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Home My WebLink About2008 Financial Statements & Federal Single Audit ReportWashington State Auditor's Office Financial Statements and Federal Single Audit Report City of Port Townsend Jefferson County Audit Period January 1, 2008 through December 31, 2008 Report No. 1002321 Issue Date September 30, 2009 Washington State Auditor Brian Sonntag September 30, 2009 Council City of Port Townsend Port Townsend, Washington Report on Financial Statements and Federal Single Audit Please find attached our report on the City of Port Townsend's financial statements and compliance with federal laws and regulations. We are issuing this report in order to provide information on the City's financial condition. Sincerely, BRIAN SONNTAG, CGFM STATE AUDITOR Insurance Building, P.O. Box 40021 • Olympia, Washington 98504-0021 • (360) 902-0370 • TDD Relay (800) 833-6388 FAX (360) 753-0646 • http://www.sao.wa.gov Table of Contents City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 FederalSummary.......................................................................................................................1 Schedule of Federal Audit Findings and Questioned Costs.........................................................3 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing Standards........................................................................................................................ 6 Independent Auditor's Report on Compliance with Requirements Applicable to its Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133..............................................................................................................................8 Independent Auditor's Report on Financial Statements.............................................................11 FinancialSection.......................................................................................................................13 Federal Summary City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 The results of our audit of the City of Port Townsend are summarized below in accordance with U.S. Office of Management and Budget Circular A-133. FINANCIAL STATEMENTS An unqualified opinion was issued on the financial statements. Internal Control Over Financial Reporting: • Significant Deficiencies: We reported no deficiencies in the design or operation of internal control over financial reporting that we consider to be significant deficiencies. • Material Weaknesses: We identified no significant deficiencies that we consider to be material weaknesses. We noted no instances of noncompliance that were material to the financial statements of the City. FEDERAL A WARDS Internal Control Over Major Programs: • Significant Deficiencies: We identified deficiencies in the design or operation of internal control over major federal programs that we consider to be significant deficiencies. • Material Weaknesses: We identified significant deficiencies that we consider to be material weaknesses. We issued a qualified opinion on the City's compliance with requirements applicable to its major federal program. We reported findings that are required to be disclosed under OMB Circular A-133. Washington State Auditor's Office 1 Identification of Major Programs: The following was a major program during the period under audit: CFDA No. Program Title 14.251 (HUD) Special Projects, Neighborhood Initiative, and Miscellaneous Grants The dollar threshold used to distinguish between Type A and Type B programs, as prescribed by OMB Circular A-133, was $300,000. The City did not qualify as a low -risk auditee under OMB Circular A-133. Washington State Auditor's Office 2 Schedule of Federal Audit Findings and Questioned Costs The City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 1. The City did not have adequate internal controls in place to ensure compliance with subrecipient monitoring requirements. CFDA Number and Title: Federal Grantor Name: Federal Award/Contract Number: Pass -through Entity Name: Pass -through Award/Contract Number: Questioned Cost Amount: Description of Condition 14.251 — Special Project, Neighborhood Initiative and Miscellaneous Grants Department of Housing and Urban Development B-05-SP-WA-1005 NA NA $0 During 2008, the City reported $572,704 in federal expenditures. Of this, $330,000 was passed through to a not -for -profit sub -recipient for construction of the Northwest Maritime Center. Federal regulations require the City to monitor sub -recipients of Federal funds. As a pass -through agency, the City is required to inform its sub -recipient of all the pertinent regulations associated with its grant, such as federal Office of Management and Budget Circulars A-122, A-133 and A-110. These circulars cover compliance areas including allowable uses of grant funding, terms of payment, period of availability, and reporting. This information is typically outlined in a written agreement, but we noted there was no official contract between the City and the non-profit. The City also is required to monitor whether its sub -recipient obtained an audit of its federal grants and must follow up on any issues affecting the grant it made to the sub -recipient. Cause of Condition The City was unaware of these grant requirements. It believed reviewing sub -recipient cost reimbursements was sufficient to fulfill grant requirements. Effect of Condition The City was unable to ensure federal funds were spent in accordance with the grant agreement. Washington State Auditor's Office 3 Recommendation We recommend the City establish and follow control policies and procedures to effectively monitor sub -recipients' use of federal funds. City's Response The City appreciates the opportunity to respond to the draft auditor's finding on subrecipient monitoring. The city acknowledges that a formal contract on subrecipient requirements was not executed between the City and the subrecipient agency. The City would like to note that the grant administration began several years ago when the first of many pass -through grants were awarded. At that time city staff met with officials from the Northwest Maritime Center, and explained the requirements for single audits of the Northwest Maritime Center, and the requirements to ensure compliance with all federal and state regulations for the pass -through grants. This included informing Northwest Maritime Center about the need to comply with the individual federal Circulars and specific requirements for each particular grant award as provided in the Catalog of Federal Domestic Assistance. This particular grant was included in the Northwest Maritime Center recent single audit report dated July 22, 2009, which was received during the city audit. That audit found the Northwest Maritime Center was in compliance with federal requirements. The City will immediately review and implement any required notices for compliance with a formal agreement for each subrecipient award specifying federal audit requirements. City staff will monitor compliance with those subrecipient agreements to ensure federal laws and regulations are in compliance. Auditor's Remarks We appreciate the City`s commitment to resolve this finding and thank them for their cooperation and assistance during the audit. We will review the corrective action taken during our next regular audit. Applicable laws and Regulations The U.S. Office of Management and Budget's Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations, outlines responsibilities for pass -through entities receiving federal funds and states in part: Section 300 The auditee shall... (b) Maintain internal control over Federal programs that provides reasonable assurance that the auditee is managing Federal awards in compliance with laws, regulations, and provisions of contracts or grant agreements that could have a material effect on each of its federal programs. Washington State Auditor's Office 4 Section 400(d) Pass -through entity responsibilities: A pass -through entity shall perform the following for the Federal awards it makes: (1) Identify Federal awards made by informing each subrecipient of CFDA title and number, award name and number, award year, if the award is R&D, and name of Federal agency. When some of this information is not available, the pass -through entity shall provide the best information available to describe the Federal award. (2) Advise subrecipients of requirements imposed on them by Federal laws, regulations, and the provisions of contracts or grant agreements as well as any supplemental requirements imposed by the pass -through entity. (3) Monitor the activities of subrecipients as necessary to ensure that Federal awards are used for authorized purposes in compliance with laws, regulations, and the provisions of contracts or grant agreements and those performance goals are achieved. (4) Ensure that subrecipients expending $300,000 ($500,000 for fiscal years ending after December 31,2003) or more in Federal awards during the subrecipient's fiscal year have met the audit requirements of this part for that fiscal year. (5) Issue a management decision on audit findings within six months after receipt of the subrecipient's audit report and ensure that the subrecipient takes appropriate and timely corrective action. (6) Consider whether subrecipient audits necessitate adjustment of the pass -through entity's own records. (7) Require each subrecipient to permit the pass -through entity and auditors to have access to the records and financial statements as necessary for the pass -through entity to comply with this part. Washington State Auditor's Office 5 Independent Auditor's Report on Internal Control over Financial Reporting and on Compliance and Other Matters in Accordance with Government Auditing► Standards City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 Council City of Port Townsend Port Townsend, Washington We have audited the financial statements of the City of Port Townsend, Jefferson County, Washington, as of and for the year ended December 31, 2008, and have issued our report thereon dated September 17, 2009. During the year ended December 31, 2008, the City changed its basis of accounting from generally accepted accounting principles to an other comprehensive basis of accounting. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to the financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit, we considered the City's internal control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City's internal control over financial reporting. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over financial reporting. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the City's ability to initiate, authorize, record, process or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the City's financial statements that is more than inconsequential will not be prevented or detected by the City's internal control. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity's internal control. Washington State Auditor's Office 6 Our consideration of internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. We did not identify any deficiencies in internal control over financial reporting that we consider to be material weaknesses, as defined above. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City's financial statements are free of material misstatement, we performed tests of the City's compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. This report is intended for the information and use of management, the Council, federal awarding agencies and pass -through entities. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. BRIAN SONNTAG, CGFM STATE AUDITOR September 17, 2009 Washington State Auditor's Office 7 Independent Auditor's Report on Compliance with Requirements Applicable to its Major Program and Internal Control over Compliance in Accordance with OMB Circular A-133 City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 Council City of Port Townsend Port Townsend, Washington COMPLIANCE We have audited the compliance of the City of Port Townsend, Jefferson County, Washington, with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to its major federal program for the year ended December 31, 2008. The City's major federal program is identified in the Federal Summary. Compliance with the requirements of laws, regulations, contracts and grants applicable to its major federal program is the responsibility of the City's management. Our responsibility is to express an opinion on the City's compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to the 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. Our audit does not provide a legal determination on the City's compliance with those requirements. As described in Finding 1 in the accompanying Schedule of Federal Audit Findings and Questioned Costs, the City did not comply with requirements regarding subrecipient monitoring that are applicable to the CFDA-14.251- Special Projects, Neighborhood Initiative and Miscellaneous Grants program. Compliance with such requirements is necessary, in our opinion, for the City to comply with requirements applicable to the program. In our opinion, except for the noncompliance described in the preceding paragraphs, the City complied, in all material respects, with the requirements referred to above that are applicable to its major federal program for the year ended December 31, 2008. Washington State Auditor's Office 8 INTERNAL CONTROL OVER COMPLIANCE The management of the City is responsible for establishing and maintaining effective internal control over compliance with requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City's internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the City's internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the entity's internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies. A control deficiency in an entity's internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity's ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity's internal control. We consider the deficiencies in internal control over compliance described in the accompanying Schedule of Federal Audit Findings and Questioned Costs as Finding 1 to be significant deficiencies. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity's internal control. Of the significant deficiencies in internal control over compliance described in the accompanying Schedule of Federal Audit Findings and Questioned Costs, we consider Finding 1 to be a material weakness. The City's response to the finding identified in our audit is described in the accompanying Schedule of Federal Audit Findings and Questioned Costs. We did not audit the City's response and, accordingly, we express no opinion on it. This report is intended for the information of management, the Council, federal awarding agencies and pass -through entities. However, this report is a matter of public record and its Washington State Auditor's Office 9 distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. BRIAN SONNTAG, CGFM STATE AUDITOR September 17, 2009 Washington State Auditor's Office 10 Independent Auditor's Report on Financial Statements City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 Council City of Port Townsend Port Townsend, Washington We have audited the accompanying financial statements of the City of Port Townsend, Jefferson County, Washington, for the year ended December 31, 2008. These financial statements are the responsibility of the City's management. Our responsibility is to express an opinion 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 of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 1 to the financial statements, the City prepares its financial statements on the basis of accounting that demonstrates compliance with Washington State statutes and the Budgeting, Accounting and Reporting System (BARS) manual prescribed by the State Auditor, which is a comprehensive basis of accounting other than generally accepted accounting principles. In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position and results of operations of the City of Port Townsend, for the year ended December 31, 2008, on the basis of accounting described in Note 1 to the financial statements. During the year ended December 31, 2008, the City changed its basis of accounting from generally accepted accounting principles to an other comprehensive basis of accounting. In accordance with Government Auditing Standards, we have also issued our report 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be considered in assessing the results of our audit. Washington State Auditor's Office 11 Our audit was performed for the purpose of forming an opinion on the financial statements taken as a whole. The accompanying Schedule of Expenditures of Federal Awards is presented for purposes of additional analysis as required by U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments, and Non -Profit Organizations. The accompanying Schedule of Long -Term Debt is also presented for purposes of additional analysis as required by the prescribed BARS manual. These schedules are not a required part of the financial statements. Such information has been subjected to the auditing procedures applied in the audit of the financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the financial statements taken as a whole. BRIAN SONNTAG, CGFM STATE AUDITOR September 17, 2009 Washington State Auditor's Office 12 Financial Section City of Port Townsend Jefferson County January 1, 2008 through December 31, 2008 FINANCIAL STATEMENTS Fund Resources and Uses Arising from Cash Transactions — 2008 Notes to Financial Statements — 2008 SUPPLEMENTAL INFORMATION Schedule of Long -Term Debt — 2008 Schedule of Expenditures of Federal Awards and Notes — 2008 Washington State Auditor's Office 13 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Fund Number and Name Fund Number and Name 010 General Fund 110 Street Budget Actual Budget Actual Beginning Net Cash Investment $ 346,479 $ 295,590 $ 154,030 $ 146,671 Revenue and Other Sources 310 Taxes $ 5,711,094 $ 5,841,165 $ 497,176 $ 505,255 320 Licenses and Permits 364,527 260,886 - 693 330 Intergovernmental 168,235 160,462 222,423 202,975 340 Charges for Goods and Services 1,194,238 1,121,799 1,000 18,828 350 Fines and Penalties 113,200 118,444 - - 360 Miscellaneous 26,650 23,449 6,461 6,260 370 Capital Contributions - - - - 390 Other Financing Sources - 239 - - Total Revenue and Other Sources 7,577,944 7,526,444 727,061 734,010 Total Resources $ 7,924,423 $ 7,822,034 $ 881,091 $ 880,681 Operating Expenditure 510 General Goverment 1,517,156 1,515,223 - - 520 Public Safety 2,626,058 2,630,166 530 Physical Environment - - - - 540 Transportation - - 545,175 537,198 550 Economic Environment 906,536 884,198 - - 560 Mental and Physical Health - - 570 Culture and Recreational 59,549 66,596 - - Total Operating Expenditures $ 5,109,299 $ 5,096,183 $ 545,175 $ 537,198 591-593 Debt Service - - - - 594-595 Capital Outlay 111,000 33,543 75,000 14,389 Total Expenditures 5,220,299 5,129,726 620,175 551,587 597-599 Other Financing Uses 2,491,426 2,461,644 167,000 167,000 Total Expenditures and Other Uses $ 7,711,725 $ 7,591,370 $ 787,175 $ 718,587 Excess (Deficit) of Resources Over Uses $ 212,698 $ 230,664 $ 93,916 $ 162,094 380.00 Nonrevenues (Except 384 and 388.80) - 315 9,100 1,232 580.00 Nonexpenditures (Except 584 and 588.80) - 3 - - Ending Net Cash and Investments $ 212,698 $ 230,976 $ 103,016 $ 163,326 The accompanying notes are an integral part of this financial statement. Washington State Auditor's Office 14 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588.80) Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name Fund Number and Name 120 Library Fund 140 PW Admin & Engineer Budget Actual Budget Actual $ 6,701 $ $ $ 13,078 3,731 - - 1,114,113 1,076,672 12,000 12,712 - - - 2,272 775,082 769,395 - - 787,082 797,458 1,114,113 1,080,404 $ 793,783 $ 797,458 $ 1,114,113 $ 1,080,404 1,105,938 1,067,899 728,783 738,813 $ 728,783 65,000 $ 738,813 58,645 $ 1,105,938 5,000 $ 1,067,899 - $ 793,783 $ 797,458 $ 1,110,938 $ 1,067,899 $ 793,783 $ 797,458 $ 1,110,938 $ 1,067,899 $ - $ - $ 3,175 $ 12,505 $ $ $ 3,175 $ 12,505 Washington State Auditor's Office 15 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588.80) Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name 150 Lodging Tax Budget Actual $ 203,207 $ $ 342,476 $ 8,128 Fund Number and Name 171 Fire and EMS Budget Actual 231,342 $ 3,060 $ 349,290 $ 388,371 $ 386,438 4,867 821,178 812,901 350,604 354,157 1,209,549 1,199,339 $ 553,811 $ 585,499 $ 1,212,609 $ 1,199,339 32,000 32,000 - - - - 1,209,549 1,199,339 354,000 356,907 $ 386,000 $ 388,907 $ 1,209,549 $ 1,199,339 $ 386,000 $ 62,908 388,907 62,908 $ 1,209,549 - $ 1,199,339 - $ 448,908 $ 451,815 $ 1,209,549 $ 1,199,339 $ 104,903 $ 133,684 $ 3,060 $ $ 104,903 $ 133,684 $ 3,060 $ Washington State Auditor's Office 16 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588.80) Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name 195 System Dev Charges Budget Actual $ 235,316 $ 9,413 Fund Number and Name 199 Community Services Budget Actual 613,018 $ $ 99,000 95,310 16,829 16,000 17,960 724,166 708,520 9,413 16,829 839,166 821,790 $ 244,729 $ 629,847 $ 839,166 $ 821,790 13,450 12,760 69,555 69,380 751,647 738,867 $ $ $ 834,652 $ 821,006 500 - $ $ $ 835,152 $ 821,006 550,000 255,069 - - $ 550,000 $ 255,069 $ 835,152 $ 821,006 $ (305,271) $ 374,779 $ 4,014 $ 783 338,000 220,205 - (640) $ 32,729 $ 594,984 $ 4,014 $ 143 Washington State Auditor's Office 17 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588 Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name Fund Number and Name 200 G.O. Debt Service 301 General CIP Projects Budget Actual Budget Actual $ 58,989 $ 19,510 $ 207,005 $ (16,886) $ 100,000 $ 75,857 $ 1,170,000 $ 344,668 1,447,500 652,849 56,102 63,165 86,000 30,885 503,395 645,447 167,000 8,170,543 659,497 784,469 2,870,500 9,198,945 $ 718,486 $ 803,979 $ 3,077,505 $ 9,182,059 1,000 1,214 3,785 $ 1,000 $ 1,214 $ $ 3,785 799,190 799,193 24,450 - - 2,613,500 1,626,508 $ 800,190 $ 800,407 $ 2,613,500 $ 1,654,743 - - 418,539 988,470 $ 800,190 $ 800,407 $ 3,032,039 $ 2,643,213 $ (81,704) $ 3,572 $ 45,466 $ 6,538,846 $ (81,704) $ 3,572 $ 45,466 $ 6,538,846 Washington State Auditor's Office 18 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 320 330 340 350 360 370 390 Total Revenue and Other Sources Total Resources Operating Expenditure 510 520 530 540 550 560 570 Total Operating Expenditures 591-593 594-595 Total Expenditures Taxes Licenses and Permits Intergovernmental Charges for Goods and Services Fines and Penalties Miscellaneous Capital Contributions Other Financing Sources General Goverment Public Safety Physical Environment Transportation Economic Environment Mental and Physical Health Culture and Recreational Debt Service Capital Outlay 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588. Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name Fund Number and Name 411 Water Sewer Fund 412 Storm Fund Budget Actual Budget Actual $ 3,583,924 $ 4,196,742 $ 332,030 $ 443,119 4,000 34,634 - - - - 66,290 4,121,194 4,100,293 470,809 521,906 176,357 138,528 22,000 13,574 100,000 638,221 - - 4,401,551 4,911,676 492,809 601,770 $ 7,985,475 $ 9,108,418 $ 824,839 $ 1,044,889 400,156 384,577 3,456,622 3,459,329 507,398 498,777 $ 3,856,778 8 $ 3,843,906 $ 507,398 $ 498,777 32,216 32,217 - - 111,650 34,800 220,000 982 $ 4,000,644 $ 3,910,922 $ 727,398 $ 499,758 1,545,875 717,051 - - $ 5,546,519 $ 4,627,973 $ 727,398 $ 499,758 $ 2,438,956 $ 4,480,445 $ 97,441 $ 545,131 6,000 17,471 - (838) 269,931 283,220 - (9) $ 2,175,025 $ 4,214,696 $ 97,441 $ 544,302 Washington State Auditor's Office 19 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588.80) Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name 415 Water Sewer CIP Budget Actual $ 48,044 $ 1,922 1,419,000 Fund Number and Name 4261992 WIS Revenue Bond Fund Budget Actual 36,672 $ 47,356 $ 59,852 145 1,894 5,624 345,244 602,750 602,750 1,420,922 345,389 604,644 608,374 $ 1,468,966 $ 382,061 $ 652,000 $ 668,226 1,000 605 129,000 34,524 129,000 34,524 1,000 605 1,290,000 345,244 - - $ 1,419,000 $ 379,769 $ 1,000 $ 605 $ 1,419,000 $ 379,769 $ 1,000 $ 605 $ 49,966 $ 2,292 $ 651,000 $ 667,621 601,750 601,750 $ 49,966 $ 2,292 $ 49,250 $ 65,871 Washington State Auditor's Office 20 MCAG NO 0364 STATEMENT C4 City of Port Townsend FUND RESOURCES AND USES ARISING FROM CASH TRANSACTIONS For the Year Ended 2008 BARS CODE Beginning Net Cash Investment Revenue and Other Sources 310 Taxes 320 Licenses and Permits 330 Intergovernmental 340 Charges for Goods and Services 350 Fines and Penalties 360 Miscellaneous 370 Capital Contributions 390 Other Financing Sources Total Revenue and Other Sources Total Resources Operating Expenditure 510 General Goverment 520 Public Safety 530 Physical Environment 540 Transportation 550 Economic Environment 560 Mental and Physical Health 570 Culture and Recreational Total Operating Expenditures 591-593 Debt Service 594-595 Capital Outlay Total Expenditures 597-599 Other Financing Uses Total Expenditures and Other Uses Excess (Deficit) of Resources Over Uses 380.00 Nonrevenues (Except 384 and 388.80) 580.00 Nonexpenditures (Except 584 and 588.80) Ending Net Cash and Investments The accompanying notes are an integral part of this financial statement. Fund Number and Name 500 Equipment Rental Budget Actual $ 345,314 $ 507,167 65,602 56,288 154,767 5,578 880,326 1,043,100 - 11,540 1,100, 695 1,116, 506 $ 1,446,009 $ 1,623,673 113,371 114,436 513,718 505,272 627,089 619,708 214,466 248,786 $ 841,555 $ 868,493 $ 841,555 $ 868,493 $ 604,453 $ 755,180 (40) $ 604,453 $ 755,220 Washington State Auditor's Office 21 MCAG NO. 0364 STATEMENT C-5 PAGE 1 OF 3 CITY OF PORT TOWNSEND FUND RESOURCES AND USES ARISING FROM CASH TRANSACTION For The Year Ended December 31, 2008 Fund Number And Name Fund Number And Name Fund Type: 101 - DRUG ENFORCEMENT ED 102 - Contingency Budget Actual Budget Actual Beginning Net Cash and Investments: $ 659 $ 659 $ 167,056 $ 168,601 Revenues and Other Financing Sources 2 1,882 6,682 3,849 $ 173,738 $ 172,450 Total Resources $ 661 $ 2,541 Expenditures And Other Financing Uses - - 102,554 99,006 $ 71,184 $ 73,444 Excess (Deficit) of Resources Over Uses $ 661 $ 2,541 Nonrevenues (Except 384) - - - - Nonexpenditures (Except 584) - - - - $ 71,184 $ 73,444 Ending Net Cash and Investments $ 661 $ 2,541 Fund Number And Name Fund Number And Name Fund Type: 190 - COMM DEV BLOCK GRANT 302 - City Hall Annex/Renov Budget Actual Budget Actual Beginning Net Cash and Investments: $ 75,721 $ 132,071 $ - $ 23,231 Revenues and Other Financing Sources 13,030 43,042 - - $ - $ 23,231 Total Resources $ 88,751 $ 175,113 Expenditures And Other Financing Uses 50,000 25,125 - - $ - $ 23,231 Excess (Deficit) of Resources Over Uses $ 38,751 $ 149,988 Nonrevenues (Except 384) - - - - Nonexpenditures (Except 584) - - - - $ - $ 23,231 Ending Net Cash and Investments $ 38,751 $ 149,988 Fund Type: Beginning Net Cash and Investments: Revenues and Other Financing Sources Total Resources Expenditures And Other Financing Uses Excess (Deficit) of Resources Over Uses Nonrevenues (Except 384) Nonexpenditures (Except 584) Ending Net Cash and Investments Fund Number And Name 417 - 1956 Trans Line Budclet I Actual $ 3,551,905 $ 3,288,285 I $ 192,076 117,845 $ 3,743,981 $ 3,406,130 $ 55,000 5,318 $ 3,688,981 $ 3,400,812 $ $ 3,688,981 $ 3,400,812 $ The accompanying notes are an integral part of this financial statement. Fund Number And Name 419- 1978 Wtr Rev Bond Red Budclet I Actual 49,002 26,085 24,776 75,087 $ 24,125 24,776 24,500 50,962 $ 276 50,962 $ 276 Washington State Auditor's Office 22 MCAG NO. 0364 (Fund Type: STATEMENT C-5 PAGE 2OF3 CITY OF PORT TOWNSEND FUND RESOURCES AND USES ARISING FROM CASH TRANSACTION For The Year Ended December 31, 2008 Fund Number And Name Fund Number And Name 424-1992/98 W/S Rev Bnd Res 601-Refundable Deposits Budaet I Actual Budaet Actua Beginning Net Cash and Investments: $ 433,180 $ 453,410 $ - $ - Revenues and Other Financing Sources 17,327 12,222 - - Total Resources $ 450,507 $ 465,632 $ - $ - Expenditures And Other Financing Uses - - - - $ - Excess (Deficit) of Resources Over Uses $ 450,507 $ 465,632 Nonrevenues (Except 384) - - - 108,654 Nonexpenditures (Except 584) - - - - $ - $ 108,654 Ending Net Cash and Investments $ 450,507 $ 465,632 Fund Type: Beginning Net Cash and Investments: Revenues and Other Financing Sources Total Resources Expenditures And Other Financing Uses Excess (Deficit) of Resources Over Uses Nonrevenues (Except 384) Nonexpenditures (Except 584) Ending Net Cash and Investments Fund Type: Beginning Net Cash and Investments: Revenues and Other Financing Sources Total Resources Expenditures And Other Financing Uses Excess (Deficit) of Resources Over Uses Nonrevenues (Except 384) Nonexpenditures (Except 584) Ending Net Cash and Investments Fund Number And Name 610- Firemen's Pension Budget Actual $ 310,097 $ 314,731 $ 92,626 103,055 $ 402,723 $ 417,786 $ 83,600 72,653 $ 319,123 $ 345,133 $ 319,123 $ 345,133 $ Fund Number And Name 621 - Memorial Budget Actual $ 21,010 $ 20,130 $ 840 6,085 $ 21,850 $ 26,215 $ 18,000 18,562 $ 3,850 $ 7,653 $ The accompanying notes are an integral part of this financial statement. Fund Number And Name 613- Court Agency 3udget Actua $ 25,539 - $ 25,539 $ 25,539 - 101,402 - 99,722 - $ 27,219JI Fund Number And Name 623 - Golf Course Budget Actual 10,000 20,400 19,861 30,400 $ 19,861 28,000 15,648 2,400 $ 4,213 Washington State Auditor's Office 23 MCAG NO. 0364 STATEMENT C-5 PAGE 3 OF 3 CITY OF PORT TOWNSEND FUND RESOURCES AND USES ARISING FROM CASH TRANSACTION nd Type: For The Year Ended December 31, 2008 Fund Number And Name 631 - Maritime Center Fund Budget I Actua Beginning Net Cash and Investments: $ - $ 3 Revenues and Other Financing Sources - - Total Resources $ - $ 3 Expenditures And Other Financing Uses - - Excess (Deficit) of Resources Over Uses $ - $ 3 Nonrevenues (Except 384) 17,505 329,999 Nonexpenditures (Except 584) - 330,000 Ending Net Cash and Investments $ 17,505 $ 2 The accompanying notes are an integral part of this financial statement. Washington State Auditor's Office 24 City of Port Townsend Notes to the Financial Statements For the Year Ended December 31, 2008 NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Port Townsend reports financial activity using the revenue and expenditure classifications, statements, and schedules contained in the Cash Basis Budgeting, Accounting and Reporting System (BARS) manual. This basis of accounting and reporting is another comprehensive basis of accounting (OCBOA) that is prescribed by the State Auditor's Office under the authority of Washington State law, Chapter 43.09 RCW. The City of Port Townsend was incorporated on January 16, 1860, and operates under the laws of the State of Washington applicable to a non -charter code city. The city is a general purpose government and provides police and fire protection, water, sewer, storm drainage, as well as maintaining parks, streets, and a library for use by its citizens. The city uses single entry, cash basis accounting for its governmental and proprietary fund types ,which is a departure from generally accepted accounting principles (GAAP). Priorto 2008, the proprietary (utility) funds were reported on accrual basis. Proprietary Funds are used to account for activities that are operated in a manner similar to private enterprise business. A. Fund Accountin The accounts of the city are organized on the basis of funds and account groups, each of which is considered a separate accounting entity. Each fund is accounted for with a separate set of single entry accounts that comprise its cash, investments, revenues and expenditures or expenses, as appropriate. The city's resources are allocated to and accounted for in individual funds depending on what they are to be spent for and how they are controlled. The following are the fund types used by the city: Governmental Fund Types.- are used to finance most governmental functions and account for and report expendable financial resources and related obligations. General Fund (Fund 010) (Current Expense Fund) This fund is the primary operating fund of the city. It accounts for all financial resources except those required to be accounted for in another fund. Special Revenue Funds (Funds in the 100 series) These funds account for revenues derived from specific taxes, grants, or other sources which are designed to finance particular activities of the city. Debt Service Funds (Funds in the 200 series) These funds are used to gather resources to pay general government debt. Capital Projects Funds (Funds in the 300 series) These funds account for financial resources which are designated for the acquisition or construction of general government capital improvements. Washington State Auditor's Office 25 Enterprise Funds (Funds in the 400 series) These funds account for operations that provide goods or services to the general public and are supported primarily through user charges. Internal Service Funds (Funds in the 500 series) These funds account for operations that provide goods or services to other departments or funds of the city or other governmental units on a cost -reimbursement basis. Fiduciary Fund Types - Fiduciary funds account for assets held by the city in a trustee capacity or as an agent on behalf of others. Refundable Deposits (601) This fund accounts for deposits being held pending city criteria for builders being fulfilled. Pension (and Other Employee Benefit) Trust Funds (611-620) Firemen's Pension Private Purpose Trust Funds (621-630) Funds used to report all trust arrangements under which principal and income benefit individual, private organization and other government. Agency Funds (Funds 631-699) This fund accounts for assets whereby the city acts as a pass through agent for various government entities. B. Basis of Accounting Basis of accounting refers to when revenues and expenditures are recognized in the accounts and reported in the financial statements. Revenues are recognized onlywhen cash is received and expenditures are recognized when paid, including those properly chargeable against the prior year(s) budget appropriations as required by state law. Purchases of capital assets are expensed during the year of acquisition. There is no capitalization of capital assets, nor allocation of depreciation expense. Inventory is expensed when purchased. C. Budgets and Budgetary Accounting Annual appropriated budgets are adopted for all funds. The financial statements include budgetary comparisons for those funds. Annual appropriated budgets are adopted at the fund level. The budgets constitute the legal authority for expenditures at that level. Annual appropriations for all funds lapse at year end. The city manager is authorized to transfer budgeted amounts between (department within and fund/object classes with departments); however, any revisions that alter the total expenditures of a fund, or that affect the number of authorized employee positions, salary ranges, hours, or other conditions of employment must be approved by the city council. Washington State Auditor's Office 26 D. Assets, Liabilities and Equities Cash and Equivalents It is the city's policy to invest all temporary cash surpluses. The amounts are included in the net cash and investments shown on the statements of fund resources and uses arising from cash transactions. The interest on these investments is prorated to the various funds. The average compensating balances maintained during 2008 were approximately $305,145.65 The city's deposits are entirely covered by federal depository insurance (FDIC and FSLIC) or by collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). Investments See Note 3. Capital Assets Capital assets are long-lived assets of the city and are recorded as expenditures when purchased. Compensated Absences Vacation pay, which may be accumulated up to 6 weeks, is payable upon resignation, retirement or death. Sick leave may be accumulated up to 1440 hours. Long -Term Debt See Note 5. Other Financing Sources Or Uses The city's "Other Financing Sources or Uses" consist of Operating transfers -in, Operating transfers -out, Special assessment bond proceeds, Proceeds from refunding bonds, and Capital leases. Risk Management See Note 8. NOTE 2 - COMPLIANCE AND ACCOUNTABILITY There have been no material violations of finance -related legal or contractual provisions. Due to higher than anticipated fuel costs, the Equipment Rental Fund did experience a budget overage. The adopted budget for the Equipment Rental Fund was $841,555.47, expenditures $868,493.23 NOTE 3 - INVESTMENTS The city's investments are either insured, registered, or held by the city or its agent in the city's name. As required by state law, all investments of the city's funds are obligations of the U S Government, the State Treasurer's Investment Pool, or deposits with Washington State banks and savings and loan institutions. Washington State Auditor's Office 27 Investments by type at December 31, 2008 are as follows: Investments Carrying Amount Market value Washington State Treasurer's Investment Pool $12,246,827.66 $12,246,827.66 US Bank Savings Account US Bank Investment Account Frontier Bank CD's $582.16 $4,953.08 $5,580,977.02 $582.16 $4,953.08 $5,580,977.02 2008 Total Investments j $17,833,339.92 $17,833,339.92 NOTE 4 - PROPERTY TAXES The Jefferson County Treasurer acts as agent to collect property taxes levied in the county for all taxing authorities. Collections are distributed after the total collected surpasses $10,000; with any balance left over distributed at month -end. Property tax revenues are recognized when cash is collected. Delinquent taxes are considered fully collectible because a lien affixes to the property when taxes are levied. The city's regular levy for 2008 was $1.56180 per $1,000.00 on an assessed valuation of $1,221,864,640 for a total regular levy of $1,908,308. In 2008 the city also had a special levy for Emergency Medical Services (EMS). The EMS levy rate was $ .31785 per $1,000 for a total levy of $388,370. NOTE 5 - LONG-TERM DEBT The accompanying Schedule of Long-term Debt (09) provides a listing of the outstanding debt of the city. /_A=Z0701I]� The City of Port Townsend issues general obligation and revenue bonds to finance the construction and remodel of capital assets. Bonded indebtedness has also been entered into to advance refund revenue bonds. General obligation bonds have been issued for both general government and business -type activities and are being repaid from the applicable resources. The revenue bonds are being repaid by proprietary fund revenues. In 2008 the issued $7,500,000 in bonds to finance road and sidewalk improvements, as well as tourism, infrastructure, and waterfront access improvements Washington State Auditor's Office 28 General obligation bonds currently outstanding is as follows: Issue Date Purpose Original Issue Interest Rate Maturiy Date Debt Outstanding 1991 Limited GO Bonds for reconstruction of the Balloon $535,000 6.4 — 2011 $55,401 Hanger at Ft.Worden for 5.45% performing arts. 1999 Limited GO Bonds for Fire & Library repairs from interfund $645,000 5.0 — 6.0% 2016 $400,000 loans;city facilities, Marine Science Ctr and Police Station. 2002 Limited GO Bonds for construction $3,465,000 1.95— 2022 $3,010,000 of City Hall Annex and old City 4.70% Hall. 2003 Limited GO Bonds for Skateboard Park, the Wave Viewing Gallery, $2,390,000 1.85- 2023 $2,090,000 City Hall, Fire Station, Pool & Pink 4.60% House Lease settlement. 2005 Limited GO Bonds for construction funds for City Hall Annex and Old $1,545,000 3.05- 2025 $1,465,000 City Hall 4.35% 2008 Limited GO Bonds for construction $7,500,000 4.15 - 2038 $7,500,000 funds for Civic and Street 5.00% Improvements TOTAL $14,520,401 The annual debt service requirements to maturity for general obligation debt is as follows: Govermental Activities Year ending December 31 Principal Interest 2009 $351,263 $641,070 2010 $367,352 $628,971 2011 $390,786 $615,571 2012 $393,000 $601,560 2013 $390,000 $586,573 2014-2018 $2,220,000 $2,675,943 2019-2023 $2,900,000 $2,140,438 2024-2028 $2,315,000 $1,510,034 2029-2033 $2,340,000 $1,036,732 2034-2038 $2,925,000 $449,058 Total $14,592,401 $10,885,950 Washington State Auditor's Office 29 As of December 31, 2008 the long term debt payable from proprietary fund resources consisted of the following: Issue Date Purpose Original Issue Interest Rate Maturiy Date Debt Outstanding 1978 Water/Sewer Revenue Bonds $395,000 5% 2018 $ 175,000 Water and Sewer Improvements Water/Sewer Revenue Bonds 1998 Refunding 1992 issue Sewer $5,950,000 4.10-4.65% 2011 $1,530,000 Treatment Plant, refunded 1978 Series B Bonds TOTAL $1,705,000 Debt service requirements to maturity for proprietary funds: Business Type Activities Year ending December 31 Principal Interest 2009 $811,527 $108,537 2010 $842,133 $82,208 2011 $722,748 $53,150 2012 $283,372 $29,663 2013 $284,006 $26,626 2014-2018 $1,454,873 $84,742 2019-2023 $732,983 $19,408 2024 $50,347 567 Total $5,181,989 $404,901 B. Public Works Trust Fund Loans and State Revolving Fund Loans State of Washington Public Works Trust Fund (PWTF) Loans are an intergovernmental loan from the Public Works Board to undertake local public works projects. These loans are a direct responsibility of the City of Port Townsend. The City currently has five such loans. State Revolving Fund (SRF) Loans are State of Washington Department of Ecology low interest loans for projects that protect and improve water quality. The City of Port Townsend currently has one SRF loan. Washington State Auditor's Office 30 As of December 31, 2008 the long-term debt payable for PWTF and SRF loans consisted of the following: Issue Date Purpose Original Issue Interest Rate Maturiy Date Debt Outstanding 1998 PWTF Loan CT Pipeline $2,172,055 1% 2018 $447,181 Tri-Area Water Storage Tri-Area Well upgrades (payoff of $1,186,718 with sale of Tri-Area assets) 1999 PWTF Loan Gaines St Lift Station $1,434,365 1 % 2019 $655,542 San Juan Sewer Trunk Line 2001 PWTF Loan Wastewater Treatment $1,153,350 .5% 2021 $718,594 Outfall Expansion Trunk Sewer Line replacement 2002 PWTF Loan Morgan Hill Water System $1,242,742 .5% 2022 $933,827 Improvements 2002 SRF Loan Wastewater Conveyance $856,803 1.5% 2024 $721,846 Storm and sewer separation Gaines St Lift Station Phase 2 Trunk Sewer Replace 2003 PWTF Loan Transportation Planning $90,000 0% 2009 $72,000 TOTAL I I I $3,548,990 C. ADVANCED REFUNDING AND DEFEASED BONDS In 1998 the City of Port Townsend refunded two prior revenue bond issues while issuing an additional $1,000,000 of debt. This 1998 Revenue Bond issue was partially defeased in 2002 due to the sale of some associated asset improvements in the Tri-Area. The 1978 "series B" revenue bonds were refunded in the amount of $115,000 and the 1992 Revenue Bonds were refunded in the amount of $4,835,000 in the 1998 Bond issue. As part of the Tri-Area well and reservoir assets sold in 2002, $1,490,000 in bonds were defeased. 1►[01290MZI21►<;y[0]►1aIF_\►l,� Substantially all city full-time and qualifying part-time employees participated in Public Employees' Retirement System (PERS), Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Volunteer Firemen Relief and Pension Fund, Firemen's Pension and Relief Fund administered by the Department of Retirement Systems, under cost -sharing multi -employer define benefit public employee retirement systems. Actuarial information in on a system -wide basis and is not considered pertinent to the city's financial statements. Contributions to the systems by both employee and employer are based upon gross wages covered by the plan. Washington State Auditor's Office 31 Historical trends or other information regarding each plan is presented in the state Department of Retirement Systems 2007 annual financial report. A copy of this report may be obtained at: Department of Retirement Systems PO Box 48380 Olympia, WA 98504-8380 NOTE 7 - RISK MANAGEMENT The City of Port Townsend is a member of the Washington Cities Insurance Authority (WCIA) Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal Cooperation Act), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose of providing a pooling mechanism for jointly purchasing insurance, jointly self - insuring, and/orjointly contracting for management services. WCIA has a total of 129 members. New members initially contract for a three year term, and thereafter automatically renew on an annual basis. A one year withdrawal notice is required before membership can be terminated. Termination does not relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general, automobile, police, public officials' errors and omissions, stop gap, and employee benefits liability. Limits are $4 million per occurrence self insured layer, $16 million per occurrence in the re -insured excess layer. The excess layer is insured by the purchase of reinsurance and insurance ans is subject to aggregate limits. Total limits are $20 million per occurrence subject to aggregate sublimits in the excess layers. The Board of directors determines the limits and terms of coverage annually. Insurance coverage for property, automobile physical damage, fidelity, inland marine, and boiler and machinery are purchased on a group basis. Various deductibles apply by type of coverage. Auto physical damage coverage and property insurance are self funded up to $500,000, for all perils other than flood and earthquake, and insured above that amount by the purchase of insurance. In-house services include risk management consultation, loss control field services, claims and litigation administration, and loss analysis. WCIA contracts for the claims investigation consultants for personal issues and land use problems, insurance brokerage, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, as determined by an outside, independent actuary. The assessment covers loss, loss adjustment, and administrative expenses. As outlined in the interlocal, WCIA retains the right to additionally assess the membership for any finding shortfall. An investment committee, using investment brokers, produces additional revenue by investment of WCIA's assets in financial instruments that complywith all State guidelines. These revenues directly offset portions of the membership's annual assessment. WCIA is governed by a Board of Directors which is comprised of one designated representative from each member. The Board elects an Executive Committee and appoints a Treasurer to provide general policy direction for the organization. The WCIA Executive Director reports to the Executive Committee and is responsible for conducting the day to day operations of WCIA. Washington State Auditor's Office 32 NOTE 8 - RESTRICTED FUNDS In accordance with bond ordinances and certain related agreements, separate restricted funds are required to be established. The assets held in these funds are restricted for specific uses, including construction, debt service, and other special reserve requirements. NOTE 9 - UTILITY RECEIVABLES All delinquent accounts receivable must receive prior City Council approval before they are written off. NOTE 10 - CONTINGENCIES AND LITIGATION In the opinion of management the city's self-insurance reserves are adequate to pay all known or pending claims. (See Note 7.) NOTE 11 — INTERFUND LOANS During 2006 the council approved two interfund loans. The first interfund loan was in the amount of $100,000 from the Equipment Rental Fund, which had an excess of cash, to the Fire and EMS Fund. The second interfund loan was approved by council in order to close out the City Hall Project. The lending fund, the Transmission Pipeline Fund, also was deemed to have an excess of funds available for investment purposes, so was able to loan $350,000 to the City Hall Construction Fund. Interest payment rates for both loans were based on the current Local Government Investment Pool rates. As of December 31, 2008 these loans were still outstanding. Interest payments from the General Fund to coverthe Fire and EMS loan have been made each year and starting in 2009 principle payments are budgeted. Interest payments from the City Hall Construction Fund were made in 2007 and have accrued for 2008 (payable 2009). There is also principle payments scheduled for 2009 on this loan. 101501MEiPAMIJ01 V 211►TiI*Q:&"y21RZ6L\ZI III Ir_\0ZI:Z0111210MOAN a21►6y There is currently an outstanding reimbursable expense for the Joint Emergency Operations Communications Tower that was built on top of the new Fire Hall. The unreimbursed expense total is $79,338.01. Washington State Auditor's Office 33 V M H OD CO 0 0 LU N Z w M Z w H E 0 00 LL N of 0) O C w LL LU O 0 � w t U = � U o U7 LL V M O C� U 75 O O O O O O O 0 - O O O O O 0 � N N M L0 0 O 0 (D r 0 � 3 M N 69, � O O V ef3 Ln Ln C Q 0) c 0 w rn o C � a) j O O O O O O O N Z O O O O O O O N C LL O O 0) ._ C U r r r r r r r rn 0) 0) m 0 aa) �� m m m .� o) O O O O O o) 00 0 0 0 0 000 LO o 0 m 00 LO � N O � M fR C 3 U 0 Q O O O O O O O O 69, 69, 69, 69, 69, 69, a� 0 0 U) > 0 0 N LO LO 7 3 O U E Q rn rn P- 0 O 0 O 0 O 0 O 0 O rn ao .�' o N0 C`� r LO OM 0) 0) 0 M tll N (6 0) (p ER V V ER V Q 3 � � ER ER ER ER OOQm O O C N U 0) N w 0 m N CO N M LO N 00 > N N N M N O U) O O O O O N U O U) Q Q 0 Z Q 00 O N OM a N C m O O O O O O H Q C H H H H CD O J J J J N J O Z .= O m O O O O J O _ N O N N N N LL N O Q U C C C C 00 F C LO H Lo O n O Ln O Ln O m> CO > In O N J N m N m N m N m N d N m Washington State Auditor's Office 34 O N J LU LL Q 0 N W W U Q U) 0- 0 Q U 75 V T z M H 00 CO O 0 LU O Z � LU M Z LU H E 0 0o LL O N 0) 0 0 w LL 0 `m 0 ~ LU t U = U o Cl) LL O M O O Ln Ln r CO 00 C 00 `; O O Ln V O) CO M O N O O W L L NOm OO G 3 M Ln r O r V Ln 00 M � r O L ( r Ef3 ER ELT 69, 69, 6e, 0) C 0 U1 rn � c � N O N 0) � LL O O O O O O Co E O M O M O M LO M LO M LO M LO M M ofN ONO ONO ONO ONO ONO ONO ONO Q LO LO LO LO LO LO LO m .� O O N O O r CO -O O O O I- O O) Ln N OO O Cd 0) r M O E M O O In N r- CO O) N >- Ln O - O) LO CO O) O N C Ef3 LO � � � � � r- Q' N ER ER C 3 o U Q S o 0 0 0 0 0 0 `m O O O O O O O N � C N 7 3 O U E Q 63 O O O LO N � LO � N O =0 00 c E N O — 00 00 000 — 000 LO- rn � O) - r O CO r O 0 3 0} Q ER O - � 0 O O N 0 N Ln C m ' d) ER ER rn 0) Lu 0 m O (6 (6 00 00 00 O) N N ,0 0 I� O) O) O) O O O LL (6 tll a LL 00 m O) O) N > Z N N N jp O N 0 0 0 Z ._ D (6 LL LL LL N N U 0 N N mLU LL O H H H >O O 0 w 0 W LL N O_ 00 N O_ 00 N a_ 00 N 00 O 00 Z > 0 N 0 Ln d) Ln d) 0 M> (`D d) N O M O N ON M O N ON M N N N m N LL 0 Washington State Auditor's Office 35 MCAG NO. 0364 SCHEDULE16 SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS For the Year Ended December 31, 2008 Federal Agency Maine . ; • Pass Throudh Agency: ; : ; :N.arrfe.::::::::::::::::::::::::::::::::::::::::::: : ; : ; : ; : ; Feiletal:Progtaruidarrie : CFDANumbe0 • : • :0ther•I:D.Adm' bee.. ; ER EnditUre$ • : • : • : • From Pass TFirougFi ::AWaids•: :Prom Direct : ' Awards::;: ; :Total: Homeland Security Commercial Equipment Direct 97-096 CEDAP-33294 Assistance Program CEDAP 12,936.15 12,936.15 Department of Homeland Security Sub -Total 12,936.15 USDA Rural Development Police Car and 10-766 56,287.59 56,287.59 In -Car Video Systems Department of Justice Bulletproof Vest Partnership 16-607 2,353.50 2,353.50 CTED/OVW STOP Grant 16-588 7,500.00 7,500.00 Department of Justice 66,141.09 SCSEP senior Community Service Senior Community Sevice 17-235 6,078.24 6,078.24 03A Olympic Area Agency on Aging Employment Program - Department of Labor 6,078.24 USDA Rural Development DOT/SOW DOT Highway Planning & Construction 20-205 LA-6227 147,037.02 147,037.02 DOT/WA Traffic Safety X52 Speeding 20-600 352.20 DOT/WA Traffic Safety Stop Stick 20-600 _ 2,000.00 2,352.20 DOT/WA Traffic Safety Night Time Seat Belt 20-602 153.63 153.63 SOW Traffic Saftey Commission Safety 20-601 1 96.00 DOT/WA Traffic Safety Drive Hammered Get Nailed 20-601 1 909.74 1,005.74 Department of Transportation 150,548.59 Grants to State LSTA One Book 45-310 G - 3516 7,000.00 7,000.00 Washington State Librat Institute of Museum & Library Services 7,000.00 HUD Special Project, Neighborhood Initiative and Miscellaneous Grants 14-251 B-05-SP-WA-1005 1 330,000.00 330,000.00 Department of Housing and Urban Development 330,000.00' Grand Total 572,704.07 Notes to schedule of Expenditure of Federal Awards for the year ended December 31, 2008: Note 1 - Basis of Accounting This schedule of federal assistance is prepared on the same basis of accounting as the City of Port Townsend's General Government Financial Statements. The City of Port To—send's General Government Funds use the cash basis of accounting. Note 2- Program Costs The amounts shown as current year expenditures represent only the federal portion of the program costs. Actual program costs may be more than shown. Note 3 - Noncash_Awards-_Eg_uigm ent The City of Port Townsend received equipment and supplies that were purchased with federal Homeland Security funds by the United States Army which administers the CEDAP valued at $12,936.15 Note 4 - Amounts Awarded to Subrecigients Included in the total amount expended for this program is $330,000.00 that was passed through to a subrecipient that administered its own project. Washington State Auditor's Office 36 ABOUT THE STATE AUDITORS OFFICE The State Auditor's Office is established in the state's Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. Our mission is to work in cooperation with our audit clients and citizens as an advocate for government accountability. As an elected agency, the State Auditor's Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. The State Auditor's Office employees are located around the state to deliver our services effectively and efficiently. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments and fraud, whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our Web site and through our free, electronic subscription service. We continue to refine our reporting efforts to ensure the results of our audits are useful and understandable. We take our role as partners in accountability seriously. We provide training and technical assistance to governments and have an extensive quality assurance program. State Auditor Chief of Staff Deputy Chief of Staff Chief Policy Advisor Director of Audit Director of Special Investigations Director for Legal Affairs Director of Quality Assurance Local Government Liaison Communications Director Public Records Officer Main number Toll -free Citizen Hotline Web Site Subscription Service Brian Sonntag, CGFM Ted Rutt Doug Cochran Jerry Pugnetti Chuck Pfeil, CPA Jim Brittain, CPA Jan Jutte, CPA, CGFM Ivan Dansereau Mike Murphy Mindy Chambers Mary Leider (360) 902-0370 (866) 902-3900 www.sao.wa.aov https://www.sao.wa.gov/EN/News/Subscriptions/ (SAO FACTS. DOC - Rev. 06/09)