MEMBERS Name Term Expires Mayor Figley December 31, 2016 Council Members Frank Lonergan, President December 31, 2018 Robert Carney December 31, 2018 Lisa Ellsworth December 31, 2016 Teresa Alonso Leon December 31, 2016 Eric Morris December 31, 2016 Sharon Schaub December 31, 2018 The above individuals may be contacted at the address below. Staff Scott Derickson, City Administrator N. Robert Shields, City Attorney Sarah Head, Finance Director City of Woodburn, Oregon 270 Montgomery Street Woodburn, OR 97071 ---PAGE BREAK--- CITY OF WOODBURN, OREGON TABLE OF CONTENTS Page FINANCIAL SECTION INDEPENDENT AUDITOR'S REPORT 1-3 MANAGEMENT'S DISCUSSION AND ANALYSIS 4-9 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position 10 Statement of Activities 11 Fund Financial Statements Balance Sheet - Governmental Funds 12 Reconciliation of Balance Sheet - Governmental Funds to the Statement of Net Position 13 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 14 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities 15 Statement of Fund Net Position - Proprietary Funds 16 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 17 Statement of Cash Flows - Proprietary Funds 18-19 Statement of Fiduciary Net Position 20 Statement of Changes in Fiduciary Net Position 21 Notes to Basic Financial Statements 22-46 REQUIRED SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual General Fund 47 Street Fund 48 Schedule of the City’s Proportionate Share of the Net Pension Liability (Asset) – Oregon Public Employee’s Retirement System 49 Schedule of the City’s Contributions – Oregon Public Employee’s Retirement System 50 SUPPLEMENTARY INFORMATION Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Street SDC Fund 51 Nonmajor Governmental Funds Combining Balance Sheet 52-53 Combining Statement of Revenues, Expenditures and Changes in Fund Balances 54-55 Schedules of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual Transit Fund 56 Building Inspection Fund 57 Search and Seizure Fund 58 Housing Rehabilitation Fund 59 Library Endowment Fund 60 Museum Endowment Fund 61 Lavelle Black Trust Fund 62 Urban Renewal Agency Fund 63 General Capital Construction Fund 64 ---PAGE BREAK--- CITY OF WOODBURN, OREGON TABLE OF CONTENTS Page FINANCIAL SECTION (Continued) SUPPLEMENTARY INFORMATION (Continued) Nonmajor Governmental Funds (Continued) Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Continued) Special Assessment Fund 65 Street/Storm Capital Construction Fund 66 Parks SDC Fund 67 Storm SDC Fund 68 Equipment Replacement Fund 69 GO Debt Service Fund 70 Nonmajor Proprietary Funds Combining Statement of Fund Net Position - Enterprise Funds 71 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Enterprise Funds 72 Combining Statement of Cash Flows - Enterprise Funds 73 Schedules of Revenues, Expenditures and Changes in Fund Balances - Budget (Non-GAAP Basis) and Actual – Nonmajor Enterprise Funds Water Fund 74 Sewer Fund 75 Sewer Capital Construction Fund 76 Water SDC Fund 77 Sewer SDC Fund 78 Water Capital Construction Fund 79 Internal Services Funds Combining Statement of Fund Net Position - Internal Service Funds 80 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 81 Combining Statement of Cash Flows - Internal Service Funds 82 Schedules of Revenues, Expenditures and Changes in Fund Balances (Budgetary Basis) - Budget and Actual Information Services Fund 83 Insurance Fund 84 Other Financial Schedules Schedule of Property Tax Transactions and Outstanding Balances 85 COMPLIANCE SECTION 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 86-87 Independent Auditor’s Report on Compliance with Requirements that Could Have a Direct and Material Effect on Each Major Program and on Internal Control Over Compliance in Accordance with OMB Circular A-133 88-89 Schedule of Expenditures of Federal Awards 90 Notes to Schedule of Expenditures of Federal Awards 91 Summary of Findings and Questioned Costs 92 Independent Auditor’s Report Required by Oregon State Regulations 93-94 ---PAGE BREAK--- - 1 - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR'S REPORT Honorable Mayor and Council Members City of Woodburn 270 Montgomery Street Woodburn, Oregon 97071 Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Woodburn as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. ---PAGE BREAK--- - 2 - Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the City of Woodburn as of June 30, 2015, 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. Emphasis of Matter As discussed in notes to the financial statements, the City adopted the accounting requirements of Governmental Accounting Standards Board Statements No. 68, Accounting and Financial Reporting for Pensions, and No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date, which resulted in the restatement of the beginning balances for the year ended June 30, 2015. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis on pages 4 through 9 and the schedules of revenues, expenditures and changes in fund balance – budget and actual for the General and Street funds (“the budgetary schedules”), the schedule of the city’s proportionate share of the net pension liability (asset) – Oregon public employees retirement system, and the schedule of the city’s contributions – Oregon public employees retirement system be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to management’s discussion and analysis described in the preceding paragraph 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. Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The budgetary and PERS schedules described above were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. The budgetary and PERS schedules have been subject to the auditing procedures applied in the audit of the basis financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the budgetary and PERS schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. Supplementary and Other 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 supplementary information and schedule of expenditures of federal awards are presented for the purpose of additional analysis and are not a required part of the basic financial statements. ---PAGE BREAK--- - 3 - The supplementary information and schedule of expenditures of federal awards are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, or other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the supplementaryinformation and schedule of expenditures of federal awards are fairly presented, in all material respects, in relation to the basic financial statements as a whole. Other Reporting Required by Government Auditing Standards and Other Legal and Regulatory Requirements Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated November 3, 2015, 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 to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Report on Other Legal and Regulatory Requirements In accordance with Minimum Standards for Audits of Oregon Municipal Corporations, we have issued our report dated November 3, 2015, on our consideration of the City's compliance with certain provisions of laws and regulations, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules. The purpose of that report is to describe the scope of our testing of compliance and the results of that testing and not to provide an opinion on compliance. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder November 3, 2015 ---PAGE BREAK--- - 4 - CITY OF WOODBURN Year Ended June 30, 2015 MANAGEMENT’S DISCUSSION AND ANALYSIS The Management's Discussion and Analysis of the City of Woodburn's Annual Financial Report (AFR) presents a discussion and analysis of the City's financial performance during the fiscal year ended June 30, 2015. The information presented here should be considered in conjunction with the financial statements included in this report. FINANCIAL HIGHLIGHTS Following are the financial highlights of the City for the fiscal year ended June 30, 2015. 2015 2014 change Net position 118,762,677 $ 111,648,478 $ 7,114,199 $ Change in net position 7,114,199 2,600,682 4,513,517 Governmental activities net position 72,778,222 68,962,107 3,816,115 Business-type activities fund net position 45,984,455 42,686,371 3,298,084 Change in governmental net position 3,816,115 1,247,621 2,568,494 Change in proprietary fund net position 3,298,084 1,353,061 1,945,023 June 30, OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Woodburn's basic financial statements. The basic financial statements include three components: the government-wide financial statements, the fund financial statements and notes to the financial statements. This report also contains required and other supplementary information. Government-wide financial statements. The government-wide financial statements present the net position (statement of net position) and results of operations (statement of activities) of the City as a whole. Included are all governmental and business-type assets, liabilities and activities of the City. The measurement focus and basis of accounting are the same for the entire entity. The measurement focus is on all economic resources of the City, including current financial resources (assets) and non-current financial resources (capital assets) and the related current and non-current liabilities and equity accounts. Both government-wide statements are prepared using the accrual basis of accounting, which is similar to the methods used by most businesses and takes into account all revenues and expenses connected with the fiscal year, even if cash involved has not been received or paid. The statement of net position presents information on all the City's assets and liabilities, with the difference between the two reported as net position. Increases or decreases in net position may indicate whether the City's financial position is improving or deteriorating. The statement of activities presents the expenses incurred in providing services to the public and the revenues associated with those activities for both governmental and business-type activities. The statement of activities begins with expenses by function. To these functions are applied charges for services, operating grants and contributions and capital grants and contributions. The resulting sums, with some adjustments, represent charges to general taxpayers and may equate to the nearest that governments can determine the "bottom line." ---PAGE BREAK--- - 5 - The government-wide financial statements are divided into two categories. Governmental activities are services funded through property taxes and intergovernmental revenues. The governmental activities for the City include general government, public safety, highways and streets, and culture and recreation. Business-type activities are operations funded primarily through charges to external users of goods and services. Business-type activities include water and wastewater. Fund Financial Statements. A fund is a fiscal and accounting entity with a self-balancing set of accounts that is used to segregate resources that are restricted to a particular activity. The use of funds deters commingling of resources designated for a specific purpose, prevents unauthorized transfer of surpluses, and ensures compliance with legal and contractual requirements. The City has three types of fund categories: governmental funds, proprietary funds, and a fiduciary fund. Governmental 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 current sources and uses of spendable resources and use the modified accrual basis of accounting. Operating statements include all sources and uses of financial resources, and display the excess of revenues and other financial sources over (under) expenditures and other uses. Included in the balance sheet are liquid assets and receivables that will be converted into cash currently and short-term liabilities, including payables to vendors and employees. Unmatured bond principal or liabilities for compensated absences not to be paid in the fiscal year are not included. Because the governmental fund statements do not encompass the long-term focus of the government-wide statements, reconciliations are provided on the subsequent page of the governmental fund statements. The emphasis is on major funds that account for the predominant assets and activities of all funds. The City maintains eighteen individual governmental funds. Information is presented separately for the General Fund, Street Fund and Street SDC Fund in the Governmental Fund Balance Sheet and Statement of Revenue, Expenditures and Changes in Fund Balances. The other governmental funds are combined into a single, aggregated presentation. Information for these non-major governmental funds is provided in the form of combining statements. Proprietary Funds. The City maintains two different types of proprietary funds: enterprise and internal service funds. These funds are used to show activities that operate more like those of commercial enterprises. Fees are charged for services provided, both to outside customers and to other units of the City. Enterprise funds are presented as business-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water and sewer activities. Internal service funds account for activities furnishing goods or services to other units of the government. Charges for these services are on a cost-reimbursement basis. The internal services funds include insurance and information services. The internal service funds are reported with governmental activities in the government-wide financial statements. Proprietary fund statements provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the Water, Sewer, and Sewer Capital Construction funds. The internal service funds are combined into a single column in the proprietary fund financial statements. The City adopts an annual appropriated budget for all of its funds. Budgetary comparison statements, demonstrating compliance with this budget, have been provided. Notes to the Financial Statements. The notes to the financial statements are an integral part of the basic financial statements and should be read along with them. The notes provide additional information necessary to communicate the financial position of the City. ---PAGE BREAK--- - 6 - Other Information. In addition to the basic financial statements and accompanying notes, this report also presents certain required and other supplementary information concerning the City. GOVERNMENT-WIDE FINANCIAL ANALYSIS The City had $173,941,681 in total assets, $1,046,147 in total deferred outflows, $51,188,927 in total liabilities and $5,036,224 in total deferred inflows, resulting in combined net position of $118,762,677 for governmental and business-type activities. The largest component of the City's net position reflects its investment in capital assets land, buildings, equipment and infrastructure, less any related debt outstanding that was needed to acquire or construct the assets). 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 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. Governmental capital assets, net of depreciation, increased $4,270,261 over the prior year due primarily from the completion of the Woodburn Interchange Project. Business-type capital assets, net of depreciation decreased $1,704,877 over the prior year due to depreciation in excess of current year capital additions. Total liabilities for both governmental and business-type activities decreased by $5,867,622 from the prior year mainly due to scheduled debt repayments. Overall, the City's financial position changed by $7,114,199 (or The majority of this is due to the application of the provisions of Statement No. 68, Accounting and Financial Reporting for Pensions from the Governmental Accounting Standards Board. This pronouncement included a restatement of the beginning net position for the fiscal year and an adjustment to the current year pension expense based on the results of the actuarial study as described in the notes to the financial statements. Statement of Net Position The following table reflects the condensed Statement of Net Position compared to the prior year. Governmental Business-type Governmental Business-type Governmental Business-type Activities Activities Total Activities Activities Total Activities Activities Total Cash and investments 19,129,639 $ 24,363,529 $ 43,493,168 $ 18,797,617 $ 23,502,819 $ 42,300,436 $ 332,022 $ 860,710 $ 1,192,732 $ Other assets 4,141,747 1,392,416 5,534,163 2,102,248 930,949 3,033,197 2,039,499 461,467 2,500,966 Capital assets 63,828,616 61,085,734 124,914,350 59,558,355 62,790,610 122,348,965 4,270,261 (1,704,876) 2,565,385 Total Assets 87,100,002 86,841,679 173,941,681 80,458,220 87,224,378 167,682,598 6,641,782 (382,699) 6,259,083 Deferred outflows 864,117 182,030 1,046,147 844,526 177,903 1,022,429 19,591 4,127 23,718 Other liabilities 5,799,592 956,381 6,755,973 6,419,608 1,940,396 8,360,004 (620,016) (984,015) (1,604,031) Long-term debt 5,226,383 39,206,571 44,432,954 5,921,031 42,775,514 48,696,545 (694,648) (3,568,943) (4,263,591) Total Liabilities 11,025,975 40,162,952 51,188,927 12,340,639 44,715,910 57,056,549 (1,314,664) (4,552,958) (5,867,622) Deferred inflows 4,159,922 876,302 5,036,224 - - - 4,159,922 876,302 5,036,224 Net position: Net investment in capital assets 59,266,063 21,979,780 81,245,843 54,411,373 19,881,340 74,292,713 4,854,690 2,098,440 6,953,130 Restricted 8,929,025 16,841,111 25,770,136 11,523,032 16,803,170 28,326,202 (2,594,007) 37,941 (2,556,066) Unrestricted 4,583,134 7,163,564 11,746,698 3,027,702 6,001,861 9,029,563 1,555,432 1,161,703 2,717,135 Total Net Position 72,778,222 $ 45,984,455 $ 118,762,677 $ 68,962,107 $ 42,686,371 $ 111,648,478 $ 3,816,115 $ 3,298,084 $ 7,114,199 $ Change 2015 2014 Governmental Activities The City’s net position from governmental activities increased $3,816,115 from 2013-14 to 2014-15. ---PAGE BREAK--- - 7 - Business-type Activities The City’s net position from business-type activities increased $3,298,084 from 2013-14 to 2014-15. Statement of Activities The following table reflects the condensed Statement of Activities compared to the prior year. Business- Business- Business- Governmental type Governmental type Governmental type Activities Activities Total Activities Activities Total Activities Activities Total Revenues Program Revenues Charges for service 1,944,279 $ 11,259,263 $ 13,203,542 $ 2,101,267 $ 10,646,521 $ 12,747,788 $ (156,988) $ 612,742 $ 455,754 $ Operating grants and contributions 1,993,925 - 1,993,925 1,915,475 - 1,915,475 78,450 - 78,450 Capital grants and contributions 1,286,163 310,272 1,596,435 885,093 446,971 1,332,064 401,070 (136,699) 264,371 Total Program Revenues 5,224,367 11,569,535 16,793,902 4,901,835 11,093,492 15,995,327 322,532 476,043 798,575 General Revenues Property taxes 8,836,939 - 8,836,939 8,234,481 - 8,234,481 602,458 - 602,458 Franchise taxes 1,539,926 - 1,539,926 1,500,730 - 1,500,730 39,196 - 39,196 Other taxes 437,339 - 437,339 454,363 - 454,363 (17,024) - (17,024) Intergovernmental 655,575 - 655,575 633,530 - 633,530 22,045 - 22,045 Other 128,240 190,449 318,689 144,342 (522,180) (377,838) (16,102) 712,629 696,527 Total General Revenues 11,598,019 190,449 11,788,468 10,967,446 (522,180) 10,445,266 630,573 712,629 1,343,202 Total Revenues 16,822,386 11,759,984 28,582,370 15,869,281 10,571,312 26,440,593 953,105 1,188,672 2,141,777 Expenses General government 3,058,648 - 3,058,648 2,646,552 - 2,646,552 412,096 - 412,096 Public safety 5,662,660 - 5,662,660 6,608,391 - 6,608,391 (945,731) - (945,731) Highways and streets 1,976,022 - 1,976,022 2,273,271 - 2,273,271 (297,249) - (297,249) Culture and recreation 2,784,248 - 2,784,248 3,530,783 - 3,530,783 (746,535) - (746,535) Interest on long-term debt 204,905 - 204,905 226,504 - 226,504 (21,599) - (21,599) Water - 2,478,695 2,478,695 - 2,792,818 2,792,818 - (314,123) (314,123) Sewer - 5,302,993 5,302,993 - 5,761,592 5,761,592 - (458,599) (458,599) Total Expenses 13,686,483 7,781,688 21,468,171 15,285,501 8,554,410 23,839,911 (1,599,018) (772,722) (2,371,740) Changes in Net Position Before Transfers 3,135,903 3,978,296 7,114,199 583,780 2,016,902 2,600,682 2,552,123 1,961,394 4,513,517 Transfers 680,212 (680,212) - 663,841 (663,841) - 16,371 (16,371) - Change in Net Position 3,816,115 3,298,084 7,114,199 1,247,621 1,353,061 2,600,682 2,568,494 1,945,023 4,513,517 - Beginning Net Position, as adjusted 68,962,107 42,686,371 111,648,478 67,714,486 41,333,310 109,047,796 1,247,621 1,353,061 2,600,682 Ending Net Position 72,778,222 $ 45,984,455 $ 118,762,677 $ 68,962,107 $ 42,686,371 $ 111,648,478 $ 3,816,115 $ 3,298,084 $ 7,114,199 $ 2015 2014 Change Governmental Activities. Total revenues for the City's governmental activities were $16,822,386 for the fiscal year ended June 30, 2015. Approximately 53% of the total revenue for the governmental activities was derived from property taxes and approximately 31% of the total revenue was from program revenues. Total expenses for governmental activities were $13,686,483 and net transfers in were $680,212 resulting in a $3,816,115 increase in net position. General governmental activities accounted for approximately 22% of the total governmental activities expense. Public Safety, Culture and Recreation and Highways and Streets expenses account for 76% of the total, and interest on long-term debt was 2% of total governmental activities expenses. Business-Type Activities. Revenues of business-type activities totaled $11,759,984 for the current fiscal year. These activities generated $11,569,535 in program revenues, and $190,449 in interest earnings and miscellaneous revenues. The total expenses for business-type activities were $7,781,688 and net transfers out were $680,212 resulting in a $3,298,084 increase in net position. Business-type activities for the City of Woodburn consist of operations for water and sewer services. ---PAGE BREAK--- - 8 - FINANCIAL ANALYSIS OF THE GOVERNMENT'S FUNDS As noted previously, the City uses fund accounting to segregate resources that are restricted to a particular activity. Fund balance represents the excess of the assets of the fund over its liabilities. Because the fund financial statements focus on current sources and uses of spendable resources, fund balances relating to each fund may be useful in assessing the government's net resources available. Governmental Funds. At the end of the fiscal year, there was $13,587,795 of fund balance of the governmental funds, a decrease of $3,774,617 from the prior year. The City's governmental funds include the General Fund, Street and Street SDC funds, and other non-major funds. The General Fund is the chief operating fund of the City. At the end of the fiscal year, a fund balance of $4,160,548 was reported by the General Fund. The fund balance increased by $582,776 from the previous year due to increases in property taxes, franchise fees, charges for services and fines and forfeitures, along with a decrease in miscellaneous revenues, as well as an increase in police expenditures, and new departments for engineering and maintenance previously reported in internal service funds. The City reports two other major governmental funds, the Street Fund and the Street SDC Fund. The Street Fund had a fund balance of $2,950,714, an increase of $200,877 from the previous year, due mainly to revenues in excess of an increase in street maintenance expenditures. The Street SDC Fund had a fund balance of $2,524,369, a decrease of $3,895,325 from the previous year, due mainly to an increase in capital outlay. There was also a prior period adjustment increasing net position by $1,064,896 due to an interfund loan. Proprietary Funds. Net position of the proprietary funds equaled $45,984,455 at the end of the current fiscal year, an increase of $3,298,084 from the prior year. The City reports three major proprietary funds, the Water Fund, the Sewer Fund and the Sewer Capital Construction Fund. The Water Fund had a net position of $600,275, an increase of $728,510 from previous year, due to an increase in charges for services and a decrease personal services expenses. There was also a prior period adjustment in the Water Fund reducing beginning net position by $322,945. The Sewer Fund had a net position of $22,062,784, an increase of $2,182,501 from previous year, due to the combination of an increase in charges for services and an increase in materials and services, coupled with a decrease in personal services and debt service expenses. There were also prior period adjustments in the Sewer Fund reducing beginning net position by $308,517. The Sewer Capital Construction Fund had a net position of $16,538,180, an increase of $50,493 from the previous year, due to a prior year loss on disposition of assets. GENERAL FUND BUDGETARY HIGHLIGHTS The original budget was amended to increase court revenues by $30,000 and recreation revenues by $20,000. The amendment also increased planning, municipal court, recreation, administration, and police by a total of $122,500, decreased contingency by $92,500 and increased transfers out by $20,000. Actual revenues (budgetary basis), exceeded budgeted amounts by General Fund expenditures ended $2,931,264 below budgeted amounts primarily due to management efforts to contain costs throughout the fiscal year. CAPITAL ASSET AND DEBT ADMINISTRATION Capital Assets. The City's investment in capital assets for its governmental and business-type activities equaled $63,828,616 and $61,085,734 respectively, at the end of the current fiscal year, net of accumulated depreciation. This investment includes land, buildings, improvements, equipment, and infrastructure. Additional information about the City's capital assets is presented in the notes to the financial statements. ---PAGE BREAK--- - 9 - 2015 2014 2015 2014 2015 2014 Land 22,567,381 $ 22,567,381 $ 1,783,816 $ 1,783,816 $ 24,351,197 $ 24,351,197 $ Construction in progress 6,197,878 1,287,569 4,841,877 4,319,096 11,039,755 5,606,665 Buildings 16,593,555 16,593,555 62,634,628 62,587,863 79,228,183 79,181,418 Equipment 6,752,476 6,101,779 2,361,602 2,361,602 9,114,078 8,463,381 Infrastructure 38,891,615 38,727,993 28,775,570 28,771,320 67,667,185 67,499,313 Accumulated depreciation (27,174,289) (25,719,922) (39,311,759) (37,033,087) (66,486,048) (62,753,009) Net capital assets 63,828,616 $ 59,558,355 $ 61,085,734 $ 62,790,610 $ 124,914,350 $ 122,348,965 $ Governmental Activities Business-type Activiites Total Long-term Debt. At the end of the current fiscal year, long-term debt outstanding for the governmental activities totaled $5,226,383, compared to $5,921,031in the prior year. For the business-type activities, total long-term debt equaled $39,206,571 compared to $42,775,515 in the prior year. The decrease is due to scheduled debt repayments. Additional information about the City's long-term debt outstanding is presented in the notes to the financial statements. Governmental Activities Business-type Activities Total 2015 2014 2015 2014 2015 2014 General obligation bonds 4,410,000 $ 4,745,000 $ - $ - $ 4,410,000 $ 4,745,000 $ URA bonds 56,338 275,872 - - 56,338 275,872 Loans 96,215 126,110 4,813,265 5,194,240 4,909,480 5,320,350 Revenue bonds - - 32,082,220 35,126,768 32,082,220 35,126,768 Bond premium - - 2,210,469 2,348,623 2,210,469 2,348,623 Accrued compensated absences 663,830 774,049 100,617 105,884 764,447 879,933 5,226,383 $ 5,921,031 $ 39,206,571 $ 42,775,515 $ 44,432,954 $ 48,696,546 $ ECONOMIC FACTORS AND NEXT YEAR'S BUDGETS AND RATES Due to reductions in the real property valuations, it is expected that future property tax increases will be less than the three percent allowed annually on existing real property value as compression on certain properties will be realized. Currently, the housing market in Woodburn is recovering more slowly than nearby areas. We continue to expect revenues to be impacted by the current national and local conditions. REQUESTS FOR INFORMATION This financial report is designed to provide the City of Woodburn's citizens, taxpayers, customers, investors and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. Questions about this report or requests for additional financial information should be addressed to the City of Woodburn, 270 Montgomery Street, Woodburn, Oregon 97071. ---PAGE BREAK--- BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 10 - CITY OF WOODBURN, OREGON STATEMENT OF NET POSITION JUNE 30, 2015 Governmental Business-type Activities Activities Totals ASSETS Cash and investments 19,129,639 $ 24,363,529 $ 43,493,168 $ Accounts receivable 632,155 900,720 1,532,875 Property taxes receivable 550,599 - 550,599 Assessment liens receivable 51,434 - 51,434 Loans receivable 802,662 - 802,662 Prepaid expenses 1,467 - 1,467 Internal balances (40,144) 40,144 - Net pension asset 2,143,574 451,552 2,595,126 Non-depreciable capital assets 28,765,259 6,625,693 35,390,952 Other capital assets, net of depreciation 35,063,357 54,460,041 89,523,398 Total Assets 87,100,002 86,841,679 173,941,681 DEFERRED OUTFLOWS Deferred outflows - contributions to PERS 864,117 182,030 1,046,147 LIABILITIES Accounts payable 5,022,426 185,945 5,208,371 Accrued payroll liabilities 746,304 188,391 934,695 Deposits payable 13,726 107,735 121,461 Interest payable 17,136 474,310 491,446 Noncurrent liabilities: Due within one year: Long-term debt 436,479 3,177,229 3,613,708 Bond premium - 138,154 138,154 Due in more than one year: Long-term debt 4,126,074 33,718,256 37,844,330 Bond premium - 2,072,315 2,072,315 Accrued compensated absenses 663,830 100,617 764,447 Total Liabilities 11,025,975 40,162,952 51,188,927 DEFERRED INFLOWS Net projected to actual earnings to PERS 4,159,922 876,302 5,036,224 NET POSITION Net investment in capital assets 59,266,063 21,979,780 81,245,843 Restricted for: Debt service 107,109 - 107,109 Culture and recreation 206,197 - 206,197 Community development 2,261,373 - 2,261,373 Construction 6,354,346 16,841,111 23,195,457 Unrestricted 4,583,134 7,163,564 11,746,698 Total Net Position 72,778,222 $ 45,984,455 $ 118,762,677 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Fees, Fines Operating Capital and Charges Grants and Grants and Expenses for Services Contributions Contributions FUNCTIONS/PROGRAMS Governmental activities: General government 3,058,648 $ 649,703 $ - $ - $ Public safety 5,662,660 716,467 12,721 1,000 Highways and streets 1,976,022 6,188 1,409,311 449,943 Culture and recreation 2,784,248 571,921 571,893 835,220 Interest on long-term debt 204,905 - - - Total Governmental activities 13,686,483 1,944,279 1,993,925 1,286,163 Business-type activities: Water 2,478,694 3,277,605 - 125,635 Sewer 5,302,994 7,981,658 - 184,637 Total Business-type activities 7,781,688 11,259,263 - 310,272 Total Activities 21,468,171 $ 13,203,542 $ 1,993,925 $ 1,596,435 $ General Revenues: Property taxes Franchise taxes Other taxes Intergovernmental Unrestricted investment earnings Miscellaneous Total General Revenues Transfers Change in Net Position Net Position - beginning of year, as originally reported Restatement Net Position - beginning of year, as restated Net Position - end of year Program Revenues ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 11 - Governmental Business-type Activities Activities Totals (2,408,945) $ - $ (2,408,945) $ (4,932,472) - (4,932,472) (110,580) - (110,580) (805,214) - (805,214) (204,905) - (204,905) (8,462,116) - (8,462,116) - 924,546 924,546 - 2,863,301 2,863,301 - 3,787,847 3,787,847 (8,462,116) 3,787,847 (4,674,269) 8,836,939 - 8,836,939 1,539,926 - 1,539,926 437,339 - 437,339 655,575 - 655,575 99,620 122,988 222,608 28,620 67,461 96,081 11,598,019 190,449 11,788,468 680,212 (680,212) - 3,816,115 3,298,084 7,114,199 72,943,496 43,317,833 116,261,329 (3,981,389) (631,462) (4,612,851) 68,962,107 42,686,371 111,648,478 72,778,222 $ 45,984,455 $ 118,762,677 $ Net (Expenses) Revenues and Changes in Net Position ---PAGE BREAK--- CITY OF WOODBURN, OREGON BALANCE SHEET - GOVERNMENTAL FUNDS JUNE 30, 2015 Special Revenue Capital Projects General Street Street SDC ASSETS Cash and investments 4,716,718 $ 3,229,416 $ 5,638,152 $ Accounts receivable 297,592 139,257 - Property taxes receivable 480,365 - - Assessment liens receivable - - - Loans receivable - - 28,256 Prepaid expenses 1,467 - - Due from other funds - - 1,179,932 Total Assets 5,496,142 $ 3,368,673 $ 6,846,340 $ LIABILITIES, DEFERRED INFLOWS AND FUND BALANCES Liabilities Accounts payable 125,945 $ 381,869 $ 4,293,715 $ Accrued payroll and payroll liabilities 635,548 36,090 - Due to other funds 155,179 - - Total Liabilities 916,672 417,959 4,293,715 Deferred Inflows Unavailable revenue 418,922 - 28,256 Fund Balance Non-spendable 1,467 - - Restricted for: Debt service - - - Construction - 2,950,714 2,524,369 Culture and recreation - - - Community development - - - Committed to: Public safety - - - Capital outlay - - - Unassigned 4,159,081 - - Total Fund Balance 4,160,548 2,950,714 2,524,369 Total Liabilities and Fund Balance 5,496,142 $ 3,368,673 $ 6,846,340 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 12 - Other Governmental Funds Total 5,043,038 $ 18,627,324 $ 171,447 608,296 70,234 550,599 51,434 51,434 774,406 802,662 - 1,467 - 1,179,932 6,110,559 $ 21,821,714 $ 156,170 $ 4,957,699 $ 50,272 721,910 1,064,896 1,220,075 1,271,338 6,899,684 887,057 1,334,235 - 1,467 107,109 107,109 834,351 6,309,434 206,197 206,197 1,469,956 1,469,956 6,960 6,960 1,340,829 1,340,829 (13,238) 4,145,843 3,952,164 13,587,795 6,110,559 $ 21,821,714 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 13 - CITY OF WOODBURN, OREGON RECONCILIATION OF BALANCE SHEET - GOVERNMENTAL FUNDS TO THE STATEMENT OF NET POSITION JUNE 30, 2015 Fund Balances 13,587,795 $ The Statement of Net Position reports receivables at their net realizable value. However, receivables not available to pay for current period expenditures are reported as unavailable in governmental funds. 1,334,235 PERS net pension asset, deferred outflows of resources arising from contributions paid, and deferred inflows arising from changes in proportionate share of earnings in the current year are not financial resources in governmental funds, but are reported in the Statement of Net Position Net pension asset 2,068,315 Deferred outflows 833,779 Deferred inflows (4,013,871) Capital assets are not financial resources in governmental funds, but are reported in the Statement of Net Position at their net depreciable value. Cost 91,002,905 Accumulated depreciation (27,174,289) All liabilities are reported in the Statement of Net Position. However, if they are not due and payable in the current period, they are not recorded in governmental funds. Accrued compensated absences (570,781) Accrued interest (17,136) Long-term debt (4,562,553) Internal service funds are proprietary-type funds and not reported with governmental funds. However, because internal service funds primarily benefit governmental activities, their assets, liabilities and net position are reported along with governmental activities in the Statement of Net Position. 382,874 Internal service fund transfers (93,051) Net Position of Governmental Activities 72,778,222 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 General Fund Street Street SDC REVENUES Taxes and assessments 8,099,893 $ 102,517 $ - $ Licenses and permits 1,898,302 168 440,595 Charges for services 969,588 336,707 - Intergovernmental 786,910 1,409,311 - Fines and forfeitures 673,377 - - Miscellaneous 147,517 172,003 27,695 Total Revenues 12,575,587 2,020,706 468,290 EXPENDITURES Current General government 2,557,455 - - Public safety 6,794,410 - - Highways and streets - 2,005,328 - Culture and recreation 2,246,343 - - Debt Service Principal - - 29,895 Interest - - 6,373 Capital outlay - - 4,293,715 Total Expenditures 11,598,208 2,005,328 4,329,983 REVENUES OVER (UNDER) EXPENDITURES 977,379 15,378 (3,861,693) OTHER FINANCING SOURCES (USES) Transfers in 21,901 220,000 3,025 Transfers out (416,504) (34,501) (36,657) Total Other Financing Sources (Uses) (394,603) 185,499 (33,632) NET CHANGE IN FUND BALANCE 582,776 200,877 (3,895,325) FUND BALANCE, beginning of year, as originally stated 3,577,772 2,749,837 5,354,798 Prior period adjustment - - 1,064,896 FUND BALANCE, beginning of year, restated 3,577,772 2,749,837 6,419,694 FUND BALANCE, end of year 4,160,548 $ 2,950,714 $ 2,524,369 $ Special Revenue Capital Projects ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 14 - Other Governmental Funds Total 1,127,310 $ 9,329,720 $ 785,739 3,124,804 44,807 1,351,102 1,175,665 3,371,886 - 673,377 106,925 454,140 3,240,446 18,305,029 607,160 3,164,615 - 6,794,410 - 2,005,328 2,034,358 4,280,701 554,534 584,429 200,459 206,832 780,215 5,073,930 , 4,176,726 22,110,245 (936,280) (3,805,216) 608,932 853,858 (335,597) (823,259) 273,335 30,599 (662,945) (3,774,617) 5,680,005 17,362,412 (1,064,896) - 4,615,109 17,362,412 3,952,164 $ 13,587,795 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 15 - CITY OF WOODBURN, OREGON RECONCILIATION OF THE STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30, 2015 Net Change in Fund Balances - Total Governmental Funds (3,774,617) $ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds defer revenues that do not provide current financial resources. However, the Statement of Activities recognizes such revenues at their net realizable value when earned, regardless of when received. Property tax receivables (50,351) Increases in other loans receivable (70,645) Governmental funds do not report expenditures for unpaid compensated absences, unpaid payroll, interest expense or arbitrage since they do not require the use of current financial resources. However, the Statement of Activities reports such expenses when incurred, regardless of when settlement ultimately occurs. Accrued compensated absences 10,750 Accrued interest payable 1,926 Capital outlays are reported as expenditures in governmental funds. However, the Statement of Activities allocates the cost of capital outlay over their estimated useful lives as depreciation expense. Capital outlay expenditures capitalized 5,724,628 Depreciation (1,454,367) Proceeds from the issuance of long-term debt provide current financial resources to governmental funds and are reported as revenues. In the same way, repayments of long-term debt use current financial resources and are reported as expenditures in governmental funds. However, neither the receipt of debt proceeds nor the payment of debt principal affect the Statement of Activities, but are reported as increases and decreases in noncurrent liabilities in the Statement of Net Position. Debt principal paid 584,429 Current year PERS pension expense related to change in net pension liability is reported as an expense in the Statement of Activities but is not recorded as an expenditure in the governmental funds. 2,729,829 Net income of internal service funds 114,533 Change in Net Position of Governmental Activities 3,816,115 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF FUND NET POSITION - PROPRIETARY FUNDS JUNE 30, 2015 Water Sewer Sewer Capital Construction ASSETS Current Assets Cash and investments 1,924,388 $ 5,407,102 $ 12,632,714 $ Accounts receivable 211,469 639,037 1,660 Due from other funds - - - Total Current Assets 2,135,857 6,046,139 12,634,374 Noncurrent Assets Nondepreciable capital assets 158,444 1,625,372 3,098,997 Other capital assets, net of depreciation 9,447,701 43,693,185 823,079 Net pension asset 173,874 277,678 - Total Noncurrent Assets 9,780,019 45,596,235 3,922,076 Total Assets 11,915,876 51,642,374 16,556,450 DEFERRED OUTFLOWS Deferred outflows - contributions to PERS 70,092 111,938 - LIABILITIES Current Liabilities Accounts payable 38,921 110,099 18,270 Accrued payroll liabilities 77,704 110,687 - Deposits payable 107,735 - - Accrued interest payable 254,842 219,468 - Due to other funds 37,446 37,446 - Current portion of long-term liabilities Long-term debt 698,544 2,478,685 - Bond premiums - 138,154 - Total Current Liabilities 1,215,192 3,094,539 18,270 Noncurrent Liabilities Long-term debt 9,790,537 23,927,719 - Bond premiums - 2,072,315 - Accrued compensated absences 42,538 58,079 - Total Noncurrent Liabilities 9,833,075 26,058,113 - Total Liabilities 11,048,267 29,152,652 18,270 DEFERRED INFLOWS Net projected to actual earnings to PERS 337,426 538,876 - NET POSITION: Net investment in capital assets (882,936) 16,839,838 3,922,076 Restricted for: Construction - - 12,296,851 Unrestricted 1,483,211 5,222,946 319,253 Total Net Position 600,275 $ 22,062,784 $ 16,538,180 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 16 - Governmental Activities Other Business- type Funds Total Internal Service 4,399,325 $ 24,363,529 $ 502,315 $ 48,554 900,720 23,859 115,036 115,036 - 4,562,915 25,379,285 526,174 1,742,880 6,625,693 - 496,076 54,460,041 - - 451,552 75,258 2,238,956 61,537,286 75,258 6,801,871 86,916,571 601,432 - 182,030 30,338 18,655 185,945 78,452 - 188,391 24,394 - 107,735 - - 474,310 - - 74,892 - - 3,177,229 - - 138,154 - 18,655 4,346,656 102,846 - 33,718,256 - - 2,072,315 - - 100,617 - - 35,891,188 - 18,655 40,237,844 102,846 - 876,302 146,050 2,238,956 22,117,934 - 4,544,260 16,841,111 - - 7,025,410 382,874 6,783,216 $ 45,984,455 $ 382,874 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Water Sewer OPERATING REVENUES Charges for services 3,277,605 $ 7,981,658 $ Miscellaneous 67,332 129 Total Operating Revenues 3,344,937 7,981,787 OPERATING EXPENSES Personal services 939,095 1,297,077 Materials and services 677,823 1,304,738 Depreciation 360,605 1,822,087 Total Operating Expenses 1,977,523 4,423,902 OPERATING INCOME (LOSS) 1,367,414 3,557,885 NONOPERATING REVENUES (EXPENSES) Investment revenue 9,078 27,300 Amortization of bond premiums - 138,154 Interest expense (470,103) (952,334) Total Nonoperating Revenues (Expenses) (461,025) (786,880) NET INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 906,389 2,771,005 Capital contributions - - Transfers in - - Transfers out (177,879) (588,504) Non-cash transfers out - - CHANGE IN NET POSITION 728,510 2,182,501 NET POSITION, beginning of year 194,710 20,188,800 Restatement (322,945) (308,517) NET POSITION, beginning of year as restated (128,235) 19,880,283 NET POSITION, end of year 600,275 $ 22,062,784 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 17 - Governmental Activities Sewer Capital Construction Other Business- type Funds Total Internal Service - $ - $ 11,259,263 $ 1,326,699 $ - - 67,461 45,016 - - 11,326,724 1,371,715 - - 2,236,172 279,336 - - 1,982,561 1,045,799 64,912 31,068 2,278,672 - 64,912 31,068 6,497,405 1,325,135 (64,912) (31,068) 4,829,319 46,580 63,993 22,617 122,988 4,138 - - 138,154 - - - (1,422,437) - 63,993 22,617 (1,161,295) 4,138 (919) (8,451) 3,668,024 50,718 - 310,272 310,272 - 57,239 34,759 91,998 156,998 - - (766,383) - (5,827) - (5,827) (93,183) 50,493 336,580 3,298,084 114,533 16,487,687 6,446,636 43,317,833 408,124 - - (631,462) (139,783) 16,487,687 6,446,636 42,686,371 268,341 16,538,180 $ 6,783,216 $ 45,984,455 $ 382,874 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF CASH FLOWS - PROPRIETARY FUNDS YEAR ENDED JUNE 30, 2015 Water Sewer CASH FLOWS FROM OPERATING ACTIVITIES Collected from customers 3,321,760 $ 7,932,784 $ Paid to suppliers (672,845) (1,251,347) Paid to employees (1,167,260) (1,652,871) Net Cash Provided by (Used in) Operating Activities 1,481,655 5,028,566 CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in - - Transfers out (190,217) (600,842) Net Cash Provided by (Used in) Non-Capital Financing Activities (190,217) (600,842) CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets - - Proceeds from disposal of capital assets 7,277 - Principal paid on loans and bonds payable (670,523) (2,755,000) System development revenue - - Interest paid (485,175) (972,714) Net Cash Provided by (Used in) Capital and Related Financing Activities (1,148,421) (3,727,714) CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 9,078 27,300 Increase (Decrease) in Cash and Investments 152,095 727,310 CASH AND INVESTMENTS, Beginning of year 1,772,293 4,679,792 CASH AND INVESTMENTS, End of year 1,924,388 $ 5,407,102 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 18 - Governmental Activities Sewer Capital Construction Other Business- Type Funds Totals Internal Service 402 $ 200 $ 11,255,146 $ 1,361,687 $ 18,270 - (1,905,922) (1,034,453) - - (2,820,131) (509,571) 18,672 200 6,529,093 (182,337) 57,239 123,955 181,194 156,998 (53,000) - (844,059) - 4,239 123,955 (662,865) 156,998 (126,464) (486,799) (613,263) (93,183) - - 7,277 - - - (3,425,523) - - 360,892 360,892 - - - (1,457,889) - (126,464) (125,907) (5,128,506) (93,183) 63,993 22,617 122,988 4,138 (39,560) 20,865 860,710 (114,384) 12,672,274 4,378,460 23,502,819 616,699 12,632,714 $ 4,399,325 $ 24,363,529 $ 502,315 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON STATEMENT OF CASH FLOWS (Continued) YEAR ENDED JUNE 30, 2015 Water Sewer RECONCILIATION OF OPERATING INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) 1,360,714 $ 3,559,703 $ Depreciation 360,605 1,822,087 Change in assets and liabilities: Accounts receivable (23,655) (49,003) Deferred outflows (2,507) (4,015) Accounts payable and accrued liabilities 10,884 64,765 Customer deposits 7,755 - Compensated absences payable (4,587) (680) Net pension liability (asset) (564,478) (903,671) Deferred inflows 336,924 539,380 Net Cash Provided by (Used in) Operating Activities 1,481,655 $ 5,028,566 $ Noncash Transactions Transfer of capital assets - $ - $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 19 - Governmental Activities Sewer Capital Construction Other Business- Type Funds Totals Internal Service (64,912) $ (31,068) $ 4,824,437 $ 46,580 $ 64,912 31,068 2,278,672 - 402 200 (72,056) (10,028) - - (6,522) (688) 18,270 - 93,919 (20,091) - - 7,755 - - - (5,267) (99,469) - - (1,468,149) (244,691) - - 876,304 146,050 18,672 $ 200 $ 6,529,093 $ (182,337) $ (5,827) $ 5,827 $ - $ (93,183) $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 20 - CITY OF WOODBURN, OREGON STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2015 Pension Trust ASSETS Cash and investments 54,617 $ LIABILITIES - NET POSITION Held in trust for benefits and other purposes 54,617 $ ---PAGE BREAK--- The accompanying notes are an integral part of the financial statements. - 21 - CITY OF WOODBURN, OREGON STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30, 2015 Pension Trust ADDITIONS Earnings 1,787 $ Total additions 1,787 DEDUCTIONS 92,515 CHANGE IN NET POSITION (90,728) NET POSITION, beginning of year 145,345 NET POSITION, end of year 54,617 $ ---PAGE BREAK--- NOTES TO BASIC FINANCIAL STATEMENTS ---PAGE BREAK--- - 22 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the City of Woodburn, Oregon (the City) have been prepared in conformity with accounting principles generally accepted in the United States of America (GAAP) as applied to governmental units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting standards. The Financial Reporting Entity The City of Woodburn, Oregon is governed by an elected mayor and six council members who comprise the City Council. The City Council exercises supervisory responsibilities over the City operations, but day-to-day management control is the responsibility of a city administrator. All significant activities and organizations for which the City is financially accountable are included in the financial statements for the year ended June 30, 2015. There are certain governmental agencies and various service districts which provide services within the City. These agencies have independently elected governing boards and the City is not financially accountable for these organizations. Therefore, financial information for these agencies is not included in the accompanying basic financial statements. As defined by accounting principles generally accepted in the United States of America, the financial reporting entity consists of the primary government, as well as its component units, which are legally separate organizations for which the elected officials of the primary government are financially accountable. Financial accountability is defined as appointment of a voting majority of the component unit's board, and either a) the ability to impose will by the primary government, or b) the possibility that the component unit will provide a financial benefit to or impose a financial burden on the primary government. The City of Woodburn's financial statements include the Woodburn Urban Renewal Agency as a blended component unit. The City Council and Board of Directors of Woodburn Urban Renewal Agency are composed of the same individuals. The separately issued financial statements of the Woodburn Urban Renewal Agency may be obtained from the City, 270 Montgomery Street, Woodburn, Oregon 97071. Basic Financial Statements Basic financial statements are presented at both the government-wide and fund financial level. Both levels of statements categorize primary activities as either governmental or business-type. Governmental activities, which are normally supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Government-wide financial statements display information about the reporting government as a whole. For the most part, the effect of interfund activity has been removed from these statements. These statements focus on the sustainability of the City as an entity and the change in aggregate financial position resulting from the activities of the fiscal period. These aggregated statements consist of the Statement of Net Position and the Statement of Activities. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include charges to customers or applicants who purchase, use, or directly benefit from goods, services or privileges provided by a given function or segment, and grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. ---PAGE BREAK--- - 23 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Basis of Presentation (Continued) Fund financial statements display information at the individual fund level. Each fund is considered to be a separate accounting entity. Funds are classified and summarized as governmental, enterprise or fiduciary. Currently, the City has general, special revenue, internal service, capital projects, debt service and enterprise type funds. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Nonmajor funds are consolidated into a single column within each fund type in the financial section of the basic financial statements and are detailed in the other supplementary information. The government-wide and proprietary fund financial statements are accounted for using an economic resources measurement focus, whereby all assets and liabilities are included in the statement of net position and the statement of fund net position. The increases and decreases in those net positions are presented in the government-wide statement of activities and in the proprietary fund statement of revenues, expenses and changes in fund net position. These funds use the accrual basis of accounting whereby revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Interfund activity consists of transfers, services provided and/or used, reimbursements, advances and loans. As a general rule, the effect of interfund activity has been eliminated from the governmental-wide financial statements. Exceptions to this general rule include interfund services provided and/or used. Interfund services provided and/or used are accounted for as revenues and expenses since the elimination of such revenues and expenses would distort the direct costs and program revenues reported for the various functions. Amounts reported as program revenues in the statement of activities include fines, fees and charges to customers or applicants for goods, services or privileges provided, operating grants and contributions, and capital grants and contributions, including special assessments. Grants and contributions not restricted are reported as general revenues rather than as program revenues. Likewise, general revenues include all taxes. Operating revenues and operating expenses are intermediate components within the proprietary fund statement of revenues, expenses and changes in fund net position, and include only those transactions that constitute their principal, ongoing activities exclusive of investing or financing transactions. Significant operating revenues include charges for services and miscellaneous income. Significant operating expenses include personnel, materials and supplies, outside services, and depreciation. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Fund Balance In the fund financial statements, the fund balance for governmental funds is reported in classifications that comprise a hierarchy based primarily on the extent to which the City is bound to honor constraints on the specific purposes for which amounts in those funds can be spent. Although not a major impact on the financial statements, Governmental Fund type fund balances are now reported in the following classifications. Fund balance is reported as nonspendable when the resources cannot be spent because they are either in a nonspendable form or legally or contractually required to be maintained intact. Resources in nonspendable form include inventories, prepaids and deposits, and assets held for resale. Fund balance is reported as restricted when the constraints placed on the use of resources are either: externally imposed by creditors (such as through debt covenants), grantors, contributors, or laws or regulations of other governments; or imposed by law through constitutional provisions or enabling legislation. ---PAGE BREAK--- - 24 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Fund Balance (Continued) Fund balance is reported as committed when the City Council takes formal action that places specific constraints on how the resources may be used. The City Council can modify or rescind the commitment at any time through taking a similar formal action. Resources that are constrained by the City’s intent to use them for a specific purpose, but are neither restricted nor committed, are reported as assigned fund balance. Intent is expressed when the City Council approves which resources should be “reserved” during the adoption of the annual budget. The City’s Finance Director uses that information to determine whether those resources should be classified as assigned or unassigned for presentation in the City’s Annual Financial Report. Unassigned fund balance is the residual classification for the General Fund. This classification represents fund balance that has not been restricted, committed, or assigned within the General Fund. This classification is also used to report any negative fund balance amounts in other governmental funds. The City Council has approved a policy to maintain an ending fund balance in the general fund, in order to provide stable services and employment to offset cyclical variations in revenues and expenditures. The targeted floor for the ending balance will be at ten percent of annual operating revenue, as shown as a minimum fund balance in the General Fund. The City Council is the highest level decision making authority and may take formal action by vote or resolution to establish, modify, or rescind a fund balance commitment. Definitions of Governmental Fund Types The General Fund is used to account for all financial resources not accounted for in another fund. Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects. The term “proceeds of specific revenues sources” means that the revenue sources for the fund must be from restricted or committed sources, specifically that a substantial portion of the revenue must be from these sources and be expended in accordance with those requirements. Capital Projects Funds are utilized to account for financial resources to be used for the acquisition or construction of capital equipment and facilities. Debt Service Funds are utilized to account for the accumulation of resources for, and the payment of, long-term debt principal and interest. Governmental Fund Financial Statements Governmental funds use the modified accrual basis of accounting whereby revenues are recorded only when susceptible to accrual (both measurable and available). “Measurable” means that the amount of the transaction can be determined. “Available” is defined as being collectible within the current period or soon enough thereafter (30 days) to be used to liquidate liabilities of the current period. Expenditures other than interest on noncurrent obligations, are recorded when the fund liability is incurred. ---PAGE BREAK--- - 25 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Governmental Fund Financial Statements (Continued) Real and personal property taxes are levied as of July 1 for each fiscal year on values assessed as of January 1. Property taxes are an enforceable lien on both real and personal property as of July 1 and are due and payable in three installments on November 15, February 15 and May 15. All property taxes are billed and collected by Marion County and remitted to the City. In the governmental fund financial statements, property taxes are reflected as revenues in the fiscal period for which they were levied, provided they are due, or past due and receivable within the current period, and collected within the current period or expected to be collected soon enough thereafter to be used to pay liabilities of the current period (30 days). Otherwise, they are reported as unavailable revenues. Intergovernmental revenues are recognized as revenues when all eligibility requirements are met. There are, however, essentially two types of intergovernmental revenues. In one, monies must be expended on the specific purpose or project before any amounts will be paid to the City; therefore, all eligibility requirements are determined to be met when the underlying expenditures are recorded. In the other, monies are virtually unrestricted as to the purpose of the expenditure and are usually revocable only for failure to comply with prescribed requirements; therefore, all eligibility requirements are determined to be met at the time of receipt, or earlier, if the susceptible accrual criteria are met. Licenses and permits, charges for services, fines and forfeits and miscellaneous revenues (except investment earnings) are recorded as revenues when received in cash because they are generally not measurable until actually received. Investment earnings are recorded as earned since they are measurable and available. When both restricted and unrestricted resources are available for use, it is the City's practice to use restricted resources first, then unrestricted resources as they are needed. The reporting model sets forth minimum criteria (percentage of the assets, liabilities, receipts or disbursements of either fund category or the government and enterprise combined) for the determination of major funds. Nonmajor funds are combined in a column in the fund financial statements and detailed in the combining section. The City reports the following major governmental funds: General Fund Street Fund Street SDC Fund The City reports the following major proprietary funds: Water Fund Sewer Fund Sewer Capital Construction Fund Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect reporting amounts of certain assets, liabilities, revenues and expenses as of and for the year ended June 30, 2015. Actual results may differ from such estimates. ---PAGE BREAK--- - 26 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Cash and Investments Investments, included in cash and investments, are carried at cost which approximates fair value. For purposes of the statement of cash flows, the proprietary funds consider cash and cash equivalents to include the cash and investment common pool. These amounts have the general characteristics of demand deposit accounts in that the proprietary funds may deposit additional cash at any time and also may withdraw cash at any time without prior notice or penalty. Receivables and Unavailable Revenues Receivables for state, county and local shared revenues, included in accounts receivable, are recorded as revenue in the governmental funds as earned. Receivables of the enterprise funds are recorded as revenue as earned. Property taxes receivable for the governmental fund types, which have been collected within thirty days subsequent to year end, are considered measurable and available and are recognized as revenues. All other property taxes are considered unavailable and, accordingly, have not been recorded as revenue. Property taxes receivable by the City represent the City's allocated share of delinquent property taxes and other amounts to be collected from property owners within Marion County, Oregon. Assessment liens in the governmental fund types are recognized as receivables at the time property owners are assessed for property improvements. All assessments receivable are considered unavailable and, accordingly, have not been recorded as revenue. Revolving loans in the government fund types are recognized as receivables at the time housing rehabilitation loans are made. All loans receivable are considered unavailable and, accordingly, have not been recorded as revenue. Capital Assets Capital assets are stated at cost or estimated historical cost. Donated assets are recorded at fair market value at date of donation. Estimated fair market value of donated assets is determined based on engineering estimates of current cost or price indexed cost. Capital assets include land, right-of-way (included with land), buildings, improvements, equipment, infrastructure and other tangible and intangible assets costing over $5,000 used in operations that have initial useful lives extending beyond a single reporting period. Infrastructure are those capital assets that are stationary in nature and can be preserved for a significantly greater number of years than most other capital assets. Infrastructure reported in governmental activities consists of roads, bridges, sidewalks and traffic and lighting systems. Infrastructure reported in business-type activities consists of water and wastewater collection systems. All capital assets, except for infrastructure in governmental activities prior to July 1, 1980, have been capitalized in the government-wide and proprietary fund financial statements. In accordance with the current financial resources measurement focus, capital assets are not capitalized in the governmental fund financial statements. All purchased capital assets are valued at cost where historical records are available and at estimated historical cost where no historical records exist. Historical cost is measured by the cash or cash equivalent price of obtaining an asset, including ancillary charges necessary to place the asset into its intended location and condition ---PAGE BREAK--- - 27 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Capital Assets (Continued) for use. Donated capital assets are reported at their estimated fair value at the time of acquisition plus ancillary charges, if any. Additions, improvements, and other capital outlays that significantly extend the useful life of an asset are capitalized. Amounts expended for maintenance and repairs are charged to expenditures/expenses in the appropriate funds as incurred and are not capitalized. Capital assets are depreciated unless they are inexhaustible in nature land and right-of-ways). Depreciation is an accounting process to allocate the cost of capital assets to expense in a systematic and rational manner to those periods expected to benefit from the use of capital assets. Depreciation is not intended to represent an estimate in the decline of fair market value, nor are capital assets, net of accumulated depreciation, intended to represent an estimate of the current condition of the assets, or the maintenance requirements needed to maintain the assets at their current level of condition. Depreciation is computed over the estimated useful lives of the capital assets. All estimates of useful lives are based on actual experience by City departments with identical or similar capital assets. Depreciation is calculated on the straight-line basis, except for infrastructure and improvements other than buildings reported in the governmental activities column of the government-wide financial statements, which are calculated using a composite depreciation method. The estimated useful lives of the various categories of assets are as follows: Buildings and improvements 10 - 40 years Water and Sewer Systems 15 - 50 years Infrastructure 50 years Equipment 5 - 15 years Upon disposal of capital assets, cost and accumulated depreciation are removed from the accounts and, if appropriate, a gain or loss on the disposal is recognized. Long-Term Debt Long-term debt directly related and expected to be paid from the enterprise funds is recorded in these funds. All other unmatured long-term debt is recorded on the statement of net position. Repayment of general bonded debt will be made from debt service funds. Bond premiums will be amortized over the life of the related debt. Payment of compensated absences will be made primarily from the General Fund, Street Fund, Water Fund and Sewer Fund. Deferred Outflows/Inflows of Resources In addition to assets, the statement of net position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows, represents a consumption of net position that applies to a future period(s) and so will not be recognized as an outflow of resources (expenditure) until then. The City reports deferred outflow of resources related to pensions for contributions made after the June 30, 2014 measurement date. ---PAGE BREAK--- - 28 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued) Deferred Outflows/Inflows of Resources (Continued) In addition to liabilities, the statement of net position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows, represents an acquisition that applies to a future period(s) and so will not be recognized as an inflow of resources (revenue) until that time. The City has two items that qualify for reporting in this category. The City reports deferred inflows related to pensions for changes in projected earnings versus actual earnings and contribution versus proportionate share of contributions. The other instance of deferred inflows arises only under a modified accrual basis of accounting. Accordingly, unavailable revenue, is reported only in the governmental funds balance sheet. The governmental funds report unavailable revenues from property taxes and loans receivable. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. Net Pension Liability The City reports its proportionate share of the Net Pension Liability of the Oregon Public Employees Retirement System (OPERS). A negative Net Pension Liability is reported as a Net Pension Asset. For purposes of measuring the net pension liability or asset, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about fiduciary net position of OPERS and additions to/deductions from OPERS’s fiduciary net position have been determined on the same basis as they are reported by OPERS. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with benefit terms. Investments are reported at fair value. Accrued Vacation Pay Accumulated vested vacation pay is accrued in the proprietary funds as it is earned by employees. In governmental fund types, the amounts, if any, expected to be liquidated with expendable available resources are accrued as liabilities of the funds and the amount payable from future resources is recorded on the statement of net position. The accrued payables in the Statement of Net Position are recorded as long-term in that the amount is not expected to materially change. Sick pay, which does not vest, is recorded in all funds when leave is taken. Budget and Budgetary Accounting A budget is prepared for each fund in accordance with the modified accrual basis of accounting for all funds. For budgetary purposes, interfund loan transactions are reported as interfund transfers. Appropriations are made at the department level for the General Fund and the object level for all other funds. Expenditures may not legally exceed appropriations. Appropriations lapse at the end of each fiscal year. Budget amounts include original approved amounts and all subsequent appropriation transfers approved by the City Council. After budget approval, the City Council may approve supplemental appropriations if an occurrence, condition, or need exists which had not been ascertained at the time the budget was adopted. Management may not amend the budget. A supplemental budget requires hearings before the public, publications in newspapers and approval by the City Council. ---PAGE BREAK--- - 29 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 ORGANIZATION AND OPERATION The City's financial operations are accounted for in the following funds: Governmental Fund Types General Fund The General Fund accounts for activities of the City which are not accounted for in any other fund. Principal sources of revenue are property taxes, franchise fees and state and county shared revenues. Primary expenditures are for police protection, recreation and general government. Special Revenue Funds Street Fund - This fund is used to account for the City’s street operations. The fund’s major source of revenue is highway gas tax received from the State of Oregon. Transit Fund – This fund accounts for amounts held to be used for weekday transportation services. Building Inspection Fund - This fund accounts for building permit revenue and associated operations. Search and Seizure Fund - This fund accounts for the seizure of private properties that are the product of illegal activity, and for the expenditure of the proceeds by the City for illegal drug activity investigations and subsequent arrests. Housing Rehabilitation Fund - This fund accounts for the City’s CDBG grant program and provides low income housing and small business loans. Library Endowment Fund - This fund accounts for funds held to be used for library improvement projects. Museum Endowment Fund - This fund accounts for amounts held for museum activities. Lavelle Black Trust Fund – This fund accounts for the donations received to continue the police dog program. Urban Renewal Fund – This fund accounts for transactions related to urban renewal, including debt service on the URA loan. Property taxes are the primary source of revenue. Capital Projects Funds Street SDC Fund - This fund accounts for the collection and spending of street SDC’s. General Capital Construction Fund - This fund is used to account for transfers from general services funds used for general services construction projects. Special Assessment Fund - This fund accounts for the repayment of local improvement district (LID) assessments. The money is used for construction of LID projects. Street/Storm Capital Construction Fund - This fund accounts for transfers from the Storm and Street funds. The money is used for street and storm related capital projects. ---PAGE BREAK--- - 30 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 ORGANIZATION AND OPERATION (Continued) Governmental Fund Types (Continued) Capital Projects Funds (Continued) Parks SDC Fund - This fund is used to account for the collection and spending of park SDC’s. Storm SDC Fund - This fund accounts for the collection and spending of storm SDC’s. Equipment Replacement Fund - This fund accounts for transfers from other funds set aside for future equipment purchases. Debt Service Fund GO Debt Service Fund - This fund accounts for debt service on the City’s 2005 GO bond. Property taxes are the major source of revenue. Proprietary Fund Types Enterprise Funds The City has six enterprise funds. Three funds are related to water, and three are related to sewer. The specific funds and their purposes are as follows. Water Fund - This fund accounts for the City’s water system operation. Customer charges are the primary source of revenue. Sewer Fund - This fund accounts for the operation of the City's sewer system. Customer charges are the primary revenue source. Sewer Capital Construction Fund - This fund was used to account for the City’s sewer treatment plant upgrade. The major source of revenue is debt proceeds. Water SDC Fund - This fund accounts for the collection and spending of water SDC’s. Sewer SDC Fund - This fund accounts for the collection and spending of sewer SDC’s. Water Capital Construction Fund - This fund accounts for water system capital improvement projects and the retirement of associated debt. Internal Service Funds The City has two internal service funds which provide services to other City departments. Internal charges are the primary revenue source for all funds. Expenditures are for the purposes as described below. Information Services Fund - This fund accounts for the maintenance and replacement of the City’s network and technology services. Insurance Fund – This fund accounts for the City’s insurance coverage. ---PAGE BREAK--- - 31 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 ORGANIZATION AND OPERATION (Continued) Internal Service Funds (Continued) Technical & Environmental Services Fund - This fund was closed during 2015. Fiduciary Fund The City has one fiduciary fund. The City's pension trust fund holds assets to provide retirement benefits to certain City employees. CASH AND INVESTMENTS The City maintains a cash and investment pool that is available for use by all funds. Each fund type's portion of this pool is displayed on the Statement of Net Position as part of “cash and investments.” Cash Deposits with financial institutions $ 474,535 $ 474,535 Cash on hand 2,310 2,310 Investments Local Government Investment Pool 43,016,323 43,016,323 Assets held for pension benefits 54,617 54,617 $ 43,547,785 $ 43,547,785 Cash is reported in the financial statements as follows: Governmental funds $ 18,627,324 Internal Service funds (included in governmental activities) 502,315 Enterprise funds 24,363,529 Fiduciary funds 54,617 $ 43,547,785 Carrying Fair Value Value Deposits The book balance of the City’s bank deposits (checking accounts) was $474,535 and the bank balance was $660,730 at year end. The difference is due to transactions in process. Bank deposits are secured to legal limits by federal deposit insurance. The remaining amount is secured in accordance with ORS 295 under a collateral program administered by the Oregon State Treasurer. Investments The State Treasurer of the State of Oregon maintains the Oregon Short-term Fund, of which the Local Government Investment Pool is part. Participation by local governments is voluntary. The State of Oregon investment policies are governed by statute and the Oregon Investment Council. In accordance with Oregon Statutes, the investment funds are invested as a prudent investor would do, exercising reasonable care, skill and ---PAGE BREAK--- - 32 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 CASH AND INVESTMENTS (Continued) Investments (Continued) caution. The Oregon Short-term Fund is the LGIP for local governments and was established by the State Treasurer. It was created to meet the financial and administrative responsibilities of federal arbitrage regulations. The investments are regulated by the Oregon Short Term Fund Board and approved by the Oregon Investment Council (ORS 294.805 to 294.895). At June 30, 2015, the fair value of the position in the Oregon State Treasurer’s Short-term Investment Pool was approximately equal to the value of the pool shares. The investment in the Oregon Short-term Fund is not subject to classification. Separate financial statements for the Oregon Short-term Fund are available from the Oregon State Treasurer. Interest Rate Risk In accordance with its investment policy, the City manages its exposure to declines in fair value of its investments by limiting the weighted average maturity of its investments. Custodial Credit Risk - Deposits This is the risk that in the event of a bank failure, the City’s deposits may not be returned. The Federal Depository Insurance Corporation (FDIC) provides insurance for the City’s deposits with financial institutions up to $250,000 each for the aggregate of all non-interest bearing accounts and up to $250,000 for the aggregate of all interest bearing accounts at each institution. Deposits in excess of FDIC coverage are with institutions participating in the Oregon Public Funds Collateralization Program (PFCP). The PFCP is a shared liability structure for participating bank depositories, better protecting public funds though still not guaranteeing that all funds are 100% protected. Barring any exceptions, a bank depository is required to pledge collateral valued at least 10% of their quarter-end public fund deposits if they are well capitalized, 25% of their quarter-end public fund deposits if they are adequately capitalized or 110% of their quarter-end public fund deposits if they are undercapitalized or assigned to pledge 110% by the Office of the State Treasurer. In the event of a bank failure, the entire pool of collateral pledged by all qualified Oregon public funds bank depositories is available to repay deposits of public funds of government entities. As of June 30, 2015, $410,730 of the City’s bank balances were exposed to custodial credit risk as part of the Public Funds Collateralization Program. Custodial Risk - Investments For an investment, this is the risk that, in the event of a failure of the counterparty, the City will not be able to recover the value of its investments or collateralized securities that are in the possession of an outside party. The City's investment policy limits the types of investments that may be held and does not allow securities to be held by the counterparty. The LGIP is administered by the Oregon State Treasury with the advice of other state agencies and is not registered with the U.S. Securities and Exchange Council. The LGIP is an open-ended no-load diversified portfolio offered to any agency, political subdivision, or public corporation of the state that by law is made the custodian of, or has control of any fund. The LGIP is commingled with the State's short-term funds. In seeking to best serve local governments of Oregon, the Oregon Legislature established the Oregon Short Term Fund Board, which has established diversification percentages and specifies the types and maturities of the investments. The purpose of the Board is to advise the Oregon State Treasury in the management and investment of the LGIP. These investments within the LGIP must be invested and managed as a prudent investor would, exercising reasonable care, skill and caution. Professional standards indicate that the investments in external investment pools are not subject to custodial risk because they are not evidenced by securities that exist in physical or book entry form. Nevertheless, management does not believe that there is any substantial custodial risk related to investments in the LGIP. ---PAGE BREAK--- - 33 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 CAPITAL ASSETS The summary of capital assets for the business-type activities for the year ended June 30, 2015 is as follows: Balances Balances July 1, June 30, 2014 Additions Retirements 2015 Nondepreciable assets Land 1,783,816 $ - $ - $ 1,783,816 $ Construction in progress 4,319,096 527,031 (4,250) 4,841,877 Subtotal, nondepreciable assets 6,102,912 527,031 (4,250) 6,625,693 Depreciable assets Buildings 62,587,863 46,765 - 62,634,628 Water and sewer systems 28,771,320 4,250 - 28,775,570 Equipment 2,361,602 - - 2,361,602 Subtotal, depreciable assets 93,720,785 51,015 - 93,771,800 Accumulated depreciation Buildings and improvements (24,591,134) (1,710,124) - (26,301,258) Water and sewer systems (10,974,631) (460,626) - (11,435,257) Equipment (1,467,322) (107,922) - (1,575,244) Total accumulated depreciation (37,033,087) (2,278,672) - (39,311,759) Total depreciable assets, net 56,687,698 (2,227,657) - 54,460,041 Net capital assets 62,790,610 $ (1,700,626) $ (4,250) $ 61,085,734 $ Depreciation expense was allocated as follows: Water funds 391,673 $ Sewer funds 1,886,999 2,278,672 $ ---PAGE BREAK--- - 34 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 CAPITAL ASSETS (Continued) The changes in the capital assets for governmental activities for the year ended June 30, 2015 are as follows: Balances Balances July 1, June 30, 2014 Additions Retirements 2015 Nondepreciable assets Land 22,567,381 $ - $ - $ 22,567,381 $ Construction in progress 1,287,569 4,984,575 (74,266) 6,197,878 Subtotal, nondepreciable assets 23,854,950 4,984,575 (74,266) 28,765,259 Depreciable assets Buildings 16,593,555 - - 16,593,555 Equipment 6,101,779 650,697 - 6,752,476 Infrastructure 38,727,993 163,622 - 38,891,615 Subtotal, depreciable assets 61,423,327 814,319 - 62,237,646 Accumulated depreciation Buildings (5,727,007) (466,102) - (6,193,109) Equipment (4,845,449) (383,491) - (5,228,940) Infrastructure (15,147,466) (604,774) - (15,752,240) Total accumulated depreciation (25,719,922) (1,454,367) - (27,174,289) Total depreciable assets, net 35,703,405 (640,048) - 35,063,357 Net capital assets 59,558,355 $ 4,344,527 $ (74,266) $ 63,828,616 $ Depreciation expense was allocated as follows: General government 434,762 $ Public safety 235,628 Highways and streets 727,619 Culture and recreation 56,358 1,454,367 $ ---PAGE BREAK--- - 35 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 LONG-TERM DEBT Long-term debt transactions for the year were as follows: Outstanding Outstanding Due July 1, Redeemed June 30, Within 2014 Issued During Year 2015 One Year Governmental Activities: Series 2005 general obligation bonds due in annual installments with principal and interest varying annually 4,745,000 $ - $ (335,000) $ 4,410,000 $ 350,000 $ 1999 Oregon EDD Loan due in annual installments of $38,319 with interest at 5.01%. 126,110 - (29,895) 96,215 30,141 2005 URA bonds due in quarterly installments of $56,933 with interest at 4.22%. 275,872 - (219,534) 56,338 56,338 5,146,982 - (584,429) 4,562,553 436,479 Accrued compensated absences 774,049 716,743 (826,962) 663,830 - 5,921,031 $ 716,743 $ (1,411,391) $ 5,226,383 $ 436,479 $ Outstanding Matured/ Outstanding Due July 1, Redeemed June 30, Within 2014 Issued During Year 2015 One Year Business-type Activities: Series 2003 Water loan paid over 25 years; interest at various rates 5,965,364 $ - $ (289,548) $ 5,675,816 $ 301,530 $ 2005 Oregon EDD due in annual installments including interest at 4.21% 2,597,120 - (190,487) 2,406,633 198,507 2005 SDWR due in annual installments including interest at 4.21% 2,597,120 - (190,488) 2,406,632 198,507 2011 Sewer Revenue Bonds paid over 20 years; interest at various rates 29,161,404 - (2,755,000) 26,406,404 2,478,685 40,321,008 - (3,425,523) 36,895,485 3,177,229 2011 Sewer Revenue Bond premium 2,348,623 - (138,154) 2,210,469 138,154 Accrued compensated absences 105,884 103,614 (108,881) 100,617 - 42,775,515 $ 103,614 $ (3,672,558) $ 39,206,571 $ 3,315,383 $ ---PAGE BREAK--- - 36 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 LONG-TERM DEBT (Continued) Future maturities of long-term debt are as follows: Governmental Activities Ending Principal Interest Total 2016 436,479 $ 185,340 $ 621,819 $ 2017 400,399 169,937 570,336 2018 420,675 153,956 574,631 2019 405,000 136,736 541,736 2020 425,000 120,536 545,536 2021-25 2,475,000 322,675 2,797,675 4,562,553 $ 1,089,180 $ 5,651,733 $ Fiscal Year June 30, Business-type Activities Ending Principal Interest Total 2016 3,177,229 $ 1,358,931 $ 4,536,160 $ 2017 3,330,966 1,358,943 4,689,909 2018 3,921,935 1,123,066 5,045,001 2019 4,407,430 996,283 5,403,713 2020 4,293,372 1,332,332 5,625,704 2021-25 15,390,073 3,587,884 18,977,957 2026-30 2,329,480 289,102 2,618,582 2031 45,000 1,969 46,969 36,895,485 $ 10,048,510 $ 46,943,995 $ June 30, Fiscal Year ---PAGE BREAK--- - 37 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM Plan Description Substantially all City employees are members in the Oregon Public Employees Retirement System (OPERS); a cost-sharing multiple-employer defined benefit pension plan that acts as a common investment and administrative agent for government units in the State of Oregon. Employees hired before August 29, 2003 belong to the Tier One/Tier Two Retirement Benefit Program (established pursuant to ORS Chapter 238), while employees hired on or after August 29, 2003 belong to the OPSRP Pension Program (established pursuant to ORS Chapter 238A). OPERS produces an independently audited CAFR which can be found at: http://www.oregon.gov/pers/Pages/section/financial_reports/financials.aspx. Benefits Provided Tier One/Tier Two Retirement Benefit Pension Benefits. The PERS retirement allowance is payable for life. It may be selected from 13 retirement benefit options. These options include survivorship benefits and lump-sum refunds. The basic benefit is based on years of service and final average salary. A percentage (2.0% for police and fire employees, 1.67% for general service employees) is multiplied by the number of years of service and the final average salary. Benefits may also be calculated under either a formula plus annuity (for members who were contributing before August 21, 1981) or a money match computation if a greater benefit results. A member is considered vested and will be eligible at a minimum retirement age for a service retirement allowance if he or she has had contribution in each of five calendar years or has reached at least 50 years of age before ceasing employment with a participating employer (age 45 for police and fire members). General service employees may retire after reaching age 55. Police and fire members are eligible after reaching age 50. Tier One general service employee benefits are reduced if retirement occurs prior to age 58 with fewer than 30 years of service. Police and fire member benefits are reduced if retirement occurs prior to age 55 with fewer than 25 years of service. Tier Two members are eligible for full benefits at age 60. The ORS Chapter 238 Defined Benefit Pension Plan is closed to new members hired on or after August 29, 2003. Death Benefits. Upon the death of a non-retired member, the beneficiary receives a lump-sum refund of the member’s account balance (accumulated contributions and interest). In addition, the beneficiary will receive a lump-sum payment from employer funds equal to the account balance, provided one or more of the following conditions are met:  the member was employed by a PERS employer at the time of death,  the member died within 120 days after termination of PERS-covered employment,  the member died as a result of injury sustained while employed in a PERS-covered job, or  the member was on an official leave of absence from a PERS-covered job at the time of death. Disability Benefits. A member with 10 or more years of creditable service who becomes disabled from other than duty-connected causes may receive a non-duty disability benefit. A disability resulting from a job-incurred injury or illness qualifies a member for disability benefit regardless of the length of PERS-covered service. Upon qualifying for either a non-duty or duty disability, service time is computed to age 58 (55 for police and fire members) when determining the benefit. ---PAGE BREAK--- - 38 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Benefits Provided (Continued) Tier One/Tier Two Retirement Benefit (Continued) Benefit Changes After Retirement. Members may choose to continue participation in a variable equities investment account after retiring and may experience annual benefit fluctuations due to changes in the market value of equity investments. Under ORS 238.360 benefits are adjusted annually through cost-of-living changes. Under current law, the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25% on the first $60,000 of annual benefit and 0.15% on annual benefits above $60,000. OPSRP Pension Program Pension Benefits. The Pension Program (ORS Chapter 238A) provides benefits to members hired on or after August 29, 2003. This portion of OPSRP provides a life pension funded by employer contributions. Benefits are calculated by formula for members who attain normal retirement age. For general service members, 1.5% is multiplied by the number of years of service and the final average salary. Normal retirement age for general service members is age 65, or age 58 with 30 years of retirement credit. For police and fire members, 1.8% is multiplied by the number of years of service and the final average salary. Normal retirement age for police and fire members is age 60 or age 53 with 25 years of retirement credit. To be classified as a police and fire member, the individual must have been employed continuously as a police and fire member for at least five years immediately preceding retirement. A member of the OPSRP Pension Program becomes vested on the earliest of the following dates: the date the member completes 600 hours of service in each of five calendar years, the date the member reaches normal retirement age, and if the pension program is terminated, the date on which termination becomes effective. Death Benefits. Upon the death of a non-retired member, the spouse or other person who is constitutionally required to be treated in the same manner as the spouse, receives for life 50 percent of the pension that would otherwise have been paid to the deceased member. Disability Benefits. A member who has accrued 10 or more years of retirement credits before the member becomes disabled or a member who becomes disabled due to job-related injury shall receive a disability benefit of 45 percent of the member’s salary determined as of the last full month of employment before the disability occurred. Benefit Changes After Retirement. Under ORS 238A.210 benefits are adjusted annually through cost-of- living changes. Under current law, the cap on the COLA in fiscal year 2015 and beyond will vary based on 1.25% on the first $60,000 of annual benefit and 0.15% on annual benefits above $60,000. Contributions PERS funding policy provides for employer contributions at actuarially determined rates. These contributions, expressed as a percentage of covered payroll, are intended to accumulate sufficient assets to pay benefits when due. Employer contribution rates for the period were based on the December 31, 2011 actuarial valuation as subsequently modified by 2013 legislated changes in benefit provisions. The rates based on a percentage of payroll, first became effective July 1, 2013. The City’s contribution rates for the period were 13.42% for Tier One/Tier Two members, 9.38% for OPSRP General Service members, and 12.11% for OPSRP Police and Fire members. The City’s total contributions exclusive of the 6% “pick-up” was $1,046,147. ---PAGE BREAK--- - 39 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Contributions (Continued) Covered employees are required to contribute 6% of their salary to the Plan, but the employer is allowed to pay any or all of the employees’ contribution in addition to the required employers’ contribution. The City has elected to contribute the 6% “pick-up” or $508,100 of the employees’ contribution. Pension Assets, Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the City reported an asset of $2,595,126 for its proportionate share of the OPERS net pension asset. The net pension asset was measured as of June 30, 2014, and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of December 31, 2012 rolled forward to June 30, 2014. The City’s proportion of the net pension asset was based on a projection of the City’s long-term share of contributions to the pension plan relative to the projected contributions of all participating employers, actuarially determined. At June 30, 2014, the City’s proportion was 0.1145%, which is unchanged from its proportion measured as of June 30, 2013. The Oregon Supreme Court (Court) ruled on April 30, 2015 that certain provisions of Senate Bill (SB) 861, signed into law in October 2013, were unconstitutional. SB 861 included provisions that limited post-retirement COLA on benefits accrued prior to the signing of the law. The Court ruled that benefits could be modified prospectively, but not retrospectively. As a result, those who retired before the bills were passed will continue to receive a COLA tied to the Consumer Price Index that normally results in a 2% increase annually. OPERS members who have accrued benefits before and after the effective dates of the 2013 legislation will have a blended COLA rate when they retire. This is a change in benefit terms subsequent to the measurement date of June 30, 2014, and has not been included in the net pension asset/liability proportionate shares calculated by OPERS. For the year ended June 30, 2015, the City recognized pension expense of $3,425,131. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net difference between projected and actual earnings on investments $ - $ 5,007,542 Changes in proportion and differences between employer contributions and proportionate share of contributions - 28,683 Contributions subsequent to measurement date 1,046,147 - Total $ 1,046,147 $ 5,036,225 Deferred Outflows of Resources Deferred Inflows of Resources ---PAGE BREAK--- - 40 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Pension Assets, Liabilities, Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions (Continued) Deferred outflows of resources related to pensions of $1,046,147 resulting from the City’s contributions subsequent to the measurement date will be recognized as either a reduction of the net pension liability or an increase in the net pension asset in the year ending June 30, 2016. Other amounts reported as deferred inflows of resources related to pensions will be recognized in pension expense as follows: Fiscal Year Ending June 30, 2016 $ 1,258,120 2017 1,258,120 2018 1,258,120 2019 1,258,120 2020 3,745 Total $ 5,036,225 Actuarial Methods and Assumptions The total pension liability in the December 31, 2012 actuarial valuation was determined using the following actuarial methods and assumptions: Actuarial Cost Method Entry Age Normal Amortization Method Amortized as a level percentage of payroll as layered amortization bases over a closed period; Tier One/Tier Two UAL is amortized over 20 years and OPSRP pension UAL is amortized over 16 years Asset Valuation Method Market value of assets Actuarial Assumptions: Inflation Rate 2.75% Investment Rate of Return 7.75% Projected Salary Increases 3.75% overall payroll growth; salaries for individuals are assumed to grow at 3.75% plus assumed rates of merit/longevity increases based on service ---PAGE BREAK--- - 41 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Actuarial Methods and Assumptions (Continued) Mortality Healthy retirees and beneficiaries: RP-2000 Sex-distinct, generational per Scale AA, with collar adjustments and set-backs as described in the valuation. Active members: Mortality rates are a percentage of healthy retiree rates that vary by group, as described in the valuation. Disabled retirees: Mortality rates are a percentage (65% for males, 90% for females) of the RP-2000 static combined disabled mortality sex-distinct table. Actuarial valuations of an ongoing plan involve estimates of the value of projected benefits and assumptions about the probability of events far into the future. Actuarially determined amounts are subject to continual revision as actual results are compared to past expectations and new estimates are made about the future. Experience studies are performed as of December 31 of even numbered years. The methods and assumptions shown above are based on the 2012 experience study which reviewed experience for the four-year period ending on December 31, 2012. Long-Term Expected Rate of Return To develop an analytical basis for the selection of the long-term expected rate of return assumption, in July 2013 the PERS Board reviewed long-term assumptions developed by both Milliman’s capital market assumptions team and the Oregon Investment Council’s (OIC) investment advisors. The table below shows Milliman’s assumptions for each of the asset classes in which the plan was invested at that time based on the OIC long-term target asset allocation. The OIC’s description of each asset class was used to map the target allocation to the asset classes shown below. Each asset class assumption was based on a consistent set of underlying assumptions, and includes adjustment for the inflation assumption. These assumptions are not based on historical returns, but instead are based on a forward-looking capital market economic model. ---PAGE BREAK--- - 42 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Long-Term Expected Rate of Return (Continued) Asset Class Core Fixed Income 7.20 % 4.50 % Short-Term Bonds 8.00 3.70 Intermediate-Term Bonds 3.00 4.10 High Yield Bonds 1.80 6.66 Large Cap US Equities 11.65 7.20 Mid Cap US Equities 3.88 7.30 Small Cap US Equities 2.27 7.45 Developed Foreign Equities 14.21 6.90 Emerging Foreign Equities 5.49 7.40 Private Equity 20.00 8.26 Opportunity Funds/Absolute Return 5.00 6.01 Real Estate (Property) 13.75 6.51 Real Estate (REITS) 2.50 6.76 Commodities 7.71 6.07 Assumed Inflation - Mean 2.75 Target Compount Annual Return (Geometric) Discount Rate The discount rate used to measure the total pension liability was 7.75% for the Defined Benefit Pension Plan. The projection of cash flows used to determine the discount rate assumed that contributions from plan members and those contributing employers are made at the contractually required rates, as actuarially determined. Based on those assumptions, the pension plan’s fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return on pension plan investments for the Defined Benefit Pension Plan was applied to all periods of projected benefit payments to determine the total pension liability. Sensitivity of the City’s proportionate share of the net pension liability to changes in the discount rate The following presents the City’s proportionate share of the net pension liability (asset) calculated using the discount rate of 7.75%, as well as what the City’s proportionate share of the net pension liability (asset) would be if it were calculated using a discount rate that is 1-percentage-point lower (6.75%) or 1-percentage-point higher (8.75%) than the current rate: Proportionate share of the net pension liability $ 5,495,539 $ (2,595,126) $ (9,437,931) 1% Decrease (6.75%) Discount Rate (7.75%) 1% Increase (8.75%) ---PAGE BREAK--- - 43 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 PENSION PLAN – OREGON PUBLIC EMPLOYEES RETIRMENT SYSTEM (Continued) Pension Plan Fiduciary Net Position Detailed information about the pension plan’s fiduciary net position is available in the separately issued OPERS financial report. DEFINED CONTRIBUTION PENSION PLANS The City sponsors two defined contribution pension plans. Both plan's provisions and contribution requirements are established and amended by the City Council. The 401A is administered by ICMA Retirement Corp. to provide retirement benefits for the City Attorney. The City has established a contribution amount equivalent to approximately 7% of covered salary. The City contributed $8,424 to the plan for the year ended June 30, 2015. The 457 plan is administered by both ICMA Retirement Corporation and First Investors Financial Services, and provides additional retirement benefits for contract and unrepresented employees. The City has established matching contribution rates of 5% or 8.5%, depending on contractual agreements. The City contributed $146,648 to the plan for the year ended June 30, 2015. TRANSFERS Interfund transfers on the budgetary basis of accounting are as follows: General $ 21,901 $ 416,504 Street 220,000 34,501 Street/Storm SDC 39,221 36,657 Transit 136,000 3,001 Building - 3,001 General Construction 382,655 - Street/Storm Capital Construction 277 - Parks SDC - 307,694 Equipment Replacement 90,000 21,901 Water - 33,087 Sewer - 213,603 Water Capital Construction 118,127 - Sewer Capital Construction 57,239 53,000 Information Services 57,529 - $ 1,122,949 $ 1,122,949 Transfers In Transfers Out ---PAGE BREAK--- - 44 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 TRANSFERS (Continued) Transfers are used to move revenues from the fund that statute or budget requires to collect them to the fund that statute or budget requires to expend them, move receipts restricted to debt service from the funds collecting the receipts to the debt service fund as debt service payments become due, and use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. INTERFUND LOANS LOANS RECEIVABLE Fund Water Capital Construction $ 151,232 $ (36,196) $ 115,036 Street SDC 151,232 (36,196) 115,036 Water Capital Construction 53,000 (53,000) - Street SDC 1,064,896 - 1,064,896 $ 1,420,360 $ (125,392) $ 1,294,968 Outstanding Outstanding June 30, 2015 Payments Received July 1, 2014 LOANS PAYABLE Fund General $ 202,896 $ (47,716) $ 155,180 Special Assessments 1,064,896 - 1,064,896 Water 49,784 (12,338) 37,446 Sewer 49,784 (12,338) 37,446 Sewer Capital Construction 53,000 (53,000) - $ 1,420,360 $ (125,392) $ 1,294,968 Outstanding Outstanding July 1, 2014 Made June 30, 2015 Payments ---PAGE BREAK--- - 45 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 BEGINNING BALANCE ADJUSTMENTS The following beginning balance adjustments have been recorded on GAAP basis to recognize the City’s proportionate share of the Net Pension Liability and deferred outflow of resources related to the implementation of GASB Statement No. 68 “Accounting and Reporting for Pension Plans” and GASB Statement No. 71 “Pension Transition for Contributions Made Subsequent to the Measurement Date”: Activity/Fund Increase (decrease) in beginning net position Governmental activities (3,841,606) $ Business-type activities: Water (322,946) Sewer (515,749) Information services (130,143) Insurance (9,640) Additionally, the beginning balance of the Street SDC fund has been increased by $1,064,896 and the Special Assessments fund has been reduced by $1,064,896 to reflect an interfund loan, and the beginning balance of the Sewer fund was increased $207,232 to reflect a prior period correction of bond premium amortization. EXPENDITURES IN EXCESS OF APPROPRIATIONS The following funds had expenditures in excess of appropriations: Fund / Category Appropriation Actual Variance Street SDC Capital outlay - $ 4,298,715 $ (4,298,715) $ Housing Rehabilitation Materials and services 40,200 108,831 (68,631) CONTINGENCIES The City purchases commercial insurance to cover all commonly insurable risks, which includes property damage, liability and employee bonds. Most policies carry a small deductible amount. No insurance claims settled in each of the prior three years have exceeded policy coverage. The City is a defendant in various litigation proceedings. Management believes any losses arising from these actions will not materially affect the City's financial position. ---PAGE BREAK--- - 46 - CITY OF WOODBURN, OREGON NOTES TO BASIC FINANCIAL STATEMENTS (Continued) YEAR ENDED JUNE 30, 2015 NEW PRONOUNCEMENTS GASB Statement No. 68 “Accounting and Reporting for Pension Plans—an amendment of GASB Statement No. 27.” The statement establishes accounting and financial reporting requirements related to pensions provided by governments. The statement was implemented in the current year. GASB Statement No. 69 “Government Combinations and Disposals of Government Operations.” The statement establishes accounting and financial reporting standards related to government combinations and disposals of government operations. The statement was implemented in the current year. GASB Statement No. 71 “Pension Transition for Contributions Made Subsequent to the Measurement Date”. The statement amends transition provisions of GASB Statement No. 68, establishes accounting and financial reporting standards for recognition of contributions made between the measurement date of the net pension liability and implementation of GASB Statement No. 68. The statement was implemented in the current year. The City will implement new GASB pronouncements no later than the required fiscal year. Management has not determined the effect on the financial statements from implementing any of the following pronouncements. GASB Statement No. 72 “Fair Value Measurement and Application” addresses accounting and financial reporting issues related to fair value measurements. It provides guidance for determining a fair value measurement for financial reporting purposes, as well as guidance for applying fair value to certain investments, and disclosures related to all fair value measurements. The statement is effective for fiscal years beginning after June 15, 2015. GASB Statement No. 73 “Accounting and Financial Reporting for Pensions and Related Assets That Are Not within the Scope of GASB Statement 68, and Amendments to Certain Provisions of GASB Statements 67 and 68”, completes the suite of pension standards. The requirements in Statement 73 for reporting pensions generally are the same as in Statement 68. The statement is generally effective for fiscal years beginning after June 15, 2015. GASB Statement No. 74, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”. This statement replaces Statement No. 46, “Financial Reporting for Postemployment Benefit Plans Other Than Pension Plans”, as amended, and Statement No. 57, “OPEB Measurements by Agent Employers and Agent Multiple- Employer Plans”. It also includes requirements for defined contribution OPEB plans that replace the requirements for those OPEB plans in Statement No. 25, “Financial Reporting for Defined Benefit Pension Plans and Note Disclosures for Defined Contribution Plans”, as amended, and Statement No. 50, “Pension Disclosures”. This statement is effective for financial statement periods beginning after June 15, 2016. GASB Statement No. 75, “Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions”, addresses reporting by governments that provide OPEB to their employees and for governments that finance OPEB for employees of other governments. It requires governments in all types of OPEB plans to present more extensive note disclosures and required supplementary information (RSI) about their OPEB liabilities. The statement is effective for fiscal years beginning after June 15, 2016. SUBSEQUENT EVENTS Management has evaluated subsequent events through November 3, 2015, the date on which the financial statements were available to be issued. Management is not aware of any subsequent events that require recognition or disclosure in the financial statements. ---PAGE BREAK--- REQUIRED SUPPLEMENTARY INFORMATION ---PAGE BREAK--- - 47 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Taxes and assessments 7,534,000 $ 7,534,000 $ 8,099,893 $ 565,893 $ Licenses and permits 107,600 107,600 150,714 43,114 Franchise fees 1,632,953 1,632,953 1,747,588 114,635 Charges for services 1,162,314 1,182,314 969,588 (212,726) Intergovernmental 695,189 695,189 786,910 91,721 Fines and forfeitures 631,400 661,400 673,377 11,977 Miscellaneous 135,392 135,392 147,517 12,125 Total Revenues 11,898,848 11,948,848 12,575,587 626,739 EXPENDITURES Council and Mayor 17,025 17,025 16,609 416 Administration 203,011 208,011 197,705 10,306 City Recorder 76,888 76,888 69,088 7,800 City Attorney 175,157 175,157 169,032 6,125 Finance 400,900 400,900 336,582 64,318 Human Resources 104,632 104,632 87,748 16,884 Municipal Court 129,337 159,337 148,772 10,565 Nondepartmental 259,610 259,610 188,915 70,695 Police 6,731,335 6,781,335 6,645,638 135,697 Library 826,673 826,673 789,583 37,090 Recreation 375,762 405,762 392,101 13,661 Aquatic Center 534,658 534,658 516,278 18,380 Community Services Administration 336,014 336,014 213,594 122,420 RSVP 73,865 73,865 59,575 14,290 Planning 326,175 333,675 275,212 58,463 Engineering 747,788 747,788 686,645 61,143 Maintenance 885,662 885,662 829,865 55,797 Contingency 2,319,714 2,227,214 - 2,227,214 Total Expenditures 14,524,206 14,554,206 11,622,942 2,931,264 REVENUES OVER (UNDER) EXPENDITURES (2,625,358) (2,605,358) 952,645 3,558,003 OTHER FINANCING SOURCES (USES) Transfers in 21,901 21,901 21,901 - Transfers out (896,543) (916,543) (416,504) 500,039 Total Other Financing Sources (Uses) (874,642) (894,642) (394,603) 500,039 NET CHANGE IN FUND BALANCE (3,500,000) (3,500,000) 558,042 4,058,042 FUND BALANCE, beginning of year 3,500,000 3,500,000 3,976,936 476,936 FUND BALANCE, end of year (budgetary basis) - $ - $ 4,534,978 4,534,978 $ Interfund loan (155,179) Accrued payroll (219,251) FUND BALANCE, end of year (GAAP basis) 4,160,548 $ Budget Amounts ---PAGE BREAK--- - 48 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - STREET FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Taxes and assessments 120,000 $ 120,000 $ 102,517 $ (17,483) $ Licenses and permits 250 250 168 (82) Franchise fees 300,000 300,000 336,707 36,707 Intergovernmental 1,300,000 1,300,000 1,409,311 109,311 Miscellaneous 174,626 174,626 172,003 (2,623) Total Revenues 1,894,876 1,894,876 2,020,706 125,830 EXPENDITURES Personal services 593,997 593,997 561,516 32,481 Materials and services 1,589,016 1,589,016 1,439,268 149,748 Contingency 1,507,231 1,507,231 - 1,507,231 Total Expenditures 3,690,244 3,690,244 2,000,784 1,689,460 REVENUES OVER (UNDER) EXPENDITURES (1,795,368) (1,795,368) 19,922 1,815,290 OTHER FINANCING SOURCES (USES) Transfers in 220,000 220,000 220,000 - Transfers out (57,001) (57,001) (34,501) 22,500 Total Other Financing Sources (Uses) 162,999 162,999 185,499 22,500 NET CHANGE IN FUND BALANCE (1,632,369) (1,632,369) 205,421 1,837,790 FUND BALANCE, beginning of year 1,632,369 1,632,369 2,760,623 1,128,254 FUND BALANCE, end of year (budgetary basis) - $ - $ 2,966,044 2,966,044 $ Accrued payroll (15,330) FUND BALANCE, end of year (GAAP basis) 2,950,714 $ Budget Amounts ---PAGE BREAK--- - 49 - CITY OF WOODBURN, OREGON SCHEDULE OF THE CITY’S PROPORTIONATE SHARE OF THE NET PENSION LIABILITY (ASSET) OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM LAST TWO FISCAL YEARS 1 2015 2014 City's proportion of the net pension liability (asset) 0.1145% 0.1145% City's proportionate share of the net pension liability (asset) (5,842,512) $ 2,595,126 $ City's covered-employee payroll 8,457,225 8,048,595 City's proportionate share of the net pension liability (asset) as a percentage of its covered-employee payroll -69.1% 32.2% Plan fiduciary net position as a percentage of the total pension liability 103.6% 92.0% 1 10-year trend information required by GASB Statement 68 will be presented prospectively ---PAGE BREAK--- - 50 - CITY OF WOODBURN, OREGON SCHEDULE OF THE CITY’S CONTRIBUTIONS OREGON PUBLIC EMPLOYEES RETIREMENT SYSTEM LAST TWO FISCAL YEARS 1 2015 2014 Contractually required contributions 1,046,147 $ 1,022,429 $ Contributions in relation to the contractually required contribution (1,046,147) (1,022,429) Contribution deficiency (excess) - $ - $ City's covered-employee payroll 8,457,225 $ 8,048,595 $ Contributions as a percentage of covered-employee payroll 12.37% 12.70% 1 10-year trend information required by GASB Statement 68 will be presented prospectively ---PAGE BREAK--- SUPPLEMENTARY INFORMATION ---PAGE BREAK--- - 51 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – STREET SDC FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and permits 300,000 $ 300,000 $ 440,595 $ 140,595 $ Miscellaneous 34,000 34,000 27,695 (6,305) Total Revenues 334,000 334,000 468,290 134,290 EXPENDITURES Debt service Principal 29,895 29,895 29,895 - Interest 6,373 6,373 6,373 - Capital outlay - - 4,293,715 (4,293,715) Contingency 4,734,953 4,734,953 - 4,734,953 Total Expenditures 4,771,221 4,771,221 4,329,983 441,238 REVENUES OVER (UNDER) EXPENDITURES (4,437,221) (4,437,221) (3,861,693) 575,528 OTHER FINANCING SOURCES (USES) Transfers in 39,221 39,221 39,221 - Transfers out (200,000) (200,000) (36,657) 163,343 Total Other Financing Sources (Uses) (160,779) (160,779) 2,564 163,343 NET CHANGE IN FUND BALANCE (4,598,000) (4,598,000) (3,859,129) 738,871 FUND BALANCE, beginning of year 4,598,000 4,598,000 5,203,566 605,566 FUND BALANCE, end of year (budgetary basis) - $ - $ 1,344,437 1,344,437 $ Interfund loan 1,179,932 FUND BALANCE, end of year GAAP basis 2,524,369 $ Budget Amounts ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS JUNE 30, 2015 Transit Building Inspection Search and Seizure ASSETS Cash and investments 16,936 $ 521,736 $ 6,960 $ Accounts receivable 143,667 - - Property taxes receivable - - - Assessment liens receivable - - - Loans receivable - - - Total Assets 160,603 $ 521,736 $ 6,960 $ LIABILITIES AND FUND BALANCE Liabilities: Accounts payable 8,980 $ 44,488 $ - $ Accrued payroll and payroll liabilities 20,109 21,225 - Due to other funds - - - Total Liabilities 29,089 65,713 - Deferred Inflows: Unavailable revenue - - - Fund Balance: Restricted for: Debt service - - - Construction - - - Culture and recreation 131,514 - - Community development - - - Committed to: Public safety - - 6,960 Capital outlay - - - Planning and building - 456,023 - Unassigned - - - Total Fund Balance 131,514 456,023 6,960 Total Liabilities and Fund Balance 160,603 $ 521,736 $ 6,960 $ Special Revenue ---PAGE BREAK--- - 52 - Capital Projects Housing Rehabilitation Library Endowment Museum Endowment Lavelle Black Trust URA General Capital Construction 185,407 $ 26,395 $ 3,196 $ 45,092 $ 1,355,604 $ 61,449 $ - - - - - 27,780 - - - - 38,643 - - - - - - - 757,750 - - - - - 943,157 $ 26,395 $ 3,196 $ 45,092 $ 1,394,247 $ 89,229 $ - $ - $ - $ - $ 10,755 $ 89,229 $ 800 - - - 8,138 - - - - - - - 800 - - - 18,893 89,229 757,750 - - - 33,667 - - - - - 56,338 - - - - - - - - 26,395 3,196 45,092 - - 184,607 - - - 1,285,349 - - - - - - - - - - - - - - - - - - - - - - - - 184,607 26,395 3,196 45,092 1,341,687 - 943,157 $ 26,395 $ 3,196 $ 45,092 $ 1,394,247 $ 89,229 $ Special Revenue ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING BALANCE SHEET - NONMAJOR GOVERNMENTAL FUNDS (Continued) JUNE 30, 2015 Special Assessment Street/Storm Capital Construction Parks SDC ASSETS Cash and investments 1,051,658 $ 68,155 $ 234,923 $ Accounts receivable - - - Property taxes receivable - - - Assessment liens receivable 51,434 - - Loans receivable - - 14,016 Total Assets 1,103,092 $ 68,155 $ 248,939 $ LIABILITIES AND FUND BALANCE Liabilities: Accounts payable - $ 2,718 $ - $ Accrued payroll and payroll liabilities - - - Due to other funds 1,064,896 - - Total Liabilities 1,064,896 2,718 - Deferred Inflows: Unavailable revenue 51,434 - 14,016 Fund Balance: Restricted for: Debt service - - - Construction - 65,437 234,923 Culture and recreation - - - Community development - - - Committed to: Public safety - - - Capital outlay - - Planning and building - - - Unassigned (13,238) - - Total Fund Balance (13,238) 65,437 234,923 Total Liabilities and Fund Balance 1,103,092 $ 68,155 $ 248,939 $ Capital Projects ---PAGE BREAK--- - 53 - Debt Service Storm SDC Equipment Replacement GO Debt Service Total 533,991 $ 884,806 $ 46,730 $ 5,043,038 $ - - - 171,447 - - 31,591 70,234 - - - 51,434 2,640 - - 774,406 536,631 $ 884,806 $ 78,321 $ 6,110,559 $ - $ - $ - $ 156,170 $ - - - 50,272 - - - 1,064,896 - - - 1,271,338 2,640 - 27,550 887,057 - - 50,771 107,109 533,991 - - 834,351 - - - 206,197 - - - 1,469,956 - - - 6,960 - 884,806 - 884,806 - - - 456,023 - - - (13,238) 533,991 884,806 50,771 3,952,164 536,631 $ 884,806 $ 78,321 $ 6,110,559 $ Capital Projects ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS YEAR ENDED JUNE 30, 2015 Transit Building Inspection Search and Seizure REVENUES Taxes and assessments - $ - $ - $ Licenses and permits - 642,590 - Charges for services 44,807 - - Intergovernmental 856,973 - - Miscellaneous 8,989 47,540 5,849 Total Revenues 910,769 690,130 5,849 EXPENDITURES General government - 607,160 - Culture and recreation 590,835 - - Debt service Principal - - - Interest - - - Capital outlay 439,852 - - Total Expenditures 1,030,687 607,160 - REVENUES OVER (UNDER) EXPENDITURES (119,918) 82,970 5,849 OTHER FINANCING SOURCES (USES) Transfers in 136,000 - - Transfers out (3,001) (3,001) - Total Other Financing Sources (Uses) 132,999 (3,001) - NET CHANGE IN FUND BALANCE 13,081 79,969 5,849 FUND BALANCE, beginning of year, as originally stated 118,433 376,054 1,111 Prior period adjustment - - - Fund balance, beginning of year, as restated 118,433 376,054 1,111 FUND BALANCE, end of year 131,514 $ 456,023 $ 6,960 $ Special Revenue ---PAGE BREAK--- - 54 - Housing Rehabilitation Library Endowment Museum Endowment Lavelle Black Trust URA General Capital Construction - $ - $ - $ - $ 600,190 $ - $ - - - - - - - - - - - - 105,926 - - - - 212,766 18,018 134 185 229 9,593 - 123,944 134 185 229 609,783 212,766 - - - - - - 120,778 - - 900 929,064 - - - - - 219,534 - - - - - 8,198 - - - - - - 619,206 120,778 - - 900 1,156,796 619,206 3,166 134 185 (671) (547,013) (406,440) - - - - - 382,655 - - - - - - - - - - - 382,655 3,166 134 185 (671) (547,013) (23,785) 181,441 26,261 3,011 45,763 1,888,700 23,785 - - - - - - 181,441 26,261 3,011 45,763 1,888,700 23,785 184,607 $ 26,395 $ 3,196 $ 45,092 $ 1,341,687 $ - $ Special Revenue Capital Projects ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCES - NONMAJOR GOVERNMENTAL FUNDS (Continued) YEAR ENDED JUNE 30, 2015 Special Assessment Street/Storm Capital Construction Parks SDC REVENUES Taxes and assessments 5,091 $ - $ - $ Licenses and permits - - 111,678 Charges for services - - - Intergovernmental - - - Miscellaneous 5,306 946 2,098 Total Revenues 10,397 946 113,776 EXPENDITURES General government - - - Culture and recreation - - - Debt service Principal - - - Interest - - - Capital outlay - 113,938 - Total Expenditures - 113,938 - REVENUES OVER (UNDER) EXPENDITURES 10,397 (112,992) 113,776 OTHER FINANCING SOURCES (USES) Transfers in - 277 - Transfers out - - (307,694) Total Other Financing Sources (Uses) - 277 (307,694) NET CHANGE IN FUND BALANCE 10,397 (112,715) (193,918) FUND BALANCE, beginning of year, as originally stated 1,041,261 178,152 428,841 Prior period adjustment (1,064,896) - - Fund balance, beginning of year, as restated (23,635) 178,152 428,841 FUND BALANCE, end of year (13,238) $ 65,437 $ 234,923 $ Capital Projects ---PAGE BREAK--- - 55 - Debt Service Storm SDC Equipment Replacement GO Debt Service Total - $ - $ 522,029 $ 1,127,310 $ 31,471 - - 785,739 - - - 44,807 - - - 1,175,665 2,628 4,440 970 106,925 34,099 4,440 522,999 3,240,446 - - - 607,160 - - - 1,641,577 - - 335,000 554,534 - 192,261 200,459 - - - 1,172,996 - - 527,261 4,176,726 34,099 4,440 (4,262) (936,280) - 90,000 - 608,932 - (21,901) - (335,597) - 68,099 - 273,335 34,099 72,539 (4,262) (662,945) 499,892 812,267 55,033 5,680,005 - - - (1,064,896) 499,892 812,267 55,033 4,615,109 533,991 $ 884,806 $ 50,771 $ 3,952,164 $ Capital Projects ---PAGE BREAK--- - 56 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - TRANSIT FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Charges for services 39,500 $ 39,500 $ 44,807 $ 5,307 $ Intergovernmental 819,150 819,150 856,973 37,823 Miscellaneous 9,600 9,600 8,989 (611) Total Revenues 868,250 868,250 910,769 42,519 EXPENDITURES Personal services 393,713 397,713 396,273 1,440 Materials and services 223,929 219,929 195,381 24,548 Capital outlay 505,000 505,000 439,852 65,148 Contingency 28,607 28,607 - 28,607 Total Expenditures 1,151,249 1,151,249 1,031,506 119,743 REVENUES OVER (UNDER) EXPENDITURES (282,999) (282,999) (120,737) 162,262 OTHER FINANCING SOURCES (USES) Transfers in 116,000 136,000 136,000 - Transfers out (3,001) (3,001) (3,001) - Total Other Financing Sources (Uses) 112,999 132,999 132,999 - NET CHANGE IN FUND BALANCE (170,000) (150,000) 12,262 162,262 FUND BALANCE, beginning of year 170,000 150,000 127,763 (22,237) FUND BALANCE, end of year (budgetary basis) - $ - $ 140,025 140,025 $ Accrued payroll (8,511) FUND BALANCE, end of year (GAAP basis) 131,514 $ Budget Amounts ---PAGE BREAK--- - 57 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - BUILDING INSPECTION FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and permits 544,671 $ 694,671 $ 642,590 $ (52,081) $ Miscellaneous 23,800 23,800 47,540 23,740 Total Revenues 568,471 718,471 690,130 (28,341) EXPENDITURES Personal services 339,663 449,663 366,799 82,864 Materials and services 270,251 440,251 239,577 200,674 Contingency 396,015 266,015 - 266,015 Total Expenditures 1,005,929 1,155,929 606,376 549,553 REVENUES OVER (UNDER) EXPENDITURES (437,458) (437,458) 83,754 521,212 OTHER FINANCING SOURCES (USES) Transfers out (3,001) (3,001) (3,001) - NET CHANGE IN FUND BALANCE (440,459) (440,459) 80,753 521,212 FUND BALANCE, beginning of year 440,459 440,459 384,150 (56,309) FUND BALANCE, end of year (budgetary basis) - $ - $ 464,903 464,903 $ Accrued payroll (8,880) FUND BALANCE, end of year (GAAP basis) 456,023 $ Budget Amounts ---PAGE BREAK--- - 58 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – SEARCH AND SEIZURE FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous - $ - $ 5,849 $ 5,849 $ EXPENDITURES Contingency 1,100 1,100 - 1,100 NET CHANGE IN FUND BALANCE (1,100) (1,100) 5,849 6,949 FUND BALANCE, beginning of year 1,100 1,100 1,111 11 FUND BALANCE, end of year - $ - $ 6,960 $ 6,960 $ Budget Amounts ---PAGE BREAK--- - 59 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL - HOUSING REHABILITATION FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Intergovernmental - $ - $ 105,926 $ 105,926 $ Miscellaneous 21,000 21,000 18,018 (2,982) Total Revenues 21,000 21,000 123,944 102,944 EXPENDITURES Personal services 12,502 12,502 11,895 607 Materials and services 40,200 40,200 108,831 (68,631) Contingency 81,881 81,881 - 81,881 Total Expenditures 134,583 134,583 120,726 13,857 NET CHANGE IN FUND BALANCE (113,583) (113,583) 3,218 116,801 FUND BALANCE, beginning of year 113,583 113,583 181,726 68,143 FUND BALANCE, end of year (budgetary basis) - $ - $ 184,944 184,944 $ Accrued payroll (337) FUND BALANCE, end of year (GAAP basis) 184,607 $ Budget Amounts ---PAGE BREAK--- - 60 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – LIBRARY ENDOWMENT FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous 150 $ 150 $ 134 $ (16) $ EXPENDITURES Contingency 26,436 26,436 - 26,436 NET CHANGE IN FUND BALANCE (26,286) (26,286) 134 26,420 FUND BALANCE, beginning of year 26,286 26,286 26,261 (25) FUND BALANCE, end of year - $ - $ 26,395 $ 26,395 $ Budget Amounts ---PAGE BREAK--- - 61 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – MUSEUM ENDOWMENT FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous 15 $ 15 $ 185 $ 170 $ EXPENDITURES Contingency 2,965 2,965 - 2,965 NET CHANGE IN FUND BALANCE (2,950) (2,950) 185 3,135 FUND BALANCE, beginning of year 2,950 2,950 3,011 61 FUND BALANCE, end of year - $ - $ 3,196 $ 3,196 $ Budget Amounts ---PAGE BREAK--- - 62 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – LAVELLE BLACK TRUST FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous 325 $ 325 $ 229 $ (96) $ EXPENDITURES Materials and services 10,000 10,000 900 9,100 Contingency 32,325 32,325 - 32,325 Total Expenditures 42,325 42,325 900 41,425 NET CHANGE IN FUND BALANCE (42,000) (42,000) (671) 41,329 FUND BALANCE, beginning of year 42,000 42,000 45,763 3,763 FUND BALANCE, end of year - $ - $ 45,092 $ 45,092 $ Budget Amounts ---PAGE BREAK--- - 63 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – URBAN RENEWAL AGENCY FUND (BUDGETARY BASIS, NON-GAAP) YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Taxes and assessments 580,000 $ 580,000 $ 600,190 $ 20,190 $ Miscellaneous 8,000 8,000 9,593 1,593 Total Revenues 588,000 588,000 609,783 21,783 EXPENDITURES Personal services 131,064 131,064 123,573 7,491 Materials and services 309,500 985,500 805,044 180,456 Debt service Principal 219,534 219,534 219,534 - Interest 8,198 8,198 8,198 - Capital outlay 1,300,000 624,000 - 624,000 Contingency 119,704 119,704 - 119,704 Total Expenditures 2,088,000 2,088,000 1,156,349 931,651 NET CHANGE IN FUND BALANCE (1,500,000) (1,500,000) (546,566) 953,434 FUND BALANCE, beginning of year 1,500,000 1,500,000 1,891,593 391,593 FUND BALANCE, end of year (budgetary basis) - $ - $ 1,345,027 1,345,027 $ Accrued payroll (3,340) FUND BALANCE, end of year (GAAP basis) 1,341,687 $ Budget Amounts ---PAGE BREAK--- - 64 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL CAPITAL CONSTRUCTION FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Intergovernmental 277,800 $ 216,800 $ 212,766 $ (4,034) $ EXPENDITURES Capital outlay 1,037,800 1,137,800 619,206 518,594 Total Expenditures 1,037,800 1,137,800 619,206 518,594 REVENUES OVER (UNDER) EXPENDITURES (760,000) (921,000) (406,440) 514,560 OTHER FINANCING SOURCES (USES) Transfers in 760,000 921,000 382,655 (538,345) NET CHANGE IN FUND BALANCE - - (23,785) (23,785) FUND BALANCE, beginning of year - - 23,785 23,785 FUND BALANCE, end of year - $ - $ - $ - $ Budget Amounts ---PAGE BREAK--- - 65 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – SPECIAL ASSESSMENT FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Taxes and assessments 16,449 $ 16,449 $ 5,091 $ (11,358) $ Miscellaneous 6,000 6,000 5,306 (694) Total Revenues 22,449 22,449 10,397 (12,052) EXPENDITURES Contingency 1,072,449 1,072,449 - 1,072,449 NET CHANGE IN FUND BALANCE (1,050,000) (1,050,000) 10,397 1,060,397 FUND BALANCE, beginning of year 1,050,000 1,050,000 1,041,261 (8,739) FUND BALANCE, end of year (budgetary basis) - $ - $ 1,051,658 1,051,658 $ Interfund loan (1,064,896) FUND BALANCE (Deficit), end of year GAAP basis (13,238) $ Budget Amounts ---PAGE BREAK--- - 66 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – STREET/STORM CAPITAL CONSTRUCTION FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous - $ - $ 946 $ 946 $ EXPENDITURES Capital outlay 167,000 167,000 113,938 53,062 Contingency 68,500 68,500 - 68,500 Total Expenditures 235,500 235,500 113,938 121,562 REVENUES OVER (UNDER) EXPENDITURES (235,500) (235,500) (112,992) 122,508 OTHER FINANCING SOURCES (USES) Transfers in 25,000 25,000 277 (24,723) NET CHANGE IN FUND BALANCE (210,500) (210,500) (112,715) 97,785 FUND BALANCE, beginning of year 210,500 210,500 178,152 (32,348) FUND BALANCE, end of year - $ - $ 65,437 $ 65,437 $ Budget Amounts ---PAGE BREAK--- - 67 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – PARKS SDC FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and permits 90,000 $ 90,000 $ 111,678 $ 21,678 $ Miscellaneous 2,785 2,785 2,098 (687) Total Revenues 92,785 92,785 113,776 20,991 EXPENDITURES Materials and services 30,000 30,000 - 30,000 Contingency 271,785 110,785 - 110,785 Total Expenditures 301,785 140,785 - 140,785 REVENUES OVER (UNDER) EXPENDITURES (209,000) (48,000) 113,776 161,776 OTHER FINANCING SOURCES (USES) Transfers out (185,000) (346,000) (307,694) 38,306 NET CHANGE IN FUND BALANCE (394,000) (394,000) (193,918) 200,082 FUND BALANCE, beginning of year 394,000 394,000 428,841 34,841 FUND BALANCE, end of year - $ - $ 234,923 $ 234,923 $ Budget Amounts ---PAGE BREAK--- - 68 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – STORM SDC FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and Permits 15,000 $ 15,000 $ 31,471 $ 16,471 $ Miscellaneous 2,000 2,000 2,628 628 Total Revenues 17,000 17,000 34,099 17,099 EXPENDITURES Contingency 484,000 484,000 - 484,000 NET CHANGE IN FUND BALANCE (467,000) (467,000) 34,099 501,099 FUND BALANCE, beginning of year 467,000 467,000 499,892 32,892 FUND BALANCE, end of year - $ - $ 533,991 $ 533,991 $ Budget Amounts ---PAGE BREAK--- - 69 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – EQUIPMENT REPLACEMENT FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Miscellaneous 4,000 $ 4,000 $ 4,440 $ 440 $ EXPENDITURES Capital outlay 883,878 883,878 - 883,878 REVENUES OVER (UNDER) EXPENDITURES (879,878) (879,878) 4,440 884,318 OTHER FINANCING SOURCES (USES) Transfers in 90,000 90,000 90,000 - Transfers out (21,901) (21,901) (21,901) - Total Other Financing Sources (Uses) 68,099 68,099 68,099 - NET CHANGE IN FUND BALANCE (811,779) (811,779) 72,539 884,318 FUND BALANCE, beginning of year 811,779 811,779 812,267 488 FUND BALANCE, end of year - $ - $ 884,806 $ 884,806 $ Budget Amounts ---PAGE BREAK--- - 70 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL – GENERAL OBLIGATION DEBT SERVICE FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Taxes and assessments 521,000 $ 521,000 $ 522,029 $ 1,029 $ Miscellaneous 900 900 970 70 Total Revenues 521,900 521,900 522,999 1,099 EXPENDITURES Debt service Principal 335,000 335,000 335,000 - Interest 192,261 192,261 192,261 - Contingency 27,239 27,239 - 27,239 Total Expenditures 554,500 554,500 527,261 27,239 NET CHANGE IN FUND BALANCE (32,600) (32,600) (4,262) 28,338 FUND BALANCE, beginning of year 32,600 32,600 55,033 22,433 FUND BALANCE, end of year - $ - $ 50,771 $ 50,771 $ Budget Amounts ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF FUND NET POSITION - NONMAJOR PROPRIETARY (ENTERPRISE) FUNDS JUNE 30, 2015 Water SDC Sewer SDC Water Capital Construction ASSETS Current Assets Cash and investments 1,057,880 $ 906,465 $ 2,434,980 $ Accounts receivable 16,680 23,816 8,058 Due from other funds - - 115,036 Total Current Assets 1,074,560 930,281 2,558,074 Noncurrent Assets Nondepreciable capital assets - - 1,742,880 Capital assets, net of depreciation - - 496,076 Total Noncurrent Assets - - 2,238,956 Total Assets 1,074,560 930,281 4,797,030 LIABILITIES Current Liabilities Accounts payable - - 18,655 NET POSITION: Net investment in capital assets - - 2,238,956 Restricted for: Construction 1,074,560 930,281 2,539,419 Total Net Position 1,074,560 $ 930,281 $ 4,778,375 $ ---PAGE BREAK--- - 71 - Total 4,399,325 $ 48,554 115,036 4,562,915 1,742,880 496,076 2,238,956 6,801,871 18,655 2,238,956 4,544,260 6,783,216 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - NONMAJOR PROPRIETARY (ENTERPRISE) FUNDS YEAR ENDED JUNE 30, 2015 Water SDC Sewer SDC Water Capital Construction OPERATING REVENUES - $ - $ - $ OPERATING EXPENSES Depreciation - - 31,068 OPERATING INCOME (LOSS) - - (31,068) NONOPERATING REVENUES (EXPENSES) Investment revenue 5,032 4,123 13,462 NET INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 5,032 4,123 (17,606) Capital contributions 125,635 184,637 - Transfers in - - 34,759 CHANGE IN NET POSITION 130,667 188,760 17,153 NET POSITION, beginning of year 943,893 741,521 4,761,222 NET POSITION, end of year 1,074,560 $ 930,281 $ 4,778,375 $ ---PAGE BREAK--- - 72 - Total - $ 31,068 (31,068) 22,617 (8,451) 310,272 34,759 336,580 6,446,636 6,783,216 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF CASH FLOWS - NONMAJOR PROPRIETARY (ENTERPRISE) FUNDS YEAR ENDED JUNE 30, 2015 CASH FLOWS FROM OPERATING ACTIVITIES Collected from customers $ - $ - CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in - - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets - - System development revenue 146,485 214,407 Net Cash Provided by (Used in) Capital and Related Financing Activities 146,485 214,407 CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 5,032 4,123 Increase (Decrease) in Cash and Investments 151,517 218,530 CASH AND INVESTMENTS, Beginning of year 906,363 687,935 CASH AND INVESTMENTS, End of year $ 1,057,880 $ 906,465 Water Sewer SDC SDC RECONCILIATION OF OPERATING INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) $ - $ - Depreciation - - Change in assets and liabilities Accounts receivable - - Net Cash Provided by (Used in) Operating Activities $ - $ - Noncash Transactions Transfer of capital assets $ - $ - SDC SDC Water Sewer ---PAGE BREAK--- - 73 - Totals $ 200 $ 200 123,955 123,955 (486,799) (486,799) - 360,892 (486,799) (125,907) 13,462 22,617 (349,182) 20,865 2,784,162 4,378,460 $ 2,434,980 $ 4,399,325 Water Capital Construction $ (31,068) $ (31,068) 31,068 31,068 200 200 $ 200 $ 200 $ 5,827 $ 5,827 Totals Construction Water Capital ---PAGE BREAK--- - 74 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE- BUDGET (NON-GAAP BASIS) AND ACTUAL - WATER FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Charges for services 3,380,576 $ 3,380,576 $ 3,277,605 $ (102,971) $ Miscellaneous 51,000 51,000 60,055 9,055 Interest earnings 5,200 5,200 9,078 3,878 Total Revenues 3,436,776 3,436,776 3,346,738 (90,038) EXPENDITURES Personal services 1,291,483 1,291,483 1,168,912 122,571 Materials and services 928,288 928,288 834,953 93,335 Debt service Principal 670,522 670,522 670,523 Interest 485,176 485,176 485,175 1 Contingency 1,622,970 1,622,970 - 1,622,970 Total Expenditures 4,998,439 4,998,439 3,159,563 1,838,876 REVENUES OVER (UNDER) EXPENDITURES (1,561,663) (1,561,663) 187,175 1,748,838 OTHER FINANCING SOURCES (USES) Transfers in 50,000 50,000 - (50,000) Transfers out (134,337) (134,337) (33,087) 101,250 Gain (loss) on sale of assets - - 7,277 7,277 Total Other Financing Sources (Uses) (84,337) (84,337) (25,810) 58,527 NET CHANGE IN FUND BALANCE (1,646,000) (1,646,000) 161,365 1,807,365 FUND BALANCE, beginning of year 1,646,000 1,646,000 1,781,501 135,501 FUND BALANCE, end of year - $ - $ 1,942,866 $ 1,942,866 $ Budget Amounts ---PAGE BREAK--- - 75 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL - SEWER FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Charges for services 7,647,580 $ 7,647,580 $ 7,981,658 $ 334,078 $ Miscellaneous 2,000 2,000 129 (1,871) Interest earnings 12,200 12,200 27,300 15,100 Total Revenues 7,661,780 7,661,780 8,009,087 347,307 EXPENDITURES Personal services 1,860,155 1,860,155 1,658,902 201,253 Materials and services 2,320,305 2,320,305 1,691,977 628,328 Debt service Principal 2,755,000 2,755,000 2,755,000 - Interest 972,713 972,713 972,713 - Capital outlay 40,000 40,000 - 40,000 Contingency 4,228,269 4,228,269 - 4,228,269 Total Expenditures 12,176,442 12,176,442 7,078,592 5,097,850 REVENUES OVER (UNDER) EXPENDITURES (4,514,662) (4,514,662) 930,495 5,445,157 OTHER FINANCING SOURCES (USES) Transfers out (322,338) (322,338) (213,603) 108,735 NET CHANGE IN FUND BALANCE (4,837,000) (4,837,000) 716,892 5,553,892 FUND BALANCE, beginning of year 4,837,000 4,837,000 5,152,234 315,234 FUND BALANCE, end of year - $ - $ 5,869,126 $ 5,869,126 $ Budget Amounts ---PAGE BREAK--- - 76 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL – SEWER CAPITAL CONSTRUCTION FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Interest earnings 60,000 $ 60,000 $ 63,993 $ 3,993 EXPENDITURES Capital outlay 5,371,250 5,371,250 126,465 5,244,785 Contingency 6,018,000 5,965,000 - 5,965,000 Total Expenditures 11,389,250 11,336,250 126,465 11,209,785 REVENUES OVER (UNDER) EXPENDITURES (11,329,250) (11,276,250) (62,472) 11,213,778 OTHER FINANCING SOURCES (USES) Transfers in 329,250 329,250 57,239 (272,011) Transfers out - (53,000) (53,000) - Total Other Financing Sources (Uses) 329,250 276,250 4,239 (272,011) NET CHANGE IN FUND BALANCE (11,000,000) (11,000,000) (58,233) 10,941,767 FUND BALANCE, beginning of year 11,000,000 11,000,000 12,674,336 1,674,336 FUND BALANCE, end of year - $ - $ 12,616,103 $ 12,616,103 $ Budget Amounts ---PAGE BREAK--- - 77 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL - WATER SDC FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and permits 60,000 $ 60,000 $ 146,485 $ 86,485 $ Interest earnings 3,475 3,475 5,032 1,557 Total Revenues 63,475 63,475 151,517 88,042 EXPENDITURES Contingency 807,475 807,475 - 807,475 REVENUES OVER (UNDER) EXPENDITURES (744,000) (744,000) 151,517 895,517 OTHER FINANCING SOURCES (USES) Transfers out (50,000) (50,000) - 50,000 NET CHANGE IN FUND BALANCE (794,000) (794,000) 151,517 945,517 FUND BALANCE, beginning of year 794,000 794,000 906,363 112,363 FUND BALANCE, end of year - $ - $ 1,057,880 $ 1,057,880 $ Budget Amounts ---PAGE BREAK--- - 78 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL - SEWER SDC FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Licenses and permits 110,000 $ 110,000 $ 214,407 $ 104,407 $ Interest earnings 1,800 1,800 4,123 2,323 Total Revenues 111,800 111,800 218,530 106,730 EXPENDITURES Contingency 702,800 702,800 - 702,800 NET CHANGE IN FUND BALANCE (591,000) (591,000) 218,530 809,530 FUND BALANCE, beginning of year 591,000 591,000 687,935 96,935 FUND BALANCE, end of year - $ - $ 906,465 $ 906,465 $ Budget Amounts ---PAGE BREAK--- - 79 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET (NON-GAAP BASIS) AND ACTUAL – WATER CAPITAL CONSTRUCTION FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Interest earnings 8,000 $ 8,000 $ 13,462 $ 5,462 $ EXPENDITURES Capital outlay 1,210,000 1,210,000 447,332 762,668 Contingency 1,349,221 1,402,221 - 1,402,221 Total Expenditures 2,559,221 2,612,221 447,332 2,164,889 REVENUES OVER (UNDER) EXPENDITURES (2,551,221) (2,604,221) (433,870) 2,170,351 OTHER FINANCING SOURCES (USES) Transfers in 164,221 217,221 118,128 (99,093) NET CHANGE IN FUND BALANCE (2,387,000) (2,387,000) (315,742) 2,071,258 FUND BALANCE, beginning of year 2,387,000 2,387,000 2,740,125 353,125 FUND BALANCE, end of year - $ - $ 2,424,383 $ 2,424,383 $ Budget Amounts ---PAGE BREAK--- - 80 - CITY OF WOODBURN, OREGON COMBINING STATEMENT OF FUND NET POSITION - INTERNAL SERVICE FUNDS JUNE 30, 2015 Information Services Insurance Total ASSETS Current Assets Cash and investments 176,322 $ 325,993 $ 502,315 $ Accounts receivable - 23,859 23,859 Total Current Assets 176,322 349,852 526,174 Noncurrent Assets Net pension asset 70,068 5,190 75,258 Total Assets 246,390 355,042 601,432 DEFERRED OUTFLOWS Deferred outflows - contributions to PERS 28,246 2,092 30,338 LIABILITIES Current Liabilities Accounts payable 3,367 75,085 78,452 Accrued payroll liabilities 21,458 2,936 24,394 Total Current Liabilities 24,825 78,021 102,846 DEFERRED INFLOWS Net projected to actual earnings - PERS 135,978 10,072 146,050 NET POSITION: Unrestricted 113,833 $ 269,041 $ 382,874 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF REVENUES, EXPENSES AND CHANGES IN FUND NET POSITION - INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 Information Services Insurance Technical & Environmental Services OPERATING REVENUES Charges for services 787,342 $ 539,357 $ - $ Miscellaneous 16,374 28,642 - Total Operating Revenues 803,716 567,999 - OPERATING EXPENSES Personal services 240,563 38,773 - Materials and services 396,878 648,921 - Total Expenses 637,441 687,694 - OPERATING INCOME (LOSS) 166,275 (119,695) - NONOPERATING REVENUES (EXPENSES) Investment revenue 1,675 2,463 - NET INCOME BEFORE CONTRIBUTIONS AND TRANSFERS 167,950 (117,232) - Transfers in 57,529 - 99,469 Non-cash transfers out (93,183) - - CHANGE IN NET POSITION 132,296 (117,232) 99,469 NET POSITION (Deficit), beginning of year, as originally stated 111,680 395,913 (99,469) Prior period adjustment (130,143) (9,640) - NET POSITION (Deficit), beginning of year (18,463) 386,273 (99,469) NET POSITION, end of year 113,833 $ 269,041 $ - $ ---PAGE BREAK--- - 81 - Total 1,326,699 $ 45,016 1,371,715 279,336 1,045,799 1,325,135 46,580 4,138 50,718 156,998 (93,183) 114,533 408,124 (139,783) 268,341 382,874 $ ---PAGE BREAK--- CITY OF WOODBURN, OREGON COMBINING STATEMENT OF CASH FLOWS - INTERNAL SERVICE FUNDS YEAR ENDED JUNE 30, 2015 Technical and Information Environmental Services Insurance Services CASH FLOWS FROM OPERATING ACTIVITIES Collected from customers 817,547 $ 544,140 $ - $ Paid to suppliers (395,002) (579,695) (59,756) Paid to employees (331,981) (45,834) (131,756) Net Cash Provided by (Used in) Operating Activities 90,564 (81,389) (191,512) CASH FLOWS FROM NON-CAPITAL FINANCING ACTIVITIES Transfers in 57,529 - 99,469 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition of capital assets (93,183) - - CASH FLOWS FROM INVESTING ACTIVITIES Interest on investments 1,675 2,463 - Increase (Decrease) in Cash and Investments 56,585 (78,926) (92,043) CASH AND INVESTMENTS, Beginning of year 119,737 404,919 92,043 CASH AND INVESTMENTS, End of year 176,322 $ 325,993 $ - $ RECONCILIATION OF OPERATING INCOME TO CASH FLOWS FROM OPERATING ACTIVITIES Operating income (loss) 166,275 $ (119,695) $ - $ Change in assets and liabilities Accounts receivable 13,831 (23,859) - Deferred outflows (641) (47) - Compensated absences payable - - (99,469) Accounts payable and accrued liabilities 2,937 69,015 (92,043) Net pension liability (227,816) (16,875) - Deferred inflows 135,978 10,072 - Net Cash Provided by (Used in) Operating Activities 90,564 $ (81,389) $ (191,512) $ Noncash Transactions Transfer of capital assets (93,183) $ - $ - $ ---PAGE BREAK--- - 82 - Totals 1,361,687 $ (1,034,453) (509,571) (182,337) 156,998 (93,183) 4,138 (114,384) 616,699 502,315 $ 46,580 $ (10,028) (688) (99,469) (20,091) (244,691) 146,050 (182,337) $ (93,183) $ ---PAGE BREAK--- - 83 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BASIS) – INFORMATION SERVICES FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Charges for services 762,259 $ 762,259 $ 787,342 $ 25,083 $ Miscellaneous - - 16,374 16,374 Interest earnings 300 300 1,675 1,375 Total Revenues 762,559 762,559 805,391 42,832 EXPENDITURES Personal services 358,961 358,961 332,180 26,781 Materials and services 398,735 413,035 396,878 16,157 Capital outlay 87,529 93,229 93,183 46 Contingency 44,863 24,863 - 24,863 Total Expenditures 890,088 890,088 822,241 67,847 REVENUES OVER (UNDER) EXPENDITURES (127,529) (127,529) (16,850) 110,679 OTHER FINANCING SOURCES (USES) Transfers in 57,529 57,529 57,529 - NET CHANGE IN FUND BALANCE (70,000) (70,000) 40,679 110,679 FUND BALANCE, beginning of year 70,000 70,000 119,713 49,713 FUND BALANCE, end of year - $ - $ 160,392 $ 160,392 $ Budget Amounts ---PAGE BREAK--- - 84 - CITY OF WOODBURN, OREGON SCHEDULE OF REVENUES, EXPENDITURES AND CHANGES IN FUND BALANCE - BUDGET AND ACTUAL (NON-GAAP BASIS) – INSURANCE FUND YEAR ENDED JUNE 30, 2015 Original Final Actual Variance REVENUES Charges for services 539,357 $ 539,357 $ 539,357 $ - $ Miscellaneous 1,000 1,000 28,642 27,642 Interest earnings 1,800 1,800 2,463 663 Total Revenues 542,157 542,157 570,462 28,305 EXPENDITURES Personal services 53,179 53,179 45,538 7,641 Materials and services 554,076 664,076 648,921 15,155 Contingency 346,902 236,902 - 236,902 Total Expenditures 954,157 954,157 694,459 259,698 REVENUES OVER (UNDER) EXPENDITURES (412,000) (412,000) (123,997) 288,003 NET CHANGE IN FUND BALANCE (412,000) (412,000) (123,997) 288,003 FUND BALANCE, beginning of year 412,000 412,000 397,011 (14,989) FUND BALANCE, end of year - $ - $ 273,014 $ 273,014 $ Budget Amounts ---PAGE BREAK--- OTHER FINANCIAL SCHEDULES ---PAGE BREAK--- - 85 - CITY OF WOODBURN, OREGON SCHEDULE OF PROPERTY TAX TRANSACTIONS AND OUTSTANDING BALANCES YEAR ENDED JUNE 30, 2015 Uncollected Interest, Uncollected 2014-15 Balance Discounts and Balances Tax Year Levy July 1, 2014 Adjustments Collections June 30, 2015 2014-15 9,054,234 $ - $ (264,847) $ (8,553,359) $ 236,028 $ 2013-14 - 250,749 (2,668) (139,102) 108,979 2012-13 - 133,820 (2,112) (62,495) 69,213 2011-12 - 79,651 (867) (50,961) 27,823 2010-11 - 30,370 (751) (18,807) 10,812 2009-10 - 11,105 (563) (2,504) 8,038 2008-09 - 7,126 (1,921) (1,234) 3,971 Prior - 17,669 (1,318) (1,076) 15,275 9,054,234 $ 530,490 $ (275,047) $ (8,829,538) $ 480,139 Unsegregated 70,460 Property taxes receivable 550,599 $ ---PAGE BREAK--- COMPLIANCE SECTION ---PAGE BREAK--- - 86 - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS Honorable Mayor and Council Members City of Woodburn 270 Montgomery Street Woodburn, Oregon 97071 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 Woodburn, as of and for the year ended June 30, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated November 3, 2015. 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 City’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. 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 determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of ---PAGE BREAK--- - 87 - 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 City’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 City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. CERTIFIED PUBLIC ACCOUNTANTS November 3, 2015 ---PAGE BREAK--- - 88 - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR’S REPORT ON COMPLIANCE FOR EACH MAJOR PROGRAM AND ON INTERNAL CONTROL OVER COMPLIANCE REQUIRED BY OMB CIRCULAR A-133 Honorable Mayor and Council Members City of Woodburn 270 Montgomery Street Woodburn, Oregon 97071 Report on Compliance for Each Major Federal Program We have audited the City of Woodburn’s compliance with the types of compliance requirements described in the OMB Circular A-133 Compliance Supplement that could have a direct and material effect on each of the City’s major federal programs for the year ended June 30, 2015. The City’s major federal programs are identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with the requirements of laws, regulations, contracts, and grants applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for each of the City’s major federal programs based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about the City’s compliance with those requirements and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion on compliance for each major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on Each Major Federal Program In our opinion, the City of Woodburn, complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on each of its major federal programs for the year ended June 30, 2015. ---PAGE BREAK--- - 89 - Report on Internal Control over Compliance Management of the City is responsible for establishing and maintaining effective internal control over compliance with the types of compliance requirements referred to above. In planning and performing our audit of compliance, we considered the City’s internal control over compliance with the types of requirements that could have a direct and material effect on each major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing an opinion on compliance for each major federal program and to test and report on internal control over compliance in accordance with OMB Circular A-133, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control over compliance. A deficiency in internal control over compliance exists when the design or operation of a control over compliance does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, noncompliance with a type of compliance requirement of a federal program on a timely basis. A material weakness in internal control over compliance is a deficiency, or combination of deficiencies, in internal control over compliance, such that there is a reasonable possibility that material noncompliance with a type of compliance requirement of a federal program will not be prevented, or detected and corrected, on a timely basis. A significant deficiency in internal control over compliance is a deficiency, or a combination of deficiencies, in internal control over compliance with a type of compliance requirement of a federal program that is less severe than a material weakness in internal control over compliance, yet important enough to merit attention by those charged with governance. Our consideration of internal control over compliance was for the limited purpose described in the first paragraph of this section and was not designed to identify all deficiencies in internal control over compliance that might be material weaknesses or significant deficiencies. We did not identify any deficiencies in internal control over compliance that we consider to be material weaknesses. However, material weaknesses may exist that have not been identified. The purpose of this report on internal control over compliance is solely to describe the scope of our testing of internal control over compliance and the results of that testing based on the requirements of OMB Circular A-133. Accordingly, this report is not suitable for any other purpose. CERTIFIED PUBLIC ACCOUNTANTS November 3, 2015 ---PAGE BREAK--- See Notes to Schedule of Expenditures of Federal Awards - 90 - CITY OF WOODBURN, OREGON SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2015 Pass-thru Federal Identification CFDA Provided to Number Number Expenditures Subrecipients U.S. Department of Justice Bulletproof Vest Partnership Program N/A 16.607 5,100 $ - $ U.S. Department of Transportation Passed through Oregon Department of Transportation Federal Transit Cluster 29045 20.500 37,657 - Capital Investment Grant 29041 20.500 322,563 - Total Federal Transit Cluster 360,220 - Rural Formula - Admin/Operations 29956 20.509 151,312 - New Freedom Program - Operations 29886 20.509 1,194 - 152,506 - Transit Services Program Cluster Enhanced Mobility of Seniors and Individuals with Disabilities - Operations 29302 20.513 100,804 - Enhanced Mobility of Seniors and Individuals with Disabilities - Equipment 29302 20.513 23,507 - Enhanced Mobility of Seniors and Individuals with Disabilities - Vehicle Maintenance 29302 20.513 57,308 - New Freedom Program - Vehicle Expansion 29886 20.521 34,246 - Total Transit Services Program Cluster 215,865 - National Highway Traffic Safety Administration Highway Safety Cluster Rural Area Transit - Operations unknown 20.616 2,142 - New Freedom Program - Operations unknown 20.600 2,400 - Total Highway Safety Cluster 4,542 - Total U.S. Department of Transportation 733,133 - General Services Administration Donation of Federal Surplus Property N/A 39.003 66 - U.S. Department of Housing and Urban Development Passed through Oregon Business Development Department Community Development Block Grant H12004 14.218 105,926 105,926 Corporation for National and Community Service Retired and Senior Volunteer Program N/A 94.002 43,474 - Total Expenditures of Federal Awards 887,699 $ 105,926 $ New Starts, Small Starts, and Core Capacity - Passenger Shelters Federal Grantor/Program Title ---PAGE BREAK--- - 91 - CITY OF WOODBURN, OREGON NOTES TO SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS YEAR ENDED JUNE 30, 2015 Purpose of the Schedule The accompanying schedule of expenditures of federal awards (the “Schedule”) is a supplementary schedule to the City of Woodburn’s basic financial statements and is presented for purposes of additional analysis. Because the Schedule presents only a selected portion of the activities of the City, it is not intended to and does not present either the financial position or the results of operations of the City. SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The information in the Schedule is presented in accordance with OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Expenditures for federal award programs are recognized on the accrual basis of accounting. Federal Financial Assistance Pursuant to the Single Audit Act Amendment of 1996 and OMB Circular A-133, federal financial assistance is defined as assistance provided by a federal agency, either directly or indirectly, in the form of grants, contracts, cooperative agreements, loans, loan guarantees, property, interest subsidies, insurance or direct appropriations. Accordingly, nonmonetary federal assistance, including federal surplus property, is included in federal financial assistance and, therefore, is reported on the Schedule, if applicable. Federal financial assistance does not include direct federal cash assistance to individuals. Solicited contracts between the state and federal government for which the federal government procures tangible goods or services are not considered to be federal financial assistance. Major Programs The Single Audit Act Amendment of 1996 and OMB Circular A-133 establish criteria to be used in defining major federal financial assistance programs. Major programs for the City are those programs selected for testing by the auditor using a risk-assessment model, as well as certain minimum expenditure requirements, as outlined in OMB Circular A-133. Programs with similar requirements may be grouped into a cluster for testing purposes. Reporting Entity The reporting entity is fully described in notes to the financial statements. Additionally, the schedule includes all federal programs administered by the City of Woodburn for the year ended June 30, 2015. Revenue and Expense Recognition The revenue and expenditure of federal awards are accounted for under the accrual basis of accounting. Revenues are recorded when earned. Expense are recorded when the liability is incurred. ---PAGE BREAK--- - 92 - CITY OF WOODBURN SCHEDULE OF FINDINGS AND QUESTIONED COSTS YEAR ENDED JUNE 30, 2015 SUMMARY OF AUDITORS' RESULTS Financial Statements Type of Auditors' report issues: Unmodified Internal control reporting: • Material weakness(es) identified? No • Significant deficiencies identified that are not considered to be material weaknesses? None reported Noncompliance material to financial statements noted? No Federal Awards Internal control over major programs: • Material weakness(es) identified? No • Significant deficiencies identified that are not considered to be material weaknesses? None reported Type of Auditors' report issued on compliance for major programs: Unmodified Any audit findings disclosed that are required to be reported in accordance with section 510(a) of Circular A-133? No Identification of major program: CFDA Numbers Name of Federal Program or Cluster 20.500 Federal Transit Cluster 20.509 Formula Grants for Rural Areas Dollar threshold used to distinguish between type A and type B programs: $300,000 Auditee qualified as low-risk auditee? No FINANCIAL STATEMENT FINDINGS None. FEDERAL AWARD FINDINGS AND QUESTIONED COSTS None. ---PAGE BREAK--- - 93 - 475 Cottage Street NE, Suite 200, Salem, Oregon 97301 (503) 581-7788 INDEPENDENT AUDITOR’S REPORT REQUIRED BY OREGON STATE REGULATIONS Honorable Mayor and Council Members City of Woodburn 270 Montgomery Street Woodburn, Oregon 97071 We have audited, in accordance with auditing standards generally accepted in the United States of America, the basic financial statements of the City of Woodburn as of and for the year ended June 30, 2015, and have issued our report thereon dated November 3, 2015. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Woodburn's financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162- 10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations, noncompliance with which could have a direct and material effect on the determination of financial statements amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. We performed procedures to the extent we considered necessary to address the required comments and disclosures which included, but were not limited to the following:  Deposit of public funds with financial institutions (ORS Chapter 295).  Indebtedness limitations, restrictions and repayment.  Budgets legally required (ORS Chapter 294).  Insurance and fidelity bonds in force or required by law.  Programs funded from outside sources.  Highway revenues used for public highways, roads, and streets.  Authorized investment of surplus funds (ORS Chapter 294).  Public contracts and purchasing (ORS Chapters 279A, 279B, 279C).  Accountability for collecting or receiving money by elected officials – no money was collected or received by elected officials. In connection with our testing nothing came to our attention that caused us to believe the City was not in substantial compliance with certain provisions of laws, regulations, contracts, and grants, including the provisions of Oregon Revised Statutes as specified in Oregon Administrative Rules 162-10-000 through 162-10-320 of the Minimum Standards for Audits of Oregon Municipal Corporations except expenditures exceeded appropriations, as detailed in the notes to the financial statements. ---PAGE BREAK--- - 94 - 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 to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Restriction on Use This report is intended solely for the information and use of the council members and management of the City of Woodburn and the Oregon Secretary of State and is not intended to be and should not be used by anyone other than these parties. GROVE, MUELLER & SWANK, P.C. CERTIFIED PUBLIC ACCOUNTANTS By: Ryan T. Pasquarella, A Shareholder November 3, 2015