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Home My WebLink About2016_05_17 CC PKTCity Council City of Brookings Meeting Agenda Brookings City Council Brookings City & County Government Center 520 3rd St., Suite 230 Brookings, SD 57006 Phone: (605) 692-6281 Fax: (605) 692-6907 Vision Statement: "We are an inclusive, diverse, connected community that fuels the creative class, embraces sustainability and pursues a complete lifestyle. We are committed to building a bright future through dedication, generosity and authenticity. Bring your dreams!" Community Room5:00 PMTuesday, May 17, 2016 Study Session The City of Brookings is committed to providing a high quality of life for its citizens and fostering a diverse economic base through innovative thinking, strategic planning, and proactive, fiscally responsible municipal management. 5:00 PM STUDY SESSION 1. Call to Order / Pledge of Allegiance. 2. Record of Council Attendance. 3. Action Items: 3.A.RES 16-037 Action on Resolution 16-037, a Resolution Awarding the Contract on 2016-08STI, Street Maintenance and Overlay Project. ResolutionAttachments: Action: Motion to Approve, Request Public Comment, Roll Call 3.B.RES 16-039 Action on Resolution 16-039, a Resolution Awarding the Contract on 2016-11STI, Airport Utility Project. Resolution Bid Tabulation Attachments: Action: Motion to Approve, Request Public Comment, Roll Call 3.C.ID 2016-0365 Action on Brookings Bicycle Advisory Committee appointment. Action: Motion to Approve, Request Public Comment, Roll Call 3.D.ID 2016-0367 Action on Comprehensive Master Plan Advisory Committee appointment. Page 1 City of Brookings May 17, 2016City Council Meeting Agenda Action: Motion to Approve, Request Public Comment, Roll Call 4. Presentations/Reports: 4.A.ID 2016-0359 Presentation of City of Brookings 2015 Annual Financial Report Council Audit Presentation 2015 Comprehensive Annual Financial Report Attachments: - Council Questions / Discussion - Estimated Time: 15 minutes 4.B.ID 2016-0358 20th Street South Interstate Access Study Update Project Update - May 2016Attachments: - Council Questions / Discussion - Item to return to Council for consideration or adoption at later date - Estimated Time: 10 minutes 4.C.ID 2016-0300 Annual Governance and Ends Policy Review Governance & Ends Policy (redlined)Attachments: - Council Questions / Discussion - Item to return to Council for consideration or adoption at later date - Estimated Time: 30 minutes 4.D.ID 2016-0290 Visioning Charrette: Council Goals Charrette Objectives updated 2015-09-15Attachments: - Council Questions / Discussion - Item to return to Council for consideration or adoption at later date - Estimated Time: 15 minutes 4.E.ID 2016-0360 Proposed Charter for Swiftel Center Planning Task Force Draft CharterAttachments: - Council Questions / Discussion - Item to return to Council for consideration or adoption at later date - Estimated Time: 10 minutes 4.F.ID 2016-0366 City Council Ex-Officio Reports 5. City Council member introduction of topics for future discussion. Any Council Member may request discussion of any issue at a future meeting only. Items cannot be added for action at this meeting. A motion and second is required stating the issue, requested outcome, and time. A majority vote is required. 6. Executive Session 6.A.ID 2016-0374 Executive Session, pursuant to SDCL 1-25-2, for purposes of consulting with legal counsel regarding proposed or pending contractual matters. Page 2 City of Brookings May 17, 2016City Council Meeting Agenda 7. Adjourn. Brookings City Council: Tim Reed, Mayor, Keith Corbett, Deputy Mayor & Council Member Council Members Patty Bacon, Dan Hansen, Mary Kidwiler, Ope Niemeyer, Nick Wendell Council Staff: Jeffrey W. Weldon, City Manager Steven Britzman, City Attorney Shari Thornes, City Clerk View the City Council Meeting Live on the City Government Access Channel 9. Rebroadcast Schedule: Wednesday 1:00pm/Thursday 7:00pm/Friday 9:00pm/Saturday 1:00pm The complete City Council agenda packet is available on the city website: www.cityofbrookings.org Assisted Listening Systems (ALS) are available upon request. Please contact Shari Thornes, Brookings City Clerk, at (605)692-6281 or sthornes@cityofbrookings.org. If you require additional assistance, alternative formats, and/or accessible locations consistent with the Americans with Disabilities Act, please contact Shari Thornes, City ADA Coordinator, at (605)692-6281 at least three working days prior to the meeting. Page 3 City of Brookings City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:RES 16-037,Version:1 Action on Resolution 16-037, a Resolution Awarding the Contract on 2016-08STI, Street Maintenance and Overlay Project. Summary: This resolution will award bids for 2016-08STI, Street Maintenance and Overlay Project to Bowes Construction Inc. Background: This project is the annual street maintenance project which includes asphalt milling, digouts and overlays on various streets in Brookings that are in need of repair. The streets identified for repair this year include: ·3rd Street between 5th Avenue and Medary Avenue: This work on this street will entail milling across the entire street and paving a two inch asphalt overlay. ·8th Street South between Onaka Trail and Main Avenue South: The work on this street will entail milling along the curb and a two-inch asphalt overlay. ·Summit Pass from Powderhorn Pass to the east approximately 500 feet: The work on this street will entail milling along the curb and a two-inch asphalt overlay. ·Western Avenue, north of Summit Pass: This project includes a new 13 foot wide concrete valley gutter at the storm sewer drop inlet location. The valley gutter will assist in water flows at the lowest point in the street. ·Heritage Drive between 7th Street South and 8th Street South: The work on this street will entail milling along the curb and a two-inch asphalt overlay. ·David Cove, north of Martin Boulevard: This project includes drain tile along the curb and gutter in David Cove to improve sub-surface drainage from the high water table. The plan is to pave an asphalt overlay on David Cove in 2017. ·Bike Trail: This project includes a two-inch asphalt overlay on the bike trail from Sunrise Ridge Road, along I-29, and south of the railroad tracks. The project also includes a shallow drainage structure east of the 3M property where water runs currently runs over the bike trail. ·Fishback Soccer Complex parking lot: This project includes asphalt repair in the parking lot area. ·East Fire Station: This project includes an asphalt overlay for the west parking lot at the Fire Station at 6th Street & 20th Avenue. The bid letting for this project was held on Tuesday, May 10, 2016 and the City received the following bids: Bowes Construction Co., Inc.:$390,036.50 The total low bid is approximately 11 % lower than the engineer’s estimate of $437,222.50. City of Brookings Printed on 5/12/2016Page 1 of 2 powered by Legistar™ File #:RES 16-037,Version:1 Fiscal Impact: The City will enter into a contract with Bowes Construction Co., Inc. for the low bid amount of $390,036.50. Recommendation: Recommend awarding the project to Bowes Construction Co., Inc. for the total low bid of $390,036.50. Attachments: Resolution City of Brookings Printed on 5/12/2016Page 2 of 2 powered by Legistar™ Resolution 16-037 Resolution Awarding Bids on Project 2016-08STI Street Maintenance and Overlay Project Whereas, the City of Brookings opened bids for Project 2016-08STI Street Maintenance and Overlay Project on Tuesday, May 10, 2016 at 1:30 pm at the Brookings City & County Government Center; and Whereas, the City of Brookings has received the following bid for Project 2016-08STI Street Maintenance and Overlay project: Bowes Construction Co., Inc., Brookings, SD: $390,036.50. Now Therefore, Be It Resolved that the total low bid of $390,036.50 for Bowes Construction Co., Inc., Brookings, SD be accepted. Passed and approved this 17th day of May, 2016. CITY OF BROOKINGS ________________________________ Tim Reed, Mayor ATTEST: _________________________ Shari Thornes, City Clerk City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:RES 16-039,Version:1 Action on Resolution 16-039, a Resolution Awarding the Contract on 2016-11STI, Airport Utility Project. Summary: This resolution will award bids for 2016-11STI, Airport Utility Project to Prunty Construction Co. Inc. Background: This project involves installing water and sanitary sewer mains and services around the new hangar and taxilane area at the Brookings Regional Airport. The project was designed by Civil Design Inc. and includes the following work: ·Base Bid: water and sanitary sewer in grass areas between hangars ·Bid Alternate 1 (Open Trench): open trench cutting and asphalt patching for the water and sanitary sewer that crosses the taxilanes ·Bid Alternate 2 (Boring): boring the water and sanitary sewer that crosses the taxilanes ·Bid Alternate 3 (Place City-furnished topsoil): placing the existing topsoil stockpile around the hangar area. The bid letting for this project was held on Tuesday, May 10, 2016 and the City received the following bids: Prunty Construction Co. Inc. Austreim Excavating Meyer Services Inc. Bowes Construction Inc. Prussman Contracting Halme Inc.Engineers Estimate Base Bid $67,956.00 $63,032.68 $70,811.82 $81,199.50 $81,698.25 $82,653.00 $90,567.00 Alternate 1 - Open Trench $21,021.00 $29,824.25 $24,869.80 $24,625.50 $41,562.00 $38,574.20 $24,591.00 Alternate 2 - Boring $19,365.00 $22,011.90 $28,364.60 $21,020.00 $33,405.00 Alternate 3 - Place City Furnished Topsoil $9,333.00 $9,180.00 $4,131.00 $8,415.00 $11,566.80 $9,180.00 $7,650.00 Total Base Bid + Alternate 1 $88,977.00 $92,856.93 $95,681.62 $105,825.00 $123,260.25 $121,227.20 $115,158.00 Total Base Bid + Alternate 2 $87,321.00 N/A $92,823.72 $109,564.10 N/A $103,673.00 $123,972.00 Total Base Bid + Alternate 1 + Alternate 3 $98,310.00 $102,036.93 $99,812.62 $114,240.00 $134,827.05 $130,407.20 $122,808.00 Total Base Bid + Alternate 2 + Alternate 3 $96,654.00 N/A $96,954.72 $117,979.10 N/A $112,853.00 $131,622.00 Staff recommends awarding a contract for the Base Bid and Alternate 2 (Boring), which will complete City of Brookings Printed on 5/12/2016Page 1 of 2 powered by Legistar™ File #:RES 16-039,Version:1 the water and sanitary sewer work to serve the hangar area. The budget for this project in the airport fund is $80,000 and the additional cost of $7,321.00 will be covered with anticipated savings from the airport operating budget (general fund). The total low bid of the Base Bid plus Bid Alternate 2 of $87,321.00 is approximately 39% lower than the engineer’s estimate of $123,972.00 for those two schedules. The City will have the street department complete the topsoil work shown in Bid Alternate 3 at a cost savings to the airport budget. Fiscal Impact: The City will enter into a contract with Prunty Construction Co., Inc. for the low bid amount of $87,321.00 for the Base Bid and Bid Alternate 2 (Boring). Recommendation: Recommend awarding the project to Prunty Construction Co., Inc. for the total low bid amount of $87,321.00 for the Base Bid and Bid Alternate 2. Attachments: Resolution Bid Tabulation City of Brookings Printed on 5/12/2016Page 2 of 2 powered by Legistar™ Resolution 16-039 Resolution Awarding Bids on Project 2016-11STI Airport Utility Project Whereas, the City of Brookings opened bids for Project 2016-11STI Airport Utility Project on Tuesday, May 10, 2016 at 1:30 pm at the Brookings City & County Government Center; and Whereas, the City of Brookings has received the following bids for Project 2016-11STI Airport Utility Project: Prunty Construction Co., Inc.: Base Bid - $67,956.00, Alternate 1 - $21,021.00, Alternate 2 - $19,365.00, Alternate 3 - $9,333.00; Austreim Excavating: Base Bid - $63,032.68, Alternate 1 - $29,824.25, Alternate 2 – no bid, Alternate 3 - $9,180.00; Meyer Services, Inc.: Base Bid - $70,811.82, Alternate 1 - $24,869.80, Alternate 2 - $22,011.90, Alternate 3 - $4,131.00; Bowes Construction Inc.: Base Bid - $81,199.50, Alternate 1 - $24,625.50, Alternate 2 - $28,364.60, Alternate 3 - $8,415.00; Prussman Contracting: Base Bid - $81,698.25, Alternate 1 - $41,562.00, Alternate 2 – No bid, Alternate 3 - $11,566.80; Halme, Inc.: Base Bid - $82,653.00, Alternate 1 - $38,574.20, Alternate 2 - $21,020.00, Alternate 3 - $9,180.00. Now Therefore, Be It Resolved that the low Base Bid of $67,956.00 and Alternate 2 of $19,365.00 for the total amount of $87,321.00 from Prunty Construction Co., Inc. be accepted. Passed and approved this 17th day of May, 2016. CITY OF BROOKINGS ________________________________ Tim Reed, Mayor ATTEST: _________________________ Shari Thornes, City Clerk 2016-11 Airport Utility Project BID TAB BID OPENING: May 10, 2016, 1:30 PM, CITY & COUNTY GOVERNMENT CENTER Base Bid $67,956.00 $63,032.68 $70,811.82 $81,199.50 $81,698.25 $82,653.00 $90,567.00 Alternate 1 - Open Trench $21,021.00 $29,824.25 $24,869.80 $24,625.50 $41,562.00 $38,574.20 $24,591.00 Alternate 2 - Boring $19,365.00 $22,011.90 $28,364.60 $21,020.00 $33,405.00 Alternate 3 - Place City Furnished Topsoil $9,333.00 $9,180.00 $4,131.00 $8,415.00 $11,566.80 $9,180.00 $7,650.00 Total Base Bid + Alternate 1 $88,977.00 $92,856.93 $95,681.62 $105,825.00 $123,260.25 $121,227.20 $115,158.00 Total Base Bid + Alternate 2 $87,321.00 N/A $92,823.72 $109,564.10 N/A $103,673.00 $123,972.00 Total Base Bid + Alternate 1 + Alternate 3 $98,310.00 $102,036.93 $99,812.62 $114,240.00 $134,827.05 $130,407.20 $122,808.00 Total Base Bid + Alternate 2 + Alternate 3 $96,654.00 N/A $96,954.72 $117,979.10 N/A $112,853.00 $131,622.00 Engineers Estimate Prunty Construction Co. Inc. Bowes Construction Inc. Halme Inc. Austreim Excavating Meyer Services Inc. Prussman Contracting City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0365,Version:1 Action on Brookings Bicycle Advisory Committee appointment. Mayor Tim Reed has submitted the following appointment to the Brookings Bicycle Advisory Committee for City Council advice and consent pursuant to Ordinance 16-001. Brookings Bicycle Advisory Committee Number of positions:1 Regular Member (filling vacancy) Term Length:3 years Residency Requirement:Not required Purpose:The role of the Brookings Bicycle Advisory Committee (BBAC) is to advise the City Council, City Manager, and City Boards on bicycling related issues; help advance the state of bicycle infrastructure; encourage bicycling for transportation and recreation; public education and awareness; improve safety and compliance with traffic laws; assist the City with bicycle plans; review and suggest legislative and policy changes; recommend priorities for use of the public funds on bicycle projects; and help ensure Brookings retains and enhances its status as a bike friendly community. Mayor’s Recommendation: 1.Mike Lockrem (term ends: 1/1/2019) Recommendation: Staff recommends approval. City of Brookings Printed on 5/12/2016Page 1 of 1 powered by Legistar™ City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0367,Version:1 Action on Comprehensive Master Plan Advisory Committee appointment. Mayor Tim Reed is recommending the following appointment to the Comprehensive Master Plan Advisory Committee: Mayor’s Recommendation: 1.Paul Von Fisher Comprehensive Master Plan Committee Residency Requirement:Not required Purpose: The purpose of the Comprehensive Master Plan Advisory Committee is to assist the City in developing a new Comprehensive Master Plan. The Advisory Committee’s Mission is to build consensus around a comprehensive strategy for Brookings’ future by engaging community input and advise the process of developing the Plan. The Committee will collaborate with the Planning Commission and city staff to complete the plan. Recommendation: Staff recommends approval. City of Brookings Printed on 5/12/2016Page 1 of 1 powered by Legistar™ City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0359,Version:1 Presentation of City of Brookings 2015 Annual Financial Report Summary: Chris Lindner, CPA, CGMA, Manager BKD, LLP will be present to discuss the 2015 Financial Audit and the City of Brookings Comprehensive Annual Financial Report. Attachments: Council Audit Presentation 2015 Comprehensive Annual Financial Report City of Brookings Printed on 5/12/2016Page 1 of 1 powered by Legistar™ experience responsiveness // CPAs & ADVISORS City of Brookings, South Dakota 2015 Audit Presentation Chris Lindner, CPA, CGFM TESTING APPROACH & TIMELINE Audit Interim/Planning, Internal Control Walkthroughs Coordination with Other Auditors OMB federal compliance audit (“Single Audit”) Final Audit Fieldwork Audit Wrap-up / Concurring Review / BKD National Office Review Audit Results and Communication 2 // experience responsiveness SUMMARY OF AUDIT RESULTS Independent Auditor’s Report –Financial Statements Unmodified (clean) opinion Report in accordance with Government Auditing Standards No Significant Deficiencies or Material Weaknesses Independent Auditor’s Report –Major Federal Programs 1 major program tested for the fiscal year 2015 Unmodified opinion –No material instances of non-compliance 3 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS Required the City to record its proportionate share of the Net Pension Asset of the South Dakota Retirement System (SDRS) No similar amounts were previously recorded Also record related deferred inflows and outflows of resources Expanded disclosures Benefit provisions and terms Investment composition and allocation, rates of return Actuarial assumptions Sensitivity of the Net Pension Asset to changes in the discount rate 4 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS 5 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS 6 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS 7 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS 8 // experience responsiveness FY15 AUDIT ITEM –IMPLEMENTATION OF GASB STATEMENT NO. 68, FINANCIAL REPORTING FOR PENSIONS 9 // experience responsiveness AUDIT COMMUNICATION LETTER Significant accounting policies Significant accounting estimates Financial statement disclosures Audit adjustments Disagreements with management or difficulties encountered in performing the audit –None Upcoming accounting pronouncements 10 // experience responsiveness A GOVERNMENT’S FINANCIAL STATEMENT –WHAT TO LOOK FOR?? Net Cost of Programs (page 28 of the City’s CAFR) Reserves Long-Term Debt Levels Other Long-Term Obligations (page 57 of the City’s CAFR) Statistical Information (starting on page 127 of the City’s CAFR) 11 // experience responsiveness RESERVES –COMPARISON TO PEER CITIES “Unrestricted” Fund Balance as a % of Annual Expenditures –General Fund 12 // experience responsiveness 2015 2014 2013 2012 City of Brookings 41%55%49%34% Peer Group 37%31%32%34% LONG-TERM DEBT LEVELS –COMPARISON TO PEER CITIES Governmental Debt Principal Outstanding to Assessed Valuation 13 // experience responsiveness 2015 2014 2013 2012 City of Brookings $2.14 $2.40 $1.99 $1.92 Peer Group $2.01 $2.02 $2.02 $1.84 LONG-TERM DEBT LEVELS –COMPARISON TO PEER CITIES Governmental Debt Principal Outstanding to Population 14 // experience responsiveness 2015 2014 2013 2012 City of Brookings $1,034 $1,121 $895 $848 Peer Group $1,133 $1,085 $940 $878 LONG-TERM DEBT LEVELS –COMPARISON TO PEER CITIES Total Debt (Governmental and Business-Type) Principal Outstanding to Population 15 // experience responsiveness Note: City of Brookings figure excludes debt principal for the Telephone Fund and Health System for comparability purposes. 2015 2014 2013 2012 City of Brookings $2,509 $2,537 $1,597 $1,411 Peer Group $2,256 $2,399 $2,149 $2,097 Questions? Thank You!!! 16 // experience responsiveness FISCAL YEAR ENDED DECEMBER 31, 2015 2015 COMPREHENSIVE ANNUALFINANCIAL REPORT CITY OF BROOKINGS, SOUTH DAKOTA About the Cover: The Hillcrest Aquatic Center opened in June 2006, and consists of four pools: • A 50 meter pool with 1 and 3 meter diving boards and a drop slide • A large wading pool with a water-drop umbrella • A plunge pool with two slides • A zero-depth leisure pool with multiple water features, including a small slide, water walls and various spray components • A splash pad with water guns and automatic water buckets Hillcrest Aquatic Center is utilized by Brookings Swim Club, SDSU Wellness Center, SDSU Athletics, The Boys & Girls Club, G.A.P., and several other local businesses and communities. Hillcrest Aquatic Center is conveniently located off 6th Street in Brookings. Hillcrest Aquatic Center employs approximately 50 seasonal staff. 2015 COMPREHENSIVE ANNUAL FINANCIAL REPORT CITY OF BROOKINGS, SOUTH DAKOTA _________________________________________ January 1, 2015 – December 31, 2015 _________________________________________ Prepared by: THE CITY FINANCE OFFICE Shawna M. Costello, CPA, CPFO Finance Director _________________________________________ 1 City of Brookings December 31, 2015 Table of Contents PART I- INTRODUCTIORY SECTION Title Page 1 Table of Contents 2 Letter of Transmittal 4 Certificate of Achievement for Excellence in Financial Reporting 9 Municipal Officials 10 Organizational Chart 11 PART II - FINANCIAL SECTION Independent Auditors' Report 13 Management's Discussion and Analysis 16 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 27 Statement of Activities 28 Fund Financial Statements Governmental Fund Financial Statements Balance Sheet 29 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Position 30 Statement of Revenues, Expenditures, and Changes in Fund Balances 31 Reconciliation of Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 32 Proprietary Fund Financial Statements Statement of Net Position 33 Statement of Revenues, Expenses, and Changes in Net Position 35 Statement of Cash Flows 36 Fiduciary Fund Financial Statements Statement of Net Position 38 Notes to the Financial Statements 39 Required Supplementary Information Schedule of Funding Progress for Postemployment Benefit Plans 76 Schedule of Pension Contributions 77 Schedule of Proportionate Share of Net Pension Asset 78 Budgetary Comparison Schedule General Fund 79 Notes to Required Supplementary Information - Budgetary Reporting 80 Supplementary Information and Combining Financial Statements Nonmajor Governmental Funds Balance Sheet 81 Statement of Revenues, Expenditures, and Changes in Fund Balances 82 Nonmajor Special Revenue Funds 83 Balance Sheet 84 Statement of Revenues, Expenditures, and Changes in Fund Balances 86 Budgetary Comparison Schedules 88 Nonmajor Debt Service Funds 97 Balance Sheet 98 Statement of Revenues, Expenditures, and Changes in Fund Balances 99 Budgetary Comparison Schedules 100 2 City of Brookings December 31, 2015 Table of Contents (Continued) Nonmajor Capital Project Funds 105 Balance Sheet 106 Statement of Revenues, Expenditures, and Changes in Fund Balances 107 Budgetary Comparison Schedules 108 Nonmajor Enterprise - Type Funds 113 Statement of Net Position 114 Statement of Revenues, Expenses, and Changes in Net Position 118 Statement of Cash Flows 120 Fiduciary Funds 124 Statement of Net Position 125 Statement of Changes in Assets and Liabilities 126 PART III - STATISTICAL SECTION 127 Table 1 Net Position by Component 128 Table 2 Changes in Net Position 130 Table 3 Fund Balances of Governmental Funds 136 Table 4 Changes in Fund Balances of Governmental Funds 138 Table 5 Assessed Value and Actual Value of Taxable Property 140 Table 6 Direct and Overlapping Property Tax Rates 140 Table 7 Principal Taxpayers 141 Table 8 Property Tax Levies and Collections 141 Table 9 Historical Sales and Use Tax Receipts 142 Table 10 Taxable Sales by Category 142 Table 11 Direct and Overlapping Sales Tax Rates 144 Table 12 Ratio of Net General Bonded Debt 144 Table 13 Ratio of Outstanding Debt by Type 145 Table 14 Direct and Overlapping Governmental Activities Debt 145 Table 15 Legal Debt Margin Information 146 Table 16 Pledged-Revenue Coverage 148 Table 17 Demographic and Economic Statistics 151 Table 18 Principal Employers 152 Table 19 Full-Time Equivalent City Government Employees by Function/Program 153 Table 20 Operating Indicators by Function/Program 154 Table 21 Capital Asset Statistics by Function/Program 155 PART IV - SINGLE AUDIT SECTION Schedule of Expenditures of Federal Awards 157 Independent Auditor's Report on Internal Control Over Financial Reporting and 159 on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards Report on Compliance For Each Major Federal Program and Report on Internal Control Over 161 Compliance - Independent Auditor's Report Schedule of Findings and Questioned Costs 163 Summary Schedule of Prior Audit Findings 166 3 May 9, 2016 The Honorable Mayor Tim Reed Members of the City Council Citizens of the City of Brookings, South Dakota We are pleased to submit to you the Comprehensive Annual Financial Report (CAFR) for the City of Brookings, South Dakota, for the fiscal year ending December 31, 2015. The report was prepared by the City’s Finance Department in accordance with U.S. Generally Accepted Accounting Principles (GAAP) applicable to governments as prescribed by the Governmental Accounting Standards Board (GASB). Responsibility for both the accuracy of the presented data and the completeness and fairness of presentation, including all disclosures, rests with the City’s management. We believe the data, as presented, is accurate and reliable in all material respects; is presented in a manner designed to set forth fairly the financial position and results from operations of the City as measured by the financial activities of its various funds. The disclosures necessary to enable readers to gain an understanding of the City’s financial affairs have been included in this report. Management of the City is responsible for establishing and maintaining an accounting and internal control structure designed to ensure that the assets of the City are protected from loss, theft, or misuse and to ensure that adequate accounting data is compiled to allow for the preparation of financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Brookings’ comprehensive framework of internal controls has been designed to provide reasonable rather than absolute assurance that the financial statements will be free from material misstatement. We believe that the City’s internal accounting controls adequately safeguard assets and provide reasonable assurance of proper recording of financial transactions. The City’s financial statements have been audited by BKD, LLP, a firm of certified public accountants authorized to conduct the City’s audit by the State of South Dakota. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Brookings for the fiscal year ended December 31, 2015, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements; assessing the accounting principles used and significant estimates made by management; and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Brookings’ financial statements for the fiscal year ending December 31, 2015 are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of the City of Brookings was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report on not only the fair presentation of the financial statements, but also on the audited government’s internal controls and legal requirements involving the administration of federal awards. These requirements are included in this report. GAAP requires that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Brookings’ MD&A can be found immediately following the report of the independent auditors. Profile of the City of Brookings Brookings is located along the I-29 corridor in East Central South Dakota and has a population of over 22,000 residents making it the fourth-largest city in South Dakota. It is 55 miles north of the State’s largest city, Sioux Falls, and just minutes from the Minnesota border. It truly is an environment free from the stress of big city living; but for those who want to occasionally visit metropolitan areas, Minneapolis-St. Paul, Fargo/Moorhead, and Omaha are all within a 200 mile radius. Being along the interstate and miles from the Minnesota border, Brookings 4 serves as a primary market area for over 70,000 consumers. Bookings is a city with an extraordinary quality of life and an outstanding school system. Families choose Brookings for its safe, friendly, and progressive environment. Home to South Dakota State University (SDSU), Brookings boasts prime educational resources for small businesses and entrepreneurs. SDSU had an enrollment over 13,000 students in 2015, making it the largest university in the state. SDSU offers Division 1-FCS college athletics, performing arts, theater, and a variety of cultural venues. SDSU is an integral part of the community and attracts many research and technology businesses which compliment core curriculum activities. A source of recognized research and innovation, SDSU supplies a young, educated workforce with skill and determination. The County and the City got their names from one of South Dakota’s greatest pioneer promoters, Wilmot W. Brookings. Brookings set out for the Dakota Territory in June of 1857. He rose to a high position in the territory, was elected the first provisional Governor of Dakota Territory, served as a judge, and was appointed superintendent of a road project to be built from the Minnesota state line west to the Missouri River about 30 miles north of Ft. Pierre, South Dakota. It was during the construction of this road that Brookings came into contact with land that was part of this county at the time. In preparation for the railroad, the City of Brookings was surveyed and platted in 1879. Dakota Agricultural College (now South Dakota State University) was founded in 1881. The City began to grow after the college was built and has been increasing in size ever since. In 1999 the City adopted the Council-Manager form of government. The City is a home-rule municipality chartered under the Constitution of the state of South Dakota and is governed by a mayor and six council members. All council positions are elected at large, for overlapping three year terms. The City provides a wide range of municipal services including public safety, streets, solid waste collection and disposal, airport, planning, culture and recreation, retail liquor, and general administrative services. In addition, the City has established semi-autonomous enterprise functions, which are governed by appointed boards. They are: Brookings Municipal Utilities (BMU) which manages electric, water, wastewater, and telecommunications/video/data operations; and the municipal Brookings Health System, which includes a 49-bed acute care hospital, home health, hospice, eye clinic, two regional “satellite” clinics, congregate living units, and a 79-bed skilled nursing facility. The City applies budgetary controls to ensure compliance with legal provisions under South Dakota Codified Laws, the City Charter, the City’s Governance and Ends Policy and with the annual appropriation ordinance and budgetary guidelines adopted by the City Council. Approved expenditures for the ensuing fiscal year for the General fund, the Special Revenue funds, Debt Service funds, and Capital Project funds are included in the annual appropriation ordinance, establishing the legal level of control. The annual budget serves as the foundation for the City of Brookings' financial planning and control. South Dakota Codified Law 9-12-2 requires the City of Brookings to adopt an ordinance as prescribed by the Department of Legislative Audit. The ordinance shows the legal level of budgetary control is at the department level within each fund. Departments are not allowed to exceed their total allocated budget or reallocate appropriations outside their department without approval of the governing body. The legal spending authority can only be obtained through contingency funds, capital expenditures carryover, or supplemental budget appropriations ordinance, all of which is approved by formal action of the City Council. Economic Condition and Outlook The information presented in these financial statements is best understood when it is considered from the broader perspective of the specific environment within which the City of Brookings operates. Local Economy “Bring Your Dreams” is the community’s marketing motto and Brookings is fortunate to have a diverse local economy including SDSU, large and small manufacturing, biosciences, food production and agriculture. This diversity has helped insulate, to some degree, the economic downturn being experienced by the national economy. In addition to the diversity, the City’s population continues to grow. The 2010 census reflected a growth of 19 percent from the 2000 census and moved Brookings from the fifth to the fourth largest city in South Dakota. With the population now over 22,900, the City has attracted various new retail and food establishments. The labor force increased from 13,042 to 13,232 from December 31, 2014 to December 31, 2015 and the total employment increased from 12,683 to 12,912 individuals for those dates, respectively. Unemployment for Brookings was at 2.4 percent, well below the national average of 4.8 percent and down .4 percent from the 2014 rate of 2.8 percent. Since the economy in Brookings has not seen the drastic impact felt by most other parts of the nation, the unemployment rate has stayed fairly steady the past year. During 2015, the city approved 463 building permits which was a slight increase from the 448 approved in 2014. The estimated construction value of residential and nonresidential construction was $58.2 million in 2015; up 20 percent from the $48.4 in 2014. Nonresidential construction accounted for 60.4 percent of the estimated construction value in 5 2015 compared to 57 percent in 2014. The largest nonresidential projects included an addition to 3M and the building of Comfort Inn & Suites. Long-Term Planning and Major Initiatives The City Council meets annually and develops a strategic plan for the City. This plan provides a launchpad for new policy initiatives but also establishes a guide for a long-range capital improvement program. It also sets the direction for the City staff in several operational areas. The 2016 Strategic Plan includes the following: • Develop initiatives for entrepreneurial approaches for improving city service delivery • Formalize comprehensive entrepreneurial programs through Brookings Economic Development Corporation (BEDC), or special committee to develop work plans for selected options • Improve the overall livability of Brookings through place-making initiatives with agendas such as: o Armory site adaptive re-use o Comprehensive Master plan update o Develop bicycle lanes, and identifying places downtown for implementing greenspace o Determine/implement select list of bicycle-friendly activities: (Silver designation, bike racks, bicycle lane designation.) o Finalize the public art program, implementation set for 2017 • Expanding lean government service practices o Lean staff committee will continue to identify opportunities for improvements, undertake selected projects for implementation. o Further develop performance management and benchmarking measures for services. o Host local conferences with other employers working on lean practices • Develop strategies to promote broader and more diverse affordable housing opportunities. o Support efforts of Affordable Housing Task Force; monitor/take action on their recommendations commensurate with the charter • Build upon past efforts to expand transparency and utility of public records. o Research/implement open .gov platform for on-line/ searchable financial records & budget o Migrate city records to web for transparency • Implement specific projects of the Sustainability Council for better stewardship of public assets. o Select specific topics from benchmark work plan for implementation by selected departments o All future city buildings to be LEED certified. o Analyze Changes in means and methods of construction using sustainability measures. Major Initiatives Some major capital initiatives planned or ongoing are listed below: Infrastructure: Street system improvements: • Continue planning for a new arterial street at 20th Street South from 22nd Avenue South to 34th Avenue South to better connect residential and industrial areas. This involves an interstate overpass to function as a “southern ring route” to better move commuter traffic around the growing southern region of Brookings. It is an intergovernmental partnership project with several local units of government. • Highway 14 upgrade - The first of four phases to the main, central traffic corridor through the center of Brookings was completed last year by the South Dakota Department of Transportation. The subsequent three phases are slated over the next five-year period to replace an aging road system while also improving safety and capacity. The total project cost is estimated at $17.5 million and includes interstate bridge replacement and the addition of pedestrian bicycle lanes and extensive landscape enhancements. Storm Drainage - Brookings continues incremental, annual work on a comprehensive ten-project multi-year master plan for storm drainage improvements: • Folsom Street/Division Avenue detention pond. • Sixth Street storm sewer upgrade. • Lefevre Drive storm sewer pipe project. • Viaduct inlet/surfacing repairs/lighting. 6 Gateway Project - The Gateway Project consists of monumental signage made of stone incorporating the new City logo placed in the City’s “gateway” corridors welcoming visitors to Brookings. There are also signs throughout the City identifying the beautiful parks and recreation areas available for the public to enjoy. Subsequent entryway landscape amenities such as landscaping, signage, decorative street lighting, and bridge amenities will follow in the area of the main interstate exit ramps following completion by the South Dakota Department of Transportation of highway improvements. Airport Project - The multi-year project will realign the current runway to comply with FAA standards. The main runway realignment project was completed in 2015. The $21.2 million project is eligible for Federal funding through the Airport Improvement Program of the Federal Aviation Administration. In addition to the new main runway, the project includes a new cross-wind runway, aprons, taxiways, navigational aids, and safety zone improvements. Brookings has the third busiest airport in the State for landings and take-offs. Street Department Building - The new street department building was moved up on the schedule due to a fire in 2014 that destroyed one of the main storage buildings. This project includes removing the old street shop/office buildings and replacing them with one multi-function building. The project is expected to be completed by summer 2016 and estimated to cost $4 million. Electrical, Water and Wastewater Plant Improvements-BMU is currently undertaking a $30 million upgrade and expansion of the wastewater treatment plant and pumping facilities to respond to new environmental regulations and community growth. Shortly thereafter, similar upgrades and expansions are slated for the water treatment plant. BMU is currently in the process of a $6.5 million upgrade to the local electrical grid to reduce the number of substations, provide redundancy power, and bury previously overhead power lines; all designed to improve electrical service reliability. Brookings Municipal Utilities will soon make a $10 million investment in its PCS services under the Spring cellular brand for 4G capabilities. Health Care Brookings Health System -The Brookings Health System Expansion and Renovation Project will consist of approximately 60,000 sq. ft. of new construction, 18,000 sq. ft. of renovation, and 24,000 sq. ft. of medical office space. The east hospital expansion will consist of a 2-story building housing our same-day surgical unit, operating rooms, central sterilization and imaging on the first floor, while the second floor will consist of our pharmacy and inpatient medical/surgical and obstetrics units. Today we stand in a unique position to further our community’s vision for caring for our own close to home. To do this, we must address three major changes which have occurred since our current hospital was built 50 years ago: Our community has grown significantly; Health care has changed radically; and, Patient expectations regarding health care are drastically different. Cultural and Recreational Facility Improvements Carnegie Building Project - Originally built in 1914, the Carnegie Library building is home to the Brookings Arts Council. The renovation project will include updating and replacing necessary electrical equipment, flooring, and HVAC as well as remodeling of the gallery display areas and arts education classroom. Improvements are slated for existing parks such as trail extensions, playground equipment upgrades and replacements, and on-going preventative maintenance of existing buildings, grounds, and facilities. Retail Commercial expansion A new hotel and a mixed use residential complex are under construction by private development and another hotel is planned. The City established a niche retail grant program to encourage new, small business in the downtown retail area and formalized an economic development policy to incentivize new and expanding commerce and industry. In addition, the City acquired 25 acres of property at the intersection of Highway 14 and Interstate 29 for more retail and commercial development opportunities. The City hopes to attract major, national retail franchises to develop in this location. Civic Infrastructure The City of Brookings is proud to partner with a wide variety of other governmental, civic, charitable, and service organizations to optimize multi-dimensional aspects for great quality of life. The City and County work together on mutual transportation and development issues. The City and School District jointly share facilities, parks, playgrounds, and programming for school-age children. The City Recreation Department has 23 diverse partnerships with other entities or special-purpose organizations for athletic, cultural, recreational, and leisure opportunities. The City library provides a wide variety of services and programs for lifelong learning. The City and South Dakota State University enjoy an excellent ‘town-and-gown’ relationship with each mutually supporting their missions and sharing their success that comes from a long history of partnerships. In addition to being an economic engine for the Brookings community, SDSU provides a wellspring of opportunities beyond post-secondary education to civic, cultural, athletic, and research advancement. For these reasons, and so many others, Brookings has received national recognition in many areas. In addition to Brookings School System being noted for high academic standards and student achievement, Brookings has been rated 7 8 9 City of Brookings Year Ended December 31, 2015 Tim Reed…………………………………………………………………………………………………Mayor Keith Corbett…………………………………………………………………………………………Deputy Mayor Patty Bacon……………………………………………………………………………………………Council Member Dan Hansen……………………………………………………………………………………………Council Member David Meyer……………………………………………………………………………………………Council Member Ope Niemeyer…………………………………………………………………………………………Council Member Jael Thorpe……………………………………………………………………………………………Council Member Jeffrey W. Weldon…………………………………………………………………………………City Manager Steven Britzman……………………………………………………………………………………City Attorney Shari Thornes…………………………………………………………………………………………City Clerk Jackie Lanning…………………………………………………………………………………………City Engineer Mike Struck……………………………………………………………………………………………Community Development Director Shawna Costello……………………………………………………………………………………Finance Director Darrell Hartmann……………………………………………………………………………………Fire Chief Donna Langland………………………………………………………………………………………Human Resources Director Elvita Landau…………………………………………………………………………………………Library Director Janet Coplan……………………………………………………………………………………………Liquor Store Manager Dan Brettschneider…………………………………………………………………………………Parks, Recreation & Forestry Director Jeff Miller………………………………………………………………………………………………Police Chief Todd Langland ………………………………………………………………………………………Solid Waste Director Matt Bartley……………………………………………………………………………………………Street Superintendent Jason R. Merkley……………………………………………………………………………………Health System Chief Executive Officer Steve Meyer……………………………………………………………………………………………Utilities Executive Vice President & General Manager OFFICIALS OF THE CITY OF BROOKINGS LEADERSHIP TEAM 10 Brookings Health System Board Citizens of Brookings Utilities Board Engineer/ Airport Utilities *Electric *Water *Wastewater *Telephone Mayor & City Council City Manager/ IT City ClerkBrookings Health System Finance FireHuman Resources Library LiquorParks, Recreation Forestry/ Golf/ Ice Arena/ Aquatics Center Police/ E-911/ Animal Control Solid Waste/Street City Attorney Event Center Board (Swiftel Center) Community Development City of Brookings December 31, 2015 CITY OF BROOKINGS ORGANIZATION CHART 11 12 Independent Auditor’s Report The Honorable Mayor and Members of the City Council City of Brookings, South Dakota Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Brookings, South Dakota (the City) as of and for the year ended December 31, 2015, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements listed in the table of contents. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We did not audit the financial statements of the Brookings Health System Fund and the Brookings Municipal Utilities Telephone, Electric, Water and Wastewater Funds, which represent 85%, 80% and 93%, respectively, of the total assets, net position and revenues of the business-type activities. We also did not audit the financial statements of the Brookings Health System Foundation, a discretely presented component unit of the City. The financial statements of the Brookings Health System Fund, Brookings Municipal Utilities Telephone, Electric, Water and Wastewater Funds, and Brookings Health System Foundation were audited by other auditors, whose reports thereon have been furnished to us, and our opinions, insofar as they relate to the amounts included for the above mentioned enterprise funds and the discretely presented component unit, are based solely on the reports of the other auditors. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 13 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, based on our audit and the reports of the other auditors, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Brookings, South Dakota as of December 31, 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 15 and 16 to the financial statements, in 2015 the City implemented the provisions of Governmental Accounting Standards Board Statement No. 68, Accounting and Financial Reporting for Pensions – an amendment of GASB Statement No. 27, as amended by GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date – an amendment of GASB Statement No 68. Our opinions are 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, pension information, schedules of funding progress and budgetary information listed in the table of contents be presented to supplement the basic financial statements. Such information, although not part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying supplementary information, consisting of combining financial statements and the schedule of expenditures of federal awards required by Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards, as listed in the table of contents, is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in 14 the United States of America. In our opinion, the information is fairly stated in all material respects in relation to the basic financial statements as a whole. 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 accompanying information in the introductory and statistical sections listed in the table of contents is presented for purposes of additional analysis and is not a required part of the basic financial statements. Such information has not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on it. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued our report dated May 9, 2016, 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 in considering the City’s internal control over financial reporting and compliance. Lincoln, Nebraska May 9, 2016 15 City of Brookings December 31, 2015 Management's Discussion and Analysis This discussion and analysis presents an overview of the financial activities and financial position for the City of Brookings (the “City”) for the year ended December 31, 2015. The information presented in this section should be considered in conjunction with that presented in the basic financial statements and notes to the financial statements. The financial information for 2014 shown in the Condensed Statements of Net Position and Condensed Statements of Activities on pages 18-20 has not been updated for changes resulting from the implementation of GASB Statement No. 68 (see page 69 for information regarding the implementation of GASB Statement No. 68) Financial Highlights • The City’s assets and deferred outflows of resources exceeded its liabilities by $318,156,171 (net position) for the calendar year reported. • The City's total ending net position of $318,156,171 this year compared to the restated prior year ending net position of $288,086,423 showing an increase of $30,069,748 during the calendar year. The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment to GASB 27. As a result, beginning net position has been restated to reflect the related net pension asset and deferred outflows and inflows of resources as of January 1, 2015 (see Note 15) • Total net position is comprised of the following: 1. Net investment in capital assets, of $178,785,345 includes property and equipment, net of accumulated depreciation and reduced for outstanding debt related to the purchase or construction of capital assets. 2. Net position of $18,122,073 is restricted by constraints imposed from outside the City such as debt covenants, grantors, laws, or regulations. 3. Unrestricted net position of $121,248,753 represents the portion available to maintain the City’s continuing obligations to citizens and creditors. • The City’s governmental activities reported total ending net position of $92,017,334 this year. This compares to the prior year restated ending net position of $81,861,454 showing a increase of $10,155,880 during the calendar year. Unrestricted net position of $22,424,600 at December 31, 2015 shows a $2,114,741 increase from the prior year. • At the end of the current calendar year, unassigned fund balance for the General Fund was $5,242,679, or 31.6% of total General Fund expenditures. • The City’s business-type activities reported increased net position of $19,913,868 compared to the restated beginning net position, ending the current year at $226,138,837. This increase in business-type activities is somewhat similar to what a private business might report as net profit and most of this increase reflects the significant Federal grant revenue for the Airport runway realignment project. • The City’s total outstanding long-term liabilities decreased by $2,208,900 ending the current fiscal year at $86,452,257 outstanding. Overview of the Financial Statements This discussion and analysis serves as an introduction to the City’s basic financial statements, which consists of three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. The report also contains required supplementary information and other supplementary information in addition to the basic financial statements. Government-wide financial statements. The government-wide financial statements are designed to give users a broad overview of the City’s finances, in a manner similar to that of a private-sector business. 16 City of Brookings December 31, 2015 Management's Discussion and Analysis The Statement of Net Position presents information on all of the City’s assets, deferred outflows of resources, liabilities, and deferred inflows of resources, excluding fiduciary funds, with the difference reported as net position. Increases or decreases in net position over time may serve as a useful indicator of whether the City’s financial position is improving or deteriorating. The Statement of Activities shows how the City’s net position changed during the fiscal year. All changes in net position are reported as soon as the underlying event that caused the change occurs, regardless of the timing of the related cash flows. There are revenues and expenses reported in this statement for some items that will only result in cash flows in future fiscal years; examples include uncollected taxes and vacation days that are earned, but not used. Both of the government-wide financial statements distinguish between functions that are mainly supported by taxes and intergovernmental revenues (governmental activities) from the functions that are intended to recover all or a significant portion of their costs through user fees and charges (business-type activities). The governmental activities of the City include general government, public safety, public works, health & welfare, culture & recreation, conservation & development, and debt service. The business-type activities of the City include the enterprise activities of electric, water, sewer, telephone, hospital, liquor, solid waste, airport, golf course, and research & technology facility. Fund financial statements. A fund is a grouping of related accounts that is used to maintain financial control over resources that have been segregated for specific activities or objectives. The City, like other state and local governments, uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. All of the funds of the City can be divided into three categories: governmental funds, proprietary funds, and fiduciary funds. 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 near-term inflows and outflows of spendable resources, as well as on balances of spendable resources available at the end of the fiscal year. Such information may be useful in evaluating a government’s near-term financing requirements. Because the focus of the governmental funds is narrower than that of the government-wide financial statements, it is useful to compare the information presented for governmental funds with similar information presented for governmental activities in the government-wide financial statements. By doing so, readers may better understand the long-term impact of the government’s near-term financing decisions. The governmental funds balance sheet and the statement of revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The City maintained 20 individual governmental funds for 2015. Information is presented separately in the governmental funds balance sheet and in the governmental funds statement of revenues, expenditures, and changes in fund balances for the General Fund which is considered to be a major fund. Data from the other 19 governmental funds are combined into a single aggregated presentation. Fund data for each individual nonmajor governmental fund is provided in the form of combining statements following the required supplementary information. The City adopts an annual budget for its governmental funds. A budgetary comparison statement has been provided as required supplementary information for the major governmental fund (General Fund) to demonstrate compliance with this budget. Proprietary funds. The City maintains two different types of proprietary funds. The first type is enterprise funds, which are used to report the same functions presented as business-type activities in the government-wide financial statements. Proprietary fund financial statements provide the same type of information as the government-wide financial statements, only in more detail. Information is presented separately in the proprietary fund financial statements for the electric, wastewater, health system, and telephone funds, all of which are considered to be major funds. Data from the remaining enterprise funds is combined into a single, aggregated presentation. Individual fund data for each of these nonmajor enterprise funds is included in the combining and individual fund section of this report. Internal service funds are the other type of proprietary funds. Internal service funds are used to accumulate and allocate costs internally among the City’s various functions for self-insurance. Because the self-insurance fund predominately benefits the 17 City of Brookings December 31, 2015 Management's Discussion and Analysis business-type functions, it has been included with the business-type activities portion of the presentation of the government- wide statements. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the City government. Fiduciary funds are not reflected in the government-wide financial statements because the resources of those funds are not available to support the City’s own programs. The accounting used for fiduciary funds is much like that used for proprietary funds. Notes to the financial statements. The notes provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Other information. In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementary information. This section includes a budgetary comparison schedule and related notes for the General Fund, and the schedule of funding progress for postemployment benefit plans. The combining statements referred to earlier in connection with nonmajor governmental funds and nonmajor enterprise funds are presented immediately following the required supplementary information. Government-Wide Financial Analysis Net position. Net position over time serves as a useful indicator of a government’s financial position. At the close of 2015, assets and deferred outflows exceeded liabilities by $318,156,171. This reflects an increase in the City’s combined net position of 14.0% between fiscal year 2014 and 2015. 2014 2015 2014 2015 2014 2015 Current and Other Assets $27,440,425 $31,206,665 $112,408,858 $128,123,281 $139,849,283 $159,329,946 Capital Assets 82,211,515 88,528,412 162,776,672 171,585,236 244,988,187 260,113,648 Total Assets 109,651,940 119,735,077 275,185,530 299,708,517 384,837,470 419,443,594 Deferred Outflows of Resources 641,997 2,410,233 - 7,257,328 641,997 9,667,561 Total Assets and Deferred Outflows of Resources 110,293,937 122,145,310 275,185,530 306,965,845 385,479,467 429,111,155 Other Liabilities 2,414,763 2,530,555 15,299,261 15,092,986 17,714,024 17,623,541 Long-Term Liabilities 27,786,677 26,155,086 60,874,480 60,297,171 88,661,157 86,452,257 Total Liabilities 30,201,440 28,685,641 76,173,741 75,390,157 106,375,181 104,075,798 Deferred Inflows of Resources - 1,442,335 - 5,436,851 - 6,879,186 Total Liabilities and Deferred 30,201,440 30,127,976 76,173,741 80,827,008 106,375,181 110,954,984 Inflows of Resources Net Investment in Capital Assets 56,625,781 64,579,729 104,777,360 114,205,616 161,403,141 178,785,345 Restricted 3,156,857 5,013,005 4,717,291 13,109,068 7,874,148 18,122,073 Unrestricted 20,309,859 22,424,600 89,517,138 98,824,153 109,826,997 121,248,753 Total Net Position 80,092,497 92,017,334 199,011,789 226,138,837 279,104,286 318,156,171 Beg. Net Position 79,734,486 80,092,497 174,863,525 199,011,789 254,598,011 279,104,286 Change in Net Position $358,011 $11,924,837 $24,148,264 $27,127,048 $24,506,275 $39,051,885 Percentage Change 0.4% 14.9% 13.8% 13.6% 9.6% 14.0% Condensed Statements of Net Position Governmental Activities Business-Type Activities Total 18 City of Brookings December 31, 2015 Management's Discussion and Analysis The Statement of Net Position reports all financial and capital resources. The statement presents the assets, deferred outflows of resources, liabilities, and deferred inflows of resources (when applicable) in order of relative liquidity. The liabilities with maturities greater than one year are reported in two components – the amount due within one year and the amount due in more than one year. The long-term liabilities of the City, consisting primarily of compensated absences payable, sales tax revenue bonds payable, loans payable, and capital leases have been reported in this manner on the Statement of Net Position. The difference between the City’s assets and deferred outflow of resources, and the liabilities and deferred inflow of resources is equal to its net position. By far the largest portion (56.2%) of the City’s net position is represented by $178.8 million in investment in capital assets (e.g., land, buildings, infrastructure, and equipment); less any related debt used to acquire those assets that are still outstanding. The City uses these capital assets to provide services to citizens; therefore, these assets are not available for future spending. Although the City’s net investment in 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. Restricted net position makes up 5.7% of the total net position. These assets are subject to external restriction on how they may be used. The remaining unrestricted balance of $121.2 million (38.1%) may be used to meet the government’s ongoing obligations to citizens and creditors. Certain balances within the unrestricted net position have internally imposed designations or limitations which may further limit the purpose for which such net position may be used. 19 City of Brookings December 31, 2015 Management's Discussion and Analysis Changes in net position. The increase in net position for 2015 was $30,069,748. The Governmental Activities Net Position increased $10,155,880 and the Business-Type Activities Net Position increased $19,913,868. The Governmental Activities net position increased significantly 2015 due to implementation of GASB 68. The Business-Type Activities significantly increased their net position in large part due to an increase in Federal grant revenue. 2014 2015 2014 2015 2014 2015 Revenues Program Revenues Charges for Services $3,326,760 $5,274,831 $132,418,963 $140,757,839 $135,745,723 $146,032,670 Operating Grants 881,030 249,049 405,059 20,112 1,286,089 269,161 Capital Grants 221,332 5,418,303 11,935,303 2,210,269 12,156,635 7,628,572 General Revenues Taxes 17,745,463 18,228,031 - - 17,745,463 18,228,031 State Shared Revenues 210,750 208,033 - - 210,750 208,033 Investment Earnings 287,430 162,862 705,244 550,280 992,674 713,142 Miscellaneous 1,957,732 1,508,487 179,817 367,492 2,137,549 1,875,979 Total Revenues 24,630,497 31,049,596 145,644,386 143,905,992 170,274,883 174,955,588 Expenses General Government 3,017,290 2,865,778 3,017,290 2,865,778 Public Safety 5,036,493 5,054,020 5,036,493 5,054,020 Public Works 7,410,926 5,934,626 7,410,926 5,934,626 Health and Welfare 112,621 101,042 112,621 101,042 Culture and Recreation 7,168,741 7,400,596 7,168,741 7,400,596 Conservation and Development 1,939,064 1,209,287 1,939,064 1,209,287 Interest charges 808,496 734,534 808,496 734,534 Electric Fund 21,175,715 22,650,657 21,175,715 22,650,657 Health System Fund 52,211,048 54,370,009 52,211,048 54,370,009 Telephone Fund 33,929,866 30,598,739 33,929,866 30,598,739 Liquor Fund 3,664,576 3,608,454 3,664,576 3,608,454 Water Fund 2,641,459 2,964,843 2,641,459 2,964,843 Wastewater Fund 3,124,572 3,704,292 3,124,572 3,704,292 Airport Fund 383,714 839,807 383,714 839,807 Golf Fund 552,028 561,156 552,028 561,156 Solid Waste Fund 2,410,877 2,168,527 2,410,877 2,168,527 Research and Technology Fund 181,122 119,473 181,122 119,473 Total Expenses 25,493,631 23,299,883 120,274,977 121,585,957 145,768,608 144,885,840 Excess Before Transfers (863,134) 7,749,713 25,369,409 22,320,035 24,506,275 30,069,748 Transfers 1,221,145 2,406,167 (1,221,145) (2,406,167) - - Change in Net Position 358,011 10,155,880 24,148,264 19,913,868 24,506,275 30,069,748 Beginning Net Position, as Previously Reported 79,734,486 80,092,497 174,863,525 199,011,789 254,598,011 279,104,286 Adjustment for GASB 68 - 1,768,957 - 7,213,180 - 8,982,137 Beginning Net Position Restated 79,734,486 81,861,454 174,863,525 206,224,969 254,598,011 288,086,423 Ending Net Position 80,092,497$ 92,017,334$ 199,011,789$ 226,138,837$ 279,104,286$ 318,156,171$ Governmental Business-Type Activities Activities Total Governmental activities. Revenues for the City’s governmental activities were $31,049,596. Taxes accounted for 59% of the overall revenues generated in 2015 compared to 72% in 2014. Capital grants and contributions increased by $5.2 million due to construction projects where large portions were the responsibility of the developers and areas were funded with Federal and State grants. Other revenue sources reflected a combination of increases and decreases with a minimal net effect. Charges for delivered services comprised 17% of the overall revenues generated which a 4% increase compared to 2014. Governmental Activities expenses decreased by 9.0% from 2014. The decrease is a combination of overall increases and decreases, with the largest decrease in public works due to the completion of the digester the City is building to accommodate the new Bel Brands Cheese plant. 20 City of Brookings December 31, 2015 Management's Discussion and Analysis Business-type activities. Overall revenues of the City’s Business-Type Activities decreased 1.2% in 2015 compared to a 14.4% increase in 2014. Charges for services experienced a healthy increase of $8.3 million, or 6.3%. Operating and capital contribution/grants decreased by $10.1 million or 82% due to completing a large capital project which was primarily funded with Federal grant money. Operating expenses increased by approximately $1.3 million or 1.1% in 2015 compared to a 10% increase in 2014. The increase is a combination of overall increases and decreases, with the largest increase in the health system fund which increased by $2.2 million or 4.1% over 2014. Financial Analysis of the City’s Funds As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Some funds are required by statute while others are established internally to assist management in accounting for certain activities. The City maintains thirty-one funds – general fund, nine special revenue funds, five debt service funds, five capital project funds, ten business-type funds and one internal service fund. Governmental Funds The accounting focus of the City’s governmental funds is to provide information on near-term inflows, outflows and balance of spendable resources. Such information is useful in assessing the City’s financing activities and abilities. In particular, the unassigned fund balance may serve as a useful measure of a government’s net resources available for spending at the end of the fiscal year. The most significant source of revenue to the City is based on taxable retail sales in the community (sales & use tax). The City experienced a 2.4% increase or $312,124 in sales tax revenue compared to the prior year. The City’s Ends policy takes a conservative approach to budgeting and provides that the City average the last five years tax revenues and budget a 2.5% increase above that average. The net increase in sales & use tax revenue was reflected as follows: 2.4% or $146,840 increase in 1st penny sales and use tax, 2.4% or $36,764 increase in the 25% portion of the 2nd penny sales and use tax, 2.4% or $110,148 increase in the 75% portion of the 2nd penny sales and use tax, and a 2.2% or $18,372 increase in the 3rd penny Bed and Booze tax. A portion of the revenue increase within the 1st penny sales and use tax, the 25% of the 2nd penny sales and use tax, and the 75% of the 2nd penny sales & use tax is due to the construction phases of the Bel Brands cheese plant. During phase I and phase II the City is reimbursing the cheese plant an amount equal to the Brookings City sales and use tax paid on equipment purchases up to $2,520,000. In addition, the City has provided a reimbursement equal to all Brookings City sales and use tax paid by the cheese plant on the purchase of construction materials for the facility of $390,000. In addition, a portion of the revenue increase within the 1st penny sales and use tax, the 25% of the 2nd penny sales and use tax, and the 75% of the 2nd penny sales & use tax is due to construction phases of improvements to the 3M plant. The City will reimburse 3M three-fourths (3/4) of City sales and use tax paid on equipment purchases not to exceed $775,500. General Fund. The General Fund is the primary operating fund of the City. The fund balance decreased by $1,467,397 from 2014, however, General Fund revenues increased overall by $861,072 or 7.0%. General Fund changes in revenue included increased property tax revenue of $106,615, or 3.9%. This increase was comprised of the statutorily provided 3.0 % inflationary adjustment and a 2.18% increase in taxable valuation due to new properties added. 21 City of Brookings December 31, 2015 Management's Discussion and Analysis Proprietary (business-type) Funds Electric Fund. In 2015, the Electric fund net position increased by $1,920,667, compared to an increase of $2,297,722 in 2014. Operating revenues increased by $1.03 million due to a 1.4% increase in kilowatt-hour sales and an overall 3.5% increase to user charges. Operating expenses increased by $1.5 million or 7.2% in 2015. $1.2 million of this increase was due to the cost of purchased power from suppliers. Operating transfers totaling $1,955,000 were made from the Electric fund to the General Fund in 2015. Telephone Fund. The Telephone fund net position increased by $3,521,835 in 2015 and $2,883,559 in 2014. Operating revenues decreased by $2.7 million due to decreased usage of the telecommunication facilities. Operating expenses decreased by $3.2 million over the prior year due to expenditures control and decreased network expense. Operating transfers totaling $200,000 were made from the Telephone Fund to the General Fund in 2015. Wastewater Fund. The Wastewater fund net position increased by $1,475,854 in 2015 and $2,230,536 in 2014. Capital contributions of $352,496 in 2015 and $1,232,643 in 2014 were responsible for 23.9% and 55.3% of the increase in net position, respectively. Operating revenues increased by $713,000 in 2015 due to a 7.5% overall increase to user charges as well as a 10.8% increase in utilities billed to customers in 2015. Operating expenses increased $506,000 in 2015, $472,000 of which was due to a manhole rehabilitation maintenance project. Health System Fund. Brookings Health System increased its net position by $8,002,702 in 2015 and $2,355,678 in 2014. The increase in net position is primarily related to an overall increase in hospital utilization; 17.1% increase in births, 13.8% increase in imaging procedures, 13.7% increase in sleep studies, 13% increase in surgical procedures, 7.8% increase of acute inpatient days, 6.3% increase in emergency room visits and a 4.1% increase in ambulance runs. In addition, Brookings Health System received $338,000 in Electronic Health Records payments from Medicare and Medicaid in 2015. General fund budgetary highlights Over the course of the year, the City Council revised the City budget two times. Supplemental appropriations and contingency transfers were approved for unanticipated, yet necessary, expenses to provide for items necessary for the health and welfare of its citizens. The final General Fund expenditure budget reflects an increase to the original budget by $399,479, or about 2.2%. Budget amendments were made to increase funds mainly for capital outlay which included the following: to authorize spending grant funds to develop and buy playground equipment for Valley View park, and unexpected equipment purchases to replace equipment lost or damaged in accidents. Increases were also necessary to account for uncompleted capital items carried over from the previous year. Actual General Fund expenditures were $1,602,950 less than the adjusted budget. Some departments didn’t complete all scheduled projects or purchases in 2015 and therefore were under budget as follows: fire was $117,952 under budget; highways and streets was $281,262 under budget; parks was $313,942 under budget. Overall, the departments held their spending in line with the budget for 2015. Actual General Fund revenues were $868,302 more than the adjusted budget due to following the conservative Governance and Ends Policy relating to budgeted revenues. 22 City of Brookings December 31, 2015 Management's Discussion and Analysis Capital Asset Administration Major activity within the Governmental Activities in 2015 included the following: Land was purchased for $229,984 that will be used for a storm drainage project. Construction in progress decreased due to completion of the South Main Avenue and 26th Street Project, which conversely increased infrastructure assets. Continuing infrastructure projects include the continued development of new residential areas. This included street, curb, gutter, and sewer improvements, much of which is donated to the City by the developer. The value added to infrastructure in 2015 was $7,207,581 of which $4,066,572 was donated. In addition, other projects included storm drainage, street overlays, and replacement of various underground pipe. Major equipment purchased or replaced included purchase of records management mobile software for the police department, 4 replacement police vehicles and 1 additional police vehicle; replacement of the ladder truck for the fire department, a variety of machinery and equipment in the street department such as 2 used pickups, 1 new pickup, 2 trailers, spreader, dump body, and an Oiler; replacement pickups (new and used), backhoe, loader/snowblower, mower, sprayer, turf truckster, spray booms for the Parks department, floor scrubber and leak detection system for the ice arena; and aerial bucket truck, stump cutter, and pickup for the Forestry department. Dollar Percentage Change Change Capital Assets (Net of Depreciation)2014 2015 2014-2015 2014-2015 Land 4,770,567$ 4,770,567$ -$ 0.0% Construction in Progress 43,036,020 32,507,308 (10,528,712) -24.5% Buildings and Other Improvements 104,399,757 124,158,687 19,758,930 18.9% Machinery and Equipment 10,570,328 10,148,674 (421,654) -4.0% Total Capital Assets (Net)162,776,672$ 171,585,236$ 8,808,564$ 5.4% Total Total Business-type Activities Major activity in the Business-Type Activities in 2015 included the following: In 2015, the Electric fund increased capital assets by approximately $2,354,000. Major purchases include a new bucket truck and knuckle boom truck. The balance was spent in the reconstruction of substations and related improvements in the ongoing effort to convert the distribution system to higher voltage. The 3M Industrial Substation reconstruction was completed and energized in May of 2015. Total Total Dollar Percentage Change Change Capital Assets (Net of Depreciation)2014 2015 2014-2015 2014-2015 Land 9,496,603$ 9,825,454$ 328,851$ 3.5% Construction in Progress 2,956,531 1,447,034 (1,509,497) -51.1% Buildings and Other Improvements 29,366,530 28,806,464 (560,066) -1.9% Machinery and Equipment 6,713,193 7,563,221 850,028 12.7% Infrastructure 33,678,658 40,886,239 7,207,581 21.4% Total Capital Assets (Net)82,211,515$ 88,528,412$ 6,316,897$ 7.7% Governmental Activities 23 City of Brookings December 31, 2015 Management's Discussion and Analysis The Telephone fund increased capital assets by approximately $2,540,000 for the acquisition and construction of capital assets in 2015. Upgrades included the continuing effort to convert customers from a copper to fiber facility, a variety of electronics and infrastructure improvements, an increase in wireless capacities, and the continued deployment of broadband services. The Wastewater fund increased capital assets by approximately $6,153,000 due to the construction in progress for the improvement of the Wastewater treatment facilities and collection system which began in 2012. The total estimated cost to complete this project is $30,600,000 and is being funded through a Wastewater revenue bond through the State Revolving Fund. The improvements are being done through four projects. Project A is the upgrade of the Wastewater Treatment Plant. Progress continues with approximately 90% of the project completed to date. Construction is expected to be substantially completed in 2016. In 2015 the Brookings Health System capital assets increased $2,288,750 primarily due to the construction in progress for the hospital renovation and addition of a medical office building. The Solid Waste fund had equipment purchases of $358,074 including a replacement of a garbage truck, concover machine, and the scale. The Airport capital asset additions totaled $1,356,925. The runway relocation project was completed in 2015. Most of the cost for this project was paid for with Federal Airport Improvement Project funds. See note 7 for additional information regarding capital assets. Long-Term Liabilities At December 31, the City had the following long-term liabilities: Dollar Percentage 2014 2015 2014 2015 Amount Amount Revenue Bonds 25,571,694$ 24,006,034$ 10,809,915$ 9,816,751$ (2,558,824)$ -7.0% Loans - - 20,593,606 24,064,478 3,470,872 16.9% Capital leases 151,640 - 24,784,739 22,484,843 (2,451,536) -9.8% OPEB 1,169,395 1,314,302 929,108 1,007,383 223,182 10.6% Amount Due Under Joint Agreements - - 1,534,477 958,734 (575,743) -37.5% Landfill Closure/Postclosure - - 723,374 537,893 (185,481) -25.6% Compensated Absences 893,948 834,750 1,499,261 1,427,089 (131,370) -5.5% Total Long-Term Liabilities 27,786,677$ 26,155,086$ 60,874,480$ 60,297,171$ (2,208,900)$ -2.5% Total Change Activities Activities Governmental Business-Type The City has outstanding Sales Tax Revenue Bonds in the amount of $9,370,000 at the end of 2015. The bonds are secured by revenue generated from the 2nd Penny Sales & Use Tax Fund. These bonds were issued to advance refund outstanding Sales Tax Revenue Bonds Series 2001, 2003 and 2005, and in addition fund the City’s portion of the construction of the City/County Administration building. The bonds are scheduled to be retired in 2022. The City has outstanding Sales Tax Revenue Bonds in the amount of $10,000,000 at the end of 2015. The bonds are secured by revenue generated from the 2nd Penny Sales & Use Tax Fund. These bond were issued to finance a variety of capital purchases and construction in 2014. The bonds are scheduled to be retired in 2033. 24 City of Brookings December 31, 2015 Management's Discussion and Analysis The City has an outstanding State Revolving Fund Bond in the amount of $566,067. This bond is secured by TIF-1 property tax increment revenues and also by revenue generated by the 2nd Penny Sales & Use Tax Fund. The City is the developer and therefore is responsible for any bond repayment in excess of the property tax revenue generated by the Tax Increment District. This bond was issued to construct infrastructure at the Innovation Campus which is designed to attract new innovative companies who can take advantage of the talent at South Dakota State University. The City has outstanding State Revolving Fund Bonds in the amounts of $333,900, $303,513, $202,442, $1,843,231, and $415,625. These bonds are secured by Storm Drainage fees assessed to property owners. These bonds were issued to construct storm drainage projects in the Southland addition, Pheasant’s Nest addition, Nelson addition, Camelot addition and Division Ave. The City has an outstanding bond from South Dakota SDHDA in the amount of $635,517. This bond is secured by TIF -3 property tax increment revenues with the developer of the project as guarantor of the bond. Therefore, the developer is responsible for any bond repayments in excess of available property tax revenue generated by the Tax Increment District. The City has an outstanding Tax Increment Revenue Note in the amount of $251,844. This note is secured by TIF -4 property tax increment revenues with the developer of the project as guarantor of the bond. Therefore, the developer is responsible for any repayments in excess of available property tax revenue generated by the Tax Increment District. A Wastewater revenue bond in the principal amount of $30,600,000 was issued December 28, 2012 through a loan between the City and the South Dakota State Revolving Fund. The proceeds will be used for the improvement of the Wastewater treatment facilities and collection system. The rates and charges relating to the improvements will be in the form of a surcharge for wastewater utility service. The initial surcharge for the loan agreement became effective January 2014. The bonds are secured by gross revenues derived solely from the revenues of the wastewater surcharge and are not a general obligation of the City of Brookings. The interest rate for the loan is 3.25% with final maturity due October 15, 2044. As of December 31, 2015 advances of $24,064,478 have been made from the principal amount. The Electric Revenue Bonds, Series 2011 were issued by the City of Brookings for $6,500,000 with interest rates of .65% to 4.0%. The proceeds were used to provide financing for all or a portion of the cost of acquiring and constructing improvements to the electrical facilities of the Utility, consisting of the construction of a 115KV transmission line, reconstruction of three substations, and the installation of four 115/12.5kV transformers and related improvements. The rates and charges relating to the improvements will be in the form of a surcharge for electric utility service. The bonds are secured by gross revenues derived from the operation of the Improvements and are irrevocably set aside, pledged, and appropriated to a special fund within the Utility as received and do not constitute a general obligation of the City of Brookings, SD. Interest is payable semiannually on June 1, and December 1, commencing on June 1, 2012. Principal is due annually on December 1 commencing on December 1, 2012, with final maturity on December 1, 2031. Outstanding principal is $5,495,000. The City has additional outstanding Utility Revenue Bonds in the amount of $4,321,751. The bonds are secured by revenue generated from the Telephone Fund (formerly PCS) and Electric Fund. These bonds will be retired in December 2019 and July 2028. The City has capital acquisition leases for purchase of utility plant to be paid using the telephone, water, wastewater, and electric funds in the amount of $12,695,000. The City has Certificates of Participation for the construction of the skilled nursing facility in the amount of $9,509,843. The City has Certificates of Participation for the construction of the new medical office building and renovation of existing hospital in the amount of $280,000. The City is liable for the accrued compensated absences of $834,750 within the Governmental Funds and $1,427,089 within the Enterprise Funds payable to all full-time employees who have been employed for more than 6 months. See note 8 for additional information regarding long-term liabilities. 25 City of Brookings December 31, 2015 Management's Discussion and Analysis Economic Outlook and Next Year’s Budget The 2015 Sales & Use Tax revenues were up 2.4% from the 2014 revenue; this growth is slightly affected by the effects of the construction at 3M and completion of a $4.7 million cheese manufacturing plant. The 2016 tax revenue was budgeted with a projected 2.9% growth from the 2015 budget. The 2015 property tax levy (payable in 2016) decreased .031 per thousand in valuation. In the last year the taxable valuation for the City of Brookings has increased $52.6 million. For 2016 the City budgeted a 2.75% overall salary increase plus movement through steps for employees. At the time the budget was completed, health insurance premiums were budgeted to increase 2%; however due to our claims experience, the premium remained the same as that of 2014. Vision premiums remained virtually the same as 2014 as did dental coverage. The 2016 budget added two new full-time positions. An additional police officer to replace an existing officer who moved to fill a second School Resource Officer(SRO) position for the Brookings School District. The SRO position will be financed 75% by the School so only 25% of the new personnel cost is reflected in the 2016 budget. The other new position is an Assistant to the City Manager. The chart at right shows the comparison of the 2016 budget with the 2015 budget for all governmental funds. The increase in personnel services reflects the cost of living adjustment (COLA) increase and regular step increases. The increase in current operations reflects additional operating expenses, necessary maintenance, and rent of temporary facilities while the new street department is being built. The decrease in subsidies to other reflects the decrease in economic incentive payments as those companies complete their projects. The decrease in capital outlay reflects the completion of multi-year projects such as the Dakota Nature Park, storm water projects and the development of the infrastructure and major street repairs on Main Avenue south. Transfers decreased significantly because in 2015 transfers were used to move the bond money between funds to pay for various capital projects and purchases. In 2016 that activity will not be necessary. The enterprise funds did not budget an increase in staff numbers for 2016. The increase in personnel services reflects the cost of living adjustment (COLA) increase and regular step increases. Capital expenses significantly decreased because of completion of construction of the airport runway realignment. CONTACTING THE CITY’S FINANCIAL MANAGEMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the monies it receives. If you have questions about this report or need additional information, contact the City of Brookings Finance Office, 520 3rd Street Suite 230, Brookings, SD 57006. 2015 2016 % BUDGET BUDGET CHANGE Personnel $10,758,783 $ 11,166,793 3.8% Current Operating 5,972,756 6,232,549 4.3% Subsidies to Other 2,606,371 1,879,202 -27.9% Capital Outlay 9,117,086 8,165,226 -10.4% Debt Service 3,210,114 3,298,701 2.8% Transfers 11,484,152 4,382,223 -61.8% ALL GOVERNMENTAL FUNDS (Liquor-Airport-SWC-2015 2016 % SWD-Golf -R&T Center)BUDGET BUDGET CHANGE Personnel $1,693,658 $1,733,334 2.3% Current Operating 4,694,455 4,760,758 1.4% Capital 2,118,659 1,368,650 -35.4% Transfers 1,025,000 1,032,250 0.7% ENTERPRISE FUNDS 26 City of Brookings December 31, 2015 Statement of Net Position Component Primary Government Unit Governmental Business-Type Health System Activities Activities Total Foundation ASSETS Cash and cash equivalents 13,821,512$ 81,732,933$ 95,554,445$ 148,849$ Investments 3,735,398 8,954,320 12,689,718 - Receivables, net 2,337,129 18,624,029 20,961,158 3,061,169 Due from other governments 1,540,027 2,581,942 4,121,969 - Internal balances 3,045,347 (3,045,347) - - Land held for resale 3,322,442 - 3,322,442 - Inventories 37,288 4,898,055 4,935,343 - Deposits 355,852 - 355,852 - Prepaid expenses 453,900 1,028,958 1,482,858 - Prepaid bond insurance 62,346 - 62,346 - Restricted cash and cash equivalents 880,420 6,197,202 7,077,622 894,129 Other investments - 836,187 836,187 - Net pension asset 1,615,004 6,315,002 7,930,006 Capital assets: Capital assets not being depreciated 11,272,488 37,277,875 48,550,363 - Capital assets being depreciated, net 77,255,924 134,307,361 211,563,285 - Total capital assets 88,528,412 171,585,236 260,113,648 - Total assets 119,735,077 299,708,517 419,443,594 4,104,147 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows 1,848,485 7,257,328 9,105,813 - Loss on debt refunding 561,748 - 561,748 - Total deferred outflows of resources 2,410,233 7,257,328 9,667,561 - Total assets and deferred outflows of resources 122,145,310 306,965,845 429,111,155 4,104,147 LIABILITIES Accounts payable 1,455,245 12,105,469 13,560,714 - Accrued expenses 210,403 1,910,804 2,121,207 2,129 Accrued interest 87,305 330,744 418,049 - Other current liabilities - 9,594 9,594 - Due to other governments 467,163 - 467,163 - Amount held for others 54,750 - 54,750 - Customer deposits - 154,331 154,331 - Unearned revenue 255,689 - 255,689 - Advance payments - 582,044 582,044 - Noncurrent liabilities: Portion due or payable within one year: Bonds payable 2,073,675 1,051,415 3,125,090 - Loans payable - 508,584 508,584 - Capital leases - 2,707,098 2,707,098 - Compensated absences 300,000 1,077,257 1,377,257 - Portion due or payable after one year: Bonds payable 21,932,359 8,765,336 30,697,695 - Loans payable - 23,555,894 23,555,894 - Capital leases - 19,777,745 19,777,745 - OPEB payable 1,314,302 1,007,383 2,321,685 - Amount due under joint operating agreement - 958,734 958,734 - Accrued landfill closure and postclosure costs - 537,893 537,893 - Compensated absences 534,750 349,832 884,582 - Total liabilities 28,685,641 75,390,157 104,075,798 2,129 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows 1,442,335 5,436,851 6,879,186 - Total liabilities and deferred inflows of resources 30,127,976 80,827,008 110,954,984 2,129 NET POSITION Net investment in capital assets 64,579,729 114,205,616 178,785,345 - Restricted for: Debt service and covenants 237,836 4,325,369 4,563,205 - Insurance deposit 355,852 - 355,852 - Other purposes (by donations)70,293 - 70,293 3,955,298 Capital assets (by donations)1,260,684 - 1,260,684 - SDRS pension purposes 2,021,154 8,135,479 10,156,633 - Enabling legislation 1,067,186 - 1,067,186 - Landfill closure and post closure - 648,220 648,220 - Unrestricted 22,424,600 98,824,153 121,248,753 146,720 Total net position 92,017,334$ 226,138,837$ 318,156,171$ 4,102,018$ The notes to the financial statements are an integral part of this statement 27 City of Brookings Year Ended December 31, 2015 Statement of Activities Program Revenues Operating Capital Primary Government Component Unit Charges for Grants and Grants and Governmental Business-Type Health System Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Foundation Primary government: Governmental activities: General government 2,865,778$ 106,379$ 47,292$ 779,090$ (1,933,017)$ - $ (1,933,017)$ - $ Public safety 5,054,020 99,666 124,476 - (4,829,878) - (4,829,878) - Public works 5,934,626 2,638,528 5,945 4,549,262 1,259,109 - 1,259,109 - Health and welfare 101,042 10,735 - - (90,307) - (90,307) - Culture and recreation 7,400,596 2,419,523 71,336 89,951 (4,819,786) - (4,819,786) - Conservation and development 1,209,287 - - - (1,209,287) - (1,209,287) - Interest and fiscal charges 734,534 - - - (734,534) - (734,534) - Total governmental activities 23,299,883 5,274,831 249,049 5,418,303 (12,357,700) - (12,357,700) - Business-type activities: Electric 22,650,657 26,341,321 - 156,718 - 3,847,382 3,847,382 - Health System 54,370,009 61,882,772 20,112 92,955 - 7,625,830 7,625,830 - Telephone 30,598,739 34,313,078 - - - 3,714,339 3,714,339 - Liquor 3,608,454 4,169,571 - - - 561,117 561,117 - Water 2,964,843 5,004,185 - 182,226 - 2,221,568 2,221,568 - Wastewater 3,704,292 4,816,146 - 352,496 - 1,464,350 1,464,350 - Airport 839,807 34,459 - 1,425,874 - 620,526 620,526 - Golf 561,156 316,181 - - - (244,975) (244,975) - Solid Waste 2,168,527 3,703,602 - - - 1,535,075 1,535,075 - Research and Technology 119,473 176,524 - - - 57,051 57,051 - Total business-type activities 121,585,957 140,757,839 20,112 2,210,269 - 21,402,263 21,402,263 - Total primary government 144,885,840$ 146,032,670$ 269,161$ 7,628,572$ (12,357,700) 21,402,263 9,044,563 - Component unit: Health System Foundation 356,524$ 700,510$ 3,741,137$ -$ 4,085,123 General revenues: Taxes: Property taxes 4,397,088 - 4,397,088 - Sales taxes 13,475,972 - 13,475,972 - Other taxes 354,971 - 354,971 - State shared revenues 208,033 - 208,033 - Unrestricted investment earnings 162,862 550,280 713,142 - Gain on disposition of capital assets - 175,464 175,464 - Miscellaneous 1,508,487 192,028 1,700,515 - Transfers 2,406,167 (2,406,167) - - Total general revenues and transfers 22,513,580 (1,488,395) 21,025,185 - Change in net position 10,155,880 19,913,868 30,069,748 4,085,123 Net position - beginning, as previously reported 80,092,497 199,011,789 279,104,286 16,895 Adjustment for implementation of GASB 68 1,768,957 7,213,180 8,982,137 - Net position - beginning, after restatement 81,861,454 206,224,969 288,086,423 16,895 Net position - ending 92,017,334$ 226,138,837$ 318,156,171$ 4,102,018$ The notes to the financial statements are an integral part of this statement Net (Expense) Revenue and Changes in Net Position 28 Balance Sheet - Governmental Funds Other Total General Governmental Governmental Fund Funds Funds ASSETS Cash and cash equivalents 5,991,306$ 7,830,206$ 13,821,512$ Investments 2,468,715 1,266,683 3,735,398 Restricted cash and cash equivalents 64,891 815,529 880,420 Receivables, (net of allowances for uncollectibles, if any): Property taxes 2,051 - 2,051 Accounts 256,469 84,115 340,584 Storm drainage fees - 688 688 Special assessments - 1,983,332 1,983,332 Interest 8,982 1,492 10,474 Due from other funds 714,405 704,975 1,419,380 Due from other governments 754,421 785,606 1,540,027 Land held for resale 3,322,442 - 3,322,442 Inventories: Supplies 14,473 - 14,473 Stores - 22,815 22,815 Deposits 355,852 - 355,852 Advance to other funds 1,201,855 - 1,201,855 Prepaid items 434,604 19,296 453,900 Total assets 15,590,466$ 13,514,737$ 29,105,203$ LIABILITIES Accounts payable 479,406$ 862,201$ 1,341,607$ Retainage payable - 113,638 113,638 Due to other funds 81,073 9,445 90,518 Due to other governments 8,170 458,993 467,163 Amount held for others - 54,750 54,750 Accrued wages payable 182,730 27,673 210,403 Advance from other funds - 1,201,855 1,201,855 Unearned revenue - 255,689 255,689 Total liabilities 751,379 2,984,244 3,735,623 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 2,051 1,896,630 1,898,681 Total deferred inflows of resources 2,051 1,896,630 1,898,681 FUND BALANCES Nonspendable 3,606,784 42,111 3,648,895 Restricted 849,383 1,786,616 2,635,999 Committed 3,609,682 5,574,697 9,184,379 Assigned 1,528,508 2,726,334 4,254,842 Unassigned 5,242,679 (1,495,895) 3,746,784 Total fund balances 14,837,036 8,633,863 23,470,899 Total liabilities, deferred inflows of resources, and fund balances 15,590,466$ 13,514,737$ 29,105,203$ City of Brookings December 31, 2015 The notes to the financial statements are an integral part of this statement 29 City of Brookings December 31, 2015 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Position Total fund balances for governmental funds 23,470,899$ Total net position reported for governmental activities in the statement of net position is different because: Net pension asset reported in governmental activities is not an available financial resource and therefore is not reported in the funds.1,615,004 Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Those assets consist of: Land 9,825,454 Construction in progress 1,447,034 Building and improvements, net of $12,558,956 accumulated depreciation 28,806,464 Equipment, net of $9,180,357 accumulated depreciation 7,563,221 Infrastructure, net of $29,291,734 accumulated depreciation 40,886,239 Total capital assets 88,528,412 Assets such as taxes receivable and special assessment receivables are not available to pay for current period expenditures and therefore are deferred in the funds.1,898,681 Pension related deferred outflows are components of the net pension asset and therefore are not reported in the funds.1,848,485 Prepaid bond insurance costs are recorded as an expenditure in the fund statements, whereas in the statement of net position they are shown as deferred charges and amortized.62,346 The deferred loss on refunding is not a current period item and therefore, is not reported in the fund financial statement 561,748 Internal service funds are used by management to charge the costs of certain activities, such as insurance, to individual funds. The assets and liabilities of certain internal service funds are included in governmental activities in the statement of net position.1,716,485 Pension related deferred inflows are components of the net pension asset and therefore are not reported in the funds.(1,442,335) Long-term liabilities, including bonds payable and accrued leave payable are not due and payable in current period and therefore are not reported in the funds. Balances at December 31, 2015 are: Bonds payable (24,006,034) OPEB payable (1,314,302) Compensated absences (834,750) Accrued interest (87,305) Total long-term liabilities (26,242,391) Total net position of governmental activities 92,017,334$ The notes to the financial statements are an integral part of this statement 30 City of Brookings Year Ended December 31, 2015 Statement of Revenues, Expenditures, and Changes in Fund Balances - Governmental Funds Other Total General Governmental Governmental Fund Funds Funds REVENUES Taxes: General property taxes 2,837,775$ 705,494$ 3,543,269$ Storm drainage taxes - 854,955 854,955 General sales and use taxes 6,327,828 7,148,144 13,475,972 Other taxes 1,488 354,971 356,459 Licenses and permits 278,742 - 278,742 Intergovernmental revenue 1,651,723 111,748 1,763,471 Charges for goods and services 402,971 1,978,058 2,381,029 Fines and forfeits 91,707 22,663 114,370 Miscellaneous revenue 1,532,639 878,123 2,410,762 Total revenues 13,124,873 12,054,156 25,179,029 EXPENDITURES Current: General government 2,593,015 4,431 2,597,446 Public safety 3,717,752 650,720 4,368,472 Public works 3,236,848 298,498 3,535,346 Health and welfare 93,827 - 93,827 Culture and recreation 3,489,472 2,372,520 5,861,992 Conservation and development - 1,238,578 1,238,578 Debt service: Principal 151,640 1,740,949 1,892,589 Interest and other charges 6,505 802,277 808,782 Capital outlay 3,289,595 3,543,079 6,832,674 Total expenditures 16,578,654 10,651,052 27,229,706 Excess (deficiency) of revenues over (under) expenditures (3,453,781) 1,403,104 (2,050,677) OTHER FINANCING SOURCES (USES) Transfers in 5,497,052 8,989,363 14,486,415 Transfers out (3,537,246) (8,543,002) (12,080,248) Issuance of long term debt - 187,274 187,274 Sale of capital assets 26,578 - 26,578 Total other financing sources 1,986,384 633,635 2,620,019 Net change in fund balances (1,467,397) 2,036,739 569,342 Fund balances - beginning 16,304,433 6,597,124 22,901,557 Fund balances - ending 14,837,036$ 8,633,863$ 23,470,899$ The notes to the financial statements are an integral part of this statement 31 City of Brookings Year Ended December 31, 2015 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities Net change in fund balances - total governmental funds $569,342 The change in net position reported for governmental activities in the statement of activities is different because: Governmental funds report capital outlays as expenditures. However, in the statement of activities the cost of those assets is allocated over their estimated useful lives and reported as depreciation expense. This is the amount by which capital outlays ($5,365,615) exceeded depreciation ($3,543,301) in the current period.1,822,314 The net effect of various miscellaneous transactions involving capital assets (i.e., sales, trade-ins, and donations) is to increase net position.4,494,583 Governmental funds recognize property taxes and special assessments as revenue in the fiscal period for which they were levied provided they are collected within 45 days, but the statement of activities includes the property taxes and special assessments as revenue in the period for which taxes are levied, exclusive of the availability criteria.1,292,013 Bond proceeds are reported as financing sources in governmental funds and thus contributed to the change in fund balance. In the statement of net position, however, issuing debt increases long-term liabilities and does not effect the statement of activities. Similarly, repayment of principal is an expenditure in the governmental funds but reduces the liability in the statement of net position: New Issuances: Bonds (187,274) Repayments: Bonds 1,740,950 Capital leases 151,640 1,892,590 Under the modified accrual basis of accounting used in governmental funds, expenditures are not recognized for transactions that are not normally paid with expendable available financial resources. In the statement of activities, however, which is presented on the accrual basis, expenses and liabilities are reported regardless of when financial resources are available. In addition, interest on long- term debt is not recognized under the modified accrual basis of accounting until due, rather than as it accrues. The adjustment combines the net changes of these liabilities: Compensated absences 59,198 OPEB liability (144,907) Amortization of bond insurance costs (8,906) Amortization of bond premium and deferred amount on refunding (68,264) Accrued interest (6,727) Combined adjustment (169,606) Some expenses reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. (e.g. pension expense)41,253 Changes in the pension related deferred outflows/inflows are direct components of the net pension asset and are not reflected in the governmental funds.210,944 Internal service funds are used by management to charge costs of certain activities, such as insurance to individual funds. The net revenue of certain internal service funds is reported with governmental activities.189,721 Change in net position of governmental activities 10,155,880$ The notes to the financial statements are an integral part of this statement 32 City of Brookings December 31, 2015 Statement of Net Position - Proprietary Funds Enterprise Funds Other Internal Service Waste-Health Enterprise Fund /Self Electric Water System Telephone Funds Total Insurance ASSETS Current assets: Cash and cash equivalents 12,442,446$ 4,492,022$ 21,343,197$ 20,890,681$ 17,282,537$ 76,450,883$ 5,282,050$ Investments - - 8,954,320 - - 8,954,320 - Receivables, (net of allowances for uncollectibles, if any): Accounts 2,048,376 448,202 10,542,294 2,580,722 939,179 16,558,773 - Unbilled accounts 1,053,231 250,847 - 484,568 259,477 2,048,123 - Interest 15 - 17,118 - - 17,133 - Due from other funds 139,156 3,741 2,225 109,554 61,281 315,957 - Due from other governments - - - - 2,581,942 2,581,942 - Current portion of advances to other funds - 51,725 - - - 51,725 - Inventories: Supplies 1,064,824 26,972 1,136,537 379,124 256,627 2,864,084 - Stores - - - 1,367,946 666,025 2,033,971 - Prepaid expenses 67,470 20,298 280,479 638,247 22,464 1,028,958 - Total current assets 16,815,518 5,293,807 42,276,170 26,450,842 22,069,532 112,905,869 5,282,050 Noncurrent assets: Restricted cash and cash equivalents 799,877 197,678 - 3,141,925 2,057,722 6,197,202 - Advances to other funds - 518,625 - - 182,074 700,699 - Net pension asset 496,313 228,318 3,871,106 1,245,549 473,716 6,315,002 - Investments - other - 9,794 236,820 588,815 758 836,187 - Capital assets: Land 74,983 73,604 1,617,996 331,267 2,672,717 4,770,567 - Buildings and other improvements 47,350,800 32,682,335 39,955,375 71,899,349 53,132,583 245,020,442 - Machinery and equipment 2,486,311 976,453 23,503,983 4,301,268 6,487,059 37,755,074 - Construction in progress 1,659,657 23,650,774 4,821,303 1,950,665 424,909 32,507,308 - Less accumulated depreciation (17,965,439) (15,691,648) (35,964,274) (55,756,458) (23,090,336) (148,468,155) - Total noncurrent assets 34,902,502 42,645,933 38,042,309 27,702,380 42,341,202 185,634,326 - Total assets 51,718,020 47,939,740 80,318,479 54,153,222 64,410,734 298,540,195 5,282,050 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows 577,170 265,516 4,419,698 1,448,468 546,476 7,257,328 - Total assets and deferred outflows of resources 52,295,190$ 48,205,256$ 84,738,177$ 55,601,690$ 64,957,210$ 305,797,523$ 5,282,050$ LIABILITIES Current liabilities: Accounts payable 1,660,969$ 1,242,388$ 6,114,490$ 2,541,004$ 264,550$ 11,823,401$ 248,505$ Retainage payable - - - - 33,563 33,563 - Due to other funds 6,458 73,955 30,072 111,050 1,423,284 1,644,819 - Accrued interest payable 25,722 165,152 78,694 59,127 2,049 330,744 - Accrued wages payable 4,472 1,300 1,225,023 39,161 36,908 1,306,864 - Accrued taxes payable 105,103 224 266,564 193,852 38,197 603,940 - Other current liabilities - - 9,594 - - 9,594 - Customer deposits 65,244 - 34,299 45,078 9,710 154,331 - Current portion of advances from other funds - - - 51,725 - 51,725 - Loans payable - 508,584 - - - 508,584 - Revenue bonds payable 311,415 - - 740,000 - 1,051,415 - Capital lease obligations 321,037 98,879 222,098 1,994,027 71,057 2,707,098 - Compensated absences 64,375 18,317 789,446 158,154 46,965 1,077,257 - Advance payments - - - 577,484 4,560 582,044 - Total current liabilities 2,564,795 2,108,799 8,770,280 6,510,662 1,930,843 21,885,379 248,505 Noncurrent liabilities: Advances from other funds - - - 518,625 182,074 700,699 - Loans payable - 23,555,894 - - - 23,555,894 - Revenue bonds payable 6,185,336 - - 2,580,000 - 8,765,336 - Capital lease obligations 2,344,563 442,860 9,567,745 6,986,408 436,169 19,777,745 - Compensated absences - - 239,000 - 110,832 349,832 - OPEB liability 94,279 41,186 468,575 268,546 134,797 1,007,383 - Amount due under joint operating agreements - - 958,734 - - 958,734 - Accrued landfill closure and postclosure costs - - - - 537,893 537,893 - Total noncurrent liabilities 8,624,178 24,039,940 11,234,054 10,353,579 1,401,765 55,653,516 - Total liabilities 11,188,973 26,148,739 20,004,334 16,864,241 3,332,608 77,538,895 248,505 Deferred inflows of resources: Pension related deferred inflows 427,503 196,664 3,324,147 1,072,863 415,674 5,436,851 - Total liabilities and deferred inflows of resources 11,616,476 26,345,403 23,328,481 17,937,104 3,748,282 82,975,746 248,505 33 City of Brookings December 31, 2015 Statement of Net Position - Proprietary Funds (continued) Enterprise Funds Other Internal Service Waste-Health Enterprise Fund /Self Electric Water System Telephone Funds Total Insurance NET POSITION Net investment in capital assets 24,443,961 17,085,301 23,313,066 10,425,656 38,937,632 114,205,616 - Restricted for: Debt service 799,877 197,678 133,534 3,141,925 52,355 4,325,369 - SDRS pension purposes 645,980 297,170 4,966,657 1,621,154 604,518 8,135,479 - Landfill closure and postclosure - - - - 648,220 648,220 - Unrestricted 14,788,896 4,279,704 32,996,439 22,475,851 20,966,203 95,507,093 5,033,545 Total net position 40,678,714$ 21,859,853$ 61,409,696$ 37,664,586$ 61,208,928$ 222,821,777 5,033,545$ Some amounts reported for business-type activities in the statement of net position are different because certain internal service fund assets and liabilities are included with business-type activities.3,317,060 Net position of business-type activities 226,138,837$ The notes to the financial statements are an integral part of this statement 34 City of Brookings Year Ended December 31, 2015 Statement of Revenues, Expenses, and Changes in Net Position - Proprietary Funds Enterprise Funds Other Internal Service Waste-Health Enterprise Fund /Self Electric Water System Telephone Funds Total Insurance OPERATING REVENUES Charges for goods and services 25,521,050$ 4,646,783$ 60,848,209$ 31,255,442$ 13,212,419$ 135,483,903$ 2,819,132$ Miscellaneous 820,271 169,363 1,034,563 3,057,636 192,103 5,273,936 - Total operating revenues 26,341,321 4,816,146 61,882,772 34,313,078 13,404,522 140,757,839 2,819,132 OPERATING EXPENSES Personal services 2,117,696 1,226,180 28,975,903 6,569,613 2,804,122 41,693,514 - Other current expenses 18,776,452 1,404,693 20,593,704 15,526,679 2,659,389 58,960,917 318,209 Cost of goods sold - - - 4,395,814 3,031,045 7,426,859 - Insurance claims and expenses - - - - - - 2,014,836 Amortization - - - 119,084 - 119,084 - Depreciation 1,419,277 858,081 3,441,349 3,228,385 1,336,542 10,283,634 - Total operating expenses 22,313,425 3,488,954 53,010,956 29,839,575 9,831,098 118,484,008 2,333,045 Operating income 4,027,896 1,327,192 8,871,816 4,473,503 3,573,424 22,273,831 486,087 NONOPERATING REVENUES (EXPENSES) Interest income 18,053 36,781 285,821 159,141 40,636 540,432 9,847 Miscellaneous income (loss)9,870 - (704,694) 5,118 85,989 (603,717) - Contributions and donations - - 20,112 - - 20,112 - Gain (loss) on disposition of capital assets 50,476 - (56,897) (37,880) (342,719) (387,020) - Payments under joint operating agreement - - 91,051 - - 91,051 - Interest expense and fiscal charges (387,346) (240,615) (597,462) (878,047) (27,666) (2,131,136) - Total nonoperating revenues (expenses)(308,947) (203,834) (962,069) (751,668) (243,760) (2,470,278) 9,847 Income before capital contributions and transfers 3,718,949 1,123,358 7,909,747 3,721,835 3,329,664 19,803,553 495,934 Capital contributions 156,718 352,496 92,955 - 1,608,100 2,210,269 - Transfers in - - - - 773,833 773,833 - Transfers out (1,955,000) - - (200,000) (1,025,000) (3,180,000) - Change in net position 1,920,667 1,475,854 8,002,702 3,521,835 4,686,597 19,607,655 495,934 Net position - beginning, as previously reported 38,182,708 20,119,326 49,011,464 32,698,878 55,988,566 4,537,611 Adjustment for implementation of GASB 68 575,339 264,673 4,395,530 1,443,873 533,765 - Net position - beginning, after restatement 38,758,047 20,383,999 53,406,994 34,142,751 56,522,331 4,537,611 Net position - ending 40,678,714$ 21,859,853$ 61,409,696$ 37,664,586$ 61,208,928$ 5,033,545$ Some amounts reported for business-type activities in the statement of activities are different because the net revenue (expense) of certain internal service funds is reported with the business-type activities.306,213 Change in net position of business-type activities 19,913,868$ The notes to the financial statements are an integral part of this statement 35 City of Brookings Year Ended December 31, 2015 Statement of Cash Flows - Proprietary Funds Enterprise Funds Other Internal Service Waste-Health Enterprise Fund /Self Electric Water System Telephone Funds Total Insurance CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 25,722,081$ 2,552,273$ 59,793,733$ 28,308,165$ 12,939,040$ 129,315,292$ - $ Internal activity-payments from other funds 1,404,713 93,453 - 1,282,763 418,561 3,199,490 2,820,433 Operating receipts from customers pledged for debt retirement 956,460 2,358,828 - 6,965,914 - 10,281,202 - Other receipts - - 1,072,633 - - 1,072,633 - Payments to suppliers (20,322,184) (1,357,524) (22,166,152) (21,132,219) (5,870,088) (70,848,167) (2,371,426) Payments to employees (2,183,044) (1,260,459) (29,412,352) (6,776,573) (2,863,650) (42,496,078) - Internal activity-payments to other funds - - - - (231,359) (231,359) - Net cash provided by operating activities 5,578,026 2,386,571 9,287,862 8,648,050 4,392,504 30,293,013 449,007 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in - - - - 773,833 773,833 - Transfers out (1,955,000) - - (200,000) (1,025,000) (3,180,000) - Operating grants - - (900) - - (900) - Contributions to foundation - - (228,215) - - (228,215) - Interfund payments - - - - (161,270) (161,270) - Principal receipts (payments) on interfund advances/loans - 49,262 - (49,262) - - - Interest receipts (payments) on interfund advances/loans - 30,981 - (30,981) - - - Net cash provided by (used in) noncapital financing activities (1,955,000) 80,243 (229,115) (280,243) (412,437) (2,796,552) - CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (2,352,527) (6,152,726) (4,955,522) (2,540,454) (2,670,019) (18,671,248) - Proceeds from long-term debt - 3,836,171 280,000 2,000 - 4,118,171 - Proceeds from sale of capital assets 51,600 - - - 150,971 202,571 - Capital grants - - 92,955 - 1,556,037 1,648,992 - Principal payments on debt (613,235) (459,363) (214,896) (2,583,323) (67,542) (3,938,359) - Interest payments on debt (388,490) (687,640) (319,240) (859,223) (27,941) (2,282,534) - Payment of financing costs - - (280,000) - - (280,000) - Net cash used in capital and related financing activities (3,302,652) (3,463,558) (5,396,703) (5,981,000) (1,058,494) (19,202,407) - CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments and certificates of deposit 115,032 - 8,001,440 - 1,000,000 9,116,472 - Purchase of investments and certificates of deposit (109,716) - (1,000,000) - - (1,109,716) - Cash payment to joint venture partner - - (575,848) - - (575,848) - Investment income 12,303 5,685 190,342 221,211 35,504 465,045 9,847 Net cash provided by investing activities 17,619 5,685 6,615,934 221,211 1,035,504 7,895,953 9,847 Net increase (decrease) in cash and cash equivalents 337,993 (991,059) 10,277,978 2,608,018 3,957,077 16,190,007 458,854 Balances - beginning of the year 12,904,330 5,680,759 11,065,219 21,424,588 15,383,182 66,458,078 4,823,196 Balances - end of the year 13,242,323 4,689,700 21,343,197 24,032,606 19,340,259 82,648,085 5,282,050 Less restricted cash and cash equivalents (799,877) (197,678) - (3,141,925) (2,057,722) (6,197,202) - Cash and cash equivalents (current) per statement of net position 12,442,446$ 4,492,022$ 21,343,197$ 20,890,681$ 17,282,537$ 76,450,883$ 5,282,050$ The notes to the financial statements are an integral part of this statement 36 City of Brookings Year Ended December 31, 2015 Statement of Cash Flows - Proprietary Funds (continued) Enterprise Funds Other Internal Service Waste-Health Enterprise Fund /Self Electric Water System Telephone Funds Total Insurance Reconciliation of operating income to net cash provided by operating activities: Operating income 4,027,896$ 1,327,192$ 8,871,816$ 4,473,503$ 3,573,424$ 22,273,831$ 486,087$ Miscellaneous income (loss)9,870 - - 4,201 85,989 100,060 - Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation 1,419,277 858,081 3,441,349 3,228,385 1,336,542 10,283,634 - Amortization - - - 119,084 - 119,084 - Impairment of investment - - - 62,415 - 62,415 - Landfill postclosure cost - - - - (185,481) (185,481) - (Increase) decrease in: Receivables 98,267 (20,507) (1,659,361) 280,626 (187,329) (1,488,304) 1,301 Inventories 55,830 28,071 (150,638) (96,671) 113,299 (50,109) - Prepaid expenses 3,619 (954) 32,063 46,232 11,515 92,475 - Deferred outflows related to pensions (167,422) (77,019) (1,352,098) (420,163) (169,943) (2,186,645) - Net pension asset 383,919 176,615 2,829,421 963,486 341,885 4,695,326 Increase (decrease) in: Deferred inflows related to pensions (287,138) (132,093) (2,048,450) (720,604) (242,695) (3,430,980) - Accounts and other payables 18,405 228,966 (810,918) 651,464 (295,927) (208,010) (38,381) Accrued wages payable 1,303 (1,206) 137,331 1,450 6,554 145,432 - Accrued leave liabilities 1,462 (1,739) (72,253) (5,676) 6,033 (72,173) - Accrued OPEB payable 2,529 1,164 69,600 6,345 (1,362) 78,276 - Other payables 10,209 - - 53,973 - 64,182 - Net cash provided by operating activities 5,578,026$ 2,386,571$ 9,287,862$ 8,648,050$ 4,392,504$ 30,293,013$ 449,007$ NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Capital asset additions from contributed capital 156,718$ 352,496$ -$ -$ 1,589,100$ 2,098,314$ -$ Accounts payable for capital assets - 1,015,042 831,474 586,349 107,835 2,540,700 - The notes to the financial statements are an integral part of this statement 37 City of Brookings December 31, 2015 Statement of Net Position - Fiduciary Funds Agency Funds ASSETS Cash and cash equivalents 101,919$ Total assets 101,919 LIABILITIES Amount held for others 101,919 Total liabilities 101,919 NET POSITION -$ 38 City of Brookings December 31, 2015 Notes to the Financial Statements 1. Summary of Significant Accounting Policies a. Financial Reporting Entity: The reporting entity of the City of Brookings, consists of the primary government (which includes all of the funds, organizations, institutions, agencies, departments, and offices that make up the legal entity, plus those funds for which the primary government has a fiduciary responsibility, even though those fiduciary funds may represent organizations that do not meet the criteria for inclusion in the financial reporting entity); those organizations for which the primary government is financially accountable; and other organizations for which the nature and significance of their relationship with the primary government are such that their exclusion would cause the financial reporting entity’s financial statements to be misleading or incomplete. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City is financially accountable if its Governing Board/City Council appoints a voting majority of another organization’s governing body and it has the ability to impose its will on that organization, or there is a potential for that organization to provide specific financial benefits to, or impose specific financial burdens on, the City (primary government). The City may also be financially accountable for another organization if that organization is fiscally dependent on the City. The Brookings Health System Foundation is reported as a discretely-presented component unit. Although the City does not control the timing or amount of receipts from the Foundation, the majority of the resources, or income thereon, are restricted to the activities of the City by the donors. Because these restricted resources held by the Foundation are primarily to be used by, or for the benefit of the City, the Foundation is considered a component unit. During the year ended December 31, 2015, the Foundation distributed approximately $96,000 to the City to fund the operations of the Health System and its capital projects. The Foundation is a private not-for-profit organization that reports under the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC), including ASC Topic 958, Not-for-Profit Entities. As such, certain revenue recognition criteria and presentation features are different from GASB revenue recognition criteria and presentation features. No modifications have been made to the Foundation's statements in the City's financial reporting entity for these differences. The Foundation has a December 31st year end. b. Basis of Presentation: Government-wide Financial Statements: The Statement of Net Position and Statement of Activities display information about the reporting entity as a whole. They include all funds of the reporting entity except for fiduciary funds. The statements distinguish between governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues, and other non-exchange revenues. Business-type activities are financed in whole or in part by fees charged to external parties for goods or services. The statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Program revenues include (a) charges paid by recipients of goods and services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. 39 City of Brookings December 31, 2015 Notes to the Financial Statements Fund Financial Statements: Fund financial statements of the reporting entity are organized into funds, each of which is considered to be a separate accounting entity. Each fund is accounted for by providing a separate set of self-balancing accounts that constitute its assets and deferred outflows, liabilities and deferred inflows, fund equity, revenues, and expenditures/expenses. Funds are organized into three major categories: governmental, proprietary, and fiduciary. An emphasis is placed on major funds within the governmental and proprietary categories. A fund is considered major if it is the primary operating fund of the City or it meets the following criteria: 1. Total assets and deferred outflows, liabilities and deferred inflows, revenues, or expenditures/expenses of the individual governmental or enterprise funds are at least 10 percent of the corresponding total for all funds of that category or type, and 2. Total assets and deferred outflows, liabilities and deferred inflows, revenues, or expenditures/expenses of the individual governmental or enterprise fund are at least 5 percent of the corresponding total for all governmental and enterprise funds combined, or 3. Management has elected to classify one or more governmental or enterprise funds as major for consistency in reporting from year to year, or because of public interest in the fund’s operations. The funds of the City financial reporting entity are described below: Governmental Funds: General Fund – the General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. The General Fund is always considered to be a major fund, and this is the only major governmental fund. Additionally, the City reports the following nonmajor governmental funds: Special Revenue Funds – special revenue funds are used to account for the proceeds of specific revenue sources (other than trusts for individuals, private organizations, or other governments or for major capital projects) that are legally restricted or committed to expenditures for specified purposes. The special revenue funds are as follows: 25% Sales and Use Tax, 75% Sales and Use Tax, Enhanced 911, Swiftel Center, Library Fines, Special Assessment, Storm Drainage, Bed and Booze Tax, and Business Improvement District (BID) Fee. Debt Service Funds – debt service funds are used to account for financial resources accumulated and payments made for principal and interest on long-term debt of the governmental funds. TIF -1 Innovation Campus Fund – to account for the financial resources accumulated for repayment of the State Revolving Fund Loan. TIF-3 Valley View Fund – to account for the financial resources accumulated for repayment of a South Dakota Housing Authority Bond (Guaranteed by Developer). TIF-4 Sieler Fund – to account for the financial resources accumulated for repayment of a Tax Increment Note (Guaranteed by Developer). TIF-5 32nd Ave Fund - to account for the financial resources accumulated for repayment of a Tax Revenue Bond. 40 City of Brookings December 31, 2015 Notes to the Financial Statements TIF-6 Digester Fund – to account for the financial resources accumulated for repayment of City funds expended on this project. Capital Projects Funds – capital projects funds are used to account for financial resources to be used for the acquisition or construction of major capital facilities and other capital assets (other than those financed by proprietary funds or trust funds for individuals, private organizations, or other governments). Dakota Nature Park Fund – to account for financial resources used for the development and construction of the new nature park located on the grounds of the old landfill. Gateway Project Fund – to account for financial resources used for the construction of new signs and improvements to the entry ways of the City. TIF-6 Digester Fund – to account for financial resources used for the design and construction of a wastewater digester for the Bel Brands cheese plant. TIF-7 South Main Fund - to account for the financial resources used for the design and construction of new streets and infrastructure surrounding the new grade school. Street Maintenance Shop - to account for the financial resources used for the design and construction of a new street maintenance shop. Proprietary Funds: Enterprise Funds – enterprise funds are used to account for operations (a) that are financed and operated in a manner similar to private business enterprises, where the intent of the governing body is that the costs (expenses, including depreciation) of providing goods or services to the general public on a continuing basis be financed or recovered primarily through user charges; or (b) where the governing body has decided that periodic determination of revenues earned, expenses incurred, and/or net income is appropriate for capital maintenance, public policy, management control, accountability, or other purposes. The City reports the following major enterprise funds: Electric Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal electrical system and related facilities. Wastewater Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal sanitary sewer system and related facilities. Health System Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal hospital and nursing home and related facilities. Telephone Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal telephone system and related services. Additionally, the City reports the following nonmajor enterprise funds: Liquor Fund – financed primarily by user charges, this fund accounts for the operation of the municipal off- sale establishment. Water Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal waterworks system and related facilities. 41 City of Brookings December 31, 2015 Notes to the Financial Statements Airport Fund – financed primarily by user charges, this fund accounts for the construction and operations of the municipal airport and related facilities. Golf Fund - financed primarily by user charges, this fund accounts for the construction and operations of the municipal golf course and related facilities. Solid Waste Fund – financed primarily by user charges, this fund accounts for the construction and operation of the municipal solid waste system and related facilities. Research and Technology Center Fund – financed primarily by user charges, this fund accounts for the rental of a building that houses new start-up entities and was originally part of the Brookings Event Center, Inc. Internal Service Funds – internal service funds are used to account for the financing of goods or services provided by one department or agency to other departments or agencies of the primary government. The City maintains one internal service fund, the self insurance fund, which administers insurance claims for other funds on a cost-reimbursement basis. Internal Service funds are never considered to be major funds. Fiduciary Funds: Fiduciary funds are never considered to be major funds: Agency Funds - agency funds are custodial in nature (assets equal liabilities) and do not involve measurement of results of operations. Agency funds are used to account for the accumulation and distribution of employee Section 125 cafeteria plan transactions and various pass-through funds. c. Measurement Focus and Basis of Accounting: Measurement focus is a term used to describe “how” transactions are recorded within the various financial statements. Basis of accounting refers to “when” revenues and expenditures or expenses are recognized in the accounts and reported in the financial statements, regardless of the measurement focus. Measurement Focus: Government-wide Financial Statements: In the government-wide Statement of Net Position and Statement of Activities, both governmental and business- type activities are presented using the “economic resources” measurement focus, applied on the accrual basis of accounting. Fund Financial Statements: In the fund financial statements, the “current financial resources” measurement focus and the modified accrual basis of accounting are applied to governmental fund types, while the “economic resources” measurement focus and the accrual basis of accounting are applied to the proprietary and fiduciary type funds. Basis of Accounting: Government-wide Financial Statements: In the government-wide Statement of Net Position and Statement of Activities, governmental and business-type activities are presented using the accrual basis of accounting. Under the accrual basis of accounting, revenues and related assets are recorded when earned (usually when the right to receive cash vests); and, expenses and 42 City of Brookings December 31, 2015 Notes to the Financial Statements related liabilities are recorded when an obligation is incurred (usually when the obligation to pay cash in the future vests). Fund Financial Statements: All governmental fund types are accounted for using the modified accrual basis of accounting. Their revenues, including property taxes, are recognized when they become measurable and available. “Available” means resources are collected or are to be collected soon enough after the end of the fiscal year that they can be used to pay the bills of the current period. The accrual period does not exceed one bill-paying cycle, and for the City of Brookings, South Dakota, the length of that cycle is 45 days. The revenues which are accrued at December 31, 2015 are property taxes, storm drainage fees, and sales taxes. Under the modified accrual basis of accounting, receivables may be measurable but not available. “Available” means collectible within the current period or soon enough thereafter to be used to pay liabilities of the current period. Reported deferred revenues, deferred inflows of resources, are those where asset recognition criteria have been met but for which revenue recognition criteria have not been met. Expenditures are generally recognized when the related fund liability is incurred. Exceptions to this general rule include principal and interest on general long-term debt which are recognized when due. All proprietary and fiduciary fund types are accounted for using the accrual basis of accounting. Their revenues are recognized when they are earned, and their expenses are recognized when they are incurred. d. Interfund Eliminations and Reclassifications: Government-wide Financial Statements: In the process of aggregating data for the government-wide financial statements, some amounts reported as interfund activity and balances in the fund financial statements have been eliminated or reclassified, as follows: 1. In order to minimize the grossing-up effect on assets and liabilities within the governmental and business-type activities columns of the primary government, amounts reported as interfund receivables and payables have been eliminated in the governmental and business-type activities columns, except for the net, residual amounts due between governmental and business-type activities, which are presented as Internal Balances. 2. In order to minimize the doubling-up effect on internal service fund activity, certain “centralized expenses” including an administrative overhead component, are charged as direct expenses to funds or programs in order to show all expenses that are associated with a service, program, department, or fund. When expenses are charged, in this manner, expense reductions occur in the Internal Service Funds, so that expenses are reported only in the function to which they relate. Fund Financial Statements: Noncurrent portions of long-term interfund receivables (reported in “Advance to” asset accounts) are equally offset by a nonspendable fund balance account which indicates that they do not constitute “available spendable resources” since they are not a component of net current position. Current portions of interfund receivables (reported in “Due from” asset accounts) are considered “available spendable resources.” e. Property Taxes: Property tax levies are established on or before October 1 of each year. Taxes are recorded as receivable, levied, and attached as an enforceable lien on property as of January 1 of each year. Taxes are payable in two installments on or before April 30 and October 31 of that year. 43 City of Brookings December 31, 2015 Notes to the Financial Statements The City is permitted by several state statutes to levy varying amounts of taxes per $1,000 of taxable valuation on taxable real property in the City. f. Inventories and Prepaid Items: Inventory in the General Fund and Swiftel Center Fund consists of expendable supplies held for consumption. Supply inventories are recorded at cost using the first-in, first-out (FIFO) method. Inventory within the proprietary funds is generally valued at average cost. Inventories are recorded as an asset at the time of purchase, and charged to expenditures or expenses when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both the government-wide and fund financial statements. The prepayments are charged to expenditures over the period of their economic benefit. Amounts of governmental fund inventories and vendor prepaid items are offset by a nonspendable fund balance account to indicate that they do not represent “available spendable resources.” g. Capital Assets: Capital assets include land, buildings, machinery and equipment, and all other tangible or intangible assets that are used in operations and that have initial useful lives extending beyond a single reporting period. Infrastructure assets are long-lived capital assets that normally are stationary in nature and normally can be preserved for a significantly greater number of years than most capital assets. The accounting treatment over capital assets depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. Government-Wide Statements Capital assets are recorded at historical cost, or estimated cost, where actual cost could not be determined. Donated capital assets are valued at their estimated fair value on the date donated. Reported cost values include ancillary charges necessary to place the asset into its intended location and condition for use. Subsequent to initial capitalization, improvements or betterments that are significant and which extend the useful life of the capital asset are also capitalized. Infrastructure assets used in general government operations, consisting of certain improvements other than buildings, including roads, bridges, sidewalks, drainage systems, and lighting systems, acquired prior to January 1, 1980, were not required to be capitalized by the City. Infrastructure assets acquired since January 1, 1980 are recorded at cost. For governmental activities capital assets, construction-period interest is not capitalized, in accordance with U.S. generally accepted accounting principles; while for capital assets used in business-type activities/proprietary fund operations, construction period interest is included as part of the capitalization value of the assets constructed in accordance with U.S. generally accepted accounting principles. Depreciation of all exhaustible capital assets is recorded as an allocated expense in the government-wide Statement of Activities, except for that portion related to common use assets for which allocation would be unduly complex, and which is reported as unallocated depreciation with net capital assets reflected in the Statement of Net Position. Accumulated depreciation is reported on the government-wide Statement of Net Position and on each proprietary fund’s Statement of Net Position. 44 City of Brookings December 31, 2015 Notes to the Financial Statements Capitalization thresholds , depreciation methods, and estimated useful lives of capital assets reported in the government-wide statements and proprietary funds are as follows: Land is an inexhaustible capital asset and is not depreciated. Fund Financial Statements In the fund financial statements, capital assets used in governmental fund operations are accounted for as capital outlay expenditures of the appropriate governmental fund upon acquisition. Capital assets used in proprietary fund operations are accounted for on the accrual basis, the same as in the government-wide statements. h. Long-Term Liabilities: The accounting treatment of long-term liabilities depends on whether the assets are used in governmental fund operations or proprietary fund operations and whether they are reported in the government-wide or fund financial statements. All long-term liabilities to be repaid from governmental and business-type resources are reported as liabilities in the government-wide statements. The long-term liabilities primarily consist of revenue bonds, financing (capital acquisition) leases and compensated absences. In the governmental fund financial statements, debt proceeds are reported as revenues (other financing sources), while payments of principal and interest are reported as expenditures when they become due. The accounting for proprietary fund long-term debt is on the accrual basis, the same in the fund statements as in the government-wide statements. i. Pensions For purposes of measuring the net pension asset, deferred outflows of resources and deferred inflows of resources related to pensions, and pension revenue and expense, information about the fiduciary net position of the South Dakota Retirement System (SDRS) and additions to/deductions from SDRS’s fiduciary net position have been determined on the same basis as they are reported by SDRS. City contributions and the net pension asset are recognized on an accrual basis of accounting. j. Deferred Inflows and Deferred Outflows of Resources: In addition to assets, the statement of net position reports a separate section for deferred outflows of resources. Deferred outflows of resources represent consumption of net position that applies to future period or periods. These items will not be recognized as an outflow of resources until the applicable future period. The City's Capitalization Depreciation Estimated Threshold Method Useful Life Land and land rights All N/A N/A Improvements other than buildings $5,000 Straight-line 10-25 yrs. Buildings 5,000 Straight-line 40-99 yrs. Machinery and equipment 5,000 Straight-line 3-25 yrs. Infrastructure 5,000 Straight-line 25-50 yrs. Utility property and improvements 5,000 Straight-line 10-50 yrs. 45 City of Brookings December 31, 2015 Notes to the Financial Statements deferred outflows includes the following: loss on debt refunding, represents the difference in the carrying value of refunded debt and its reacquisition price, which will be amortized into interest expense over the shorter of the life of the refunded or refunding debt; unrecognized items not yet charged to pension expense and contributions from the employer after the measurement date but before the end of the employer's reporting period. In addition to liabilities, the governmental funds balance sheet reports a separate section for deferred inflows of resources. Deferred inflows of resources represent acquisitions of net position that applies to a future period or periods. These items will not be recognized as an inflow of resources until the applicable future period. The City's deferred inflows included the following: unavailable revenues, represent certain receivables recorded by the City which are deferred as they are not received with the City's measurable period of 45 days, and are not considered measurable and available under the modified accrual basis of accounting; unrecognized items having not yet reduced pension expense. k. Program Revenues: Program revenues derive directly from the program itself or from parties other than the City’s taxpayers or citizenry, as a whole. Program revenues are classified into three categories, as follows: 1. Charges for services – these arise from charges to customers, applicants, or others who purchase, use, or directly benefit from the goods, services, or privileges provided, or are otherwise directly affected by the services. 2. Program-specific operating grants and contributions – these arise from mandatory and voluntary non- exchange transactions with other governments, organizations, or individuals that are restricted for use in a particular program. 3. Program-specific capital grants and contributions – these arise from mandatory and voluntary non- exchange transactions with other governments, organizations, or individuals that are restricted for the acquisition of capital assets for use in a particular program. l. Proprietary Funds Revenue and Expense Classifications: Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the enterprise funds and of the government’s internal service funds are charges to customers for goods and services. Operating expenses include the cost of sales and service, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. m. Equity Classifications: Government-wide Statements: Equity is classified as net position and is displayed in three components: 1. Net investment in capital assets – consists of capital assets, including restricted capital assets, net of accumulated depreciation (if applicable) and reduced by the outstanding balances of any bonds, mortgages, notes, or other borrowings that are attributable to the acquisition, construction, or improvement of those assets. Deferred outflows of resources or deferred inflows of resources that are attributable to the acquisition, construction, or improvements of those assets or related debt also should be included in this component of net position. If there are unspent related debt proceeds at year-end, the portion of the debt 46 City of Brookings December 31, 2015 Notes to the Financial Statements attributable to the unspent proceeds is not included in the calculation of net investment in capital assets. 2. Restricted – consists of restricted assets and deferred outflows of resources, reduced by liabilities and deferred inflows of resources related to those assets, with constraints placed on their use either by (a) external groups such as creditors, grantors, contributors, or laws and regulations of other governments; or (b) law through constitutional provisions or enabling legislation. 3. Unrestricted – consists of the assets, deferred outflows of resources, liabilities, and deferred inflows of resources that are not included in the net investment in capital assets or the restricted component of net position. Fund Financial Statements: Governmental fund equity is classified as fund balance, and may distinguish between “Nonspendable”, “Restricted”, “Committed”, “Assigned”, and “Unassigned” components. Proprietary fund equity is classified the same as in the government-wide financial statements. Agency funds have no fund equity. Fund balance classification policies and procedures: In accordance with Government Accounting Standards Board (GASB) No. 54, Fund Balance Reporting and Governmental Fund-Type Definitions, the City classifies governmental fund balances as follows: Nonspendable – includes fund balance amounts that cannot be spent either because it is not in spendable form or because of legal or contractual constraints. Restricted – includes fund balance amounts that are constrained for specific purposes which are externally imposed by providers, such as creditors or amounts constrained due to constitutional provisions or enabling legislation. Committed – includes fund balance amounts that are constrained for specific purposes that are internally imposed by the government through formal action of the highest level of decision making authority and does not lapse at year-end. Assigned – includes fund balance amounts that are intended to be used for specific purposes that are neither considered restricted or committed. City Council’s Governance and Ends policy gives the City Manager authority to assign fund balance. Unassigned – includes positive fund balance within the General fund which has not been classified within the above mentioned categories and negative fund balance in other governmental funds. The City Council committed the following fund balances through the Governance and Ends policy: o Stabilization arrangement where a minimum of 10 percent of the 2012 General Fund beginning adopted appropriations should be established as committed fund balance and maintained for use in meeting unanticipated needs and or emergencies, such as an urgent event that affects the safety of the Citizens of the City of Brookings, City of Brookings employees, and Brookings Students. The urgent event could be a blizzard, tornado, fire, flood, terrorist attack, bombing, explosions, train derailments, straight-line winds/severe thunderstorm, hazardous materials incident, water contamination, failure of electrical grid, mass casualty/fatality or health epidemic. Specific unanticipated needs and/or emergencies are determined by the City’s highest level of decision-making authority as use of this fund balance must be approved by a two-thirds vote of the City Council. Additionally, the City’s policy prohibits the use of this fund balance for more than two consecutive years. o 5 percent of the of the annual revenue of the 75% - 2nd Penny Sales and Use Tax should be committed for future economic development opportunities until a one million dollar balance is achieved. 47 City of Brookings December 31, 2015 Notes to the Financial Statements o One-time sales of land will be added to the committed fund balance for future land purchases for industrial and economic development. The City Council committed the following fund balances through City ordinances: o Ordinance No. 03-10 commits use of 25% Sales tax for lease purchase agreements of realty, land acquisition, the programmed chip sealing street maintenance, specialized equipment, the transfer to the E-911 fund, purchasing firefighting vehicles, public safety and equipment, and debt retirement related thereto. o Ordinance No. 03-10 commits use of 75% Sales tax for construction and financing of public improvements. o Ordinance No. 21-10 commits funds to finance public storm drainage infrastructure improvements. o Ordinance No 23-11 commits funds for retail economic development investment. o Ordinance No 02-12 commits BID Fee funds to promotion and marketing of the City. n. Application of Net Position and Fund Balances: It is the City’s policy to first use restricted resources, prior to the use of unrestricted resources, when an expense is incurred for purposes for which both restricted and unrestricted net positions are available. When expenditures are incurred for purposes for which amounts in any of the unrestricted fund balance classification can be used, committed amounts should be reduced first, followed by assigned and the unassigned amounts. o. Cash and Cash Equivalents and Investments: Cash and cash equivalents include cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. The City pools the cash resources of its funds for cash management purposes. The proprietary funds essentially have access to the entire amount of their cash resources on demand. Accordingly, each proprietary fund’s equity in the cash management pool is considered to be cash and cash equivalents for the purpose of the Statement of Cash Flows. Interest is allocated to the funds on the basis of average cash balances. All investments are carried at fair value, which is determined based on quoted market prices. Investment income consists of interest received and the net change in fair value of investments. p. 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 the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses/expenditures during the reporting period. Actual results could differ materially from those estimates. q. Health System Net Patient and Resident Service Revenue and Receivables: The Health System has agreements with third-party payors that provide for payments to the Health System at amounts different from its established rates. Payment arrangements include prospectively determined rates, reimbursed costs, discounted charges, and per diem payments. Net patient and resident service revenue is reported at the estimated net realizable amounts from patients, residents, third-party payors, and others for services rendered, including estimated retroactive adjustments under reimbursement agreements with third- party payors. Retroactive adjustments are accrued on an estimated basis in the period the related services are rendered and adjusted in future periods as final settlements are determined. 48 City of Brookings December 31, 2015 Notes to the Financial Statements The carrying amount of patient and resident receivables is reduced by a valuation allowance that reflects management’s best estimate of amounts that will not be collected from patients and residents and third-party payors. Management reviews patient and resident receivables by payor class and applies percentages to determine estimated amounts that will not be collected from third parties under contractual agreements and amounts that will not be collected from patients and residents due to bad debts. Management considers historical write off and recovery information in determining the estimated bad debt provisions. Management also reviews accounts to determine if classification as charity care is appropriate. As discussed previously, the Health System has agreements with third-party payors that provide for payments to the Health System at amounts different from its established rates. A summary of the payment arrangements with major third-party payors follows: Hospital Medicare During 2009, the Health System began participation in the Centers for Medicare and Medicaid Services (CMS) Rural Community Hospital Demonstration Program as mandated under Section 410A of the Medicare Modernization Act. For inpatient services provided to patients after January 1, 2009, the Health System is reimbursed on a cost-based methodology subject to retrospective settlement within prescribed limits compared to their initial year base costs under the program. The RCHD program concluded on September 30, 2015 and has yet to be extended. Beginning October 1, 2015, inpatient acute services rendered to Hospital Medicare program beneficiaries were paid at prospectively determined rates per discharge. These rates varied according to a patient classification system that was based on clinical, diagnostic, and other factors. The Health System is reimbursed for cost reimbursable items at a tentative rate with final settlement determined after submission of annual cost reports by the Health System and audits thereof by the Medicare Administrative Contractor. The Health System's Medicare cost reports have been audited by the Medicare Administrative Contractor through the year ended December 31, 2013. Hospital Medicaid Inpatient acute care services rendered to Hospital Medicaid program beneficiaries are paid at prospectively determined rates per discharge. These rates vary according to a patient classification system that is based on clinical, diagnostic, and other factors. Outpatient services rendered to Medicaid program beneficiaries are reimbursed under a reimbursement methodology based on historical cost. Retroactive settlements are not carried out by the Medicaid program. Hospital Blue Cross Services rendered to Hospital Blue Cross subscribers are reimbursed under a prospectively determined methodology. Nursing Home The Health System is reimbursed for resident services at established billing rates which are determined on a cost-related basis subject to certain limitations as prescribed by South Dakota Department of Social Services regulations. These rates are subject to retroactive adjustments by field audit. The Health System also participates in the Medicare program for which payments for resident services is made on a prospectively determined per diem rate which varies based on a case-mix resident classification system. The Health System has also entered into payments with certain commercial insurance carriers and other organizations. The basis for payment to the Health System under these agreements includes prospectively determined rates per discharge and discounts from established charges. Concentration of gross revenues by major payor accounted for the following percentages of the Health System's patient and resident service revenues for the year ended 2015: 49 City of Brookings December 31, 2015 Notes to the Financial Statements Laws and regulations governing the Medicare, Medicaid, and other programs are extremely complex and subject to interpretation. As a result, there is at least a reasonable possibility that recorded estimates will change by a material amount in the near term. The net patient service revenue for the year ended December 31, 2015 increased by approximately $248,000 due to removal of allowances previously estimated that are no longer necessary as a result of final settlements and year that are no longer likely subject to audits, review, and investigations. Charity Care The Health System provides care to patients and residents who meet certain criteria under its charity care policy without charge or at amounts less than its established rates. Because the Health System does not pursue collection of amounts determined to qualify as charity care, they are not reported as patient and resident service revenue. 2. DEFICIT FUND BALANCE The following funds had a fund balance deficit as of December 31, 2015: Swiftel Center Fund (Special Revenue Fund) had a negative balance of $135,766 due to a significant purchase of a capital asset in a prior year, and payment of prior years taxes owed following a tax audit. Because of this, the fund level statement reflected the large expenditure without any offsetting revenue thereby having a negative impact on fund balance. The TIF-1 Innovation Campus Fund (Debt Service Fund) had a negative balance of $1,157,179 because of a large advance to the capital project fund which will be paid off with future tax increment revenue. The TIF-7 S. Main Fund (Capital Project Fund) had a negative balance of $52,760 because the cash for the portion of the project attributable to the City wasn't budgeted to be transferred until 2016. 3. DEPOSITS AND INVESTMENTS The City follows the practice of aggregating the cash and investments of various funds to maximize cash management efficiency and returns. Various restrictions on deposits and investments are imposed by statutes. These restrictions are summarized below: Deposits - The City’s cash deposits are made in qualified public depositories as defined by South Dakota Codified Law (SDCL) 4-6A-1, 7-20-1, 7-20-1.1 and 9-22-6.2, and may be in the form of demand or time deposits. Qualified depositories are required by SDCL 4-6A-3 to maintain at all times, segregated from their other assets, eligible collateral having a value equal to at least 100 percent of the public deposit accounts which exceed deposit insurance such as the Federal Deposit Insurance Corporation (FDIC) and National Credit Union Share Insurance (NCUA). In lieu of pledging eligible securities, a qualified public depository may furnish irrevocable standby letters of credit issued by Federal Home Loan Banks accompanied by written evidence of that bank's public debt rating which may not be less than "AA" or a qualified public depository may furnish a corporate surety bond of a corporation authorized to do business in South Dakota. Medicare 41% Medicaid 7% Blue Cross 25% Other 27% Total 100% 50 City of Brookings December 31, 2015 Notes to the Financial Statements Investments - In General, SDCL 4-5-6 permits City funds to be invested in (a) securities of the United States and securities guaranteed by the United States government either directly or indirectly; or (b) repurchase agreements fully collateralized by securities described in (a); or in (c) shares of an open-end, no-load fund administered by an investment company whose investments are in securities described in (a) and repurchase agreements described in (b). Also, SDCL 4-5-9 requires that investments shall be in the physical custody of the political subdivision or may be deposited in a safekeeping account with any bank or trust company designated by the political subdivision as its fiscal agent. Credit Risk – State law limits eligible investments for the City, as discussed above. The City has an investment policy that does not further limit its investment choices. As of December 31, 2015, the City had the following investments and maturities. Custodial Credit Risk – Deposits – The risk that in the event of a depository failure the City’s deposits may not be returned to it. The City does not have a deposit policy for custodial credit risk. As of December 31, 2015, the City's deposits in financial institutions were fully insured or collateralized and were not exposed to custodial credit risk. Custodial Credit Risk – Investments – The risk that, in the event of default of the counterparty to a transaction, the City will not be able to recover the value of investment or collateral securities that are in the possession of an outside party. United States Government Securities, with a fair market value of $12,679,104, are held in a safekeeping account with First Bank & Trust Wealth Management Services in Brookings, South Dakota. First Clearing, LLC <FCC>, a non-bank affiliate of Wachovia Corporation, and a registered broker-dealer, a member of the New York Stock Exchange and a member of the National Association of Securities Dealers, Inc., carries the City of Brookings, SD account and acts as its custodian for funds and securities deposited with First Bank & Trust Wealth Management directly by the City. Money Market Funds, with a fair market value of $50,396,041, are held in a safekeeping account with First Bank & Trust Wealth Management Services in Brookings, South Dakota. Money Market Funds, with a fair market value of $2,636,319, are held in a safekeeping account with Wells Fargo Brokerage Services, LLC, in Brookings, South Dakota. Coverage for cash and securities in protected client accounts is provided from two sources. The Securities Investor Protection Corporation <SIPC> protects up to $500,000, of which $100,000 may be cash. Additional protection has been obtained, at no cost to the City of Brookings, SD, for the remaining net equity balance of the cash and securities in the City’s account. This coverage does not protect against losses from any change in market values of investments. Concentration of Credit Risk – The City places no limit on the amount that may be invested in any one issuer. As of December 31, 2015, the City had investments in excess of 5% of the total investment portfolio: 76.69% of the City's investments are in money markets at First Bank & Trust Wealth Management Services, and 6.06% are in Federal Farm Credit Bank securities (FFCB). Credit Fair Investment Type Rating Value Less than 1 1 to 5 Money Market Fund - U.S. Agencies Not Rated 50,396,041$ 50,396,041$ -$ Money Market Fund - U.S. Agencies AAAm 2,636,319 2,636,319 - U.S. Treasuries AAA 1,979,570 - 1,979,570 U.S. Agencies Obligations AAA 10,699,534 - 10,699,534 Total Investments 65,711,464$ 53,032,360$ 12,679,104$ Maturities in Years 51 City of Brookings December 31, 2015 Notes to the Financial Statements Interest Rate Risk – The City has a formal investment policy that limits investment maturities to less than five <5> years from the date of purchase as a means of managing its exposure to fair value losses arising from increasing interest rates. Assignment of Investment Income – State law allows income from deposits and investments to be credited to either the General Fund or the fund making the investment. The City’s policy is to credit all income from investments to the fund making the investment. Summary of Deposit and Investment Balances Following is a reconciliation of the City’s deposit and investment balances as of December 31, 2015: 4. RECEIVABLES AND DUE FROM OTHER GOVERNMENTS: Receivables for the City’s individual major funds, aggregate nonmajor funds, and fiduciary funds including the applicable allowances for uncollectible accounts are as follows at December 31, 2015: The City expects all receivables to be collected within one year, except for $1,853,431 in deferred Special Assessments in the Special Revenue Special Assessments Fund. Allowances for uncollectible accounts receivable in the Enterprise Funds are calculated based on historical trend data. The other funds receivables are stated at face value. As of December 31, 2015, the allowance for doubtful accounts in the Enterprise Funds were as follows: Totals Investments 65,711,464$ Certificates of deposits 2,174,306 Deposits and cash on hand 47,537,934 115,423,704$ Government-wide Fiduciary Funds Statement of Statement of Net Position Net Position Totals Cash and cash equivalents 95,554,445$ 101,919$ 95,656,364$ Investments 12,689,718 - 12,689,718 Restricted assets: Cash and cash equivalents 7,077,622 - 7,077,622 115,321,785$ 101,919$ 115,423,704$ Special Unbilled Interest Taxes Accounts Assessments Accounts Total General Fund 8,982$ 2,051$ 256,469$ -$ -$ 267,502$ Electric Fund 15 - 2,048,376 - 1,053,231 3,101,622 Wastewater Fund - - 448,202 - 250,847 699,049 Health System Fund 17,118 - 10,542,294 - - 10,559,412 Telephone Fund - - 2,580,722 - 484,568 3,065,290 Nonmajor and Other Funds 1,492 688 1,023,294 1,983,332 259,477 3,268,283 27,607$ 2,739$ 16,899,357$ 1,983,332$ 2,048,123$ 20,961,158$ Electric Fund 19,500$ Health System Fund 2,381,000 Telephone Fund 425,611 Wastewater Fund 7,000 Water Fund 7,600 2,840,711$ 52 City of Brookings December 31, 2015 Notes to the Financial Statements The total of Due from Other Governments of $4,121,969 includes the following significant items: 5. OTHER INVESTMENTS Other Investments at December 31, 2015 were as follows: Telephone Fund South Dakota Network, LLC $330,357 Express Communications, Inc. 11,895 DHE, LLC 117,585 Capital credits 128,978 Total Telephone Fund 588,815 Wastewater Fund – capital credits 9,794 Water Fund – capital credits 758 Health System Fund – investment in joint venture 236,820 Total Investments – Other – Enterprise Funds $836,187 There is an operating agreement between all of the members of South Dakota Network, LLC (SDN) including the Telephone Fund, which requires a selling member to first offer to other members any units available for sale. The City owns 7.84% of this company. There is a buy-sell agreement between all of the shareholders of Express Communications, Inc., including the Telephone Fund, which requires a selling shareholder to first offer to other shareholders any stock available for sale. The City owns 11,368 shares or 10.14% of Express Communications, Inc. There is an operating agreement between all the members of DHE, LLC (DHE), including the Telephone Fund, for the sole and exclusive benefit of the members and no third party shall have any rights under the agreement. The City owns 12.5% of this company. Capital credits represent each respective Fund’s patronage capital allocation resulting from their relationships with cooperative associations. 6. PCS LICENSES The Telephone Fund has FCC licenses to operate a Personal Communication Services (PCS) network in Eastern South Dakota and Northwestern Iowa which includes the cities of Watertown, Brookings, Sioux Falls and Sioux City. The license agreements for PCS expired in June 2015 and were renewed until June 2025. Although the FCC licenses were issued with a stated term, they can be renewed routinely, and renewal of the license is expected without substantial Fund/Fund Type Amount Service General Fund/Major Governmental 625,198$ State of South Dakota, December Sales and Use Tax 13,822 Brookings County, Property Tax Collected by Brookings County 3,557 Brookings County, County Highway Bridge Tax 1,359 Brookings County, Wheel Tax 1,611 Brookings County, Billings 35,367 State of South Dakota, December Liquor Tax 73,507 State of South Dakota, State Highway and Bridge Tax 25% Sales & Use Tax/Special Revenue Fund 154,117 State of South Dakota, December Sales and Use Tax 75% Sales & Use Tax/Special Revenue Fund 468,171 State of South Dakota, December Sales and Use Tax Enhanced 911/Special Revenue Fund 76,483 Brookings County, Billings 4,146 State of South Dakota, 911 Surcharge Storm Drainage/Special Revenue Fund 4,882 Brookings County, Storm Drainage Tax Collected by County Bed and Booze Tax/Special Revenue Fund 77,807 State of South Dakota, December Sales and Use Tax Airport/Enterprise Fund 2,581,942 Federal Government, Airport Improvement Project Grant Funds Total 4,121,969$ 53 City of Brookings December 31, 2015 Notes to the Financial Statements cost and no legal, regulatory, contractual, or other factors currently exist that limit the useful life of the licenses, so long as the Telephone Fund continues to operate PCS systems as authorized by each license and provides wireless service to the public. The cost of the license agreements totaling $3,551,203 were amortized equally over an estimated economic useful life of 15 years. Amortization expense was $106,474 for the year ended December 31, 2015, at which point the licenses became fully amortized. The income related to the PCS system consisted of the following: The Telephone fund was operating under an agreement with Sprint PCS through June 8, 2018. Subsequent to December 31, 2015 the Telephone Fund signed an addendum with Sprint PCS extending the agreement through December 31, 2028. Under the agreement, Sprint provides the Telephone Fund significant support services such as billing, collections, long-distance, customer care and national advertising. Additionally, the telephone fund derives substantial roaming and travel revenues and expenses when Sprint and Sprint's network partners' wireless subscribers incur minutes of use in the Telephone Fund's territories. The Telephone Fund is also required to make affiliation fee payments based on estimated annual revenues. The actual cost for the year ended December 31, 2015 was $1,225,848. OPERATING REVENUES PCS service and activation $ 18,671,305 Handsets and accessories 2,660,687 Tower sublease 411,512 Uncollectibles (725,057) Total operating revenues 21,018,447 OPERATING EXPENSES Plant specific 3,660,508 Customer 6,982,737 Administrative and general 552,622 Sales 2,560,743 Cost of goods sold 3,222,424 Depreciation 1,438,386 Amortization 120,036 Total operating expenses 18,537,456 NET OPERATING INCOME 2,480,991 OTHER INCOME (EXPENSES) Interest income 269 Interest expense (585,047) Miscellaneous 2,345 Net other expenses (582,433) PCS NET INCOME 1,898,558$ 54 City of Brookings December 31, 2015 Notes to the Financial Statements 7. CHANGES IN CAPITAL ASSETS A summary of changes in capital assets for the year ended December 31, 2015 is as follows: Depreciation expense was charged to functions as follows: Governmental Activities: General government $ 205,203 Public safety 434,709 Public works 1, 713,975 Culture and recreation 1,182,796 Health and welfare 6,618 Total depreciation expense Governmental Activities $ 3,543,301 Beginning Ending Balances Increases Decreases Transfers Balances Governmental Activities Capital assets not being depreciated Land 9,496,603$ 328,851$ -$ -$ 9,825,454$ Construction in progress 2,956,531 1,310,005 - (2,819,502) 1,447,034 Total capital assets not being depreciated 12,453,134 1,638,856 - (2,819,502) 11,272,488 Capital assets being depreciated Infrastructure 61,479,955 5,896,758 (8,979) 2,810,239 70,177,973 Buildings and improvements 41,219,808 419,081 (282,732) 9,263 41,365,420 Equipment 15,401,814 1,989,472 (670,404) 22,696 16,743,578 Total capital assets being depreciated 118,101,577 8,305,311 (962,115) 2,842,198 128,286,971 Less accumulated depreciation for: Infrastructure 27,801,297 1,491,156 (719) - 29,291,734 Buildings and improvements 11,853,278 964,936 (259,258) - 12,558,956 Equipment 8,688,621 1,087,209 (618,169) 22,696 9,180,357 Total accumulated depreciation 48,343,196 3,543,301 (878,146) 22,696 51,031,047 Total capital assets being dep. net 69,758,381 4,762,010 (83,969) 2,819,502 77,255,924 Governmental Activities capital assets, net 82,211,515$ 6,400,866$ (83,969)$ -$ 88,528,412$ Beginning Ending Balances Increases Decreases Transfers Balances Business-Type Activities: Capital assets not being depreciated: Land 4,770,567$ -$ -$ -$ 4,770,567$ Construction in progress 43,036,020 13,049,446 (5,387,588) (18,190,570) 32,507,308 Total capital assets not being depreciated 47,806,587 13,049,446 (5,387,588) (18,190,570) 37,277,875 Capital assets being depreciated: Buildings and improvements 219,625,305 10,341,029 (3,136,462) 18,190,570 245,020,442 Equipment 36,800,574 2,631,835 (1,654,639) (22,696) 37,755,074 Total capital assets being depreciated 256,425,879 12,972,864 (4,791,101) 18,167,874 282,775,516 Less accumulated depreciation for: Buildings and improvements 115,225,548 7,452,808 (1,816,601) - 120,861,755 Equipment 26,230,246 2,830,826 (1,431,976) (22,696) 27,606,400 Total accumulated depreciation 141,455,794 10,283,634 (3,248,577) (22,696) 148,468,155 Total capital assets being depreciated, net 114,970,085 2,689,230 (1,542,524) 18,190,570 134,307,361 Business-Type Activities capital assets, net 162,776,672$ 15,738,676$ (6,930,112)$ -$ 171,585,236$ 55 City of Brookings December 31, 2015 Notes to the Financial Statements Depreciation expense was charged to functions as follows: Business-Type Activities: Electric $1,419,277 Hospital 3,441,349 Telephone 3,228,385 Liquor 44,595 Water 339,304 Wastewater 858,081 Airport 180,010 Golf 77,783 Solid Waste 641,843 Research and Technology Center 53,007 Total depreciation expense Business-Type Activities $10,283,634 Significant projects included in construction in progress for the primary government are as follows: Expended as of Project Description Authorized 12/31/2015 Committed Governmental Activities: Steet Shop Project 4,059,674$ 1,269,492$ 2,790,182$ - 4,059,674$ 1,269,492$ 2,790,182$ Expended as of Project Description Authorized 12/31/2015 Committed Business-Type Activities: Telephone Fund Next Gen Softswitch 625,511 562,960 62,551 PCS OSSN Upgrade 85,829 85,829 - PCS Radio Access Network 273,895 - 273,895 Wastewater Fund Wastewater Treatment Plant (WWTP) and Facilities Design 4,349,232 4,154,115 195,117 WWTP Improvements - Project A Plant Upgrade 19,601,787 18,619,486 982,301 Health System Renovation and Construction of Facilities 22,900,000 4,736,186 18,163,814 47,836,254$ 28,158,576$ 19,677,678$ 56 City of Brookings December 31, 2015 Notes to the Financial Statements Beginning Ending Due Within Balance Additions Reductions Balance One Year Revenue bonds 25,475,814$ 187,274$ (1,740,949)$ 23,922,139$ 2,073,675$ Premium on issuance 95,880 - (11,985) 83,895 - Total bonds payable 25,571,694 187,274 (1,752,934) 24,006,034 2,073,675 Capital leases 151,640 - (151,640) - - OPEB General Fund 1,092,947 135,311 - 1,228,258 - Special Revenue Funds 76,448 9,596 - 86,044 - Compensated absences General Fund 841,415 613,688 (673,877) 781,226 281,600 Special Revenue Funds 52,533 35,708 (34,717) 53,524 18,400 Governmental Activities Long-Term Liabilities 27,786,677$ 981,577$ (2,613,168)$ 26,155,086$ 2,373,675$ 8. DEBT OBLIGATIONS Long Term Liabilities A summary of changes in long-term liabilities is as follows: Governmental Activities: Business-Type Activities: Beginning Ending Due Within Balance Additions Reductions Balance One Year Revenue bonds 10,809,915$ -$ (993,164)$ 9,816,751$ 1,051,415$ Loans payable 20,593,606 3,836,171 (365,299) 24,064,478 508,584 Capital leases 24,784,739 280,000 (2,579,896) 22,484,843 2,707,098 OPEB 929,108 78,275 - 1,007,383 - Landfill closure/ postclosure 723,374 - (185,481) 537,893 - Compensated absences 1,499,261 2,896,673 (2,968,845) 1,427,089 1,077,257 Amount due under joint operating agreement 1,534,477 - (575,743) 958,734 - Business-Type Activities Long-Term Liabilities 60,874,480$ 7,091,119$ (7,668,428)$ 60,297,171$ 5,344,354$ 57 City of Brookings December 31, 2015 Notes to the Financial Statements Governmental Activities: Revenue Bonds: City of Brookings, South Dakota Sales Tax Revenue Bonds, 2010A Series, final maturity date December 2022; Interest rate varies from 1.25% to 3.15%; payments are made from 75% Sales and Use Tax/Public Improvement Fund. Callable at option of the City in whole or in part beginning on December, 2018. Original issue $16,735,000.9,370,000$ Plus: Premium on issuance 83,895 City of Brookings, South Dakota Sales Tax Revenue Bonds, 2014A Series, final maturity date December 2033; Interest rate 3.15%; payments are made from 75% Sales and Use Tax/Public Improvement Fund. Original issue $10,000,000.10,000,000 City of Brookings, South Dakota SDHDA TIF #3 Bond, (Guaranteed by Developer), final maturity date December 2023; interest rate 5%; payments made from the TIF #3 Fund. Original issue: $1,035,000.635,517 City of Brookings, South Dakota State Revolving Fund Bond #2, final maturity date December 2035; interest rate 3%; payments made from TIF #1 Fund. Original issue $670,000.566,067 City of Brookings, South Dakota State Revolving Fund Bond #3, final maturity date December 2033; interest rate 3%; payments made from Storm Drainage Fund. Original issue $390,519. 333,900 City of Brookings, South Dakota State Revolving Fund Bond #4, final maturity date April 2033; interest rate 3%; payments made from Storm Drainage Fund. Original issue $335,314.303,513 City of Brookings, South Dakota State Revolving Fund Bond #5, final maturity date January 2033; interest rate 3%; payments 202,442 made from Storm Drainage Fund. Original issue $226,121. City of Brookings, South Dakota State Revolving Fund Bond #6, final maturity date October 2032; interest rate 3%; payments 1,843,231 made from Storm Drainage Fund. Original issue $1,972,719. City of Brookings, South Dakota Tax Increment Revenue Note, (Guaranteed by Developer), final maturity date June 2019; interest rate 7.5%; payments made from TIF#4 Fund. Original issue $450,940.251,844 City of Brookings, South Dakota State Revolving Fund Bond #9, final maturity date July 2035; interest rate 3%; payments made from Storm Drainage Fund. Original issue up to $1,570,000.415,625 24,006,034 OPEB Liability:1,314,302 Compensated Absences:834,750 Total Governmental Activities Long-Term Liabilities 26,155,086$ Long-term liabilities payable at December 31, 2015 is comprised of the following: 58 City of Brookings December 31, 2015 Notes to the Financial Statements Business-Type Activities: Revenue Bonds: City of Brookings, South Dakota Utility Revenue Bonds Series 2000; final maturity date December 2019; interest rate 6.5% to 7.75% depending on length of time to maturity; payments made from the Telephone Fund. Callable at option of the City in whole or in part at anytime. Original issue $9,450,000. 3,320,000$ City of Brookings, South Dakota Electric Utility Revenue Bonds Series 2005; final maturity date July 2028; interest rate 5.95% per annum; payments are made from the Electric Fund. Callable at option of the City in $10,000 increments at anytime. Original issue $1,353,319.1,001,751 City of Brookings, South Dakota Electric Utility Revenue Bonds Series 2011; final maturity date December 2031; interest rate .65% to 3.9% depending on length to maturity; payments are made from the Electric Fund. Callable at option of the City in whole or in part beginning on December 1, 2022. Original issue $6,500,000.5,495,000 Total Revenue Bonds:9,816,751 Loans: City of Brookings, South Dakota State Revolving Fund Bond #7; final maturity date October 2044; interest rate 3.25%; payments made from Wastewater Fund. 24,064,478 Total Loans:24,064,478 Financing (Capital Acquisition) Leases: Lease and purchase of utility plant for the Telephone, Water, Wastewater, and Electric Funds. Series 1998; interest rates 3.9-5.1% due December 1, 2018. Orig. issue $20,155,000.4,640,000 Series 1999; interest rates 4.15-5.25% due December 1, 2019. Orig. issue $9,335,000.2,755,000 Series 2006; interest rates 4.75% due December 1, 2026. Orig. issue $8,000,000.5,300,000 Lease and purchase of Skilled Nursing Facility for Brookings Health System. Series 2012; interest rate 3.98% due October 15, 2042. Original issue $10,000,000.9,509,843 Lease and purchase of Hospital Renovation and Addition of Medical Office Building. Series 2015A; interest rate2.60% through 2020, variable thereafter, due October 2025. Original issue $8,000,000.79,400 Series 2015B; interest rate 3.95% through 2025, variable thereafter, due October 2037. Original issue $22,000,000.200,600 Total Leases:22,484,843 OPEB Liability:1,007,383 Landfill Closure/Postclosure Costs:537,893 Compensated Absences:1,427,089 Amount Due Under Joint Operating Agreement:958,734 Total Business-Type Activities Long-Term Liabilities 60,297,171$ 59 City of Brookings December 31, 2015 Notes to the Financial Statements The annual requirements to amortize all debt outstanding for Governmental Activities as of December 31, 2015, except for the compensated absences and other postemployment benefits (OPEB) are as follows: Assets acquired through capital leases for business-type activities were primarily for buildings and various infrastructure, which are being depreciated over the lesser of their estimated useful lives or the term of the related lease. The annual requirements to amortize all debt outstanding for Business-Type Activities as of December 31, 2015, except for compensated absences, landfill closure/postclosure, OPEB and amounts due under joint operating agreement are as follows: Business-Type Activities: Year Ending December 31,Principal Interest Principal Interest 2016 1,051,415$ 494,430$ 508,584$ 775,939$ 2017 1,114,865 429,295 525,315 759,207 2018 1,188,525 359,082 542,597 741,926 2019 1,262,410 282,850 560,448 724,075 2020 351,532 200,560 578,886 705,637 2021-2025 1,953,874 806,407 3,192,936 3,229,678 2026-2030 2,054,130 401,232 3,753,859 2,668,755 2031-2035 840,000 33,600 4,413,322 2,009,292 2036-2040 - - 5,188,638 1,233,977 2041-2044 - - 4,799,893 338,197 9,816,751$ 3,007,456$ 24,064,478$ 13,186,683$ Year Ending December 31,Principal Interest Principal Interest 2016 2,707,098$ 953,769$ 4,267,097$ 2,224,138$ 2017 3,119,541 821,284 4,759,721 2,009,786 2018 2,982,233 670,841 4,713,355 1,771,849 2019 1,425,184 523,289 3,248,042 1,530,214 2020 708,401 455,298 1,638,819 1,361,495 2021-2025 4,020,224 1,797,941 9,167,034 5,834,026 2026-2030 2,251,116 1,048,061 8,059,105 4,118,048 2031-2035 1,946,962 723,715 7,200,284 2,766,607 2036-2040 2,295,818 374,859 7,484,456 1,608,836 2041-2044 1,028,266 38,618 5,828,159 376,815 22,484,843$ 7,407,675$ 56,366,072$ 23,601,814$ Revenue Bonds Loans Capital Acquisition Leases Total Year Ending December 31,Principal Interest 2016 2,073,675$ 718,549$ 2017 2,127,594 666,330 2018 2,181,519 609,893 2019 2,246,348 548,188 2020 2,311,388 481,486 2021-2025 5,993,009 1,534,126 2026-2030 4,206,032 805,443 2031-2035 2,782,574 156,161 23,922,139$ 5,520,176$ Revenue Bonds 60 City of Brookings December 31, 2015 Notes to the Financial Statements The Series 2000 Utility Revenue Bonds are secured by a pledge of the revenues of the Telephone Fund, through final maturity of the bonds in 2019. The total principal and interest remaining to be paid on the bonds is $3,987,275, with annual payments expected to require approximately 13 percent of net revenues. The Series 2005 Utility Revenue Bonds are secured by a pledge of the revenues from the Electric Fund of the improvements funded from the issuance, through final maturity of the bonds in 2028. The total principal and interest remaining to be paid on the bonds is $1,418,203. The Series 2011 Utility Revenue Bonds are secured by a pledge of the revenues from the Electric Fund, of improvements funded from the issuance, through final maturity of the bonds in 2031. The total principal and interest remaining to be paid on the bonds is $7,418,729. Total debt service payments for the Series 2005 and 2011 Bonds are expected to require approximately 10 percent of the net revenues of the Electric Fund. 9. OPERATING LEASE COMMITMENTS The Telephone Fund has various leases relating to the Sioux Falls, Sioux City, Watertown and Brookings stores. In addition to rent, the Fund also pays real estate taxes, repairs and maintenance and insurance above normal premium on leased property. Rent expense and future minimum rental commitments for these leases are as follows: Expense: 2015 $ 793,781 Commitments: 2016 $ 538,579 2017 424,937 2018 337,489 2019 307,689 2020 153,632 Total Commitments $1,762,326 The Health System leases clinic office space and equipment under certain non-cancellable and cancellable long-term lease agreements. Rent expense and future minimum rental commitments for these leases are as follows: Expense: 2015 $ 901,336 Commitments: 2016 $ 116,463 10. LANDFILLS: State and federal laws and regulations require Municipalities to place a final cover on their municipal landfill when it stops accepting waste and to perform certain maintenance and monitoring functions at the site for thirty years after closure. Although closure and postclosure care costs will be paid only near or after the date that the landfill stops accepting waste, the Municipality reports a portion of these closure and postclosure care costs as an operating expense in each period based on landfill capacity used as of each balance sheet date. The $537,893 reported as landfill closure and postclosure care liability at December 31, 2015, represents the cumulative amount reported to date based on the use of 29.00% of the estimated capacity of the landfill. The Municipality will recognize the remaining estimated cost of closure and postclosure care of $1,316,911 as the remaining estimated capacity is filled. These amounts are based on what it would cost to perform all closure and postclosure care in 2015. The Municipality expects to close the landfill in the year of 2045. Actual cost may be higher due to inflation, changes in technology, or changes in regulations. The Municipality is required by state and federal laws and regulations to make annual contributions to a trust to finance closure and post closure care. The City is in compliance with these requirements; and, at December 31, 2015, investments of $1,186,113 are held for these purposes. These are reported as restricted assets on the statement of net 61 City of Brookings December 31, 2015 Notes to the Financial Statements position. The Municipality expects that future inflation costs will be paid from interest earnings on these annual contributions. However, if interest earnings are inadequate or additional post closure care requirements are determined (due to changes in technology or applicable laws and regulations, for example), these costs may need to be covered by increased fees to future landfill users or from future tax revenue. 11. SEGMENT INFORMATION FOR ENTERPRISE FUNDS The Electric Fund maintained by the City provides construction and operation of the municipal electric system and related facilities. The City has issued separate revenue bonds to finance its Electric Fund. Investors in those bonds rely solely on the revenue generated by the individual activities for repayment. Segment information for these separately identifiable activities that have bonds or other debt instruments outstanding with a revenue stream pledged in support of that debt, as well as a requirement to account for the activity’s revenues, expenses, gains and losses, assets and liabilities apart from other activities within the same fund or in different funds is as follows: A. Electric Fund CONDENSED STATEMENT OF NET POSITION Unsecured Series Series Total Operations 2005 Bonds 2011 Bonds Electric Fund Assets Current assets 14,348,364$ 1,693,159$ 634,839$ 16,676,362$ Due from other funds 139,156 - - 139,156 Noncurrent assets, excluding capital assets 711,316 109,716 475,158 1,296,190 Capital assets 27,026,494 862,551 5,717,267 33,606,312 Total assets 42,225,330 2,665,426 6,827,264 51,718,020 Deferred Outflows of resources 577,170 - - 577,170 Total assets and deferred outflows of resourc 42,802,500 2,665,426 6,827,264 52,295,190 Liabilities Current liabilities 2,231,903 56,513 269,921 2,558,337 Due to other funds 6,458 - - 6,458 Noncurrent liabilities 2,438,842 945,336 5,240,000 8,624,178 Total liabilities 4,677,203 1,001,849 5,509,921 11,188,973 Deferred inflows of resources 427,503 - - 427,503 Net position Net Investment in capital assets 24,360,894 (139,200) 222,267 24,443,961 Restricted 860,983 109,716 475,158 1,445,857 Unrestricted 12,475,917 1,693,061 619,918 14,788,896 Total net position 37,697,794 1,663,577 1,317,343 40,678,714 Total liabilites, deferred inflows of resources, 42,802,500$ 2,665,426$ 6,827,264$ 52,295,190$ net position Electric Fund December 31, 2015 62 City of Brookings December 31, 2015 Notes to the Financial Statements CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Unsecured Series Series Total Operations 2005 Bonds 2011 Bonds Electric Fund Operating revenues 25,384,863$ 328,824$ 627,634$ 26,341,321$ Depreciation/amortization expense (1,249,139) (36,583) (133,555)(1,419,277) Other operating expense (20,888,805) (5,343) - (20,894,148) Operating income 3,246,919 286,898 494,079 4,027,896 Nonoperating revenues (expenses) Investment income 17,643 346 64 18,053 Interest expense (143,576) (61,332) (182,438)(387,346) Other 60,346 - - 60,346 Contributed capital 156,718 - - 156,718 Transfers out (1,955,000) - - (1,955,000) Changes in net position 1,383,050 225,912 311,705 1,920,667 Beginning net position, as restated 36,314,744 1,437,665 1,005,638 38,758,047 Ending net position 37,697,794$ 1,663,577$ 1,317,343$ 40,678,714$ Year Ended December 31, 2015 CONDENSED STATEMENT OF CASH FLOWS Unsecured Series Series Total Net cash provided (used) by:Operations 2005 Bonds 2011 Bonds Electric Fund Operating activities 4,626,910$ 323,481$ 627,635$ 5,578,026$ Noncapital financing activities (1,955,000) - - (1,955,000) Capital and related financing activities (2,750,414) (114,497) (437,741)(3,302,652) Investing activities 17,209 346 64 17,619 Net increase (decrease)(61,295) 209,330 189,958 337,993 Beginning cash and cash equivalents 10,390,746 1,593,545 920,039 12,904,330 Ending cash and cash equivalents 10,329,451$ 1,802,875$ 1,109,997$ 13,242,323$ Electric Fund Year Ended December 31, 2015 Electric Fund Unsecured State Revolving Total Operations Fund Loan Wastewater Fund Assets Current assets 5,354,264$ (64,198)$ 5,290,066$ Due from other funds 3,741 - 3,741 Noncurrent assets, excluding capital assets 847,372 107,043 954,415 Capital assets 12,075,033 29,616,485 41,691,518 Total assets 18,280,410 29,659,330 47,939,740 Deferred outflows of resources 265,516 - 265,516 Total assets and deferred outflows of resource 18,545,926 29,659,330 48,205,256 Liabilities Current liabilities 395,053 1,639,791 2,034,844 Due to other funds 25,760 48,195 73,955 Noncurrent liabilities 484,046 23,555,894 24,039,940 Total liabilities 904,859 25,243,880 26,148,739 Deferred inflows of resources 196,664 - 196,664 Net positions Net Investment in capital assets 11,533,294 5,552,007 17,085,301 Restricted 387,805 107,043 494,848 Unrestricted 5,523,304 (1,243,600) 4,279,704 Total net position 17,444,403 4,415,450 21,859,853 Total liabilities, deferred inflows of resources, and net position 18,545,926$ 29,659,330$ 48,205,256$ Wastewater Fund December 31, 2015 63 City of Brookings December 31, 2015 Notes to the Financial Statements CONDENSED STATEMENT OF REVENUES, EXPENSES, AND CHANGES IN NET POSITION Unsecured State Revolving Total Operations Fund Loan Wastewater Fund Operating revenues 2,457,213$ 2,358,933$ 4,816,146$ Depreciation/amortization expense (608,152) (249,929) (858,081) Other operating expense (2,545,986) (84,887) (2,630,873) Operating income (696,925) 2,024,117 1,327,192 Nonoperating revenues (expenses) Investment income 36,781 - 36,781 Interest expense (30,923) (209,692) (240,615) Contributed capital 350,700 1,796 352,496 Changes in net position (340,367) 1,816,221 1,475,854 Beginning net position, as restated 17,784,770 2,599,229 20,383,999 Ending net position 17,444,403$ 4,415,450$ 21,859,853$ Wastewater Fund Year Ended December 31, 2015 CONDENSED STATEMENT OF CASH FLOWS Unsecured State Revolving Total Net cash provided (used) by:Operations Fund Loan Wastewater Fund Operating activities 1,282,899$ 1,103,672$ 2,386,571$ Noncapital financing activities 80,243 - 80,243 Capital and related financing activities (1,818,863) (1,644,695) (3,463,558) Investing activities 5,685 - 5,685 Net increase (450,036) (541,023) (991,059) Beginning cash and cash equivalents 5,096,891 583,868 5,680,759 Ending cash and cash equivalents 4,646,855$ 42,845$ 4,689,700$ Wastewater Fund Year Ended December 31, 2015 64 City of Brookings December 31, 2015 Notes to the Financial Statements 12. INDIVIDUAL INTERFUND BALANCES AND TRANSFERS Interfund receivables and payables result from the time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. The composition of interfund balances as of December 31, 2015 is as follows: Interfund 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, and use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. The financial statements reflect interfund transfers as follows: Interfund advances or loans between funds are authorized by the governing board allowing the use of monies available in one fund to finance a project or purchase in another. The terms are established by the governing board. The financial statements reflect interfund advances as follows: General Nonmajor Health Nonmajor Due From Fund Governmental System Enterprise General Fund -$ -$ 70,850$ 942$ 6,533$ -$ 2,748$ 81,073$ Nonmajor Governmental 5,065 - - - 4,256 - 124 9,445 Electric 292 - 1,365 97 2,120 2,225 359 6,458 Wastewater 180 4,975 18,972 84 836 - 48,908 73,955 Health System - - 19,435 2,454 6,110 - 2,073 30,072 Telephone 8,268 - 13,466 130 88,650 - 536 111,050 Nonmajor Enterprise 700,600 700,000 15,068 34 1,049 - 6,533 1,423,284 Total 714,405$ 704,975$ 139,156$ 3,741$ 109,554$ 2,225$ 61,281$ 1,735,337$ Due To Electric Telephone TotalWastewater General Nonmajor Nonmajor Transfer Out Fund Governmental Enterprise General Fund -$ $ 3,300,000 $ 237,246 $ 3,537,246 Nonmajor Governmental 2,492,052 5,639,363 411,587 8,543,002 Electric 1,955,000 - - 1,955,000 Telephone 200,000 - - 200,000 Nonmajor Enterprise 850,000 50,000 125,000 1,025,000 Total $ 5,497,052 $ 8,989,363 $ 773,833 $ 15,260,248 Transfer In Total Owed to Owed from (Receivable)(Payable) Amount General Fund TIF 1 Innov Campus Fund 1,201,855$ Liquor Fund Golf Fund 182,074 Wastewater Fund Telephone Fund 570,350 1,954,279$ Interfund Advances 65 City of Brookings December 31, 2015 Notes to the Financial Statements The annual amounts due for principal and future interest on interfund advances are as follows: 13. RESTRICTED NET POSITION The following table shows the net position restricted as shown on the Statement of Net Position: Principal Interest Total 2016 129,557$ 64,573$ 194,130$ 2017 133,932 60,198 194,130 2018 138,490 55,640 194,130 2019 490,648 50,891 541,539 2020 85,316 28,572 113,888 2021-2025 439,806 111,426 551,232 2026-2030 443,634 52,977 496,611 2031 92,896 - 92,896 1,954,279$ 424,277$ 2,378,556$ Fund Restricted By Amount General Fund: Library 69,843$ D.A.R.E Donors 450 Insurance Deposit Contract 355,852 STP Funds (Surface Transportation Grant)Grantor 779,090 Special Revenue Funds: Enhanced 911 Law 112,461 Library Fines Law 30,938 Bed and Booze Tax Law 923,787 Debt Service Funds: TIF 3 Valley View Covenant 1,432 TIF 5 32nd Ave Covenant 32,178 TIF 6 Digester Covenant 204,226 Capital Project Funds: Nature Park Project Donors 217,734 Gateway Project Donors 263,860 Governmental Funds - Pension Purposes Standard 2,021,154 Enterprise Funds: Electric Fund – debt service Covenant 799,877 Telephone Fund - debt service Covenant 3,141,925 Water Fund - debt service Covenant 52,355 Wastewater Fund - debt service Covenant 197,678 Health System - debt service Covenant 133,534 Solid Waste Fund – landfill Law 648,220 Enterprise Funds - Pension Purposes Standard 8,135,479 Total Restricted Net Position 18,122,073$ Donors 66 City of Brookings December 31, 2015 Notes to the Financial Statements 14. FUND BALANCES The following provides details of the aggregate amounts displayed on the face of the balance sheet: Other General Governmental Fund Funds Total Fund Balances: Nonspendable: Inventory 14,473$ 22,815$ 37,288$ Inventory land held for resale 1,600,000 - 1,600,000 Prepaid items 434,604 19,296 453,900 Insurance deposit 355,852 - 355,852 Advances 1,201,855 - 1,201,855 3,606,784 42,111 3,648,895 Restricted for: Donor purposes 70,293 481,594 551,887 Debt service - 237,836 237,836 Library - 30,938 30,938 E-911 - 112,461 112,461 Grant conditions 779,090 - 779,090 City promotion - 923,787 923,787 849,383 1,786,616 2,635,999 Committed: Industrial park development 1,965,442 - 1,965,442 Financial stabilization 1,642,367 - 1,642,367 Retail development 1,873 - 1,873 Police & Fire Capital and other - 1,546,372 1,546,372 Economic development - 1,000,000 1,000,000 Promotion/marketing of City - 159,305 159,305 Special assessment projects - 1,226,657 1,226,657 Storm drainage - 1,642,363 1,642,363 3,609,682 5,574,697 9,184,379 Assigned to: Capital project carryover 277,146 2,726,334 3,003,480 Future capital improvement 1,251,362 - 1,251,362 1,528,508 2,726,334 4,254,842 Unassigned 5,242,679 (1,495,895) 3,746,784 14,837,036$ 8,633,863$ 23,470,899$ 67 City of Brookings December 31, 2015 Notes to the Financial Statements 15. CHANGE IN ACCOUNTING PRINCIPLES The City implemented GASB Statement No. 68, Accounting and Financial Reporting for Pensions - an amendment of GASB Statement No. 27 and GASB Statement No. 71, Pension Transition for Contributions Made Subsequent to the Measurement Date - an amendment of GASB Statement No. 68. These Statements improve the accounting and financial reporting by state and local governments for pensions. These Statements establish standards for measuring and recognizing assets and liabilities, deferred outflows and deferred inflows of resources, and expenses. Note disclosures and required supplementary information requirements about pensions are also addressed. Implementation of these standards required the City to record its portion of the financial statement items mentioned above in relation to the City's proportionate share of the South Dakota Retirement System (SDRS) through retroactive restatement of beginning balances. The City's financial statements as of January 1, 2015 were restated as follows: Adjustment to the proprietary funds financial statements were the same as those to the business-type activities. 16. PENSION PLAN Plan Description All employees, working more than 20 hours per week during the year, participate in the South Dakota Retirement System (SDRS), a cost-sharing multiple-employer defined benefit pension plan administered by SDRS to provide retirement benefits for employees of the State of South Dakota and its political subdivisions. The SDRS provides retirement, disability, and survivor's benefits based on a member’s class within the Plan. The right to receive retirement benefits vests after three years of credited service. Authority for establishing, administering, and amending plan provisions are found in South Dakota Codified Law 3-12. The SDRS issues a publicly available financial report that includes financial statements and required supplementary information. That report may be obtained at http://www.sdrs.sd.gov/publications.aspx or by writing to South Dakota Retirement System, P.O. Box 1098, Pierre, SD 57501-1098 or by calling (605) 773-3731. Benefits Provided SDRS has three different classes of members: Class A general members, Class B public safety and judicial members, and Class C cement plant retirement fund members. The City has no Class B judicial members or Class C members. Class A retirement benefits are determined as the larger of that provided by the standard formula or the alternate formula. The Class A standard formula benefit is determined as 1.70% times credited service prior to 2008, plus 1.55% times credited service thereafter times the employee's final average compensation. Final average compensation is the highest average annual compensation earned by a member during 12 consecutive calendar quarters of the last 40 such quarters during the periods of credited service. The Class A alternate formula is determined as 2.40% times credited service prior to 2008, plus 2.25% times credited service thereafter times the employee's final average compensation less 80 percent of the member’s primary Social Security benefit. Class A members who retire after age 65 with three years of service are entitled to an unreduced annual retirement benefit. An unreduced annual retirement benefit is also available after age 55 for Class A members where the sum of age and credited service is greater than or equal to 85. Class B public safety benefits are determined as 2.40% times credited service prior to 2008, plus 2.00% times credited service thereafter times the employee’s final average compensation. Class B public safety members with 3 years of credited service are eligible to retire at age 55. An unreduced annual retirement benefit is also available after age 45 for Class B public safety members where the sum of age and credited service is greater than or equal to 75. Employees are eligible for service- related disability. Disability benefits are determined as a percentage of the member’s final average compensation, Governmental Business-Type Total Primary Activities Activities Government Net Position January 1, 2015, as previously reported 80,092,497$ 199,011,789$ 279,104,286$ Retatement for pension accounting: Net Pension Asset 2,699,524 11,010,331 13,709,855 Pension Related Deferred Outflows of Resources 2,195,937 8,954,668 11,150,605 Pension Related Deferred Infows of Resources (3,126,504) (12,751,819) (15,878,323) Net Position January 1, 2015, as restated 81,861,454$ 206,224,969$ 288,086,423$ 68 City of Brookings December 31, 2015 Notes to the Financial Statements dependent on several factors, but are payable immediately without an actuarial reduction. Death benefits are determined as a percentage of the employee's final average salary. See the SDRS annual report for further details. The annual increase in the amount of SDRS benefits payable on each July 1stis indexed to the consumer price index (CPI) based on SDRS funded status: • If the SDRS market value funded ratio is 100% or more - 3.1% Cost-of-Living Adjustment (COLA) • If the SDRS market value funded ratio is 80.0% to 99.9%, index with the CPI • 90.0% to 99.9% funded - 2.1% minimum and 2.8% maximum COLA • 80.0% to 90.0% funded - 2.1% minimum and 2.4% maximum COLA • If the SDRS market value funded ratio is less than 80% - 2.1% COLA All benefits except those depending on the Member's Accumulated Contributions are annually increased by the Cost-of- Living Adjustment. Contributions Per SDCL 3-12, contribution requirements of the active employees and the participating employers are established and may be amended by the SDRS Board. Covered employees are required by state statute to contribute the following percentages of their salary to the plan; Class A Members - 6.0% of salary and Class B Public Safety Members - 8.0% of salary. All participating employers are required to contribute an amount equal to the members’ contributions. Employees whom were members prior to July 1, 2010 may make an additional contribution of 1.5% of their salary for optional spouse coverage. State statute requires the employer to contribute an amount equal to the employee's contribution plus an additional contribution in the amount of 6.2% for any Class A member’s calendar year compensation exceeding the maximum taxable amount for Social Security. The City's share of contributions to the SDRS for the fiscal year ended December 31, 2015 was $2,067,929, equal to the required contributions for the year. Net Pension Asset, Pension Revenue and Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions At June 30, 2015, the measurement date used for the December 31, 2015 net pension asset, SDRS was 104.1% funded and accordingly had a net pension asset. The proportionate shares of the components of the net pension asset of SDRS, for the City as of December 31, 2015, are as follows: The net pension asset was measured as of June 30, 2015 and the total pension liability used to calculate the net pension asset was determined by an actuarial valuation as of that date. At December 31, 2015, the City reported an asset of $7,930,006 for its proportionate share of the net pension asset. The City’s share of the net pension asset was based on the City’s share of contributions to the Plan relative to all employer contributions to the Plan. At June 30, 2015, City's proportion was 1.8697180%, which is a decrease from the City’s proportion of 1.9029331% at June 30, 2014. For the year ended December 31, 2015, the City recognized a reduction of pension expense of $1,151,574. At December 31, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Proportionate share of net position restricted for pension benefits 201,490,786$ Less proportionate share of total pension liability 193,560,780 Proportionate share of net pension asset 7,930,006$ Deferred Outflows of Resources Deferred Inflows of Resources Difference between expected and actual experience 1,623,705$ -$ Changes in assumptions 6,287,998 - Net difference between projected and actual earnings on pension plan investments - 6,856,571 Changes in proportion and difference between City contribution and proportionate share of contributions Change in Proportion - City (excluding BMU and BHS)- 22,615 Change in Proportion - Brookings Municipal Utilities (BMU)74,021 - Change in Proportion - Brookings Health System (BHS)55,985 - City contributions subsequent to the measurement date 1,064,104 - Total 9,105,813$ 6,879,186$ 69 City of Brookings December 31, 2015 Notes to the Financial Statements Deferred outflows of resources related to pensions resulting from City contributions subsequent to the June 30, 2015 measurement date of $1,064,104 will be recognized as an increase of the net pension asset in the fiscal year ending December 31, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pensions will be recognized in net pension expense (revenue) as follows: Actuarial Assumptions The total pension liability in the SDRS June 30, 2015 actuarial valuation was determined using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.25% Salary Increases 5.83% at entry to 3.75% after 30 years of service Investment Rate of Return 7.50%, net of pension plan investment expense Mortality rates were based on the RP-2000 Mortality Table, projected generally with Scale BB and with rates reduced to fit recent experience analysis. The actuarial assumptions used in the SDRS June 30, 2015 valuation were based on the results of an actuarial experience study for the period July 1, 2005 through June 30, 2010. The mortality assumptions were revised based on an extension of the experience study including mortality experience through June 30, 2013. Investment portfolio management is the statutory responsibility of the South Dakota Investment Council (SDIC), which may utilize the external money managers for management of a portion of the portfolio. SDIC is governed by the Prudent Man Rule (i.e., the council should use the same degree of care as a prudent man). Current SDIC investment policies dictate limits on the percentage of assets invested in various types of vehicles (equities, fixed income securities, real estate, cash, private equity, etc.). The long-term expected rate of return on pension plan investments was determined using a method in which best-estimate ranges of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each major asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. Best estimates of real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015 are summarized in the following table: Discount Rate The discount rate used to measure the total pension liability was 7.50%. The projection of cash flows used to determine the discount rate assumed that employee contributions will be made at the current contribution rate and that contributions from employers will be made at contractually required rates. Based on these assumptions, the pension plan's fiduciary net position was projected to be available to make all future benefit payments of current plan members. Target Long-Term Expected Asset Class Allocation Real Rate of Return Global Equity 61.0%4.5% Fixed Income 27.0%1.8% Real Estate 10.0%5.2% Cash 2.0%0.0% Total 100.0% Year-Ended December 31:Net 2016 406,978$ 2017 406,978 2018 (979,675) 2019 1,328,242 1,162,523$ 70 City of Brookings December 31, 2015 Notes to the Financial Statements Therefore, the long-term expected rate of return on pension plan investments 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 Asset (Liability) to Changes in the Discount Rate The following presents the City's proportionate share of net pension asset (liability) at June 30, 2015 calculated using the discount rate of 7.50%, as well as what the City's proportionate share of the net pension asset (liability) would be if it were calculated using a discount rate that is one percentage point lower (6.50%) or one percentage point higher (8.50%) than the current rate: Pension Plan Fiduciary Net Position Detailed information about the plan's fiduciary net position is available in the separately issued SDRS financial report. 17. OTHER POSTEMPLOYMENT BENEFITS Plan Description: The City, under the authority of SDCL 9-14-35 and SDCL 6-1-16, operates three single-employer defined benefit healthcare plans: City General, Brookings Municipal Utilities (BMU) and Brookings Health System (BHS or Health System). Each plan provides medical benefits to eligible employees and their spouses. The City General and BMU plans are self funded plans reported as an internal service fund of the City which is included within the scope of this report; therefore, they do not issue a stand-alone financial report nor are they included in the report of another entity. The Brookings Health System Plan is administered by Wellmark Blue Cross and no separate financial report is issued for the Plan. City General For current and retired City General employees hired before January 1, 2010, the City pays 50% of the cost of premiums. Also, the rates being paid by retirees for benefits are typically lower than those had the retirees been rated as a separate group. The difference between these amounts is the implicit rate subsidy, which is considered other post- employment benefits in addition to the portion of premiums paid by the City for retired City General employees. Benefit provisions for City General employees represented by a collective bargaining agreement are established and amended through collective bargaining with the recognized bargaining agent for each group. Benefits and eligibility for administrators and those not covered by a collective bargaining agreement are established and amended by the City Council. Brookings Municipal Utilities BMU retirees are required to pay 100% of the premiums charged to active employees. Similar to City General employees, as the rates being paid by retirees for benefits are typically lower than those had the retirees been rated as a separate group, the difference between these amounts is the implicit rate subsidy, which is considered other post- employment benefits. Additionally, BMU pays $100 per month to certain qualified BMU retirees for health insurance premiums. Benefit provisions for BMU employees represented by a collective bargaining agreement are established and amended through collective bargaining with the recognized bargaining agent for each group. Benefits and eligibility for administrators and those not covered by a collective bargaining agreement are established and amended by Municipal Utilities Board. Brookings Health System Retirees of BHS are required to pay 100% of the premiums charged to active employees. As the rates being paid by retirees for benefits are typically lower than those had the retirees been rated as a separate group, the difference between these amounts is the implicit rate subsidy, which is considered other post-employment benefits. Benefits provisions for BHS employees are established and amended by the Health System Board of Directors. Current 1% Decrease Discount Rate 1% Increase (6.50%) (7.50%) (8.50%) City's proportionate share of the net pension asset (liability)(19,959,742)$ 7,930,006$ 30,671,698$ 71 City of Brookings December 31, 2015 Notes to the Financial Statements Funding Policy: At this time the City operates all plans on a pay-as-you-go basis. For fiscal year 2015 the City contributed approximately $335,000, all for current premiums (or 55.6% of the total premiums), and plan participants contributed approximately $267,000 (or 44.4% of total premiums) through required contributions ranging from $269.93 to $1,107.58 per month for coverage. Annual OPEB Cost and Net OPEB Obligation: The City’s annual other postemployment benefit (OPEB) cost (expense) is calculated based on the annual required contribution (ARC), an amount actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis is projected to cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed thirty years. The following table shows the components of the City’s annual OPEB cost for the year, the amount actually paid from the plan, and changes in the City’s net OPEB obligation. The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the net OPEB obligation for 2015 and the preceding two years were as follows: City BMU Health General Funds System Fund Annual required contribution 344,746$ 123,359$ 102,033$ Interest on net OPEB 37,788 13,197 11,969 Adjustment to annual required contribution (44,789) (15,641) (14,186) Annual OPEB cost (expense)337,745 120,915 99,816 Contributions made (195,387) (109,690) (30,216) Change in net OPEB obligation 142,358 11,225 69,600 OPEB obligation at beginning of year 1,259,645 439,882 398,975 OPEB obligation at end of year 1,402,003$ 451,107$ 468,575$ Percentage Fiscal of Annual Net Year Annual OPEB Cost OBEB Ended OPEB Cost Contributed Obligation City General 12/31/2015 337,745$ 57.85% 1,402,003$ 12/31/2014 338,798$ 44.18% 1,259,645$ 12/31/2013 362,080 49.83% 1,070,522 BMU Funds 12/31/2015 120,915 90.72% 451,107 12/31/2014 121,055 79.04% 439,882 12/31/2013 129,559 46.85% 414,510 Health System Fund 12/31/2015 99,816 30.27% 468,575 12/31/2014 100,210 29.15% 398,975 12/31/2013 102,654 36.32% 327,972 72 City of Brookings December 31, 2015 Notes to the Financial Statements As of January 1, 2014, the most recent actuarial valuation date, the City’s actuarial value of assets, actuarial liability for benefits, unfunded actuarial accrued liability, covered payroll, and unfunded accrual liability as a percentage of covered payroll is as follows: Actuarial valuation of an ongoing plan involves estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the health care cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, will present multi-year trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions: Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the January 1, 2014 actuarial valuation, the Projected Unit Credit Actuarial Cost Method was used. The actuarial assumptions included a discount rate of 3.00% and an annual healthcare cost trend rate of 5.7% initially, with annual healthcare cost trend rates ranging from 5.7% to 4.5%.The rates include a 2.75% inflation assumption. The UAAL is being amortized as a level percentage of projected payrolls over an open period of 30 years. As the City is operating on a pay-as-you-go basis, the funded status is zero percent. 18. COMMITMENTS AND CONTINGENCIES The City participates in a number of federally assisted grant programs. Federal financial assistance programs are subject to financial and compliance audits. The amount of expenditures, if any, which may be disallowed by the granting agencies is not determinable at this time; however, City officials do not believe that such amounts would be significant. The City is a defendant in a number of lawsuits and claims in its normal course of operations. Management is currently of the opinion that ultimate settlement of such lawsuits and claims will not have a materially adverse effect on the financial statements. The health care industry is subject to numerous laws and regulations of federal, state, and local governments. Compliance with these laws and regulations, specifically those relating to the Medicare and Medicaid programs, can be subject to government review and interpretation, as well as regulatory actions unknown and unasserted at this time. Federal government activity has increased with respect to investigations and allegations concerning possible violations by health care providers of regulations, which could result in the imposition of significant fines and penalties, as well as significant repayments of previously billed and collected revenues from patient services. Management believes that the Health System is in substantial compliance with current laws and regulations. Actuarial Unfunded Accrued Actuarial UAAL as a Actuarial Liability Accrued Percentage Value of (Unit Credit Liability Funded Covered of Covered Assets Cost Method)(UAAL)Ratio Payroll Payroll (a) (b)(b-a)(a/b)(c) [(b-a)/c] City General Funds -$ 3,143,217$ 3,143,217$ 0% 7,004,859 45% Brookings Municipal Utilities Funds - 1,536,714 1,536,714 0% 9,311,986 17% Brookings Health System Fund - 1,086,409 1,086,409 0% 15,309,660 7% 73 City of Brookings December 31, 2015 Notes to the Financial Statements 19. RISK MANAGEMENT The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; errors and omissions; injuries to employees; and natural disasters. During the period ended December 31, 2015, the City managed its risks as follows: Employee Health Insurance The City is exposed to various risks of loss related to employees. During the fiscal year 1997, the City of Brookings established a Medical Self Insurance Fund (an internal service fund) to account for and finance its health risks of loss. Under this program, the Medical Self Insurance Fund pays the first $75,000 per person and is reinsured for any remaining loss for that person. The Plan also has aggregate stop loss coverage for the group which pays 100% of the group’s claims beyond the aggregate limits (125% of expected claims). Settled claims resulting from these risks have not exceeded the liability coverage in any of the past three fiscal years. During 2015, $2,014,836 was paid in claims, net of any stop loss reimbursements. Property and Liability Insurance The City purchases insurance coverage for its boilers, equipment, and property from a commercial insurance carrier. The deductible for this coverage is $5,000. The City joined the South Dakota Public Assurance Alliance (SDPAA), a public entity risk pool currently operating as a common risk management and insurance program for South Dakota local government entities. The objective of the SDPAA is to administer and provide risk management services and risk sharing facilities to the members and to defend and protect the members against liability, to advise members on loss control guidelines and procedures, and provide them with risk management services, loss control and risk reduction information and to obtain lower costs for that coverage. The City's responsibility is to promptly report to and cooperate with the SDPAA to resolve any incident which could result in a claim being made by or against the City. The City pays an annual premium to the pool to provide coverage for governmental general liability, official’s liability, automobile liability, automobile physical damage, and law enforcement liability . The agreement with the South Dakota Public Assurance Alliance provides that the above coverages will be provided to a $6,000,000 limit for general liability and automobile liability; a $3,000,000 limit for officials liability and law enforcement liability. Member premiums are used by the pool for payment of claims and to pay for reinsurance for claims in excess of $250,000 to the upper limit. A portion of the member premiums are also allocated to a cumulative reserve fund. The City would be eligible to receive a refund for a percentage of the amount allocated to the cumulative reserve fund on the following basis: End of Municipality’s First Full Year 50% End of Municipality’s Second Full Year 60% End of Municipality’s Third Full Year 70% End of Municipality’s Fourth Full Year 80% End of Municipality’s Fifth Full Year 90% End of Municipality’s Sixth Full Year and Thereafter 100% As of December 31, 2015, the Municipality has a vested balance in the cumulative reserve fund of $355,852. The City carries a $1,000 deductible for the automobile physical damage. The City does not carry additional insurance to cover claims in excess of the upper limit. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years. The Health System has malpractice insurance coverage to provide protection for professional liability losses on a claims- made basis subject to a limit of $1 million per claim and an annual aggregate limit of $3 million. Should the claims-made 74 City of Brookings December 31, 2015 Notes to the Financial Statements policy not be renewed or replaced with equivalent insurance, claims based on occurrences during the term, but reported subsequently, will be uninsured. Workers’ Compensation The City joined the South Dakota Municipal League Worker’s Compensation Fund, a public entity risk pool currently operating as a common risk management and insurance program for South Dakota local government entities. The City pays an annual premium to the pool to provide worker’s compensation coverage for its employees. Coverage limits are set by state statute. The pool pays the first $325,000 of any claim per individual. The pool has statutory coverage. The City does not carry additional insurance to cover claims in excess of the upper limit. Settled claims resulting from these risks have not exceeded the liability coverage during the past three years. Unemployment Benefits The City has elected to be self-insured and retain all risk for liabilities resulting from claims for unemployment benefits. Unemployment claims are charged back to the appropriate department and are paid as they occur. During the year ended December 31, 2015, 5 claims were filed for unemployment benefits. These claims resulted in the payment of benefits in the amount of $15,291. 20. EXCESS OF EXPENDITURES OVER APPROPRIATIONS The following funds had expenditures for which there were no appropriations: Swiftel Fund $ 32,957 *The Swiftel Center operating revenue was over budget by $166,393 due to more events than anticipated and thus expenditures were greater than anticipated. BID Fee Fund $ 31 * This excess is due to the 2% administrative expense required by the Governance and Ends Policy exceeding expectations. 21. SUBSEQUENT EVENTS In January 2016 the Municipal Utilities Board approved an interfund loan from the Electric Fund to the Telephone Fund in the amount of $5,500,000 to be repaid over a term of four years at the interest rate of 4.5% annually. The Municipal Utilities Board also approved to retire the outstanding debt from the municipal tax free bonds issued in 1998, 1999, and 2000 with an outstanding amount of $10,715,000. These bonds were repaid on March 1, 2016. 75 City of Brookings Year Ended December 31, 2015 Required Supplementary Information - Schedule of Funding Progress for Postemployment Benefit Plans City General Fund Actuarial Unfunded Accrued Actuarial UAAL as a Actuarial Liability Accrued Percentage Actuarial Value of (Unit Credit Liability Funded Covered of Covered Valuation Assets Cost Method)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)[(b-a)/c] January 1, 2010 -$ 2,292,485$ 2,292,485$ 0%6,157,004$ 37% January 1, 2012 - 3,079,499 3,079,499 0%6,540,860 47% January 1, 2014 - 3,143,217 3,143,217 0%7,004,859 45% Brookings Municipal Utilities Funds Actuarial Unfunded Accrued Actuarial UAAL as a Actuarial Liability Accrued Percentage Actuarial Value of (Unit Credit Liability Funded Covered of Covered Valuation Assets Cost Method)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)[(b-a)/c] January 1, 2010 -$ 759,104$ 759,104$ 0%8,725,325$ 9% January 1, 2012 - 1,392,070 1,392,070 0%9,035,740 15% January 1, 2014 - 1,536,714 1,536,714 0%9,311,986 17% Actuarial Unfunded Accrued Actuarial UAAL as a Actuarial Liability Accrued Percentage Actuarial Value of (Unit Credit Liability Funded Covered of Covered Valuation Assets Cost Method)(UAAL)Ratio Payroll Payroll Date (a)(b)(b-a)(a/b)(c)[(b-a)/c] January 1, 2010 -$ 468,328$ 468,328$ 0%13,711,402$ 3% January 1, 2012 - 1,088,282 1,088,282 0%13,501,040 8% January 1, 2014 - 1,086,409 1,086,409 0%15,309,660 7% Brookings Health System Fund 76 City of Brookings Year Ended December 31, 2015 Required Supplementary Information - Schedule of Pension Contributions 2015 2014 Contractually required contribution 2,067,929$ 2,010,973$ Contributions in relation to the contractually required contribution 2,067,929$ 2,010,973$ Contribution deficiency (excess)-$ -$ City's covered-employee payroll 33,625,505$ 32,580,616$ Contributions as a percentage of covered-employee payroll 6.15%6.17% Note to Schedule: South Dakota Retirement System This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the City will present information for those year for which information is available. Data reported as of the measurement date. 77 City of Brookings Year Ended December 31, 2015 Required Supplementary Information - Schedule of Proportionate Share of Net Pension Asset 2015 2014 City's proportion of the net pension asset 1.87%1.90% City's proportionate share of net pension asset*7,930,006$ 13,709,855$ City's covered-employee payroll 33,633,036$ 32,786,489$ City's proportionate share of the net pension asset as a percentage of its covered-employee payroll 23.58%41.82% Plan fiduciary net position as a percentage of the total pension asset 104.10%107.30% Notes to the Schedule: *The amounts presented for each fiscal year were determined as of the measurement date of the collective net pension asset which is June 30. This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10-year trend is compiled, the City will present information for those years for which information is available. Data reported is measured as of the calendar year end. South Dakota Retirement System 78 City of Brookings Year Ended December 31, 2015 Required Supplementary Information - Budgetary Comparison Schedule - General Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 2,910,000$ 2,910,000$ 2,834,093$ (75,907)$ General sales and use taxes 6,025,000 6,025,000 6,327,828 302,828 Amusement taxes 1,500 1,500 1,488 (12) Penalties and interest on delinquent taxes 2,500 2,500 3,682 1,182 Licenses and permits 219,681 256,300 278,742 22,442 Intergovernmental revenue: Federal grants 42,115 139,115 880,482 741,367 State grants - 5,000 5,945 945 State shared revenues 530,000 530,000 574,903 44,903 County shared revenues 162,500 162,500 190,393 27,893 Charges for goods and services: Public safety 6,800 6,800 7,919 1,119 Public works 225 225 - (225) Health and welfare 9,500 9,500 7,615 (1,885) Culture and recreation 508,750 508,750 387,437 (121,313) Fines and forfeits 101,060 101,060 91,707 (9,353) Miscellaneous revenue: Interest earned 160,500 160,500 119,589 (40,911) Rentals 75,825 92,825 103,267 10,442 Contributions and donations from private sources 73,000 73,000 74,964 1,964 Liquor Operating Agreement 601,420 601,420 605,415 3,995 Other 595,605 670,576 629,404 (41,172) Total revenues 12,025,981 12,256,571 13,124,873 868,302 EXPENDITURES General government: Legislative 117,018 124,040 108,325 15,715 Contingency 205,500 205,500 - 205,500 Executive 724,703 771,320 584,627 186,693 Financial administration 785,699 775,031 702,038 72,993 Other 1,495,680 1,493,084 1,334,107 158,977 Public safety: Police 3,296,259 3,301,309 3,255,533 45,776 Fire 1,626,775 1,628,843 1,510,891 117,952 Other protection 89,700 89,700 88,895 805 Public works: Community development 440,250 436,918 399,345 37,573 Engineer 492,467 473,518 460,291 13,227 Highways and streets 3,614,125 3,671,106 3,389,844 281,262 Health and welfare: Animal control 100,896 100,578 93,827 6,751 Culture and recreation: Recreation 726,553 755,923 630,613 125,310 Parks 2,907,253 3,200,892 2,886,950 313,942 Libraries 1,159,247 1,153,842 1,133,368 20,474 Total expenditures 17,782,125 18,181,604 16,578,654 1,602,950 Deficiency of revenues over expenditures (5,756,144) (5,925,033) (3,453,781) 2,471,252 OTHER FINANCING SOURCES (USES) Transfers in 5,986,890 5,986,890 5,497,052 (489,838) Transfers out (237,246) (3,537,246) (3,537,246) - Sale of capital assets 12,000 12,000 26,578 14,578 Total other financing sources 5,761,644 2,461,644 1,986,384 (475,260) Net change in fund balances 5,500 (3,463,389) (1,467,397) 1,995,992 Fund balances - beginning 16,304,433 16,304,433 16,304,433 - Fund balances - ending 16,309,933$ 12,841,044$ 14,837,036$ 1,995,992$ 79 City of Brookings December 31, 2015 Required Supplementary Information Notes to Required Supplementary Information – Budgetary Reporting The City follows these procedures in establishing the budgetary data reflected in the financial statements. 1. At the first regular Council meeting in September of each year or within ten days thereafter, the governing board introduces the annual appropriation ordinance for the ensuing fiscal year. 2. After adoption by the governing board, the operating budget is legally binding and actual expenditures for each purpose cannot exceed the amounts budgeted, except as indicated in number 4. 3. A line item for contingencies may be included in the annual budget. Such a line item may not exceed 5 percent of the total municipal budget and may be transferred by resolution of the governing board to any other budget category that is deemed insufficient during the year. 4. If it is determined during the year that sufficient amounts have not been budgeted, state statute allows the adoption of supplemental budgets. 5. Unexpended appropriations lapse at year-end unless encumbered by resolution of the governing board. 6. Formal budgetary integration is employed as a management control device during the year for the General Fund and special revenue funds and capital projects funds. 7. The Budgetary Comparison Schedules have been prepared on the modified accrual basis of accounting. The Budgetary Comparison Schedule presents expenditures for capital outlay and debt service purposes within each function. 80 Combining Balance Sheet - Nonmajor Governmental Funds Special Debt Capital Revenue Service Project Funds Funds Funds Total ASSETS Cash and cash equivalents 4,632,134$ - $ 3,198,072$ 7,830,206$ Investments 1,266,683 - - 1,266,683 Restricted cash and cash equivalents - 282,512 533,017 815,529 Receivables, (net of allowances for uncollectibles, if any): Accounts 84,115 - - 84,115 Storm drainage fees 688 - - 688 Special assessments 1,983,332 - - 1,983,332 Interest 1,492 - - 1,492 Due from other funds 704,975 - - 704,975 Due from other governments 785,606 - - 785,606 Prepaid items 19,296 - - 19,296 Inventories 22,815 - - 22,815 Total assets 9,501,136$ 282,512$ 3,731,089$ 13,514,737$ LIABILITIES Accounts payable 399,918$ -$ 462,283$ 862,201$ Retainage payable - - 113,638 113,638 Due to other funds 9,445 - - 9,445 Due to other governments 458,993 - - 458,993 Amount held for others 54,750 - - 54,750 Accrued wages payable 27,673 - - 27,673 Advance from other funds - 1,201,855 - 1,201,855 Unearned revenue 255,689 - - 255,689 Total liabilities 1,206,468 1,201,855 575,921 2,984,244 DEFERRED INFLOWS OF RESOURCES Unavailable revenue 1,896,630 - - 1,896,630 Total deferred inflows of resources 1,896,630 - - 1,896,630 FUND BALANCES Nonspendable 42,111 - - 42,111 Restricted 1,067,186 237,836 481,594 1,786,616 Committed 5,574,697 - - 5,574,697 Assigned - - 2,726,334 2,726,334 Unassigned (285,956) (1,157,179) (52,760) (1,495,895) Total fund balances (deficit)6,398,038 (919,343) 3,155,168 8,633,863 Total liabilities, deferred inflows of resources and fund balances (deficit)9,501,136$ 282,512$ 3,731,089$ 13,514,737$ City of Brookings December 31, 2015 81 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds Special Debt Capital Revenue Service Project Funds Funds Funds Total REVENUES Taxes: Property - $ 705,494$ - $ 705,494$ Storm drainage 854,955 - - 854,955 General sales and use 7,148,144 - - 7,148,144 Other 354,971 - - 354,971 Intergovernmental: County other 111,748 - - 111,748 Charges for goods and services: Culture and recreation 1,978,058 - - 1,978,058 Fines and forfeits: Fines 22,663 - - 22,663 Miscellaneous revenue: Interest income 38,939 - 4,334 43,273 Special assessments 563,022 - - 563,022 Contributions and donations from private sources - - 15,660 15,660 Other 236,258 - 19,910 256,168 Total revenues 11,308,758 705,494 39,904 12,054,156 EXPENDITURES Current: General government 4,431 - - 4,431 Public safety 650,720 - - 650,720 Public works 177,164 - 121,334 298,498 Culture and recreation 2,372,520 - - 2,372,520 Conservation and development 1,238,578 - - 1,238,578 Debt service: Principal 1,492,388 248,561 - 1,740,949 Interest and other charges 680,421 121,856 - 802,277 Capital outlay 1,314,910 - 2,228,169 3,543,079 Total expenditures 7,931,132 370,417 2,349,503 10,651,052 Excess (deficiency) of revenues over (under) expenditures 3,377,626 335,077 (2,309,599) 1,403,104 OTHER FINANCING SOURCES (USES) Transfers in 3,933,738 - 5,055,625 8,989,363 Transfers out (6,128,833) - (2,414,169) (8,543,002) Debt proceeds 187,274 - - 187,274 Total other financing sources (uses)(2,007,821) - 2,641,456 633,635 Net change in fund balances 1,369,805 335,077 331,857 2,036,739 Fund balances (deficit) - beginning 5,028,233 (1,254,420) 2,823,311 6,597,124 Fund balances (deficit) - ending 6,398,038$ (919,343)$ 3,155,168$ 8,633,863$ 82 City of Brookings December 31, 2015 Combining Statements – Nonmajor Special Revenue Funds 25% Sales & Use Tax Fund– to account for the revenue and expenditures of 25% of the 2nd penny sales tax. Proceeds are committed by the City Council to be used for capital improvements, including lease purchase agreements or realty, land acquisition, the programmed chip sealing, street maintenance, specialized equipment, the transfer to the Enhanced 911 fund, purchase of firefighting vehicles, public safety and equipment, and debt retirement related thereto. 75% Sales & Use Tax Fund – to account for the revenue and expenditures of 75% of the 2nd penny sales tax. Proceeds are committed by the City Council to be used for capital improvements which involve the construction and financing of public improvements. Enhanced 911 Fund – to account for the per phone line surcharge assessed to customers of private phone companies operating within Brookings County. These funds are used to defray the costs incurred by the City in providing emergency dispatch services. Swiftel Center Fund – to account for the operations and maintenance of the City owned facility. Financing is provided by revenues from events, rentals, and inter-fund transfers. Library Fines Fund – to account for the revenue derived from library fines and other allowed charges. Expenditures are authorized by the Library Board. Special Assessment Fund – to account for the revenue and expenditures of projects that may be assessed back to the property owner. Storm Drainage Fund – to account for the revenue and expenditures to maintain and construct storm drainage facilities. Financing is provided by a surcharge to property owners and inter-fund transfers. Bed and Booze Tax Fund – to account for the revenues and expenditures of the special one percent (1%) city gross receipts tax on lodging, alcoholic beverages, prepared food, and admissions. Revenues are restricted by State Law for the purpose of land acquisition; architectural fees; construction costs; payment for civic center, auditorium, or athletic facility buildings (including the maintenance staffing and operations of such facilities); and the promotion and advertising of the City. Business Improvement District (BID) Fee Fund – to account for the revenues and expenditures of the $2 per night occupancy fee charged to lodging facilities. Revenues are committed by City Council for improvements benefiting the City and its hotels and motels located within the District. 83 City of Brookings December 31, 2015 Combining Balance Sheet - Nonmajor Special Revenue Funds 25% Sales 75% Sales Enhanced Swiftel Library & Use Tax & Use Tax 911 Center Fines ASSETS Cash and cash equivalents 428,815$ 485,384$ 51,834$ 306,891$ 25,975$ Investments 263,129 496,470 - - 10,614 Receivables, (net of allowances for uncollectibles, if any): Accounts - - - 69,879 - Storm drainage fees - - - - - Special assessments - - - - - Interest 311 588 - - 6 Due from other funds 700,000 4,975 - - - Due from other governments 154,117 468,171 80,629 - - Prepaid items - - - 19,296 - Inventories - - - 22,815 - Total assets 1,546,372$ 1,455,588$ 132,463$ 418,881$ 36,595$ LIABILITIES Accounts payable -$ 123,787$ 1,315$ 268,278$ 592$ Due to other funds - - 4,380 - 5,065 Due to other governments - 439,880 - 19,113 - Amount held for others - - - - - Accrued wages payable - - 14,307 11,567 - Unearned revenue - - - 255,689 - Total liabilities - 563,667 20,002 554,647 5,657 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - - - - - Total deferred inflows of resources - - - - - FUND BALANCES Nonspendable - - - 42,111 - Restricted - - 112,461 - 30,938 Committed 1,546,372 1,000,000 - - - Unassigned - (108,079) - (177,877) - Total fund balances (deficit)1,546,372 891,921 112,461 (135,766) 30,938 Total liabilities, deferred inflows of resources and fund balances (deficit)1,546,372$ 1,455,588$ 132,463$ 418,881$ 36,595$ 84 City of Brookings December 31, 2015 Combining Balance Sheet - Nonmajor Special Revenue Funds (continued) Special Storm Bed and BID Assessment Drainage Booze Tax Fee Total 1,142,464$ 1,142,223$ 903,479$ 145,069$ 4,632,134$ - 496,470 - - 1,266,683 - - - 14,236 84,115 - 688 - - 688 1,983,332 - - - 1,983,332 - 587 - - 1,492 - - - - 704,975 - 4,882 77,807 - 785,606 - - - - 19,296 - - - - 22,815 3,125,796$ 1,644,850$ 981,286$ 159,305$ 9,501,136$ 3,197$ -$ 2,749$ -$ 399,918$ - - - - 9,445 - - - - 458,993 - - 54,750 - 54,750 - 1,799 - - 27,673 - - - - 255,689 3,197 1,799 57,499 - 1,206,468 1,895,942 688 - - 1,896,630 1,895,942 688 - - 1,896,630 - - - - 42,111 - - 923,787 - 1,067,186 1,226,657 1,642,363 - 159,305 5,574,697 - - - - (285,956) 1,226,657 1,642,363 923,787 159,305 6,398,038 3,125,796$ 1,644,850$ 981,286$ 159,305$ 9,501,136$ 85 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 25% Sales 75% Sales Enhanced Swiftel Library & Use Tax & Use Tax 911 Center Fines REVENUES Taxes: Storm drainage -$ -$ -$ -$ -$ General sales and use 1,557,617 4,737,757 - - - Other - - 354,971 - - Intergovernmental: County other - - 111,748 - - Charges for goods and services: Culture and recreation - - - 1,978,058 - Fines and forfeits: Fines - - - - 22,663 Miscellaneous revenue: Interest income 5,826 8,784 141 - 50 Special assessments - - - - - Other 3,692 - - - - Total revenues 1,567,135 4,746,541 466,860 1,978,058 22,713 EXPENDITURES Current: General government - - - - - Public safety - - 650,720 - - Public works - - - - - Culture and recreation - - 2,347,212 25,308 Conservation and development 47,869 591,110 - - - Debt service: Principal - 1,380,000 - - - Interest and other charges - 597,813 - - - Capital outlay - 516,049 53,030 376,492 - Total expenditures 47,869 3,084,972 703,750 2,723,704 25,308 Excess (deficiency) of revenues over (under) expenditures 1,519,266 1,661,569 (236,890) (745,646) (2,595) OTHER FINANCING SOURCES (USES) Transfers in - 1,004,203 174,432 751,492 - Transfers out (2,172,511) (3,136,410) (16,982) - - Debt proceeds - - - - - Total other financing sources (uses)(2,172,511) (2,132,207) 157,450 751,492 - Net change in fund balances (653,245) (470,638) (79,440) 5,846 (2,595) Fund balances (deficit) - beginning 2,199,617 1,362,559 191,901 (141,612) 33,533 Fund balances (deficit) - ending 1,546,372$ 891,921$ 112,461$ (135,766)$ 30,938$ 86 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds (continued) Special Storm Bed and BID Assessment Drainage Booze Tax Fee Total -$ 854,955$ -$ -$ 854,955$ - - 852,770 - 7,148,144 - - - - 354,971 - - - - 111,748 - - - - 1,978,058 - - - - 22,663 1,212 21,597 1,127 202 38,939 563,022 - - - 563,022 - 11,696 - 220,870 236,258 564,234 888,248 853,897 221,072 11,308,758 - - - 4,431 4,431 - - - - 650,720 - 177,164 - - 177,164 - - - - 2,372,520 - - 389,599 210,000 1,238,578 - 112,388 - - 1,492,388 - 82,608 - - 680,421 50,238 319,101 - - 1,314,910 50,238 691,261 389,599 214,431 7,931,132 513,996 196,987 464,298 6,641 3,377,626 1,608,491 345,120 50,000 - 3,933,738 - (427,930) (375,000) - (6,128,833) - 187,274 - - 187,274 1,608,491 104,464 (325,000) - (2,007,821) 2,122,487 301,451 139,298 6,641 1,369,805 (895,830) 1,340,912 784,489 152,664 5,028,233 1,226,657$ 1,642,363$ 923,787$ 159,305$ 6,398,038$ 87 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - 25% Sales & Use Tax Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General sales and use taxes 1,482,000$ 1,482,000$ 1,557,617$ 75,617 Miscellaneous revenue: Interest income 7,700 7,700 5,826 (1,874) Other - - 3,692 3,692 Total revenues 1,489,700 1,489,700 1,567,135 77,435 EXPENDITURES Conservation and development Economic development 62,226 62,226 47,869 14,357 Total expenditures 62,226 62,226 47,869 14,357 Excess of revenues over expenditures 1,427,474 1,427,474 1,519,266 91,792 OTHER FINANCING USES Transfers out (1,838,322) (2,364,985) (2,172,511) 192,474 Total other financing uses (1,838,322) (2,364,985) (2,172,511) 192,474 Net change in fund balances (348,622) (937,511) (653,245) 284,266 Fund balances - beginning 2,199,617 2,199,617 2,199,617 - Fund balances - ending 1,850,995$ 1,262,106$ 1,546,372$ 284,266$ 88 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - 75% Sales & Use Tax Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General sales and use taxes 4,543,000$ 4,543,000$ 4,737,757$ 194,757$ Miscellaneous revenue: Interest income 38,800 38,800 8,784 (30,016) Total revenues 4,581,800 4,581,800 4,746,541 164,741 EXPENDITURES Public works Highways and streets 4,600,000 579,451 516,049 63,402 Conservation and development Economic development 886,678 1,027,205 591,110 436,095 Debt Service - Principal 1,797,981 1,797,981 1,380,000 417,981 Interest 596,573 596,573 597,813 (1,240) Total expenditures 7,881,232 4,001,210 3,084,972 916,238 Excess (deficiency) of revenues over (under) expenditures (3,299,432) 580,590 1,661,569 1,080,979 OTHER FINANCING SOURCES (USES) Transfers in - 1,004,203 1,004,203 - Transfers out (1,943,270) (3,579,924) (3,136,410) 443,514 Total other financing sources (uses)(1,943,270) (2,575,721) (2,132,207) 443,514 Net change in fund balances (5,242,702) (1,995,131) (470,638) 1,524,493 Fund balances - beginning 1,362,559 1,362,559 1,362,559 - Fund balances - ending (3,880,143)$ (632,572)$ 891,921$ 1,524,493$ 89 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Enhanced 911 Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: Other taxes 355,000$ 355,000$ 354,971$ (29)$ Intergovernmental revenue: County shared revenues 87,217 111,717 111,748 31 Miscellaneous revenue: Interest income 1,000 1,000 141 (859) Total revenues 443,217 467,717 466,860 (857) EXPENDITURES Public safety: Other protection 698,449 764,206 703,750 60,456 Total expenditures 698,449 764,206 703,750 60,456 Deficiency of revenues under expenditures (255,232) (296,489) (236,890) 59,599 OTHER FINANCING SOURCES (USES) Transfers in 174,432 174,432 174,432 - Transfers out - - (16,982) (16,982) Total other financing sources (uses)174,432 174,432 157,450 (16,982) Net change in fund balances (80,800) (122,057) (79,440) 42,617 Fund balances - beginning 191,901 191,901 191,901 - Fund balances - ending 111,101$ 69,844$ 112,461$ 42,617$ 90 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Swiftel Center Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Charges for goods and services: Culture and recreation 1,811,665$ 1,811,665$ 1,978,058$ 166,393$ Total revenues 1,811,665 1,811,665 1,978,058 166,393 EXPENDITURES Culture and recreation: Auditoriums 2,510,261 2,690,747 2,723,704 (32,957) Total expenditures 2,510,261 2,690,747 2,723,704 (32,957) Deficiency of revenues under expenditures (698,596) (879,082) (745,646) 133,436 OTHER FINANCING SOURCES Transfers in 695,000 875,486 751,492 (123,994) Total other financing sources 695,000 875,486 751,492 (123,994) Net change in fund balances (3,596) (3,596) 5,846 9,442 Fund deficits - beginning (141,612) (141,612) (141,612) - Fund deficits - ending (145,208)$ (145,208)$ (135,766)$ 9,442$ 91 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Library Fines Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Fines and forfeits 30,000$ 30,000$ 22,663$ (7,337)$ Miscellaneous revenue: Interest income - - 50 50 Total revenues 30,000 30,000 22,713 (7,287) EXPENDITURES Culture and recreation: Libraries 35,000 35,000 25,308 9,692 Total expenditures 35,000 35,000 25,308 9,692 Deficiency of revenues under expenditures (5,000) (5,000) (2,595) 2,405 Net change in fund balances (5,000) (5,000) (2,595) 2,405 Fund balances - beginning 33,533 33,533 33,533 - Fund balances - ending 28,533$ 28,533$ 30,938$ 2,405$ 92 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Special Assessment Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Interest income 600$ 600$ 1,212$ 612$ Special assessments 479,900 831,600 563,022 (268,578) Total revenues 480,500 832,200 564,234 (267,966) EXPENDITURES Public works: Highways and streets 110,000 110,000 50,238 59,762 Total expenditures 110,000 110,000 50,238 59,762 Excess of revenues over expenditures 370,500 722,200 513,996 (208,204) OTHER FINANCING SOURCES Transfers in - 1,608,491 1,608,491 - Total other financing sources - 1,608,491 1,608,491 - Net change in fund balances 370,500 2,330,691 2,122,487 (208,204) Fund balances - beginning (895,830) (895,830) (895,830) - Fund balances - ending (525,330)$ 1,434,861$ 1,226,657$ (208,204)$ 93 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Storm Drainage Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: Storm drainage tax 820,000$ 810,000$ 849,521$ 39,521$ Penalties and interest on delinquent taxes 300 300 5,434 5,134 Miscellaneous revenue: Interest income 3,000 8,000 21,597 13,597 Other - 11,606 11,696 90 Total revenues 823,300 829,906 888,248 58,342 EXPENDITURES Public works: Highways and streets 2,052,640 643,750 496,265 147,485 Debt Service Principal 100,760 113,000 112,388 612 Interest 94,300 94,300 82,608 11,692 Total expenditures 2,247,700 851,050 691,261 159,789 Excess (deficiency) of revenues over (under) expenditures (1,424,400) (21,144) 196,987 218,131 OTHER FINANCING SOURCES (USES) Transfer In - 345,120 345,120 - Transfer out - (427,930) (427,930) - Proceeds from long term debt 970,000 210,000 187,274 (22,726) Total other financing sources (uses)970,000 127,190 104,464 (22,726) Net change in fund balances (454,400) 106,046 301,451 195,405 Fund balances - beginning 1,340,912 1,340,912 1,340,912 - Fund balances - ending 886,512$ 1,446,958$ 1,642,363$ 195,405$ 94 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Bed and Booze Tax Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General sales and use taxes 775,000$ 775,000$ 852,770$ 77,770$ Miscellaneous revenue: Interest income 1,300 1,300 1,127 (173) Total revenues 776,300 776,300 853,897 77,597 EXPENDITURES Conservation and development Economic development 450,936 450,936 389,599 61,337 Total expenditures 450,936 450,936 389,599 61,337 Excess of revenues over expenditures 325,364 325,364 464,298 138,934 OTHER FINANCING SOURCES (USES) Transfers in 50,000 50,000 50,000 - Transfers out (375,000) (375,000) (375,000) - Total other financing uses (325,000) (325,000) (325,000) - Net change in fund balances 364 364 139,298 138,934 Fund balances - beginning 784,489 784,489 784,489 - Fund balances - ending 784,853$ 784,853$ 923,787$ 138,934$ 95 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - BID Fee Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Interest income 350$ 350$ 202$ (148)$ Occupancy fee 400,000 400,000 220,870 (179,130) Total revenues 400,350 400,350 221,072 (179,278) EXPENDITURES General government Financial administration 4,400 4,400 4,431 (31) Conservation and development Economic development 200,000 210,000 210,000 - Total expenditures 204,400 214,400 214,431 (31) Excess of revenues over expenditures 195,950 185,950 6,641 (179,309) Net change in fund balances 195,950 185,950 6,641 (179,309) Fund balances - beginning 152,664 152,664 152,664 - Fund balances - ending 348,614$ 338,614$ 159,305$ (179,309)$ 96 City of Brookings December 31, 2015 Combining Statements – Nonmajor Debt Service Funds TIF-1 Innovation Campus Fund – To account for the revenues and expenditures of the Tax Increment District (TID) # 1. This TID was created to capture the incremental tax revenue generated by development of the Innovation Campus area and to pay for the debt incurred on the infrastructure improvements. TIF-3 Valley View Fund - To account for the revenues and expenditures of the Tax Increment District (TID) # 3. This TID was created to capture the incremental tax revenue generated by development of the Valley View addition and to pay for the debt incurred by the developer on the infrastructure improvements. This debt is developer guaranteed. TIF-4 Sieler Fund - To account for the revenues and expenditures of the Tax Increment District (TID) # 4. This TID was created to capture the incremental tax revenue generated by development of the Sieler addition and to pay for the debt incurred by the developer on the infrastructure improvements. This debt is developer guaranteed. TIF-5 32nd Ave Fund - To account for the revenue and expenditures of the Tax Increment District (TID) #5. This TID was created to capture the incremental tax revenue generated by development of the area along 32nd Ave and to pay for the debt incurred by the City on the infrastructure improvements. TIF-6 Digester Fund – To account for the revenues and expenditures of the Tax Increment District (TID) #6. This TID was created to capture the incremental tax revenue generated by development of the Bel Cheese plant area to pay for the debt incurred by the City on the digester. 97 City of Brookings December 31, 2015 Combining Balance Sheet - Nonmajor Debt Service Funds TIF-1 TIF-3 Innovation Valley TIF-4 TIF-5 TIF-6 Campus View Sieler 32nd Ave Digester Total ASSETS Restricted cash and cash equivalents 44,676$ 1,432$ -$ 32,178$ 204,226$ 282,512$ Total assets 44,676$ 1,432$ -$ 32,178$ 204,226$ 282,512$ LIABILITIES Advance from other funds 1,201,855$ -$ -$ -$ -$ 1,201,855$ Total liabilities 1,201,855 - - - - 1,201,855 FUND BALANCES (DEFICITS) Restricted - 1,432 - 32,178 204,226 237,836 Unassigned (1,157,179) - - - - (1,157,179) Total fund balances (deficit)(1,157,179) 1,432 - 32,178 204,226 (919,343) Total liabilities and fund balances 44,676$ 1,432$ - $ 32,178$ 204,226$ 282,512$ 98 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds TIF-1 TIF-3 Innovation Valley TIF-4 TIF-5 TIF-6 Campus View Sieler 32nd Ave Digester Total REVENUES Taxes: Property 308,042$ 199,681$ 82,199$ 14,193$ 101,379$ 705,494$ Total revenues 308,042 199,681 82,199 14,193 101,379 705,494 EXPENDITURES Debt service: Principal 27,183 157,773 63,605 - - 248,561 Interest and other charges 60,338 42,924 18,594 - - 121,856 Total expenditures 87,521 200,697 82,199 - - 370,417 Net change in fund balances 220,521 (1,016) - 14,193 101,379 335,077 Fund balances (deficit) - beginning (1,377,700) 2,448 - 17,985 102,847 (1,254,420) Fund balances (deficit) - ending (1,157,179)$ 1,432$ - $ 32,178$ 204,226$ (919,343)$ 99 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 1 Innovation Campus Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 250,000$ 250,000$ 308,042$ 58,042$ Total revenues 250,000 250,000 308,042 58,042 EXPENDITURES Debt service Principal 187,148 187,148 27,183 159,965 Interest and other charges 62,852 62,852 60,338 2,514 Total expenditures 250,000 250,000 87,521 162,479 Net change in fund balances - - 220,521 220,521 Fund deficit - beginning (1,377,700) (1,377,700) (1,377,700) - Fund deficit - ending (1,377,700)$ (1,377,700)$ (1,157,179)$ 220,521$ 100 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 3 Valley View Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 165,000$ 223,000$ 199,681$ (23,319)$ Total revenues 165,000 223,000 199,681 (23,319) EXPENDITURES Debt service Principal 122,337 180,337 157,773 22,564 Interest and other charges 42,663 42,663 42,924 (261) Total expenditures 165,000 223,000 200,697 22,303 Net change in fund balances - - (1,016) (1,016) Fund balances - beginning 2,448 2,448 2,448 - Fund balances - ending 2,448$ 2,448$ 1,432$ (1,016)$ 101 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 4 Sieler Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 80,500$ 87,500$ 82,199$ (5,301)$ Total revenues 80,500 87,500 82,199 (5,301) EXPENDITURES Debt service Principal 55,000 62,000 63,605 (1,605) Interest and other charges 25,500 25,500 18,594 6,906 Total expenditures 80,500 87,500 82,199 5,301 Net change in fund balances - - - - Fund balances - beginning - - - - Fund balances - ending - $ - $ - $ - $ 102 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 5 32nd Ave Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 25,000$ 25,000$ 14,193$ (10,807)$ Total revenues 25,000 25,000 14,193 (10,807) EXPENDITURES Interest and other charges 25,000 25,000 - 25,000 Total expenditures 25,000 25,000 - 25,000 Net change in fund balances - - 14,193 14,193 Fund balances - beginning 17,985 17,985 17,985 - Fund balances - ending 17,985$ 17,985$ 32,178$ 14,193$ 103 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 6 Digester Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Taxes: General property taxes 100,000$ 100,000$ 101,379$ 1,379$ Total revenues 100,000 100,000 101,379 1,379 EXPENDITURES Debt service Interest and other charges 100,000 100,000 - 100,000 Total expenditures 100,000 100,000 - 100,000 Net change in fund balances - - 101,379 101,379 Fund balances - beginning 102,847 102,847 102,847 - Fund balances - ending 102,847$ 102,847$ 204,226$ 101,379$ 104 City of Brookings December 31, 2015 Combining Statements – Nonmajor Capital Project Funds Dakota Nature Park Fund - to account for the resources received and expenditures to construct the nature park facility. The park includes trails, ponds for fishing and recreation, and a Nature Center. Resources are derived from private donations and grants. Gateway Project Fund - to account for the resources received and expenditures to purchase and put in place stone signage throughout the City identifying various parks and entrances to the City. Resources are derived mainly from private donations. TIF-6 Digester Fund – to account for the resources and expenditures to construct a digester to treat the waste water generated from the Bel Brands Cheese Plant. Resources are derived from grants and debt financing. TIF-7 S Main Fund - to account for the resources and expenditures to design and construct the streets and infrastructure surrounding the new grade school. Street Shop - to account for the resources and expenditures to design and construct the new street department shop. 105 City of Brookings December 31, 2015 Combining Balance Sheet - Nonmajor Capital Project Funds Dakota Nature Gateway TIF 6 TIF 7 Street Park Project Digester S Main Shop Total ASSETS Cash and cash equivalents - $ - $ - $ 95,354$ 3,102,718$ 3,198,072$ Restricted cash and cash equivalents 217,734 263,860 51,423 - - 533,017 Total assets 217,734$ 263,860$ 51,423$ 95,354$ 3,102,718$ 3,731,089$ LIABILITIES Accounts payable -$ -$ 45,120$ 148,114$ 269,049$ 462,283$ Retainage payable - - - - 113,638 113,638 Total liabilities - - 45,120 148,114 382,687 575,921 FUND BALANCES Restricted 217,734 263,860 - - 481,594 Assigned - - 6,303 2,720,031 2,726,334 Unassigned - - - (52,760) - (52,760) Total fund balances (deficit)217,734 263,860 6,303 (52,760) 2,720,031 3,155,168 Total liabilities and fund balances 217,734$ 263,860$ 51,423$ 95,354$ 3,102,718$ 3,731,089$ 106 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Project Funds Dakota Nature Gateway TIF6 TIF 7 Street Park Project Digester S Main Shop Total REVENUES Miscellaneous revenue: Interest income 623$ 391$ -$ 159$ 3,161$ 4,334$ Contributions and donations from - private sources 15,660 - - - - 15,660 Other - - - 19,910 - 19,910 Total revenues 16,283 391 - 20,069 3,161 39,904 EXPENDITURES Current: Public works - - 121,334 - - 121,334 Capital outlay 58,192 5,523 - 781,324 1,383,130 2,228,169 Total expenditures 58,192 5,523 121,334 781,324 1,383,130 2,349,503 Deficiency of revenues under expenditures (41,909) (5,132) (121,334) (761,255) (1,379,969) (2,309,599) OTHER FINANCING SOURCES Transfers in - - - 955,625 4,100,000 5,055,625 Transfers out (460,558) - - (1,953,611) - (2,414,169) Total other financing sources (460,558) - - (997,986) 4,100,000 2,641,456 Net change in fund balances (502,467) (5,132) (121,334) (1,759,241) 2,720,031 331,857 Fund balances - beginning 720,201 268,992 127,637 1,706,481 - 2,823,311 Fund balances (deficit) - ending 217,734$ 263,860$ 6,303$ (52,760)$ 2,720,031$ 3,155,168$ 107 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Dakota Nature Park Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Interest income -$ -$ 623$ 623$ Contributions and donations from private sources - 11,000 15,660 4,660 Total revenues - 11,000 16,283 5,283 EXPENDITURES Culture and recreation: Parks - 144,500 58,192 86,308 Total expenditures - 144,500 58,192 86,308 Deficiency of revenues under expenditures - (133,500) (41,909) 91,591 OTHER FINANCING USES Transers out - (460,558) (460,558) - Total other financing uses - (460,558) (460,558) - Net change in fund balances - (594,058) (502,467) 91,591 Fund balances - beginning 720,201 720,201 720,201 - Fund balances - ending 720,201$ 126,143$ 217,734$ 91,591$ 108 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Gateway Project Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Interest income -$ -$ 391$ 391$ Total revenues - - 391 391 EXPENDITURES Culture and recreation: Parks - 23,000 5,523 17,477 Total expenditures - 23,000 5,523 17,477 Net change in fund balances - (23,000) (5,132) 17,868 Fund balances - beginning 268,992 268,992 268,992 - Fund balances - ending 268,992$ 245,992$ 263,860$ 17,868$ 109 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 6 Digestor Fund Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) EXPENDITURES Public works Public works -$ 370,000$ 121,334$ 248,666$ Total expenditures - 370,000 121,334 248,666 Net change in fund deficit - (370,000) (121,334) 248,666 Fund balance - beginning 127,637 127,637 127,637 - Fund balances (deficit) - ending 127,637$ (242,363)$ 6,303$ 248,666$ 110 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - TIF 7 S Main Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Other -$ 21,500$ 19,910$ -1,590$ Interest earned - - 159 159 Total revenues - 21,500 20,069 (1,431) EXPENDITURES Conservation and development Public works - 857,432 781,324 76,108 Total expenditures - 857,432 781,324 76,108 Deficiency of revenues under expenditures - (835,932) (761,255) 74,677 OTHER FINANCING SOURCES (USES) Transfers in - 955,625 955,625 - Transfers out - (1,953,611) (1,953,611) - Total other financing sources (uses)- (997,986) (997,986) - Net change in fund balance - (1,833,918) (1,759,241) 74,677 Fund balances - beginning 1,706,481 1,706,481 1,706,481 - Fund balances (deficit) - ending 1,706,481$ (127,437)$ (52,760)$ 74,677$ 111 City of Brookings Year Ended December 31, 2015 Budgetary Comparison - Street Shop Variance With Budgeted Amounts Actual Final Budget (Modified Accrual Positive Original Final Basis)(Negative) REVENUES Miscellaneous revenue: Interest earned -$ -$ 3,161$ 3,161$ Total revenues - - 3,161 3,161 EXPENDITURES Public Works Highways and Streets - 1,656,006 1,383,130 272,876 Total expenditures - 1,656,006 1,383,130 272,876 Deficiency of revenues under expenditures - (1,656,006) (1,379,969) 276,037 OTHER FINANCING SOURCES Transfers in - 4,100,000 4,100,000 - Total other financing sources - 4,100,000 4,100,000 - Net change in fund balance - 2,443,994 2,720,031 276,037 Fund balances - beginning - - - - Fund balances - ending - $ 2,443,994$ 2,720,031$ 276,037$ 112 City of Brookings December 31, 2015 Combining Statements – Nonmajor Enterprise Funds Liquor Fund – to account for revenues and expenses of the City owned liquor store. Water Fund – to account for water services provided to the residents of the City of Brookings. All activities necessary to provide such service are accounted for in this fund. Airport Fund – to account for air transportation services to the residents of the City. All activities necessary to provide such service are accounted for in this fund, including, but not limited to, administration, operations, and maintenance. Golf Fund – to account for revenues and expenses of the City-owned municipal golf course. Solid Waste Fund – to account for solid waste services provided to the residents of the City. All activities necessary to provide such services are accounted for in this fund, including, but not limited to administration, operations, maintenance, billing, and collection. Research & Technology Center Fund – to account for revenues and expenses of a City-owned facility designed to house startup companies. 113 City of Brookings December 31, 2015 Combining Statement of Net Position - Nonmajor Enterprise Funds Liquor Water Airport ASSETS Current assets: Cash and cash equivalents 1,918,942$ 10,814,702$ - $ Investments - - - Receivables, (net of allowances for uncollectibles, if any): Accounts 4,298 418,589 - Unbilled accounts - 202,100 - Due from other funds - 11,871 48,195 Due from other governments - - 2,581,942 Inventories: Supplies - 233,393 - Stores 666,025 - - Prepaid expenses - 22,464 - Total current assets 2,589,265 11,703,119 2,630,137 Noncurrent assets: Restricted cash and cash equivalents - 52,355 - Advances to other funds 182,074 - - Net pension asset 40,083 233,033 23,011 Investments - other - 758 - Capital assets: Land - 203,013 1,923,340 Buildings and improvements 281,077 14,736,173 29,902,782 Machinery and equipment 329,084 552,600 973,029 Construction in progress - 100,149 - Less accumulated depreciation (401,846) (6,631,214) (9,251,701) Total noncurrent assets 430,472 9,246,867 23,570,461 Total assets 3,019,737 20,949,986 26,200,598 DEFERRED OUTFLOWS OF RESOURCES Pension related deferred outflows 45,877 270,999 26,337 Total assets and deferred outflows of resources 3,065,614$ 21,220,985$ 26,226,935$ LIABILITIES Current liabilities: Accounts payable 66,844$ 120,883$ 16,653$ Retainage payable - - 20,000 Due to other funds 2,198 14,302 1,401,737 Accrued interest payable - 2,049 - Accrued wages payable 7,667 2,576 1,824 Accrued taxes payable 32,035 265 - Customer deposits 9,000 - 710 Capital lease obligations - 71,057 - Compensated absences 1,599 19,381 740 Advance payments - 4,560 - Total current liabilities 119,343 235,073 1,441,664 Noncurrent liabilities: Capital lease obligations - 436,169 - Compensated absences 6,395 - 2,959 OPEB liability 17,812 47,096 6,775 Advances from other funds - - - Accrued landfill closure and postclosure costs - - - Total noncurrent liabilities 24,207 483,265 9,734 Total liabilities 143,550 718,338 1,451,398 DEFERRED INFLOWS OF RESOURCES Pension related deferred inflows 35,797 200,725 20,550 Total liabilities and deferred inflows of resources 179,347 919,063 1,471,948 114 City of Brookings December 31, 2015 Combining Statement of Net Position - Nonmajor Enterprise Funds Research & Solid Technology Golf Waste Center Total 31,526$ 4,351,451$ 165,916$ 17,282,537$ - - - - - 437,913 78,379 939,179 - 57,377 - 259,477 - 1,215 - 61,281 - - - 2,581,942 - 23,234 - 256,627 - - - 666,025 - - - 22,464 31,526 4,871,190 244,295 22,069,532 - 2,005,367 - 2,057,722 - - - 182,074 33,774 143,815 473,716 - - - 758 50,000 496,364 - 2,672,717 1,371,855 4,722,084 2,118,612 53,132,583 563,065 4,069,281 - 6,487,059 324,760 - - 424,909 (1,044,120) (5,081,136) (680,319) (23,090,336) 1,299,334 6,355,775 1,438,293 42,341,202 1,330,860 11,226,965 1,682,588 64,410,734 38,656 164,607 - 546,476 1,369,516$ 11,391,572$ 1,682,588$ 64,957,210$ 5,001$ 52,415$ 2,754$ 264,550$ 13,563 - - 33,563 1,320 710 3,017 1,423,284 - - - 2,049 3,041 21,800 - 36,908 - 5,897 - 38,197 - - - 9,710 - - - 71,057 7,120 18,125 - 46,965 - - - 4,560 30,045 98,947 5,771 1,930,843 - - 436,169 28,979 72,499 - 110,832 11,485 51,629 134,797 182,074 - - 182,074 - 537,893 - 537,893 222,538 662,021 - 1,401,765 252,583 760,968 5,771 3,332,608 30,162 128,440 - 415,674 282,745 889,408 5,771 3,748,282 115 City of Brookings December 31, 2015 Combining Statement of Net Position - Nonmajor Enterprise Funds (continued) Liquor Water Airport NET POSITION Net investment in capital assets 208,315 8,453,495 23,547,450 Restricted for: Debt service - 52,355 - SDRS pension purposes 50,163 303,307 28,798 Landfill closure and postclosure - - - Unrestricted 2,627,789 11,492,765 1,178,739 Total net position 2,886,267$ 20,301,922$ 24,754,987$ 116 City of Brookings December 31, 2015 Combining Statement of Net Position - Nonmajor Enterprise Funds (continued) Research & Solid Technology Golf Waste Center Total 1,083,486 4,206,593 1,438,293 38,937,632 - - - 52,355 42,268 179,982 - 604,518 - 648,220 - 648,220 (38,983) 5,467,369 238,524 20,966,203 1,086,771$ 10,502,164$ 1,676,817$ 61,208,928$ 117 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenses, and Changes in Net Position - Nonmajor Enterprise Funds Liquor Water Airport OPERATING REVENUES Charges for goods and services 4,169,571$ 4,812,082$ 34,459$ Miscellaneous - 192,103 - Total operating revenues 4,169,571 5,004,185 34,459 OPERATING EXPENSES Personal services 308,741 1,286,376 125,506 Other current expenses 233,114 1,339,836 69,403 Cost of goods sold 3,031,045 - - Depreciation 44,595 339,304 180,010 Total operating expenses 3,617,495 2,965,516 374,919 Operating income (loss)552,076 2,038,669 (340,460) NONOPERATING REVENUES (EXPENSES) Interest income 14,590 14,500 - Miscellaneous income - 73,463 - Gain (loss) on disposition of capital assets - 7,971 (467,707) Interest expense and fiscal charges - (27,666) - Total nonoperating revenues (expenses)14,590 68,268 (467,707) Income (loss) before capital contributions and transfers 566,666 2,106,937 (808,167) Capital contributions - 182,226 1,425,874 Transfers in - - 340,016 Transfers out (375,000) - - Change in net position 191,666 2,289,163 957,723 Net position - beginning, as previously reported 2,650,697 17,742,620 23,772,060 Adjustment for implementation of GASB 68 43,904 270,139 25,204 Net position - beginning, after restatement 2,694,601 18,012,759 23,797,264 Net position - ending 2,886,267$ 20,301,922$ 24,754,987$ 118 City of Brookings Year Ended December 31, 2015 Combining Statement of Revenues, Expenses, and Changes in Net Position - Nonmajor Enterprise Funds Research & Solid Technology Golf Waste Center Total 316,181$ 3,703,602$ 176,524$ 13,212,419$ - - - 192,103 316,181 3,703,602 176,524 13,404,522 251,353 832,146 - 2,804,122 237,221 713,349 66,466 2,659,389 - - - 3,031,045 77,783 641,843 53,007 1,336,542 566,357 2,187,338 119,473 9,831,098 (250,176) 1,516,264 57,051 3,573,424 - 11,279 267 40,636 12,526 - - 85,989 - 117,017 - (342,719) - - - (27,666) 12,526 128,296 267 (243,760) (237,650) 1,644,560 57,318 3,329,664 - - 1,608,100 433,817 - - 773,833 - (575,000) (75,000) (1,025,000) 196,167 1,069,560 (17,682) 4,686,597 853,611 9,275,079 1,694,499 55,988,566 36,993 157,525 - 533,765 890,604 9,432,604 1,694,499 56,522,331 1,086,771$ 10,502,164$ 1,676,817$ 61,208,928$ 119 City of Brookings Year Ended December 31, 2015 Combining Statement of Cash Flows - Nonmajor Enterprise Funds Liquor Water Airport CASH FLOWS FROM OPERATING ACTIVITIES Receipts from customers 4,166,392$ 4,893,515$ 35,151$ Internal activity-payments from other funds - 178,915 - Payments to suppliers (3,336,675) (1,251,118) (280,281) Payments to employees (311,663) (1,311,409) (131,544) Internal activity-payments to other funds - - - Net cash provided by (used in) operating activities 518,054 2,509,903 (376,674) CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in - - 340,016 Transfers out (375,000) - - Interfund payments - - (161,270) Net cash provided by (used in) noncapital financing activities (375,000) - 178,746 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Acquisition and construction of capital assets (5,400) (543,508) (1,358,109) Proceeds from sale of capital assets - 7,971 - Capital grants - - 1,556,037 Principal payments on debt (67,542) - Interest payments on debt - (27,941) - Principal payments on interfund advances/loans (182,074) - - Net cash provided by (used in) capital and related financing activities (187,474) (631,020) 197,928 CASH FLOWS FROM INVESTING ACTIVITIES Sale of investments 1,000,000 - - Interest income 9,464 14,494 - Net cash provided by investing activities 1,009,464 14,494 - Net increase in cash and cash equivalents 965,044 1,893,377 - Balances - beginning of the year 953,898 8,973,680 - Balances - end of the year 1,918,942 10,867,057 - Less restricted cash and cash equivalents - (52,355) - Cash and cash equivalents (current) per statement of net position 1,918,942$ 10,814,702$ - $ 120 City of Brookings Year Ended December 31, 2015 Combining Statement of Cash Flows - Nonmajor Enterprise Funds Research & Solid Technology Golf Waste Center Total 328,707$ 3,340,589$ 174,686$ 12,939,040$ - 239,646 - 418,561 (255,588) (680,291) (66,135) (5,870,088) (252,557) (856,477) - (2,863,650) - (231,359) - (231,359) (179,438) 1,812,108 108,551 4,392,504 433,817 - - 773,833 - (575,000) (75,000) (1,025,000) - - - (161,270) 433,817 (575,000) (75,000) (412,437) (404,927) (358,075) - (2,670,019) - 143,000 - 150,971 - - - 1,556,037 - - - (67,542) - - - (27,941) 182,074 - - - (222,853) (215,075) - (1,058,494) - - - 1,000,000 - 11,279 267 35,504 - 11,279 267 1,035,504 31,526 1,033,312 33,818 3,957,077 - 5,323,506 132,098 15,383,182 31,526 6,356,818 165,916 19,340,259 - (2,005,367) - (2,057,722) 31,526$ 4,351,451$ 165,916$ 17,282,537$ 121 City of Brookings Year Ended December 31, 2015 Combining Statement of Cash Flows - Nonmajor Enterprise Funds (continued) Liquor Water Airport Reconciliation of operating income to net cash provided by (used in) operating activities: Operating income (loss)552,076$ 2,038,669$ (340,460)$ Miscellaneous income - 73,463 - Adjustments to reconcile operating income to net cash provided by (used in) operating activities: Depreciation 44,595 339,304 180,010 Landfill postclosure cost - - - Change in operating assets and liabilities: (Increase) decrease in: Receivables (3,179) (49,534) 692 Inventories (41,590) 159,183 - Prepaid expenses - 1,411 - Deferred outflows related to pensions (15,210) (78,610) (8,732) Net pension asset 26,916 180,262 15,452 Increase (decrease) in: Deferred inflows related to pensions (17,965) (134,820) (10,314) Account and other payables (30,926) (27,559) (210,878) Accrued wages payable 727 1,739 251 Accrued leave payable 3,365 5,208 (2,506) Accrued OPEB payable (755) 1,187 (189) Net cash provided by (used in) operating activities 518,054$ 2,509,903$ (376,674)$ NONCASH INVESTING, CAPITAL AND FINANCING ACTIVITIES Capital asset additions from contributed capital -$ 182,226$ 1,406,874$ Accounts payable for capital assets - 87,835 20,000$ 122 City of Brookings Year Ended December 31, 2015 Combining Statement of Cash Flows - Nonmajor Enterprise Funds (continued) Research & Solid Technology Golf Waste Center Total (250,176)$ 1,516,264$ 57,051$ 3,573,424$ 12,526 - - 85,989 77,783 641,843 53,007 1,336,542 - (185,481) - (185,481) - (133,471) (1,837) (187,329) - (4,294) - 113,299 - 10,104 - 11,515 (12,816) (54,575) - (169,943) 22,679 96,576 - 341,885 (15,137) (64,459) - (242,695) (18,367) (8,527) 330 (295,927) 299 3,538 - 6,554 4,148 (4,182) - 6,033 (377) (1,228) - (1,362) (179,438)$ 1,812,108$ 108,551$ 4,392,504$ -$ -$ -$ 1,589,100$ - - - 107,835 123 City of Brookings December 31, 2015 Combining Statements – Fiduciary Funds Section 125 Agency Fund – to account for the employees’ withholdings and disbursements for Section 125 Flexible Spending Accounts. Rural Fire Agency Fund – to account for deposits and disbursements for the Brookings Rural Volunteer Fire Association. I-29 Corridor Agency Fund – to account for the deposits and disbursements for the I-29 Corridor Committee. 124 City of Brookings December 31, 2015 Combining Statement of Net Position - Fiduciary Funds Section 125 Rural Fire I-29 Corridor Agency Fund Agency Fund Agency Fund Total ASSETS Cash and cash equivalents 5,247$ 57,958$ 38,714$ 101,919$ Total Assets 5,247 57,958 38,714 101,919 LIBILITIES Amounts held for others 5,247 57,958 38,714 101,919 Total Liabilities 5,247$ 57,958$ 38,714$ 101,919$ 125 City of Brookings Year Ended December 31, 2015 Combining Statement of Changes in Assets and Liabilities - Fiduciary Funds Balance Balance January 1,December 31, 2015 Additions Deductions 2015 Section 125 Agency Fund Assets:- Cash and cash equivalents 1,957$ 60,561$ 57,271$ 5,247$ Liabilities: Due to flex claims 1,957$ 60,561$ 57,271$ 5,247$ Rural Fire Agency Fund Assets:- Cash and cash equivalents 43,926$ 14,032$ -$ 57,958$ Liabilities: Due to Rural Fire Association 43,926$ 14,032$ -$ 57,958$ I-29 Corridor Agency Fund Assets: Cash and cash equivalents 38,714$ -$ -$ 38,714$ Liabilities: Due to I-29 Corridor Committee 38,714$ -$ -$ 38,714$ Total All Agency Funds Assets: Cash and cash equivalents 84,597$ 74,593$ 57,271$ 101,919$ Total assets 84,597 74,593 57,271 101,919 Liabilities: Due to flex claims 1,957 60,561 57,271 5,247 Due to Rural Fire Association 43,926 14,032 - 57,958 Due to I-29 Corridor Committee 38,714 - - 38,714 Total liabilities 84,597$ 74,593$ 57,271$ 101,919$ 126 City of Brookings December 31, 2015 Statistical Section This part of the City of Brookings comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplemental information says about the City’s overall financial health. Contents Page Financial Trends 128 These schedules contain trend information to help the reader understand how the government’s financial performance and well-being have changed over time. Revenue Capacity 140 These schedules contain information to help the reader assess two of the government’s significant local revenue sources: property and sales tax. Debt Capacity 144 These schedules present information to help the reader assess the affordability of the government’s current levels of outstanding debt and the government’s ability to issue additional debt in the future. Demographic and Economic Information 151 These schedules offer demographic and economic indicators to help the reader understand the environment in which the government’s financial activities take place. Operating Information 153 These schedules contain service and infrastructure data to help the reader understand how the information in the government’s financial report relates to the services and activities the government provides and performs. 127 Table 1 2015 2014 2013 Net investment in capital assets 64,579,729$ 56,625,781$ 62,699,489$ Restricted 5,013,005 3,156,857 2,259,218 Unrestricted 22,424,600 20,309,859 14,775,779 Total Governmental Activities Net Position 92,017,334 80,092,497 79,734,486 Net investment in capital assets 114,205,616 104,777,360 95,258,237 Restricted 13,109,068 4,717,291 4,525,348 Unrestricted 98,824,153 89,517,138 75,079,940 Total Business-type Activities Net Position 226,138,837 199,011,789 174,863,525 Net investment in capital assets 178,785,345 161,403,141 157,957,726 Restricted 18,122,073 7,874,148 6,784,566 Unrestricted 121,248,753 109,826,997 89,855,719 Total Primary Government Net Position 318,156,171$ 279,104,286$ 254,598,011$ City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Governmental Activities Net Position by Component (accrual basis of accounting) Business-type Activities Primary Government Last Ten Fiscal Years 128 Table 1 (continued) 2012 2011 2010 2009 2008 2007 2006 58,460,116$ 52,072,530$ 45,842,974$ 45,371,397$ 41,597,591$ 35,609,628$ 30,072,329$ 3,442,323 6,763,195 2,322,180 12,734,742 13,439,911 12,297,442 10,995,047 15,314,013 15,594,203 19,472,723 6,337,114 6,185,767 6,753,769 5,392,450 77,216,452 74,429,928 67,637,877 64,443,253 61,223,269 54,660,839 46,459,826 80,957,243 73,528,406 70,247,535 65,388,333 58,727,447 52,110,330 49,026,839 4,537,278 5,586,414 5,385,722 7,571,555 7,941,050 7,064,753 14,347,974 73,515,304 69,954,220 64,395,679 60,706,355 62,658,499 61,470,156 50,424,286 159,009,825 149,069,040 140,028,936 133,666,243 129,326,996 120,645,239 113,799,099 139,417,359 125,600,936 116,090,509 110,759,730 100,325,038 87,719,958 79,099,168 7,979,601 12,349,609 7,707,902 20,306,297 21,380,961 19,362,195 25,343,021 88,829,317 85,548,423 83,868,402 67,043,469 68,844,266 68,223,925 55,816,736 236,226,277$ 223,498,968$ 207,666,813$ 198,109,496$ 190,550,265$ 175,306,078$ 160,258,925$ Net Position by Component (accrual basis of accounting) Last Ten Fiscal Years City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) 129 2015 2014 2013 2,865,778$ 3,017,290$ 2,358,748$ Public Safety 5,054,020 5,036,493 4,764,759 Public Works 5,934,626 7,410,926 10,914,820 Health and Welfare 101,042 112,621 158,918 Culture and Recreation 7,400,596 7,168,741 6,295,703 1,209,287 1,939,064 990,262 734,534 808,496 675,609 Total Governmental Activities Expenses 23,299,883 25,493,631 26,158,819 Electric 22,650,657 21,175,715 20,251,826 Hospital 54,370,009 52,211,048 36,080,349 Telephone 30,598,739 33,929,866 33,816,035 PCS - - - Liquor 3,608,454 3,664,576 9,680,751 Water 2,964,843 2,641,459 2,692,785 Wastewater 3,704,292 3,124,572 2,698,766 Airport 839,807 383,714 442,346 Golf 561,156 552,028 546,691 Solid Waster 2,168,527 2,410,877 2,580,584 119,473 181,122 169,691 121,585,957 120,274,977 108,959,824 Total Primary Government Expenses 144,885,840 145,768,608 135,118,643 Program Revenues Governmental Activities: Charges for Services General Government 106,379 103,908 105,121 Public Safety 99,666 97,099 113,355 Public Works 2,638,528 927,311 1,104,225 Health and Welfare 10,735 11,848 10,765 Culture and Recreation 2,419,523 2,186,594 1,994,400 Conservation and Development - - - Operating Grants and Contributions 249,049 881,030 217,529 Capital Grants and Contributions 5,418,303 221,332 4,736,387 Total Governmental Activities Program Revenues 10,942,183$ 4,429,122$ 8,281,782$ Statistics (Unaudited) Research and Technology Total Business-type Activities Expenses Governmental Activities: General Government Conservation and Development Interest on Long-Term Debt City of Brookings Comprehensive Annual Financial Report December 31, 2015 Table 2 Changes in Net Position (accrual basis of accounting) Last Ten Fiscal Years Business-type Activities: 130 2012 2011 2010 2009 2008 2007 2006 1,055,817$ 2,020,020$ 2,127,308$ 2,000,014$ 1,737,799$ 1,645,669$ 1,499,615$ 4,270,067 4,118,486 3,917,316 3,690,186 3,397,216 3,186,250 2,939,777 6,729,324 4,290,086 5,803,132 5,153,952 3,339,805 835,588 3,667,007 92,113 93,423 89,310 93,475 87,399 87,304 77,816 6,436,427 6,966,088 6,017,894 5,629,096 5,795,387 5,472,577 5,434,517 2,293,814 870,748 692,741 1,362,380 1,181,557 2,185,183 1,102,739 639,310 616,398 694,435 780,087 874,677 868,693 669,871 21,516,872 18,975,249 19,342,136 18,709,190 16,413,840 14,281,264 15,391,342 19,199,183 19,453,708 18,823,598 17,911,760 15,562,676 14,298,942 12,482,504 35,296,152 31,719,055 30,377,015 29,827,107 27,743,482 25,231,796 22,850,330 32,003,023 29,004,409 29,096,920 28,488,641 29,133,641 31,431,991 23,009,163 - - - - - 1,325,629 8,113,437 9,075,437 8,683,666 8,290,341 8,063,595 7,835,940 7,464,533 6,743,006 2,354,964 2,523,258 2,478,061 2,425,345 2,184,665 2,151,034 2,029,178 2,747,422 2,477,695 2,347,343 2,397,293 2,327,187 2,180,399 1,991,188 425,870 375,364 437,557 419,489 426,354 483,848 434,238 548,373 491,379 478,085 473,086 - - - 2,164,105 2,240,293 1,948,344 1,984,222 1,846,228 1,742,340 1,679,150 86,983 106,994 85,264 95,361 90,712 86,130 69,173 103,901,512 97,075,821 94,362,528 92,085,899 87,150,885 86,396,642 79,401,367 125,418,384 116,051,070 113,704,664 110,795,089 103,564,725 100,677,906 94,792,709 279,334 133,387 67,569 86,767 146,987 97,459 311,910 103,308 106,281 70,169 77,437 84,017 91,106 110,769 661,937 536,813 914,078 1,133,442 496,853 463,042 301,225 12,986 15,081 13,064 16,527 14,878 15,699 943 1,681,932 2,035,253 1,603,842 1,755,012 1,680,555 2,053,842 1,942,243 - 21,105 17,419 10,064 232,391 55,800 720,334 264,644 204,509 221,492 164,708 488,979 116,898 97,179 2,198,436 3,780,047 2,676,500 1,971,109 1,311,600 579,544 702,376 5,202,577$ 6,832,476$ 5,584,133$ 5,215,066$ 4,456,260$ 3,473,390$ 4,186,979$ Statistics (Unaudited) City of Brookings Comprehensive Annual Financial Report December 31, 2015 131 2015 2014 2013 Business-type Activities Charges for Services Electric 26,341,321$ 25,314,931$ 23,946,694$ Hospital 61,882,772 53,809,700 37,829,424 Telephone 34,313,078 37,007,090 35,519,726 PCS - - - Liquor 4,169,571 3,986,650 10,593,780 Water 5,004,185 4,188,992 4,077,955 Wastewater 4,816,146 4,102,822 3,418,736 Airport 34,459 25,669 20,025 Golf 316,181 304,314 334,640 Solid Waste 3,703,602 3,485,365 3,248,335 Research and Technology 176,524 193,430 148,490 Operating Grants and Contributions 20,112 405,059 34,994 Capital Grants and Contributions 2,210,269 11,935,303 7,680,056 Total Business-type Activities Program Revenues 142,988,220 144,759,325 126,852,855 Total Primary Government Program Revenues 153,930,403 149,188,447 135,134,637 Net (Expense)/Revenue Governmental Activities (12,357,700) (21,064,509) (17,877,037) Business-type Activities 21,402,263 24,484,348 17,893,031 Total Primary Government Net Expense 9,044,563 3,419,839 15,994 General Revenue and Transfers Governmental Activities: Taxes Property Tax 4,397,088 4,230,428 3,848,367 Sales Tax 13,475,972 13,163,848 12,806,189 Other Tax 354,971 351,187 355,141 State Shared Revenues 208,033 210,750 189,336 Unrestricted Investment Earnings (Loss)162,862 287,430 (13,967) Gain on Disposition Of Capital Assets - 104,521 12,233 Miscellaneous Revenue, Net 1,508,487 1,853,211 645,650 Transfers 2,406,167 1,221,145 2,552,122 Total Governmental Activities General Revenues 22,513,580$ 21,422,520$ 20,395,071$ Table 2 (continued) Changes in Net Position (accrual basis of accounting) City of Brookings Statistics (Unaudited) Comprehensive Annual Financial Report December 31, 2015 Last Ten Fiscal Years 132 2012 2011 2010 2009 2008 2007 2006 22,536,286$ 21,971,749$ 20,843,620$ 18,961,413$ 17,450,757$ 16,198,651$ 14,584,035$ 37,778,186 33,206,801 30,634,289 30,768,105 29,132,073 27,306,264 25,663,614 33,721,116 31,795,176 31,308,878 28,811,968 31,710,534 34,693,699 27,642,945 - - - - - 1,273,886 7,468,302 9,971,319 9,524,345 9,102,921 8,833,238 8,518,713 7,953,519 7,238,017 4,026,895 3,345,211 2,931,954 2,912,247 2,764,407 2,536,785 2,270,345 3,238,910 2,937,624 2,733,661 2,627,272 2,475,986 2,350,354 2,201,480 70,845 38,577 50,292 29,685 28,774 45,436 69,070 377,663 324,398 330,926 318,158 - - - 3,057,700 2,893,545 3,034,242 2,954,547 2,742,602 2,792,048 2,608,938 99,363 181,972 195,616 196,776 203,700 188,596 177,054 105,083 84,057 38,753 78,557 172,380 81,997 23,695 2,516,752 902,745 679,348 1,350,487 1,523,419 735,885 2,056,923 117,500,118 107,206,200 101,884,500 97,842,453 96,723,345 96,157,120 92,004,418 122,702,695 114,038,676 107,468,633 103,057,519 101,179,605 99,630,510 96,191,397 (16,314,295) (12,142,773) (13,758,003) (13,494,124) (11,957,580) (10,807,874) (11,204,363) 13,598,606 10,130,379 7,521,972 5,756,554 9,572,460 9,760,478 12,603,051 (2,715,689) (2,012,394) (6,236,031) (7,737,570) (2,385,120) (1,047,396) 1,398,688 3,666,358 3,466,805 3,208,774 2,743,170 2,529,446 2,346,486 1,973,794 11,423,187 10,869,687 10,516,247 10,405,659 10,675,328 10,574,365 9,560,754 311,280 362,092 491,212 170,218 170,816 150,000 141,365 173,383 154,794 174,797 184,959 174,655 187,654 187,334 201,966 417,244 133,621 230,000 353,647 565,739 467,644 (67,947) 175,188 153,249 (277,447) (42,581) (193,468) (51,784) 717,957 504,890 731,405 707,411 1,919,560 620,650 301,606 2,938,647 2,984,124 1,543,322 2,550,138 2,739,139 2,839,500 2,392,000 19,364,831$ 18,934,824$ 16,952,627$ 16,714,108$ 18,520,010$ 17,090,926$ 14,972,713$ Statistics (Unaudited) City of Brookings Comprehensive Annual Financial Report December 31, 2015 133 2015 2014 2013 Other Tax -$ -$ -$ Unrestricted Investment Earnings 550,280 705,244 344,479 Gain on Disposition of Capital Assets 175,464 5,047 - Minority Interest Payment - - - Miscellaneous Revenue, Net 192,028 174,770 168,312 Transfers (2,406,167) (1,221,145) (2,552,122) Total Business-type Activities General Revenues (1,488,395) (336,084) (2,039,331) Total Primary Government General Revenues 21,025,185 21,086,436 18,355,740 10,155,880 358,011 2,518,034 19,913,868 24,148,264 15,853,700 30,069,748$ 24,506,275$ 18,371,734$ Total Primary Government Governmental Activities Business-type Activities City of Brookings Comprehensive Annual Financial Report December 31, 2015 Last Ten Fiscal Years Statistics (Unaudited) Table 2 (continued) Changes in Net Position (accrual basis of accounting) Business-type Activities Change in Net Position 134 2012 2011 2010 2009 2008 2007 2006 -$ -$ -$ 8,544$ 5,303$ -$ -$ 687,850 1,004,282 761,254 1,151,930 2,032,135 2,669,261 2,065,144 (102,132) (121,605) (115,988) 31,046 (12,290) (694) (512,467) (573,316) (332,836) (345,268) (184,022) (304,943) (2,828,288) (1,000,000) 138,458 1,344,008 84,045 125,333 128,231 84,883 120,045 (2,938,647) (2,984,124) (1,543,322) (2,550,138) (2,739,139) (2,839,500) (2,392,000) (2,787,787) (1,090,275) (1,159,279) (1,417,307) (890,703) (2,914,338) (1,719,278) 16,577,044 17,844,549 15,793,348 15,296,801 17,629,307 14,176,588 13,253,435 3,050,536 6,792,051 3,194,624 3,219,984 6,562,430 6,283,052 3,768,350 10,810,819 9,040,104 6,362,693 4,339,247 8,681,757 6,846,140 10,883,773 13,861,355$ 15,832,155$ 9,557,317$ 7,559,231$ 15,244,187$ 13,129,192$ 14,652,123$ City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) 135 Last Ten Fiscal Years 2015 2014 2013 General Fund Reserved -$ -$ -$ Unreserved, Designated - - - Unreserved - - - Nonspendable 3,606,784 3,907,467 2,528,342 Restricted 849,383 68,104 70,892 Committed 3,609,682 3,609,682 3,496,014 Assigned 1,528,508 1,328,102 1,237,505 Unassigned 5,242,679 7,391,078 5,387,268 Total General Fund 14,837,036 16,304,433 12,720,021 All Other Governmental Funds Reserved - - - Unreserved, Designated - - - - - - - - - Nonspendable 42,111 114,912 69,673 Restricted 1,786,616 2,732,901 2,442,979 Committed 5,574,697 4,549,043 7,330,753 Assigned 2,726,334 1,834,118 - Unassigned (1,495,895) (2,633,850) (3,322,382) 8,633,863$ 6,597,124$ 6,521,023$ Note: In 2011, reporting of fund balance was changed to meet the requirements of GASB 54. Unreserved, reported in Special Revenue Funds Capital Projects Funds Total All Other Governmental Funds Statistics (Unaudited) Table 3 Fund Balances of Governmental Funds (modified accrual basis of accounting) City of Brookings Comprehensive Annual Financial Report December 31, 2015 136 2012 2011 2010 2009 2008 2007 2006 -$ -$ 2,450,478$ 870,836$ 503,209$ 852,087$ 881,478$ - - 667,158 2,779,067 2,319,265 4,650,025 - - - 5,373,043 4,115,965 4,568,066 2,394,795 5,524,685 2,634,912 2,616,277 - - - - - 58,954 66,553 - - - - - 3,445,058 4,498,922 - - - - - 1,542,554 1,509,153 - - - - - 3,662,265 2,509,943 - - - - - 11,343,743 11,200,848 8,490,679 7,765,868 7,390,540 7,896,907 6,406,163 - - 1,625,518 3,699,446 4,215,796 3,515,069 3,104,234 - - - 3,720,000 4,410,374 3,325,500 - - - - - 7,089,328 3,069,328 2,139,063 4,002,508 6,366,871 - - 4,090,906 164,784 1,103,407 - 80,930 57,008 56,944 - - - - - 3,398,017 6,305,790 - - - - - 5,857,965 6,102,802 - - - - - - - - - - - - (2,159,902) (1,800,429) - - - - - 7,153,088$ 10,665,107$ 12,805,752$ 10,653,558$ 11,868,640$ 10,843,077$ 9,552,035$ Statistics (Unaudited) City of Brookings Comprehensive Annual Financial Report December 31, 2015 137 Table 4 Changes in Fund Balances of Governmental Funds (modified accrual basis of accounting) Last Ten Fiscal Years 2015 2014 2013 Revenues Taxes General Property Taxes 3,543,269$ 3,376,885$ 3,016,469$ Storm Drainage Taxes 854,955 854,150 829,337 General Sales and Use Tax 13,475,972 13,163,848 12,806,189 Other Taxes 356,459 352,603 356,617 Licenses and Permits 278,742 239,343 278,460 Intergovernmental 1,763,471 1,418,147 2,264,557 Charges for Goods and Services 2,381,029 2,148,309 1,966,908 Fines and Forfeitures 114,370 119,012 131,109 Miscellaneous Revenue 2,410,762 2,068,555 868,679 Total Revenue 25,179,029 23,740,852 22,518,325 Expenditures General Government 2,597,446 2,589,569 2,028,213 Public Safety 4,368,472 4,145,744 4,010,385 Public Works 3,535,346 3,662,177 8,053,705 Health and Welfare 93,827 97,919 145,749 Culture and Recreation 5,861,992 5,869,280 5,144,313 Conservation and Development 1,238,578 1,951,862 990,262 Debt Service Principal 1,892,589 6,602,213 1,709,729 Interest 808,782 750,036 551,795 Capital Outlay 6,832,674 8,585,567 4,955,184 27,229,706 34,254,367 27,589,335 (2,050,677) (10,513,515) (5,071,010) Other Financing Sources (Uses) Transfers In 14,486,415 4,319,909 9,361,323 Transfers Out (12,080,248) (3,098,764) (6,809,201) 187,274 12,118,405 3,081,110 Refunding Bonds Issued - - - Premium (Discount) on Bonds Issued - - - Payment to Refunded Bond Escrow Agent - - - Sale of Capital Assets 26,578 144,667 181,991 Insurance Recoveries - 689,811 - 2,620,019 14,174,028 5,815,223 569,342$ 3,660,513$ 744,213$ 12.36%25.79%9.69% City of Brookings Comprehensive Annual Financial Report December 31, 2015 Net Change in Fund Balances Debt service as a percentage of noncapital expenditures Statistics (Unaudited) Total Expenditures Deficiency of Revenues under Expenditures Proceeds From Long Term Debt Total Other Financing Sources 138 2012 2011 2010 2009 2008 2007 2006 2,841,272$ 2,652,942$ 2,386,777$ 2,195,782$ 2,014,817$ 1,852,440$ 1,712,943$ 824,933 828,081 811,791 544,121 522,267 485,253 259,486 11,423,187 10,869,687 10,516,247 10,405,658 10,675,328 10,574,365 9,560,755 312,756 362,092 491,212 173,839 172,496 151,824 143,117 415,398 221,132 158,086 226,109 258,130 221,929 57,040 1,158,203 924,513 1,349,720 628,583 897,928 995,230 518,917 1,660,204 2,018,029 1,585,429 1,740,750 1,900,111 2,135,782 2,802,007 125,436 127,095 90,867 97,690 106,023 96,235 83,026 1,151,440 4,355,357 1,511,361 1,802,263 2,561,074 1,200,440 1,514,701 19,912,829 22,358,928 18,901,490 17,814,795 19,108,174 17,713,498 16,651,992 1,912,768 1,812,771 1,678,891 1,677,392 1,642,248 1,587,536 1,430,745 3,766,245 3,580,331 3,459,678 3,307,418 3,206,549 2,995,551 2,796,566 3,969,147 3,171,773 3,018,999 2,707,472 2,537,756 2,382,443 2,197,199 83,015 87,768 85,601 85,436 83,448 81,045 73,261 5,128,429 5,752,280 5,065,207 4,725,144 4,908,885 4,923,233 4,913,084 1,916,933 870,748 696,405 1,275,895 654,175 789,464 1,652,739 2,104,628 2,067,011 610,019 1,823,340 1,901,308 1,774,883 1,405,653 701,867 574,969 933,626 734,131 805,499 861,970 807,851 9,131,820 7,190,357 6,414,053 6,188,877 6,689,546 2,788,326 4,930,470 28,714,852 25,108,008 21,962,479 22,525,105 22,429,414 18,184,451 20,207,568 (8,802,023) (2,749,080) (3,060,989) (4,710,310) (3,321,240) (470,953) (3,555,576) 7,385,314 7,738,544 6,046,458 5,396,083 7,354,896 4,473,911 4,219,172 (4,446,667) (4,754,420) (4,117,803) (2,845,945) (4,615,757) (1,634,411) (1,827,172) 2,362,261 128,394 6,922,220 1,244,986 399,073 - 3,129,547 - - 10,735,000 - - - - - - 143,820 - - - - - - (13,967,350) - - - - 131,991 206,086 175,649 75,432 25,000 800 209,195 - - - - - - - 5,432,899 3,318,604 5,937,994 3,870,556 3,163,212 2,840,300 5,730,742 (3,369,124)$ 569,524$ 2,877,005$ (839,754)$ (158,028)$ 2,369,347$ 2,175,166$ 13.61%14.75%9.93%15.66%17.20%17.13%14.49% City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) 139 Assessed Value and Actual Value of Taxable Property Fiscal Year Agriculture Property Residential Property Commercial Property Total Taxable Assessed Value Total Direct Tax Rate Estimated Actual Taxable Value Assessed Value as a Percentage of Actual Value 2015 1,117,070$ 601,728,500$ 520,802,468$ 1,123,648,038$ 2.61 1,266,747,083$ 89% 2014 1,001,010 572,896,960 497,095,358 1,070,993,328 2.64 1,220,195,094 88% 2013 880,820 549,048,075 468,646,718 1,018,575,613 2.68 1,171,125,793 87% 2012 922,725 531,622,005 450,729,874 983,274,604 2.65 1,127,965,599 87% 2011 802,040 536,924,455 441,438,513 979,165,008 2.58 1,088,200,532 90% 2010 658,740 531,010,785 418,790,992 950,460,517 2.56 1,057,327,279 90% 2009 1,193,330 519,390,380 404,030,050 924,613,760 2.54 1,016,293,745 91% 2008 1,276,785 481,112,678 371,310,852 853,700,315 2.54 910,434,341 94% 2007 1,034,120 438,906,975 337,813,791 777,754,886 2.57 837,500,441 93% 2006 917,860 402,262,660 307,040,591 710,221,111 2.61 787,544,821 90% Fiscal City Direct Year Rate County Rate Operating Debt Service Total School 2015 2.61 4.30 9.29 1.05 10.34 17.25 2014 2.64 4.51 9.56 1.07 10.63 17.78 2013 2.68 4.78 9.69 0.93 10.61 18.07 2012 2.65 4.73 9.25 0.94 10.19 17.57 2011 2.58 4.63 9.17 0.94 10.11 17.32 2010 2.56 4.68 9.17 0.99 10.16 17.40 2009 2.54 4.70 9.23 1.04 10.27 17.51 2008 (2)2.54 4.71 n/a n/a 10.51 17.76 2007(2)2.57 4.83 n/a n/a 10.77 18.17 2006(2)2.61 4.91 n/a n/a 11.00 18.52 (2) Separate operating rate and debt service rate not available for 2006-2008. (1) School District amount varies based on class of property, this table uses owner occupied. Table 5 Last Ten Fiscal Years Source: Deputy Director of Brookings County Board of Equalization Source: County Finance Officer Overlapping Rates Brookings School District (1)Total Direct & Overlapping Rates City of Brookings Comprehensive Annual Financial Report December 31, 2015 Table 6 Last Ten Fiscal Years Direct and Overlapping Property Tax Rates Statistics (Unaudited) 140 Comprehensive Annual Financial Report December 31, 2015 Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value Taxable Assessed Value Rank Percentage of Total Taxable Assessed Value 30,696,500$ 1 2.73%7,565,910$ 5 1.07% Bel Brands USA Inc 19,720,400 2 1.76%- 17,902,800 3 1.59%10,020,275 2 1.41% Innovation Village I LLC 15,145,800 4 1.35%- 11,969,400 5 1.07%8,798,440 3 1.24% 10,945,600 6 0.97%- 10,013,200 7 0.89%6,054,345 6 0.85% 9,090,000 8 0.81%3,588,120 9 8,588,100 9 0.76%- 0.00% Prarieland Partners Comm 8,147,500 10 0.73%- - - 14,168,570 1 1.99% Northern Border Pipeline - - 7,609,627 4 1.07% - - 3,901,600 7 0.55% - - 3,736,530 8 0.53% MPM Properties LLC - - 3,378,485 10 0.48% 142,219,300$ 12.66%68,821,902$ 9.18% Fiscal Year Ended Dec. 31 Taxes Levied for the Fiscal Year Actual Amount Percent of Levy Collected Collections in Subsequent Years Amount Percentage of Levy 2015 2,933,514$ (see note below) 2014 2,829,351 2,827,356$ 99.93%-$ 2,827,356$ 99.93%2013 2,725,609 2,724,004 99.94%1,549 2,725,553 100.00% 2012 2,610,007 2,606,943 99.88%3,064 2,610,007 100.00% 2011 2,525,000 2,522,853 99.91%2,147 2,525,000 100.00% 2010 2,435,050 2,431,149 99.84%3,901 2,435,050 100.00% 2009 2,351,611 2,338,232 99.43%13,379 2,351,611 100.00% 2008 2,145,259 2,137,070 99.62%8,189 2,145,259 100.00% 2007 1,998,830 1,992,120 99.66%6,710 1,998,830 100.00% 2006 1,853,677 1,839,572 99.24%14,105 1,853,677 100.00% Note : The year shown on this table indicates the year of the levy for collection in the next year, the 2015 tax levy will be collected in the year 2016, so such information is not available at the time of preparing this table. Last Ten Fiscal Years Total Collection to Date Property Tax Levies and Collections Global Properties LLC Larson Manufacturing Wal-Mart RPS Prop of Brookings Den-Will Park Place Totals Source : Brookings County Board of Equalization Table 8 First Bank & Trust 3M City of Brookings Statistics (Unaudited) Table 7 Principal Taxpayers Current Year and Ten Years Ago 2015 2006 Taxpayer Dakotronics Individual 141 Historical Sales and Use Tax Receipts Year General Sales Tax Second Penny Sales Tax Bed and Booze Tax (1) 2015 6,327,828$ 6,295,374$ 852,770$ 2014 6,180,988 6,148,462 834,398 2013 6,031,135 5,999,034 776,020 2012 5,353,119 5,324,296 745,772 2011 5,083,364 5,055,937 730,386 2010 4,930,652 4,904,535 681,060 2009 4,883,575 4,852,351 669,732 2008 5,034,114 5,023,927 617,287 2007 4,953,567 4,944,944 675,854 2006 4,527,049 4,518,636 515,070 Note 1: This sales tax is generated on revenue from lodging, alcoholic beverages, prepared food, Table 10 2015 2014 2013 2012 4,817,812$ 4,774,773$ 3,162,548$ 3,091,160$ Construction 23,198,279 49,954,176 18,793,981 10,474,771 Manufacturing 68,317,602 66,460,875 45,156,711 41,645,668 63,736,072 61,757,973 58,710,762 53,122,067 Wholesale Trade 32,972,756 35,228,991 36,436,419 29,170,715 Retail Trade 403,696,421 388,986,776 374,772,056 353,040,255 7,289,425 7,037,098 8,502,522 7,617,294 Services 103,652,639 98,365,125 94,689,688 87,868,632 Other 31,605 243,507 1,748,854 343,496 707,712,611$ 712,809,294$ 641,973,541$ 586,374,058$ City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) and admission. Table 9 Last Ten Fiscal Years Source: South Dakota Department of Revenue & Regulation Agriculture, Forestry, Fishing, And Mining Finance, Insurance, and Real Estate Transportation and Public Utilities Taxable Sales by Category Last Ten Fiscal Years 142 Table 10 (continued) 2011 2010 2009 2008 2007 2006 3,087,586$ 3,181,788$ 3,039,659$ 3,440,586$ 3,638,773$ 3,605,787$ 8,618,867 18,999,179 13,245,268 177,826 164,528 121,413 38,728,774 39,870,007 44,800,267 51,595,198 54,333,786 49,164,261 55,683,634 57,591,566 56,626,863 67,311,733 97,167,667 64,131,772 28,177,927 28,070,480 28,379,271 17,383,415 17,746,050 16,343,978 341,146,735 337,595,550 325,909,561 279,837,198 264,591,551 241,697,520 7,383,082 7,198,463 7,975,351 6,457,586 7,000,195 6,242,834 93,746,109 73,790,455 73,659,678 62,530,126 47,416,809 48,845,716 299,735 62,855 156,915 - - - 576,872,449$ 566,360,343$ 553,792,833$ 488,733,668$ 492,059,359$ 430,153,281$ City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Taxable Sales by Category Last Ten Fiscal Years 143 Table 11 Direct and Overlapping Sales Tax Rates Fiscal Year City Direct Rate (1) City Direct Rate (2) State Rate Total Tax Rate 2015 2.00%1.00%4.00%7.00% 2014 2.00%1.00%4.00%7.00% 2013 2.00%1.00%4.00%7.00% 2012 2.00%1.00%4.00%7.00% 2011 2.00%1.00%4.00%7.00% 2010 2.00%1.00%4.00%7.00% 2009 2.00%1.00%4.00%7.00% 2008 2.00%1.00%4.00%7.00% 2007 2.00%1.00%4.00%7.00% 2006 2.00%1.00%4.00%7.00% (1) General Rate Fiscal Year Sales Tax Revenue Bonds Total Taxable Sales Percentage of Actual Taxable Sales Per Capita 2015 19,936,067$ 707,712,611$ 2.82%858.39 2014 21,343,250 712,809,294 2.99%918.98 2013 12,724,633 641,973,541 1.98%563.26 2012 14,090,239 586,374,058 2.40%623.71 2011 15,805,091 576,872,449 2.74%711.04 2010 17,405,091 566,360,343 3.07%789.13 2009 13,768,040 553,792,833 2.49%682.13 2008 14,815,000 488,733,668 3.03%745.78 2007 16,145,000 492,059,359 3.28%829.52 2006 17,415,000 430,153,281 4.05%926.23 (2) This rate is generated on revenue from lodging, alcoholic beverages, prepared food, Last Ten Fiscal Years City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) and admission. Table 12 Ratio of Net General Bonded Debt Last Ten Fiscal Years Source: South Dakota Department of Revenue and Regulations 144 Comprehensive Annual Financial Report Table 13 Ratio of Outstanding Debt by Type Last Ten Fiscal Years Fiscal Year Capital Leases Revenue Bonds Notes and Loans Revenue Bonds Loans Capital Leases Total Primary Government Percentage of Personal Income (1) Per Capita (1) 2015 -$ 24,006,034$ -$ 9,816,751$ 24,064,478$ 22,484,843$ 80,372,106$ 5.83%3,461$ 2014 151,640 25,571,694 - 10,809,915 20,593,606 24,784,739 81,911,594 5.80%3,527 2013 297,042 17,012,869 2,909,217 11,750,015 4,120,364 27,737,866 63,827,373 4.59%2,825 2012 486,185 17,993,436 380,000 12,642,228 54,166 23,763,569 55,319,584 3.98%2,449 2011 652,465 17,681,550 148,123 13,491,721 - 21,505,000 53,478,859 3.91%2,406 2010 811,476 19,153,156 456,123 7,553,650 - 23,455,000 51,429,405 4.26%2,332 2009 963,495 14,940,935 764,123 8,078,162 - 25,309,999 50,056,714 4.45%2,480 2008 1,108,835 15,214,073 924,000 8,570,398 70,412 27,085,000 52,972,718 4.62%2,667 2007 1,372,143 16,145,000 1,232,000 9,030,488 208,639 28,775,000 56,763,270 5.52%2,916 2006 1,459,027 17,415,000 1,540,000 9,463,555 343,474 30,375,000 60,596,056 6.71%3,223 Source: Direct and Overlapping Governmental Activities Debt As of December 31, 2015 Debt repaid with property taxes: School District Subtotal, overlapping debt City of Brookings direct debt Total direct and overlapping debt Statistics (Unaudited) City of Brookings December 31, 2015 1) See Table 17 Demographic and Economic Statistics, for income and population data. Table 14 Estimated Percentage Applicable Governmental Activities Business-type Activities Estimated Share of Overlapping Debt (1) Debt OutstandingGovernmental Unit 25,220,000.00$ 76% Sources: Assessed value data used to estimate applicable percentages provided by the County Auditors Office. Debt outstanding data was provided by the Brookings School District. Note: Overlapping governments are those that coincide, at least in part, with the geographic boundaries of the City of Brookings. This schedule estimates the portion of the outstanding debt of those overlapping governments that is borne by the residents and businesses of the City of Brookings. This process recognizes that, when considering the governments' ability to issue and repay long-term debt, the entire debt burden borne by the residents and businesses should be taken into account. However, this does not imply that every taxpayer is a resident, and therefore responsible for repaying debt, of each overlapping government. (1) The percentage of overlapping debt applicable is estimated by using taxable assessed property values. Applicable percentages were estimated by determining the portion of the schools taxable assessed value that is within the City's boundaries and dividing it by the Schools' total taxable assessed value. 19,167,200$ 19,167,200 24,006,034 43,173,234$ 145 2015 2014 2013 2012 2011 56,182,402$ 53,549,666$ 50,928,781$ 49,163,730$ 48,958,250$ 23,922,139 25,399,103 20,111,263 18,649,493 17,829,673 32,260,263$ 28,150,563$ 30,817,518$ 30,514,237$ 31,128,577$ 42.6%47.4%39.5%37.9%36.4% Note: The State of South Dakota Constitution sets two legal debt limits on municipalities. The City has an unrestricted (i.e. for any legally authorized purpose) legal debt limit equal to 5% of the total assessed value of taxable property. In addition, the Constitution permits the City to issue debt for water or sewer improvements in an amount equal to 10% of the total value of taxable property. Water or sewer debt that applies against the 10% limit does not apply against the 5% limit. City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Total Net Debt applicable to the Limit as a Percentage of Debt Limit Table 15 Legal Debt Margin Information Last Ten Fiscal Years Debt Limit (5% limit) Total Net Debt applicable to Limit Legal Debt Margin Fiscal year 146 Statistics (Unaudited) 2010 2009 2008 2007 2006 47,523,026$ 46,230,688$ 42,685,016$ 38,887,744$ 35,511,056$ 19,609,279 15,705,058 16,208,485 17,585,639 19,298,474 27,913,747$ 30,525,630$ 26,476,531$ 21,302,105$ 16,212,582$ 41.3%34.0%38.0%45.2%54.3% "No Limit" Debt Debt Capacity at 5% (unrestricted) Additional 10% Debt Capacity (Water/Sewer) 1,123,648,038$ 56,182,402$ 112,364,804$ 2014A Sales Tax Revenue Bonds (3.15%)- 9,370,000 - - 10,000,000 - - 635,517 - - 566,067 - - 333,900 - SRF Loan No. 4 Bond (3%)- 303,513 - SRF Loan No. 5 Bond (3%)- 202,442 - SRF Loan No. 6 Bond (3%)- 1,843,231 - SRF Loan No. 7 Bond (3.25)24,064,478 - - SRF Loan No. 9 Bond (3%)415,625 Revenue Note TIF 4 (7.5%)- 251,844 - 3,320,000 - - 1,001,751 - - 2011 Series electric Utility Revenue Bonds (.65% to 339%)5,495,000 - - 33,881,229 23,922,139 Other Debt: Series 1998 Capital Lease - Utility Equipment 4,640,000 - - Series 1999 Capital Lease - Utility Equipment 2,755,000 5,300,000 - - 9,509,843 - - Seried 2015A Capital Lease - Hospital Renovatino/addition 79,400 - - Seried 2015B Capital Lease - Hospital Rennovation/addition 200,600 - - 22,484,843 - - Total Debt 56,366,072 23,922,139 - N/A 32,260,263$ 112,364,804$ City of Brookings Comprehensive Annual Financial Report December 31, 2015 Table 15 (cont) Legal Debt Margin Information Last Ten Fiscal Years Fiscal year 2000 Series Utility Revenue Bonds (6.50% to 7.75%) Legal Debt Margin Calculation for Fiscal Year 2015 2015 Assessed Value Maximum Debt Capacity Existing Bonds: 2010A Sales Tax Revenue Bonds (1.25% to 3.15%) SDHDA TIF 3 (5%) SRF Loan No.2 Bond TIF 1 (3%) SRF Loan No.3 Bond (3%) 2005 Series Electric Utility Revenue Bonds (5.95%) Total Bonded Debt Total Other Debt Available Debt Capacity Series 2006 Capital Lease - Utility Equipment Series 2012 COP - Skilled Nursing Facility 147 Comprehensive Annual Financial Report Fiscal Sales Tax Utility Service Less Operating Net Available Year Revenue Principal Interest Coverage Charge Expense Revenue Principal Interest Coverage 2015 6,295,374$ 1,380,000$ 278,442$ 3.80 2014 6,148,462 1,355,000 305,542 3.70 - - - - - - 2013 5,999,034 1,340,000 322,293 3.61 - - - - - - 2012 5,324,296 1,690,000 356,093 2.60 745,772 336,234 409,538 10,822 18,788 13.83 2011 5,055,937 1,600,000 470,023 2.44 - - - - - - 2010 4,904,535 1,415,000 588,634 2.45 - - - - - - 2009 4,852,351 1,370,000 636,508 2.42 - - - - - - 2008 5,023,927 1,330,000 682,434 2.50 - - - - - - 2007 4,944,944 1,270,000 725,389 2.48 - - - - - - 2006 4,518,636 1,245,000 760,625 2.25 - - - - - - Debt Service Sales Tax Revenue Bonds State Revolving Fund Bond #3 Pledged-Revenue Coverage State Revolving Fund Bond #2 (not shown here) is to be repaid with property tax increment and if that isn't sufficient, 2nd Penny Sales Tax. Note: Details regarding the City's outstanding debt can be found in the notes to the financial statements. Operating Expenses do not include interest, depreciation, amortization, and other post employment benefit expenses. State Revolving Fund Bond #3 shown is backed by storm sewer fees. Last Ten Years Debt Service City of Brookings December 31, 2015 Statistics (Unaudited) Table 16 148 City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Table 16 (continued) Pledged-Revenue Coverage Last Ten Years Utility Service Less Operating Net Available Charge Expense Revenue Principal Interest Coverage 371,097$ 41,926$ 329,171$ 53,164$ 61,333$ 2.87 356,363 42,521 313,842 50,100 64,397 2.74 348,697 40,065 308,632 47,213 67,284 2.70 347,600 44,932 302,668 44,493 70,005 2.64 348,751 44,136 304,615 41,929 72,569 2.66 345,196 49,621 295,575 39,513 74,985 2.58 310,932 43,753 267,179 37,236 77,262 2.33 312,012 40,359 271,653 35,090 79,407 2.37 327,272 56,263 271,009 33,068 81,429 2.37 255,552 43,017 212,535 216,445 93,907 0.68 Debt Service 2005 Utility Revenue Bonds 149 City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Table 16 (continued) Pledged-Revenue Coverage Last Ten Years Utility Service Less Operating Net Available Charge Expense Revenue Principal Interest Coverage 627,635$ -$ 627,635$ 255,000$ 182,745$ 1.43 619,932 - 619,932 250,000 185,266 1.42 599,627 - 599,627 250,000 187,557 1.37 570,484 - 570,484 250,000 185,688 1.31 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - 2011 Utility Revenue Bonds Debt Service 150 Statistics (Unaudited) Fiscal Year Population (1) Per Capita Income (2) Total Personal Income (thousands of dollars) (2) School Enrollment (3) Unemploy- ment Rate (4) 2015 23,225 41,416$ 1,379,745$ 3,400 2.6% 2014 23,225 42,862 1,413,079 3,275 2.6% 2013 22,591 42,615 1,390,472 3,183 2.8% 2012 22,591 42,615 1,390,472 2,983 3.3% 2011 22,228 42,622 1,369,025 2,929 4.2% 2010 22,056 37,693 1,207,146 2,853 4.4% 2009 20,184 35,447 1,124,713 2,794 3.9% 2008 19,865 36,545 1,146,155 2,745 2.4% 2007 19,463 33,337 1,027,816 2,700 2.2% 2006 18,802 29,790 903,311 2,676 2.4% Source : 3) Brookings School District Business Office 4) South Dakota Department of Labor Median age from 2010 census was 23.4 year old. Education statistics per the 2010 census indicate that 93.8% of the population 25 years or older has a high school degree or greater with 45.5% of the same population holding a Bachelor's degree or greater. 2) U.S. Department of Commerce Bureau of Economic Analysis. Personal Income and Per Capita Income are based on Brookings County. City of Brookings Comprehensive Annual Financial Report December 31, 2015 Table 17 Demographic and Economic Statistics Last Ten Fiscal Years 1) U.S. Census Bureau 151 Current Year and Four Years Ago Employees Rank Percentage of Total City Employed Employees Rank Percentage of Total City Employed 3,900 1 16.79%2,121 1 11.28% 1,605 2 6.91%1,655 2 8.80% 975 3 4.20%796 3 4.23% 465 4 2.00%551 4 2.93% 433 5 1.86%405 7 2.15% 425 6 1.83%425 6 2.26% 414 7 1.78%257 9 1.37% 400 8 1.72%316 8 1.68% 382 9 1.64%443 5 2.36% 319 10 1.37% Fishback Financial Corp.- 455 10 2.42% Total 9,318 23.33%5,303 28.20% Wal-Mart Twin City Fan 2011 Daktronics South Dakota State Univ. 3M Source : Employee data provided by Brookings Economic Development corporation and total city employment provided by South Dakota Department of Labor. Hy-Vee Food Store City of Brookings Note: The employment survey is not conducted annually by the Brookings Economic Development Corporation. The data from 10 years ago is not available. Brookings Health System Brookings School District Principal Employers Employer 2015 Larson Manufacturing City of Brookings Comprehensive Annual Financial Report December 31, 2015 Statistics (Unaudited) Table 18 152 Full-Time Equivalent City Government Employees by Function/Program 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Mayor/City Council 7 7 7 7 7 7 7 7 7 7 City Clerk 3 3 3 3 3 3 3 3 2 2 City Manager 1 1 1 1 1 1 1 1 1 1 Human Resources 2 2 2 2 2 2 2 2 2 2 Finance 4 5 4 4 4 4 4 4 4 4 Information Technology 2 1 1 1 1 1 1 1 1 1 Community Development 4.8 4.8 4.8 4 4 4 4 - - - Engineering 5.2 5.2 5.2 6 6 6 6 9 8 8 Police 36 35 34 33 33 32 30 30 30 29 Fire 3 3 3 3 3 3 3 3 3 3 E-911 9 9 8 7 7 7 7 7 6 9 Streets 14 14 14 14 14 14 14 13 13 13 Animal Control 1 1 1 1 1 1 1 1 1 1 Aquatic Center 0 1 1 1 - - - - - - Recreation 3 1 1 1 4 4 4 4 4 3 Park 10 9 8 8 8 8 11 11 11 11 Ice Arena 1 2 2 2 - - - - - - Forestry 4 5 5 5 5 5 4 4 4 4 Library 10 10 10 10 10 10 10 10 9 9 1 1 1 1 1 1 1 1 1 1 5 5 6 6 6 6 6 6 6 6 Water 10 10 10 16 16 16 16 16 17 18 Electric 36 35 36 37 37 37 39 39 40 41 12 12 12 16 16 16 17 16 16 16 Telephone 100 102 102 94 93 94 95 95 93 96 Hospital 220 225 234 228 223 234 264 250 210 210 Golf Course 3 3 3 3 3 3 - - - - 2 2 2 2 2 2 2 2 2 2 6 6 6 6 6 6 6 6 6 6 6 6 6 7 7 7 7 7 7 7 City of Brookings Comprehensive Annual Financial Report December 31, 2015 Wastewater Solid Waste Collection Solid Waste Disposal Storm Drainage Airport Liquor Public Safety Public Works Health and Welfare Culture and Recreation General Government Function/Program Full-Time Equivalent Employees as of December 31 Table 19 Last Ten Fiscal Years Statistics (Unaudited) 153 Table 20 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Public Safety Dispatch 9,962 9,265 8,069 7,528 7,859 7,115 6,948 7,112 7,231 6,385 390 434 426 483 420 459 455 533 648 600 Fire 202 237 203 178 180 198 185 145 190 150 6:47 5:53 6:08 4:33 6:05 6:20 6:03 6:03 5:36 6:12 Public Works Community Development Number of code enforcement investigations 936 1,262 1,685 1,325 1,349 1,774 1,565 800 225 ** Percent of rental units inspected & Licensed 29%19%35%23%24%19%37%35%18%0% Engineering Number of building permits issued: Single family 88 79 70 71 60 75 114 89 113 106 Townhomes 7 5 3 6 2 2 10 9 12 15 Duplexes - 2 - 3 - 1 2 5 9 2 Apartments 8 3 10 16 4 - 7 8 7 - 4,939 4,901 4,758 4,703 4,677 4,655 4580 4,521 4,390 4,277 827 822 712 584 565 575 544 517 429 432 Tons of refuse collected 4,553 4,464 4,406 4,427 4,440 4,577 4,431 4,549 4,622 4,422 Tons of yard waste collected 710 589 598 519 514 566 518 397 410 420 Street 244.13 - 231.44 208.00 208.00 208.00 208 197.7 197.70 197.70 Total miles swept 2,500.00*2,500.00***************** Culture and Recreation Park & Recreation Number of season passes sold for pool 1,559 1,559 1,410 1,828 1,721 1,861 1659 1,405 1,567 1,481 Number of season passes sold for golf 233 198 271 329 313 329 332 282 298 321 Number of paid golf rounds played 9-holes 4,729 2,783 3,884 4,735 4,179 4,673 5295 4,903 4,792 4,747 18-holes 2,673 2,403 2,190 2,600 2,266 2,593 2427 2,125 2,212 1,767 Library Participants in children's programs 37,838 22,216 21,033 20,940 20,695 20,084 22,384 13,355 14,861 13,655 Use of electronic databases 8,713 5,184 5,120 3,219 2,849 3,636 1,711 2,865 1,759 3,811 Total circulation 274,733 278,588 286,892 286,548 297,798 301,802 297940 275,418 254,618 247,541 Swiftel Events Held at Swiftel Center 213 256 249 225 240 208 200 209 276 335 Source: City Departments Notes: * adjusted method of measuring **Indicates information not available Fire calls Solid Waste Average response time (min:sec) Total lane miles swept Tons of recycling collected City of Brookings Comprehensive Annual Financial Repor December 31, 2015 Statistics (Unaudited) Number of households collected Total number of 911 calls Operating Indicators by Function/Program Last Ten Fiscal Years Function/Program Total number of animals impounded 154 Statistics (Unaudited) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 General Government General Government Buildings 1 1 1 1 1 1 1 1 1 1 Stations 1 1 1 1 1 1 1 1 1 1 4 4 4 4 4 4 4 4 4 4 7 7 7 7 6 6 6 6 6 5 244.13 236.90 231.44 229.89 228.8 227.97 227.34 227.21 226.93 226.67 3,025 3,025 3,004 2,990 2,933 2,881 2,746 2,664 2,645 2,573 118 130 126 126 126 126 118 118 118 118 Acreage 664.8 664.8 664.8 664.8 664.8 664.8 664.8 664.8 664.8 664.8 14 13 13 13 13 13 13 12 12 12 21 21 21 21 21 21 21 20 20 20 11 11 11 11 11 11 11 11 11 11 1 1 1 1 1 1 1 1 1 1 Runways 2 2 2 2 2 2 2 2 2 2 Water Miles of water mains 124.02 124.02 122.2 121.87 121.33 121.18 119.51 118.3 114.21 113.7 City of Brookings December 31, 2015 Comprehensive Annual Financial Report Playgrounds Table 21 Last Ten Fiscal Years Function/Program Police Fire Stations Refuse Collection Capital Asset Statistics by Function/Program Baseball/Softball Fields Recreation Centers Soccer/Football Fields Airport Collection Trucks Other Public Works Paved Streets (miles) Street lights Traffic signals Parks and Recreation 155 156 Federal Pass-Through Passed CFDA Entity Identifying Through to Number Number Subreceipients U.S Department of Transportation Direct Funding: *Airport Improvement Program 20.106 3-46-0005-25-2012 -$ 24,413$ 20.106 3-46-0005-26-2013 - 1,202,701 20.106 3-46-0005-27-2015 - 131,400 1,358,514$ Pass-Through the South Dakota Department of Public Safety, Office of Highway Safety: Highway Safety Cluster Alcohol Impaired Driving Countermeasures Incentive Grants I 20.601 2014-27-08 - 1,901 State and Community Highway Safety 20.600 2014-27-08 - 5,642 7,543 Minimum Penalties for Repeat Offenders for Driving While Intoxicated 20.608 2014-27-08 - 845 Total U.S. Department of Transportation 1,366,902 U.S. Department of Health and Human Services Direct Funding: Rural Health Care Services Outreach, Rural Health Network Development and Small Health Care Provider Quality Improvement Program 93.912 H9CRH22855 - 52,539 Pass-Through the South Dakota Department of Health: Public Health Emergency Preparedness 93.889 15PHP45 - 4,500 Pass-Through the State of South Dakota Department of Rural Health: Small Rural Hospital Improvement Grant Program 93.301 *********- 9,360 Total U.S. Department of Health and Human Services 66,399 General Services Administration Pass-Through the South Dakota Federal Property Agency: Donation of Federal Surplus Personal Property (Note 3)39.003 *********- 575 Total General Service Administration 575 U.S. Department of Interior Pass-Through the South Dakota State Historic Preservation Office: Historic Preservation Fund Grants-In-Aid 15.904 12054336 01 - 7,292 Pass-Through the South Dakota Department Game Fish & Parks Outdoor Recreation Acquisition, Development and Planning 15.916 *********- 45,000 Total U.S. Department of Interior 52,292 CITY OF BROOKINGS, SOUTH DAKOTA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2015 Total Federal ExpendituresFederal Grantor/Pass-Through Grantor/Program or Cluster Title 157 CITY OF BROOKINGS, SOUTH DAKOTA SCHEDULE OF EXPENDITURES OF FEDERAL AWARDS FOR THE YEAR ENDED DECEMBER 31, 2015 U.S. Department of Justice Direct Funding: Bureau of Justice Assistance, Bulletproof Vest Partnership Program 16.607 *********- 682 Total U.S. Department of Justice 682 U.S. Department of Housing and Urban Development Pass-Through the Governor's Office Federal Funds Community Development Block Grants 14.228 782871227 52,770 52,770 Total U.S. Department of Housing and Urban Development 52,770 U.S. Environmental Protection Agency Pass-Through the State of South Dakota Department of Environment and Natural Resources Clean Water State Revolving Fund Cluster Capitalization Grants for Clean Water State Revolving Funds 66.468 - 187,274 187,274 Total U.S. Environmental Protection Agency 187,274 Total Federal Awards 52,770$ 1,726,894$ ******No Pass-through entity identifying number available Note 1: Note 2: Note 3:The amount reported represents 23.3% of the original acquisition cost of the federal surplus property received by the municipality. (Original acquisition cost is provided by Federal Surplus Property. It is not what the City actually paid for the items.) Note 4:In accordance with Uniform Guidance, major programs are determined using a risk-based approach. Programs in the above schedule denoted with an asterisk (*) are determined by the independent auditor to be major programs. Expenditures reported on the Schedule are reported on the accrual basis of accounting. Such expenditures are recognized following, as applicable, either the cost principles in OMB Circular A-87 or the cost principles contained in Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards , wherein certain types of expenditures are not allowable or are limited as to reimbursement. The City has elected not to use the 10 percent de minimums indirect cost rate allowed under the Uniform Guidance. The accompanying schedule of expenditures of federal awards (the “Schedule”) includes the federal award activity of the City of Brookings, South Dakota (the “City”) under programs of the federal government for the year ended December 31, 2015. The accompanying notes are an integral part of this Schedule. The information in this Schedule is presented in accordance with the requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Because the Schedule presents only a selected portion of the operations of the City, it is not intended to and does not present the financial position, changes in net position or cash flows, where applicable, of the City of Brookings, South Dakota. 158 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of the Financial Statements Performed in Accordance with Government Auditing Standards The Honorable Mayor and Members of the City Council City of Brookings, South Dakota We have audited, 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, the financial statements of the governmental activities, the business-type activities, the discretely presented component unit, each major fund and the aggregate remaining fund information of the City of Brookings, South Dakota (the City), as of and for the year ended December 31, 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 May 9, 2016, which contained a reference to the reports of other auditors and an “Emphasis of Matter” paragraph regarding a change in accounting principle. Our report includes a reference to other auditors who audited the financial statements of the Brookings Health System Fund, the Brookings Municipal Utilities Telephone, Electric, Water and Wastewater Funds, and the Brookings Health System Foundation, as described in our report on the City’s financial statements. This report does not include the results of the other auditors’ testing of internal control over financial reporting or compliance and other matters that are reported on separately by those auditors. Internal Control Over Financial Reporting Management of the City is responsible for establishing and maintaining effective internal control over financial reporting (internal control). In planning and performing our audit of the financial statements, we considered the City’s 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. 159 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 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 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. We noted a certain matter that we reported to the City’s management in a separate letter dated May 9, 2016. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the entity's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. As required by South Dakota Codified Law 4- 11-11, this report is a matter of public record and its distribution is not limited. Lincoln, Nebraska May 9, 2016 160 Report on Compliance for the Major Federal Program and Report on Internal Control Over Compliance Independent Auditor's Report The Honorable Mayor and Members of the City Council City of Brookings, South Dakota Report on Compliance for the Major Federal Program We have audited the City of Brookings, South Dakota’s (the City’s) compliance with the types of compliance requirements described in the OMB Compliance Supplement that could have a direct and material effect on the City’s major federal program for the year ended December 31, 2015. The City’s major federal program is identified in the summary of auditor’s results section of the accompanying schedule of findings and questioned costs. Management’s Responsibility Management is responsible for compliance with federal statutes, regulations, contracts and the terms and conditions of its federal awards applicable to its federal programs. Auditor’s Responsibility Our responsibility is to express an opinion on compliance for the City's major federal program based on our audit of the types of compliance requirements referred to above. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and the audit requirements of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). Those standards and the Uniform Guidance require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on a major federal program occurred. An audit includes examining, on a test basis, evidence about 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 the major federal program. However, our audit does not provide a legal determination of the City’s compliance. Opinion on the Major Federal Program In our opinion, the City of Brookings, South Dakota complied, in all material respects, with the types of compliance requirements referred to above that could have a direct and material effect on its major federal program for the year ended December 31, 2015. 161 Report on Internal Control Over Compliance Management of the City of Brookings, South Dakota 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 the major federal program to determine the auditing procedures that are appropriate in the circumstances for the purpose of expressing our opinion on compliance for the major federal program and to test and report on internal control over compliance in accordance with the Uniform Guidance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of 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 the Uniform Guidance. Accordingly, this report is not suitable for any other purpose. As required by South Dakota Codified Law 4-11-11, this report is a matter of public record and its distribution is not limited. Lincoln, Nebraska May 9, 2016 162 City of Brookings, South Dakota Schedule of Findings and Questioned Costs Year Ended December 31, 2015 Summary of Auditor’s Results Financial Statements 1. The type of report the auditor issued on whether the financial statements audited were prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) was: Unmodified Qualified Adverse Disclaimer 2. The independent auditor’s report on internal control over financial reporting disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 3. Noncompliance considered material to the financial statements was disclosed by the audit? Yes No Federal Awards 4. The independent auditor’s report on internal control over compliance for major federal awards programs disclosed: Significant deficiency(ies)? Yes None reported Material weakness(es)? Yes No 5. The opinion expressed in the independent auditor’s report on compliance for major federal awards was: Unmodified Qualified Adverse Disclaimer 6. The audit disclosed findings required to be reported by 2 CFR 200.516(a)? Yes No 7. The City’s major program was: Cluster/Program CFDA Number Airport Improvement Program 20.106 163 City of Brookings, South Dakota Schedule of Findings and Questioned Costs (Continued) Year Ended December 31, 2015 8. The threshold used to distinguish between Type A and Type B programs was $750,000. 9. The City qualified as a low-risk auditee? Yes No 164 City of Brookings, South Dakota Schedule of Findings and Questioned Costs (Continued) Year Ended December 31, 2015 Findings Required to be Reported by Government Auditing Standards Reference Number Finding Questioned Costs No matters are reportable. Findings Required to be Reported by the Uniform Guidance Reference Number Finding Questioned Costs No matters are reportable. 165 City of Brookings, South Dakota Summary Schedule of Prior Audit Findings Year Ended December 31, 2015 Reference Number Summary of Finding Status No matters are reportable. 166 City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0358,Version:1 20th Street South Interstate Access Study Update Summary: HDR Engineering will provide a summary on the 20th Street South Interstate Access Study. Background: The City hired HDR Engineering to perform a preliminary interstate access evaluation of the proposed 20th Street South interchange. The study involved gathering data at a multitude of intersections along the 22nd Avenue corridor, updating the existing traffic forecasting model, operational analysis conditions, crash analysis, and a cursory environmental review of existing databases near the proposed project location. The intent of the study is to provide the basis for decisions by the City of Brookings, SDDOT and Federal Highway Administration. This study is a precursor to an Interstate Justification Report (IJR) or an Environmental Impact Analysis. Attachments: Project Update - May 2016 City of Brookings Printed on 5/16/2016Page 1 of 1 powered by Legistar™ Project Update 20th Street South Interstate Access Evaluation Project Purpose •Determine whether FHWA criteria are satisfied for new interchange at 20th Street South •Is there a roadway capacity need that can only be satisfied by a new interchange? •Would a new interchange harm Interstate operations? •Would a new interchange pose environmental impacts? Project Tasks •Data gathering •Traffic forecasting •Operations analysis •Crash analysis •Environmental review •Coordination •Documentation •Quality Assurance/Quality Control •Project Administration Existing Conditions Interchange Alternative 1 Interchange Alternative 2 Interchange Alternative 3 Interchange Alternative 4 Future No-Build Conditions Future with 20th St. S. Overpass Future with 20th St. S. Interchange Interstate Operations Environmental Review •Section 4(f) and 6(f) resources – small impacts requiring mitigation •Farmland •Floodplain – permit required •Wetlands – small areas requiring mitigation •Cultural Resources – none found, field survey needed •Threatened and Endangered Species – minimize tree clearing •Noise – noise analysis required •Alternatives 1 and 2 have least impact Results Summary •Traffic operations needs could be met with additional improvements to the surrounding roadways •Interstate operations will remain good under any scenario •Interchange construction would result in some small impacts requiring mitigation Questions? Jason Kjenstad, PE, LSIT Project Manager HDR Engineering, Inc. 6300 S. Old Village Place Sioux Falls, SD 57108 605-977-7740 jason.kjenstad@hdrinc.com Rick Laughlin, PE, PTOE Senior Transportation Engineer rick.laughlin@hdrinc.com City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0300,Version:1 Annual Governance and Ends Policy Review Summary: The City Council is required to conduct an annual review of the Governance and Ends Policies. The Council may modify any policy at any time deemed prudent and necessary. Last review of the policies was held on March 15, 2015. At that time, the City Council identified suggested changes and staff subsequently prepared the enclosed draft amendments. No action has been taken on the amendments. The City Council will review the proposed changes and discuss any additional modifications to the policies. Action on amendments would be scheduled for an action meeting. Attachments: G&E Policy (redline version) City of Brookings Printed on 5/11/2016Page 1 of 1 powered by Legistar™ City of Brookings Governance & Ends Policies Adopted: December 11, 2000 Amended: April 15, 2014 (SUGGESTED AMENDMENTS 4/19/2016) Amended: 04/15/2014 1 City of Brookings Governance and Ends Policies This document, established by the Brookings City Council, defines, protects, and prioritizes the workings of City Government. It is the ongoing hope of the Brookings City Council to lead the Citizens of Brookings in an ethical and prudent manner, in the best interests of the citizens, looking to the future rather than the past, as provided in the Mission Statement: The City of Brookings is committed to providing a high quality of life for its citizens, and fostering a diverse economic base, through innovative thinking, strategic planning, and proactive, fiscally responsible municipal management. Table of Contents: Governance Policies Defining the Purpose of the City Council, City Manager, and all City Employees 1. Governance Process 1.1 Ownership of the Council 1.2 Council Role 1.3 Council Style and Vision 1.4 Council Action 1.5 Council Code of Conduct 1.6 Citizen Advisory Boards 1.7 Review and Update of Policies 2. Council-Staff Linkage 2.1 City Manager Role 2.2 Delegation to the City Manager 2.3 Monitoring Executive Performance Ends Policies Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means 1. Financial Stability 2. Municipal Services 3. Business Models 4. Economic Development 5. Employee Training and Development 6. Intergovernmental Cooperation and Relations 7. Strategic Planning Appendix A: City Council Code of Ethics Appendix B: Volunteer Code of Ethics Amended: 04/15/2014 2 City of Brookings Policy 1, Governance Process Defining the purpose of the City Council, City Manager, and all City Employees: 1.1 Governance Process, Ownership of the Council: Key Performance Area Governance Process is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “municipal management.” The Brookings City Council shall answer to, and take into consideration the best interests of, all residents of the City of Brookings, both vocal and silent citizens, with respect paid to all residents, regardless of their economic status. Since the City is “owned” by the Citizens, the Council’s thinking shall be influenced by this ownership. Secondarily, the City Council shall consider the needs of any person who regularly shops in, uses facilities of, or accesses services from the City of Brookings. 1. The Council represents the Citizens. Therefore, it shall educate itself regarding the values held by the persons it represents and shall act always under the influence of those values. The Council’s education may be facilitated by (a) formal and informal Citizen opinions; (b) formal and informal focus groups to explore specific issues; (c) considering input by citizen volunteers who participate on advisory boards, committees and commissions; (d) monitoring the demand and utilization of services; (e) discussions with representatives from other governmental and educational bodies; and (f) reviewing reports and citizen responses in the media. 2. The Council shall report periodically to the Citizens on its stewardship. At least once per year, the Mayor shall give an accounting of the City’s financial resources and the extent to which these funds have been translated into services, in the State of the City message. 1.2 Governance Process, Council Role The role of the Council, on behalf of the Citizens of Brookings, is to assure that the City of Brookings (a) accomplishes what it should, and (b) avoids unacceptable activities and conditions. 1. The Council will engage in structured contact with citizens of Brookings to represent their diversity. 2. The Council will define in Ends policies what is to be accomplished in terms of benefits, recipients, and their relative priorities. It will define in Executive Limitations policies those activities and conditions it considers unacceptable. The Council will delegate performance on these matters to a City Manager. 3. The Council will carry out its job with discipline, emphasizing strategic rather than short-term issues, policy rather than single events, and group rather than individual decisions. 4. Whenever possible, the Council will avoid the use of committees that separate the wholeness of the Council. When further research on a topic is needed, the Council may appoint one Amended: 04/15/2014 3 member to investigate. However, the Council should avoid subgroups of Council members, since subgroups tend to develop a life separate from the Council as a whole. 5. The annual cycle of the Council will conclude with a review of Ends policies, in April, just prior to City Manager construction of a new annual plan and budget. 6. The Council shall honor all demands and restrictions outlined in the Brookings City Charter. 1.3 Governing Process, Council Style & Vision The Council will govern with an emphasis on (a) outward vision rather than an internal preoccupation, (b) strategic leadership rather than administrative detail, (c) clear distinction of Council and City Manager roles, (d) collective rather than individual decisions, (e) future rather than past or present, and (f) proactively rather than reactivity. The Council will: 1. Deliberate in many voices, but govern in one. 2. Cultivate a sense of excellence. The Council will be responsible for excellence in governing. The Council will be an initiator of policy, with the advice and counsel of the City Manager. 3. Cultivate a sense of group responsibility. The Council will use the expertise of individual members to enhance the ability of the Council as a body. However, it is not the intention of the Council to defer the group’s judgment to any one individual. 4. Direct, control and inspire the organization through the careful establishment of broad written policies reflecting the Council's values and perspectives. The Council's major policy focus will be on the intended long-term impacts outside the operating organization, not on the administrative or programmatic means of attaining those effects. 5. Enforce upon itself whatever discipline is needed to govern with excellence. Discipline will apply to matters such as attendance, preparation for meetings, policymaking principles, respect of roles, and ensuring the continuity of governance capability. Continual Council development will include orientation of new members in the Council's governance process and periodic Council discussion of process improvement. The Council will allow no officer, individual or committee of the Council to hinder or be an excuse for not fulfilling its commitments. In compliance with this policy, in May 2002 the City Council adopted a City Council Code of Ethics. It is attached to this document as Appendix A. 6. Monitor and discuss the Council's process and performance at each meeting. Self- monitoring will include comparison of Council activity and discipline to policies in the Ends, Governance Process and Council-Staff Linkage categories. 1.4 Governance Process, Council Action The job of the City Council of Brookings is to achieve the mission in a prudent and ethical way. The job of the Council is to make certain contributions to the total, which are unique to its public trusteeship role and necessary for proper governance and management of the City. Consequently, the "products" of the Council itself shall be: A. Connection between the Council and its "ownership," the Citizens. Amended: 04/15/2014 4 B. Written governing policies that concern: - Governance Process (how the Council carries out its task, and the passing of power and measurement of its use) and - Ends Policies (what benefits, for whom, at what cost), and Executive Limitations (prudent and ethical limitations binding upon the staff); C. The assurance of staff performance (through guidance and evaluation of the City Manager). 1.5 Governance Process, Council Code of Conduct Since Council members have no authority as individuals, members shall refrain from efforts that may lead to situations in which a Councilperson might have occasion to overstep their bounds. Although not every situation can be outlined, some common areas of concern include: 1. Staff being intimidated or manipulated by a Councilperson’s individual comments or actions. Council members must bear in mind that at times, staff may ask for an individual opinion from a Council member, and while the Council member may sincerely respond only as an individual, staff will often place undue emphasis on the opinion, due to the Council member’s status. 2. Staff being polarized by dissention. Although all Council members are obligated to register differences of opinion on Council issues at the Council level as passionately as desired, individual members must not direct their differences of opinion to staff in a manner which creates dissension or polarization in the organization. 3. Since no one has the right to speak on behalf of the entire Council, individual Council members are encouraged to conduct themselves in a professional manner in all communications. 4. Members will not individually render binding judgments of the City Manager or staff performance apart from compliance with Council policies as monitored by the Council as a body. 1.6 Governance Process, Citizen Advisory Boards The Council values the expression of citizen viewpoints on topics of concern to the Council. Therefore, the Council will continue the tradition of seeking input from volunteer citizen advisory boards and committees, although final responsibility for decisions, and the implementation that follows, rests entirely with the Council. The Council reminds staff that the ideal purpose of citizen involvement is to seek objective opinions from a diverse range of citizens. The Council and staff recognize that the ideal purpose of citizen involvement is to seek objective opinions from a diverse range of citizens. Guideline A: The Council will make every effort to offer overall direction and guidelines to citizen volunteers, through the use of Council Ends Policy statements, and by reviewing the mission and need for each citizen advisory board and committee on an annual basis. During the annual review: Amended: 04/15/2014 5 1. The Council will determine if the need for a citizen advisory board or committee justifies continuation of the board or committee. If continuation is justified, proceed to #2. 2. The Council will make an effort to determine the most effective use of citizen volunteers, with a primary decision being the length of service for each board and committee. The Council believes citizen input will be more likely objective and updated if the advisory board or committee is kept in an ad hoc (short-term) format. However, the Council recognizes that some complex issues require citizen involvement for a longer period in order to be effective. 3. Unless otherwise specified by the Council, the City Manager will coordinate the activities and reporting functions of all citizen advisory boards and committees. 4. The City Manager will base his guidance of citizen advisory boards and committees on Ends Policies established by the Council. 5. The Mayor, with advice and consent of the Council, will make all appointments to citizen advisory boards and committees. 6. Upon recommendation of the City Manager, the Council may approve the creation of ad hoc committees to assist the City Manager or his staff. 7. In compliance with this policy, in May 2002 the City Council adopted a Volunteer Code of Ethics. It is attached to this document as Appendix B. 8. The Mayor and Council may, but shall not be obligated, to re-appoint members to expiring terms subject to any term limitation as specified by each respective board. The Mayor and Council shall consider and balance the value of institutional knowledge and experience as well as the need for new and different perspectives and contributions to the board in the appointment/re-appointment process. Guideline B: The Council directs all staff to review relevant Ends Policies with citizens upon their appointment to an advisory board or committee. The Council asks staff to be as objective as possible in educating and presenting options to citizens, since the purpose of advisory boards and committees is not only to hear from citizens, but to increase citizen involvement, loyalty, and creativity toward their City. 1. The Council asks the City Manager to create and regularly update an orientation packet for each new volunteer that includes relevant Ends Policies. 2. The Council asks staff to review this orientation packet with each potential volunteer, prior to their appointment, emphasizing this very policy (Policy 1.6), and asking for a citizen signature on the line that indicates understanding of this policy. 3. Staff will provide regular summaries of citizen committee work to the Council. 1.7 Governance Process, Review and Update of Policies Amended: 04/15/2014 6 The Council will review all policies (including Governance, Council-Staff Linkage, Ends, and Executive Limitations) during the first quarter of each year, although the Council may also review and update any policy at any time deemed prudent and necessary by the Council. The Council expects immediate adjustment by the City Manager to any policy change instituted by the Council. Amended: 04/15/2014 7 City of Brookings Policy 2, Council-Staff Linkage Defining the purpose of the City Council, City Manager, and all City Employees. 2.1 Council-Staff Linkage, City Manager Role As the Council's single official link to the operating City government, the City Manager's performance will be considered to be synonymous with organizational performance as a total. Consequently, the City Manager's job contributions can be stated as performance in these, but not limited to: 1. City government accomplishment of the provisions of Council policies within the Policy Governance Model, especially Ends Policies, but also including Governance Process, and Council-Staff Linkage policies. 2. City government operation within the boundaries of prudence and ethics established in Council policies on Executive Limitations. 2.2 Council-Staff Linkage, Delegation to the City Manager All Council authority delegated to staff is delegated through the City Manager, so that all authority and accountability of staff -- as far as the Council is concerned -- is considered to be the authority and accountability of the City Manager. 1. The Council will direct the City Manager to achieve certain results, for the citizens, at a certain cost, through the establishment of Ends policies. The Council will limit the latitude the City Manager may exercise in practices, methods, conduct, and other "means" through the establishment of Executive Limitations within those policies. 2. As long as the City Manager uses any reasonable interpretation of the Council's Ends and Executive Limitations policies, the City Manager is authorized to establish all further policies, make all decisions, take all actions, establish all practices, and develop all activities. 3. The Council may change its Ends and Executive Limitations policies, thereby shifting the boundary between Council and City Manager domains. By doing so, the Council changes the latitude given to the City Manager. Council members will respect and support the City Manager’s decisions and choices, whenever made pursuant to existing Council Policies. 4. Only decisions of the Council acting as a body are binding upon the City Manager. 5. In the case of Council members, citizen advisory committees, or others, requesting information or assistance without Council authorization, the City Manager may turn to the Council for guidance, especially when such requests will require an inordinate amount of staff time or funds, or are disruptive to the efficient operation of the City. 2.3 Council-Staff Linkage, Monitoring Executive Performance. Monitoring executive performance is synonymous with monitoring organizational performance against Council policies on Ends and on Executive Limitations. Any evaluation of the City Manager’s performance, formal or informal, shall be measured against these expectations. This Amended: 04/15/2014 8 policy places the burden of measuring performance on two primary considerations: well-defined Ends and Executive Limitation policies, and reasonably accurate measurements. Without well- defined policies and reasonably accurate performance metrics, the effectiveness of monitoring performance is compromised. 1. The purpose of monitoring is simply to determine the degree to which Council policies are being fulfilled. Information which does not do this will not be considered monitoring. Monitoring will be as automatic as possible, using a minimum of Council time so that meetings can be used to create the future rather than to review the past. 2. A given policy may be monitored in one or more of three ways: a. Internal report: Disclosure of compliance information to the Council from the City Manager. b. External report: Discovery of compliance information by an objective party who is selected by and reports directly to the Council. Such reports must assess executive performance only against policies of the Council, not those of the external party unless the Council has previously indicated that party's opinion to be the standard. c. Direct Council inspection: Discovery of compliance information by a Council member, or the Council as a whole. This is a Council inspection of documents, activities or circumstances directed by the Council which allows a "prudent person" test of policy compliance. 3. The Council recognizes that, at times, non-compliance with a policy may be necessary and prudent in the short term. However, in order to monitor the performance of the City, and to modify policies that need improvement, the Council must be constantly aware of compliance issues. The Council expects monitoring and reporting compliance or non- compliance to be the City Manager’s highest priority. To promote regular monitoring, the Council asks the City Manager to follow these guidelines: a. All Ends and Executive Limitations statements will be monitored and compliance will be formally announced by the City Manager to the Council on a quarterly basis. a. All ends and Executive Limitations statements will be monitored by the City Manager who is expected to be responsible for achieving and maintaining compliance. b. Any non-compliance will be reported immediately, at the next Council meeting, if not before, and non-compliance will then be monitored on a monthly basis, until compliance is reestablished, or the policy is changed. b. Any non-compliance of material significance shall be reported to the City Council as soon as practical; and such non-compliance shall be monitored and corrective actions taken by the City Manager to re-gain compliance. 4. At a minimum annually, the Council will institute a formal evaluation of the City Manager. This evaluation will consider only monitoring data as defined here, as it has appeared over the intervening year. Amended: 04/15/2014 9 City of Brookings Ends Policy 1, Financial Stability Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Financial Stability: Key Performance Area Financial stability is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “fiscally responsible municipal management.” One of the duties of the City Manager is the development of a process that keeps the Council aware of upcoming budgetary needs and requests, so that the Council may aid in the creation of ongoing budget priorities. Good stewardship requires the Council to discern what is in the best interests of the citizens, and budget accordingly. Therefore, budgeting for any fiscal period or the remaining part of any fiscal period shall not deviate materially from Council Policies as established in key performance areas, or other City Council policies. The City Manager is therefore prohibited from budgeting or spending that: 1. Lowers the City’s bond rating; 2. Lowers the pledged revenues collected by the City in the last preceding fiscal years as determined by the City to not less than 1.75 times the annual principal and interest requirements on the outstanding bonds with a goal to maintain a 2 times coverage. 3. Violates Federal, State, or Municipal laws; ethical standards; and generally accepted accounting and budgeting principles. In addition, the City Manager may not bypass Council judgment to allow budgeting that: 1. Allows expenditures to exceed revenues, including the contingency as an expenditure; 2. Increases the property tax rate; 3. Includes capital expenditures that have not been previously approved by the Council; in a Capital Improvement Plan or other council action; 4. Causes the City to incur new debt; 5. Increases operating expenses (meaning personnel and capital excluded) in any department beyond inflation using at least a rolling six month average of the Midwest Consumer Price Index; 6. Provides for employee compensation and benefits that exceed market standards; Guideline A: With respect to budget preparations, the City Manager shall stay within the confines of what constitutes a conservative perspective, as it is the Council’s intention to: a. Make conservative revenue projections using the previous five-year average as a benchmark, with an emphasis on the previous year actual and current year actual. Projections using current data should not be made with less than 6 months rolling actual data. b. Provide valuable citizen services; c. Lighten the debt load of the City; d. If a property tax rate is justified only because of state limitations, a special reserve will be created. e. The City has established the policy that financial, service and program performance measures be developed and used as an important component of decision making and Amended: 04/15/2014 10 incorporated into governmental budgeting. The City encourages all departments to utilize performance measures. At a minimum, performance measures should be used to report on the outputs of each program and should be related to the objectives of each department. Performance measures should: a. Be based on program objectives that tie to the City Council’s goals and program mission or purpose; b. Measure program results or accomplishments; c. Provide for comparisons over time; d. Measure efficiency and effectiveness; e. Be reliable, verifiable and understandable; f. Be reported internally and externally; g. Be monitored and used in decision-making processes; and h. Be limited to a number and degree of complexity that can provide an efficient and meaningful way to assess the effectiveness and efficiency of key programs. Guideline B: In addition, as the City Manager assumes his duties, the Council requests that the City Manager keep information flowing to the Council, especially concerning plans relating to consolidation or expansion of any City departments. Therefore, the City Manager may not consolidate or expand any City Department without first informing the Council of the intended action. Guideline C: The City of Brookings establishes and will maintain reservations of Fund Balance, as defined herein, in accordance with Governmental Accounting and Financial Standards Board Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions. This Policy shall only apply to the cities governmental funds. The fund balance information is used to identify the available resources to repay long-term debt, reduce property taxes, add new governmental programs, expand existing ones, or enhance the financial position of the City, in accordance with policies established by the City Council. Fund Balance shall consist of five categories: non-spendable, restricted, committed, assigned and unassigned amounts. a. Non-spendable Fund Balance: Amounts that are not in a spendable form (such as inventory) or are required to be maintained intact. b. Restricted Fund Balance: Amounts that can be spent only for the specific purposes stipulated by external resource providers, or enabling legislation. Restrictions may be changed or lifted only with the consent of the resource providers. c. Committed Fund Balance: Amounts that can be used only for the specific purposes determined by a formal action of the City Council. Commitments may be changed or lifted only the City Council taking the same formal action that imposed the constraint originally. d. Assigned Fund Balance: Amounts the City intends to use for a specific purpose. e. Unassigned Fund Balance: The residual classification for the general fund and includes amounts that not contained in the other classifications. Unassigned amounts are the portion of fund balance which is not obligated or specifically designated and is available for any purpose. The City Manager is directed to use first the restricted resources, prior to the use of the unrestricted resources, when an expense is incurred for purposes for which both restricted and unrestricted funds are available. When expenditures are incurred for purposes for which amounts in any of the Amended: 04/15/2014 11 unrestricted fund balance classifications can be used, committed amounts should be reduced first, followed by assigned amounts and the unassigned amounts. City Council hereby directs the City Manager to establishes and maintain the following committed fund balance: a. Fiscal Stabilization Arrangement: A minimum of 10 percent of the General Fund beginning adopted appropriations (expenditure budget) should be incrementally established and maintained for use in meeting unanticipated needs and/or emergencies. I. Use of Stabilization Fund Balance: The amount shall be used only after all efforts have been exhausted to fund unanticipated needs and/or emergencies, such as an urgent event that affects the safety of the Citizens of the City of Brookings, City of Brookings Employees, and Brookings Students. The urgent event could be a blizzard, tornado, fire, flood, terrorist attack, bombing, explosions, train derailments, straight-line winds/severe thunderstorm, hazardous materials incident, water contamination, failure of electrical grid, mass casualty/fatality or health epidemic. Once the City Manager or his/her designee has determined that it is necessary to draw down fund balance, written communication should be provided by the City Manager to the City Council, explaining the nature of the unanticipated need and/or emergency and requires approval by a two-thirds vote of the Council. The Stabilization Fund Balance may not be used for more than two consecutive years. II. Replenishment of Stabilization Fund Balance: If the reserves are drawn down below the minimum required level of 10 percent, then a budgetary plan shall be implemented by the City Manager to return the reserve to a minimum 10 percent level in no more than a 5-year period. The City Manager will report the progress of the replenishment to the Council in the annual budget. III. Funding of Stabilization Fund Balance: Proceeds from the sale of City-owned surplus property and any other funds identified in the budget will be used to increase the reserve. Interest earnings will be applied on the reserve balance each fiscal year until replenished to the minimum required level. The City Council directs the City Manager to establish annually the Assigned Fund Balance by identifying at the close of each fiscal year, subject approval of the City Council, funds identified in the annual budget and any revisions thereto to provide for differences, if any, between budgeted revenues and expenditures for a specific purpose; however, before expenditure, amounts must be appropriated by the City Council. Council options for further reserves include: a. Transfer to increase the reserve of another fund that is not at the established target; b. To finance un-funded necessities of the previous year’s budget reductions; c. To pay off debt with a portion of the reserve; d. To finance the expansion of City services; e. To offer property tax, or other tax relief. Other governmental funds are not addressed as they exist primarily to ensure and demonstrate compliance with limitations on the use of existing dedicated revenues and that they were expended for their intended purposes. Capital project funds would be spent out at the end of the project. Amended: 04/15/2014 12 Guideline D: The use of one-time revenues will be guided by this policy. Examples of one-time revenues include: infrequent sales of assets, bond refunding savings, infrequent revenues from development, and grants. These revenues may be available for more than one year (a three-year grant), but are expected to be non-recurring. Examples of expenditures for which the City may wish to use one- time revenues include startup costs, stabilization (to cover expenditures that temporarily exceed revenues), early debt retirement, and capital purchases. The City Manager will not bypass Council judgment in making use of one-time revenue. In utilizing one-time revenue, the City Manager will carefully analyze and minimize the need for ongoing expenditures. Guideline E: Capital expenditures will be planned each year in a Five-Year Capital Improvement Plan. The annual budget will provide a separate accounting of capital expenditures in each department. The City Manager should plan major projects with an estimated expenditure and with sources of funding identified. Guideline F: Upon the City Council’s adoption of an annual budget and Five-Year Capital Plan that is presented in accordance with Guidelines A through E, the City Manager assumes responsibility for ensuring compliance with the budget as an established City Council Policy. This includes expenditure control, and program and service delivery within that budget. Minor deviations are tolerable and encouraged to maintain cost control and deliver quality services. Examples of minor deviations are variances of purchases and costs between line items in a budget, changes in programs and services resulting in cost savings or without cost, the use of grants that do not cause future costs, and the purchases of minor equipment. This list is not exhaustive. Major deviations require notification and sometimes prior approval by the City Council. Examples of major deviations include the use of the contingency fund, program eliminations or additions, the use of cash instead of debt when debt was planned, changes in the capital improvement plan, and change orders in capital projects. This list is not exhaustive. To facilitate a budget that can respond to changing needs, the City Council will approve a contingency fund for the City Manager to utilize at his/her discretion. Examples of uses for the City Manager’s contingency fund include: unbudgeted training opportunities for staff; purchases of software, hardware, and small equipment that was unbudgeted; one-time expenditures to fill a major position vacancy; one-time expenditures requested by outside entities; and emergencies in general. The City Manager would be expected to make an effort to avoid utilizing the contingency. The City Manager will report compliance or deviations from this Guideline for Financial Stability on a quarterly basis. Guideline G: Budgets for Enterprise Funds will be prepared by the City Manager with a goal of providing quality services and sustaining a maximum return to the General Fund on a long-term basis. Net Assets serve over time as a useful indicator of a government’s financial position. Within the annual Amended: 04/15/2014 13 financial statement the City Manager will annually provide a management discussion and analysis of business type funds and the changes in net assets. Guideline H: Appropriation and Subsidy Policy & Guidelines Purpose. The purpose of this policy is to establish guidelines and criteria regarding the allocation and use of municipal subsidies within the City of Brookings. These guidelines shall be used in processing and reviewing applications requesting municipal subsidy assistance. Protecting the financial interest is of the City of Brookings is of the utmost importance, so it is the intent of the City to provide a minimum amount of municipal subsidies, as well as other incentives that the City may deem appropriate, for the shortest term required for the project to proceed. The City reserves the right to approve or reject projects on a case-by-case basis, taking into account established policies, specific project criteria, and demand on city services in relation to the potential benefits to be received from a proposed project. Meeting policy guidelines or other criteria does not guarantee the award of municipal subsidies. Furthermore, the approval or denial of one project is not intended to set precedent for approval or denial of another project. Whenever possible, it is the City’s intent to coordinate the use of municipal services with other local governing bodies and taxing jurisdictions. Objective of Municipal Subsidies. The City of Brookings is committed to providing a high quality of life for its citizens and fostering a diverse economic base through innovative thinking, strategic planning, and proactive, fiscally responsible municipal management. To fulfill this commitment, the Brookings City Council will closely examine its goals and the goals of its city departments to identify outcomes that will meet the standards as outlined in the mission statement above. The Council also recognizes that its support of programs and services outside the scope of its city departments may be necessary to fulfill the commitment and achieve the desirable quality of life for its citizens. As a matter of policy, the City of Brookings will consider using municipal funds to assist in the following areas, but are not limited to, opportunities in the areas of:  Affordable Housing  Arts & Culture  Youth Development  Diversity  Economic Development  Education & Literacy  Environment  Government Stewardship  Health  Parks, Recreation & Open Spaces  Partnerships  Preservation/ History  Safety Amended: 04/15/2014 14  Transportation/Transit The Brookings City Council may choose to annually allocate a specified funding amount for a specific category, regardless of the number of applicants for that particular programming area. General Guidelines for the Allocation of Municipal Subsidies. The City of Brookings may allocate up to four (4) percent of the annual General Fund expenditures to subsidize community needs and programs. The City’s current and projected financial health and stability will be the key deciding factor in determining its ability to provide funds to outside organizations. In addition, the Council will consider a number of factors as defined in the City’s Funding Application when making this decision. A key factor will be the applicant’s ability to provide a service or outcome that improves the quality of life for the citizens of Brookings. The applicant must also provide a “but for” analysis which demonstrates the need for public assistance. Other factors include the applicant’s ability to become self-sustaining, the duration of the funding commitment, and operating verses capital requests. Municipal subsidy will not be used for projects that would place extraordinary demands on city infrastructure and services. Request for donations or subsidies from individuals, religious or political groups based out of the City of Brookings will not be considered. Request for donations or subsidies from qualified organizations outside of the funding timeline will not be considered. General Guidelines for Subsidies. The Brookings City Council evaluates program-funding proposals on an annual basis for funding in the following calendar year. The City’s fiscal year is January 1 to December 31. Proposals must be submitted to the City Clerk in accordance with the budget cycle schedule and proposal format outlined below. Requests may only be made during this period of time. Completed applications must be received on or before June 1st of each given year. Following, a review by the City Manager and Finance Manager, the application shall be referred to the City Council for further consideration during the annual budget meetings. Organizations applying for a donation or subsidy must submit a completed Application for Funding along with a detailed description of the project; a preliminary site plan; the amount requested; the duration of the funding request; the public purpose of the project; verifiable funding sources and uses; and a “but for” analysis which demonstrates the need for public assistance. Additional documents which may be required include the organization’s current expense statement and budget, Board of Directors listing, current Annual Report, and all other items specified in the City of Brookings Application for Funding. Budget Hearing Process. Brookings City Council budget meetings are held in the months of August and September. All budget meetings are open to the public. Applicants may or may not be invited to make a presentation on their funding proposal. Applicants are encouraged to attend all budget meetings to remain informed during the process. Applicants should be prepared to answer Amended: 04/15/2014 15 questions based on the application. Final action on the budget occurs at the last Council meeting in September. Brookings School District Subsidies. Appropriation of public funds can be set aside for specific purposes which promote the City of Brookings mission and the local quality of life within the City of Brookings. Brookings Municipal Utilities transfers funds each year to the General Fund as a means to keep city property taxes at a low level for the citizens of Brookings. The City of Brookings may annually appropriate up to 15% of the transfer from the Brookings Municipal Utilities to the Brookings School District. Economic Development/Promotions Subsidies. A subsidy from the 3rd B Fund shall meet the requirements of the SD State Statute 10-52-8*. Funds will be appropriated from the 3rd B Fund to entities with the capacity to promote and advertise the city, its facilities, attractions, and activities. In any fiscal year, the City may require the unencumbered funds be returned to the City 3rd B Fund. Subsidy Agreement and Reporting Requirements. The City of Brookings requires all recipients of municipal funds to enter into appropriate agreements that identify the reason for the subsidy, the public purpose served by the subsidy, subsidy payment schedule, final the specific performance measurements to be attained, and final reporting on outcomes. Failure to provide final reporting of funds and all other required reports will make applicant ineligible for future subsidies. The City has established the policy that financial, service and program performance measures be developed and used as an important component of decision making and incorporated into governmental budgeting. The City encourages all departments to utilize performance measures. At a minimum, performance measures should be used to report on the outputs of each program and should be related to the objectives of each department. The City encourages all subsidy recipients to utilize performance measures. At a minimum, performance measures should be used to report on the outputs/outcomes of each subsidized program and should be related to the objectives described earlier in this sub-section. The performance measurements should: 1. Be based on program objectives that tie to the City Council’s goals and program mission or purpose; 2. Measure program results or accomplishments; 3. Provide for comparisons over time; 4. Measure efficiency and effectiveness; 5. Be reliable, verifiable and understandable; 6. Be reported internally and externally; 7. Be monitored and used in decision-making processes; and 8. Be limited to a number and degree of complexity that can provide an efficient and meaningful way to assess the effectiveness and efficiency of key programs. All agreements and reports shall be timely prepared and filed with the City Clerk. Failure to comply with any of these requirements may result in the revocation of the requested subsidy as well as fines, repayment requirements, and a determination that the organization is ineligible for future municipal subsidies for a period of years. * Applicable State Statute: Amended: 04/15/2014 16 10-52-8. Additional tax on lodgings, alcoholic beverages, prepared food, and admissions -- Purposes -- Conformance with state sales and use tax. Notwithstanding the tax rate limitations of §10-52-2 or 10-52-2.1, any municipality may impose an additional municipal non-ad valorem tax at the rate of one percent upon the gross receipts of all leases or rentals of hotel, motel, campsites, or other lodging accommodations within the municipality for periods of less than twenty-eight consecutive days, or sales of alcoholic beverages as defined in §35-1-1, or establishments where the public is invited to eat, dine, or purchase and carry out prepared food for immediate consumption, or ticket sales or admissions to places of amusement, athletic, and cultural events, or any combination thereof. The tax shall be levied for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities. Such taxes shall conform in all respects to the state sales and use tax on such items with the exception of the rate. Amended: 04/15/2014 17 City of Brookings Ends Policy 2, Municipal Services Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Municipal Services: Key Performance Area Municipal Services is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “providing a high quality of life for citizens.” The City Council deems City Services, along with fiscal management, as the highest priorities of the City Manager and City Employees. There is no more important function of City Government than to serve the Citizens of Brookings in a friendly, effective manner. For this document, the City Council defines Municipal Services as Life Safety (police and fire), and Functional Services (all other departments). Guideline A: In terms of Life Safety, involving the police and fire departments, the City Manager will: 1. In emergency situations, uphold the decisions made by the fire or police chief; 2. Maintain personnel at established baselines; 3. Provide appropriate equipment to maximize safety of personnel; 4. Enforce ordinances and laws; 5. Not allow situations to develop that may raise insurance rates for citizens or for the City; 6. Maintain the budget in such a way that will not lower the quality of services. Guideline B: In terms of Functional Services, which include all departments of the City other than Life Safety, the City Manager will: 1. Repair infrastructure in a timely manner; 2. Increase services while forecasting benefits; 3. Expand department budgets only while documenting baselines; 4. Approve changes that fall within the long-term plan; 5. Continually strive to improve operational efficiencies; 6. Establish, model, and enforce the highest standards of exceptional customer service from city employees; 7. Enforce ordinances and laws; 8. Document ongoing citizen satisfaction and performance reviews for services provided; 9. Provide support and guidance for staff when they are forced to work outside of their expertise; 10. Seek opportunities to share facilities with other entities; 11. Anticipate foreseeable needs; 12. Use foresight in developing services; 13. Deliver services in a timely and quality manner; 14. Consider citizen complaints; 15. Emphasize a user-friendly approach; 16. Apply technology whenever beneficial. Amended: 04/15/2014 18 Guideline C: The City of Brookings has unique enterprise operations including the Solid Waste Fund, the Edgebrook Golf Course, the Research and Technology Center, the Liquor Retail Store, and the Liquor Override. In terms of enterprise operations the City Manager will: 1. Comply with Guideline B; 2. Review the Return on Assets (ROA) on an annual basis. The Return on Assets will be calculated, using the formula: Net income divided by average total assets. The numbers to calculate the return on assets ratio will be taken from the last and latest balance sheets and latest income statements for each enterprise fund. It will be necessary to average the total assets entries from your last and current balance statements when doing the calculation, but excluding the General Fund transfer expense. 3. Net Assets are an indicator of a financial position. The financial position of an enterprise fund can be tracked over time to assess whether a funds financial health is improving or deteriorating. The City Manager will report annually to the City Council a comparison of the net assets for the two most recent audited fiscal years for the above enterprise funds listed in Guideline C. 4. In addition the Liquor Fund’s annual report will be presented annually comparing the net profit as the net asset report includes both the operating agreement income and the retail income. 5. Compare, as a percentage, the General Fund Transfer to the gross revenue of each enterprise operation on an annual basis. General Fund Transfer Comparison, Item #3 Total Year Landfill Collections Liquor Retail Override 2000 13.2% 6.6% 6.1% 4.6% 7.3% 2001 14.0% 6.7% 5.9% 4.4% 7.1% 2002 29.2% 12.4% 6.5% 5.1% 7.8% 6. Review a five-year Capital Improvement Plan (CIP) on an annual basis. The CIP must list the capital outlays and source of funds, including demonstrating that needed capital reserves are maintained so that the enterprises are being operated in a stable financial manner. Each department prepares a Five-year CIP on an annual basis. Amended: 04/15/2014 19 City of Brookings Ends Policy 3, Business Models Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Business Models (Long Range Planning, Customer Satisfaction, Productivity and Process Improvement): Key Performance Areas Operation of the City under a business model, emphasizing long range planning, customer satisfaction, and productivity and process improvement, is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “innovative thinking and strategic planning.” The City Council chooses to import models and practices not only from government, but just as importantly, from innovative business models. In other words, the Council wants the City, whenever possible and prudent, to operate with similar systems and attitudes adopted by any successful business. Some of the major themes the Council chooses to emphasize are: 1. Benchmarking. The Council wants to constantly compare City performance with other cities and other departments; to be sure Brookings is operating in not only an efficient, but creative and innovative manner. The Council is aware that Brookings is unique—at times, the City’s emphasis and direction will, and should, differ considerably from other cities. However, information about best practices from other communities will always help the Council make better choices. 2. Continuous improvement. The Council expects measurements of performance to challenge the status quo, through the use of continuous improvement processes. Since the needs of our citizen customers are constantly changing, so should our practices. 3. Goal-setting. The Council expects specific goals to challenge each City Department. 4. Accountability. The Council expects the City Manager to hold City Employees to standards that demand excellence. “Good enough” is not an acceptable standard. 5. Customer satisfaction. The Council expects the City to institute a form of measurement to gather and monitor customer satisfaction. Amended: 04/15/2014 20 City of Brookings Ends Policy 4, Economic Development Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Mission Statement : “The City of Brookings is committed to providing a high quality of life for its citizens, and fostering a diverse economic base, through innovative thinking, strategic planning, and proactive, fiscally responsible municipal management.” Economic Development: Key Performance Area Economic Development and expansion is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “fostering a diverse economic base.” The Council understands and intends to emphasize the importance of a healthy economy in Brookings and the surrounding area. For the entire community a healthy economy is critical to a high quality of life. Because of its great importance, there are many entities involved in economic development in Brookings. As the City is a significant funding source for much of the economic development efforts in Brookings it is the Council’s intention to spend economic development dollars in the wisest most productive manner possible. The City Council’s desired End is to have an economy that is healthy and growing with enough economic activity to support and fund public services. Toward that end, some overall indicators, expressed as ends, have been identified: A. The property tax base is growing. B. Sales taxes are increasing. C. Retail, Commercial, and Industrial buildings are not vacant. D. There are employment opportunities. E. There are competitive wages. Having developed some overall Ends, following are more specific Ends to provide guidance to both the City Council and the City Manager. 1. City Government is prepared for economic development opportunities. a) 5% of the annual revenue of 75% - 2nd Penny Sales & Use Tax should be reserved for future economic development opportunities until a $1 million dollar committed fund balance is achieved. A strategic plan will be developed to replenish the committed fund balance should it fall below the minimum committed fund balance of $1 million dollars. b) One-time sales of land will be added to the committed fund balance for future land purchases for industrial and economic development. c) The City Manager is designated as the primary contact from city government for economic development inquiries. d) City government, through its City Manager, acts as a facilitator for cooperation amongst the various economic development entities. e) There is adequate land available for future Industrial and Commercial development. Amended: 04/15/2014 21 f) BEDC has an Action Plan with Committees in place to foster economic development, create opportunities, and react to opportunities. 2. Economic development entities are working cooperatively and collaboratively. a) A comprehensive economic development strategy exists. b) Economic development entities, the Growth Partnership Board, the BEDC, the DBI, and the Chamber meet with the city manager on a regular basis and report to the City Council on a regular basis. c) There is an excellent relationship between economic development entities and the Governor’s Office of Economic Development. d) The BEDC is the primary host. There will be a planned, cooperative effort for all “hosting.” 3. Economic development efforts are conducted with an emphasis on the community’s assets. a) The growth and expansion of existing Brookings industries and retail is the primary target for increased employment and economic growth. b) SDSU students and SDSU Colleges are viewed as potential partners to targeted businesses and industries. A business or industry closely related to a field of study at SDSU can profit from the use of a quasi-professional/professional work force willing to work part-time and eventually full-time, the knowledge base held within an SDSU college, and other partnerships with SDSU. c) The City will partner with the innovation campus at SDSU. Research Park at South Dakota State University. 4. The land around the Swiftel Center/Ice Arena is developed to enhance and complement the existing land use in the area. 5. Tourism is bringing outside money to the community. a) Quality events and promotions occur frequently. b) There is an events coordinator and an emphasis on filling the summer months with activities. Hotel rooms are full. c) “3rd Penny” tax receipts are increasing. d) Sales tax receipts are directly impacted by events. e) Facilities (Ice Arena, Swiftel Center, Sports Fields, Performing Arts Center, Wellness Center, Dakota Nature Center) are used at capacity. f) Promotion dollars leverage significant visitor spending. g) The community accepts a plan for the broadening of the tax base for promotional uses. 6. Tourism entities are working cooperatively and collaboratively. a) A comprehensive promotion strategy exists. b) City Government acts as a facilitator for cooperation among the various tourism entities. 7. Business Improvement District #1 “Pillow Tax” is bringing outside money to the community. a) Conferences, conventions, meetings occur frequently. b) The CVB aggressively recruits and promotes activities with an emphasis on filling week days with activities and increase week day overnight stays. c) Facilities are maintained, expanded to remain competitive in the market. Amended: 04/15/2014 22 d) BID Tax “Pillow Tax” funds leverage significant visitor spending. e) The Board of Directors appointed by the City Council annually prepares and updates plan reporting improvements for the district area for City Council approval. f) The City Council shall assign 10% of the annual revenue from the “Pillow Tax” until such time a minimum of $100,000 is assigned and maintained for the specific purpose of cash flow. 8. The Research and Technology Center operates to facilitate the start-up and continued health of commercial based business and industry. A specific policy guides the management of the Research and Technology Center. 9. Because the State of South Dakota provides local control of the number of liquor licenses allowed in a City, there are ample liquor licenses available for future development of amenities the traveling and visiting public desires. The City of Brookings has a policy to guide the distribution of licenses (operating agreements). 10. The appropriation for tourism and promotion will not exceed the sum of the “3rd Penny” revenues raised annually. 11. The cost of economic development activities fluctuate based on the need and projects proposed. 12. The City Council has considered predevelopment agreements with large retail developments. The Council will consider development agreements and incentives with business development projects that qualify for the various policy programs available. Amended: 04/15/2014 23 City of Brookings Ends Policy 5, Employee Training and Development Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Employee Training and Development: Key Performance Area Employee Training and Development is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “proactive, fiscally responsible municipal management.” The Council values City of Brookings employees as emissaries to the world. With this in mind, the work environment for employees shall be one in which employees are appreciated, and encouraged to grow and expand their skills. Compensation and benefit packages will promote excellence, within the safest possible working conditions. The goal of training shall be to provide tools to assist staff to exceed management and customer expectations. Deviations from the below stated guidelines must be reviewed and approved by the Council. Guideline A: Training shall equip employees with the attitudes and behaviors necessary to achieve excellence. Based on this guideline, training shall: 1. Commence immediately upon hiring, and continue throughout the career of the employee, providing specific tools for optimal performance and productivity; 2. Emphasize continuous improvement of employees and processes; 3. Enhance an employee’s opportunity for promotion; 4. Emphasize customer service; 5. Focus on effective technological practices. Guideline B: Compensation Ranges will be objectively determined by the City Manager in accordance with this policy. Research shall compare compensation and benefits with those of other public entities with whom the City may compete for qualified employees, along with private sector organizations that have similar positions in the surrounding area. Infrequently, full market surveys may be required to evaluate and implement necessary modifications to the City’s pay system. Full market surveys that might require the services of a consultant to evaluate the City’s compensation levels will be completed only upon recommendation of City Manager and approval by the Council. The organizations to be included in the market research for non-exempt positions will consist of other public sector entities primarily in South Dakota, as well as private sector organizations in the local region, as appropriate, that have similar positions. For management and professional positions, the market will include many of the organizations previously identified, plus similarly sized cities in surrounding states that the city would compete with for applicants as identified by the City Manager. It is not intended that the market will include significantly larger South Dakota cities, such as Sioux Falls and Rapid City, unless the market conditions clearly suggest the need to do so. Amended: 04/15/2014 24 In order to ensure that there is consistency in the methodology used when determining the compensation ranges and benefits, the City Manager will follow the guidelines below. In addition to infrequent full market surveys, periodic checks of benchmark positions will be completed as directed by the City Manager to monitor and maintain the City’s compensation program. To maintain compensation levels that are comparable to market, the City Manager will identify and select benchmark positions and organizations to survey on a timetable appropriate to upcoming budget year. Efforts will be made to survey the same or like organizations as in the previous survey unless an exception to this policy can be justified. In order to maintain the internal equity of the compensation system, the Job Factor Evaluation System adopted by the City will be used for all job classification reviews. The job evaluation is not intended to provide a specific value for a position; rather it is intended to provide an assessment of the “relative” value of a position to the organization, compared to other positions. The following criteria defined in the Job Factor Evaluation will be used in evaluating the internal equity placement of City positions: 1. Scope of Supervision: Factor measures both the level of supervision required as well as the number of individuals supervised. 2. Job knowledge: Factor measures the extent and nature of knowledge required to perform the duties of the position. 3. External Contacts: Factor measures the nature and frequency of external contacts. 4. Decision Making: Factor measures the level of decision-making and independent thought required. 5. Job Complexity: Factor measures level of analytical ability required in the position and the complexity of typical situations faced. 6. Physical Working Conditions: Factor measures nature of physical working environment and frequency in which employee typically works in that environment. 7. Exposure to Hazards: Factor measures employee’s typical exposure to health and physical dangers and frequency of such exposure. The pay grades and pay ranges will remain consistent and uniform as follows: 1. The bargaining unit will have established pay grades with ranges of 21.7% and a six percent differential between each grade. The pay grades will be determined based on position title, specific duties involved, and job factor evaluation system. 2. The management group will also have established pay ranges of 35%. Pay ranges will be established by position title, specific duties involved, and job factor evaluation system. The non-union/non-management will be placed on a similar pay system with ranges of 21.7%. There is also in place for management exempt employees a pay for performance system which is administered by the City Manager based on budgeted funds to provide recognition to management staff for their additional contributions, achievements and service to the City of Brookings over the past year. 3. For the police bargaining the Council will have pay grades with ranges of 21.7% with exceptions with less than 21.7% ranges to minimize overlap. Amended: 04/15/2014 25 A combination of the data collected on the identified benchmark positions and the job factor evaluation system will be used to place each City position at appropriate pay grades in the City of Brookings Pay Plan Schedules. By using both the market survey data and the job factor evaluation, the City will have a pay system that is within market and reflects the City of Brookings organization. The Council will not assume an obligation to automatically increase pay ranges without justification. Justification will rely on a review of the Midwest CPI and specific salary date received/obtained from sources as determined appropriate by City Manager. The purpose of this process is to develop a pay system that is fair and within market and to provide a process that is consistent and reproducible. In summary, this policy provides further definition to the following Council policy. It is the intent of the Council for compensation to: 1. Be commensurate with individual productivity within the market range; 2. Be systematic, with defined ranges, with consistent span in the pay ranges where feasible using the median of the maximum rate of pay of surveyed positions as a benchmark; 3. Be used as a reward and motivation to achieve excellence; 4. Be attractive to top candidates; 5. Be adequate to retain top performers; 6. Exceed standards only when justified by exceptional performance; 7. Emphasize the use of reward bonuses over pay increases; 8. Be structured, when appropriate, to allow staff attrition to maintain market rates. Amended: 04/15/2014 26 City of Brookings Ends Policy 6, Intergovernmental Cooperation and Relations Establishing what is to be done, for whom, at what cost, and Executive Limitations to define unacceptable means Intergovernmental Cooperation and Relations: Key Performance Area Intergovernmental Cooperation and Relations is considered a key performance area by the Brookings City Council, and appears in the Mission Statement as “providing a high quality of life for citizens…through innovative thinking and strategic planning.” The Council wishes to coordinate efforts with other governmental bodies, to mutual benefit, whenever possible. The Council hopes to continue to work closely with any governmental body seeking to serve the best interests of the Citizens of Brookings in a more integrated manner. Staff must remember their importance in establishing and maintaining rapport with scores of governmental agencies and groups. At times, one staff person is the only representative of Brookings to encounter a given government official and regardless of the size or length of the interaction, the Council hopes staff conducts themselves in a manner that would be the pride of Brookings. Though too numerous to mention every governmental body, examples of governmental bodies that the Council wishes to coordinate efforts with include (not in order of importance): Federal, State, County, University, School District, Cities with home rule, other Cities, and Municipal League. Amended: 04/15/2014 27 City of Brookings Ends Policy 7, Strategic Planning In an effort to live out the City’s Mission Statement, the Council and staff will utilize a systematic process of Strategic Planning to guide its major policy decisions. Strategic Planning is a disciplined effort to produce fundamental decisions and actions that shape and guide organization, its purpose, function, priorities, decisions, and implementation process. Strategic Planning will enable to Council and staff to blend futuristic thinking, objective analysis, and subjective evaluation of goals and priorities to chart future courses of action that will ensure the long-run vitality and effectiveness of the organization. The result of this deliberative process should ideally be a specific set of priorities, developed and adopted over a timeline as determined by the Council, consisting of over-arching policy goals and objectives as outcomes of the decision-making process. The staff will then provide a suitable work plan that will ensure the effective implementation of the policy goals. Amended: 04/15/2014 28 Amendments • May 13, 2002 – The City Council approved the City Council Code of Ethics as Attachment A, and the Volunteer Code of Ethics as Attachment B. • November 27, 2002 – Amended Ends Policy 2, Municipal Services, to add Guideline C for enterprise funds. • May 27, 2003 – Amended Economic Development Policy. • January 11, 2005 – Amended Financial Stability Ends Policy. • May 8, 2007 – Amended Policy 1, Governance Process; Policy 2, Council-Staff Linkage; Ends Policy 1, Financial Stability; Ends Policy 2, Municipal Services; Ends Policy 4, Economic Development; Ends Policy 5, Employee Development and Training. • April 29, 2008 – Amended Ends Policy 1, Financial Stability, adding Guideline H: Appropriation and Subsidy Policy & Guidelines. • November 22, 2011 – Amended Policy 1, Financial Stability Kay Performance Area, Guideline C, Guideline E, and Guideline G; Amended Policy 2, Municipal Services, Guideline B, and Guideline C; Amended Ends Policy 4, Economic Development #1, #2, #7, #8 and #10. • December 4, 2012 – Resolution No. 153-12*: Amended Ends Policy 1, Financial Stability, Guideline C, Section a. Fiscal Stabilization Arrangement. • May 28, 2013 – Amended Appendix A, City Council Code of Ethics • April 15, 2014 – Resolution No. 40-14. Amended Governance Policy 2.2(2), Council-Staff Linkage, Delegation to the City Manager; Amended Governance Policy 2.3, Council-Staff Linkage, Monitoring Executive Performance; Amended Governance Policy 1.6, Governance Process. • *Commencing 2012, all amendments to the Governance & Ends Policy must be done by Resolution. Amended: 04/15/2014 29 City of Brookings Governance and Ends Policies - Appendix A City Council Code of Ethics Approved May 13, 2002 Amended May 28, 2013 The mayor and council are responsible for making policy decisions for the community. The City Council provides vision, direction and leadership to the community and the organization. The City Council further represents the Brookings Community with other governmental entities and officials. In order to maintain and enhance public trust and confidence in our local government, to achieve equity and social justice, to affirm human dignity, and to better the quality of life for residents of Brookings the members of the City Council dedicate themselves to the stewardship of the public trust and therefore embrace the following ideals, seeking to:  Uphold constitutional government and the laws of the City of Brookings by recognizing I am an agent for the democratic process and not the owner of authority;  Conduct public and private life as to be an example for my fellow citizens and take responsibility for my actions, even when it is uncomfortable or unpopular to do so;  Be mindful of my neutrality and impartiality, rendering equal service to all and to extend the same treatment I wish to receive myself;  Abstain from voting when a conflict of interest exists in accordance with the Brookings City Charter, Section 7.01 (a) Conflicts of Interest provision;  Be tolerant, respectful and attentive to divergent ideas, suggestions and opinions;  Maintain and respect the confidentiality of private and confidential information, and treat all persons, claims and transactions in a fair and equitable manner;  Attend and be actively engaged in all regular and special meetings, including briefings, and public functions where my presence is expected and be prepared in the execution of such;  Be a prudent steward of public resources and actively consider the impact of my decisions on the financial and social stability of the City and its citizens;  Make decisions based on the merits of the issue with attention to due process and citizen participation;  Be knowledgeable and develop an understanding of local, state, and national governmental guidance, directives, regulations and ordinances pertaining to my position.  Be prepared to make unpopular decisions based on my interpretation of the public’s best interest;  Make decisions and recommendations based upon research and facts involving staff and stakeholders which considers the goals, impacts and the best interest of the greatest number of those affected. It is the policy of the City of Brookings to uphold, promote, and demand the highest standards of ethics from all its Council members. Brookings Council members shall maintain the utmost standards of personal integrity, truthfulness, honesty, and fairness in carrying out their public duties, avoid any Amended: 04/15/2014 30 improprieties in their roles as public servants including the appearance of impropriety, and never use their city position or powers for improper personal gain. The code of ethical behavior will govern members of the City Council. City Council members are encouraged to monitor their compliance and offer constructive recommendations to fellow Council members if necessary. As a member of the City Council, I accept these ideals and policy, and pledge to do in the interest and purposes for which our government has been established. Date Signature Amended: 04/15/2014 31 City of Brookings Governance and Ends Policies - Appendix B City of Brookings Volunteer Code of Ethics Approved May 13, 2002 Volunteer advisory boards, committees and commissions provide a very important service to the City of Brookings. Members of volunteer boards, committees and commissions are often the first and only contact an individual might have with city government. In order to maintain and enhance public trust and confidence in our local government, to achieve equity and social justice, to affirm human dignity, and to better the quality of life for residents of Brookings the members of volunteer boards and committees dedicate themselves to the stewardship of the public trust and therefore embrace the following ideals, seeking to:  Uphold constitutional government and the laws of the city of Brookings;  Conduct public and private life as to be an example for my fellow citizens;  Abstain from voting when a conflict of interest exists in accordance with the Brookings City Charter, Section 7.01 (a) Conflicts of Interest provision;  Be mindful of my neutrality and impartiality, rendering equal service to all and to extend the same treatment I wish to receive myself;  Be tolerant, respectful and attentive. Avoid comments, body language or distracting activity that conveys a message of disrespect for the presentations from citizens, staff or colleagues;  Maintain and respect the confidentiality of private and confidential information;  Attend all regular and special meetings, including briefings, subcommittee meetings and public functions where my presence is expected;  Be prepared by reading all documents pertaining to an issue in advance of the above mentioned meetings or event;  Be an active and attentive participant;  Be professional in both appearance and manner; and  Read, comprehend and comply with local, state, and national governmental guidance, directives, regulations and ordinances pertaining to my position. It is the policy of the City of Brookings to uphold, promote, and demand the highest standards of ethics from all its appointed officials. Brookings City officials shall maintain the utmost standards of personal integrity, truthfulness, honesty, and fairness in carrying out their public duties, avoid any improprieties in their roles as public servants including the appearance of impropriety, and never use their city position or powers for improper personal gain. The code of ethical behavior will govern members of all City of Brookings boards, committees and commissions. Volunteers are responsible to self-monitor their behavior. Concerns regarding a volunteer’s behavior should be reported to the City Manager. Deviation from this Code of Ethics may result in removal from the Board. As an appointed official, I accept these ideals and policy, and pledge to act in the interest and purposes for which our government has been established. Date Signature City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0290,Version:1 Visioning Charrette: Council Goals Summary: The Brookings Economic Development Corporation (BEDC) hosted a community Visioning Charrette in 2013 to gather input for future planning and projects. The City Council reviewed the Visioning Charrette Final Report on April 21, 2015 and September 15, 2015 to identify areas the City may take leadership or support roles. The Council requested periodic review of the document to gauge progress. Attached is a summary of the proposed areas of involvement discussed. Attachments: City of Brookings Proposed Objectives - updated 9/15/2015 City of Brookings Printed on 5/11/2016Page 1 of 1 powered by Legistar™ Updated 9/15/15 2013 Brookings Area Visioning Charrette: The following represents areas of the Charrette outcomes where the City of Brookings will take both leadership and support roles in working with strategic partners to further the betterment of Brookings, as it aligns with the City’s Mission of providing a high quality of life for its citizens and fostering a diverse economic base through innovative thinking, strategic planning, and proactive, fiscally responsible municipal management. City Leadership Role/Support Role Community Engagement Objective: Establish an idea harvesting process to solicit suggestions and relay success derived from suggestions. Actions Progress Notes 1. Frequently hold town hall meetings/public forums on salient topics to solicit community input. - Set aside time at study sessions @ 5:30 pm - Start with Ex-officio reports Sustainability Council Indicator Report Leadership Objective: Engage K-16 educational system in leadership programming to ensure leadership skills and traits are developed at an early age, and to solicit involvement of younger individuals in the community leadership process. Actions Progress Notes 1 Create additional connections between student associations and public bodies In addition to SDSU student senate. Identify student group partners (Human Rights Committee). Bring diversity of opinion. Invite High School Student Body to provide reports every other month during school year. Social Environment Objective: Create a variety of indoor and outdoor gathering spaces that provide life-stage and intergenerational opportunities for residents to connect. Actions Progress Notes 1 Create multiple indoor/outdoor wellness opportunities Indoor recreation center 2 Develop an outdoor town center gathering space RFP for armory Concept of master design for downtown area to include green space, amenities Programming: Downtown @ Sundown, Farmers Market, festivals Keep item in front of Council via progress notes Campus/Community Relationship Objective: Pursue campus/community partnerships that advance innovation and development opportunities for SDSU and the Brookings Community. Actions Progress Notes 1 Hold annual meeting between City Council and Updated 9/15/15 Student Senate 2 Involve the community as active participants in the SDSU strategy and civic discussions University Campus Coalition Campus/Community Relationship Objective: Promote and encourage interaction and connections by students, residents, and businesses throughout all aspects of the community. Actions Progress Notes 1. Welcome letters to new students Mayor’s Office currently doing this Economic Environment Objective: Closely align economic development efforts with “people focus” to ensure availability of human talent. Actions Progress Notes 1 Provide an affordable variety of available housing 2 Increase amenities and provide incentives to fill key gaps Physical Environment Objective: Create distinct and diverse neighborhoods utilizing varied subdivision designs, neighborhood gateway entrances, and community features such as parks and pathways. Actions Progress Notes 1 Revitalize older neighborhoods Involve Planning Commission, Historic Preservation Commission, Sustainability Council 2 Implement adaptive reuse of buildings Armory 3 Develop design guidelines Downtown – review current voluntary design guidelines 4 Generate retail space of all sizes Consider alley ways as alternatives, not necessarily retail. Adaptive reuse, green space with retail, gathering spaces Reduce dumpsters in alleys Make sure we don’t have restrictions on dual occupancies so rear entrances are allowed Limit truck traffic 5 Develop space to allow creative expression More discussion needed on creative expression space (bring back in 3 months) Physical environment is special topic for study session Charrette discussion quarterly basis 6 Address urban blight of housing and buildings Updated 9/15/15 Physical Environment Objective: Incorporate sustainable design features in residential, commercial and industrial districts. Actions Progress Notes 1 Develop green space and gardens Downtown City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0360,Version:1 Proposed Charter for Swiftel Center Planning Task Force Summary: In an effort for continuous improvement to services provided by the Swiftel Center, and in anticipation of constantly-changing market demands for entertainment, special event, and meeting facility venues, the concept of developing a long-range strategic plan for this major city-owned facility is recommended. The attachment describes the specific purpose, objectives, and task force composition. This is on this study session agenda for purposes of city council input. If deemed acceptable, it will be placed on the June 14 City Council agenda. Fiscal Impact: None Attachments: Draft Charter City of Brookings Printed on 5/12/2016Page 1 of 1 powered by Legistar™ SWIFTEL CENTER STRATEGIC PLANNING TASK FORCE CHARTER PURPOSE: The Task Force will create a long term strategic plan for the Swiftel Center. Once approved the plan will be used by the City Council for capital planning, the Convention Visitor Bureau for marketing planning and the Swiftel Center Advisory Board and Staff for operation planning. OBJECTIVES: 1) Review current Swiftel Center Mission Statement and modify if needed. 2) Review, augment and update if necessary the 2014 Meeting Market Report provided by the CVB; to include an update of the local community inventory of meeting room facilities. This should be quantified in terms of: number of rooms, size, capacity, and their respective target markets. 3) Identify the trends in the competitive marketplace for the various markets in which the Swiftel Center operates, and attempt to anticipate future changes and trends. This should include, but not be limited to, projections of future market demands. 4) Assess the current facilities and amenities at the Swiftel Center and their ability to favorably respond to each of these projected trends. 5) Determine which hospitality markets the Swiftel Center currently operates/competes within and compare with future hospitality markets in which the Swiftel Center should operate/compete. 6) Identify any applicable operational, programmatic, physical, capital, and financial modifications that will be necessary to favorably position the Swiftel Center to continue to be successful, and improve on that success, in the goal of fulfilling its mission. 7) Create a long term vision statement for the Swiftel Center The above objectives should be undertaken as an instrumentation tool in assisting the Swiftel Center to continue to meet its mission statement. DELIVERABLE FINAL PRODUCT: A specific set of strategic initiatives for the City Council to consider that, if implemented, would improve the ability of the Swiftel Center to respond to, support, and expand the various entertainment, special event, and public assembly market demands and venues in the area. The report will be submitted to the City Council for approval. SWIFTEL CENTER MISSION STATEMENT: . . . to enhance the quality of life for the citizens of the region by providing a gathering place for cultural, recreational, educational and community events, thereby positively impacting the economy of Brookings. MEMBERSHIP: The Task Force shall be comprised of seven (7) individuals selected by the Mayor: -One member from the Swiftel Center Advisory Board -One member from the Convention and Visitors Bureau Board -Two members from the Hospitality Industry -One representative from SDSU -Two Community Leaders with Business Background The Task Force will be staffed by: -Executive Director of the Swiftel Center -City Manager or his designee -Executive Director of the Convention Visitors Bureau City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0366,Version:1 City Council Ex-Officio Reports Summary: Pursuant to council direction, “City Council Member Ex-Officio Reports” will be a standing agenda item at all Council Study Sessions. The Council Members that serve as Ex-Officio members on the Brookings Health System Board of Trustees and Utility Board will provide verbal reports regarding recent meetings they have attended. Brookings Municipal Utility Board: 1.Council Member Niemeyer 2.Mayor Reed Brookings Health Systems Board of Trustees: 1.Council Member Hansen 2.Council Member Corbett City of Brookings Printed on 5/12/2016Page 1 of 1 powered by Legistar™ City of Brookings Staff Report Brookings City & County Government Center, 520 Third Street Brookings, SD 57006 (605) 692-6281 phone (605) 692-6907 fax File #:ID 2016-0374,Version:1 Executive Session, pursuant to SDCL 1-25-2, for purposes of consulting with legal counsel regarding proposed or pending contractual matters. 1-25-2. Executive or closed meetings--Purposes--Authorization--Misdemeanor. Executive or closed meetings may be held for the sole purposes of: 1) Discussing the qualifications, competence, performance, character or fitness of any public officer or employee or prospective public officer or employee. The term “employee” does not include any independent contractor; 2) Discussing the expulsion, suspension, discipline, assignment of or the educational program of a student; 3) Consulting with legal counsel or reviewing communications from legal counsel about proposed or pending litigation or contractual matters; 4) Preparing for contract negotiations or negotiating with employees or employee representatives; 5) Discussing marketing or pricing strategies by a board or commission of a business owned by the state or any of its political subdivisions, when public discussion may be harmful to the competitive position of the business. However, any official action concerning such matters shall be made at an open official meeting. An executive or closed meeting shall be held only upon a majority vote of the members of such body present and voting, and discussion during the closed meeting is restricted to the purpose specified in the closure motion. Nothing in § 1-25-1 or this section may be construed to prevent an executive or closed meeting if the federal or state Constitution or the federal or state statutes require or permit it. A violation of this section is a Class 2 misdemeanor. Source: SL 1965, ch 269; SL 1980, ch 24, § 10; SL 1987, ch 22, § 1. City of Brookings Printed on 5/16/2016Page 1 of 1 powered by Legistar™