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HomeMy WebLinkAbout04-22-15 Pasco PFD Board Agenda PacketPasco Public Facilities District Building Regional Facilities through Community Partnerships April 22, 2015 4:00 p.m. Pasco City Hall - Conference Room #1 AGENDA 1. Call to order and roll call 2. Approval of minutes: * Regular Meeting December 23, 2014 3. Claims Approval: * 1st Quarter 2015: $106,543.19 4. Financial Report: * 1 st Quarter: • Operating Statement • Net Assets Statement * 2014 Financial Report 5. Old Business: Update on TCRPFD 6. New Business: Pasco Project Selection Path Forward 7. Other Business: 8. Adjournment (* indicates documents mailed with agenda) PUBLIC FACILITIES DISTRICT BOARD December 23, 2014 MINUTES Call To Order: The meeting was called to order at 4:00 p.m., by PFD President Morrissette, in Conference Room #1 at Pasco City Hall. Roll Call: Board Members Present: Leonard Dietrich, John Merk, Craig Maloney, Spence Jilek and Mark Morrissette. Also Present: Stan Strebel, Deputy City Manager and Eva Lindgren, Interim Finance Manager. Approval of Minutes: It was motioned by Mr. Dietrich, seconded by Mr. Merk, and carried to approve the minutes of the July 16, 2014 Regular Meering. Claims Approval: President Morrissette presented third quarter Claims History. Following discussion, it was motioned by Mr. Merk seconded by Dr. Jilek and carried to approve payment of third quarter claims in the total amount of $109,789.12. Financial Report: President Morrissette presented the third quarter Operating Statement reflecting Total Sources of Funds $307,770.00 and Total Uses of Funds $305,836.00. The third quarter Net Assets Statement was also presented reflecting an actual Net Asset balance of $49,458.00. Following discussion, the Financial Report was accepted as presented. Mr. Strebel proposed to skip the January PFD meeting and meet in April. President Morrissette requested the April meeting be scheduled after April 15`s. It was motioned by Mr. Dietrich, seconded by Dr. Jilek, and carried to cancel the January meeting and schedule the first quarter PFD meeting in April after the 15th. Old Business: None New Business: • 2015 Operating Budget Mr. Strebel presented the 2015 Pasco Public Facilities District operating budget. PUBLIC FACILITIES DISTRICT BOARD Minutes —December 23, 2014 Page - 1 It was motioned by Dr. Jilek, seconded by Mr. Merk, and carried to approve the 2015 Pasco Public Facilities District Operating Budget as presented. Auditor's Recommendation "Compensation Waiver" Mr. Strebel explained the Auditor's recommendation regarding the "Waiver of Remuneration," as contained in the audit report. Each Board Member was provided a form, waiving all compensation for meeting attendance for the time that they have served on the board and through the remainder of their current terms for completion. After completion all forms were returned to Mr. Strebel. It was also noted that there were no findings or other issues identified by the State Auditor in the recent report. • Association of Washington State Public Facilities Districts Membership Mr. Strebel presented the 2015 Membership Dues invoice in the sum of $750.00. Mr. Dietrich stated it would be advisable to find out about possible membership levels. Mr. Strebel will contact the Association in order to explore membership level options and report back to the PFD Board. Following discussion, it was motioned by Dr. Jilek seconded by Mr. Maloney and carried to pay up to $750.00 for renewal of 2015 Membership Dues. • Report on Pending Property Sale: Sandifur Parkway Mr. Strebel stated the property sale is scheduled to be complete by January Wh, 2015. • Update on TCRPFD Mr. Strebel reported the TCRPFD was in the process of establishing a committee to consider community feedback and desired projects. Mr. Maloney stated that he would be interested in being a member of the committee. Other Business • Training: Open Public Meetings Act (new legal requirement) Mr. Strebel stated that Mr. Dietrich, President Morrissette and Mr. Merk need to complete the required training which will take place today after the meeting. Mr. Maloney and Dr. Jilek previously completed the training. Mr. Dietrich, President Morrissette and Mr. Merk agreed to remain after adjournment in order to complete the required training. Adjournment: There being no other business, President Morrissette adjourned the meeting at 5:02 p.m. Mark Morrissette, President Debra L. Clark, PFD Secretary PUBLIC FACILITIES DISTRICT BOARD Minutes — December 23, 2014 Page - 2 mmw N W m M O m m r O O O O T OJ t0 N m 0 N N N W O O O O (O N O a a 7 N O O O O M N N O M M N N N h O O O O h W V O fA fR fR f9 C,.j N C r A O F H L a0 W O uj w W N H W W_ Wm N N N y H H C C C T J J JLL N N N f Y C C C Q a U U U U v M J J J m m m N N N a a a a a a Y Y Y M U U U N N N H a N W W W N N N a a M z z z e o `0 0 z 0 o D D Y Y Y Q Q Q U U U N N N C C C W W W W W W 0❑ J O O O U U U Q Q Q 0 E .2 U e6 0 E 7 �E C N N N N N M C PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF REVENUES, EXPENDITURES & CHANGES IN FUND BALANCE Year to Date Ending March 31, 2015 REVENUES Sales Tax City of Pasco Grant Interest Income Total Revenues EXPENDITURES Advertising/Publications Legal Services Kennewick PFD Professional Services Insurance Administrative Services Total Expenditures Net Change in Fund Balances Annual 2015 2015 Budget Actual $ 370,000 $ 34,319 20,000 5,001 100 24 390,100 39,344 1,000 1,000 370,000 34,319 10,000 2,800 729 12,000 3,000 396,800 38,048 (6,700) 1,296 Beginning Fund Balance, January 1 52,000 49,311 Ending Fund Balance $ 45,300 $ 50,607 PASCO PUBLIC FACILITIES DISTRICT BALANCESHEET As of March 31, 2015 ASSETS Cash $ 82,740 Prepaid Insurance 2,186 TOTAL ASSETS 84,926 19GI031gII11VR Accounts Payable 34,319 TOTAL LIABILITIES 34,319 TOTAL NET ASSETS $ 50,607 Administrative and Community Services Department 525 N. 3rd Avenue, Pasco, WA 99301 MEMORANDUM TO: The Board of the Pasco Public Facilities District FROM: Eva Lindgrei Aeputy Director of ACS RE: 2014 Annual Financial Statements and 2015 I't Quarter Financial Statements Enclosed please find the 2014 annual financials and the 2015 1" quarter financials. I will be attending the Pasco Public Facilities District board meeting on April 22 and will be available to answer any questions you may have regarding these documents. The City is in the process of updating its practices to more closely accord with Governmental GAAP (Generally Accepted Accounting Principles), which has resulted in some changes to how the Public Facility District's financial information is being reported both on an annual and quarterly basis. Below are items of note relating to the 2014 Annual Financial Statements: • Two months of sales taxes receivable are reflected in these statements, since there is a two- month lag in sales tax payments from the State of Washington (i.e. November sales taxes are received in January.) • Three months of sales taxes payable are reflected in these statements, since the October taxes were received at the end of December and not remitted until January. • Prepaid insurance is reported. • Descriptive language has been made less specific. For example, "Kennewick PFD" has become "Intergovernmental Payments." Below are items of note regarding the 2015 1 st Quarter Financial Statements: Because January and February receipts are 2014 revenues, this statement reports only March receipts as revenues. These receipts represent January sales taxes. No sales taxes receivable are recorded for February or March sales taxes, since these amounts are currently unknown. PASCO PUBLIC FACILITIES DISTRICT Pasco, Washington ANNUAL FINANCIAL STATEMENTS For the fiscal year ended December 31, 2014 Prepared by: Finance Division Administrative and Community Services Department Richard G. Terway — Director This page is intentionally blank. TABLE OF CONTENTS Directory of Board of Directors........................................1 Management's Discussion and Analysis...............................2 Basic Financial Statements Government -wide Financial Statements Statement of Net Position...............................................8 Statement of Activities..................................................9 Fund Financial Statements Balance Sheet — Governmental Fund................................10 Statement of Revenues, Expenditures and Changes in Fund Balance — Governmental Fund......................................11 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Fund Budget To Actual ..................12 Notes to the Financial Statements...........................................13 This page is intentionally blank. Pasco Public Facilities District 2014 Basic Financial Statements Directory of Board Directors As of December 31, 2014 APPOINTED DIRECTORS TERM EXPIRES PRESIDENT Mark Morrissette 7/14/2016 VICE PRESIDENT Leonard Dietrick 7/14/2018 SECRETARY/TREASURER Craig Maloney 7/14/2018 DIRECTORS Spencer Jilek 7/14/2017 John Merk 7/14/2015 Pasco Public Facilities District 2014 Basic Financial Statements Management's Discussion and Analysis This management discussion and analysis of the Pasco Public Facilities District's (PPFD) financial performance provides an overview of the financial activities for the year ended December 31, 2013. Please read it in conjunction with the accompanying basic financial statements and the notes to the financial statements. Financial Highlights • The assets of the Pasco Public Facilities District's exceeded its liabilities at December 31, 2014 by $49,311. The Pasco Public Facilities District program revenues exceeded its program expenses by $1,787. Overview of the Financial Statements This discussion and analysis are intended to serve as an introduction to the Pasco Public Facilities District's basic financial statements. Those financial statements comprise three components: 1) government -wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements themselves. Government -wide financial statements. The government -wide financial statements are designed to provide readers with a broad overview of the Pasco Public Facilities District's finances in a manner similar to a private -sector business. The Statement of Net Position presents information on all of the assets and liabilities with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position of the Pasco Public Facilities District is improving or deteriorating. The statement of activities presents information showing how the government's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes). The government -wide financial statements include a single function (classified as culture and recreation) which is primarily supported by taxes and intergovernmental revenues (Governmental Activities). The PPFD currently does not have any business -type activities. The governmental activity of the Pasco Public Facilities District was to provide support to the Kennewick Convention Center. In addition, the Pasco Public Facilities District conducted some project concept planning and evaluation work through consultant contracts. The government -wide financial statements can be found on pages 8-9 of this report. 2 Pasco Public Facilities District 2014 Basic Financial Statements Fund financial statements. A fund is a grouping of related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. The Pasco Public Facilities District like other governments uses fund accounting to ensure and demonstrate compliance with finance -related legal requirements. 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 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 statements. By doing so, readers may better understand the long-term impact of the government's near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statements of revenues, expenditures and changes in fund balances provide a reconciliation to facilitate this comparison between governmental funds and governmental activities. The PPFD maintains just one governmental fund; the general fund. Information is presented in the governmental fund balance sheet and in the governmental fund statement of revenues, expenditures and changes in fund balances. The general fund is a major fund as defined by the Governmental Accounting Standards Board (GASB). The PPFD adopts an annual appropriated budget for its general fund. A budgetary comparison statement has been provided for the general fund to demonstrate compliance with this budget. The basic governmental fund financial statements can be found starting on page 10 of this report. Notes to the Financial Statements. The notes provide additional information that is essential to a full understanding of the data provided in the fund statements. The notes to the financial statements can be found starting on page 13. Government -wide Financial Analysis As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the PPFD, assets exceeded liabilities by $49,311 at the close of 2014. All of the Pasco Public Facilities District's net position represents working capital (current assets minus current liabilities), as it does not have any investments in long term capital assets or long term debt obligations. At the end of the current and prior fiscal years, the PPFD was able to report positive net position. The government's net position increased by $1,787 during the current fiscal year. This increase represents the degree to which ongoing revenues have exceeded ongoing expenses. Payables represent the amount of sales taxes payable to the Kennewick Public Facility District (KPFD), per inter -local agreement. Pasco Public Facilities District 2014 Basic Financial Statements Current assets Current liabilities Total net position Pasco Public Facility District Net Position Governmental Activities Restated 2014 2013 $151,603 $140,514 102,292 92,990 Total Primary Government Restated 2014 2013 $ 151,603 $140,514 102,292 92,990 $ 49,311 $ 47,524 $ 49,311 $ 47,524 Statement of Activities The following condensed table of changes in net assets compares the revenues and expenses for the current year to those of the prior year. Program revenues General revenues Total revenues Program expenses Changes in net position Pasco Public Facility District Changes in Net Position Governmental Activities Restated 2014 2013 $ 19,996 $ 20,000 404,574 400,128 424,570 420,128 Total Primary Government Restated 2014 2013 $ 19,996 $ 20,000 404,574 400,128 424,570 420,128 422,783 412,968 422,783 412,968 1,787 7,160 1,787 7,160 The largest form of revenue is from sales taxes ($404,574 and $400,128 in 2014 and 2013, respectively). The largest expense is the payment to the KPFD for all of the sales taxes received. The other expenses are mostly administrative in nature, and continued one-time costs relating to market analysis and feasibility studies for a potential regional aquatics center. m Pasco Public Facilities District 2014 Basic Financial Statements Financial Analysis of the Government's Funds. As noted earlier, the Pasco Public Facilities District (PPFD) uses fund accounting to ensure and demonstrate compliance with finance related legal requirements. Governmental funds. The focus of the Pasco Public Facilities District's governmental funds is to provide information on near-term inflows, outflows and balances of spendable resources. Such information is useful in assessing the Pasco Public Facilities District financing requirements. In particular, unrestricted fund balance may serve as a useful measure of a government's net resources available for spending at the end of the fiscal year. As of the end of the current fiscal year, the PPFD's only governmental fund is its general fund. The general fund is the chief operating fund of the PPFD and reported an ending fund balance of $49,311, an increase of $1,787, in comparison with the prior year. All of fund balance consists of unassigned fund balance, which is available for spending at the government's discretion. As a measure of the general fund's liquidity, it may be useful to compare unrestricted, unassigned fund balance to total expenditures. This represents 12% of total expenditures. Overall, revenues increased by $4,446 and total expenditures increased by 9,815. Generally fund revenues were affected by the continued strength in sales activity as the increase was due to increases in sales tax revenues. Normally revenues and expenditures would be expected to increase by the same amount, however, in the prior year there were one-time expenditures related to supporting the Regional Public Facility District and which were not reported in the current year. General Fund Budgetary Highlights There was no change in appropriations between the original and final amended budget. Actual revenues were 121% of both the original and revised budget; actual expenditures were 115% of the original and revised budget. This was due to increased sales tax revenue and the related KPFD expense of all sales taxes received. Economic Factors and Next Year's Budget 2015's budget was developed using the expectations that 2015 activity would be similar to 2014's actual revenues and expenditures. Requests for Information This financial report is designed to provide a general overview of the Pasco Public Facilities District's finances for all those with an interest in the government's finances. Questions concerning any of the information provided in this report or requests for additional financial information should be addressed to the Deputy Director of A&CS, City of Pasco, P.O. Box 293, Pasco, WA 99301. Pasco Public Facilities District 2014 Basic Financial Statements This page is intentionally blank. 0 Pasco Public Facilities District 2014 Basic Financial Statements BASIC FINANCIAL STATEMENTS Pasco Public Facilities District 2014 Basic Financial Statements ASSETS Investments Taxes receivable Prepaid items Total assets LIABILITIES Accoimts payable Total liabilities PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF NET POSITION As of December 31, 2014 Governmental Activities $ 80,193 68,495 2,915 151,603 102,292 102,292 NET POSITION Unrestricted 49,311 Total net position $ 49,311 The notes to the financial statements are an integral part of this statement. E Total Primary Government $ 80,193 68,495 2,915 151,603 102,292 102,292 49,311 S 49,311 Pasco Public Facilities District 2014 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF ACTMTIES For the Year Ended December 31, 2014 Charges for Operating Capital Governmental Toml Prmnry Funaamal Programs Expenses Services Grants Grants Activities Government Primary Goventment Governmental Activities: Cultural& Community Activities $ 422,783 $ $ 19,996 $ - $ (402,787) $(402,787) Total Gover»enml Activities 422,783 19,996 (402,787) (402,787) Total Pramy Government $ 422,783 $ $ 19,996 $ Geremlrevemres: Taxes 404,521 404,521 lnvesrmcot earnings 53 53 Totalgecemlrevetwts 404,574 404,574 Change in net position 1,787 1,787 Net position - beguming 47,524 47,524 Net position- ending 499311 49,311 The notes to the 5naucial statemems are an integral part oftbiv statement. 0 Pasco Public Facilities District 2014 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT BALANCE SHEET As ofDecember 31, 2014 ASSETS Investments Taxes Receivable Prepaid Items Total assets LIABILITIES Accounts Payable Total LiabAties FUND BALANCES Unassigned Total find balance 80,193 68,495 2,915 151,603 102,292 102,292 49,311 $ 49,311 The notes to the financial statements are an integral part of this statement. 10 Pasco Public Facilities District 2014 Basic Financial Statements STATEMENT OF REVENUES, EXPENDITURES & CHANGES IN FUND BALANCE Year to Date Ending December 31, 2014 REVENUES Taxes Grants Investment earnings Total Revenues EXPENDITURES Current: Culture and Conmumnity Activities: AdvertisingTubfications Legal Services Intergovernmental Payments Professional Services Insurance Administrative Services Total Expenditures Net change in find balance Fund balance - beginning Fund balance - ending IrMi5. I 2014 Budget $ 330,000 20,000 95 2014 Actual $ 404,521 19,996 53 $ 350,095 $ 424,570 $ 1,000 1,000 330,000 20,000 2,800 12,000 366,800 (16,705) 47,233 $ 68 675 404,521 2,721 2,798 12,000 422,783 1,787 47,524 $ 30,528 $ 49,311 The notes to the financial statements are an integral part of this statement. 11 Pasco Public Facilities District 2014 Basic Financial Statements PASCO PUBLIC FACILITIES DISTRICT STATEMENT OF REVENUES, EXPENDITURES & CHANGES IN FUND BALANCE - BUDGErTO ACTUAL -GENERAL FUND Year to Date Ending December 31, 2014 REVENUES Taxes Grants Investment earnings Total Reverses EXPENDITURES Current: Culture and recreation: Advertising/Publications Legal Services Intergovernmental Services Professional Services Insurance Administrative Services Total Expenditures Net change in fiord balance Fund balance - beg®ing Fund balance - ending Original Final 68 932 Budget Budget Actual Variance $ 330,000 $ 330,000 $ 404,521 $ 74,521 20,000 20,000 19,996 (4) 95 95 53 (42) $ 350,095 $ 350,095 $ 424,570 $ 74,475 1,000 1,000 68 932 1,000 1,000 675 325 330,000 330,000 404,521 (74,521) 20,000 20,000 2,721 17,279 2,800 2,800 2,798 2 12,000 12,000 12,000 - 366,800 366,800 422,783 (55,983) (16,705) (16,705) 1,787 18,492 47,233 47,233 47,524 291 $ 30,528 $ 30,528 $ 49,311 $ 18,783 The notes to the financial statements are an integral part ofths statement. 12 Pasco Public Facilities District 2014 Basic Financial Statements NOTES TO THE FINANCIAL STATEMENTS NOTE 1— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The financial statements of the Pasco Public Facilities District (PPFD) have been prepared in conformity with Generally Accepted Accounting Principles (GAAP) as applied to government units. The Governmental Accounting Standards Board (GASB) is the accepted standard-setting body for establishing governmental accounting and financial reporting principles. The following is a summary of the more significant policies. A. Reporting Entity The Pasco Public Facilities District (PPFD or "District") was created by the Council of the City the Pasco by passage of Ordinance No. 3558 on July 15, 2002, to participate in acquisition, construction, operation, and/or financing of a regional center (as defined in RCW 35.57) in the Tri -Cities area. State law, as defined in the Revised Code of Washington (RCW) Chapter 35.57 (the City PFD Act), authorizes the City Council, as the legislative authority of the City, to create a public facilities district coextensive with the boundaries of the City for the purposes, among others, of acquiring, constructing, operating, and financing one or more "Regional Centers" through cooperative and joint ventures with one or more qualifying public facilities districts. A Regional Center is defined in the City Public Facilities District (PFD) Act as "...convention, conference, or special events center, or any combination of facilities, and related parking facilities, serving a regional population constructed, improved or rehabilitated after July 25, 1999 at a cost of at least $10,000,000 including debt service." State law also states a public facilities district created before July 31, 2002 that commences construction or improvement of a Regional Center before January 1, 2004 may impose, solely for Regional Center Purposes, a 0.033% sales and use tax. The Sales Tax operates to shift a share of the State's sales and use tax revenues to the public facilities district at no additional cost to taxpayers. The Board of Directors is comprised of 5 members; two members appointed by the City Council and 3 members appointed by the City Council based on recommendations from local organizations. The Board then elects a President, a Vice President, and a Secretary/Treasurer. The initial appointment of the Board called for one - one year term, one - two year term, one - three year term and two - four year terms. Thereafter, appointments are for four year terms. 13 Pasco Public Facilities District 2014 Basic Financial Statements B. Government -wide and fund fmancial statements The government—wide financial statements (i.e., the Statement of Net Position and the Statement of Activities) report information on all of the non -fiduciary activities of the primary government. As there is just one fund, the general fund, there is no interfund activity in these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business -type activities, which rely to a significant extent on fees and charges for support. The PPFD had no business -type activities in the current or prior year. The Statement of Activities demonstrates the degree to which the direct expenses of a given function or segment is offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. PPFD policy is to not allocate indirect costs to a specific function or segment. Program revenues include 1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and 2) grants and contributions that are restricted to meeting the operational or capital requirements for a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. C. Measurement focus, basis of accounting, and financial statement presentation The government -wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. For this purpose, the City considers revenues to be available if they are collected within 60 days of the end of the current fiscal period. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. The PPFD reports the general fund as a major governmental fund. The general fund is the PPFD's primary operating fund. It accounts for all governmental financial resources. Amounts reported as program revenues include 1) charges to customers, 2) operating grants and contributions, and 3) capital grants and contributions. General revenues include all taxes. The PPFD does not have a flow of funds policy and therefore utilizes the default provided by GASB 54 which assumes restricted assets are used before unrestricted assets. D. Assets, liabilities and equities Deposits and investments 14 Pasco Public Facilities District 2014 Basic Financial Statements The government's cash and cash equivalents are considered to be cash on hand, demand deposits, and short-term investments with original maturities of three months or less from the date of acquisition and include amount invested in the State of Washington's Local Government Investment pool. This is done via City of Pasco's City Treasurer. The investments are held in the City of Pasco's name and are recorded in the City accounts, as held on behalf of the PPFD. Receivables and payables Receivables consist of sales taxes receivable. Payables result from an inter -local agreement with the Kennewick Public Facility District (KPFD) that all sales tax received will be passed through to the KPFD. Fund balance and fund flow policies Fund balance of governmental funds is reported in various categories based on the nature of any limitations requiring the use of resources for specific purposes. The District itself can establish limitations on the use of resources through either a commitment (committed fund balance) or an assignment (assigned fund balance). The committed fund balance classification includes amounts that can be used only for specific purposes determined by formal action of the District's highest level of decision- making authority. The Board is the highest level of decision making authority for the government that can, by adoption of an ordinance prior to the end of the fiscal year, commit fund balance. Once adopted, the limitation imposed by the ordinance remains in place until a similar action is taken (the adoption of another ordinance) to remove or revise the limitation. Amounts in the assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as committed. The Board may also assign fund balance as it does when appropriating fund balance to cover a gap between estimated revenue and appropriations in the subsequent year's appropriated budget. Unlike commitments, assignments generally only exist temporarily. In other words, an additional action does not normally have to be taken for the removal of an assignment. Conversely, as discussed above, an additional action is essential to either remove or revise a commitment. The District has not adopted a specific flow of funds policy relating to the use of restricted and unrestricted resources when both are available. Therefore the statements are prepared using the default option provided in GASB 54 which provides that when both restricted and unrestricted resources are available, restricted resources are used first. In the fund financial statements, governmental funds report restrictions of fund balance as follows: Non spendable fund balance - includes amounts that are not in spendable form such as inventory or are required to be maintained intact such as the principal of a permanent fund. Restricted fund balance - includes amounts that can be spent only for the specific purpose stipulated by external resource providers such as for grant providers, bondholders, higher levels of government, or through enabling legislation. 15 Pasco Public Facilities District 2014 Basic Financial Statements Committed fund balance — includes amounts that can be used only for the specific purposes determined by a formal action of the Board. Commitments may be changed or lifted only by the Board taking the same formal action that imposed the constraint originally. Assigned fund balance — includes amounts intended to be used by the District for specific purposes. Intent can be expressed by the governing body or by an official designated by the governing body to which the governing body designates authority. Unassigned fund balance - includes amounts that are available for any purpose. NOTE 2 - STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY Scope of Budgetary Accounting. Annual appropriated budgets are adopted for the PPFD on the modified accrual basis of accounting. Annual appropriated budgets are adopted at the major expenditure category level. Appropriations lapse at year-end. Budgetary accounts are integrated in fund ledgers for all budgeted funds. Amending the Budget. When the Board determines it is in the best interest of the PPFD to increase or decrease the appropriation for a particular item, it may do so with a motion approved by an affirmative vote of at least three Board members. The financial statements contain the original and final budget information. The original budget is the first complete appropriated budget. The final budget is the original budget adjusted by any authorized amendments. Budget Compliance. The PPFD expenditures exceeded the budget appropriation by $55,983. The primary source of revenue is sales tax, which is volatile in nature. By contract, the total amount of sales tax received is an expense and was passed through to the KPFD even though it exceeded the amount estimated and budgeted. NOTE 3 — DETAILED NOTES ON ALL FUNDS A. Deposits and investments As of December 31, 2014 the government had the following: Weighted Average Fair Value Maturities (Years) Local Government Investment Pool Total Invested Cash Equivalents $80,193 N/A Interest rate risk Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of an investment. The PPFD does not have an investment policy, but manages its exposure to declines in fair value by limiting investing only in the State of Washington's Local Government Investment Pool (LGIP). 16 Pasco Public Facilities District 2014 Basic Financial Statements Credit risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill its obligations. The PPFD does not have an investment policy, but manages its exposure to credit risk by limiting investing only in the State of Washington's LGIP. Concentration of credit risk. Concentration of credit risk is the risk of loss attributed to the magnitude of a government's investment in a single issuer. The PPFD does not have an investment policy, but manages its exposure to concentration of credit risk by limiting investing only in the State of Washington's Local Government Investment Pool. The LGIP invests in a variety of governmentally issued securities. Custodial credit risk — deposits. This is the risk that in the event of a bank failure, the governments' deposits may not be returned. The PPFD does not have a deposit policy, but manages its exposure to custodial risk by investing 100% of its fund in the State of Washington's Local Government Investment Pool and therefore does not maintain any deposits in a bank. Custodial credit risk — investments. For an investment, this is the risk that, in the event of the failure of the counterparty, the government will be able to recover the value of its investments or other collateral securities that are in the possession of an outside parry. The PPFD does not have a custodial credit risk policy, but manages its exposure by investing 100% of its funds in the State of Washington's Local Government Investment Pool. B. Receivables and payables Taxes receivable. The PPFD received November and December 2014 sales tax distributions from the State of Washington in January and February 2015, respectively. The State receives the sales tax, and then distributes the appropriate portion of the tax the following month to the local governmental entities. As receivables are recognized when earned, the sales taxes from underlying sales transactions are recognized as receivables. Per the inter -local agreement, 100% of the sales tax received is owed to KPFD. Sales taxes are received on the last day of the month, creating a payable which is then paid to KPFD during the next month. NOTE 4 — PRIOR PERIOD CORRECTION OF AN ERROR For 2013 entity -wide and fund statements, only November sales taxes receivable were accrued. Since the PPFD is a pass-through entity with regards to sales taxes, the 2013 understatement of $32,863 in both accrued receivables and payables, no change to the 2013 ending equity resulted. Therefore, no restatements of beginning net position or fund balance were required for the current financial statements. For 2013 fund statements, deferred inflows were not accrued to offset the December taxes receivable, in accordance with the 31 -day revenue recognition period stipulated in the PPFD's footnotes. Since neither the taxes nor deferred revenues were accrued, no restatement of beginning fund balance was required. 17 Pasco Public Facilities District 2014 Basic Financial Statements NOTE 5 — CHANGE IN APPLICATION OF ACCOUNTING PRINCIPLE Governmental fund financial statements are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Revenues are recognized as soon as they are both measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. In 2013, the City considered revenues to be available if they were collected within 31 days of the end of the "current" fiscal period. For the 2014 financial statements, a 60 -day revenue recognition period is being applied. However, because any increase in sales taxes receivable are off -set by taxes payable, no restatements of beginning fund balance are required. NOTE 6 - OTHER INFORMATION A. Risk Management The Pasco Public Facilities District owns no property and does not hire any employees. Therefore, the PPFD does not carry any insurance other than maintaining coverage for officials' errors and omissions. In 2014, there were no policy coverage changes, claims, nor settlements. B. Related organization City of Pasco. Pursuant to RCW 35.57 (the "City PFD Act") the Pasco Public Facilities District was formed and created by City of Pasco Ordinance No. 3558 on July 15, 2002, coextensive with the boundaries of the City of Pasco, with the powers and authority set forth in the City PFD Act. All corporate powers of the PPFD are exercised by or under the authority of the PPFD Board; and the business, property and affairs of the PPFD are managed under the direction of the PPFD Board, except as may be otherwise provided in the Charter. The PPFD operates independently from the City of Pasco. The PPFD contracts with the City of Pasco to administer its accounting operations, manage its cash and provide organizational administrative support. Sales tax proceeds are received by the City for the benefit of the PPFD. The City Treasurer disburses funds on behalf of the PPFD and invests any surplus amounts commingled with City investments. Separate accounts are maintained within the City to designate and hold separately amounts on behalf of the PPFD. IU