See Notes to Financial Statements 9 Net change in fund balances – total governmental funds $ 12,973,482 Amounts reported for governmental activities in the statement of ac-tivities are
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Statement of Governmental Fund Revenues, Expenditures and Changes in Fund Balance/Statement of Activities
Year Ended June 30, 2007
General Fund Adjustments
Statement
of Activities Revenues
Property taxes $ 37,622,692 $ 37,622,692 Fines, fees and other 1,210,345 $ (400,227) $ 810,118 Investment income 2,909,400 (142,867) 2,766,533 State aid 277,331 — 277,331 Federal and state grants 25,845 — 25,845
Total revenues 42,045,613 (543,094) 41,502,519
Expenditures/Expenses
Salaries and benefits 20,120,860 (6,715) 20,114,145 Periodicals and other library materials 9,356,416 (6,458,031) 2,898,385 Occupancy expense 5,690,605 (3,539,668) 2,150,937 General and administrative 3,888,266 (859,145) 3,029,121 Depreciation — 6,830,465 6,830,465
Total expenditures/expenses 39,056,147 (4,033,094) 35,023,053
Excess of Revenues over Expenses 2,989,466 3,490,000 6,479,466
Other Financing Sources
Bond proceeds 9,984,016 (9,984,016) —
Change in Net Assets 12,973,482 (6,494,016) 6,479,466
Fund Balance – Net Assets,
Beginning of Year 41,824,984 54,089,210 95,914,194
Fund Balance – Net Assets,
End of Year $ 54,798,466 $ 47,595,194 $ 102,393,660
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Trang 2See Notes to Financial Statements 9
Net change in fund balances – total governmental funds $ 12,973,482
Amounts reported for governmental activities in the statement of
ac-tivities are different because governmental funds report capital
outlays as expenditures However, in the statement of
activi-ties, the cost of those assets is allocated over their estimated
useful lives and reported as depreciation expense This is the
amount by which capital outlays ($10,478,947) exceeded
de-preciation ($6,830,465) 3,648,482
Some expenses reported in the statement of activities do not require
the use of current financial resources and, therefore, are not
re-ported as expenditures in governmental funds:
• This is the amount by which noncurrent early retirement
benefits increased during the period (6,715)
• The issuance of long-term debt provides current financial
resources to governmental funds; however, it has no effect
on net assets Also, governmental funds report the effect
of issuance costs, premiums, discounts and other similar
items when debt is first issued, whereas these amounts are
deferred and amortized in the statement of activities This
amount is the net effect of these differences in the treatment
of long-term debt and related items (9,875,207)
• In the statement of activities, gain or loss from the sale of
capital assets is reported, whereas on the governmental funds,
only the proceeds from the sale increase financial resources
Thus, the change in net assets differs from the change in fund
balance by the cost of capital assets sold (260,576)
Change in net assets in governmental activities $ 6,479,466
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June 30, 2007
10
Note 1: Nature of Operations and Summary of Significant Accounting Policies
Nature of Operations
The Library District, organized under the Revised Statutes of the State of Missouri, provides li-brary services to portions of Clay, Platte and Jackson counties, which district excludes the area serviced by the Kansas City Public Library District and the North Kansas City Public Library The District currently operates 30 branches, with its main offices and distribution center in Independ-ence, Missouri
Accounting Method
Fund Accounting
The accounts of the Library are organized on the basis of funds, each of which is considered to
be a separate accounting entity The operations of each fund are accounted for by providing a sepa-rate set of self-balancing accounts, which comprise its assets, liabilities, fund equity, revenues, and expenditures or expenses As the Library’s sole purpose is the operation of its library system, the Library maintains only a general fund
Government-wide and Fund Financial Statements
The government-wide financial statements are presented on the economic resources measure-ment focus and the accrual basis of accounting Accordingly, all of the Library’s assets and li-abilities, including capital assets as well as long-term lili-abilities, are included in the accompanying statement of net assets The statement of activities presents changes in net assets Under the ac-crual basis of accounting, revenues are recognized in the period in which they are earned while expenses are recognized in the period in which the liability is incurred, regardless of the timing of related cash flows
Governmental fund financial statements report using the current financial resources measurement focus and the modified accrual basis of accounting Under the modified accrual basis of accounting, revenues and receivables are recognized when measurable and available for payment of current li-abilities The Library considers revenues to be available if they are anticipated to be collected within 60 days of the end of the fiscal year Expenditures are recorded when the related fund liabil-ity is incurred
Certain revenues are recorded when cash is received because they are generally not measurable un-til actually received Interest is recorded when earned since it is measurable and available
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The general fund is used to account for all financial transactions that are a part of the Library’s annual operating budget and are primarily funded through property tax revenues
Property Tax Revenues
Valuations are established as of January 1, and tax bills are due November 1 and become
delin-quent on the following January 1 Substantially all tax revenues applicable to the proceeding cal-endar year are received by the District by each June 30 Property taxes are recognized as revenue
in the period for which the taxes are levied The Library received approximately 97% of its fi-nancial support (exclusive of investment income) from property taxes during the year ended
June 30, 2007
Cash Equivalents
The Library considers all liquid investments with original maturities of three months or less to be cash equivalents At June 30, 2007, cash equivalents consisted of a money market account
Investments
Investments in nonnegotiable certificates of deposit are carried at amortized cost All other investments are carried at fair value Fair value is determined using quoted market prices for all investments carried at fair value other than collateralized mortgage obligations Fair value of collateralized mortgage obligations is estimated using a published pricing service
Investment income includes interest income and the net change for the year in the fair value of investments carried at fair value Investment income is assigned to the fund with which the related investment asset is associated
Net Assets
Reserves are reported in the governmental fund statements to indicate that a portion of the fund balance is restricted by law or contract for a specific purpose
Designated net assets remain under control of the Library’s Board of Directors, which, at its discretion, can use the funds for other purposes
Of the $45,788,755 in unrestricted net assets reported at June 30, 2007, $28,661,638 (consisting of investments, cash and interest receivable) has been designated by the Library’s Board of Directors for capital additions
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June 30, 2007
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In the government-wide statements, equity is classified as net assets and displayed in three components:
• Invested in Capital Assets, Net of Related Debt – consists of capital assets, including
re-stricted capital assets, net of accumulated depreciation and capitalized debt issuance costs, reduced by the net outstanding balances of any bonds, mortgages, notes or other borrowings that are attributable to the acquisition, construction or improvement of those assets
• Restricted Net Assets – consists of net assets with constraints placed on their use by either
(1) external groups such as creditors, grantors, contributors or laws or regulations of other governments or (2) law through constitutional provisions or enabling legislation
• Unrestricted Net Assets – all other net assets that do not meet the definition of “restricted”
or “invested in capital assets, net of related debt.”
Prepaid Subscriptions
The costs incurred in the purchase of subscriptions to periodicals and books are amortized over the terms of the subscriptions Subscription terms are usually one year or less
Capital Assets
Capital assets are recorded at cost at the date of acquisition, or fair value at the date of donation if acquired by gift Depreciation is computed using the straight-line method over the estimated useful
life of each asset (Also see Note 4)
Compensated Absences
Library policies permit most employees to accumulate vacation and sick leave benefits that may be realized as paid time off or, in limited circumstances, as a cash payment Expense and the re-lated liability are recognized as vacation benefits are earned whether the employee is expected to real-ize the benefit as time off or in cash Expense and the related liability for sick leave benefits are recognized when earned to the extent the employee is expected to realize the benefit in cash deter-mined using the termination payment method Sick leave benefits expected to be realized as paid time off are recognized as expense when the time off occurs and no liability is accrued for such bene-fits employees have earned but not yet realized Compensated absence liabilities are computed us-ing the regular pay and termination pay rates in effect at the statement of net assets date
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Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
ac-cepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and li-abilities at the date of the financial statements and the reported amounts of revenues, expenses,
gains, losses and other changes in net assets during the reporting period Actual results could differ from those
estimates
Risk Management
The Library is exposed to various risks of loss from torts; theft of, damage to and destruction of assets; business interruption; errors and omissions; employee injuries and illnesses; natural disas-ters; and employee health, dental and accident benefits Commercial insurance coverage is
pur-chased for claims arising from such matters Settled claims have not exceeded this commercial
coverage in any of the three preceding years
Note 2: Pension Plans
Multi-Employer Plan
Plan Description
The Mid-Continent Public Library participates in the Missouri Local Government Employees Retirement System (LAGERS), an agent multiple-employer public employee retirement system that acts as a common investment and administrative agent for local government entities in Missouri LAGERS is a defined bene-fit pension plan which provides retirement, disability and death benebene-fits to plan members and beneficiaries LAGERS was created and is governed by statute, Section RSMo 70.600 – 70.755 As such, it is the sys-tem’s responsibility to administer the law in accordance with the expressed intent of the General Assembly The plan is qualified under the Internal Revenue Code Section 401(a) and is tax exempt
The Missouri Local Government Employees Retirement System issues a publicly available financial report that includes financial statements and required supplementary information That report may be obtained by writing to LAGERS, P O Box 1665, Jefferson City, Missouri 65102, or by calling 1-800-447-4334
Funding Status
The Mid-Continent Public Library’s salaried employees do not contribute to the pension plan The political subdivision is required by state statute to contribute at an actuarially determined rate; the current rate is 16.8% of annual covered payroll The contribution requirements of plan members are determined by the governing body of the political subdivision The contribution provisions of the political subdivision are established by state statute This is trial version
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June 30, 2007
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Annual Pension Cost
For 2007, the political subdivision’s annual pension cost of $1,980,706 was equal to the required and actual contributions The required contribution was determined as part of the February 28, 2005 and/or February 28, 2006 annual actuarial valuation using the entry age actuarial cost method The actuarial assumptions as of February 28, 2007 included (a) a rate of return on the investment
of present and future assets of 7.5% per year, compounded annually, (b) projected salary increases of 4.0% per year, compounded annually, attributable to inflation, (c) additional projected salary increases ranging from 0.0% to 6.0% per year, depending on age and division, attributable to seniority/merit, (d) pre-retirement mortality based on the RP-2000 Combined Healthy Table set back 0 years for men and 0 years for women and (e) post-retirement mortality based on the 1971 Group Annuity Mortality Table projected to 2000 set back one (1) year for men and seven (7) years for women The actuarial value of assets was determined using techniques that smooth the effects of short-term volatility in the market value of investments over a five-year period The unfunded actuarial accrued liability is being amortized as a level percentage of projected payroll on an open basis The am-ortization period at February 28, 2007 was 15 years
Annual Pension Cost Three Year Trend Information
Ended
Annual Pension Cost (APC)
Percentage of APC Contributed
Net Pension Obligation
June 30, 2005 $ 1,776,857 100% $0
June 30, 2006 $ 1,892,574 100% $0
June 30, 2007 $ 1,980,706 100% $0
Tax Deferred Annuity Plan
During 1994, in order to provide additional retirement benefits for eligible employees, the Library adopted a tax deferred annuity plan underwritten by The Variable Annuity Life Insurance Com-pany The tax deferred annuity plan is a voluntary plan in which all full or part-time employees are eligible to contribute a portion of their gross salary into a tax-deferred annuity The Library does not contribute to this plan
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Note 3: Deposits, Investments and Investment Income
Deposits
Custodial credit risk is the risk that, in the event of a bank failure, a government’s deposits may not
be returned to it The Library’s deposit policy for custodial credit risk requires compliance
with the provisions of state law
State law requires collateralization of all deposits with federal depository insurance; bonds and
other obligations of the U.S Treasury, U.S agencies or instrumentalities or the state of Missouri; bonds of any city, county, school district or special road district of the state of Missouri; bonds of any state; or a surety bond having an aggregate value at least equal to the amount of the deposits The Library had no bank balances exposed to custodial credit risk at June 30, 2007
Investments
The Library may legally invest in direct obligations of and other obligations guaranteed as to the principal by the U.S Treasury, certain U.S agencies and instrumentalities, states and certain other political subdivisions
At June 30, 2007, the Library had the following investments and maturities:
Maturities in Years
Less
More than 10
U.S agency and
instrumentality obligations $ 46,087,338 $ 33,860,872 $ 12,226,466 $ — $ — Repurchase agreements 2,497,549 2,497,549 — — — Money market funds 1,321,574 1,321,574 — — —
$ 49,906,461 $ 37,679,995 $ 12,226,466 $ 0 $ 0
Interest Rate Risk As a means of limiting its exposure to fair value losses arising from
ris-ing interest rates, the Library’s investment policy states no funds shall be invested in obliga-tions which are to mature beyond the date that the funds are needed for purposes for which they were received by the Consolidated Public Library District
Credit Risk Credit risk is the risk that the issuer or other counterparty to an investment will
not fulfill its obligations The Library’s investment policy does not address credit risk At June
30, 2007, the Library’s investments in U.S agencies obligations not directly guaranteed by the U.S government were rated AAA by Standard & Poor’s Repurchase agreements and money market investments are unrated
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June 30, 2007
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Concentration of Credit Risk The Library places no limit on the amount that may be invested in
any one issuer At June 30, 2007, the Library’s investment in collateralized mortgage obligations
issued by the U.S government agencies, repurchase agreements and money market funds are as
follows:
Federal Home Loan Mortgage Corporation 39%
Federal National Mortgage Association 28%
Federal Home Loan Bank 27%
UMB Bank, N.A 5%
Custodial Credit Risk For an investment, custodial credit risk is the risk that, in the event of
the failure of the counterparty, the Library will not be able to recover the value of its
invest-ment or collateral securities that are in the possession of an outside party All of the
underly-ing securities for the Library’s investments in repurchase agreements at June 30, 2007 are held
by the counterparties in the Library’s name The Library’s investment policy does not address
how securities underlying repurchase agreements are to be held
The Library’s policy is to collateralize the demand deposits and repurchase agreements
with
securities held by the financial institution’s agent and in the Library’s name Because
se-curity investments were held by the financial institution and in the Library’s name, none of
the Library’s deposits or investments was exposed to custodial credit risk as of June 30,
2007
Summary of Carrying Values
The carrying values of deposits and investments shown above are included in the statement of net
assets at June 30, 2007 as follows:
Carrying value
Investments 49,906,461
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Included in the following statement of net assets captions:
Cash and cash equivalents $ 6,368,581
Cash and cash equivalents—designated 3,819,123
Investments—designated 24,665,555
Investment Income
Investment income for the year ended June 30, 2007 consisted of:
Net decrease in fair value of investments (212,432)
Note 4: Changes in Capital Assets
Capital Assets
A summary of the Library’s capital assets activity for the year ended June 30, 2007 is as follows:
Balance June 30, 2006 Increases Decreases Transfers
Balance June 30, 2007 Useful Life
Net depreciable assets 47,175,560 8,672,628 (6,374,015) 2,873,050 51,434,323
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