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2020 0428 Council Agenda PacketMoses Lake City Council David Curnel, Mayor | Daryl Jackson, Deputy Mayor | Mike Riggs, Council Member | Karen Liebrecht, Council Member Don Myers, Council Member | David Eck, Council Member| Dean Hankins, Council Member REMOTE ACCESS ONLY Tuesday, April 28, 2020, 6 PM Due to the COVID-19 pandemic, the Governor has amended the emergency proclamation to prohibit all in person meetings of local government and only require public access to the remote meeting. Citizens can join this meeting via phone by calling 877 853 5257 (Toll Free) or 888 475 4499 (Toll Free) and entering the webinar id: 990-725-86159 or online https://zoom.us/j/99072586159 Study Session Agenda Study Session – Grant County Conservation District Watershed Council Regular Meeting Agenda Call to Order – 7 p.m. Roll Call Pledge of Allegiance Summary Reports: Mayor’s Report Additional Business City Manager’s Report Citizen’s Communications – Citizens who would like to address the Council must submit written comments to the City Clerk no later than 3 p.m. on the day of the meeting. Comments will be provided to Council electronically and recorded in the meeting minutes, the public will not have access to speak at the meeting. Consent Agenda Motion All items listed below are considered to be routine and will be enacted by one motion. There will be no separate discussion of these items unless a Council Member requests specific items to be removed from the Consent Agenda for discussion prior to the time Council votes on the motion to adopt the Consent Agenda. Moses Lake Council Packet 4-28-20, Page 1 of 158 April 28, 2020, City Council Meeting – Page 2 Consent Agenda Continued #1 pg 3 a.City Council Meeting Minutes dated April 14, 2020 b.Claims and Payroll c.Extend Emergency Declaration Resolution 3802 d.Nelson Road Jurisdictional Transfer/Transfer of Ownership Ordinance 2947 e.Accept State Auditor’s Report of the 2018 Financial Statements Old Business – none scheduled New Business #2 pg 132 2020 Budget Appropriation Ordinance 2948 – First Presentation Presented by Cindy Jensen, Finance Director Summary: Council to review and consider adoption at the next meeting #3 Motion pg 138 Poth Major Plat #1 Reimbursement Deferral Request Presented by Fred Snoderly, Municipal Services Director Summary: Council to review and consider direction Administrative Reports Council Communications and Reports Executive Session Litigation pursuant to RCW 42.30.110(1)(i) Adjournment Moses Lake Council Packet 4-28-20, Page 2 of 158 MOSES LAKE CITY COUNCIL April 14, 2020 CALL TO ORDER The regular meeting of the Moses Lake City Council was called to order at 7 p.m. by Mayor Curnel via audio only Zoom meeting access. Special notices for attendance and citizen comment were posted on the meeting agenda as well as a special News Flash on the city’s website. ROLL CALL Present: Mayor Curnel, Deputy Mayor Jackson; Council Members Eck, Riggs, Liebrecht, Myers, and Hankins. PLEDGE OF ALLEGIANCE Council Member Hankins led the Pledge of Allegiance. SUMMARY REPORTS CITY MANAGER’S REPORT COVID-19 Homelessness Funds City Manager Allison Williams is working through the process to obtain approval from the Health District to acquire these funds for a local program. Water Rights Appeal City Manager Allison Williams worked with City Attorney Katherine Kenison to enter into a contract with special counsel to draft an appeal that will be filed tomorrow regarding the Department of Ecology’s recent determination on our water rights. CONSENT AGENDA #1 a. City Council meeting minutes dated March 24, 2020 b.Claim Checks 147398 through 147593 in the amount of $1,861,298.52; Payroll Checks 63350 through 63368 in the amount of $16,380.00; and ElectronicPayments dated March 20, 2020 in the amount of $423,394.40c.FFCRA Emergency Leave Resolution 3799 (with changes coming)d. Digital and Electronic Signatures Resolution 3800 e.Build on Unplatted Property Nutrien Resolution 3801 f.Poth Final Plat Acceptanceg. Do Not Extinguish Agreement MLFD-Nutrienh. Fire Apparatus Contract Amendmenti.Award Reservoir 8 Painting Project Bid j.Accept Westlake Lift Station Upgrade k.Accept Cascade, Dog, and Dano Parks’ Resurfacing Staff advised Council of changes expected to item (c) FFCRA Resolution to be consistent with the state paid leave program, clarified no subdividing on item (e) Nutrien Resolution, explained the exterior material changes for Fire Apparatus item (h), and provided additional information on barbed wire fence for item (j) lift station upgrade. Action taken: Council Member Hankins moved to approve the Consent Agenda, second by Council Member Riggs. The motion carried 7 – 0. OLD BUSINESS Moses Lake Council Packet 4-28-20, Page 3 of 158 CITY COUNCIL MINUTES – April 14, 2020 pg. 2 #2 LOCAL Program Intent The state requires an application as the first part of their process to participate in the bond program. This step will allow them to review the City’s financial history prior to consideration to enter into an interlocal agreement for the Larson Rec Center project. Action taken: Council Member Riggs moved to approve the Notice of Intent, second by Council Member Myers. The motion carried 7 – 0. NEW BUSINESS #3 Quasi-Judicial Hearings MLMC Update Ordinance 2949 The ordinance transfers most land use decisions and certain appeals to a Hearing Examiner, and establishes one regular meeting each month for the Planning Commission. Action taken: Council Member Eck moved to adopt Ordinance 2949, second by Council Member Riggs. The motion carried 7 – 0. ADMINISTRATIVE REPORTS Finance Director Cindy Jensen provided the 4th Quarter Financial Report in the meeting packet and gave a verbal update on the status of acquiring a new solution for yard waste pickup. The 2019 State Auditor’s Report was posted online last Monday and Council requested a verbal report to the public on April 28. Police Chief Kevin Fuhr advised that the federal government has released COVID-19 grants and his department has been allocated $36,908 for pandemic reimbursable expenses. It has been determined that K-9 Chief will not return to active duty and K-9 Officer Nick Stewart will be working on obtaining a new K-9 for his unit. The community has contributed $45k for K-9 expenses. The City’s insurance will be covering replacement cost of the K-9, less a deductible. COUNCIL COMMUNICATIONS AND REPORTS Council Member Myers reported that Grant Transit Authority will receive $1.6 million in federal aid from the COVID-19 payback plan. If they reach a 50% driver capacity, the system will shut down to basic maintenance services. Staff replied to his question about the Stratford Rd construction which will be going again in the next few weeks and the water rate study update will be provided to Council via email. Staff also advised that water conservation will be in effect again this summer. Council Members Liebrecht, Riggs, and Jackson expressed appreciation to the City Manager and staff for the outstanding response efforts during this pandemic crisis. Mayor Curnel advised that the Grant County Health District is operating in the red and that 90% of the employees are tending to COVID-19 related work. He also announced that this would be Community Development Director Kris Robbins’ last Council meeting. All of the Council thanked her for her work with the City and wished her well in her future endeavors. EXECUTIVE SESSION Moses Lake Council Packet 4-28-20, Page 4 of 158 CITY COUNCIL MINUTES – April 14, 2020 pg. 3 Mayor Curnel called an Executive Session at 7:48 p.m. to be held for 30 minutes pursuant to RCW 42.30.110(1) subsections (b), (g) and (i) for discussion on property acquisition, qualifications of a public employee, and litigation; and there will be no further business. ADJOURNMENT The regular meeting was adjourned at 8:20 p.m. ______________________________________ David Curnel, Mayor ATTEST____________________________________ Debbie Burke, City Clerk Moses Lake Council Packet 4-28-20, Page 5 of 158 To: Allison Williams, City Manager From: Cindy Jensen, Finance Director Council Meeting Date: April 28, 2020 Proceeding Type: Consent Agenda Subject: Semi-Monthly Disbursement Report The following amounts were budgeted and sufficient funds were available to cover these payments: Claim Checks 147594 - 147764 $1,611,836.34 Payroll Checks 0063369 - 0063389 $22,708.06 Electronic Payments Payroll ACH -04/03/2020 $465,980.04 Electronic Payments Payroll ACH -04/17/2020 $432,845.81 Summary RCW 42.24 governs the process for audit and review of claims and payroll payments for the City. RCW 42.24.180 requires the review and approval of all payments at a regularly scheduled public meeting on at least a monthly basis. The State Budgeting, Accounting and Reporting Systems (BARS) Manual outlines the above format for approval by the City Council. RCW 42.24.080 requires that all claims presented against the City by persons furnishing materials, rendering services, or performing labor must be certified by the appropriate official to ensure that the materials have been furnished, the services rendered, or the labor performed as described, and that the claims are just, due and unpaid obligations against the City. RCW 42.24.180 allows expedited processing of the payment of claims when certain conditions have been met. The statute allows the issuance of warrants or checks in payment of claims before the legislative body has acted to approve the claims when: (1) the appropriate officers have furnished official bonds; (2) the legislative body has adopted policies that implement effective internal control; (3) the legislative body has provided for review of the documentation supporting the claims within a month of issuance; and (4) that if claims are disapproved, they shall be recognized as receivables and diligently pursued. The City meets all these conditions. To comply with the requirements, Finance staff schedule payment of claims and payroll for semi-monthly Council approval on the Consent Agenda. The payments listed in the schedule cover all claims and payroll payments during the period prior to the date of the Council meeting. All payments made during this period were found to be valid claims against the City. Details are attached and any questions should be directed to the City Manager or Finance Director. The City’s internal controls include certification of the validity of all payments by the appropriate department prior to submission for payment. The Finance Director has delegated authority for the examination of vouchers and authorization of payments to the Finance, Accounts Payable, and Payroll staff. All payments are reviewed and validated. The Finance Division regularly reviews its processes to ensure appropriate internal controls are in place. 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Background The draft resolution extends the effective date of original provisions adopted by Resolution 3798 on March 24, 2020. Fiscal and Policy Implications Fiscal impact of the emergency will be assessed and reported at a later date. Options Option Results •Adopt the Resolution Staff will continue best practices and measures to minimize or avoid personal contact •Take no action.Provide staff with alternative direction Moses Lake Council Packet 4-28-20, Page 33 of 158 Page 2 of 2 Staff Recommendation Staff recommends the City Council consider adoption of the resolution as presented. Attachments A. Draft Resolution Legal Review The following documents are attached and subject to legal review: Type of Document Title of Document Date Reviewed by Legal Counsel • Resolution COVID-19 Response April 23, 2020 Moses Lake Council Packet 4-28-20, Page 34 of 158 RESOLUTION NO. 3802 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF MOSES LAKE EXTENDING THE EFFECTIVE DATE AND TEMPORARY PROCEDURES TO RESPOND TO THE COVID-19 PANDEMIC Recitals: 1. City Manager Williams and Mayor Curnel issued a Proclamation of Emergency, declaring COVID-19 pandemic to be an emergency in the City of Moses Lake pursuant to Section 38.52 RCW and other relevant provisions of state, local, and federal law; and 2. Council adopted Resolution 3798 on March 24, 2020 to ratify the emergency proclamation with an expiration date of April 28, 2020; and 3. The City remains committed to protecting the public and staff by minimizing the spread of COVID-19. NOW THEREFORE, BE IT RESOLVED, by the City Council of the City of Moses Lake, Washington, that: Section 1. Effectiveness Extension. The provisions of Resolution 3798 shall remain effective upon adoption of this resolution and will expire on May 12, 2020 unless further extended by formal action of Council. INTRODUCED, PASSED, AND ADOPTED BY THE CITY COUNCIL OF THE CITY OF MOSES LAKE on this 28th day of April, 2020. ________________________________________ David Curnel, Mayor ATTEST: __________________________________ Debbie Burke, City Clerk Moses Lake Council Packet 4-28-20, Page 35 of 158 Page 1 of 2 STAFF REPORT To: Allison Williams, City Manager From: Fred Snoderly, Municipal Services Director Date: April 10, 2020 Proceeding Type: Consent Agenda Subject: Ordinance – Corporate Boundary Changes Nelson Road Legislative History: •First Presentation: •Second Presentation: •Requested Action: April 14, 2020 Motion Staff Report Summary Attached is an ordinance that provides for the transfer of jurisdiction from the County to the City of right-of-way for Nelson Road from Highway 17 to Road L NE. The County will adopt a similar ordinance or resolution approving the corporate boundary changes. Background The current corporate boundary is adjacent to Nelson on both sides of the roadway for a significant portion of the length of the roadway. During recent development, the City has not been able to require owners to make improvements to Nelson Road due to the fact that the County has jurisdiction of the roadway and they do not require curb, gutter, and sidewalks as part of their roadway network. The proposed Groff Elementary School is moving forward and it will be to the advantage of the City to have jurisdiction over Nelson Road to be able to require appropriate improvements and signing for the new use. The County is in agreement that the use of this roadway is urban and makes more sense to be in the City as development continues in the area. Fiscal and Policy Implications City will assume maintenance and operational control of the roadway. Moses Lake Council Packet 4-28-20, Page 36 of 158 Page 2 of 2 Options Option Results • Move to adopt the Ordinance Staff will notify the County. • Take no action The City will not take jurisdiction. Staff Recommendation Staff recommends City Council adopt the Ordinance as presented. Attachment A. Ordinance with Exhibit Legal Review Ordinance was provided by City Attorney Katherine Kenison. Moses Lake Council Packet 4-28-20, Page 37 of 158 ORDINANCE NO. 2947 AN ORDINANCE ADJUSTING CORPORATION BOUNDARIES OF THE MUNICIPALITY PURSUANT TO RCW 35A.21.210 AND REVISING THE CORPORATE BOUNDARY TO INCLUDE THE FULL WIDTH OF A SEGMENT OF NELSON ROAD RIGHT OF WAY FROM GRANT COUNTY Recitals: 1. The segment of E. Nelson Road right of way (ROW) east of SR 17 extending to Road L NE is within Grant County’s jurisdiction as shown on Exhibit A. 2. The City’s corporate limits are adjacent to the southern boundary of the ROW and the ROW is entirely within the City’s UGA. 3. It is in the City and County’s best interest to amend the corporate boundary of the City so that the ROW described in Exhibit A to this ordinance is located in its entirety within the City’s jurisdiction where is coincides with the City’s boundaries for consistency in the administration of construction projects, coordination of utilities, permitting, and maintenance. 4. The revision of the corporate boundary of a city is effective upon approval by both the City Council and the County legislative authority as provided for in RCW 35A.21.210 (2). 5. The City’s SEPA Responsible Official determined that adoption of this Ordinance is categorically exempt under WAC 197-11-800(19) as an Ordinance related to procedures only. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF MOSES LAKE, WASHINGTON ORDAINS AS FOLLOWS: Section 1. Adjustment. The City Council of the City of Moses Lake finds the corporate boundary revision that includes the full width of E. Nelson Road east of SR 17 extending to Road L NE and is already located within the City’s UGA to be wholly within the City’s jurisdiction, as shown on Exhibit A, would be a useful part of the City’s street infrastructure system and simplify jurisdictional issues associated with E. Nelson Road. Section 2. The City Council approves the corporate boundary revision to include the right of way for E. Nelson Road as shown in Exhibit A. Section 3. That a copy of this ordinance shall be filed with the Board of County Commissioners of Grant County, Washington. Section 4. This ordinance shall take effect and be in force five (5) days after its passage and publication of its summary as provided by law. Moses Lake Council Packet 4-28-20, Page 38 of 158 Adopted by the City Council and signed by it Mayor on April 28, 2020. ____________________________________ David Curnel, Mayor ATTEST: ____________________________________ Debbie Burke, City Clerk APPROVED AS TO FORM: _____________________________________ Katherine L. Kenison, City Attorney Vote: Riggs Liebrecht Myers Jackson Curnel Eck Hankins Aye Nay Abstain Absent Date Published: May 5, 2020 Date Effective: May 10, 2020 Moses Lake Council Packet 4-28-20, Page 39 of 158 EXHIBIT A LEGAL DESCRIPTION THAT PORTION OF NELSON ROAD RIGHT-OF-WAY IN SECTIONS 24 AND 25, TOWNSHIP 19 NORTH, RANGE 28 EAST, W.M., GRANT COUNTY, WASHINGTON, 30 FEET ON EACH SIDE OF THE FOLLOWING DESCRIBED CENTERLINE: COMMENCING AT THE NORTHWEST CORNER OF SAID SECTION 25; THENCE EAST ALONG THE LINE COMMON TO SAID SECTIONS 24 AND 25, A DISTANCE OF 220 FEET, MORE OR LESS, TO THE EAST RIGHT-OF-WAY OF STATE ROUTE 17, BEING THE POINT OF BEGINNING OF SAID CENTERLINE; THENCE CONTINUING EAST ALONG SAID LINE, 5041 FEET, MORE OR LESS, TO THE WEST RIGHT-OF-WAY OF ROAD “L” NE, SAID POINT BEING THE POINT OF TERMINUS OF SAID CENTERLINE. Moses Lake Council Packet 4-28-20, Page 40 of 158 Page 1 of 2 STAFF REPORT To: Allison Williams, City Manager From: Cindy Jensen, Finance Director Date: April 24, 2020 Proceeding Type: Consent Agenda Subject: State Auditor’s Office Report on the 2018 Financial Statements Legislative History: •First Presentation: March 16, 2020—Audit Exit Conference •Requested Action: Motion Staff Report Summary Attached for Council’s information is the Washington State Auditor’s Office (SAO) report regarding their examination (audit) of the City of Moses Lake for the period January 1 through December 31, 2018. SAO issued one report on Financial Statements, which includes two areas of review and corresponding two “reports”, as noted below: 1.Financial Reporting, with respect to: (a)Evaluation of internal controls (b)Compliance with laws and regulations 2.Financial Statements (and related disclosures and internal controls) SAO also performs an Accountability Audit bi-annually which would result in a separate report. 2018 was an “off” year, so this report was not prepared. The City received an audit finding because there were errors in the financial statements originally presented to the Auditors. We had errors in the presentation of funds and didn’t properly apply a new accounting principle. We responded to the finding, and our response is included in the auditor’s report. We have had a similar finding in the past 3 reports, however, in my opinion we are making progress. It should be noted that the errors were corrected prior to publishing the report. As stated in the enclosed auditor’s reports, the Auditor gave the City’s Financial Statements an Unmodified Opinion (i.e.: clean opinion with no qualifications – the highest possible rating). Moses Lake Council Packet 4-28-20, Page 41 of 158 Page 2 of 2 Background Due to the size and complexity of documents included in the audit report, only the Auditor’s written reports and comments have been included in the Council packet; however, the entire report – including the financial statements themselves and the related footnotes, Management Discussion and Analysis and supplemental information - may be found on the State Auditor’s website https://portal.sao.wa.gov/ReportSearch/Home/ViewReportFile?arn=1025927&isFinding=false&s p=false Click the tab “Audit Reports” then enter “City of Moses Lake” and simply select “Search Audit Reports” towards the bottom of the screen. (Additionally, the Comprehensive Annual Financial Report (CAFR) is posted on the City’s website. To access the CAFR on-line, go to “www.cityofml.com”; then go to “ Departments” at the top of the page and click on “Finance”; on the Left-hand side click on “Financial Reports”, and then either “Comprehensive Annual Financial Reports” for the full CAFR, or “Audited Financial Statements” for the SAO report.) The Finance Department would like to thank the SAO for their assistance in reviewing the operations of the City--we value their insight and appreciate their comments and recommendations for improvement. Fiscal and Policy Implications It is a requirement of our bond issues that we report our financial condition. This report has been published for the investment community on the Electronic Municipal Market Access (EMMA) website. Option Results • Move to accept the Financial Statements Audit Report Council is acknowledging receipt of the SAO audit report. • Take no action The report would be unchanged. Staff Recommendation Staff recommends that City Council move to accept the Financial Statements Audit Report for the City of Moses Lake for the year ended December 31, 2018. Attachments A. Audit Report Legal Review N-A Moses Lake Council Packet 4-28-20, Page 42 of 158 Financial Statements Audit Report City of Moses Lake For the period January 1, 2018 through December 31, 2018 Published April 6, 2020 Report No. 1025927 Moses Lake Council Packet 4-28-20, Page 43 of 158 Insurance Building, P.O. Box 40021 y Olympia, Washington 98504-0021 y (360) 902-0370 y Pat.McCarthy@sao.wa.gov Office of the Washington State Auditor Pat McCarthy April 6, 2020 Council City of Moses Lake Moses Lake, Washington Report on Financial Statements Please find attached our report on the City of Moses Lake’s financial statements. We are issuing this report in order to provide information on the City’s financial condition. Sincerely, Pat McCarthy State Auditor Olympia, WA Moses Lake Council Packet 4-28-20, Page 44 of 158 Office of the Washington State Auditor TABLE OF CONTENTS Schedule of Audit Findings and Responses.................................................................................... 4 Summary Schedule of Prior Audit Findings.................................................................................... 8 Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards...................................................................................................10 Independent Auditor's Report on Financial Statements................................................................ 13 Financial Section........................................................................................................................... 16 About the State Auditor's Office ................................................................................................... Page 3 Moses Lake Council Packet 4-28-20, Page 45 of 158 Office of the Washington State Auditor SCHEDULE OF AUDIT FINDINGS AND RESPONSES 2018-001 The City’s internal controls over accounting and financial statement preparation were inadequate to ensure accurate and complete financial reporting. Background The City Council, the Mayor, state and federal agencies, and the public rely on the information included in the financial statements and reports to make decisions. City management is responsible for designing, implementing, and maintaining internal controls to ensure financial statements are prepared and fairly presented in accordance with generally accepted account principles (GAAP). In our previous three audits, we reported findings related to weaknesses in controls over financial reporting that hindered the City’s ability to produce accurate financial statements. Description of Condition We identified the following deficiencies in internal controls over financial reporting that, when taken together, represent a material weakness. x City management did not have a formal process to comprehensively evaluate the City’s complete financial statements for accuracy, consistency across financial statements and disclosures, and compliance with the provisions of Generally Accepted Accounting Principles (GAAP). x City management did not sufficiently research Governmental Accounting Standards Board Statement No. 75 (GASB 75), Accounting and Financial Reporting for Postemployment Benefits Other Than Pension, to ensure proper implementation. x City staff did not reconcile the City’s bank statements at year-end. Cause of Condition The City prepares its financial statements in accordance with GAAP. These financial statements are complex, and the reporting requirements change frequently. The City has experienced turnover in its accounting staff over the past several years. As a result, staff members have not been able to dedicate sufficient time to perform a comprehensive review of the accuracy of the completed financial statements before they submit the statements to our Office. Page 4 Moses Lake Council Packet 4-28-20, Page 46 of 158 Office of the Washington State Auditor Effect of Condition The material weakness in controls resulted in the following reporting errors: x The City did not report its Ambulance Fund as a major fund despite the fund meeting the criteria for major fund reporting. x The City understated Other Post-Employment Benefit (OPEB) liability by $3,327,279 and related deferred outflow by $161,564. x The City understated the change in accounting principle related to the GASB 75 implementation by $3,098,184. The City also incorrectly reported this change as a prior-period adjustment. x The City understated cash and investments by $46,823. x The City understated General Fund charges for services by $31,374. Because of this, the expenses for the Water Fund, Ambulance Fund, and Sanitation Fund were also misstated. x Governmental Activities and Business-Type Activities columns did not correctly total on the Government Wide Statements. We also identified other, less-significant errors that we communicated to City’s management during the audit. Recommendation We recommend the City dedicate adequate time and resources for staff who understand GAAP reporting requirements to comprehensively review the completed financial statements for compliance with those requirements and to perform other functions at year-end that are necessary to ensure accurate financial reports. City’s Response The City takes very seriously its responsibility to produce accurate, meaningful financial statements. The 2016 and 2017 audit had the same finding, and although we tried to correct most of the conditions at that time, we were not able to completely correct the condition. In response to your finding we have tried to isolate and explain the issues identified. The weaknesses identified in the 2017 audit can primarily be attributed to turnover in staff, which did not allow us to finish the CAFR in time to do a thorough review. Unfortunately, this scenario was repeated during preparation of the 2018 audit, as an accountant left our employment in the spring of 2019. We were without that position until finally filling it with an Accounting Manager in the fall of 2019. Page 5 Moses Lake Council Packet 4-28-20, Page 47 of 158 Office of the Washington State Auditor Another issue previously hampering our effort was the CAFR preparation software had not been fully implemented in prior years. In order to improve on the prior year finding, we hired a CPA firm familiar with the software to help us put the 2018 CAFR together and establish the links among the statements. We prepared the analysis to determine major funds. It was originally done on budgetary comparison (i.e. including interfund and debt activity). When that was recalculated using the financial statement presentation, it showed the Ambulance Fund should have been a major fund. The Accountant who left our employment had the main responsibility of preparing the pension and Other Post-Employment Benefits (OPEB) data for inclusion in the financial statements. Our understanding was that the information previously included in the footnotes needed to be recorded on the face of the financial statements. So we applied the methodology we had previously used to determine the liability, and recorded that liability. That produced a liability of about $3.5 million which, in our opinion, is reasonable considering we are paying medical benefits on 15 people (dropping to 14 in late 2019), with annual expenses of about $143,600 in 2018 and $152,700 in 2019. We did not realize that we were required to use the State Actuary’s calculation from their website, which created a liability that was almost twice what we expected. When that was brought to our attention we made the appropriate corrections. Even though we completed bank reconciliations through 2018, we were still not able to totally find and correct discrepancies. However, we are much closer than we were in prior years, and have identified $22,000 (about half) of the discrepancy noted by SAO. We self-disclosed the understatement of the General Fund charges for services when we discovered that the adjusting journal entry was not made. We have a listing of year end entries, and since that was a new process in the prior year, it had not been added to the list. As this was considered immaterial, we did not make this correction. Overall, we feel we had made progress in getting the data to flow accurately into the financial statements, and sought outside professional help to assist us in that endeavor. Unfortunately, staff shortages hampered some of our progress. We did make corrections to add the Ambulance Fund as a major fund, and updated the OPEB liability to the State Actuary’s calculated number in the final statements. We also continue to look for opportunities to train our staff in financial statement preparation. Page 6 Moses Lake Council Packet 4-28-20, Page 48 of 158 Office of the Washington State Auditor We appreciate the good working relationship we have with the State Auditor’s Office, and are trying to make improvements to our financial statement process to discover and correct errors before we finalize information for SAO. Auditor’s Remarks We appreciate the City’s commitment to resolving the conditions noted, and we will evaluate the City’s corrective actions during our next audit. Applicable Laws and Regulations Government Auditing Standards, December 2011 Revision, paragraph 4.23 establishes reporting requirements related to significant deficiencies or material weaknesses in internal control, instances of fraud or abuse, and noncompliance with provisions of law, regulations, contracts, or grant agreements. The American Institute of Certified Public Accountants defines significant deficiencies and material weaknesses in its Codification of Statements on Auditing Standards, section 265, Communicating Internal Control Related Matters Identified in an Audit, paragraph 7. RCW 43.09.200 Local government accounting –Uniformsystemaccounting, requires the State Auditor to prescribe the system of accounting and reporting for all local governments. The Budgeting, Accounting and Reporting System (BARS) manual, 3.1.3, Internal Control,requireseach localgovernmenttoestablishandmaintaineffectivesystem of internal controls that provides reasonable assurance that the government will achieve its objectives. Page 7 Moses Lake Council Packet 4-28-20, Page 49 of 158 Office of the Washington State Auditor SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS City of Moses Lake January 1, 2018 through December 31, 2018 This schedule presents the status of findings reported in prior audit periods. Audit Period:January 1, 2017 through December 31, 2017 Report Ref. No.:1023701 Finding Ref. No.:2017-001 Finding Caption: The City’s internal controls over accounting and financial statement preparation were inadequate to ensure accurate and complete financial reporting. Background: Government Auditor Standards requires auditor to communicate material weaknesses as a finding. We identified the following deficiencies in internal controls over financial reporting that, when taken together, represent a material weakness: x City management did not have a formal process to comprehensively evaluate the City’s complete financial statements for accuracy, consistency across financial statements and disclosures, and compliance with the provisions of the State Auditor’s Office Budgeting, Accounting and Reporting System (BARS) manual. x The City allocates administrative costs in proportion to expenses of its funds. The City has not demonstrated this method approximates the actual costs of services received. x City staff did not reconcile the City’s bank statements during the year. As a result, the City understated its taxes receivable by about $1.3 million and overstated its cash and investments by about $109,000. We also could not determine if about $770,000 in administrative expense allocation to proprietary funds was a fair and equitable allocation of costs. Status of Corrective Action: ☐Fully Corrected ☒Partially Corrected ☐Not Corrected ☐Finding is considered no longer valid Corrective Action Taken: The City does have a process to ensure the accuracy of the financial statements. We have lists of year-end closing journal entries that include the procedures to create the journal entries Page 8 Moses Lake Council Packet 4-28-20, Page 50 of 158 Office of the Washington State Auditor (i.e. what reports to run, the timeframes to gather data, etc.) We have a staff member assigned to be lead on the CAFR preparation. The Accounting Manager had been lead for several years, but retired at the end of 2017, so this was re-assigned to an Accountant who was not as experienced in this task. In regards to the cost allocation plan for City administrative expenses, we developed a model that spread these costs proportionately over the base operating expenses of each fund, discounting transfers and other single transactions that may not require administrative resources. It is our opinion that this spreads the administrative costs fairly and equitably. This model was used for the 2017 financial statements—it was just not adopted as policy. We documented the methodology and intend to formalize that in a cost allocation policy. The Finance Director also noted that the GASB 33 tax revenue accrual was missing, but it was so late in the process that we didn’t go back to correct it, since the presentation was consistent, and hadn’t been applied since the pronouncement was effective in 2001. It was intended to be corrected in the 2018 financial statements. Unfortunately, the Gas Tax accrual was determined to be material to the Street fund, so we did make the modifications in the 2017 statements. Otherwise, the Finance Director was reviewing the statements almost at the same time as the auditors. We found many of the same issues as SAO, and communicated corrections to them as we went along. In 2018, we have scheduled to have a good draft available for review in advance of the time the records are transmitted to SAO. We also addressed the lack of bank statement/cash reconciliation by hiring a retired bookkeeper on a temporary basis to go through the records and document the bank statement activity in the spring of 2018. There were some discrepancies identified, but it was difficult to pinpoint the exact amounts and times. We subsequently discovered that we had some transactions that created checks, but the batches didn’t post all the way through to the General Ledger, which left the book balance higher than the bank balance. These are harder to identify, as we have posting journals that indicate a transaction was completed, but it didn’t end up in the transaction detail. We are staying current on the bank reconciliations. All of the issues noted in the 2017 finding have been addressed;however, the 2018 financials contained different errors, which is why we marked the finding as “partially corrected”. Page 9 Moses Lake Council Packet 4-28-20, Page 51 of 158 Office of the Washington State Auditor INDEPENDENT AUDITOR’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS City of Moses Lake January 1, 2018 through December 31, 2018 City Council City of Moses Lake Moses Lake, Washington 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, each major fund and the aggregate remaining fund information of the City of Moses Lake, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements, and have issued our report thereon dated March 26, 2020. As discussed in Note 17 to the financial statements, during the year ended December 31, 2018, the City implemented Governmental Accounting Standards Board Statement No. 75,Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. INTERNAL CONTROL OVER FINANCIAL REPORTING In planning and performing our audit of the financial statements, we considered the City’s internal control over financial reporting (internal control) to determine the audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant Page 10 Moses Lake Council Packet 4-28-20, Page 52 of 158 Office of the Washington State Auditor deficiencies may exist that were not identified. However, as described in the accompanying Schedule of Audit Findings and Responses, we identified certain deficiencies in internal control that we consider to be material weaknesses. 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. We consider the deficiencies described in the accompanying Schedule of Audit Findings and Responses as Finding 2018-001 to be material weaknesses. COMPLIANCE AND OTHER MATTERS As part of obtaining reasonable assurance about whether the City’s financial statements are free from material misstatement, we performed tests of the City’s compliance with certain provisions of laws, regulations, contracts and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. CITY’S RESPONSE TO FINDINGS The City’s response to the findings identified in our audit is described in the accompanying Schedule of Audit Findings and Responses. The City’s response was not subjected to the auditing procedures applied in the audit of the financial statements and, accordingly, we express no opinion on the response. PURPOSE OF THIS REPORT The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing, and not to provide an opinion on the effectiveness of the City’s internal control or on compliance. This report is an integral part of an audit performed in Page 11 Moses Lake Council Packet 4-28-20, Page 53 of 158 Office of the Washington State Auditor accordance with Government Auditing Standards in considering the City’s internal control and compliance. Accordingly, this communication is not suitable for any other purpose. However, this report is a matter of public record and its distribution is not limited. It also serves to disseminate information to the public as a reporting tool to help citizens assess government operations. Pat McCarthy State Auditor Olympia, WA March 26, 2020 Page 12 Moses Lake Council Packet 4-28-20, Page 54 of 158 Office of the Washington State Auditor INDEPENDENT AUDITOR’S REPORT ON FINANCIAL STATEMENTS City of Moses Lake January 1, 2018 through December 31, 2018 City Council City of Moses Lake Moses Lake, Washington REPORT ON THE FINANCIAL STATEMENTS We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Moses Lake, as of and for the year ended December 31, 2018, and the related notes to the financial statements, which collectively comprise the City’s basic financial statements as listed on page 16. 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 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, Page 13 Moses Lake Council Packet 4-28-20, Page 55 of 158 Office of the Washington State Auditor including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the City’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control.Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, each major fund and the aggregate remaining fund information of the City of Moses Lake, as of December 31, 2018, and the respective changes in financial position and, where applicable, cash flows thereof, and the budgetary comparison for the General Fund, for the year then ended in accordance with accounting principles generally accepted in the United States of America. Matters of Emphasis As discussed in Note 17 to the financial statements, in 2018, the City adopted new accounting guidance, Governmental Accounting Standards Board Statement No. 75,Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management’s discussion and analysis and required supplementary information listed on page 16 be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing Page 14 Moses Lake Council Packet 4-28-20, Page 56 of 158 Office of the Washington State Auditor 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. OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING STANDARDS In accordance with Government Auditing Standards, we have also issued our report dated March 26, 2020 on our consideration of the City’s internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City’s internal control over financial reporting and compliance. Pat McCarthy State Auditor Olympia, WA March 26, 2020 Page 15 Moses Lake Council Packet 4-28-20, Page 57 of 158 Office of the Washington State Auditor FINANCIAL SECTION City of Moses Lake January 1, 2018 through December 31, 2018 REQUIRED SUPPLEMENTARY INFORMATION Management’s Discussion and Analysis –2018 BASIC FINANCIAL STATEMENTS Statement of Net Position –2018 Statement of Activities –2018 Balance Sheet –Governmental Funds –2018 Reconciliation of the Governmental Funds Balance Sheet to the Government-wide Statement of Net Position –2018 Statement of Revenues, Expenditures and Changes in Fund Balance –Governmental Funds –2018 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-wide Statement of Activities – 2018 Statement of Revenues, Expenditures, and Changes in Fund Balances –Budget and Actual –General Fund - 2018 Statement of Net Position –Proprietary Funds –2018 Statement of Revenues, Expenses, and Changes in Fund Net Position –Proprietary Funds –2018 Statement of Cash Flows –Proprietary Funds –2018 Statement of Net Position –Fiduciary Funds –2018 Notes to the Financial Statements –2018 REQUIRED SUPPLEMENTARY INFORMATION Condition Assessments and Preservation of Infrastructure Eligible for Modified Approach –2018 Schedule of Proportionate Share of the Net Pension Liability –PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 –2018 Schedule of Employer Contributions –PERS 1, PERS 2/3, LEOFF 1, LEOFF 2 –2018 Schedule of Changes in the Employers’ Net OPEB Liability and Related Ratios – LEOFF 1 –2018 Page 16 Moses Lake Council Packet 4-28-20, Page 58 of 158 MANAGEMENT DISCUSSION AND ANALYSIS As management of the City of Moses Lake, we offer readers of the City of Moses Lake’s financial statementthis narrative overview and analysis of the financial activities of the City of Moses Lake for the fiscal year ended December 31, 2018. The information presented here should be read in conjunction with additionalinformation that we have furnished in our letter of transmittal, the financial statements and notes to thefinancial statements. All amounts, unless otherwise indicated, are expressed in thousands of dollars and arerounded to the nearest thousand. FINANCIAL HIGHLIGHTS The assets of the City of Moses Lake exceeded its liabilities at the close of the most recent fiscal year by$165,632 (net position). Of this amount, $15,573 (unrestricted net positions) may be used to meet thegovernment’s ongoing obligations to citizens and creditors. The government’s total net position increased by $11,647. As of the close of the current fiscal year, the City of Moses Lake’s governmental funds reported combinedending fund balances of $10,869, an increase of $1,993 from the prior year. At the end of the current fiscal year, unassigned fund balance available to spend at the City’s discretion forthe general fund was $6,091. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the City of Moses Lake’s basicfinancial statements. The City of Moses Lake’s basic financial statements are comprised of threecomponents: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to thefinancial statements. This report also contains other supplementary information in addition to the basicfinancial statements themselves. Government-wide financial statements. The government-wide financial statements are designed toprovide readers with a broad overview of the City of Moses Lake’s finances, in a manner similar to a private-sector business. The statement of net position presents information on all of the City of Moses Lake’s assets and liabilities,with the difference between the two reported as net position. Over time, increases or decreases in netposition may serve as a useful indicator of whether the financial position of the City of Moses Lake isimproving or deteriorating. The statement of activities presents information showing how the government’s net position changed duringthe most recent fiscal year. All changes in net positions are reported as soon as the underlying event givingrise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses arereported in this statement for some items that will only result in cash flows in future fiscal periods (e.g.,uncollected taxes and earned but unused vacation leave). Both of the government-wide financial statements distinguish functions of the City of Moses Lake that areprincipally supported by taxes and intergovernmental revenues (governmental activities) from other 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 of Moses Lake include general government, public safety, highways and streets, engineering (i.e. public works), economic development, and culture andrecreation. The business-type activities of the City of Moses Lake include a water and sewer utility, sanitation (solid waste), storm water, ambulance and a non-commercial municipal airport. Page 17 Moses Lake Council Packet 4-28-20, Page 59 of 158 Fund financial statements. A fund is a grouping of related accounts that is used to maintain control overresources that have been segregated for specific activities or objectives. The City of Moses Lake, 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 of Moses Lake 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 reportedas 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 ofspendable 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 presentedfor governmental activities in the government-wide financial statements. By doing so, readers may betterunderstand the long-term impact of the government’s near term financing decision. Both the governmentalfund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fundbalances provide a reconciliation to facilitate this comparison between governmental funds and governmentalactivities. The City of Moses Lake maintains ten governmental funds. The City’s only major governmental fund asdetermined by GASB criteria is the General Fund. The General Fund is presented separately in thegovernmental funds balance sheet, and the governmental funds statement of revenues, expenditures, andchanges in fund balances. Data from the remaining governmental funds are combined into a single,aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided inthe form of combining statements after the required supplementary information in this report. The City of Moses Lake adopts an annual appropriated budget for its general fund. A budgetary comparisonstatement has been provided for the general fund to demonstrate compliance with this budget. Proprietary funds. The City of Moses Lake maintains two different types of proprietary funds. Enterprisefunds are used to report the same functions presented as business-type activities in the government-wide financial statements. The City of Moses Lake uses enterprise funds to account for its water and sewer utility,sanitation (solid waste), storm water, ambulance, and airport operations. Internal service funds are an accounting device used to accumulate and allocate costs internally among the City of Moses Lake’s variousfunctions. The City of Moses Lake also uses internal systems to account for its fleet of vehicles, risk management, unemployment programs, building services, and computer services. Because these servicespredominately benefit governmental rather than business-type functions, they have been included within governmental activities in the government-wide financial statements. Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail. The proprietary fund financial statements provide separate information for the water and sewerutility, sanitation and ambulance which are considered to be major funds of the City of Moses Lake. Like thenonmajor governmental funds, data from the remaining proprietary funds are combined into a single,aggregated presentation. Individual fund data for each of these nonmajor proprietary funds is provided in theform of combining statements after the required supplementary information in this report. Conversely, theinternal service funds are combined into a single, aggregated presentation in the proprietary funds financialstatements. Individual fund data for the internal service funds is also provided in the form of combiningstatements elsewhere in this report. Page 18 Moses Lake Council Packet 4-28-20, Page 60 of 158 Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outsidethe government. Fiduciary funds are not reflected in the government-wide financial statement because theresources of those funds are not available to support the City of Moses Lake’s own programs. Theaccounting 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 fullunderstanding of the data provided in the government-wide and fund financial statements. The notes tothe financial statements can be found immediately following the basic financial statements. Other information. Required Supplementary Information. In addition to the basic financial statements and the accompanying notes this report also presents certain required supplementary information concerninginfrastructure assets reported using the modified approach and pension plan funding. The required supplementary information immediately follows the notes to the financial statements in the Basic Statements section of this report. Combining Statements. The combining statements referred to earlier in connection with nonmajor governmental funds, nonmajor proprietary funds, and internal service funds are presented in a separatesection immediately following the required supplementary information. GOVERNMENT-WIDE FINANCIAL ANALYSIS Statement of Net Position As noted earlier, net position may serve over time as a useful indicator of a government’s financialposition. In the case of the City of Moses Lake, assets exceeded liabilities by $165,632 at December 31,2018. GovernmentalActivities Business-type Activities Total 2018 2017 2018 2017 2018 2017 Current and other assets $ 14,188 $ 10,370 $ 25,940 $ 22,545 $ 40,128 $ 32,915Capital assets 72,019 70,392 84,636 85,139 156,655 155,531 Total assets 86,207 80,762 110,576 107,684 196,783 188,446 Total deferred outflows of resources 987 937 247 292 1,234 1,229Long-term liabilities (as restated for GASB 75) 13,432 12,125 7,618 9,357 21,050 21,482Other liabilities 5,416 5,815 3,166 3,696 8,582 9,511 Total liabilities 18,848 17,940 10,784 13,053 29,632 30,993 Total deferred inflows of resources (as restated)2,231 1,218 522 378 2,753 1,596 Net position: Net investment in capital assets 67,063 63,143 78,064 77,544 145,127 140,687Restricted 3,620 2,339 1,312 1,284 4,932 3,623Unrestricted (as restated for GASB 75) (4,568) (2,942) 20,141 15,716 15,573 12,774 Total net position $ 66,115 $ 62,540 $ 99,517 $ 94,544 $ 165,632 $157,084 Page 19 Moses Lake Council Packet 4-28-20, Page 61 of 158 The largest portion of the City of Moses Lake’s net position (88%) reflects its investment in capital assets(e.g., land, buildings, machinery, and equipment), less any related debt used to acquire those assets thatis still outstanding. The City of Moses Lake uses these capital assets to provide services to citizens;consequently, these assets are not available for future spending. Although the City of Moses Lake’sinvestment in its capital assets is reported net of related debt, it should be noted that the resourcesneeded to repay this debt must be provided from other sources, since the capital assets themselvescannot be used to liquidate these liabilities. An additional portion of the City of Moses Lake’s net position (3%) represents resources that are subjectto external restrictions on how they may be used. The remaining balance of unrestricted net positions(9%) may be used to meet the government’s ongoing obligations to citizens and creditors. At the end of the current fiscal year, the City of Moses Lake is able to report positive balances in all threecategories of net position for the government as a whole, as well as for its separate businesstypeactivities. There is a deficit in unrestricted net position in the governmental funds because the City has longterm commitments that are greater than currently available resources, primarily longterm citywidepension benefits and other postemployment benefit liabilities. There was a change in accounting principal in 2018, as GASB 75 was applied to the City’s program to fund medical care for a certain group of retiredpublic safety officers. Application of this pronouncement resulted in an increase in OPEB liability of $6.589 million. Refer to the notes to the financial statements for a more indepth discussion of pensionand other longterm liabilities. The City continues to invest in its infrastructure and other capital assets as the local economy improves. Statement of Changes in Net Position The changes in net position table indicates the increases or decreases in net position of the city resultingfrom its operations. The City’s total net position increased by $11,647 in 2018. The increase after transferswas split among an increase in governmental $6,674 and an increase in business-type activities $4,973. Page 20 Moses Lake Council Packet 4-28-20, Page 62 of 158 The following is a summarized version of the City’s changes in net position. The table shows therevenues, expenses, and related changes in net position in table form for the governmental activitiesautonomous from the business-type activities for 2018. City of Moses Lake Changes in Net PositionGovernmentalActivitiesBusiness-typeActivities Total 2018 2017 2018 2017 2018 2017 Revenues:Program RevenueCharges for service $ 6,717 $ 4,947 $ 19,738 $ 18,390 $ 26,455 $ 23,337Operating grants and contributions 490 405 11 - 501 405Capital grants and contributions 1,233 331 1,545 761 2,778 1,092General RevenueProperty taxes 6,910 6,811 -- 6,910 6,811Sales taxes 8,548 7,425 -- 8,548 7,425Business taxes 5,053 4,905 -- 5,053 4,905Other taxes ------Other 1,674 380 104 130 1,778 510 Total revenues 30,625 25,204 21,398 19,281 52,023 44,485 Expenses: General government 2,502 2,358 - - 2,502 2,358Public safety 9,160 9,071 - - 9,160 9,071Public works 1,619 1,556 - - 1,619 1,556Transportation 3,934 3,152 - - 3,934 3,152Culture & recreation 5,744 5,607 - - 5,744 5,607Economic environment 1,129 1,148 - - 1,129 1,148Interest on long-term debt 289 350 - - 289 350Water/server utility - - 8,358 7,619 8,358 7,619Sanitation - - 4,445 3,904 4,445 3,904Ambulance-- 2,332 2,158 2,332 2,158Airport- -60546054Storm water -- 804 745 804 745 Total expenses 24,377 23,242 15,999 14,480 40,376 37,722 Increase in net position before transfers 6,248 1,962 5,399 4,801 11,647 6,763Transfers 426 426 (426) (426) - - Change in net position 6,674 2,388 4,973 4,375 11,647 6,763Net position 01/01 (as restated) 59,441 63,666 94,544 90,167 153,985 153,833Direct adj to net position - GASB 75 ** - (6,589) - - - (6,589)Prior period adjustment - (24) - - - (24) Net position 12/31 $ 66,115 $ 59,441 $ 99,517 $ 94,544 $ 165,632 $ 153,985 **The City had a direct adjustment to net position due to the misstatement of pension calculations in 2017 and implementation ofGASB 75 in 2018. Governmental activities. Governmental activities increased the City of Moses Lake’s net position by$6,674. As shown in the Statement of Activities, $8,440 of the total cost was paid for by either thosedirectly benefitting from the programs or by governments and organizations that subsidized certainprograms through grants and contributions. Key elements of this increase are as follows: The increase in charges for services of $1,770 was due largely to rate adjustments made to offset the significant increase in the Washington State minimum wage, coupled with additional reimbursable activity by the Police Department (i.e. adding school resource officers paid by the school district and participation in regional task forces). The increase in sales taxes of $1,123 was attributable primarily to the start of a voted sales tax of Page 21 Moses Lake Council Packet 4-28-20, Page 63 of 158 0.2% for transporation improvements which started to be collected April 1, 2018. Total expenses for governmental activities remained relatively flat as the City maintained its programs. Business-type activities. Total net positions of business-type activities increased by $4,973 for the year.Of the $21,398 in business type revenue, 92% was provided by charges for services, with the remaindercoming from capital grants and contributions as well as investment earnings. CPI related increases inrates were adequate to cover ongoing program costs, and add to the net position as investments weremade in infrastructure. Page 22 Moses Lake Council Packet 4-28-20, Page 64 of 158 FINANCIAL ANALYSIS OF THE CITY’S FUNDS As noted earlier, the City of Moses Lake uses fund accounting to ensure and demonstrate compliance with finance-related legal requirements. Governmental Funds. The focus of the City of Moses Lake’s governmental funds is to provide information on near-term inflows, outflows, and balances of spendable resources. Such information isuseful in assessing the City of Moses Lake’s financing requirements. Page 23 Moses Lake Council Packet 4-28-20, Page 65 of 158 As of the end of the current fiscal year, the City of Moses Lake’s governmental funds, which includes debtservice funds, capital projects funds, and special revenue funds had an ending fund balance of $10,868,an increase of $1,993 in comparison with the prior year. It is partly made up of unassigned fund balance$6,091, which is available for spending at the government’s discretion. The remainder of fund balance isseparated into different categories. Nonspendable fund balance consists of inventories and other prepaidexpenses $184. $2,544 is restricted for public safety, tourism, and parks capital programs along with debtservice. $1,439 is committed for public safety pensions, museum programs, and transportationimprovements; and $611 is assigned for street operations. The General Fund is the chief operating fund of the City of Moses Lake. At the end of the current fiscalyear, unassigned fund balance of the general fund was $6,091 while the total fund balance was at $6,563. The fund balance of the City of Moses Lake's General Fund increased by $1,437 during the current fiscalyear. Key factors in the changes are as follows: The City sold some surplus properties, bringing in $710. The voted sales tax described above went into a special revenue fund, and not General Fund. However, because of this new tax, the City was able to reduce its transfer to the Street Repair and Reconstruction Fund by about $280. Proprietary funds. The City of Moses Lake’s proprietary funds provide the same type of informationfound in the government-wide financial statements, but in more detail. The proprietary funds are thosefunds that account for government operations where the intent is for the costs to be paid primarily by usercharges. Enterprise funds are those that provide services predominantly to external users and the internalservice funds provide service principally to other City operations. The funds consist of five enterprisefunds, and five internal service funds. Unrestricted fund balance of the Water and Sewer Utility at the end of the year amounted to $14,507,which makes up 91% of the total net positions for all enterprise funds. Other factors concerning thefinances of these two funds have already been addressed in the discussion of the City of Moses Lake’sbusiness-type activities. GENERAL FUND BUDGETARY HIGHLIGHTS Original compared to final budget The final revenue budget for the General Fund increased by $430 from the original budget whileexpenditures were $525 higher than the original. Increases were made up of the carryforward of unspentprogram budgets from the prior year, corrections of budget oversights, and program enhancements. Actual results compared to final budget General fund revenues were over final amended budget by $1,755 (8%) and expenditures less by $273(1%). The General Fund budget is built assuming positive variances in both revenue and expenditures.Revenue is conservatively estimated, while expenditure estimates utilize highest probable costs. Becauseof growth in virtually all categories, along with the unbudgeted sale of properties, the revenues had a largepositive variance. Because the revenue was strong, the operations were encouraged to spend ondeferred capital, maintenance and technology within the constraints of the total budget. The net effect Page 24 Moses Lake Council Packet 4-28-20, Page 66 of 158 was an increase in General Fund balance of $1,437. CAPITAL ASSET AND DEBT ADMINISTRATION Capital assets. The investment in capital assets includes land, buildings and improvements, machineryand equipment, park facilities, aquatic facilities, and streets, including construction in progress on buildings and systems. The total investment for its governmental and business-type activities as ofDecember 31, 2018 amounts to $156,654 (net of accumulated depreciation). Governmental Activities: Capital assets from governmental activities increased $1,628 from $70,391 in2017 to $72,019 in 2018. The City's investment in infrastructure, facilities and rolling stock, exceeded current year depreciation for all assets in 2018. City of Moses Lake's Capital Assets(Net of depreciation) GovernmentalActivities Business-typeActivities Total 2018 2017 2018 2017 2018 2017Land and land improvements $ 5,561 $ 5,561 $ 988 $ 988 $6,549 $ 6,549Buildings and otherimprovements 19,463 20,234 26,481 27,288 45,944 47,522Machinery and equipment 5,134 5,085 4,444 3,296 9,578 8,381Infrastructure40,416 39,511 51,708 51,903 92,124 91,414Intangible-- 285 285 285 285Construction in Progress 1,445 - 729 1,378 2,174 1,378 Total assets $ 72,019 $ 70,391 $ 84,635 $ 85,138 $156,654 $155,529 Additional information on the capital assets of the City of Moses Lake can be found in Note 5. Infrastructure. The City of Moses Lake has elected to use the modified approach as defined by GASBstatement 34 for reporting its streets, alleys, bike paths, parking lots, bridge, storm drains, catch basins,dry wells and piping. The City has made a commitment to preserve and maintain the street infrastructureat an acceptable condition rather than recording depreciation. The rating scales for paved streets, bridgeand storm water system are further explained in the required supplementary information, which follows thenotes to the basic financial statements. The City’s engineering department evaluates the condition that paved streets are kept based on a formulaestablished by a street assessment program. The formula is calculated using 8 different criteria applied toall paved streets from one intersection to another. Among the criteria is depths and lengths of cracks,sags and humps, and patching. From the inputting of the information the system evaluates all criteria andproduces a rating. The condition assessment is taken at least once every three years. The City has no setpolicy as to the level the streets are to be maintained. However, the City has a program where the streetshave a crack seal process applied every six years to prevent the erosion of the street condition. By definition the City has one bridge that it maintains. The portion that is under water, is inspected everyfive years by the state Department of Transportation and documented in an inspection report given to andmaintained by the City. The bridge is given a sufficiency rating, which is a numerical rating based on a 100point scale. The rating is based on its structural adequacy and safety, load capacity, essentiality for public use, and its serviceability and functional obsolescence. Currently the one bridge carries a sufficiencyrating of between 65 and 70. The City inspects and evaluates the remainder of the bridge above the water line using the pavement management system that is used for rating paved streets. The bridge has no load Page 25 Moses Lake Council Packet 4-28-20, Page 67 of 158 limits which substantiates its superior rating. Projected costs to maintain the bridge are included in thebudgeted cost of the streets. The City maintains an inventory of these infrastructure assets. With triennial assessments establishing thecondition level of the assets, the City makes annual estimates of the cost to maintain its streets which arealso reported in the City’s annual Capital Improvement Program. For 2018 the City budgeted $2,980 formajor road and sidewalk maintenance projects. The actual amount expended was $1,993 as a majorproject was delayed. Normally there were no significant changes in the condition levels of the streets. With relatively mildweather patterns the condition level of the streets was maintained above the acceptable conditions for theCity. To ensure continued maintenance, in 2017 the City established a Transportation Benefit District togenerate revenue and to address future repair needs. In November, 2017, a ballot measure to convert therevenue from the Council approved car tab fee to a voter approved 0.2% sales tax was passed by thevoters, and the new sales tax started to be collected on April 1, 2018. More than $1,450 is expected to begenerated by this new sales tax annually, to be added to the Real Estate Excise Tax and grants to supportmaintenance of the street infrastructure. Long-term debt. At the end of the fiscal year, the City of Moses Lake had total bonded debt outstandingof $11,120. Of this amount, $5,245 comprises debt backed by the full faith and credit of the governmentand $5,875 represents bonds secured solely by specified revenue sources (i.e., revenue bonds). City of Moses Lake's Oustanding DebtGeneral Obligation and Revenue Debt(Actual Amounts) Governmental Activities Business-type Activities Total 2018 2017 2018 2017 2018 2017 General obligation debt $ 4,731,666 $ 5,791,666 $ 513,334 $568,334$ 5,245,000 $ 6,360,000 Revenue debt --5,875,000 6,810,000 5,875,000 6,810,000 Total long-term debt $ 4,731,666 $ 5,791,666 $ 6,388,334 $ 7,378,334 $11,120,000 $13,170,000 The City of Moses Lake’s total bonded debt decreased by $2,050 which represents principal payments.No new debt was issued in 2018. The earliest final maturity for existing debt is 2020, and the last maturities are in 2026. Currently, the city does not anticipate issuing any new debt in the foreseeablefuture, although City Council has recently authorized creating the detailed specifications for a new Parks and Recreation facility to replace an aging Larson Park recreation center, estimated to cost $11.5 million.The final plan could be funded by available resources in the Parks Capital Fund and hotel/motel taxes, with any balance being bonded. The funds for construction wouldn’t be needed until 2020 with therepayment starting in 2021, after a significant existing debt service payment is completed. The City of Moses Lake maintains favorable rating from S&P Global Ratings Group. The Water & SewerRevenue Bonds are rated “AA-” and the Limited Tax General Obligation Bonds are rated "A+". Page 26 Moses Lake Council Packet 4-28-20, Page 68 of 158 Washington State statutes limit the amount of general obligation debt a governmental entity may issue to7.5% of its total assessed valuation, subject to a 60% majority vote of qualified electors. Of the 7.5% limit,2.5% is for general purposes, 2.5% for open space/park facilities and 2.5% for utilities. Non-voted (limitedtax) general obligation indebtedness is limited to 1.5% of assessed valuation. The combination ofunlimited tax and limited tax general obligation debt for all purposes cannot exceed 7.5% of assessedvaluation. The City’s assessed valuation for 2018 was $2,189,215,750 and the remaining debt capacity isas follows: (Actual amounts inthousands) General Purpose-Non-voted (i.e.Councilmanic) net of Outstanding debt $27,778General Purpose-Voted 21,892 Total General Purpose-Voted and Non-Voted 49,670Open Space/Park Facilities 54,730Utilities 54,730 Total $ 159,130 Additional information on the City’s long-term debt can be found in Note 8 to the Financial Statements. ECONOMIC FACTORS AND THE NEXT YEAR’S BUDGETS AND RATES Because of its location on the major interstate that runs between Seattle and Spokane, a vibrant portdistrict that is home to one of the largest airports in the country, along with recreational opportunities thataccompany a lakeside community, Moses Lake has seen steady growth. Growth generally translates into greater revenues attributable in part to increased sales taxes, propertytaxes, permit fees, and the like. The City finds itself in a somewhat unique and fortunate situation. As thenational economy has seen extended growth following the “Great Recession” the City is experiencinggrowth in property taxes from new construction, sales taxes and permitting fees. In addition to the natural growth in the economy, the local taxpayers decided to invest in the communitytwice in the past two years. In November 2017, a 0.2% sales tax for a local transportation benefit districtfor major street repair and maintenance passed, and went into effect on April 1, 2018. In November 2019,Grant County voters approved a 0.3% sales tax for criminal justice purposes which will start beingcollected on April 1, 2020. The formula for distribution is 60% to the County, and the remaining 40%distributed to cities within the county on a per capita basis. The aforementioned factors were considered inthe preparation of the City’s 2019 and 2020 budget. A change in state law is also helping to shore up our important sales tax stream. The Legislature approveda law that would apply sales tax collection to more internet retailers, to be effective in late 2018. The Cityis experiencing sales tax growth of over 5% through mid-2019. In reviewing the building activity in the local economy currently in progress and anticipated for the future, itis anticipated that the local economy should continue to improve in 2019 and perhaps for several years inthe future, but at a moderate rate, which supports the assumption that current service levels can bemaintained. Page 27 Moses Lake Council Packet 4-28-20, Page 69 of 158 Several industrial and retail concerns in and around the City have completed new projects or expansionsin 2018. These expansions, additions, and new projects will result in added building activity, a short terminflux of construction employment, and in the long term, add jobs to the City’s employment base. Theexpansion and/or new location of industry and retail in and around the City will have a direct effect on thelocal economy and have an effect on building activity which will affect the City’s property tax receipts. Theadded employment has resulted in additional population in and around the City which will affect retail salesand, therefore, the City’s retail sales tax receipts. Property tax increases have been limited by voter approved initiatives. However, gross property taxreceipts have increased because of annexations and new construction within the City. The property owner with the largest real estate tax assessment within the City appealed their 2012assessment. The County is seeking a $1.2 billion value and the property owner a $450 million value orless. Washington State Board of Tax Appeals (BTA) assessed a valuation of $904 million for the propertyowner. The property owner appealed the verdict to Superior Court. Superior Court remanded the case back to BTA for clarification. The BTA returned with a new valuation of $774 million for the 2012assessment. The decision is reflected in the city's property tax revenue for 2016. The same property owner has disputed their 2013, 2014 and 2015 assessment. All years have been heard by the Board ofEqualization and were appealed to the BTA. The County feels strongly that the board will more favorably view the County’s determination of assessed value than that of the property owner. (Even though we gotthe judgment, we have not received the additional taxes, but they are not counted in the General Fund balance, since they are recorded as a deferred inflow of resources.) This same company has ceasedoperations in mid-2019 citing tariff issues. The current property tax assessments have been loweredconsiderably in recent years, so this should not create a significant reduction. While it is expected that future budgets may be limited by voter approved initiatives and legislation, whichcan reduce income to the City’s General or Operating Fund, it is expected that some of the limitationsexperienced by the City will be tempered by continued economic development, primarily in the retail,industrial, and tourism sectors. All of the referenced factors were considered in preparing the City ofMoses Lake’s budget for the 2019 fiscal year. The projected outlook for the City of Moses Lake and surrounding area remains positive as more buildingpermits are issued and more industrial firms are moving into the area or expanding current facilitiesbecause of relatively inexpensive land and power costs. Requests for Information This financial report is designed to provide a general overview of the City of Moses Lake’s finances for allthose with an interest in the government’s finances. Questions concerning any of the information providedin this report or requests for additional financial information should be addressed to the Finance Director,401 S. Balsam, PO Box 1579, Moses Lake, WA 98837. Page 28 Moses Lake Council Packet 4-28-20, Page 70 of 158 CITY OF MOSES LAKE Statement of Net Position December 31, 2018 Primary Government Governmental Activities Business-Type Activities Total ASSETS Pooled cash & investments $ 13,416,631 $ 14,243,673 $ 27,660,304Receivables (net of allowances for uncollectibles)3,972,289 2,453,303 6,425,592Internal balances (6,849,734) 6,849,734 -Inventories and prepaid items 243,032 476,063 719,095Restricted assets:Cash - 1,311,875 1,311,875Capital assetsLand and land improvements 5,560,986 1,273,031 6,834,017Construction in Progress 1,444,995 729,486 2,174,481Net of accumulated depreciationBuildings and other improvements 19,463,477 26,480,650 45,944,127Machinery and equipment 5,737,868 4,444,428 10,182,296Infrastructure39,811,723 51,708,370 91,520,093Net Pension Asset 3,405,847 605,828 4,011,675 Total assets 86,207,114 110,576,441 196,783,555 DEFERRED OUTFLOWS OF RESOURCES Deferred loss on refunding $ 141,224 $ 28,245 $ 169,469Deferred outflows related to pensions 846,190 218,772 1,064,962 Total deferred outflows of resources 987,414 247,017 1,234,431 LIABILITIES Accounts payable and other current liabilities 1,048,209 650,877 1,699,086Accrued interest 48,032 104,155 152,187Unearned revenues -11,398 11,398Noncurrent liabilities:Due within one year 1,465,303 1,641,567 3,106,870Due in more than one year 6,065,368 7,618,462 13,683,830Net pension liability 2,854,509 756,815 3,611,324Total OPEB Liability 7,366,225 - 7,366,225 Total liabilities 18,847,646 10,783,274 29,630,920 DEFERRED INFLOWS OF RESOURCES Deferred inflows related to pensions 2,231,287 522,269 2,753,556 Total deferred inflows of resources 2,231,287 522,269 2,753,556 NET POSITION Invested in Capital Assets 67,063,404 78,064,287 145,127,691Restricted For:Debt Service 184,705 1,312,269 1,496,974Pension benefits 343,215 - 343,215Other purpose 3,092,333 - 3,092,333Unrestricted Net Positon (4,568,062) 20,141,359 15,573,297 Total net position $ 66,115,595 $ 99,517,915 $ 165,633,510 The notes to the financial statements are an integral part of this statement. Page 29 Moses Lake Council Packet 4-28-20, Page 71 of 158 CITY OF MOSES LAKEStatement of ActivitiesFor the Year Ended December 31, 2018Net (Expenses) Revenues andChanges in Net PositionProgram Revenues Primary GovernmentExpensesCharges forServicesOperating GrantsandContributionsCapital GrantsandContributionsGovernmentalActivitiesBusiness-typeActivitiesTotalFunction/ProgramsPrimary Government:Governmental Activities:General government $ 2,502,138 $ 2,030,384 $ 12,000 $ - $ (459,754)$ - $ (459,754)Public safety 9,159,773 1,605,448 115,525 - (7,438,800) - (7,438,800)Public works 1,618,887 705,486 - - (913,401) - (913,401)Transportation 3,933,763 632,892 242,496 901,855 (2,156,520) - (2,156,520)Culture and recreation 5,743,730 1,520,010 120,010 331,028 (3,772,682) - (3,772,682)Economic Environment 1,129,366 222,551 - - (906,815) - (906,815)Interest on long-term debt 288,584 - - - (288,584) - (288,584)Total governmental activities24,376,2416,716,771490,0311,232,883(15,936,556)-(15,936,556)Business-type activities:Water/Sewer utility 8,357,844 11,608,379 8,110 1,295,109 - 4,553,754 4,553,754Sanitation 4,445,067 4,467,541 2,547 - - 25,021 25,021Ambulance2,331,665 2,735,028--- 403,363403,363Airport60,48327,071- 57,771-24,35924,359Storm Water804,390899,525- 191,753- 286,888286,888Total business-type activities15,999,44919,737,54410,6571,544,633-5,293,3855,293,385Total primary government$ 40,375,690$ 26,454,315$500,688$ 2,777,516(15,936,556)5,293,385(10,643,171)General Revenues:Property taxes 6,909,510 - 6,909,510Retail sales and use taxes 8,547,671 - 8,547,671Business taxes 5,053,402 - 5,053,402Investment earnings 477,889 106,227 584,116Insurance recoveries 13,462 - 13,462Gain (Loss) on Asset Disposal 1,180,618 - 1,180,618Miscellaneous 1,800 - 1,800Transfers, internal activities 425,660 (425,660) -Total general revenues and transfers22,610,012(319,433)22,290,579Changes in net position6,673,4564,973,95211,647,408Net position - beginning 66,055,726 94,543,963 160,599,689Prior Period Adjustments (24,428) - (24,428)Changes in Accounting Principles (6,589,159) - (6,589,159)Net position - ending$ 66,115,595$ 99,517,915$ 165,633,510The notes to the financial statements are an integral part of this statement Page 30 Moses Lake Council Packet 4-28-20, Page 72 of 158 CITY OF MOSES LAKE Balance Sheet Governmental Funds December 31, 2018 General Other Governmental Funds Total Governmental Funds ASSETSPooled cash & investments $ 4,980,632 $ 4,074,745 $ 9,055,377Receivables (net of allowance for uncollectibles):Taxes 2,916,739 348,210 3,264,949Customer accounts 124,284 -124,284Unbilled services 56,140 -56,140Other receivables 295,388 18,255 313,643Notes/contracts receivable -19,070 19,070Due from other governments 84,155 75,395 159,550Prepaid Expenses 67,862 65,618 133,480 Total assets 8,525,200 4,601,293 13,126,493 LIABILITIES, DEFERRED INFLOWS OF RESOURCES AND FUND BALANCES Liabilities:Accounts payable 189,242 258,651 447,893Salaries and benefits payable 242,658 10,153 252,811Other short-term liabilities 149 -149 Total liabilities 432,049 268,804 700,853 Deferred inflows of resources:Deferred property tax 1,355,629 - 1,355,629Deferred traffic citations 79,492 -79,492Deferred unavailable receivables 95,183 26,738 121,921Total deferred inflows of resources 1,530,304 26,738 1,557,042 Fund Balances:Nonspendable:Inventories and noncurrent receivables 114,131 69,395 183,526Restricted for:Public safety programs - 243,434 243,434Tourism- 952,128 952,128Debt service - 184,705 184,705Culture and recreation - 1,163,813 1,163,813Committed for:Committed 357,908 - 357,908Culture and recreation - 21,339 21,339Transportation - 1,059,510 1,059,510Assigned to transportation -611,427 611,427Unassigned6,090,808 - 6,090,808 Total fund balances 6,562,847 4,305,751 10,868,598Total liabilities, deferred inflows of resources and fund balances $ 8,525,200 $ 4,601,293 $ 13,126,493 The notes to the financial statements are an integral part of this statement. Page 31 Moses Lake Council Packet 4-28-20, Page 73 of 158 CITY OF MOSES LAKE Reconciliation of the Governmental Funds Balance Sheet to The Government-wide Statement of Net Position December 31, 2018 Total Governmental Fund Balances $ 10,868,598 Amounts reported for governmental activities in the government-wide statement of net position aredifferent because: Capital assets used in governmental activities are not financial resources andtherefore are not reported in the funds (exclusive of internal service funds' capitalassets)55,141,078 Other long-term assets are not available to be collected in current period revenuesand therefore are deferred in the funds.1,557,042 Internal service funds are used by management to change the costs of certainactivities, such as insurance, information services, fleet management, and buildingmaintenance, to individual funds. The assets and liabilities of these internal servicefunds are included in governmental activities on the government-wide statement ofnet position. Internal Service funds' net position 14,657,814Internal payable-charges under cost to business-type activities- prior years (2,447,164)Internal receivable-charges over cost to business-type activities - current years (1,570,910) Net adjustment to arrive at net position - governmental activities 10,639,740 Liabilities, including bonds, loans, and compensated absences, not due andpayable in the current period and therefore are not reported in the governmentalfund balance sheets, but are reported on the government-wide statement of netposition (exclusive of internal service funds' debt). Bonds payable (2,566,667)Issuance discounts, premiums and deferred amount on refunding (27,013)Accrued interest payable (42,511)Compensated absences (1,708,442)Pension obligations (net)(380,006)Other postemployment benefits (7,366,225)Net adjustment to arrive at net position - governmental activities (12,090,864) Net position of governmental activities $ 66,115,594 The notes to the financial statements are an integral part of this statement. Page 32 Moses Lake Council Packet 4-28-20, Page 74 of 158 CITY OF MOSES LAKE Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended December 31, 2018 General Other Governmental Funds Total Governmental Funds REVENUESTaxes $ 17,372,377 $ 2,842,499 $ 20,214,876Licenses and Permits 751,922 53,541 805,463Intergovernmental revenues 833,076 1,129,754 1,962,830Charges for services 3,283,878 213,728 3,497,606Fines and forfeits 807,553 - 807,553Interest earnings 355,065 64,697 419,762Rents and royalties 156,500 - 156,500Contributions/donations 12,000 293,467 305,467Assessments-49,407 49,407Miscellaneous18,382 63,907 82,289 Total revenues 23,590,753 4,711,000 28,301,753 EXPENDITURES Current:General Government 2,683,496 - 2,683,496Public safety 10,306,099 119,913 10,426,012Public works 1,817,778 - 1,817,778Transportation - 4,059,450 4,059,450Economic environment 1,205,921 - 1,205,921Culture and recreation 5,376,619 295,143 5,671,762Capital outlay 56,147 1,121,984 1,178,131 Debt service:Principal - 274,999 274,999Interest and debt issue costs 25,110 102,083 127,193 Total expenditures 21,471,170 5,973,572 27,444,742 Excess (deficiency) of revenues over(under) expenditures 2,119,583 (1,262,572)857,011 OTHER FINANCING SOURCES (USES)Transfers in 500,000 3,482,300 3,982,300Transfers (out) (1,892,540) (1,664,100) (3,556,640) Proceeds from sale of capital assets 709,874 -709,874 Total other financing sources (uses)(682,666)1,818,200 1,135,534 Net change in fund balances 1,436,917 555,628 1,992,545 Fund balances-beginning 5,125,930 3,750,123 8,876,053 Fund balances-ending $ 6,562,847 $ 4,305,751 $ 10,868,298 The notes to the financial statements are an integral part of this statement. Page 33 Moses Lake Council Packet 4-28-20, Page 75 of 158 CITY OF MOSES LAKE Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Government-wide Statement of Activities For the Year Ended December 31, 2018 Net changes in fund balances - total governmental funds:$ 1,992,545 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures. However in the statement of activitiesthe cost of those assets is allocated over their estimated useful lives and reported as depreciationexpense. This is the amount by which capital outlays exceed depreciation in the current period Capital outlay 1,150,105Depreciation expense (723,884) Net increase (decrease) in net position - governmental activities 426,221 Revenues in the statement of activities that do not provide current financial resources are notreported as revenues in the fund statement.55,844 The net effect of various miscellaneous transactions involving capital assets (i.e. sales,disposals, and donations) is to increase net position. Contributed assets 869,884Gain(loss) on sale/disposals of assets (25,095) Net increase (decrease) in net position - governmental activities 844,789 The issuance of long-term debt provides current financial resources to governmental funds, whilethe repayment of the principal of long-term debt consumes the current financial resources ofgovernmental funds. Neither transaction, however, has any effect on net position. Alsogovernmental funds report the effect of issuance costs, premiums, discounts, and similar itemswhen debt is first issued, whereas these amounts are deferred and amoritized in the statement ofactivities. This amount is the net effect of these differences in the treatment of long-term debt andrelated items. Debt principal payments 274,999 Net increase in net position - governmental activities 274,999 Some expenses reported in the statement of activities do not require the use of current financialresources and, therefore, are not reported as expenditures in governmental funds. Pension 887,258Other post employment benefits 288,678Accrued debt interest 1,614Compensated absences (90,820)Amoritization of deferred bond costs 3,377 Net decrease in net position - governmental activities 1,090,107 Accrued interest revenue in the statement of net activities does not provide current financialresources and is not reported as revenue in governmental funds. - Internal service funds are used by management to charge the costs of equipment, insurance,data processing, and fleet management to individual funds. The net revenue of certain activitiesof internal service funds is reported with governmental activities. Internal service funds change in net position 3,559,860Loss(gain) from charges to business-type activities (1,570,910) Net increase in net position - governmental activities 1,988,950 Change in net position in governmental activities $ 6,673,455 The notes to the financial statements are an integral part of this statement. Page 34 Moses Lake Council Packet 4-28-20, Page 76 of 158 CITY OF MOSES LAKE Statement of Revenues, Expenditures, and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended December 31, 2018 Budget Amounts Actual Variance with Final Budget Positive Original Final Amounts (Negative) REVENUESTaxes $ 16,370,000 $ 16,570,000 $ 17,372,377 $ 802,377Licenses and Permits 611,000 611,000 751,922 140,922Intergovernmental revenues 462,000 462,000 833,076 371,076Charges for services 3,172,370 3,252,370 3,283,878 31,508Fines and forfeits 466,000 616,000 807,553 191,553Interest earnings 180,000 180,000 355,065 175,065Rents and royalties 143,600 143,600 156,500 12,900Contributions/donations -- 12,000 12,000Miscellaneous500500 18,382 17,882 Total revenues 21,405,470 21,835,470 23,590,753 1,755,283 EXPENDITURESCurrent:General Government 2,761,088 2,784,488 2,683,496 100,992Public safety 9,857,666 10,309,366 10,306,099 3,267Public works 1,828,798 1,828,798 1,817,778 11,020Economic environment 1,335,635 1,335,635 1,205,921 129,714Culture and recreation 5,350,972 5,400,472 5,376,619 23,853Capital outlay 60,000 60,000 56,147 3,853Debt service:Interest and debt issue costs 25,200 25,200 25,110 90 Total expenditures 21,219,359 21,743,959 21,471,170 272,789 Excess (deficiency) of revenues over(under) expenditures 186,111 91,511 2,119,583 2,028,072 OTHER FINANCING SOURCES (USES)Transfers in 500,000 500,000 500,000 -Transfers (out) (1,896,240) (1,896,240) (1,892,540) 3,700Proceeds from sale of capital assets - - 709,874 709,874 Total other financing sources (uses)(1,396,240)(1,396,240)(682,666)713,574 Net change in fund balances (1,210,129)(1,304,729)1,436,917 2,741,646 Fund balances-beginning 322,900 317,400 5,125,930 4,808,530 Fund balances-ending $ (887,229)$ (987,329)$ 6,562,847 $ 7,550,176 The notes to the financial statements are an integral part of this statement. Page 35 Moses Lake Council Packet 4-28-20, Page 77 of 158 CITY OF MOSES LAKESTATEMENT OF NET POSITIONpage 1 of 2Proprietary FundsDecember 31, 2018Business-type Activities-Enterprise FundsGovernmentalActivitiesWater/SewerSanitationAmbulanceNon-MajorEnterprise FundsTotalsInternalServiceFundsASSETSCurrent assets:Pooled cash & investments $ 13,170,782 $ 99,036 $ 460,016 $ 513,839 $ 14,243,673 $ 4,361,254Receivables (net of allowance for uncollectibles) 1,262,092 623,895 432,797 134,518 2,453,302 4,652Due from other governments -----30,000Interfund loans receivable 3,281,662 - - - 3,281,662 -Inventory 352,443 51,040 65,583 6,997 476,063 109,552Total current assets18,066,979773,971958,396655,35420,454,7004,505,458Noncurrent assetsRestricted assets:Revenue bond reserves/debt service:Pooled cash & investments 1,311,875 - - - 1,311,875 -Total restricted assets1,311,875---1,311,875-Capital assets:Land and land rights 836,006 - - 151,898 987,904 608,951Construction in Progress 729,486 - - - 729,486 571,720Net of accumulated depreciation:Buildings 26,140,486 - - 340,164 26,480,650 11,085,198Infrastructure 44,964,093 - - 6,744,277 51,708,370 -Machinery and equipment 4,267,469 - 87,223 89,736 4,444,428 4,612,101Intangible assets 285,127 - - - 285,127 -Total capital assets77,222,667-87,2237,326,07584,635,96516,877,970Net pension asset--605,828-605,828-Total non current assets78,534,542-693,0517,326,07586,553,66816,877,970Total assets96,601,521773,9711,651,4477,981,429107,008,36821,383,428DEFERRED OUTFLOWS OF RESOURCESDeferred amount on refunding28,245---28,245-Deferred Pension113,657-90,53314,581218,77147,045Total deferred outflows of resources$ 141,902$-$ 90,533$ 14,581$ 247,016$ 47,045The notes to the financial statements are an integral part of this statement Page 36 Moses Lake Council Packet 4-28-20, Page 78 of 158 CITY OF MOSES LAKEStatement of Net PositionPage 2 of 2Proprietary FundsDecember 31, 2018Business-type Activities-Enterprise FundsGovernmentalActivitiesWater/SewerSanitationAmbulanceNon-MajorEnterprise FundsTotalsInternalServiceFundsLIABILITIESCurrent Liabilities:Accounts payable$ 163,896 $ 295,046 $5,638 $3,314 $ 467,894 $ 311,403Salaries and benefits payable45,961-44,4127,08697,45935,951Interfund loans payable-300,000150,000-450,000 2,831,662Unearned revenue---11,39811,398-Interest payable-----5,520Capital leases payable-----361,824G.O. bonds payable57,489---57,489805,000Compensated Absenses25,244-18,3523,79047,38610,978Accrued interest104,155---104,155-Intergovernmental loans payable561,692---561,692-Revenue bonds payable975,000---975,000-Other short-term liabilities7085,452--85,522-Total current liabilities1,933,507680,498218,40225,5882,857,9954,362,338Noncurrent liabilities:Revenue bonds payable (net discount/premium) 5,049,707 - - - 5,049,707 -G.O. bonds payable (net discount/premium) 489,481 - - - 489,481 1,415,791Intergovernmental loans payable 1,652,796 - - - 1,652,796 -Compensated absenses 227,198 - 165,171 34,108 426,477 98,809Net pension liability 651,081 - - 105,734 756,815 348,263Lease payable-----394,922Total noncurrent liabilities8,070,263-165,171139,8428,375,2762,257,785Total liabilities10,003,770680,498383,573165,43011,233,2716,620,123DEFERRED INFLOWS OF RESOURCESPension268,951-205,99247,326522,269152,536Total deferred inflows of resources268,951-205,99247,326522,269152,536NET POSITIONNet investment in capital assets 70,650,990 - 87,223 7,326,075 78,064,288 11,068,770Restricted for debt service 1,312,269 - - - 1,312,269 -Restricted for pension benefits - - 490,369 - 490,369 -Unrestricted 14,507,443 93,473 574,823 457,179 15,632,918 3,589,044Total net position$ 86,470,702$93,473$ 1,152,415$ 7,783,25495,499,844$ 14,657,814Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds.$ 4,018,071Net position of business-type activities$ 99,517,915The notes to the financial statements are an integral part of this statement Page 37 Moses Lake Council Packet 4-28-20, Page 79 of 158 CITY OF MOSES LAKEStatement of Revenues, Expenses, and Changes in Net PositionProprietary FundsFor the Year Ended December 31, 2018Business-type Activities-Enterprise FundsGovernmentalActivitiesWater/SewerSanitationAmbulanceNon-MajorEnterprise FundsTotalsInternalServiceFundsOPERATING REVENUESCharges for services$ 10,784,392 $ 4,466,240 $ 2,423,522 $ 897,590 $ 18,571,744 $ 7,834,447Miscellaneous636,8011,3011556,078694,195-Licenses and Permits22,300---22,300-Total operating revenues11,443,4934,467,5412,423,537953,66819,288,2397,834,447OPERATING EXPENSESSalaries and benefits 2,178,311 43,872 1,666,610 353,884 4,242,677 1,351,801Supplies and contractual services 3,877,984 4,404,641 733,004 518,063 9,533,692 1,254,293Utilities 581,132 - - 28,483 609,615 126,780Repairs and maintenance 352,063 - - 53,863 405,926 311,804Insurance claims and expenses -----600,149Depreciation and amortization 2,372,363 - 27,560 85,425 2,485,348 1,065,861Total operating expenses9,361,8534,448,5132,427,1741,039,71817,277,2584,710,688Operating income (loss)2,081,64019,028(3,637)(86,050) 2,010,981 3,123,759NONOPERATING REVENUES (EXPENSES)Intergovernmental revenues 8,110 2,547 311,595 115,542 437,794 -Interest and other earnings 106,223 - - - 106,223 58,128Insurance recoveries -----13,462Intergovernmental payments (61,961) - - - (61,961) -Interest expense (289,457) (3,750) (2,587) - (295,794) (166,381)Miscellaneous revenues 164,750 - - - 164,750 5,053Gain (Loss) on disposal of Assets 140 - - - 140 495,839Total nonoperating revenues (expenses)(72,195)(1,203)309,008115,542351,152406,101Income (loss) before contributions and transfers2,009,44517,825305,37129,4922,362,1333,529,860Capital contributions 1,295,109 - - 191,753 1,486,862 30,000Transfers in - - 74,340 - 74,340 -Transfers (out) (500,000) - - - (500,000) -Changes in net position2,804,55417,825379,711221,2453,423,3353,559,860Net position - beginning 83,666,148 75,647 772,704 7,950,390 11,097,954Net position - ending$ 86,470,702$93,472$ 1,152,415$ 8,171,635 $ 95,888,224$ 14,657,814Adjustment to reflect the consolidation of internal service fund activities related to enterprise funds1,570,910Changes in net position of business-type activities$ 4,994,245The notes to the financial statements are an integral part of this statement Page 38 Moses Lake Council Packet 4-28-20, Page 80 of 158 City of Moses Lake, WashingtonStatement of Cash FlowsPage 1 of 2Proprietary FundsFor the Year Ended December 31, 2018Business-type Activities- Enterprise FundsGovernmentalActivitiesWater/SewerSanitationAmbulanceNon-MajorEnterprise FundsTotalInternalServiceFundsCASH FLOWS FROM OPERATING ACTIVITIESReceipts from customers$ 10,883,696 $ 4,469,044 $ 2,392,248 $ 933,478 $ 18,678,466 $ 7,834,447Payment to Suppliers(4,729,585) (4,423,903) (785,407) (568,498) (10,507,393) (2,039,948)Payments to employees(2,767,417)(46,777) (1,689,645) (381,853) (4,885,692) (1,382,071)Miscellaneous revenues804,3691,301141,935807,6195,054Net cash provided by (used for) operating activities4,191,063(335)(82,790)(14,938) 4,093,000 4,417,482CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIESPayments (to) other funds--(108,666)-(108,666)-Advances from other funds1,590,782--- 1,590,782-Transfers from other funds--74,340-74,340-Transfers (to) other funds(500,000)(75,000)--(575,000)-Insurance recoveries-----13,462Other intergovernmental revenues8,1102,547311,59557,771380,023-Other intergovernmental payments(61,961)---(61,961)-Net cash provided by (used for) noncapital financingactivities 1,036,931 (72,453) 277,269 57,771 1,299,518 13,462CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIESProceeds from capital debt-----30,321Principal paid on debt(1,555,249)--- (1,555,249) (2,213,652)Interest paid on debt(293,597)(3,750)(2,587)-(299,934) (168,200)Capital contributions484,738---484,738-Purchases of capital assets(939,193)-(24,830)(45,987) (1,010,010) (1,422,011)Proceeds from sale of capital assets-----495,839Net cash provided by (used for) capital relatedfinancing activities (2,303,301) (3,750) (27,417) (45,987) (2,380,455) (3,277,703)CASH FLOWS FROM INVESTING ACTIVITIESInterest Income-----58,127Net cash provided by (used in) investing activities-----58,127Net increase (decrease) in cash and cash equivalents2,924,693(76,538)167,062(3,154) 3,012,063 1,211,368Cash and cash equivalents, January 111,557,964175,574292,953516,994 12,543,487 3,149,886Cash and cash equivalents - December 3114,482,65799,036460,015513,840 15,555,550 4,361,254The notes to the financial statements are an integral part of this statement Page 39 Moses Lake Council Packet 4-28-20, Page 81 of 158 City of Moses Lake, WashingtonStatement of Cash Flowspage 2 of 2Proprietary FundsFor the Year Ended December 31, 2018Business-type Activities- Enterprise FundsGovernmentalActivitiesWater/SewerSanitationAmbulanceNon-MajorEnterprise FundsTotalInternalServiceFundsReconciliation of Operating Income (Loss) to Net Cash Provided by (Used for) Operating ActivitiesOperating income (loss) $ 2,081,636 $ 19,027 $ (3,637) $ (48,571) $ 2,048,455 $ 3,123,759Adjustments to reconcile operating (loss) income to net cash (used in) provided by operating activities:Depreciation 2,372,363 - 27,560 51,787 2,451,710 1,065,861Loss on refunding 28,245 - - - 28,245 -Allowance for uncollectible accounts--(67,119)-(67,119)-Decrease (increase) in accounts receivable(42,874)2,80435,845(2,581)(6,806)-Decrease (increase) in inventory79413,188(41,463)-(27,481)-Decrease (increase) in prepaid expenses-----(2,414)Decrease (increase) in pension liability(470,189)-(37,995)(21,462) (529,646)(78,790)(Decrease) increase in accounts payable80,800(32,449)(10,940)1,02838,439255,493(Decrease) increase in salaries payable700(942)10,19277710,72715,656(Decrease) increase in advances---11,39811,398-(Decrease) increase in compensated absences(119,617)(1,963)4,768(7,314) (124,126)32,863(Decrease) increase in miscellaneous revenues259,205---259,2055,054Total adjustments2,109,427(19,362)(79,152)33,6332,044,5461,293,723Net cash provided by (used for) operating activities4,191,063(335)(82,789)(14,938) 4,093,001 4,417,482Noncash investing, capital, and financing activities:Contributions of capital assets $ 484,738 $ - $ - $ - $ 484,738 $ -The notes to the financial statements are an integral part of this statement Page 40 Moses Lake Council Packet 4-28-20, Page 82 of 158 CITY OF MOSES LAKE Statement of Net Position Fiduciary Funds December 31, 2018 Agency Funds ASSETSPooled cash & investments $ 948,772Receivables (net of allowance for uncollectibles)1,176 Total assets 949,948 LIABILITIESCustodial accounts payable 949,948 Total liabilities $ 949,948 The notes to the financial statements are an integral part of this statement. Page 41 Moses Lake Council Packet 4-28-20, Page 83 of 158 CITY OF MOSES LAKE Notes to the Financial Statements For the Year Ended December 31, 2018 NOTE 1- Summary of Significant Accounting Policies The financial statements of the City of Moses Lake have been prepared in conformity with generallyaccepted accounting principles (GAAP) as applied to governmental units. The Governmental AccountingStandards Board (GASB) is the accepted standard setting body for establishing governmental accountingand financial reporting principles. The significant accounting policies are described below. A. Reporting Entity The City of Moses Lake was incorporated on September 19, 1938 and operates under the laws of theState of Washington applicable to a non-charter code city with a Council/Manager form of government.The City of Moses Lake provides a full range of municipal services, which include: police, fire,engineering, parks, street, economic development, and administrative services. Included in the City’sEnterprise Fund financial reports are: water and wastewater, Sanitation (or Solid Waste), Ambulance,Airport, and Stormwater. The City has analyzed the rules for component units, and has determined thatthe primary government consists solely of the legal entity of the City. B. Basis of Presentation - Government-Wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement ofactivities) report information on all of the non-fiduciary activities of the primary government. For the mostpart, the effect of inter-fund activity has been removed from these statements. Governmental activities,which normally are supported by taxes and intergovernmental revenues, are reported separately frombusiness-type activities, which rely to a significant extent on fees and charges for support. The statement of activities demonstrates the degree to which the direct expenses of a given function orsegment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Our policy is to allocate indirect costs to a specific function or segment ifthey are non-tax supported. 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 orsegment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included amongprogram revenues are reported instead as general revenues. As a general rule the effect of the interfund activity has been eliminated for the government-wide financialstatements. Separate fund financial statements are provided for governmental funds, proprietary funds, and fiduciaryfunds, even though the latter are excluded from the government-wide financial statements. The majorindividual governmental fund and major individual enterprise funds are reported as separate columns inthe fund financial statements. The City of Moses Lake reports one major governmental fund: Page 42 Moses Lake Council Packet 4-28-20, Page 84 of 158 The General Fund is the City’s operating fund. It accounts for all financial resources of the generalgovernment, except those required or elected to be accounted for in another fund. The City of Moses Lake reports the following major proprietary funds: The Water/Sewer Fund accounts for the activities of the City’s water and sewer utility. Revenues arereceived from water and sewer services provided to the general public. Expenses are comprised ofmaintenance and extensions of drainage, water and sewer service facilities, operating a water supplysystem, maintaining sewer treatment plants and operating a water drainage system. This fund alsoreflects the operation of revenue bonds outstanding, the funds available for redemption of bonds,cumulative reserve and construction funds. The Sanitation Fund accounts for the activities of providing contracted garbage services to its citizens.The fund is self-supporting through user charges and recycling. The Ambulance Fund accounts for the activities of emergency services and transporation of patients.Revenues are Generate by a utility fee for City residences and user charges. Additionally, the City of Moses Lake reports the following fund types: Special Revenue Funds account for revenue from specific taxes or other earmarked revenue sources that by law are designed to finance particular functions or activities of the City. Capital Projects Funds account for financial resources used for the construction and acquisition of majorcapital facilities other than those financed by special assessments or proprietary funds. Debt Service Funds finance and account for the payment of interest and principal on all tax-supporteddebt, serial and term, including those payable from special assessments. Non-major Proprietary Funds account for Airport funds supported by rental charges and Storm Waterfunds supported through user charges. Internal Service Funds account for information service, equipment rental, building maintenance, self-insurance, and unemployment compensation provided to other departments or agencies of the City on acost reimbursement basis. Agency Funds are custodial in nature, representing assets held by the City in an agency capacity for theState of Washington, Grant County and others. These funds report only assets and liabilities and have nomeasurement focus, as the purpose of this type of fund is to simply receive and disburse funds belongingto another organization. Generally, the effect of the Inter-fund activity has been eliminated from the government-wide financial statements. An exception to this general rule is administrative overhead charges where the amounts arereasonably equivalent in value to the inter-fund services provided. Inter-fund charges for governmental services, including utilities and certain internal services, have not been eliminated. Elimination of these Page 43 Moses Lake Council Packet 4-28-20, Page 85 of 158 charges would distort the direct costs and program revenues reported for the various functions concerned. Amounts reported as program revenues include (1) charges to customers, (2) operating grants andcontributions, and (3) capital grants and contributions, including special assessments. Internally dedicatedresources are reported as general revenues rather than program revenues. General revenues include alltaxes. C. Measurement Focus, Basis of Accounting The government-wide financial statements are reported using the economic resource’s measurementfocus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financialstatements. Revenues are recorded when earned and expenses are recorded when a liability is incurred,regardless of the timing of related cash flows. Property taxes are recognized as revenue in the year forwhich they are levied. Grants and similar items are recognized as revenue as soon as all eligibilityrequirements imposed by the provider have been met. Governmental fund financial statements are reported using the current financial resource’s measurementfocus and the modified accrual basis of accounting. Revenues are recognized as soon as they are bothmeasurable and available. Revenues are considered available when they are collectible within the currentperiod or soon enough thereafter to pay liabilities of the current period. For this purpose, the Cityconsiders revenues available if they are collected within 60 days of the end of the current fiscal period.The City considers property taxes as available if they are collected within 60 days after year-end.Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However,debt service expenditures, as well as expenditures related to compensated absences and claims andjudgments, are recorded only when payment is due. Property taxes, licenses, and interest associated within the current period are all considered to be susceptible to accrual and so have been recognized as revenues of the current fiscal period. Only theportion of special assessment receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to bemeasurable and available only when cash is received by the City. The proprietary fund statements are reported using the economic resources measurement focus and full-accrual basis of accounting. Revenues are recorded when earned and expenses are recorded whenliability is incurred regardless of the timing of the cash flows. Proprietary funds distinguish operating revenues and expenses from non-operating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with a proprietary fund’s principal ongoing operation. The principal operating revenues forenterprise funds are customer charges for services. Operating expenses for enterprise funds and internalservice funds include the cost of sales and services, administrative expenses, and depreciation on capitalassets. Revenues and expenses not meeting this definition are reported as non-operating revenues andexpenses. Page 44 Moses Lake Council Packet 4-28-20, Page 86 of 158 D. Budgetary Information Scope of Budget Budgets serve as control mechanisms in the operations of governmental units. Legal budgetary(expenditure) control for the City is at the fund level; i.e., expenditures may not exceed budgetedappropriations at the fund level. However, budget and actual information is kept by department, accountelement, and object for management review of operations. Annual appropriated budgets are adopted for the general and certain special revenue funds on themodified accrual basis of accounting. Budgets for debt service and capital project funds are adopted at thelevel of the individual debt issue or project and for fiscal periods that correspond to the lives of debt issuesor projects. The financial statements include budgetary comparisons for the General Fund and all majorSpecial Revenue funds. Budgets for special revenue funds are required to be prepared, but not requiredto be included in this report. Budgets for proprietary and fiduciary funds, although not legally required, areprepared for operational oversight but are not presented in the financial statements. The FinanceDepartment prepares budgetary comparisons for all funds not presented in this report, which is availableat www.cityofml.com/finance. Appropriations for general and special revenue funds lapse at year-end (except for appropriations forcapital outlays, which are carried forward from year to year until fully expended or the purpose of the appropriation has been accomplished or abandoned). Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders, contracts) outstanding at year-end are reported as a reservation of fund balances and does not constituteexpenditures or liabilities because the commitments will be re-appropriated and honored during the subsequent year. Amending the Budget The City Manager is authorized to transfer budgeted amounts between departments within any fund: however, any revisions that alter the total expenditures of a fund, or that affect the number of authorizedemployee positions, salary ranges, hours, or other conditions of employment must be approved by the City Council. When the Council determines that it is in the best interest of the City to increase or decrease the appropriation for a particular fund, it may do so by ordinance approved by one more than the majority afterholding public hearing(s). The budget amounts shown in the financial statements are the final authorized amounts as revised duringthe year. The financial statements contain the original and final budget information. The original budget is the firstcomplete appropriated budget. The final budget is the original budget adjusted by all reserves, transfers,allocations, supplemental appropriations, and other legally authorized changes applicable for the fiscalyear. Page 45 Moses Lake Council Packet 4-28-20, Page 87 of 158 E. Assets, Liabilities, Fund Balance, Net Position Pooled Cash and Investments It is the City’s policy to invest all temporary cash surpluses. This amount is classified on the balance sheetas pooled cash and investments in various funds. The interest on these investments is prorated to thevarious funds that are statutorily required to receive interest and the balance of the interest is credited tothe General Fund. For purposes of the statement of cash flows, the proprietary fund’s equity in pooled investments isconsidered cash since all of the city’s investments are internally pooled and participating funds use thepool as if it were a demand deposit account. Receivables Taxes receivable consist of property taxes and related interest and penalties (See Property Taxes NoteNo. 4). Accrued interest receivable consists of amounts earned on investments, notes, and contracts atthe end of the year. Special assessments are recorded when levied. Special assessments receivable consist of current anddelinquent assessments and related interest and penalties. Deferred assessments on the fund financialstatements consist of unbilled special assessments that are liens against the property benefitted. Customer accounts receivable consist of amounts owed from private individuals or organizations forgoods and services including amounts owed for which billings have not been prepared. Notes andcontracts receivable consist of amounts owed on open account from private individuals or organizationsfor goods and services rendered. Amounts Due to and From Other Funds and Governments, Interfund Loans and Advances Receivable Activities between funds that are representative of lending/borrowing arrangements outstanding at the endof the fiscal year are referred to as either “Interfund loans receivable/payable” or “advances to/from otherfunds.” All other outstanding balances between funds are reported as “due to/from other funds.” Anyresidual balances outstanding between the governmental activities and business-type activities arereported in the government-wide financial statements as “internal balances.” A separate schedule ofInterfund loans receivable and payable is furnished in Note No. 13, Interfund Balances and Transfers. Advances between funds, as reported in the fund financial statements, are offset by a fund balancereserve account in applicable governmental funds to indicate that they are not available for appropriation and are not expendable available financial resources. Page 46 Moses Lake Council Packet 4-28-20, Page 88 of 158 Inventories Inventories in governmental funds consist of expendable supplies held for consumption. The cost isrecorded as expenditures at the time individual inventory items are purchased. The reserve for inventory isequal to the ending amount of inventory to indicate that a portion of the fund balance is not available forfuture expenditures. A comparison to market value is not considered necessary. Inventories in proprietary funds are valued by the First in First Out method which approximates the marketvalue. Restricted Assets and Liabilities These accounts contain resources for construction and debt service, including current and delinquentspecial assessments receivable, in enterprise funds. The current portion of related liabilities is shown asPayables from Current Restricted Assets. Specific debt service reserve requirements are described inNotes No. 8 & 10, Long-Term Debt. The restricted assets of the enterprise funds are composed of the following: Cash Investments - Debt Service $ 1,312,269 Total Restricted Assets $ 1,312,269 Capital Assets - See Note No. 5, Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets, (e.g., roads, bridges,sidewalks, and similar items) are reported in the applicable governmental or business-type columns in thegovernment-wide financial statements. Capital assets are defined by the City as assets with an initial,individual cost of more than $5,000 and an estimated useful life in excess of one year. Such assets arerecorded at historical cost or estimated historical cost if purchased or constructed. Donated capital assetsare recorded at acquisition value at the date of donation. Costs for additions or improvements to capital assets are capitalized when they increase the effectivenessor efficiency of the asset. The costs for normal maintenance and repairs are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interestincurred during the construction phase of the capital assets of business-type activities is included as partof the capitalized value of the assets constructed. Page 47 Moses Lake Council Packet 4-28-20, Page 89 of 158 Property, plant, and equipment of the primary government, is depreciated using the straight-line methodover the following estimated useful life: Assets Years Buildings/Improvement's 5 - 50Other Improvements 5 - 25Vehicles 5 - 15Machinery & Equipment 5 - 20Utility Infrastructure 20 - 50Streets, Paths, Trails, Stormwater Infrastructure N/ATraffic Signals 40Runway's & Taxiways 12 - 20 Infrastructure capital assets, valued at $50,000 or greater, are long-lived capital assets that are normally stationary in nature and can be preserved for a significantly greater number of years than most capitalassets. Included in the City’s infrastructure are the streets and the bridge network. The City has elected to use the modified approach as defined in GASB Statement No. 34 for infrastructure reporting for stormwater structures, the bridge, paved streets, bike paths, and alleys. Depreciation expenses are not reported for such assets nor are amounts capitalized in connection with improvements that lengthen the lives of theassets unless the improvements also increase the service potential. Deferred Outflows and Inflows of Resources In addition to assets, Statement of Net Position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element represents a consumption of netposition that applies to a future period and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City has two items that qualify for reporting in this category.Deferred charge on debt refunding result from the difference in the carrying value of refunded debt and the reacquisition price. This amount is deferred and amortized over the shorter of the life of the refundedor refunding debt. Deferred outflows related to pension plans are discussed in detail in Note 6 – Pension Plans. In addition to liabilities, the Statement of Net Position will report a separate section for deferred inflows ofresources, which represents an acquisition of net position by the government, which is applicable to afuture reporting period and so will not be recognized as an inflow of resources (revenue) until that time.The City has one item on the Statement of Net Position that qualifies for reporting in this category.Deferred inflows related to pension plans are discussed in detail in Note 6 – Pension Plans. Thegovernmental funds report unavailable revenues from two sources, taxes receivable and otherreceivables. These amounts are deferred and recognized as an inflow of resources in the period that theamounts become available. Compensated Absences Compensated absences are absences for which employees will be paid, such as vacation and sick leave.All vacation and sick pay is accrued when incurred in the government-wide, proprietary, and fiduciary fundfinancial statements. Page 48 Moses Lake Council Packet 4-28-20, Page 90 of 158 Vacation pay, which may be accumulated up to two years of earned annual leave, is payable uponseparation of employment for any reason. Sick leave may be accumulated up to 480 hours for a payoff ofunion exempt employees, and is payable upon voluntary termination with a minimum of 2 weeks notice ora reduction in work force in accordance with the following schedule: Years of Service Percent PayableSick Leave 0-4 105-9 2510-19 5020-29 7530+ 100 For members of the General Union bargaining unit who were City employees and members of the Public Employees Retirement System as of January 1, 1983 and who retire, 50% of accumulated sick leave (to amaximum of 480 hours) will be paid as severance pay. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows ofresources related to pensions, and pension expense, information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans’ fiduciary net position havebeen determined on the same basis as they are reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) arerecognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Other Accrued Liabilities These accounts consist of accrued wages and accrued employee benefits. Long-term Debt (See Note 8 Long-term Debt for more information.) In the government-wide financial statements and proprietary fund types in the fund financial statements,long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts are deferredand amortized over the life of the bonds using the straight-line method. Bonds payable are reported net of the applicable bond premium or discount. See Note 8 Long-term Debt for more information. Fund Balance Classification Fund balance for governmental funds is reported in the following classifications depicting the relativestrength of the constraints, which control how specific amounts can be spent Non-spendable includes fund balances that cannot be spent either because they are not in a spendable form or because of legal or contractual constraints. Page 49 Moses Lake Council Packet 4-28-20, Page 91 of 158 Restricted includes fund balances 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 balances constrained for specific purposes that are internally imposed by the government through formal action (resolution or ordinance) of the highest level of decision making authority, which is the City Council, and may be altered only by a similar formal action of the City Council, Assigned includes fund balances intended to be used for specific purposes that are neither considered restricted or committed. Unassigned includes fund balance is the residual amount of the general fund which has not been classified within the above-mentioned categories. The City uses restricted amounts to be spent first when both restricted and unrestricted fund balance isavailable unless there are legal documents/contracts that prohibit doing this, such as a grant agreementrequiring dollar for dollar spending. Additionally, the City would first use committed fund balance, then assigned fund balance, and lastly unassigned fund balance. Minimum Fund Balance The City has a formal policy on General Fund Balance as follows: “It will be the policy of the City toestablish and maintain a General Fund Balance of at least ten percent (10%) of the total General Fund’sbudgeted revenue, excluding the beginning fund balance and identified one-time revenues. Any and allexpenditures from the General Fund Balance Reserve account shall require a majority vote of the entireCity Council.” NOTE 2- STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY There have been no material violations of finance-related legal or contractual provisions. The City's annual budget process is similar each year. The City's budget procedures are mandated byWashington State Law. The calendar below outlines the general time frame followed to prepare, reviewand adopt the annual budget. Prior to November 15, the City Manager submits a proposed budget to the City Council. This budgetis based on priorities established by the Council and estimates provided by the City departements during the preceding months and balanced with available resources. The Council conducts two public hearings on the proposed budget in November/December to obtaintaxpayer comments. Page 50 Moses Lake Council Packet 4-28-20, Page 92 of 158 The budget is legally enacted by the City Council upon completion of the public hearings by passage of an ordinance. This must be done in December so that the budget is in place on January 1 of thesubsequent year. NOTE 3- DEPOSITS AND INVESTMENTS Deposits The City of Moses Lake maintains a deposit relationship with a Washington State commercial bank that isclassified as a Public Depository. The Public Deposit Protection Commission of the State of Washington(PDPC) covers all deposits not insured by the Federal Depository Insurance Corporation (FDIC). TheFDIC insures the first $250,000.The PDPC is a statutory authority established under RCW 39.58. Itconstitutes a multiple financial institution collateral pool that insures public deposits. In such a pool, agroup of financial institutions holding public funds pledge collateral to a common pool. The PDPCprovides protection by maintaining strict standards as to the amount of public deposits financial institutionscan accept, and by monitoring the financial condition of all public depositories and optimizingcollateralization requirements. At December 31, 2018, the bank balance was $979,162 Investments Investments are subject to the folloiwng risks. Interest rate risk: Interest rate risk is the risk that changes in interest rates of debt investments willadversely affect the fair value of an investment or a deposit. Because the pools indicate they will returnbook value, there is minimal interest rate risk. Credit Risk: Safety of principle is the foremost objective of the City. Investments shall be undertaken in amanner that seeks to ensure the preservation of capital in the overall portfolio. Credit risk is the risk thatan issuer or other counter party to an investment will not fulfill its obligations. The Washington StateInvestment Pool, is like a 2a-7 fund, managed by the State Treasurer’s Office is limited to high qualityobligations with limited maximum and average maturities, which is to minimize both market and credit risk.The pool is unrated but the State of Washington’s Legislature has regulatory oversight. Under the City’s investment policy, all temporary cash surpluses are invested. The City’s investment policyis more conservative to limit risk, investing the portfolio in treasury notes and bills, certificates of deposit with qualified public depositories, and bankers acceptances with a credit rating for A1 or P1 by nationallyrecognized rating organizations. The City’s investments are in compliance with all state investment laws and City investment policies. Concentration of credit risk: Concentration risk is the risk of loss attributed to the magnitude of the City’s investment in a single issuer. The City’s policy states, with the exception of US Treasury securities andauthorized pools, no more than 50% of the portfolio can be invested in a single security type or institution. Custodial credit risk - investments: Custodial risk is the risk that in event of a failure of the counterparty toan investment transaction the City would not be able to recover the value of the investement or collateralsecurities. The City has no custodial risk based on GASB 40 guidelines. Page 51 Moses Lake Council Packet 4-28-20, Page 93 of 158 Investment in Local Government Investment Pool (LGIP) The City of Moses Lake is a participant in the Local Government Investment Pool was authorized byChapter 294, Laws of 1986, and is managed and operated by the Washington State Treasurer. The StateFinance Committee is the administrator of the statute that created the pool and adopts rules. The StateTreasurer is responsible for establishing the investment policy for the pool and reviews the policy annuallyand proposed changes are reviewed by the LGIP advisory Committee. Investments in the LGIP, a qualified external investment pool, are reported at amortized cost whichapproximates fair value. The LGIP is an unrated external investment pool. The pool portfolio is invested ina manner that meets the maturity, quality, diversification and liquidity requirements set forth by the GASBS 79 for external investments pools that elect to measure, for financial reporting purposes, investments atamortized cost. The LGIP does not have any legally binding guarantees of share values. The LGIP does not impose liquidity fees or redemption gates on participant withdrawals. The Office of the State Treasurer prepares a stand-alone LGIP financial report. A copy of the report is available from the Office of the State Treasurer, PO Box 40200, Olympia, Washington 98504-0200, onlineat http://www.tre.wa.gov. Investments in Grant Count Investment Pool (GCIP) The City of Moses Lake is a participant in the Grant County Investment Pool, an external investment pool.The City reports its investment in Grant County Investment Pool (GCIP) at amortized cost rather than fairvalue because the difference between amortized cost and fair value is insignificant. There are nolimitations or restrictions on either pool. The responsibility for managing the pool resides with the CountyTreasurer. The Pool is established from the RCW 36.29 which authorizes the County Treasurer to investthe funds of participants. The county external investment pool does not have a credit rating and had aweighted average maturity of 604 days as of December 31, 2018. As of December 31, 2018 the City had the following investments: Investment Type Fair Value Rating Weighted Average Maturity (days) Grant County Investment Pool $13,046,591 not rated 1194 WA State Investment Pool 15,993,602 not rated 14 Total Fair Value $29,040,193 Portfolio Weighted Average Maturity 604 NOTE 4- PROPERTY TAXES The County Treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. Page 52 Moses Lake Council Packet 4-28-20, Page 94 of 158 Property Tax Calendar January 1 Taxes are levied and become an enforceable lien against properties Febuary 14 Tax bills are mailedApril 30 First of two equal installment payments dueMay 31 Assessed value of property established for next year's levy at 100% of market valueOctober 31 Second installment is due Property tax is recorded as a receivable and revenue when levied. Property tax collected in advance of thefiscal year to which it applies is recorded as deferred inflow and recognized as revenue of the period towhich it applies. No allowance for uncollectible tax is established because delinquent taxes are consideredfully collectible. Prior year tax levies were recorded using the same principal, and delinquent taxes areevaluated annually. The City may levy up to $3.6 per $1,000 of assessed valuation for general governmental services. TheCity’s regular levy for 2018 was $3.3228 per $1,000 on an assessed valuation of $2,082,206,538 for a total regular levy of $6,918,721. Washington State Constitution and Washington State law, RCW 84.55.010, limit the rate. NOTE 5- CAPITAL ASSETS A summary of Governmental capital assets for the year ended December 31, 2018 were as follows: Governmental Activities BeginningBalance Increases Decreases EndingBalance Capital Assets Not Depreciated:Land $ 5,560,986 $ - $ - $ 5,560,986Infrastructure* 38,941,839 869,884 - 39,811,723CIP - 2,295,285 (850,290) 1,444,995 Total Non-Depreciated 44,502,825 3,165,169 850,290 46,817,704 Capital Assets Depreciated:Buildings 34,726,101 205,352 40,475 34,890,978Intangible 147,051 - - 147,051Machinery and Equipment 14,785,370 845,593 20,772 15,610,191Infrastructure 1,590,338 76,176 - 1,666,514 Total Depreciated 51,248,860 1,127,121 61,247 52,314,734 Less Accumulated Depreciation:Buildings 14,491,768 951,114 15,381 15,427,501Intangible 147,051 - - 147,051 Machinery and Equipment 9,699,994 796,968 20,772 10,476,190Infrastructure 1,020,982 41,663 - 1,062,645 Total Accumulated Depreciation 25,359,795 1,789,745 36,153 27,113,387 Total Capital Assets Depreciated, Net 25,889,065 (662,624) (25,094) 25,201,347 Governmental ActivitiesCapital Assets, Net $70,391,890 $ 2,502,545 $ (875,384) $72,019,051 Page 53 Moses Lake Council Packet 4-28-20, Page 95 of 158 Governmental Activities BeginningBalance Increases Decreases EndingBalance Less associated debt (4,955,647) Capital assets net of debt $67,063,404 *The City accounts for the city streets, alleys, parking lots, boat ramps/landings, bike/jogging paths,bridges and storm drains using the modified approach and reports them as non- depreciableInfrastructure. Under the modified approach, rather than recording depreciation, asset condition isreported. The City includes internal service fund assets as part of governmental totals above. Depreciationincludes amortization of intangible assets. Page 54 Moses Lake Council Packet 4-28-20, Page 96 of 158 Depreciation expense was charged to functions/programs of the primary government as follows: Governmental Activities Depreciation General Government $ 38,935Public Safety 39,978Transportation 44,831Public Works 13,634Culture and Recreation 586,506Capital Assets Held by the Government's Internal ServiceFunds, changed to the various functions based onusage 1,065,860 Total Depreciation - Governmental Activities $ 1,789,744 A summary of Business-type capital assets for the year ended December 31, 2018 were as follows: Business-type Activities BeginningBalance Increase Decreases EndingBalance Capital Assets Not Depreciated:Land $ 987,904 $ - $ - $ 987,904Infrastructure 6,287,433 191,753 - 6,479,186CIP 1,378,479 2,854,221 3,503,214 729,486Intangible 285,127 - - 285,127 Total Non-Depreciated 8,938,943 3,045,974 3,503,214 8,481,703 Capital Assets Depreciated: Buildings 40,717,401 - - 40,717,401Machinery and Equipment 4,840,115 1,298,705 - 6,138,820Infrastructure 75,722,831 1,107,533 - 76,830,364 Total Depreciated 121,280,347 2,406,238 -123,686,585 Less Accumulated Depreciation:Buildings 13,429,149 808,100 - 14,237,249Machinery and Equipment 1,543,762 150,131 - 1,693,893Infrastructure 30,107,702 1,493,478 - 31,601,180 Total Accumulated Depreciation 45,080,613 2,451,709 -47,532,322 Total Capital Assets Depreciated, Net 76,199,734 (45,471)- 76,154,263 Business-type ActivitiesCapital Assets, Net $ 85,138,677 $ 3,000,503 $ (3,503,214) $ 84,635,966 Less associated debt (6,571,678)Less non capital lease obligation Capital assets net of debt $ 78,064,288 Page 55 Moses Lake Council Packet 4-28-20, Page 97 of 158 Depreciation expense charged to Business Type Activities were as follows: Business-Type Activities Depreciation Water/Sewer $ 2,372,363Stormwater 18,149Ambulance27,560Airport33,638 Total Depreciation - Business - Type Activities $ 2,451,710 Collections Not Capitalized The City has a collection of Indian artifacts that have been acquired over the years, the “Adam EastCollection.” This collection is held at the Moses Lake Museum and Art Center and is determined to beexempt from capitalization. This collection meets all the exemption requirements as follows: 1. The collection is held for public exhibition, education or research in furtherance of public service, rather than financial gain. 2. The collection is protected, kept unencumbered, cared for, and preserved. 3. The collection is subject to Moses Lake Museum & Art Center Collection Policy section VI: Dwhich requires the proceeds from sales of collection items to be used to acquire other items forthe collection. Construction Commitments The City has active construction projects as of December 31, 2018. The only active project with a significant outstanding commitment is improvements to Lakeshore Drive Water Main Improvement andWell 31B Development. Water Capital reserves will be used to liquidate the commitment. Project Total ContractAmountAwarded Spent to Date RemainingCommitment Lakeshore Dr. water main improvement $270,000$7,183$ 262,817Well 31B development 1,000,000 10,619 989,381 Total $ 1,270,000 $ 17,802 $ 1,252,198 Page 56 Moses Lake Council Packet 4-28-20, Page 98 of 158 NOTE 6- PENSION PLANS The following table represents the aggregate pension amounts for all plans subject to the requirements ofthe GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2018. Aggregate Pension Amounts - All Plans Pension Liabilities $ (3,611,324) Pension Assets $ 4,011,675Deferred outflows of resources $ 1,064,962 Deferred inflows of resources $ (2,753,556)Pension expense/expenditures $ (153,045) State Sponsored Pension Plans Substantially all the City’s full-time and qualifying part-time employees participate in one of the followingstatewide retirement systems administered by the Washington State Department of Retirement Systems,under cost-sharing, multiple-employer public employee defined benefit and defined contribution retirementplans. The state Legislature establishes, and amends, laws pertaining to the creation and administration ofall public retirement systems. The Department of Retirement Systems (DRS), a department within the primary government of the Stateof Washington, issues a publicly available comprehensive annual financial report (CAFR) that includesfinancial statements and required supplementary information for each plan. The DRS CAFR may beobtained by writing to: Department of Retirement Systems Communications Unit P.O. Box 48380 Olympia, WA 98540-8380 Alternatively, the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov. Public Employees' Retirement System (PERS) PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees oflocal governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component. PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service.The AFC is the average of the member’s 24 highest consecutive service months. Members are eligible Page 57 Moses Lake Council Packet 4-28-20, Page 99 of 158 for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25years of service, or at age 60 with at least five years of service. Members retiring from active status priorto the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reduced toreflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, anoptional cost-of-living adjustment (COLA), and a one-time duty-related death benefit, if found eligible bythe Department of Labor and Industries. PERS 1 members were vested after the completion of five yearsof eligible service. The plan was closed to new entrants on September 30, 1977. Contributions The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employercontribution rate is developed by the Office of the State Actuary and includes an administrative expensecomponent that is currently set at 0.18 percent. Each biennium, the state Pension Funding Counciladopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as apercentage of covered payroll) for 2018 were as follows: PERS Plan 1 Actual Contribution Rates:Employer Employee* January - August 2018PERS Plan 1 7.49 6.00PERS Plan1 UAAL 5.03 -Administrative Fee 0.18 - Total 12.70 6.00 September - December 2018 PERS Plan 1 7.52 6.00Pers Plan 1 UAAL 5.13 -Administrative Fee 0.18 - Total 12.83 6.00 * For employees participating in JBM, the contribution rate was 12.26% PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined astwo percent of the member’s average final compensation (AFC) times the member’s years of service forPlan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member’s 60 highest-paidconsecutive service months. There is no cap on years of service credit. Members are eligible forretirement with a full benefit at 65 with at least five years of service credit. Retirement before age 65 isconsidered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit andare 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor thatvaries according to age for each year before age 65. PERS Plan 2/3 members who have 30 or moreyears of service credit and are at least 55 years old can retire under one of two provisions: With a benefit that is reduced by three percent for each year before age 65; or With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return-to- work rules. Page 58 Moses Lake Council Packet 4-28-20, Page 100 of 158 PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting areduction of five percent for each year of retirement before age 65. This option is available only to thosewho are age 55 or older and have at least 30 years of service credit. PERS Plan 2/3 retirement benefitsare also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefitsinclude duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped atthree percent annually and a one-time duty related death benefit, if found eligible by the Department ofLabor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3members are vested in the defined benefit portion of their plan after ten years of service; or after fiveyears of service if 12 months of that service are earned after age 44. PERS Plan 3 defined contribution benefits are totally dependent on employee contributions andinvestment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established bystatute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits.PERS Plan 3 members are immediately vested in the defined contribution portion of their plan. Contributions The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the StateActuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates includea component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employeecontribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates(expressed as a percentage of covered payroll) for 2018 were as follows: PERS Plan 2/3 Actual Contribution Rates: January-June2018 Employer Employee* January - August 2018:PERS Plan 2/3 7.49 7.38 PERS Plan 1 UAAL 5.03 -Administrative Fee 0.18 - Employee PERS Plan 3 - Varies Total 12.70 7.38 September - December 2018: PERS Plan 2/3 7.52 7.41PERS Plan 1 UAAL 5.13 - Administrative Fee 0.18 -Employee PERS Plan 3 - Varies Total 12.83 7.41 * For employees participating in JBM, the contribution rate was 18.45% to 18.53% The City’s actual PERS plan contributions were $376,341 to PERS Plan 1 and $557,483 to PERS Plan2/3 for the year ended December 31, 2018. Law Enforcement Officers' and Fire Fighters' Retirement System (LEOFF) Page 59 Moses Lake Council Packet 4-28-20, Page 101 of 158 LEOFF membership includes all full-time, fully compensated, local law enforcement commissionedofficers, firefighters, and as of July 24, 2005, emergency medical technicians. LEOFF is comprised of twoseparate defined benefit plans. LEOFF Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined peryear of service calculated as a percent of final average salary (FAS) as follows: 20+ years of service – 2.0% of FAS 10-19 years of service – 1.5% of FAS 5-9 years of service – 1% of FAS The FAS is the basic monthly salary received at the time of retirement, provided a member has held thesame position or rank for 12 months preceding the date of retirement. Otherwise, it is the average of thehighest consecutive 24 months’ salary within the last ten years of service. Members are eligible forretirement with five years of service at the age of 50. Other benefits include duty and non-duty disabilitypayments, a cost-of living adjustment (COLA), and a one-time duty-related death benefit, if found eligibleby the Department of Labor and Industries. LEOFF 1 members were vested after the completion of fiveyears of eligible service. The plan was closed to new entrants on September 30, 1977. Contributions Starting on July 1, 2000, LEOFF Plan 1 employers and employees contribute zero percent, as long as theplan remains fully funded. The LEOFF Plan I had no required employer or employee contributions forfiscal year 2018. Employers paid only the administrative expense of 0.18 percent of covered payroll. LEOFF Plan 2 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the final average salary (FAS) per year of service (the FAS is based on the highestconsecutive 60 months). Members are eligible for retirement with a full benefit at 53 with at least five years of service credit. Members who retire prior to the age of 53 receive reduced benefits. If themember has at least 20 years of service and is age 50, the reduction is three percent for each year prior to age 53. Otherwise, the benefits are actuarially reduced for each year prior to age 53. LEOFF 2 retirementbenefits are also actuarially reduced to reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped at three percentannually and a one-time duty-related death benefit, if found eligible by the Department of Labor andIndustries. LEOFF 2 members are vested after the completion of five years of eligible service. Contributions The LEOFF Plan 2 employer and employee contribution rates are developed by the Office of the StateActuary to fully fund Plan 2. The employer rate included an administrative expense component set at 0.18percent. Plan 2 employers and employees are required to pay at the level adopted by the LEOFF Plan 2Retirement Board. Effective July 1, 2017, when a LEOFF employer charges a fee or recovers costs for services rendered bya LEOFF 2 member to a non-LEOFF employer, the LEOFF employer must cover both the employer andstate contributions on the LEOFF 2 basic salary earned for those services. Page 60 Moses Lake Council Packet 4-28-20, Page 102 of 158 The LEOFF Plan 2 required contribution rates (expressed as a percentage of covered payroll) for 2018were as follows: LEOFF Plan 2 Actual Contribution Rates: Employer Employee State and local governments %5.25 %8.75Administrative fee %0.18 %- Total %5.43 %8.75 Ports and Universities %8.75 %8.75Administrative fee %0.18 %- Total %8.93 %8.75 The City’s actual contributions to the plan were $309,397 for the year ended December 31, 2018. The Legislature, by means of a special funding arrangement, appropriates money from the state GeneralFund to supplement the current service liability and fund the prior service costs of Plan 2 in accordancewith the recommendations of the Pension Funding Council and the LEOFF Plan 2 Retirement Board. Thisspecial funding situation is not mandated by the state constitution and could be changed by statute. Forthe state fiscal year ending June 30, 2018, the state contributed $68,152,127 to LEOFF Plan 2. Theamount recognized by the City as its proportionate share of this amount is $190,649. Actuarial Assumptions The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarialvaluation completed in 2018 with a valuation date of June 30, 2017. The actuarial assumptions used inthe valuation were based on the results of the Office of the State Actuary’s (OSA) 2007-2012 Experience Study and the 2017 Economic Experience Study. Additional assumptions for subsequent events and law changes are current as of the 2017 actuarialvaluation report. The TPL was calculated as of the valuation date and rolled forward to the measurementdate of June 30, 2018. Plan liabilities were rolled forward from June 30, 2017, to June 30, 2018, reflectingeach plan’s normal cost (using the entry-age cost method), assumed interest and actual benefit payments. Inflation: 2.75% total economic inflation; 3.50% salary inflation Salary increases: In addition to the base 3.50% salary inflation assumption, salaries are also expected to grow by promotions and longevity. Investment rate of return: 7.4% Mortality rates were based on the RP-2000 report’s Combined Healthy Table and Combined DisabledTable, published by the Society of Actuaries. The OSA applied offsets to the base table and recognizedfuture improvements in mortality by projecting the mortality rates using 100 percent Scale BB. Mortalityrates are applied on a generational basis; meaning, each member is assumed to receive additionalmortality improvements in each future year throughout his or her lifetime. Page 61 Moses Lake Council Packet 4-28-20, Page 103 of 158 There were changes in methods and assumptions since the last valuation. Lowered the valuation interest rate from 7.70% to 7.50% for all systems except LEOFF 2. For LEOFF 2 the valuation interest rate was lowered from 7.50% to 7.40%. Lowered the assumed general salary growth from 3.75% to 3.50% for all systems. Lowered assumed inflation from 3.00% to 2.75% for all systems. Modified how the valuation software calculates benefits paid to remarried duty-related death survivors of LEOFF 2 members. Updated the trend that the valuation software uses to project medical inflation for LEOFF 2 survivors of a duty-related death, and for certain LEOFF 2 medical-related duty disability benefits. Discount Rate The discount rate used to measure the total pension liability for all DRS plans was 7.4 percent. To determine that rate, an asset sufficiency test included an assumed 7.5 percent long-term discount rateto determine funding liabilities for calculating future contribution rate requirements. (All plans use 7.5percent except LEOFF 2, which has assumed 7.4 percent). Consistent with the long-term expected rateof return, a 7.4 percent future investment rate of return on invested assets was assumed for the test.Contributions from plan members and employers are assumed to continue being made at contractuallyrequired rates (including PERS 2/3, PSERS 2, SERS 2/3, and TRS 2/3 employers, whose rates include acomponent for the PERS 1, and TRS 1 plan liabilities). Based on these assumptions, the pension plans’fiduciary net position was projected to be available to make all projected future benefit payments of currentplan members. Therefore, the long-term expected rate of return of 7.4 percent was used to determine thetotal liability. Long-Term Expected Rate of Return The long-term expected rate of return on the DRS pension plan investments of 7.4 percent was determined using a building-block-method. In selecting this assumption, the Office of the State Actuary(OSA) reviewed the historical experience data, considered the historical conditions that produced pastannual investment returns, and considered capital market assumptions and simulated expectedinvestment returns provided by the Washington State Investment Board (WSIB). The WSIB uses thecapital market assumptions and their target asset allocation to simulate future investment returns overvarious time horizons. Estimated Rates of Return by Asset Class Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’starget asset allocation as of June 30, 2018, are summarized in the table below. The inflation componentused to create the table is 2.2 percent and represents the WSIB’s most recent long-term estimate ofbroad economic inflation. Page 62 Moses Lake Council Packet 4-28-20, Page 104 of 158 Asset Class Target Allocation % Long-TermExpected Rate ofReturn Arithmetic Fixed Income %20.00 %1.70Tangible Assets %7.00 %4.90Real Estate %18.00 %5.80Global Equity %32.00 %6.30Private Equity %23.00 %9.30 Total %100.00 %- Sensitivity of the Net Pension Liability/(Asset) The table below presents the City’s proportionate share of the net pension liability calculated using thediscount rate of 7.4 percent, as well as what the City’s proportionate share of the net pension liabilitywould be if it were calculated using a discount rate that is 1-percentage point lower (6.4 percent) or 1-percentage point higher (8.4 percent) than the current rate. 1% Decrease(6.4%) CurrentDiscount Rate(7.4%)1% Increase(8.4%) PERS 1 $ 2,989,299 $ 2,432,425 $ 1,950,061PERS 2/3 $ 5,392,312 $ 1,178,899 $ (2,275,629)LEOFF 1 $ (448,979) $ (564,385) $ (663,743)LEOFF 2 $ (458,425) $ (3,447,290) $ (5,885,057) Pension Plan Fiduciary Net Position Detailed information about the State’s pension plans’ fiduciary net position is available in the separatelyissued DRS financial report. Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and DeferredInflows of Resources Related to Pensions At June 30, 2018, the City reported a net pension asset of $4,011,675 for its proportionate share of the netpension liabilities as follows: Liability (or Asset) PERS 1 $ 2,432,425PERS 2/3 $ 1,178,899LEOFF 1 $ (564,385)LEOFF 2 $ (3,447,290) The amount of the asset reported above for LEOFF Plans 1 and 2 reflects a reduction for State pensionsupport provided to the City. The amount recognized by the City as its proportionate share of the netpension asset, the related State support, and the total portion of the net pension asset that was associatedwith the City were as follows: Page 63 Moses Lake Council Packet 4-28-20, Page 105 of 158 LEOFF 1 Asset LEOFF 2 Asset Employer's proportionate share $ (564,385)$ (3,447,290) State's proportionate share of the netpension asset associated with theemployer $ (3,817,487) $ (2,232,055) Total $ (4,381,872)$ (5,679,345) At June 30, the City’s proportionate share of the collective net pension liabilities was as follows: ProportionateShare 6/30/2017 ProportionateShare 6/30/2018 Change inProportion PERS 1 %0.056 %0.054 %0.002PERS 2/3 %0.071 %0.069 %0.002 LEOFF 1 %0.031 %0.031 %-LEOFF 2 %0.175 %0.170 %0.005 Employer contribution transmittals received and processed by the DRS for the fiscal year ended June 30are used as the basis for determining each employer’s proportionate share of the collective pensionamounts reported by the DRS in the Schedules of Employer and Non-employer Allocations for all plansexcept LEOFF 1. LEOFF Plan 1 allocation percentages are based on the total historical employer contributions to LEOFF 1from 1971 through 2000 and the retirement benefit payments in fiscal year 2018. Historical data wasobtained from a 2011 study by the Office of the State Actuary (OSA). In fiscal year 2018, the state of Washington contributed 87.12 percent of LEOFF 1 employer contributions and all other employerscontributed the remaining 12.88 percent of employer contributions. LEOFF 1 is fully funded and no further employer contributions have been required since June 2000. If the plan becomes underfunded, funding ofthe remaining liability will require new legislation. The allocation method the plan chose reflects the projected long-term contribution effort based on historical data. In fiscal year 2018, the state of Washington contributed 39.30 percent of LEOFF 2 employer contributions pursuant to RCW 41.26.725 and all other employers contributed the remaining 60.70 percent of employercontributions. The collective net pension liability (asset) was measured as of June 30, 2018, and the actuarial valuationdate on which the total pension liability (asset) is based was as of June 30, 2017, with update proceduresused to roll forward the total pension liability to the measurement date. Pension Expense For the year ended December 31, 2018, the City recognized pension expense as follows: Pension Expense PERS 1 $131,525PERS 2/3 $(68,814)LEOFF 1 $(94,974) LEOFF 2 $(120,780) Total $(153,043) Page 64 Moses Lake Council Packet 4-28-20, Page 106 of 158 Deferred Outflows of Resources and Deferred Inflows of Resources At December 31, 2018, the City reported deferred outflows of resources and deferred inflows of resourcesrelated to pensions from the following sources: PERS 1 DeferredOutflows of Resources DeferredInflows of Resources Net different between projected and actual investment earnings on pension plan investments $ - $ (96,663)Contributions subsequent to the measurement date $ 190,220 $ - Total $ 190,220 $ (96,663) PERS 2/3 Deferred Outflows ofResources Deferred Inflows ofResources Differences between expected and actual experience $ 144,502 $ (206,404)Net difference between projected and actual investment earnings on pension plan investments $ - $ (723,427)Changes in assumptions $ 13,791 $ (335,505)Changes in proportion and differences between contributions andproportionate share of contributions $ - $ (116,193)Contributions subsequent to the measurement date $ 280,760 $ - Total $ 439,053 $ (1,381,529) LEOFF 1 DeferredOutflows ofResources DeferredInflows ofResources Net difference between projected and actual investment earnings onpension plan investments $ - $ (45,820) Total $- $ (45,820) LEOFF 2 DeferredOutflows of Resources DeferredInflows of Resources Differences between expected and actual experience $ 184,665 $ (80,046) Net different between projected and actual investment earnings onpension plan investment $ - $ (603,322)Changes in assumptions $ 1,951 $ (494,748)Changes in proportion and differences between contributions andproportionate share of contributions $ 86,679 $ (51,428)Contributions subsequent to the measurement date $ 162,393 $ - Total $ 435,688 $ (1,229,544) Page 65 Moses Lake Council Packet 4-28-20, Page 107 of 158 All Plans DeferredOutflows ofResources DeferredInflows ofResources Difference between expected and actual experience $ 329,167 $ (286,450)Net difference between projected and actual investment earnings onpension plan investments $ - $ (1,469,232)Changes of assumptions $ 15,742 $ (830,253)Changes in proportion and differences between contributions andproporionate share of contributions $ 86,679 $ (167,621)Net difference between projected and actual investment earnings onpension plan investments $ 633,373 $ - Total $ 1,064,961 $ (2,753,556) Deferred outflows of resources related to pensions resulting from the City’s contributions subsequent tothe measurement date will be recognized as a reduction of the net pension liability in the year endedDecember 31, 2018. Other amounts reported as deferred outflows and deferred inflows of resourcesrelated to pensions will be recognized in pension expense as follows: Year Ended December 31: PERS Plan 1 PERS Plan 2/3 LEOFF Plan 1 LEOFF Plan 2 2019 $4,229$ (142,395)$44$ (61,054)2020 $ (21,131) $ (258,145) $ (10,337) $ (152,401)2021 $ (63,409) $ (459,529) $ (28,153) $ (347,172)2022 $ (16,353) $ (180,699) $ (7,374) $ (135,356)2023 $ - $ (77,418) $ - $ (49,823)Thereafter $ - $ (105,049) $ - $ (210,444) Local Governments Firemens’ Pension Plan The City of Moses Lake is also the administrator of a pension retirement plan called Firemen’s Pension Plan, which is a closed, single-employer, defined benefit pension plan that was established inconformance with RCW Chapter 41.16 and 41.18. The plan provides retirement and disability benefits, annual cost-of-living adjustments, and death benefits to plan members and beneficiaries. These benefitprovisions are established by the State Legislature. Membership is limited to firefighters employed prior to March 1, 1970, when the LEOFF retirement system was established. The City’s obligation under the Firemen’s Pension Plan consists of paying the difference between pensionbenefits provided by LEOFF and those provided by the Firemen’s’ Pension Plan for covered firefighterswho retire after March 1, 1970. Membership of the Firemen's Pension Plan December 31, 2018 Retirees currently receiving full retirement benefits through LEOFF 6 Retirees receiving benefits through both LEOFF and FPP 2Beneficiaries receiving benefits through FPP 3 Active plan members'- Page 66 Moses Lake Council Packet 4-28-20, Page 108 of 158 Contributions Current contributions to the plan are comprised of interest on investments and the state tax on fireinsurance. Pension payments increase by Cost of Living Allowances (COLAs) from the Washington StateRetirement system. Medical insurance premiums and service costs were paid from the general fund firedepartment in 2015, therefore 2015 forward, 100% of pension fund assets are available for pensionpayments. COLAs are capped at three percent and will remain below projected increases in MedicalInsurance Premiums. Assets, medical service costs, and premiums from the Firemen's Pension Plan areas follows: Schedule of Funding Progress for Firemens’ Pension Plan ActuarialValuation Date Value ofAssets(a) Actuarial AccruedLiability(AAL)(b) UnfundedAAL (UAAL)(b-a)Funded Ratio(a/b) CoveredPayroll(c) UAAL as a Percentageof CoveredPayroll([b-a]/c) 12/31/2015 $ 318,517 $ 146,871 $ (171,646)%217 $ -%-12/31/2016 330,371 153,324 (177,047)%215 -%-12/31/2017 343,215 212,009 (131,206)%162 -%-12/31/2018 $ 357,908 $ 192,593 $ (165,315)%186 $ -%- Note: 2015 first year of actuarial valuation of pension plan without OPEB. Schedule of Employer Contributions for the Firemens' Pension Plan FiscalYearEnding ActualEmployerContribution FireInsurancePremiums TotalEmployerContributions AnnualRequiredContributions(ARC) Percentageof ARCContributed 12/31/2015 $ - $ 29,272 $ 29,272 $ (10,105) $ -12/31/2016 - 28,586 28,586 (8,534) -12/31/2017 - 30,190 30,190 (6,206) -12/31/2018 $ - $ 29,791 $ 29,791 $ (8,794) $ - Note: 2015 first year of actuarial valuation of pension plan without OPEB 2018 Annual required conitrbution (ARC)1. Amortization of UAAL-beginning of year $ (10,960)2. Interest to end of year (238) 3. ARC at end of year (11,198)Interest on NPO (207)Adjustment to ARC 2,610Annual pension cost (8,794)Employer contributions 29,791 Change in NPO (38,585)NPO at beginning of year (112,893) NPO at end of year $ (151,478) Page 67 Moses Lake Council Packet 4-28-20, Page 109 of 158 Net Pension Obligation Trend Information Fiscal YearEnding AnnualPension Cost(APC) AnnualPension CostsContributed Contribution as a Percentof APC Net Pension Obligation(NPO) 12/31/2014 $ - $ 28,955 %-$ -12/31/2015 (10,105) 29,272 %290 (39,377) 12/31/2016 (8,534) 28,586 %335 (76,497)12/31/2017 (6,206) 30,190 %486 (112,893)12/31/2018 $ (8,794) $ 29,791 %339 $ (151,478) Note: 2015 first year of actuarial valuation of pension plan without OPEB Deferred Compensation Plans The City of Moses Lake offers its employees a deferred compensation plan created in accordance withInternal Revenue Service Code Section 457. Employees are offered a choice of plans with ICMARetirement Corporation or the State of Washington Deferred Compensation Program. The plan, availableto all employees, permits them to defer a portion of their salary until future years. The deferredcompensation is not available to employees until termination, retirement, death, or an unforeseeableemergency. The plan’s funds, held in trust for the exclusive benefit of the participants and theirbeneficiaries, are not included in the presentation of the City’s financial reports. NOTE 7- RISK MANAGEMENT The City of Moses Lake is a member of the Washington Cities Insurance Authority (WCIA). Utilizing Chapter 48.62 RCW (self-insurance regulation) and Chapter 39.34 RCW (Interlocal CooperationAct), nine cities originally formed WCIA on January 1, 1981. WCIA was created for the purpose ofproviding a pooling mechanism for jointly purchasing insurance, jointly self-insuring, and / or jointlycontracting for risk management services. WCIA has a total of 160 members. New members initially contract for a three-year term, and thereafter automatically renew on an annual basis. A one-year withdrawal notice is required before membership can be terminated. Termination doesnot relieve a former member from its unresolved loss history incurred during membership. Liability coverage is written on an occurrence basis, without deductibles. Coverage includes general,automobile, police, errors or omissions, stop gap, employment practices and employee benefits liability. Limits are $4 million per occurrence in the self-insured layer, and $16 million in limits above the self-insured layer is provided by reinsurance. Total limits are $20 million per occurrence subject to aggregatesand sublimits. The Board of Directors determines the limits and terms of coverage annually. Insurance for property, automobile physical damage, fidelity, inland marine, and boiler and machinerycoverage are purchased on a group basis. Various deductibles apply by type of coverage. Propertycoverage is self-funded from the members’ deductible to $750,000, for all perils other than flood andearthquake, and insured above that to $300 million per occurrence subject to aggregates and sublimits.Automobile physical damage coverage is self-funded from the members’ deductible to $250,000 and Page 68 Moses Lake Council Packet 4-28-20, Page 110 of 158 insured above that to $100 million per occurrence subject to aggregates and sublimits. In-house services include risk management consultation, loss control field services, and claims andlitigation administration. WCIA contracts for certain claims investigations, consultants for personnel andland use issues, insurance brokerage, actuarial, and lobbyist services. WCIA is fully funded by its members, who make annual assessments on a prospectively rated basis, asdetermined by an outside, independent actuary. The assessment covers loss, loss adjustment,reinsurance and other administrative expenses. As outlined in the interlocal, WCIA retains the right toadditionally assess the membership for any funding shortfall. An investment committee, using investment brokers, produces additional revenue by investment ofWCIA’s assets in financial instruments which comply with all State guidelines. A board of Directors governs WCIA, which is comprised of one designated representative from eachmember. The Board elects an Executive Committee and appoints a Treasurer to provide general policydirection for the organization. The WCIA Executive Director reports to the Executive Committee and isresponsible for conducting the day to day operations of WCIA. The City of Moses Lake maintains insurance against most normal hazards except for unemploymentcompensation where the City has elected to become self-insured. The City also has set aside monies forpossible future self-insurance for accident insurance and this self-insures the first $50,000. Independent claims managers’ process claims. Based on the claims manager’s estimates, the City’s estimated liabilityfor possible losses at December 31, 2018 were as follows: Unemployment Compensation $ 11,551 Claims settlements and loss expenses are accrued in the unemployment compensation fund for theestimated settlement value of both reported and unreported claims. This fund is responsible for collecting interfund premiums from insured funds and departments and for paying claim settlements. Interfundpremiums are assessed on the basis of claims experience and are reported as revenues and expenses or expenditures. The amount of unemployment claims paid for the last three years are: 2016 2017 2018 $26,993 $26,888 $36,934 NOTE 8- LONG-TERM DEBT A. LONG-TERM DEBT The City of Moses Lake has issued general obligation and revenue bonds to finance the purchase of landor building upgrades and the acquisition or construction of reservoirs, an aquatic center, water and sewer lines and upgrade of wastewater treatment plants. Bonded indebtedness has also been entered intocurrently and in prior years to advance refund several general obligation and revenue bonds. General obligation bonds have been issued for both general government and business-type activities and are Page 69 Moses Lake Council Packet 4-28-20, Page 111 of 158 being repaid from the applicable resources. The revenue bonds are being repaid by proprietary fundrevenues. General obligation bonds currently outstanding are as follows: Name of Issuance Maturity Original Interest Amount Issuance Purpose Date Date Debt Rate Outstanding 2010 LTGO Civic Center 09/07/2010 12/01/2020 $ 5,925,000 2.00- $ 1,310,000 Bond 3.25% 2012 LTGO Govt'l - Internal 12/12/2012 09/01/2023 1,650,000 .75- 855,000 Bond Service Refunding 3.00% 2015 LTGO Govt'l Activities 7/14/15 8/1/2026 2,970,833 3.00 - 2,566,667 Bond Refunding 4.00% 2015 LTGO Operation 07/14/2015 08/01/2026 594,167 3.00- 513,333 Bond Complex Refunding 4.00% Total $ 11,140,000 $ 5,245,000 The annual debt service requirements to maturity for general obligation bonds are as follows: Governmental Activities Business-Type Activities Year Principal Interest Principal Interest TotalPrincipal Total Interest 2019 $ 1,092,500 $ 160,446 $ 57,500 $ 18,767 $ 1,150,000 $ 179,2132020 1,125,833 127,671 59,167 17,042 1,185,000 144,7132021 475,000 92,233 60,000 15,267 535,000 107,5002022 483,333 77,983 61,667 13,467 545,000 91,4502023 500,833 60,400 64,167 11,000 565,000 71,4002024-2027 1,054,167 85,500 210,833 17,100 1,265,000 102,600 Total $ 4,731,666 $ 604,233 $ 513,334 $ 92,643 $ 5,245,000 $ 696,876 Revenue bonds currently outstanding are as follows: Issuance Maturity InterestBond Date Date Original Debt Rate Balance Revenue Bonds '04 10/13/2004 9/01/2024 $ 7,015,000 5.00%$ 4,285,000-Revenue Bonds '11 08/23/2011 9/01/2021 4,905,000 2.5-3.25% 1,590,000 Total $ 11,920,000 $ 5,875,000 Revenue bond debt service requirements to maturity are as follows: Page 70 Moses Lake Council Packet 4-28-20, Page 112 of 158 Year Principal Interest Total 2019 $ 975,000 $ 263,350 $ 1,238,3502020 1,015,000 226,188 1,241,1882021 1,060,000 184,713 1,244,7132022 545,000 141,250 686,2502023 1,110,000 114,000 1,224,0002024-2025 1,170,000 58,500 1,228,500 Total $ 5,875,000 $ 988,001 $ 6,863,001 Per Internal Revenue Service Code Section 148, rebate arbitrage are earnings on investments purchasedfrom gross proceeds of a bond issue that are in excess of the amount that would have been earned if theinvestments were invested at a yield equal to the yield on the bond issue. The rebate arbitrage must bepaid to the federal government. The City of Moses Lake carefully monitors investments to restrict earningsto a yield less than the bond issue, and therefore limit any arbitrage liability. As of December 31, 2018 theCity has no arbitrage rebate liability. Government Loans Government loans have been received to provide for construction of proprietary fund capital. The City participates in a program administered by the state's Department of Community Development on behalf ofthe Public Works Trust Fund (PWTF) Board. The program provides low interest loans for local infrastructure projects. Government loans for improvements at Wastewater Treatement Plant (WWTP)outstanding at year-end are as follows: Loan Interest Rate Amount PWTF WWTP-Design .50%$ 96,841PWTF WWTP-Construction .50% 2,117,647 Total $ 2,214,488 The annual debt service requirements to maturity for Government loans are as follows: Year Principal Interest Total 2019 $ 561,692 $ 11,072 $ 572,7642020 561,692 8,237 569,9292021 561,692 5,456 567,1482022 529,412 2,647 532,059 Total $ 2,214,488 $ 27,412 $ 2,241,900 In proprietary funds, unamortized debt issue costs are recorded as deferred inflow and bonds are displayed net of premium or discount; annual interest expense is decreased by amortization of debt Page 71 Moses Lake Council Packet 4-28-20, Page 113 of 158 premium and increased by the amortization of debt issue costs and discount. At December 31, 2018, the City has $184,488 available in debt service funds to service the generalbonded debt. Restricted assets in proprietary funds contain $1,312,269 in sinking funds and reserves asrequired by bond indentures. NOTE 9- LEASES Capital Leases The City of Moses Lake has entered into lease agreements for financing machinery, equipment and otherimprovements. An insignificant portion of these capital leases were used to purchase items below thecapitalization threshold and therefore are non-capital items. These lease agreements qualify as capital leases for accounting purposes, and therefore, have beenrecorded at the present value of their future minimum lease payments as of the inception date. The assets acquired through capital leases are as follows: Governmental Business-Net Capital Lease Asset Activities Type Activities Machinery & Equipment $ 1,814,256 $-Less Accumulated Depreciation 535,492 - Total $ 1,278,764 $- The future minimum lease obligation and the net present value of these minimum lease payments as ofDecember 31, 2018 are as follows: Year Governmental Activities Business-Type Activities 2019 $ 347,895 $- 2020 287,696 -2021 104,954 - 2022 35,522 - Total Minimum Lease Payments 776,067 - Less: Interest 56,046 - Present Value of Minimum lease Payments $ 720,021 $- Page 72 Moses Lake Council Packet 4-28-20, Page 114 of 158 NOTE 10- CHANGES IN LONG-TERM LIABILITIES During the year ended December 31, 2018, the following changes occurred in long-term liabilities: Governmental activities BeginningBalance01/01/2018 Additions Reductions EndingBalance12/31/18 Due WithinOne Year InternalService Funds Bonds payable:General obligation bonds $ 5,791,666 $ - $ 1,060,000 $ 4,731,666 $ 1,092,500 $ 2,165,000Less deferred amountIssuance premiums(discounts)266,546 - 42,518 224,028 - 55,791 Total bonds 6,058,212 -1,102,518 4,955,694 1,092,500 2,220,791Capital leases 1,221,820 - 465,074 756,746 361,824 756,746Claims and judgements - - - - - -Compensated absences 1,686,854 120,398 - 1,807,252 10,979 98,809Pension 3,722,470 - 867,961 2,854,509 - 348,263OPEB 1,065,744 2,673,202 - 3,738,946 - - Governmental liabilities $ 13,755,100 $ 2,793,600 $ 2,435,553 $ 14,113,147 $ 1,465,303 $ 3,424,609 Business-type activitiesBonds payable:General obligation bonds $ 568,323 $ - $ 55,000 $ 513,323 $ 57,489Revenue bonds 6,810,000 - 935,000 5,875,000 975,000Less deferred amountsIssuance premiums(discounts) 216,424 - 33,069 183,355 - Total bonds 7,594,747 -1,023,069 6,571,678 1,032,489Governmental loans 2,776,180 - 561,692 2,214,488 561,692Compensated absences 597,988 - 124,124 473,864 47,386Pension/OPEB 1,378,039 - 621,224 756,815 - Business-type liabilities $ 12,346,954 $-$ 2,330,109 $ 10,016,845 $ 1,641,567 Internal service funds predominately serve the governmental funds. Accordingly, long-term liabilities forthem are included as part of the totals for governmental activities. At year end $3,424,609 of internalservice funds debt and compensated absences are included in the above amounts. Also, for thegovernmental activities except internal service funds, claims and judgments and compensated absencesare generally liquidated by the general fund. NOTE 11- CONTINGENCIES AND LITIGATIONS The City of Moses Lake has recorded in its financial statements all material liabilities, including anestimate for situations which are not yet resolved but where, based on available information, managementbelieves it is probable that the City will have to make payment. In the opinion of management, the City’sinsurance policies and/or self-insurance reserves are adequate to pay all known or pending claims. The City participates in a number of federal and state assisted programs. These grants are subject toaudit by the grantors or their representatives. Such audits could result in requests for reimbursement tograntor agencies for expenditures disallowed under the terms of the grants. City management believesthat such disallowance, if any, will be immaterial. As of December 31, 2018, there were no significant lawsuits. Page 73 Moses Lake Council Packet 4-28-20, Page 115 of 158 Of the litigation settled in the past three years, where the City was the defendant, none exceeded theinsurance coverage. NOTE 12- RESTRICTED COMPONENT OF NET POSITION The government-wide statement of net position reports $4,932,522 of restricted component of netposition, of which $835,472 is restricted by enabling legislation. NOTE 13- INTERFUND BALANCES AND TRANSFERS Interfund Balances Loans between funds are classified as interfund loans receivable or payable on the statement of netposition. The loans were for Operations Complex construction, Civic Center Construction, and operatingexpenses. Interfund balances at December 31, 2018 were as follows: DUE FROM DUETO GENERAL FUND BUILDING MAINTENANCE SANITATION FUND AMBULANCE FUND TOTALS Water/Sewer $- $ 2,831,662 $ 300,000 $ 150,000 $ 3,281,662Totals$- $ 2,831,662 $ 300,000 $ 150,000 $ 3,281,662 Interfund Transfers Interfund transfers are the flow of assets without a reciprocal return of assets, goods or services. Theprinciple reason for the transfers is to move the resources from the fund collecting them to the fund usingthem as required by statute or budget and to account for operating subsidies between funds inaccordance with budget authorization. The interfund transfer activity for the year is as follows: TRANSFER FROM TRANSFERTO GENERAL STREETS TOURISM DEBTSERVICE WATERSEWER TOTALS General $ - $ - $ - $ - $ 500,000 $ 500,000Streets1,705,000 ----1,705,000Debt Service 113,200 150,900 613,200 -- 877,300Ambulance74,340----74,340 Totals $ 1,892,540 $ 150,900 $ 613,200 $ - $ 500,000 3,156,640 Page 74 Moses Lake Council Packet 4-28-20, Page 116 of 158 NOTE 14- OTHER POSTEMPLOYMENT BENEFIT (OPEB) PLANS In addition to the pension benefits described in Note No. 6, the City provides post-retirement medical carebenefits for members of the Law Enforcement Officers and Firefighters (LEOFF) retirement system hiredbefore October 1, 1977. The following table represents the aggregate OPEB amounts for all plans subject to the requirements ofGASB 75 for the year 2018: Aggregate OPEB Amounts - LEOFF 1 Retiree HealthPlan OPEB Liability $ 7,366,225OPEB expense/expenditures $ (9,666) Membership Currently the City has 15 individuals that meet the eligibility requirements. This is considered a closedgroup with no new eligible members. Plan Description The "plan" is required by State of Washington Revised Code (RCW) chapter 41.26. Employers, such asmunicipalities, counties, and fire districts, are required to pay the costs of necessary medical services for any active or retired members of the Law Enforcement Officers' and Firefighters' Retirement System PlanOne (LEOFF I). Under subsection 4, the employer may provide for medical insurance through insurance carriers. The plan covers retirees who are retired on disability as well as those who are retired afterreaching age requirements. To qualify for medical services, the employee need only be active or disability retired, or the employee's service retirement date is that day following separation from LEOFFemployment with the City. To make this plainer, if the employee leaves the City and takes a job withanother member of the Washington State Retirement System, regardless of the plan, then that memberwould then be liable for the employee's medical services. Employees may retire after 5 years of serviceafter reaching age 50. Employees with 20 years of service who leave employment before retirement ageare eligible for medical benefits upon reaching age 50. Insurance for retired individuals is provided throughthe employer's group plan, which covers both active and qualified retired members. The health insurancecoverage and medical costs for retired firefighters are paid for out of the fire department budget and lawenforcement officers are paid out of the police department budget. The medical services cover active andretired members only. Spouses are not eligible. Financial reporting for the LEOFF retiree healthcare planis included in the City’s Comprehensive Annual Financial Report. Funding Status and Funding PolicyAs of December 2018, there are no active members, and currently 15 retired members, all receivingbenefits. Health insurance premiums are paid monthly. Other medical services are paid bi-monthly asbillings are presented for reimbursement. The City reimburses 100 percent of the amount of validatedclaims for medical costs incurred by these individuals. The pension board performs an annual survey todetermine the care to be covered. Employer contributions are financed on a pay-as-you-go basis andthere are no assets accumulated in a qualifying trust. Fire fighter and police benefits are paid out of thegeneral fund. For 2018, the City paid medical insurance premiums of $52,316 for pre-age 65 and $129,245 for post-age Page 75 Moses Lake Council Packet 4-28-20, Page 117 of 158 65. Other medical payments paid by the City are for all eligible medical services not paid for by theinsurance. Total OPEB Liability The City’s total OPEB liability of $7,366,225 was measured as of December 31, 2018. Schedule of Changes in the Total OPEB Liability LEOFF 1 Retiree HealthPlan Total OPEB Liability at 1/1/2018 $ 7,654,903Service cost - Interest -Changes of benefit terms - Differences between expected andactual experience 268,752 Changes of assumptions (259,086)Benefit payments (298,344)Other changes - Total OPEB Liability at 12/31/2018 $ 7,366,225 The schedule of changes in the Total OPEB Liability (TOL) reconciles the change in the TOL from theprior year’s valuation. The reconciliation is also used to calculate the components of the OPEB Expensetable. Given the maturity of LEOFF 1 Retiree HealthPlan, all OPEB Expense table components match theTOL reconciliation above. This is because the differences between expected and actual experience, andthe assumption changes, are amortized, or spread out, over a one-year period (or rather are recognizedimmediately). Under GASB 75, the amortization time period equals the average of the expected remainingservice lives of all active and inactive members that are provided with OPEB through the OPEB plan.LEOFF 1 Retiree HealthPlan is 100% retired, therefore the amortization period is one year. LEOFF 1 Retiree HealthPlan does not have deferred outflows or inflows since all costs are recognizedimmediately. As such, the Deferred Outflows and Inflows of Resources table and the SubsequentRecognition Years table required by GASB 75 would both display zeroes. Actuarial Methods and Assumptions LEOFF 1 Retiree HealthPlan does not have deferred outflows or inflows since all costs are recognizedimmediately. As such, the Deferred Outflows and Inflows of Resources table and the Subsequent Recognition Years table required by GASB 75 would both display zeroes. The City used the alternative measurement method permitted under GASB Statement No. 45. The methods and assumptions used include techniques that are designed to reduce the effects of short-termvolatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. There are no active employees in this plan. The historical age of retirement for regular retirees is 55 yearsof age; the City’s average was 51 years of age. Employees who retired on disability were excluded fromthis calculation. Page 76 Moses Lake Council Packet 4-28-20, Page 118 of 158 Life expectancies are based on mortality tables at the Office of the State Actuary for Washington(osa.leg.wa.gov). Life expectancies that included partial years were rounded to the nearest whole year.The calculation of post-employment health insurance coverage for each year in the worksheet is based onthe assumption that all participants will live until their expected ages as displayed in the mortality tables. The expected rate of increase in health care insurance premiums is based on projections of the Office ofthe Actuary at the Centers for Medicare & Medicaid Services, as published in National Health CareExpenditures Projections 2014-2024 Tables, Table 16: National Health Expenditure Amounts, and AnnualPercent Change by Type of Sponsor: Calendar Years 2009-2025 published by the Health Care FinancingAdministration (www.cms.hhs.gov). Based on the S&P Municipal Bond 20 Year High Great Rate Index, a discount rate of 3.60 percent wasused. In addition, the actuarial cost method used to determine the actuarial accrued liability was Entry Age Normal. The funded actuarial accrued liability is being amortized as a level percentage of projected payrollon a closed basis. The remaining amortization period at December 31, 2018 is thirteen years. Sensitivity of the Total OPEB Liability The Total OPEB Liability will only be realized if future economic and demographic experience matches our assumptions. It is equally important to understand what will happen if the economic and demographicexperience is different than assumed. Below, we analyze the impact of changing the Healthcare Trendand Discount Rate assumptions by 1 percentage point. The following presents the total OPEB liability of the City calculated using the current healthcare cost trendrate of 6.4 percent, as well as what the OPEB liability would be if it were calculated using a discount ratethat is 1-percentage point lower (5.4%) or 1-percentage point higher (7.4%) that the current rate. 1% Decrease (5.4%) Current Healthcare CostTrend Rate (6.4%) 1% Increase (7.4%) Total OPEB Liability $ 8,341,420 $ 7,366,225 $ 6,554,078 The following presents the total OPEB liability of the City calculated using the discount rate of 3.6 percent,as well as what the OPEB liability would be if it were calculated using a discount rate that is 1-percentagepoint lower (2.6%) or 1-percentage point higher (4.6%) that the current rate. 1% Decrease(5.4%) CurrentHealthcare CostTrend Rate(6.4%)1% Increase(7.4%) Total OPEB Liability $ 6,582,925 $ 7,366,225 $ 8,285,026 NOTE 15- HEALTH & WELFARE The City of Moses Lake is a member of the Association of Washington Cities Employee Benefit TrustHealth Care Program (AWC Trust HCP). Chapter 48.62 RCW provides that two or more local government Page 77 Moses Lake Council Packet 4-28-20, Page 119 of 158 entities may, by Interlocal agreement under Chapter 39.34 RCW, form together or join a pool ororganization for the joint purchasing of insurance, and/or joint self-insurance, to the same extent that theymay individually purchase insurance, or self-insure. An agreement to form a pooling arrangement was made pursuant to the provisions of Chapter 39.34RCW, the Interlocal Cooperation Act. The AWC Trust HCP was formed on January 1, 2014 whenparticipating cities, towns, and non-city entities of the AWC Employee Benefit Trust in the State ofWashington joined together by signing an Interlocal Governmental Agreement to jointly self-insure certainhealth benefit plans and programs for participating employees, their covered dependents and otherbeneficiaries through a designated account within the Trust. As of December 31, 2018, 257 cities/towns/non-city entities participate in the AWC Trust HCP. The AWC Trust HCP allows members to establish a program of joint insurance and provides health andwelfare services to all participating members. The AWC Trust HCP pools claims without regard toindividual member experience. The pool is actuarially rated each year with the assumption of projectedclaims run-out for all current members. The AWC Trust HCP includes medical, dental and visioninsurance through the following carriers: Kaiser Foundation Health Plan of Washington, Kaiser FoundationHealth Plan of Washington Options, Inc., Regence BlueShield, Asuris Northwest Health, Delta Dental ofWashington, and Vision Service Plan. Eligible members are cities and towns within the state of Washington. Non-City Entities (public agency, public corporation, intergovernmental agency, or politicalsubdivision within the state of Washington) are eligible to apply for coverage into the AWC Trust HCP, submitting application to the Board of Trustees for review as required in the Trust Agreement. Participating employers pay monthly premiums to the AWC Trust HCP. The AWC Trust HCP is responsible for payment of all covered claims. In 2018, the AWC Trust HCP purchased stop lossinsurance for Regence/Asuris plans at an Individual Stop Loss (ISL) of $1.5 million through Life Map, and Kaiser ISL at $1 million with Companion Life through ASG Risk Management. The aggregate policy is for200% of expected medical claims. Participating employers’ contract to remain in the AWC HCP for a minimum of three years. Participatingemployers with over 250 employees must provide written notice of termination of all coverage a minimumof 12 months in advance of the termination date, and participating employers with under 250 employeesmust provide written notice of termination of all coverage a minimum of 6 months in advance oftermination date. When all coverage is being terminated, termination will only occur on December 31.Participating employers terminating a group or line of coverage must notify the HCP a minimum of 60 daysprior to termination. A participating employer’s termination will not obligate that member to past debts, orfurther contributions to the HCP. Similarly, the terminating member forfeits all rights and interest to theHCP Account. The operations of the Health Care Program are managed by the Board of Trustees or its delegates. TheBoard of Trustees is comprised of four regionally elected officials from Trust member cities or towns, theEmployee Benefit Advisory Committee Chair and Vice Chair, and two appointed individuals from the AWCBoard of Directors, who are from Trust member cities or towns. The Trustees or its appointed delegates review and analyze Health Care Program related matters andmake operational decisions regarding premium contributions, reserves, plan options and benefits in compliance with Chapter 48.62 RCW. The Board of Trustees has decision authority consistent with the Page 78 Moses Lake Council Packet 4-28-20, Page 120 of 158 Trust Agreement, Health Care Program policies, Chapter 48.62 RCW and Chapter 200-110-WAC. The accounting records of the Trust HCP are maintained in accordance with methods prescribed by theState Auditor’s office under the authority of Chapter 43.09 RCW. The Trust HCP also follows applicableaccounting standards established by the Governmental Accounting Standards Board (“GASB”). In 2018,the retiree medical plan subsidy was eliminated, and is noted as such in this report. Year-end financialreporting is done on an accrual basis and submitted to the Office of the State Auditor as required byChapter 200-110 WAC. The audit report for the AWC Trust HCP is available from the Washington StateAuditor’s office. NOTE 16- JOINT VENTURES In 1995, the City of Moses Lake entered an Inter-local Cooperative Agreement under the authority of RCWChapter 39.34 in order to provide for the joint exercise of powers, privileges and authorities to operate aconsolidated 911 emergency dispatch facility named Multi Agency Communications Center (MACC).MACC serves as the Public Safety Answering Point for all of the law enforcement agencies in GrantCounty. The City paid a rate of $53,767 per month in 2018. Other participants of the 1995 Agreementinclude: the City of Electric City, the City of Ephrata, the City of Grand Coulee, the City of Quincy, the Cityof Royal City, the City of Soap Lake, the City of Warden, Emergency Telephone Tax District, EphrataTelephone Tax District, Grant County, Grant County Emergency Services, Grant County Coroner, GrantCounty Fire District #3, Grant County Fire District #4, Grant County Fire District #5/15, Grant County FireDistrict #6, Grant County Fire District #7, Grant County Fire District #8, Grant County Fire District #10,Grant County Fire District #11, Grant County Fire District #12, Grant County Fire District #13, GrantCounty Fire District #14, Grant County Mental Health, Grant County Public Hospital District #2 dba QuincyValley Hospital, Grant County Sherriff Office, Port of Moses Lake, the Town of Coulee City, and the Town of Mattawa. Grant County will account for MACC as an Agency fund and financial reports can be obtainedfor MACC at the Grant County Auditor’s Office, 37 C ST NW Ephrata, Washington, 98823. NOTE 17- CHANGE IN ACCOUNTING PRINCIPLE AND PRIOR PERIOD ADJUSTMENT For the fiscal year ended December 31, 2018, the city implemented GASB Statement No. 75 “Accountingand Financial Reporting for Postemployment Benefit Other than Pensions.” This statement replaced GASB Statement No. 45 “Accounting and Financial Reporting by Employers for PostemployementBenefits Other than Pensions,” as amended. The statement establishes standards for recognizing and measuring liability, deferred outflows of resources, and expenditures. Due to the requirement of thisstatement, the City has incurred a change in accounting principle, as displayed below: GovernmentalActivity OPEB balance per GASB 45 $ 1,065,744Change in Accounting Principle 6,589,159 OPEB balance per GASB 75 $ 7,654,903 Page 79 Moses Lake Council Packet 4-28-20, Page 121 of 158 In addition, a prior period adjustment was recorded to correct the balances in pension accounts: Net PensionLiability DeferredOutflowPension Deferred InflowPension Balance at 12/31/2017 as reported $ 5,100,510 $ 1,038,272 $ 1,596,478Prior Period Adjustment 22,971 (79,553) (78,096) Balance at 2017 as reported $ 5,123,481 $ 958,719 $ 1,518,382 Page 80 Moses Lake Council Packet 4-28-20, Page 122 of 158 CITY OF MOSES LAKE Required Supplementary Information Condition Assessments and Preservation of Infrastructure Eligible for Modified Approach Streets The City has taken a proactive approach with its maintenance practices associated with its streets and roads. The City performs condition assessments on its system of streets through the City PavementManagement System. This program generates a Pavement Condition Rating (PCR) for each segment ofprimary streets, secondary streets, tertiary collectors and residential streets. There is a numerical indexfrom zero to 100 (0 - 100) that represents the pavement's functional condition based on the quantity,severity, and type of visual distress, such as cracking. Based on the PCR valuation, condition ratings areassigned as follows: a PCR of less than 20 is considered to be in "very poor" condition; a PCR of greaterthan 20 but less than 40 is defined as having a "poor" status; a PCR of between 40 and 60 is regarded asbeing in "fair" condition; a PCR of 60 to 80 is evaluated as being in "good" status and a score from 80 to100 is defined as being in "very good" condition. Condition assessments are undertaken at least onceevery three years. The three most recent complete assessments of the City's streets are shown below. 2018 2017 - 2015 2014 - 2012ConditionratingFeet%Feet %Feet % VERY POOR 66,178 %9.33 19,892 %2.65 14,989 %2.02POOR 81,520 %11.49 8,312 %1.11 8,818 %1.19FAIR-%-29,231 %3.90 18,746 %2.53GOOD126,805 %17.88 181,759 %24.23 153,206 %20.69VERY GOOD 434,799 %61.31 510,792 %68.10 544,763 %73.56 TOTAL 709,302 %100.01 749,986 %99.99 740,522 %99.99 It is the Policy of the City Engineering Department to maintain 70 percent of the streets at a PCR of 40 orhigher. The table below shows the length and percentage of feet of streets that meet the 40 target level 2018 2017 - 2015 2014 - 2012 PCR score Feet %Feet %Feet % PCR 0 to 39 147,698 %20.82 28,204 %3.76 23,807 %3.21PCR 40 to 100 561,604 %79.18 721,782 %96.24 716,715 %96.79 Total 709,302 %100.00 749,986 %100.00 740,522 %100.00 The four classifications of streets that the City has are primary, secondary, tertiary collectors andresidential. There is a state highway which is considered a primary street that bisects the City which ismaintained and evaluated by the State of Washington, Department of Transportation. The majority ofstreets that fall below the PCR to 40 are residentail streets. The majority of the remaining streets underthe PCR of 40 is a section of the City that has no sewer services at this time. Once funding is available to extend utilities to the particular area it is the City's plan to construct paved streets and maintained them ata level consistent with the remainder of the City. Page 81 Moses Lake Council Packet 4-28-20, Page 123 of 158 Below is information on budgeted and actual expenditures incurred to maintain and preserve the streetsystem at or above the minimum acceptable condition level from 2010 to 2018 Amounts in Thousands 2018 2017 2016 2015 2014 2013 2012 2011 2010Budgeted2,980 1,530 1,008 210 160 700 158 1,210 550Expended 1,352 1,314 894 183 186 700 265 775 859 The budgeted amount is equivalent to the anticipated amount needed to maintain streets up to the recommended condition level. Under spending of budgeted amounts occurs when street projects areremoved from the work schedule due to conflicts with other major construction work; lowering of priority due to cost considerations brought on by excessive bids over estimates or shortages of sufficientcontractor bids; and through direction from Council. Bridge The City currently maintains one simple structure bridge. Physical inspections to determine the surfaceand underneath condition of the bridge and the degree of wear and deterioration are carried out every twoyears by City staff. Underwater inspections are contracted by the State Department of Transportation onceevery five years. Inspections reveal deficiencies in the bridge such as steel corrosion, damaged pillars,cracked concrete, deteriorated bridge decks and erosion. These are documented in an inspection reportprovided by the State Department of Transportation along with recommended repairs and neededservices. A key elements in determining the condition of the bridge is the Sufficiency Rating (SR), the numericalvalue which indicateds a bridge's relative ability to serve its inteded purpose, measure considered by stateand federal governments as the basis for establishing eligibility and priority for the bridge replacement andrehabilitation. The numerical rating is based on the summation of four calculated values: structuraladequacy and safety, serviceability and functional obsolescence, essentiality for public use, and specialreductions. The value ranges from 100 (newly constructed bridge) to 0 (bridge incapable of carryingtraffic). In general, the lower the SR, the higher the priority. To qualify for replacement, a bridge must have asufficiency rating of less than 50 and be strucutrally deficient or functionally obsolete. To be eligible for rehabilitation, a bridge must have a SR of 80 or less and be structurally deficient or functionally obsolete.A structurally deficient bridge is defined as one whole condition or design has impacted its ability to adequately carry intended traffic loads. A functionally obsolete bridge is one in which the deck geometryload carrying capacity, clearance, or approach roadway alignment has reduced its ability to adequately meet traffic needs below accepted design standards. Below are the three most recent sufficiency ratings of the Alder St. causeway. Sufficiency Rating 2015 73%2011 70%2006 69% It is the policy of the City to maintain its bridge in such a manner that the sufficiency rating is 20 or higher.A rating of 20 or less is usually indicative of a bridge with structural defiency. The most common remedy isfull replacement or rehabilitation of the bridge. As of September 30, 2015 the City's lone bridge was givena 'good' evaluation. With annual surface inspections and maintenance, as well as minimal water flowunder the bridge it is anticipated that the bridge will continue to have favorable evaluation well into the Page 82 Moses Lake Council Packet 4-28-20, Page 124 of 158 future. With little change in the last two ratings the results of the City's efforts to maintain the bridge inabove standard condition are evident. Because the City's bridge is relatively small (149 feet long) the budget and actual expended amounts tomaintain and preserve the bridge are included in the budget and expended amounts for streets.Historically there has been no identifiable budget or expenditure for the maintenance of the lone bridge. Budget amounts are the anticipated amount needed to maintain and preserve the bridge up to therequired condition level. The traffic, weight loads, aging and weather extremes all have an effect on thecondition and maintenance level of the bridge. Storm Water The City established a storm water fund in 2010, and in 2011 the City transferred assets worth $4,197,819 previously held by the Street Department to the fund. The storm water system includes manholes, catchbasins, underground injection control structures (i.e. drywells), infiltration basins, outfall structures andpipe. The City finished locating and documenting all storm water infrastructure in 2016, allowing allinspections to be entered into a comprehensive reporting system. The documentation was completedwith the addition of the 29 miles of storm pipe. Condition assessments will be completed every three yearswith one-third of the system structures inspected annually. The City’s storm pipe will be inspected over 8-10 years with those sections that are found to collect more sediment to be inspected on a more regularbasis. The rating system is a numerical index from zero to 100 (0-100) that represents the storm water's functional condition based on the quality, severity, and type of problem, such as sedimentation, structurecracks, etc. At this time there is no rating system for manholes. The City is developing a system that would closely mimic the existing rating system but currently manholes being inspected are given either apass or fail grade. The measurement scale and basis for condition measurement is as follows: Rating 70-100 Good Condition-serves the intended function and scores well in all areas41-69 Fair condition-serves the intended function, but scores less well and has other issues.0-40 Poor condition- may or may not fulfill its design function, has other serious issues, and requiresmaintenance or rebuild. It is the policy of the City Engineering Department to maintain 70% of the storm water structures and pipe at a condition of 41 or higher. All manholes and 2 miles (8%) of pipe were inspected in 2016. All pipeinspected was found to be in fair to good condition. All catch basins have been inspected in the last three years as has 95% of the approximately 3,350 total structures. Of the inspected structures, excluding pipe,eight percent were in poor to fair condition with the remaining 92% in fair to good condition. Budget amounts are the anticipated amount needed to maintain and preserve the storm water system upto the required condition level. The last five years are as follows. Amounts in Thousands2018201720162015 2014 Budgeted $ 787 $ 595 $673$ 516 $ 546Expended $ 749 $ 625 $ 590 $ 475 $ 523 Page 83 Moses Lake Council Packet 4-28-20, Page 125 of 158 CITY OF MOSES LAKE, WASHINGTON Schedule of Proportionate Share of the Net Pension Liability PERS Plan 1 As of June 30, 2018 Last 10 Fiscal Years* 2018 2017 2016 2015 Employer's proportion of the net pension liability (asset)%0.054465 %0.056081 %0.059183 %0.058920Employer's proportionate share of the net pension liability $ 2,432,425 $ 3,011,814 $ 3,178,406 $ 3,082,064State's proportionate share of the net pension liability (asset)associated with the employer $0$0$0$0TOTAL $ 2,432,425 $ 3,011,814 $ 3,178,406 $ 3,082,064 Employer's covered employee payroll $ 29,442 $ 59,441 $ 6,806,380 $ 6,781,379Employer's proportionate share of the net pension liability as apercentage of covered employee payroll %8,261.8 %5,066.9 %46.7 %45.4Plan fiduciary net position as a percentage of the total pension liability %63.22 %61.24 %59.10 %59.10 CITY OF MOSES LAKE, WASHINGTON Schedule of Proportionate Share of the Net Pension Liability PERS Plan 2/3 As of June 30, 2018 Last 10 Fiscal Years*2018 2017 2016 2015 Employer's proportion of the net pension liability (asset)%0.069046 %0.070870 %0.072259 %0.072378Employer's proportionate share of the net pension liability $ 1,178,899 $ 2,462,394 $ 3,638,184 $ 2,586,107State's proportionate share of the net pension liability (asset)associated with the employer $0$0$0$0TOTAL $ 1,178,899 $ 2,462,394 $ 3,638,184 $ 2,586,107 Employer's covered employee payroll $ 7,194,485 $ 6,942,538 $ 5,806,141 $ 6,633,123Employer's proportionate share of the net pension liability as apercentage of covered employee payroll %16.4 %35.5 %62.7 %39.0Plan fiduciary net position as a percentage of the total pension liability %95.77 %90.97 %85.82 %89.20 Page 84 Moses Lake Council Packet 4-28-20, Page 126 of 158 CITY OF MOSES LAKE, WASHINGTON Schedule of Proportionate Share of the Net Pension Liability LEOFF Plan 1 For the Year Ended December 31, 2018 Last 10 Fiscal Years* 2018 2017 2016 2015Employer's proportion of the net pension liability (asset)%0.031087 %0.030779 %0.030556 %0.031497Employer's proportionate share of the net pension liability $ 564,385 $ 466,985 $ 314,814 $ 379,608State's proportionate share of the net pension liability (asset)associated with the employer $ 3,817,487 $ 3,158,676 $ 2,129,395 $ 2,567,659TOTAL$ 4,381,872 $ 3,625,661 $ 2,444,209 $ 2,947,267 Plan fiduciary net position as a percentage of the total pension liability %114.42 %135.96 %123.74 %127.36 CITY OF MOSES LAKE, WASHINGTON Schedule of Proportionate Share of the Net Pension Liability LEOFF Plan 2 As of June 30, 2018 Last 10 Fiscal Years*2018 2017 2016 2015Employer's proportion of the net pension liability (asset)%0.169799 %0.175273 %0.168008 %0.175245Employer's proportionate share of the net pension liability $ 3,447,290 $ 2,432,221 $ 977,185 $ 1,801,168State's proportionate share of the net pension liability (asset)associated with the employer $ 2,232,055 $ 1,577,737 $ 637,053 $ 1,190,934TOTAL$ 5,679,345 $ 4,009,958 $ 1,614,238 $ 2,992,102 Employer's covered employee payroll $ 5,608,617 $ 5,493,721 $ 5,089,727 $ 5,195,821Employer's proportionate share of the net pension liability as apercentage of covered employee payroll %61.5 %44.3 %19.2 %34.7Plan fiduciary net position as a percentage of the total pension liability %118.50 %113.36 %106.04 %111.67 Page 85 Moses Lake Council Packet 4-28-20, Page 127 of 158 CITY OF MOSES LAKE, WASHINGTON Schedule of Employer Contributions PERS Plan 1 For the Year Ended December 31, 2018 Last 10 Fiscal Years* 2018 2017 2016 2015 Statutorily or contractually required contributions $ 364,057 $ 514,045 $ 332,976 $ 15,102Contributions in relation to the statutorily or contractually requiredcontributions $ (364,057) $ (514,045) $ (332,976) $ (15,102) Contribution deficiency (excess)$0$0$0$0 Covered employer payroll $ 29,442 $ 88,832 $ 6,862,609 $ 148,256Contributions as a percentage of covered employee payroll %1,236.52 %578.67 %4.85 %10.19 CITY OF MOSES LAKE, WASHINGTON Schedule of Employer Contributions PERS Plan 2/3 As of December 31, 2018 Last 10 Fiscal Years*2018 2017 2016 2015 Statutorily or contractually required contributions $ 532,768 $ 687,427 $ 421,911 $ 671,782Contributions in relation to the statutorily or contractually requiredcontributions $ (532,768) $ (687,427) $ (421,911) $ (671,782) Contribution deficiency (excess)$0$0$0$0 Covered employer payroll $ 10,935,656 $ 10,384,172 $ 6,772,246 $ 6,633,123Contributions as a percentage of covered employee payroll %4.87 %6.62 %6.23 %10.13 Page 86 Moses Lake Council Packet 4-28-20, Page 128 of 158 CITY OF MOSES LAKE, WASHINGTON Schedule of Employer Contributions LEOFF Plan 1 As of December 31, 2018 Last 10 Fiscal Years* 2018 2017 2016 2015Statutorily or contractually required contributions $0$0$0$0Contributions in relation to the statutorily or contractually requiredcontributions $ 0 $ 0 $ 0 $ 0 Contribution deficiency (excess)$0$0$0$0 Covered employer payroll $0$0$0$0Contributions as a percentage of covered employee payroll %0.00 %0.00 %0.00 %0.00 CITY OF MOSES LAKE, WASHINGTON Schedule of Employer Contributions LEOFF Plan 2 As of December 31, 2018 Last 10 Fiscal Years 2018 2017 2016 2015 Statutorily or contractually required contributions $ 294,447 $ 418,850 $258,688$ 272,168Contributions in relation to the statutorily or contractually requiredcontributions $ (294,447) $ (418,850) $ (258,688) $ (272,168)Contribution deficiency (excess) $ 0 $ 0 $ 0 $ 0 Covered employer payroll $ 8,619,087 $ 7,991,703 $ 5,122,544 $ 5,195,821Contributions as a percentage of covered employee payroll %3.42 %5.24 %5.05 %5.24 Page 87 Moses Lake Council Packet 4-28-20, Page 129 of 158 CITY OF MOSES LAKE, WASHINGTON Schedule of Changes in the Employers' Net OPEB Liability and Related Ratios* For the Year Ended December 31, 2018 Last 10 Fiscal Years* 2018 Differences between expected and actual experience $ 268,752Changes of assumptions (259,086)Benefit payments, including refunds of member contributions $ (298,344) Net change in total OPEB liability $ (288,678)Total OPEB liability - beginning 7,654,903 Total OPEB liability - ending 7,366,225Covered payroll -Net OPEB liability as a percentage of covered payroll %- *Additional years' information will be displayed as it becomes available due to changes in GAAPimplementation in 2018. Page 88 Moses Lake Council Packet 4-28-20, Page 130 of 158 Office of the Washington State Auditor ABOUT THE STATE AUDITOR’S OFFICE The State Auditor’s Office is established in the state’s Constitution and is part of the executive branch of state government. The State Auditor is elected by the citizens of Washington and serves four-year terms. We work with our audit clients and citizens to achieve our vision of government that works for citizens, by helping governments work better, cost less, deliver higher value, and earn greater public trust. In fulfilling our mission to hold state and local governments accountable for the use of public resources, we also hold ourselves accountable by continually improving our audit quality and operational efficiency and developing highly engaged and committed employees. As an elected agency, the State Auditor’s Office has the independence necessary to objectively perform audits and investigations. Our audits are designed to comply with professional standards as well as to satisfy the requirements of federal, state, and local laws. Our audits look at financial information and compliance with state, federal and local laws on the part of all local governments, including schools, and all state agencies, including institutions of higher education. In addition, we conduct performance audits of state agencies and local governments as well as fraud, state whistleblower and citizen hotline investigations. The results of our work are widely distributed through a variety of reports, which are available on our website and through our free, electronic subscription service. We take our role as partners in accountability seriously, and provide training and technical assistance to governments, and have an extensive quality assurance program. Contact information for the State Auditor’s Office Public Records requests PublicRecords@sao.wa.gov Main telephone (360) 902-0370 Toll-free Citizen Hotline (866) 902-3900 Website www.sao.wa.gov Page 89 Moses Lake Council Packet 4-28-20, Page 131 of 158 Page 1 of 2 STAFF REPORT To: Allison Williams, City Manager From: Cindy Jensen, Finance Director Date: April 24, 2020 Proceeding Type: New Business Subject: 2020 Budget Appropriation Ordinance Legislative History: •First Presentation: •Second Presentation April 28, 2020 May 12, 2020 •Requested Action: First Presentation The first budget amendment in 2020 is a combination of 2019 programs being carried forward, and new grants or Council initiatives since the 2020 budget was set. In some cases, there is additional revenue to support the additional expenditures, either in program revenues or grants. In those cases that are not supported by additional revenue, the fund balance is adequate to absorb the increase. The attached ordinance increases the 2020 budget for nine funds resulting in citywide total expenditures of $2,030,533 and adds $1,015,000 to estimated revenue, resulting in a net use of fund balance of $1,015,533 in these funds. General Fund is proposed to increase by $129,400, with a revenue increase of $100,000, for a net use of beginning fund balance of $29,400. Background RCW 35.33.091 sets forth the requirements to amend the budget absent a true “emergency”. Often, fund amendments are primarily the result of things already approved by Council but just not completely incorporated in the current budget. Examples in the attached ordinance include the AFSCME bargaining unit settlement; the new Financial Management and Asset Management software systems; pre-payment of the fire apparatus chassis; and the replacement of a K-9 which was retired due to injury. Budgets being carried forward include the completion of the 2018 audit; the balance remaining in the Wellness budget; completion of the Dick Deane shelter; completion of a traffic signalization project; and vehicle purchases that were on order at the end of 2019. New circumstances have also arisen that require additional funding, such as the COVID 19 response and a grant for Comprehensive Plan preparation. The schedule attached to the appropriation ordinance details all of these changes. Fiscal and Policy Implications It is a compliance issue to have actual results be within the authorized appropriation. If we overspend an appropriation, the State Auditor’s Office would likely note it as an area of non- compliance with state laws. Moses Lake Council Packet 4-28-20, Page 132 of 158 Page 2 of 2 Options Option Results • Adopt the Ordinance Increase the appropriation authority in each of the effected funds • Modify the Ordinance Certain items could be removed or added to the ordinance • Do not adopt the Ordinance Some funds may exceed the 2020 budget authority, potentially causing an audit compliance issue Staff Recommendation Since this is the first presentation, Staff recommends City Council consider the Ordinance and give direction for desired changes prior to the second presentation. Attachments A. Ordinance and Schedule 1 Legal Review N-A Moses Lake Council Packet 4-28-20, Page 133 of 158 ORDINANCE NO. 2948 AN ORDINANCE AMENDING THE 2020 BUDGET FOR THE CITY OF MOSES LAKE AND MAKING APPROPRIATIONS FROM UNAPPROPRIATED FUND BALANCES WITHIN VARIOUS FUNDS FOR EXPENDITURE DURING 2020 FOR VARIOUS PURPOSES AS DESCRIBED IN THE ATTACHED SCHEDULE. Whereas, the various funds indicated on the attached Schedule 1 contain Unappropriated Fund Balances available for appropriation and expenditures during 2020 in various amounts and for the purposes mentioned in the attached Schedule; and Whereas, at the time of the adoption of the 2020 budget it could not reasonably have been foreseen that the appropriation provided for by this ordinance would be required; and the City Council declares that an emergency exists of the type contemplated by RCW 35.33.091 and that it is in the best interests of the City to make the appropriation herein provided. THE CITY COUNCIL OF THE CITY OF MOSES LAKE, WASHINGTON DO ORDAIN AS FOLLOWS: Section 1. Appropriations are hereby made, for expenditure during 2020, from Unappropriated Fund Balances in the various Funds to the various accounts and in the various amounts, and for the specific purposes, all as specified in the Schedule attached hereto and incorporated herein. Section 2. This ordinance is one making an appropriation and shall take effect immediately upon its passage and approval as provided by law. Section 3. The City Council declares that an emergency exists and this ordinance is deemed a public emergency ordinance necessary for the protection of public health, public safety, public property, or public peace and shall take effect immediately as provided by law upon one reading if a majority plus one of the whole membership of the City Council vote in favor of passage. Section 4. Severability. If any section of this ordinance is found to be unconstitutional or invalid as written or as applied to any particular person or circumstances, no other section of the ordinance shall be deemed to be invalid, but rather, should be deemed to have been enacted independently and without regard to the section affected. Adopted by the City Council of the City of Moses Lake, WA and signed by its Mayor on ________, 2020. ______________________________________ David Curnel, Mayor Moses Lake Council Packet 4-28-20, Page 134 of 158 ATTEST: ____________________________ Debbie Burke, City Clerk APPROVED AS TO FORM: _____________________________________ Katherine L. Kenison, City Attorney Vote: Riggs Liebrecht Myers Jackson Curnel Eck Hankins Aye Nay Abstain Absent Date Published: Date Effective: Moses Lake Council Packet 4-28-20, Page 135 of 158 Account #Account Name Amount Description GENERAL FUND Finance 000-003-51423-000-0411-0000-00 Professional Services 24,000$ Finish 18 audit-prepare 19 Financial Stmts Community Development 000-004-55860-000-0411-0000-00 Professional Services 100,000 External support for Comp Plan Misc. Services 000-006-51790-000-0411-0000-00 Wellness-Professional Service 5,400 Carryforward balance of Wellness Budget Total General Fund 129,400 Revenue 000-004-33458-000-1010-0000-00 State Commerce Grant 100,000 Grant for Comprehensive Plan Prep. Net use of General Fund balance 29,400 GRANTS & DONATIONS Parks 103-103-59476-085-0621-2333-56 Parks Facilities 25,000$ Complete Dick Deane Shelter Police 103-103-59421-085-0641-2308-30 Equipment 40,000 Replacement K9 and related expenses Total Grant & Donations Fund 65,000 Revenue 103-000-36721-085-1012-2308-30 Police Donations 40,000 Police Donations-K9 103-000-36776-085-1012-2332-56 Parks Facilities Donations 5,000 Dick Deane Shelter Total Grant & Donations Fund Revenue 45,000 Net Use of Beginning Balance 20,000 STREETS (Operating) 116.116.54230.000.0111.0000.00 Full Time Salaries 1,000$ AFSCME Settlement 116.116.54230.000.0113.0000.00 Standby Pay 7,270 116.116.54230.000.0115.0000.00 Retroactive Pay 6,000 One Time Signing Bonus 116.116.54230.000.0211.0000.00 Social Security 758 116.116.54230.000.0213.0000.00 Retirement PERS 1,274 116.116.54230.000.0312.0000.00 Operating Supplies 600 Boot Allowance 116-116-54230-000-0482-0000-00 Repair & Maint- Roadway 25,000 Radar Detection Equipment Total Streets Operating Fund 41,902 WATER (Operating) 410.411.53450.000.0111.0000.00 Full Time Salaries 26,730$ AFSCME Settlement 410.411.53450.000.0111.0000.00 Standby Pay 10,900 410.411.53450.000.0115.0000.00 Retroactive Pay 13,500 One Time Signing Bonus 410.411.53450.000.0211.0000.00 Social Security 3,077 410.411.53450.000.0213.0000.00 Retirement PERS 5,173 410.411.53450.000.0312.0000.00 Operating Supplies 1,350 Boot Allowance Total Water Operating Fund 60,730 WASTEWATER (Operating) 410.412.53550.000.0111.0000.00 Full Time Salaries 7,910$ AFSCME Settlement 410.412.53550.000.0113.0000.00 Standby Pay 10,900 410.412.53550.000.0115.0000.00 Retroactive Pay 13,500 One Time Signing Bonus 410.412.53550.000.0211.0000.00 Social Security 1,752 410.412.53550.000.0213.0000.00 Retirement PERS 2,946 410.412.53550.000.0312.0000.00 Operating Supplies 1,500 Boot Allowance Total Wastewater Operating Fund 38,508 City of Moses Lake 2020 Appropriation Schedule SCHEDULE 1 Appropriate out of unappropriated fund balances of the various funds and in the various amounts and for the purposes as described: 1 of 2 Moses Lake Council Packet 4-28-20, Page 136 of 158 Account #Account Name Amount Description City of Moses Lake 2020 Appropriation Schedule SCHEDULE 1 Appropriate out of unappropriated fund balances of the various funds and in the various amounts and for the purposes as described: STORMWATER 493.493.54240.000.0111.0000.00 Full Time Salaries 14,267$ AFSCME Settlement 493.493.54240.000.0113.0000.00 Standby Pay 3,630 493.493.54240.000.0115.0000.00 Retroactive Pay 4,500 One Time Signing Bonus 493.493.54240.000.0211.0000.00 Social Security 1,436 493.493.54240.000.0213.0000.00 Retirement PERS 2,414 493.493.54240.000.0312.0000.00 Operating Supplies 450 Boot Allowance Total Stormwater Fund 26,697 FLEET MANAGEMENT 519-519-59448-000-0641-0000-00 Machinery & Equipment 215,000$ Balance-3 Police vehicles-carryforward 519-519-59448-000-0641-0000-00 Machinery & Equipment 93,600 Wastewater Truck with Crane-Carryforward 519-519-59448-000-0641-0000-00 Machinery & Equipment 970,000 Prepayment on Fire Apparatus chassis Total Fleet Management Fund 1,278,600 Revenue 519-000-39180-000-1920-0000-00 Intergov. Loan Proceeds 970,000 LOCAL program proceeds for Fire Net use of Beginning Balance 308,600 CENTRAL SERVICES (IT) 517-517-51888-000-0351-0000-00 Minor Equipment 10,000$ Computers/phones for COVID 19 Response 517-517-51888-000-0354-0000-00 Computer Software 134,400 Fin. System replacement (carryfwd & Amend ) 517-517-51888-000-0354-0000-00 Computer Software 140,000 Cityworks-General Fund Users 517-517-51888-000-0112-0000-00 Temporary Pay 48,000 Software implementation project management 517-517-51888-000-0112-0000-00 Social Security 3,700 Benefits for Temp Total Central Services Fund 336,100 BUILDING MAINTENANCE 528.528.51830.000.0111.0000.00 Full Time Salaries 27,850$ AFSCME Settlement 528.528.51830.000.0115.0000.00 Retroactive Pay 15,000 One Time Signing Bonus 528.528.51830.000.0211.0000.00 Social Security 3,393 528.528.51830.000.0213.0000.00 Retirement PERS 5,703 528.528.51830.000.0312.0000.00 Operating Supplies 1,650 Boot Allowance Total Building Maintenance Fund 53,596 Citywide Total Expenditures 2,030,533$ Revenues 1,015,000 Net 1,015,533$ 2 of 2 Moses Lake Council Packet 4-28-20, Page 137 of 158 Page 1 of 3 STAFF REPORT To: Allison Williams, City Manager From: Fred Snoderly, Municipal Services Director Date: April 23, 2020 Proceeding Type: New Business Subject: Poth Major Plat #1 Reimbursement Deferral Request Legislative History: •First Presentation:April 28, 2020 •Second Presentation: •Action:Motion Staff Report Summary Mark Poth is subdividing 4.4 acres into 9 lots in the R1, Single Family Residential Zone. Poth Major Plat #1 is in the 3200 block Peninsula Drive and Tract 34 of Battery Orchard Tracts. Mr. Poth is requesting a deferral to the reimbursements due to the City as part of the platting process for this project. Background In 2008, the City of Moses Lake began the Lakeshore Peninsula reconstruction project. This project began on Peninsula Drive at the overpass crossing I-90 and extended south to approximately 300 feet past the access road to the Lower Peninsula Park. This project was funded using City funds. During the design phase of the project, it was determined the City lacked the amount of right of way (ROW) necessary for the widening of the roadway in various locations along the project. Property owners were given the option to dedicate ROW to the City, or the City would purchase the ROW from the individual property owners. Upon completion of the project, the City set up reimbursements against all property that fronted the newly constructed roadway and set up additional reimbursements against the property owners who charged the City for additional ROW. The reimbursements are as follows: 13.08.164 Sewer Connection Charges – Lakeshore/Peninsula Reconstruction: Side sewer connection charges in Section 33, Township 19 North, Range 28 East, Willamette Meridian; Section 4, Township 18 North, Range 28 East, Willamette Meridian; and Section 5, Township 18 North, Range 28 East, Willamette Meridian, installed by the City of Moses Lake, under the Lakeshore Peninsula Reconstruction Project, shall be reimbursed by the property owner upon property subdivision or upon request to connect to city sewer. This connection charge shall be assessed against the following property at the following amounts: Moses Lake Council Packet 4-28-20, Page 138 of 158 Page 2 of 3 A. Section 33, Township 19 N, Range 28 East, Willamette Meridian, Grant County, Washington: 3203 Peninsula - Battery Orchard Tracts - Lot 34 550.65 12.40.112 Street Improvement Charges – Lakeshore and Peninsula Drive Reconstruction Project - 2009, Peninsula Drive Reconstruction Project - 2008, and street improvements to Lakeshore Drive between Pommer Street and Wanapum Drive: Street improvements consisting of improving portions of Lakeshore Drive and Peninsula Drive with city funds shall be reimbursed at a rate of ninety three dollars and nineteen cents ($93.19) per front foot and the listed cost of the additional right-of-way for the below referenced property owners upon platting of said property. B. Parcels in the Southwest 1/4, Northeast 1/4, Section 33, T 19 North, Range 28 East W.M., City of Moses Lake, Grant County, Washington, described as follows: 1. Tract 34, Battery Orchard Tracts. Additional right-of-way: $10,000 GC Parcel Number: 90313000 The reimbursements are adjusted June 1st every year according to the West Coast Consumer Price Index (CPI). The MLMC 12.40.112 (A) currently has a value of $111.12 per front foot, MLMC 12.40.112 (B1) currently has a value of $11972.70 and MLMC 13.08.164 (A) has a value of $550. Mr. Poth references the Mitigated Determination of Non-Significance (MDNS), prepared by then Senior Planner Ann Henning, in September of 2015. (Attached to his request) Mr. Poth states the MDNS clearly defines what fees are to be paid with Poth Major Plat #1. City staff have reviewed the MDNS and find no reference to the required reimbursements. As part of the Planning Commission minutes for the meeting held September 24, 2015. Mr. Mann moved that it be recommended to City Council that the preliminary plat be approved with the following conditions: 1. The comments of the Development Engineer shall be addressed before final plat submittal with the stipulation that one half of the reimbursements be paid upon submittal of the final plat and the other half be paid before the expiration of the reimbursement time limit. In the Findings of Fact, Conclusions, Decisions and Conditions of Approval, dated January 30, 2020, the Planning Commission lists 5 conditions of approval. Item number five states “The plat shall not be recorded until all the City fees and reimbursements are paid to the City of Moses Lake. Fiscal and Policy Implications The fiscal implications do not directly affect the City of Moses Lake, the reimbursements due will continue to increase each year by the west coast CPI. If the deferral is granted, it would set precedent for future developers to request deferral of reimbursement costs. Moses Lake Council Packet 4-28-20, Page 139 of 158 Page 3 of 3 Options Option Results • Take no action Mr. Poth would be required to pay half of the reimbursements due and pay the remainder with Poth Major Plat 2 • Deny the deferral Mr. Poth would be required to pay the full reimbursements due with Poth Major Plat 1 • Approve the request Mr. Poth would be allowed to pay the required reimbursements with Poth Major Plat 2 Staff Recommendation Staff recommends Council take no action and follow the Planning Commission recommendation from the September 24, 2015, meeting to allow Mr. Poth to pay half of the required reimbursements with Poth Major Plat #1 and pay the remainder with Poth Major Plat #2. Attachment A. Planning Commission minutes from September 24, 2015 B. Findings of Fact for Poth Major Plat #1, January 30, 2020 C. 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