KENT DISTRICT LIBRARY REPORT ON FINANCIAL STATEMENTS ... · activity, the major fund, and the...
Transcript of KENT DISTRICT LIBRARY REPORT ON FINANCIAL STATEMENTS ... · activity, the major fund, and the...
KENTDISTRICTLIBRARY
REPORTONFINANCIALSTATEMENTS(withrequiredsupplementaryinformation)
YEARENDEDDECEMBER31,2019
TABLEOFCONTENTS
PageINDEPENDENTAUDITOR’SREPORT.........................................................................................................................................1‐2MANAGEMENT’SDISCUSSIONANDANALYSIS...................................................................................................................3‐10BASICFINANCIALSTATEMENTS.................................................................................................................................................11 Government‐WideFinancialStatements StatementofNetPosition...............................................................................................................................................12 StatementofActivities......................................................................................................................................................13 FundFinancialStatements BalanceSheet‐GovernmentalFunds.....................................................................................................................14‐15 StatementofRevenues,Expenditures,andChanges inFundBalances‐GovernmentalFunds................................................................................................................16
ReconciliationoftheStatementofRevenues,Expenditures,andChanges inFundBalancesofGovernmentalFundstotheStatementofActivities...............................................17 ProprietaryFund StatementofNetPosition...............................................................................................................................................18 StatementofRevenues,ExpensesandChangesinNetPosition....................................................................19 StatementofCashFlows..................................................................................................................................................20 FiduciaryFund StatementofFiduciaryNetPosition...........................................................................................................................21 StatementofChangesinFiduciaryNetPosition...................................................................................................22 NotestoFinancialStatements............................................................................................................................................23‐42REQUIREDSUPPLEMENTARYINFORMATION......................................................................................................................43 BudgetaryComparisonSchedule‐GeneralFund.........................................................................................................44 ScheduleofChangesintheEmployer’sPensionLiabilityandRelatedRatios.................................................45 ScheduleofEmployerPensionContributions................................................................................................................46 NotestotheRequiredSupplementaryInformation....................................................................................................47
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INDEPENDENTAUDITOR’SREPORTTotheBoardofTrusteesKentDistrictLibraryReportontheFinancialStatementsWe have audited the accompanying financial statements of the governmental activities, the business‐typeactivity,themajorfund,andtheaggregateremainingfundinformationoftheKentDistrictLibraryasofandforthe year ended December 31, 2019, and the related notes to the financial statements, which collectivelycomprisetheLibrary’sbasicfinancialstatementsaslistedinthetableofcontents.Management’sResponsibilityfortheFinancialStatementsManagement is responsible for the preparation and fair presentation of these financial statements inaccordancewith accountingprinciples generally accepted in theUnited States ofAmerica; this includes thedesign,implementation,andmaintenanceofinternalcontrolrelevanttothepreparationandfairpresentationoffinancialstatementsthatarefreefrommaterialmisstatement,whetherduetofraudorerror.Auditor’sResponsibilityOurresponsibilityistoexpressopinionsonthesefinancialstatementsbasedonouraudit.Weconductedouraudit in accordance with auditing standards generally accepted in the United States of America. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether thefinancialstatementsarefreefrommaterialmisstatement.Anaudit involvesperformingprocedures toobtainauditevidenceabout theamountsanddisclosures in thefinancialstatements.Theproceduresselecteddependontheauditor’sjudgment,includingtheassessmentoftherisksofmaterialmisstatementofthefinancialstatements,whetherduetofraudorerror.Inmakingthoserisk assessments, the auditor considers internal control relevant to the entity’s preparation and fairpresentation of the financial statements in order to design audit procedures that are appropriate in thecircumstances,butnot for thepurposeof expressinganopinionon theeffectivenessof theentity’s internalcontrol. Accordingly,weexpressnosuchopinion. Anauditalso includesevaluating theappropriatenessofaccountingpoliciesusedandthereasonablenessofsignificantaccountingestimatesmadebymanagement,aswellasevaluatingtheoverallpresentationofthefinancialstatements.Webelievethat theauditevidencewehaveobtained issufficientandappropriatetoprovideabasis forourauditopinions.
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OpinionsIn our opinion, the basic financial statements referred to above present fairly, in allmaterial respects, therespectivefinancialpositionofthegovernmentalactivities,thebusiness‐typeactivity,themajorfund,andtheaggregate remaining fund information as of December 31, 2019, and the respective changes in financialposition and, where applicable, cash flow thereof for the year then ended in accordance with accountingprinciplesgenerallyacceptedintheUnitedStatesofAmerica.OtherMattersRequiredSupplementaryInformationAccounting principles generally accepted in the United States of America require that the management’sdiscussionandanalysisandtherequiredsupplementaryinformation,asidentifiedinthetableofcontents,bepresented to supplement the basic financial statements. Such information, althoughnot a part of the basicfinancialstatements,isrequiredbytheGovernmentalAccountingStandardsBoard,whoconsidersittobeanessentialpartof financial reporting forplacing thebasic financial statements in anappropriateoperational,economic,orhistorical context. Wehaveappliedcertain limitedprocedures to the requiredsupplementaryinformationinaccordancewithauditingstandardsgenerallyacceptedintheUnitedStatesofAmerica,whichconsisted of inquiries of management about themethods of preparing the information and comparing theinformationforconsistencywithmanagement’sresponsestoourinquiries,thebasicfinancialstatements,andotherknowledgeweobtainedduringourauditofthebasicfinancialstatements.Wedonotexpressanopinionorprovideanyassuranceontheinformationbecausethelimitedproceduresdonotprovideuswithsufficientevidencetoexpressanopinionorprovideanyassurance.June26,2020
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MANAGEMENT’SDISCUSSIONANDANALYSISAs management of the Kent District Library (the Library), we offer readers of the Kent District Library’sfinancialstatementsthisnarrativeoverviewandanalysisofthefinancialactivitiesoftheKentDistrictLibraryforthefiscalyearendedDecember31,2019.FINANCIALHIGHLIGHTSGovernmental‐wide
The assets and deferred outflows of the Library exceeded its liabilities and deferred inflows at theclose of the most recent fiscal year by $29,058,643 (net position). Of this amount, $12,760,368(unrestricted net position) may be used to meet the Library’s ongoing obligations to citizens andcreditors.
TheLibrary’stotalnetpositionincreasedby$2,277,836.
Fund‐level
Governmentalfunds
As of the close of the 2019 fiscal year, the Library’s governmental funds reported ending fundbalanceof$13,586,860,anincreaseof$1,332,525incomparisonwiththeprioryear.
Attheendofthecurrentfiscalyear,unassignedfundbalanceforthegeneralfundwas$7,898,213
or 32% of total general fund expenditures, exceeding the Kent District Library Board’s fundbalanceminimumof15%to20%ofexpenditures.
Proprietaryfund
Asofthecloseofthe2019fiscalyear,theLibrary’senterprisefundreportedendingfundbalance
of$2,984,anincreaseof$931.Theentiretyofthisbalanceisconsideredunrestricted.OVERVIEWOFTHEFINANCIALSTATEMENTSThisdiscussionandanalysisisintendedtoserveasanintroductiontotheLibrary’sbasicfinancialstatements.The Library’s basic financial statements are comprised of three components: 1) government‐wide financialstatements,2) fund financial statements,and3)notes to the financial statements. This reportalsocontainsrequiredsupplementaryinformationinadditiontothebasicfinancialstatementsthemselves.Government‐widefinancialstatements.Thegovernment‐widefinancialstatementsaredesignedtoprovidereaderswithabroadoverviewoftheLibrary’sfinances,inamannersimilartoaprivate‐sectorbusiness.ThestatementofnetpositionpresentsinformationonalloftheLibrary’sassets,deferredoutflowsofresources,liabilities, and deferred inflows of resourceswith the difference between the four reported asnetposition.Over time, increases or decreases in net positionmay serve as a useful indicator of whether the financialpositionoftheLibraryisimprovingordeteriorating.The statementofactivities presents information showinghow theLibrary’snetposition changedduring themostrecentfiscalyear.Allchangesinnetpositionarereportedassoonastheunderlyingeventgivingrisetothechangeoccurs,regardlessofthetimingofrelatedcashflows.Thus,revenuesandexpensesarereportedinthisstatementforsomeitemsthatwillonlyresultincashflowsinfuturefiscalperiods(e.g.,earnedbutunusedcompensatedabsences).
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Both of the government‐wide financial statements distinguish functions of the Library that are principallysupportedby taxes and intergovernmental revenues (governmentalactivities) fromother functions that areintended to recover all or a significant portion of their costs through user fees and charges (business‐typeactivities). The governmental activities of the Library include culture and recreation. The business‐typeactivitiesoftheLibraryconsultingactivity.Thegovernment‐widefinancialstatementscanbefoundonpages12and13ofthisreport.Fund financialstatements. A fund is a groupingof related accounts that isused tomaintain controloverresourcesthathavebeensegregatedforspecificactivitiesorobjectives.TheLibraryusesfundaccountingtoensureanddemonstratecompliancewith finance‐related legalrequirements. Allof the fundsof theLibrarycanbedividedintotwocategories:governmentalfundsorfiduciaryfunds.Governmentalfunds. Governmentalfundsareusedtoaccountforessentiallythesamefunctionsreportedasgovernmentalactivities in thegovernment‐wide financialstatements. However,unlike thegovernment‐widefinancial statements, governmental fund financial statements focus on near‐term inflows and outflows ofspendableresources,aswellasonbalancesofspendableresourcesavailableattheendofthefiscalyear.Suchinformationmaybeusefulinevaluatingagovernment’snear‐termfinancingrequirements.Becausethefocusofgovernmentalfundsisnarrowerthanthatofthegovernment‐widefinancialstatements,itisusefultocomparetheinformationpresentedforgovernmentalfundswithsimilarinformationpresentedforgovernmental activities in the government‐wide financial statements. By doing so, readers may betterunderstandthelong‐termimpactofthegovernment’sneartermfinancingdecisions. Boththegovernmentalfund balance sheet and the governmental fund statement of revenues, expenditures, and changes in fundbalances provide information to facilitate this comparison between governmental funds and governmentalactivities.TheLibrarymaintainstwoindividualgovernmentalfunds.Informationispresentedinthegovernmentalfundbalancesheetandinthegovernmentalfundstatementofrevenues,expenditures,andchangesinfundbalancefor the general fundwhich is considered amajor fund and the capital projects fundwhich is considered anonmajorfund.TheLibraryadoptsanannualappropriatedbudgetforitsgeneralfund.Abudgetarycomparisonschedulehasbeenprovidedforthegeneralfundintherequiredsupplementaryinformation.Thebasicgovernmentalfundfinancialstatementscanbefoundonpages14through16ofthisreport.
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Proprietary funds.TheLibrarymaintainsone typeofproprietary fund.Enterprise fundsareused toreportthesamefunctionsasbusiness‐typeactivitiesinthegovernment‐widefinancialstatements.TheLibraryusestheenterprisefundtoaccountforitsconsultingactivity.Proprietaryfundsprovidedthesametypeofinformationasthegovernment‐widefinancialstatements,onlyinmoredetail.Thebasicproprietaryfundfinancialstatementscanbefoundonpages18through20ofthisreport.Fiduciaryfunds.Fiduciaryfundsareusedtoaccountforresourcesheldforthebenefitofpartiesoutsidethegovernment. Fiduciary funds are not reflected in the government‐wide financial statements because theresources of those funds arenotavailable to support the Library’s ownprograms. The accountingused forfiduciaryfundsismuchlikethatusedforproprietaryfunds.Thefiduciaryfundfinancialstatementscanbefoundonpages21and22ofthisreport.Notestothe financialstatements. Thenotesprovidesupplementary information that isessential toa fullunderstandingofthedataprovidedinthegovernment‐wideandfundfinancialstatements. Thenotestothefinancialstatementscanbefoundonpages23through42ofthisreport.Other information. Inaddition to thebasic financial statements andaccompanyingnotes, this report alsopresents certain required supplementary information concerning the Library’s progress in funding itsobligationtoprovideretirementbenefitsto itsemployeesandthegeneral fundbudgetonpages44through47.Government‐wideFinancialAnalysisAsnotedearlier,netpositionmayserveovertimeasausefulindicatorofgovernment’sfinancialposition.Inthecaseof theLibrary,assetsanddeferredoutflowsofresourcesexceeded liabilitiesanddeferred inflowofresourcesby$29,058,643atthecloseofthemostrecentfiscalyear.$8,923,316 of the Library’s net position (31%) reflects its investment in capital assets (e.g., library books,furniture and equipment), less any related debt, none at year end, used to acquire those assets that is stilloutstanding. TheLibraryusesthesecapitalassetstoprovideservicestocitizens;consequently, theseassetsarenotavailableforfuturespending.
KentDistrictLibrary’sNetPosition
2019 2018 2019 2018 2019 2018
Currentassets 38,033,374$ 35,507,046$ 2,984$ 2,053$ 38,036,358$ 35,509,099$Pensionassets 10,694,591 3,772,162 ‐ ‐ 10,694,591 3,772,162Capitalassets 8,923,316 8,434,319 ‐ ‐ 8,923,316 8,434,319
Totalassets 57,651,281 47,713,527 2,984 2,053 57,654,265 47,715,580
Deferredoutflowsofresources 131,422 3,329,741 ‐ 131,422 3,329,741
Long‐termliabilities 474,095 304,475 ‐ ‐ 474,095 304,475Otherliabilities 1,000,519 965,034 ‐ ‐ 1,000,519 965,034
Totalliabilities 1,474,614 1,269,509 ‐ ‐ 1,474,614 1,269,509
Deferredinflowofresources 27,252,430 22,995,005 ‐ ‐ 27,252,430 22,995,005
NetpositionInvestmentincapitalassets 8,923,316 8,434,319 ‐ ‐ 8,923,316 8,434,319Restrictedcontributions 355,381 325,508 ‐ ‐ 355,381 325,508Restrictedforpension 7,019,578 6,394,575 ‐ ‐ 7,019,578 6,394,575Unrestricted 12,757,384 11,624,352 2,984 2,053 12,760,368 11,626,405
Totalnetposition 29,055,659$ 26,778,754$ 2,984$ 2,053$ 29,058,643$ 26,780,807$
ActivitiesGovernmental Business‐type
Activities Total
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Theunrestrictednetpositionof$12,760,368maybeusedtomeettheLibrary’songoingobligationstocitizensandcreditors.At the end of the current fiscal year, the Library is able to report positive balances in all categories of netpositionforitsgovernmentalactivities.TheLibrary’snetpositionincreasedby$2,277,836duringthecurrentfiscalyear.Themajorityoftheincreasecanbeattributedtoincreasedpropertytaxrevenue.Governmentalactivities.GovernmentalactivitiesincreasedtheLibrary’snetpositionby$2,276,905andthebusiness‐typeactivitiesincreasednetpositionby$931.Keyelementsareasfollows:
KentDistrictLibrary’sChangesinNetPosition
Revenues 2019 2018 2019 2018 2019 2018ProgramrevenuesChargesforservices 192,717$ 291,834$ 21,573$ 75,435$ 214,290$ 367,269$Capitalgrantsandcontributions ‐ 104,000 ‐ ‐ ‐ 104,000
GeneralrevenuesPropertytaxes 22,130,099 21,188,285 ‐ ‐ 22,130,099 21,188,285Penalfines 787,989 831,140 ‐ ‐ 787,989 831,140Stateaid 905,003 863,786 ‐ ‐ 905,003 863,786Investmentincome 369,488 231,514 ‐ ‐ 369,488 231,514Other 1,313,343 938,469 ‐ ‐ 1,313,343 938,469
Totalrevenues 25,698,639 24,449,028 21,573 75,435 25,720,212 24,524,463
ExpensesLibraryservices 23,421,734 23,552,613 ‐ ‐ 23,421,734 23,552,613Consulting ‐ ‐ 20,642 73,382 20,642 73,382
Totalexpenses 23,421,734 23,552,613 20,642 73,382 23,442,376 23,625,995
Increaseinnetposition 2,276,905 896,415 931 2,053 2,277,836 898,468
Netposition,beginningofyear 26,778,754 25,882,339 2,053 ‐ 26,780,807 25,882,339
Netposition,endofyear 29,055,659$ 26,778,754$ 2,984$ 2,053$ 29,058,643$ 26,780,807$
GovernmentalActivities
Business‐typeActivities Total
Overall government activities revenue is up $1,249,611 from the prior year. The majority of theincreaseisduetocollectingmorepropertytaxrevenueandincreasede‐ratefunding.
Business‐typeactivityrevenuedecreased$53,862fromtheprioryear,basedondecreasedconsulting
activityduringthecurrentyear. Governmentalexpensesdecreased$130,879.Thedecreasecanprimarilybeattributedtoadecrease
inspendingonmaterials. Business‐type expenses decreased $52,740. The decrease can be attributed to decreased consulting
activityduringthecurrentyear.
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KentDistrictLibraryEXPENSESANDREVENUES‐GOVERNMENTALACTIVITIES
DECEMBER31,
‐
5,000
10,000
15,000
20,000
25,000
30,000
Expenses Revenues
Thousands
2019
2018
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KentDistrictLibraryREVENUESBYSOURCE‐GOVERNMENTALACTIVITIES
DECEMBER31,
Propertytaxes86%
Stateaid4%
Penalfines3%
Chargesforservices1%
Investmentincome1%Other
5%
2019
Propertytaxes87%
Stateaid4%
Penalfines3%
Chargesforservices1%
Investmentincome1%
Other4%
2018
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FinancialAnalysisoftheGovernment’sFundsAsnotedearlier,theLibraryusesfundaccountingtoensureanddemonstratecompliancewithfinance‐relatedlegalrequirements.Governmental funds. The focusof theLibrary’sgovernmental funds is toprovide informationonnear‐terminflows,outflows,andbalancesofspendable resources. Suchinformation isuseful inassessingtheLibrary’sfinancing requirements. In particular, unassigned fund balance may serve as a useful measure of agovernment’snetresourcesavailableforspendingattheendofthefiscalyear.As of the end of the current fiscal year, the Library’s governmental funds reported combined ending fundbalanceof$13,586,860,anincreaseof$1,332,525incomparisonwiththeprioryear. Approximately58%ofthis total amount ($7,898,213) constitutes unassigned, which is available for spending at the Library’sdiscretion.Theremainderoffundbalanceisrestricted,non‐spendable,committed,orassignedtoindicatethatit is not available for new spending because it has already been committed to 1) donations ($355,381), 2)capital projects ($3,129,709), 3) subsequent year expenditures ($885,854) or 4) prepaid expenses($1,253,501).ThegeneralfundisthechiefoperatingfundoftheLibrary. Attheendofthecurrentfiscalyear,unassignedfundbalanceofthegeneralfundwas$7,898,213whiletotalfundbalancewas$13,522,658.Asameasureofthegeneralfund’sliquidity,itmaybeusefultocomparebothunassignedfundbalanceandtotalfundbalancetototalfundexpenditures.Unassignedfundbalancerepresents32%oftotalgeneralfundexpenditures,whiletotalfundbalancerepresents55%ofthatsameamount.ThefundbalanceoftheLibrary’sgeneralfundincreasedby$1,332,525duringfiscalyear2019.Akeyfactorinthisincreaseisasfollows:
Increaseinpropertytaxrevenueande‐ratefundingProprietaryfunds.TheLibrary’sproprietaryfundfinancialstatementsprovidethesametypeofinformationfoundinthegovernment‐widefinancialstatements,butinmoredetail.Unrestrictednetpositionattheendoftheyearamountedto$2,984.Thetotalincreaseinnetpositionis$931andislargelyrelatedtoasignificantdecreaseinexpenses.CapitalAssetandDebtAdministrationCapitalassets. TheLibrary’s investment incapitalassets for itsgovernmentalactivitiesasofDecember31,2019, amounts to $8,923,316 (net of accumulateddepreciation). This investment in capital assets includeslibrarybooksandmaterials,furnitureandequipment,andbuildingandbuildingimprovements.Majorcapitalasseteventsduringthecurrentfiscalyearincludedthefollowing:
Newlibrarybooksandmaterials Newcomputersandtechnology
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KentDistrictLibrary’sAssets(NetofDepreciation)
2019 2018
Buildings 463,958$ 548,314$Buildingimprovements 846,192 958,038Landimprovements 357,966 387,196Librarybooksandmaterials 5,240,817 5,063,516Vehicles 306,522 362,550Furnitureandequipment 71,468 113,298Land 440,000 440,000Informationtechnology 425,531 549,740Constructioninprogress 770,862 11,667
8,923,316$ 8,434,319$
GovernmentalActivities
AdditionalinformationontheLibrary’scapitalassetscanbefoundinthenotesofthisreport.Long‐termdebt.Attheendofthecurrentfiscalyear,theLibraryhadtotaldebtoutstandingof$474,095.Thisrepresentscompensatedabsencesearnedbutnotusedasofyear‐end.
KentDistrictLibrary’sOutstandingDebt
2019 2018
Compensatedabsences 474,095$ 304,475$
GovernmentalActivities
TheLibrary’stotaldebtincreasedby$169,620(55.7%)duringthecurrentfiscalyear.AdditionalinformationontheLibrary’slong‐termdebtcanbefoundinthenotesofthisreport.EconomicFactorsandNextYear’sBudgetsandRatesKentDistrictLibrary’sgoalistomaintainandenhancetheservicesthatareprovidedtothepublicutilizingthemostefficientandeffectivemethods. TheLibraryhasprojectedexpenditurestoexceedrevenuesin2020by$885,854. The Library has a conservative and fiscally responsible budget for the fiscal year 2020 thatwillsupporttheLibrary’sactivitiesandprograms.RequestsforInformationThisfinancialreportisdesignedtoprovideageneraloverviewoftheLibrary’sfinancesforallthosewithaninterestinthegovernment’sfinances.QuestionsconcerninganyoftheinformationprovidedinthisreportorrequestsforadditionalfinancialinformationshouldbeaddressedtoKentDistrictLibrary,814W.RiverCenterNE,ComstockPark,MI49321.
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BASICFINANCIALSTATEMENTS
KENTDISTRICTLIBRARYSTATEMENTOFNETPOSITION
DECEMBER31,2019
Seenotestofinancialstatements. 12
GovernmentalActivities
Business‐typeActivity Total
ASSETSCash 2,455,107$ 17,418$ 2,472,525$Investments 13,154,212 ‐ 13,154,212ReceivablesAccounts 298,748 ‐ 298,748Taxes 20,857,353 ‐ 20,857,353
Internalbalances 14,453 (14,453) ‐Prepaidexpenses 1,253,501 19 1,253,520Netpensionasset 10,694,591 ‐ 10,694,591Capitalassets,notbeingdepreciated 1,210,862 ‐ 1,210,862Capitalassets,netofaccumulateddepreciation 7,712,454 ‐ 7,712,454
TOTALASSETS 57,651,281 2,984 57,654,265
DEFERREDOUTFLOWOFRESOURCESPensionrelateditems 131,422 ‐ 131,422
LIABILITIESAccountspayable 690,618 ‐ 690,618Accruedpayroll,taxesandwithholding 309,586 ‐ 309,586Unearnedrevenue 315 ‐ 315NoncurrentliabilitiesDuewithinoneyear 189,638 ‐ 189,638Dueinmorethanoneyear 284,457 ‐ 284,457
TOTALLIABILITIES 1,474,614 ‐ 1,474,614
DEFERREDINFLOWSOFRESOURCESUnavailablerevenue 23,445,995 ‐ 23,445,995Pensionrelateditems 3,806,435 ‐ 3,806,435
TOTALDEFERREDINFLOWSOFRESOURCES 27,252,430 ‐ 27,252,430
NETPOSITIONInvestmentincapitalassets 8,923,316 ‐ 8,923,316Restricted‐contributions 355,381 ‐ 355,381Restricted‐pensionbenefits 7,019,578 ‐ 7,019,578Unrestricted 12,757,384 2,984 12,760,368
TOTALNETPOSITION 29,055,659$ 2,984$ 29,058,643$
KENTDISTRICTLIBRARYSTATEMENTOFACTIVITIES
YEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 13
Functions/Programs ExpensesChargesforServices
GovernmentalActivities
Business‐typeActivity Total
GovernmentalactivitiesRecreationandcultureLibrary 23,421,734$ 192,717$ (23,229,017)$ ‐$ (23,229,017)$
Business‐typeactivityConsulting 20,642 21,573 ‐ 931 931
Total 23,442,376$ 214,290$ (23,229,017) 931 (23,228,086)
GeneralrevenuesTaxesPropertytaxes,leviedforgeneral 22,130,099 ‐ 22,130,099
Penalfines 787,989 ‐ 787,989Statesources 905,003 ‐ 905,003Investmentincome 369,488 ‐ 369,488Other 1,313,343 ‐ 1,313,343
Totalgeneralrevenues 25,505,922 ‐ 25,505,922
Changeinnetposition 2,276,905 931 2,277,836
Netposition,beginningofyear 26,778,754 2,053 26,780,807
Netposition,endofyear 29,055,659$ 2,984$ 29,058,643$
ProgramRevenues
Net(Expense)RevenueandChangesinNetPosition
KENTDISTRICTLIBRARYBALANCESHEET
GOVERNMENTALFUNDSDECEMBER31,2019
Seenotestofinancialstatements. 14
Nonmajor TotalCapital Governmental
General Projects FundsASSETS
ASSETSCash 2,455,107$ ‐$ 2,455,107$Investments 13,154,212 ‐ 13,154,212Duefromotherfunds ‐ 64,202 64,202ReceivablesAccounts 298,748 ‐ 298,748Taxes 20,857,353 ‐ 20,857,353
Prepaidexpenses 1,253,501 ‐ 1,253,501
TOTALASSETS 38,018,921$ 64,202$ 38,083,123$
LIABILITIES,DEFERREDINFLOWSOFRESOURCESANDFUNDBALANCE
LIABILITIESAccountspayable 690,618$ ‐$ 690,618$Accruedpayroll,taxesandwithholding 309,586 ‐ 309,586Duetootherfunds 49,749 ‐ 49,749Unearnedrevenue 315 ‐ 315
TOTALLIABILITIES 1,050,268 ‐ 1,050,268
DEFERREDINFLOWSOFRESOURCESUnavailablerevenue‐USFfunds 114,657 ‐ 114,657Unavailablerevenue‐propertytaxes 23,331,338 ‐ 23,331,338
TOTALDEFERREDINFLOWS 23,445,995 ‐ 23,445,995
Seenotestofinancialstatements. 15
Nonmajor TotalCapital Governmental
General Projects Funds
FUNDBALANCENonspendable‐prepaidexpenditures 1,253,501$ ‐$ 1,253,501$Restricted‐donations 355,381 ‐ 355,381Committed‐capitalprojects 3,129,709 ‐ 3,129,709Assigned‐capitalprojects ‐ 64,202 64,202Assigned‐subsequentyearexpenditures 885,854 ‐ 885,854Unassigned 7,898,213 ‐ 7,898,213
TOTALFUNDBALANCE 13,522,658 64,202 13,586,860
TOTALLIABILITIES,DEFERREDINFLOWSOFRESOURCESANDFUNDBALANCE 38,018,921$ 64,202$ 38,083,123$
Totalgovernmentalfundbalances 13,586,860$
Amountsreportedforgovernmentalactivitiesinthestatementofnetpositionaredifferentbecause:Deferredoutflowsofresources‐relatedtopension 131,422Deferredinflowsofresources‐relatedtopension (3,806,435)Netpensionasset 10,694,591
Capitalassetsusedingovernmentalactivitiesarenotfinancialresourcesand,therefore,arenotreportedinthefunds.Capitalassetsnotbeingdepreciated 1,210,862$Capitalassetsbeingdepreciated,net 7,712,454 8,923,316
Long‐termliabilities,suchascompensatedabsences,arenotdueandpayableinthecurrentperiodandarethereforenotreportedinthefunds.Compensatedabsencespayable (474,095)
Netpositionofgovernmentalactivities 29,055,659$
KENTDISTRICTLIBRARYSTATEMENTOFREVENUES,EXPENDITURES,ANDCHANGES
INFUNDBALANCES‐GOVERNMENTALFUNDSYEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 16
Nonmajor TotalCapital Governmental
General Projects FundsREVENUESLocalsourcesPropertytaxes 22,130,099$ ‐$ 22,130,099$Penalfines 787,989 ‐ 787,989Chargesforservices 192,717 ‐ 192,717Interestincome 369,488 ‐ 369,488Publicdonations 332,221 ‐ 332,221Other 981,122 ‐ 981,122
Totallocalsources 24,793,636 ‐ 24,793,636
Statesources 905,003 ‐ 905,003
Totalrevenues 25,698,639 ‐ 25,698,639
EXPENDITURESCurrentRecreationandcultureSalariesandwages 11,751,783 ‐ 11,751,783Employeebenefits 3,727,249 ‐ 3,727,249CollectionsDigital 1,611,377 ‐ 1,611,377Physical 2,087,267 ‐ 2,087,267
Supplies 489,120 ‐ 489,120Contractualservices 1,163,801 ‐ 1,163,801Programmingandoutreach 290,140 ‐ 290,140Maintenanceandutilities 1,603,552 ‐ 1,603,552Staffandboarddevelopment 169,794 ‐ 169,794Other 587,156 ‐ 587,156Capitaloutlay 884,875 ‐ 884,875
Totalexpenditures 24,366,114 ‐ 24,366,114
EXCESS(DEFICIENCY)OFREVENUESOVER(UNDER)EXPENDITURES 1,332,525 ‐ 1,332,525
FUNDBALANCE,beginningofyear 12,190,133 64,202 12,254,335
FUNDBALANCE,endofyear 13,522,658$ 64,202$ 13,586,860$
KENTDISTRICTLIBRARYRECONCILIATIONOFTHESTATEMENTOFREVENUES,EXPENDITURES,AND
CHANGESINFUNDBALANCESOFGOVERNMENTALFUNDSTOTHESTATEMENTOFACTIVITIESYEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 17
Netchangeinfundbalances‐totalgovernmentalfunds 1,332,525$
Amountsreportedforgovernmentalactivitiesinthestatementofactivitiesaredifferentbecause:Governmentalfundsreportcapitaloutlaysasexpenditures.Inthestatementofactivitiesthesecostsareallocatedovertheirestimatedusefullivesasdepreciation:Depreciationexpense (2,556,040)Gain/lossondisposalofcapitalassets (51)Capitaloutlay 3,045,088
Compensatedabsencesarereportedontheaccrualmethodinthestatementofactivities,andreportedasanexpenditurewhenfinancialresourcesareusedinthegovernmentalfunds:Accruedcompensatedabsencesbeginningoftheyear 304,475Accruedcompensatedabsencesendoftheyear (474,095)
Someexpensesreportedinthestatementofactivitiesdonotrequiretheuseofcurrentfinancialresourcesand,therefore,arenotreportedasexpendituresingovernmentalfunds:Pensionrelateditems 625,003
Changeinnetpositionofgovernmentalactivities 2,276,905$
KENTDISTRICTLIBRARYPROPRIETARYFUND
STATEMENTOFNETPOSITIONDECEMBER31,2019
Seenotestofinancialstatements. 18
Consulting
CURRENTASSETSCash 17,418$Prepaidexpenses 19
TOTALCURRENTASSETS 17,437
CURRENTLIABILITYDuetootherfunds 14,453
NETPOSITIONUnrestricted 2,984$
KENTDISTRICTLIBRARYPROPRIETARYFUND
STATEMENTREVENUES,EXPENSESANDCHANGESINNETPOSITIONYEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 19
ConsultingREVENUEChargesforservices 21,573$
OPERATINGEXPENSESSalariesandwages 572Benefits 144Professionalservices 16,300Other 3,626
Totalexpenses 20,642
Changeinnetposition 931
NETPOSITION,beginningofyear 2,053
NETPOSITION,endofyear 2,984$
KENTDISTRICTLIBRARYPROPRIETARYFUND
STATEMENTOFCASHFLOWSYEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 20
ConsultingCASHFLOWSFROMOPERATINGACTIVITIESReceiptsfromcustomers 38,069$Paymenttoemployees (716)Paymenttosuppliersandother (19,935)
Netcashprovidedinoperatingactivities 17,418
CASHBeginningofyear ‐
Endofyear 17,418$
RECONCILIATIONOFNETOPERATINGREVENUES(EXPENSE)TONETCASHPROVIDED(USED)BYOPERATINGACTIVITIESOperatingincome 931$Adjustmentstoreconcileoperatingincome(loss)tonetcashprovided(used)byoperatingactivities(Increase)decreaseinassetsAccountsreceivable 16,496Prepaidexpenditures 14
Increase(decrease)inliabilityDueto/fromotherfunds (23)
Netcashprovidedbyoperatingactivities 17,418$
KENTDISTRICTLIBRARYSTATEMENTOFFIDUCIARYNETPOSTION
DECEMBER31,2019
Seenotestofinancialstatements. 21
PensionTrustFund
ASSETSInvestments 54,716,636$ReceivablesInterestanddividends 60,330
TOTALASSETS 54,776,966
NETPOSITIONRestrictedforpension 54,776,966$
KENTDISTRICTLIBRARYFIDUCIARYFUND
STATEMENTOFCHANGESINFIDUCIARYNETPOSITIONYEARENDEDDECEMBER31,2019
Seenotestofinancialstatements. 22
PensionTrustFund
ADDITIONSContributionsEmployer 535,203$Nonemployer 155,932
Totalcontributions 691,135
InvestmentincomeNetappreciation 8,842,063Interestanddividends 917,129
Totalinvestmentincome 9,759,192
Lessinvestmentexpense (103,121)
Totalinvestmentincome 9,656,071
Totaladditions 10,347,206
DEDUCTIONSBenefitspaidtomembers 2,163,327Administrativeexpense 110,664Other 2,957
TOTALDEDUCTIONS 2,276,948
CHANGEINNETPOSITION 8,070,258
NETPOSITIONBeginningofyear 46,706,708
Endofyear 54,776,966$
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
23
NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIESDescriptionofGovernment‐wideFinancialStatementsThegovernment‐widefinancialstatements(i.e.,thestatementofnetpositionandthestatementofactivities)report informationonallof thenon‐fiduciaryactivitiesof theprimarygovernment. Governmentalactivities,which normally are supported by taxes and intergovernmental revenues, are reported separately from thebusiness‐typeactivity,whichrelytoasignificantextentonfeesandchargesforsupport.ReportingEntityKentDistrictLibrarycommencedofficialoperationspursuanttoActNo.24ofthePublicActsof1989onJuly1,1994,andisgovernedbyaBoardofTrustees(the“Board”)consistingofeightmembers,eachappointedbytheKentCountyBoardofCommissioners, according togeographic regions.TheBoardhas theauthority to levyproperty taxes, the power to designatemanagement, and the accountability for all fiscalmatters, includingbudgetadoption.TheLibraryprovidesservicestotheresidentsofitsdistrict,andmayenterintocontractstoprovidelibraryservicestomunicipalitiesoutsideofitsdistrict.TheLibraryhasdeterminedthatnoentitiesshouldbeconsolidatedintoitsfinancialstatementsascomponentunits as defined by Governmental Accounting Standards Board (GASB). Therefore, the reporting entityconsists of the primary government financial statements only. The criteria for including a component unitincludesignificantoperationalorfinancialrelationshipswiththeLibrary.BasisofPresentation‐Government‐wideFinancialStatementsWhile separate government‐wide and fund financial statements are presented, they are interrelated. Thegovernmentalactivitiescolumnincorporatesdata fromthegovernmental funds,whilebusiness‐typeactivityincorporate data from the Library’s enterprise fund. Separate financial statements are provided for thegovernmental funds, proprietary fund and fiduciary fund, even though the latter are excluded from thegovernment‐widefinancialstatements.As a general rule, the effect of interfund activity has been eliminated from the government‐wide financialstatements.BasisofPresentation‐FundFinancialStatementsThe fund financial statements provide information about the Library’s funds, including its fiduciary fund.Separate statements for each fund category ‐ governmental, proprietary and fiduciary ‐ arepresented. Theemphasisoffundfinancialstatementsisonmajorgovernmentalfunds. Theremaininggovernmentalfundisreportedasanonmajorfund.Themajorindividualgovernmentalfundisreportedasaseparatecolumninthefundfinancialstatements.TheLibraryreportsthefollowingmajorgovernmentalfund:
The general fund is the Library’s primary operating fund. It accounts for all financial resources of thegeneralgovernment.Therearenoresourcesrequiredtobeaccountedforinanotherfund.
Additionally,thegovernmentreportsthefollowingnonmajorproprietaryfund:
Theconsultingfundaccountsfortherevenueandexpensesrelatedtoconsultingonmanagementoflibrariestothirdparties.
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24
NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)BasisofPresentation‐FundFinancialStatements(continued)Additionally,thegovernmentreportsthefollowingnonmajorfundtype:
Capitalprojectfund‐Thecapitalprojectfundaccountsforthereceiptofproceedsandtransfersfromthegeneralfundforthepurchaseofcapitalassetsorconstructionofmajorcapitalprojects.
Additionally, the government reports, as a fiduciary fund, the pension trust fund,which accounts for theactivitiesof theKentDistrictLibraryEmployees’RetirementPlan,whichaccumulatesresources forpensionbenefitpaymentstoqualifiedemployees.During the course of operations the Libraryhas activity between funds for variouspurposes. Any residualbalancesoutstandingatyearendarereportedasduefrom/tootherfundsandadvancesto/fromotherfunds.While these balances are reported in fund financial statements, certain eliminations are made in thepreparation of the government‐wide financial statements. Balances between the funds included ingovernmental activities are eliminated so that only the net amount is included as internal balances in thegovernmental activities column. Similarly, balances between the funds included in business‐type activities(i.e., theenterprise funds)areeliminatedsothatonlythenetamount is includedas internalbalances in thebusiness‐typeactivitiescolumn.Further, certain activity occurs during the year involving transfers of resources between funds. In fundfinancialstatementstheseamountsarereportedatgrossamountsastransfersin/out.Whilereportedinfundfinancial statements, certain eliminations are made in the preparation of the government‐wide financialstatements.Transfersbetween the funds included ingovernmentalactivitiesareeliminatedso thatonly thenetamountisincludedastransfersinthegovernmentalactivitiescolumn.
MeasurementFocusandBasisofAccounting
The accounting and financial reporting treatment is determined by the applicable measurement focus andbasis of accounting. Measurement focus indicates the type of resources being measured such as currentfinancial resources or economic resources. The basis of accounting indicates the timing of transactions oreventsforrecognitioninthefinancialstatements.The government‐wide financial statements (the statement of net position and statement of activities) arereported using the economic resourcesmeasurement focus and the accrual basis of accounting, as are theproprietaryfundandfiduciaryfundfinancialstatements. Revenuesarerecordedwhenearnedandexpensesare recordedwhena liability is incurred, regardlessof the timingof related cash flows. Property taxesarerecognized as revenues in the year for which they are levied. Grants and similar items are recognized asrevenueassoonasalleligibilityrequirementsimposedbytheproviderhavebeenmet.Governmental fund financial statements (the balance sheet and statement of revenue, expenditures andchanges in fund balances) are reported using the current financial resources measurement focus and themodified accrual basis of accounting. Revenues are recognized as soon as they are both measurable andavailable.Revenuesareconsideredtobeavailablewhentheyarecollectiblewithinthecurrentperiodorsoonenoughthereaftertopayliabilitiesofthecurrentperiod.Forthispurpose,thegovernmentconsidersrevenuesto be available if they are collected within 60 days of the end of the current fiscal period. Expendituresgenerally are recorded when a liability is incurred, as under accrual accounting. However, expendituresrelatedtocompensatedabsencesandclaimsandjudgmentsarerecordedonlywhenpaymentisdue.Generalcapitalassetsacquisitionsarereportedasexpendituresingovernmentalfunds.
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
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NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)MeasurementFocusandBasisofAccounting(continued)
Interestassociatedwith thecurrent fiscalperiod is considered tobe susceptible toaccrualandsohasbeenrecognizedasrevenueofthecurrentfiscalyear.Allotherrevenueitemsareconsideredtobemeasurableandavailableonlywhencashisreceivedbythegovernment.The proprietary and fiduciary funds are reported using the economic resourcesmeasurement focus and theaccrual basis of accounting. The fiduciary fund has nomeasurement focus but utilizes the accrual basis ofaccountingforreportingitsassetsandliabilities.BudgetaryInformation
Budgetarybasisofaccounting:
Annual budgets are adoptedon abasis consistentwith generally accepted accountingprinciples for thegeneralfund.Theappropriatebudget ispreparedby fundand function. The legal levelofbudgetarycontrol (i.e., thelevelatwhichexpendituresmaynotlegallyexceedappropriations)isthefunctionlevel.
Appropriations in the budgeted fund lapse at the end of the fiscal year even if they have relatedencumbrances.Encumbrancesarecommitmentsrelatedtounperformed(executory)contractsforgoodsorservices(i.e.,purchaseorders,contracts,andcommitments).TheLibrarydoesnotutilizeencumbranceaccounting.Thebudgetwasamendedduring theyearwithsupplementalappropriations. ThebudgetwasamendedpriortoDecember31,2019.TheLibrarydoesnotconsidertheamendmentstobesignificant.Violations,ifany,arenotedintherequiredsupplementaryinformationsections.
Assets,Liabilities,DeferredOutflows/InflowsofResources,andNetPosition/FundBalance
CashandCashEquivalents
TheLibrary’scashandcashequivalentsareconsideredtobecashonhand,demanddepositsandshort‐terminvestmentswithoriginalmaturitiesof3monthsorlessfromthedateofacquisition.
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
26
NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)Assets,Liabilities,DeferredOutflows/InflowsofResources,andNetPosition/FundBalance(continued)
InvestmentsIn accordance with Michigan Compiled Laws, the Library is authorized to invest in the followinginvestmentvehicles:
a. Bonds,securities,andotherobligationsoftheUnitedStatesoranagencyorinstrumentalityoftheUnitedStates.
b. Certificatesofdeposit,savingsaccounts,depositaccounts,ordepositoryreceiptsofabankwhichis a member of the Federal Deposit Insurance Corporation (FDIC) or a savings and loanassociationwhichisamemberoftheFederalSavingsandLoanInsuranceCorporation(FSLIC)oracreditunionwhichis insuredbytheNationalCreditUnionAdministration(NCUA),butonlyifthe bank, savings and loan association, or credit union is eligible to be a depository of surplusfundsbelonging to the Stateunder section5or6ofActNo. 105of thePublicActs of 1855, asamended,beingSection21.145and21.146oftheMichiganCompiledLaws.
c. Commercial paper rated at the time of purchase within the three (3) highest classificationsestablishedbynot lessthantwo(2)standardratingservicesandwhichmaturesnotmorethan270daysafterthedateofpurchase.
d. TheUnitedStatesgovernmentorfederalagencyobligationsrepurchaseagreements.
e. BankersacceptancesofUnitedStatesbanks.
f. Mutual funds composed of investment vehicles, which are legal for direct investment by localunitsofgovernmentinMichigan.
MichiganCompiledLawsallowforcollateralizationofgovernmentdeposits,iftheassetsforpledgingareacceptabletotheStateTreasurerunderSection3of1855PA105,MCL21.143,tosecuredepositsofStatesurplus funds,securities issuedbytheFederalLoanMortgageCorporation,FederalNationalMortgageAssociation,orGovernmentNationalMortgageAssociation.
PrepaidExpenses
Certain payments to vendors reflect costs applicable to future accounting periods and are recorded asprepaiditemsinbothgovernment‐wideandfundfinancialstatements.
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
27
NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)Assets,Liabilities,DeferredOutflows/InflowsofResources,andNetPosition/FundBalance(continued)
CapitalAssets
Capital assets, which include furniture, equipment, and library books, are reported in the government‐widefinancialstatements.CapitalassetsaredefinedbytheLibraryasassetswithaninitial,individualcostofmore than$5,000andanestimateduseful life inexcessof threeyears. The totalofbookspurchasedduring the year are capitalized and are depreciated over five years. The Library has elected not tocapitalize rare books. Fully depreciated books are removed from the asset schedule. Such assets arerecordedathistoricalcostorestimatedhistoricalcostifpurchased.Donatedcapitalassetsarerecordedatestimatedfairmarketvalueatthedateofdonation.Thecostsofnormalmaintenanceandrepairsthatdonotaddtothevalueoftheassetormateriallyextendassetlivesarenotcapitalized.CapitalassetsoftheLibrary,aredepreciatedusingthestraight‐linemethodoverthefollowingestimatedusefullives.
Assets Years
Building 25Buildingimprovements 10‐15Landimprovements 15Vehicles 5Librarybooksandmaterials 5Informationtechnology 5Furnitureandequipment 5
DeferredOutflows/InflowsofResources
In addition to assets, the statement of financial position will sometimes report a separate section fordeferredoutflowsofresources.Thisseparatefinancialstatementelement,deferredoutflowsofresources,representsaconsumptionofnetpositionthatappliestoafutureperiod(s)andsowillnotberecognizedasanoutflowofresources(expense/expenditure)untilthen.TheLibraryonlyhasoneitemthatqualifiesforreportinginthiscategory. It isthepensionrelateditemsreportedinthegovernment‐widestatementofnetposition.Adeferredoutflowisrecognizedforpensionrelateditemsandisexpensedintheplanyearinwhichitapplies.
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
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NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)Assets,Liabilities,DeferredOutflows/InflowsofResources,andNetPosition/FundBalance(continued)
DeferredOutflows/InflowsofResources(continued)
Inaddition to liabilities, thestatementof financialpositionwill sometimesreporta separate section fordeferred inflows of resources. This separate financial statement element, deferred inflows of resources,representsanacquisitionofnetpositionthatappliestoafutureperiod(s)andsowillnotberecognizedasaninflowofresources(revenue)untilthattime.TheLibraryhasthreeitemsthatqualifyforreportinginthis category. The first relates to property taxes. The governmental funds and the governmental‐widereportunavailablerevenuesfrompropertytaxes.Theseamountsaredeferredandrecognizedasaninflowofresourcesintheperiodthattheamountsbecomeavailable.Theseconditemisthefutureresourcesyetto be recognized in relation to the pension accrual calculation. These future resources arise fromdifferences in theestimatesusedby theactuary to calculate thepension liability and theactual results.Theamountsareamortizedoveraperioddeterminedbytheactuary.ThethirdrelatestoUSFfundsthatarereceivedmorethan60daysafteryear‐end.Theseamountsaredeferredandrecognizedasaninflowofresourcesintheperiodthattheamountsbecomeavailable.Pension
Forpurposesofmeasuringthenetpensionasset,deferredoutflowsofresourcesanddeferredinflowsofresources related to pensions, andpension expense, information about the fiduciarynet positionof theKent District Library Employees’ Retirement Plan and additions to/deductions from the Kent DistrictLibraryEmployees’RetirementPlan’s fiduciarynetpositionhavebeendeterminedon thesamebasisastheyarereported.Forthispurpose,benefitpayments(includingrefundsofemployeecontributions)arerecognizedwhendueandpayableinaccordancewiththebenefitterms.Investmentsarereportedatfairvalue.
NetPositionFlowAssumption
Sometimes the Library will fund outlays for a particular purpose from both restricted (e.g., restrictedcontributionsorgrantproceeds)andunrestrictedresources.Inordertocalculatetheamountstoreportasrestricted‐netpositionandunrestricted‐netpositioninthegovernment‐widefinancialstatements,aflowassumptionmustbemadeabouttheorderinwhichtheresourcesareconsideredtobeapplied.ItistheLibrary’spolicy to consider restricted ‐netposition tohavebeendepletedbeforeunrestricted ‐netpositionisapplied.
FundBalancePolicies
Fund balance of governmental funds is reported in various categories based on the nature of anylimitationsrequiringtheuseofresourcesforspecificpurposes.TheLibraryitselfcanestablishlimitationson the use of resources through either a commitment (committed fund balance) or an assignment(assignedfundbalance).Thecommittedfundbalanceclassificationincludesamountsthatcanbeusedonlyforthespecificpurposesdeterminedbya formalactionof theLibrary’shighest levelofdecision‐makingauthority. TheBoardofTrusteesisthehighestlevelofdecision‐makingauthorityfortheLibrarythatcan,byadoptionofaBoardactionpriortotheendofthefiscalyear,commitfundbalance. Onceadopted,thelimitationimposedbytheBoardactionremainsinplaceuntilasimilaractionistaken(theadoptionofanotherBoardaction)toremoveorrevisethelimitation.
KENTDISTRICTLIBRARYNOTESTOFINANCIALSTATEMENTS
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NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
Assets,Liabilities,DeferredOutflows/InflowsofResources,andNetPosition/FundBalance(continued)FundBalancePoliciesAmounts in the assigned fund balance classification are intended to be used by the Library for specificpurposes but do not meet the criteria to be classified as committed. The Board of Trustees has byresolution authorized the Director of Finance to assign fund balance. The Board of Trusteesmay alsoassignfundbalanceasitdoeswhenappropriatingfundbalancetocoveragapbetweenestimatedrevenueand appropriations in the subsequent year’s appropriated budget. Unlike commitments, assignmentsgenerallyonlyexist temporarily. Inotherwords,anadditionalactiondoesnothave tobe taken for theremoval of an assignment. Conversely, as discussed above, an additional action is essential to eitherremoveorreviseacommitment.The Libraryhas adopted aminimumunassigned fundbalancepolicy,which states that the Librarywillmaintain a minimum unassigned fund balance of 15% of subsequent year’s budgeted operationalexpenses. This minimum fund balance is to protect against cash flow shortfalls related to timing ofprojectedrevenuereceiptsandtomaintainabudgetstabilizationcommitment. If the fundbalance fallsbelow theminimum 15% level, Librarymanagement will replenish shortages/deficiencies by reducingrecurringexpenditurestoeliminateanystructuraldeficit, increasetaxesinaccordancewithlaw,feesforservices,pursueotherfundingsources,orsomecombinationofthetwooptions.
UseofEstimates
TheprocessofpreparingfinancialstatementsinconformitywithaccountingprinciplesgenerallyacceptedintheUnitedStatesofAmericarequirestheuseofestimatesandassumptionsregardingcertaintypesofassets, liabilities, revenues, and expenditures. Such estimates primarily relate to unsettled transactionsand events as of the date of the financial statements. Accordingly, upon settlement, actual resultsmaydifferfromestimatedamounts.
RevenuesandExpenditures/Expenses
PropertyTaxes
Property taxes become an enforceable lien on the property as of December 1. Taxes are levied onDecember1andaredueinFebruaryofthefollowingyear.TheLibraryengagesothermunicipalitiestobilland collect its ownproperty taxes. Library tax revenues are recognized in the fiscal year following theDecember 1 levy date. Property taxes levied for the ensuing year’s revenue are included in taxesreceivable and deferred inflows. Property tax receivables related to delinquent taxes are also deferredunlesscollectedwithin60daysofyear‐end.Property taxes are levied on eachDecember1 on the taxable valuation of property as of theprecedingDecember31.TaxesareconsidereddelinquentonMarch1ofthefollowingyear,atwhichtimepenaltiesandinterestareassessed.TheLibrary’s2018taxisleviedandcollectibleonDecember1,2018andisrecognizedasrevenueintheyear ended December 31, 2019 financial statements, when the proceeds of the levy are budgeted andavailable forthe financingoperations. The2018taxablevalueof thedistrict totaled$17,458,730,231(aportion of which is not captured from all jurisdictions), on which taxes of 1.2733 mills are levied foroperatingpurposes.
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NOTE1‐SUMMARYOFSIGNIFICANTACCOUNTINGPOLICIES(continued)
RevenuesandExpenditures/Expenses(continued)
CompensatedAbsences
It is the Library’s policy to permit employees to accumulate earned but unused sick and vacation paybenefits.ThereisnoliabilityforunpaidaccumulatedsickleavesincetheLibrarydoesnothaveapolicytopay any amountswhen employees separate from servicewith the Library. All vacation pay is accruedwhen earned in the government‐wide financial statements. A liability for these amounts is reported ingovernmental funds only if they have matured, for example, as a result of employee resignations andretirements.
NOTE2‐DEPOSITSANDINVESTMENTSAsofDecember31,2019,theLibrarydoesnothaveanyinvestmentsasdefinedunderGASB40.
TheLibraryparticipatesintheKentCountyPooledInvestmentFund,whichisalocalgovernmentinvestmentpoolestablishedunderMichiganstatestatutesforparticipatingMichiganmunicipalities.ThePool,whichisanonriskcategorizedqualifyinginvestment,iscarriedatfairmarketvalue.ThePoolisnotsubjecttoregulatoryoversight, isnotregisteredwiththeSEC.ThePoolissuesaseparatereport. TheLibrary’sportionofFundisdetermined by the percentage held. The Library holds 3.38%of the Pooled Investment Fund. Per themostrecent Financial Overview of Kent County, the Pool’s value is $349,278,249. The Library’s portion of this,therefore, is $11,810,913. TheCounty investment pool is not rated.Additional information regarding creditrisk of the investments held in the County Investment pool can be found in the notes to the financialstatementsoftheCounty’sComprehensiveAnnualFinancialreport.Custodialcreditrisk‐deposits.Inthecaseofdeposits,thisistheriskthatintheeventofabankfailure,theLibrary’s depositsmay not be returned to it. As of December 31, 2019, $15,324,308 of the Library’s bankbalance of $16,068,418was exposed to custodial credit risk because itwasuninsured anduncollateralized.Thecarryingvalueonthebooksfordepositsattheendoftheyearwas$15,609,319.Custodialcreditrisk‐investments.Foraninvestment,thisistheriskthat,intheeventofthefailureofthecounterparty, theLibrarywillnotbeabletorecoverthevalueof its investmentsorcollateralsecuritiesthatareinthepossessionofanoutsideparty.Statelawdoesnotrequire,andtheLibrarydoesnothave,apolicyforinvestmentcustodialcreditrisk. ThedepositriskoftheKentCountyInvestmentPoolisconsistentwithCDsinvestedinthepool.TheLibrarywillminimizecustodialcreditrisk,whichistheriskoflossduetothefailureofthesecurityissuerorbacker,by; limitinginvestmentstothetypesofsecuritiesallowedbylaw;andpre‐qualifyingthefinancialinstitutions,broker/dealers,intermediariesandadvisorswithwhichtheLibrarywilldobusiness.Foreigncurrencyrisk.TheLibraryisnotauthorizedtoinvestininvestmentswhichhavethistypeofrisk.
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NOTE2‐DEPOSITSANDINVESTMENTS(continued)Fair Value Measurement. The Kent County Investment Pool was measured at net asset value (or itsequivalent)asapracticalexpedientand,accordingly,hasnotbeenclassifiedinthefairvaluehierarchy.Thecashandcashequivalentsandinvestmentsreferredtoabovehavebeenreportedineitherthecashandcashequivalentsorinvestmentscaptionsonthefinancialstatements,baseduponcriteriadisclosedinNote1.ThefollowingsummarizesthecategorizationoftheseamountsasofDecember31,2019
Deposits 15,609,319$
AspresentedinthefinancialstatementsCash 2,455,107$Investments 13,154,212
15,609,319$
Pension. The Kent District Library’s Employees’ Retirement Plan (the “Plan”) investments are maintainedseparatelyfromtheLibrary’scashandinvestments,andaresubjecttoseparateinvestmentpoliciesandstatestatutes. Accordingly, the required disclosure for the Plan’s deposits and investments are presentedseparately.Deposits.ThePlandoesnotmaintainanycheckingorotherdemand/timedepositaccounts.Investments.TheMichiganPublicEmployeesRetirementSystems’InvestmentAct,PublicAct314of1985,asamended,authorizesthePlantoinvestinstocks,governmentandcorporatesecurities,mortgages,realestate,andvariousother investment instruments,subjecttocertainlimitations.ThePlanhastheresponsibilityandauthority tooversee the investmentportfolio.ThePensionBoardofTrusteesmanages thePlan’s assets.AllinvestmentdecisionsaresubjecttoMichiganlawandtheinvestmentpolicyestablishedbythePlan.
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32
NOTE2‐DEPOSITSANDINVESTMENTS(continued)Interestraterisk.Inaccordancewithitsinvestmentpolicy,thePlanwillminimizeinterestraterisk,whichistheriskthatthemarketvalueofsecuritiesintheportfoliowillfallduetochangesinmarketinterestrates,by;structuring the investment portfolio so that securities mature to meet cash requirements for ongoingobligations, thereby avoiding the need to sell securities in the openmarket; and, investing operating fundsprimarily in shorter‐term securities, liquid asset funds,moneymarketmutual funds, or similar investmentpoolsandlimitingtheaveragematurityinaccordancewiththePlan’scashrequirements.
Investmenttype FairValue
Weightedaveragematurity(years)
U.S.Treasurybills,notes,andbonds 4,287,549$ 10.96Governmentagencyobligations 19,816 0.54Corporatebonds,debenturesandnotes 3,660,789 10.59Foreignobligations 605,311 6.65Municipalobligations 74,786 38.86Mortgagebackedsecurities 570 7.06Corporatecollateralizedmortgageobligations 71,230 22.66Governmentcollateralizedmortgageobligations 80,959 3.55Assetbackedsecurities 739,930 3.22Privateplacements 71,480 5.92Moneymarketmutualfunds 1,102,102 N/AFixedincomemutualfunds 5,403,086 N/ADomesticequityfunds 25,100,903 N/AGlobalfixedincomefund 5,240,182 N/AForeignequitymutualfunds 8,257,943 N/A
Totalfairvalue 54,716,636$
Portfolioweightedaveragematurity 10.13
1daymaturityequalsapproximately.0027years.
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33
NOTE2‐DEPOSITSANDINVESTMENTS(continued)Concentrationofcreditrisk.ThePlanwillminimizeconcentrationofcreditrisk,whichistheriskoflossattributedtothemagnitudeofthePlan’sinvestmentinasingleissuer,bydiversifyingtheinvestmentportfoliosothattheimpactofpotentiallossesfromanyonetypeofsecurityorissuerwillbeminimized.ObligationsoftheU.S.governmentorobligationsexplicitlyguaranteedbytheU.S.governmentarenotconsideredtohavecreditriskanddonotrequiredisclosureofcreditquality.
Investmenttype FairValue AAA AA1‐3 A1‐3Baa1andBelow Unrated
RatingAgency
U.S.Treasurybills,notes,andbonds 4,287,549$ 3,190,224$ ‐$ ‐$ ‐$ 1,097,325$ Moody's
Governmentagencyobligations 19,816 19,816 ‐ ‐ ‐ ‐ Moody's
Corporatebonds,debenturesandnotes 3,660,789 90,018 210,178 1,557,403 1,684,688 118,502 Moody's
Foreignobligations 605,311 41,040 152,515 183,617 215,982 12,157 Moody's
Municipalobligations 74,786 ‐ 54,325 20,461 ‐ ‐ Moody's
Mortgagebackedsecurities 570 ‐ ‐ ‐ ‐ 570 Moody's
Corporatecollateralizedmortgageobligations 71,230 47,903 ‐ ‐ ‐ 23,327 Moody's
Governmentcollateralizedmortgageobligations 80,959 ‐ ‐ ‐ ‐ 80,959 Moody's
Assetbackedsecurities 739,930 426,598 ‐ ‐ ‐ 313,332 Moody's
Privateplacements 71,480 ‐ ‐ 19,993 41,423 10,064 Moody's
9,612,420$ 3,815,599$ 417,018$ 1,781,474$ 1,942,093$ 1,656,236$
Rating
Fair valuemeasurement. The Plan is required to disclose amounts within a framework established formeasuring fair value.The frameworkprovidesa fair valuehierarchy thatprioritizes the inputs tovaluationtechniquesusedtomeasurefairvalue.Thehierarchygivesthehighestprioritytounadjustedquotedprocessin active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority tounobservable inputs (Level 3measurements). The three levels of the fair value hierarchy are described asfollows:
Level1:Quotedpricesinactivemarketsforidenticalsecurities.Level 2: Prices determined using other significant observable inputs. Observable inputs are inputs thatothermarketparticipantsmayuse inpricinga security.Thesemay includeprices for similar securities,interestrates,prepaymentspeeds,creditriskandothers.Level 3: Prices determined using significant unobservable inputs. In situations where quoted prices orobservable inputs are unavailable or deemed less relevant, unobservable inputs may be used.Unobservable inputs reflect theDistrict’sownassumptionsabout the factorsmarketparticipantswoulduseinpricinganinvestmentandwouldbebasedonthebestinformationavailable.
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NOTE2‐DEPOSITSANDINVESTMENTS(continued)ThePlan’s investmentsareheldinafinancial institutionadministeredtrustfund.FollowingisasummaryofthePlan’sinvestmentsasofDecember31,2019:
Level1 Level2 Total
U.S.Treasurybills,notes,andbonds ‐$ 4,287,549$ 4,287,549$Governmentagencyobligations ‐ 19,816 19,816Corporatebonds,debenturesandnotes ‐ 3,660,789 3,660,789Foreignobligations ‐ 605,311 605,311Municipalobligations ‐ 74,786 74,786Mortgagebackedsecurities ‐ 570 570Corporatecollateralizedmortgageobligations ‐ 71,230 71,230Governmentcollateralizedmortgageobligations ‐ 80,959 80,959Assetbackedsecurities ‐ 739,930 739,930Privateplacements ‐ 71,480 71,480Moneymarketmutualfunds 1,102,102 ‐ 1,102,102Fixedincomemutualfunds 5,403,086 ‐ 5,403,086Domesticequityfunds 5,274,597 19,826,306 25,100,903Globalfixedincomefund ‐ 5,240,182 5,240,182Foreignequitymutualfunds 8,257,943 ‐ 8,257,943
Totalassetsatfairvalue 20,037,728$ 34,678,908$ 54,716,636$
FairValue
Theassetorliability’sfairvaluemeasurementlevelwithinthefairvaluehierarchyisbasedonthelowestlevelofanyinputthatissignificanttothefairvaluemeasurement.Valuationtechniquesusedneedtomaximizetheuseofobservableinputsandminimizetheuseofunobservableinputs.NOTE3‐INTERFUNDRECEIVABLESANDPAYABLESThecompositionofinterfundbalancesasofDecember31,2019isasfollows:
Amount Amount
Capitalprojectsfund 64,202$ Consultingfund 14,453$Generalfund 49,749
64,202$
ReceivableFund PayableFund
Theoutstandingbalancesbetweenfundsresultmainlyfromcashpaymentsandreceiptsbeingmadefromandreceivedbythegeneralfund.Thefundsexpecttocollectorpayout,asapplicable,inthesubsequentyear.
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NOTE4‐CAPITALASSETSThecapitalassetsfortheyearendedDecember31,2019wereasfollows:
Balance BalanceJanuary1, December31,2019 Additions Deletions 2019
PrimarygovernmentGovernmentalactivitiesCapitalassetsnotbeingdepreciatedLand 440,000$ ‐$ ‐$ 440,000$Constructioninprogress 11,667 759,195 ‐ 770,862
Totalcapitalassets,notbeingdepreciated 451,667 759,195 ‐ 1,210,862
CapitalassetsbeingdepreciatedBuildings 2,108,900 ‐ ‐ 2,108,900Buildingimprovements 1,616,650 22,000 ‐ 1,638,650Landimprovements 423,704 ‐ ‐ 423,704Librarybooksandmaterials 10,312,217 2,087,267 ‐ 12,399,484Vehicles 430,066 ‐ 18,000 412,066Informationtechnology 3,649,918 176,626 ‐ 3,826,544Furnitureandequipment 2,034,150 ‐ 11,531 2,022,619
Totalcapitalassets,beingdepreciated 20,575,605 2,285,893 29,531 22,831,967
LessaccumulateddepreciationforBuildings 1,560,586 84,356 ‐ 1,644,942Buildingimprovements 658,612 133,846 ‐ 792,458Landimprovements 36,508 29,230 ‐ 65,738Librarybooksandmaterials 5,248,701 1,909,966 ‐ 7,158,667Vehicles 67,516 56,028 18,000 105,544Informationtechnology 3,100,178 300,835 ‐ 3,401,013Furnitureandequipment 1,920,852 41,779 11,480 1,951,151
Totalaccumulateddepreciation 12,592,953 2,556,040 29,480 15,119,513
Totalcapitalassets,beingdepreciated,net 7,982,652 (270,147) 51 7,712,454Totalgovernmentalactivities,capitalassets,net 8,434,319$ 489,048$ 51$ 8,923,316$
Depreciationexpenseamountedto$2,556,040.NOTE5‐LONG‐TERMDEBTChangesinLong‐termLiabilitiesLong‐termliabilityactivityfortheyearendedDecember31,2019wasasfollows:
Beginning Ending DuewithinBalance Additions Reductions Balance OneYear
Governmentalactivities:Compensatedabsences 304,475$ 1,007,430$ 837,810$ 474,095$ 189,638$
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NOTE6‐PENSIONPLANSDefinedContributionRetirementPlanTheLibrary’sdefinedbenefitretirementplanclosedtonewemployeesonDecember31,2009.Followingtheclosure of the defined benefit plan, the Kent District Library Deferred Compensation Plan (the “Plan”)wascreatedinaccordancewiththeInternalRevenueCode,Section457andwasofferedtoemployeeshiredafterDecember31,2009.TheLibrarywillmatch100%ofanemployee’scontributionupto7.5%oftheemployee’swages,andthedifferencebetween7.5%and11.5%willbematchedat50%.TheLibrarycontributed$429,064totheplanfortheyearendedDecember31,2019.PlanDescriptionTheKentDistrictLibraryEmployees’RetirementPlan(the“Plan”)isasingle‐employerdefinedbenefitpensionplan covering approximately 40% of the employees of the Library. The Plan provides certain retirement,disability and death benefits to plan members and beneficiaries. The Plan was established and may beamendedbytheLibraryBoardofTrusteesandisadministeredbytheLibraryPlanPensionBoard.ThePensionBoard consists of fivemembers, three ofwhom are appointed by the Library Board and two ofwhom areelectedbyfullyvestedparticipants.ThePlanwasclosedtonewentrantsonDecember31,2009.The Plan issues publicly available financial report that includes financial statements and requiredsupplementaryinformationforthePlan.ThefinancialreportmaybeobtainedbycontactingtheLibrary.BenefitsProvidedUponretirement,eachvestedmemberreceivesabenefitequalto2.25%ofthemember’sfinalaveragesalarymultiplied by years credited service, not to exceed 75%of themember’s final average salary. The normalretirementage is62and thebenefit amount isadjusted forearly retirement. ThePlanprovides forannualpost‐retirementcostoflivingadjustmentsthebeginningofeachPlanyearequalto1%oftheoriginalbenefitprovided that a corresponding increase occurs in the Consumer Price Index. Retirees begin receiving thisadjustmentonthefirstdayofthePlanyearfollowing36monthsofretirement.Employeescoveredbybenefitterms. At theDecember31,2019,valuationdate, the followingemployeeswerecoveredbythebenefitterms:
Inactiveemployeesorbeneficiariescurrentlyreceivingbenefits 176Inactiveemployeesentitledtobutnotyetreceivingbenefits 39Activeemployees 96
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Contributions. The Library’s funding policy provides for periodic employer contributions at actuariallydetermined rates that, expressed as percentages of covered payroll, are designed to accumulate sufficientassets to pay benefits when due. The normal cost and actuarial accrued liability are determined using anentry‐ageactuarialcostmethod.Unfundedactuarialaccruedliabilityisbeingamortizedasaleveldollaroveraperiodof10years.
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NOTE6‐PENSIONPLANS(continued)BenefitsProvided(continued)DuringtheyearendedDecember31,2019,contributionstotaling$691,135,consistingof$535,203employercontributions,$6,262ofothercontributionsand$149,670employeecontributions,weremadeinaccordancewithcontributionrequirementsdeterminedbyanactuarialvaluationof thePlan. Unionmembers’requiredcontributionratewas3.5%oftheircoveredpayrollforplanyear2019.TheLibraryisrequiredtocontributeatactuariallydeterminedratesexpressedasapercentageofcoveredpayroll.TheLibrary’scontributionratewas 1.91% of annual covered payroll in 2019. Administrative costs of the Plan are financed throughinvestmentearnings.Atyearend,theLibraryiscurrentonallrequiredpensionplanpayments. Amountsaccruedatyearendforaccountingpurposesareseparatelystated inthe financialstatementsasa liability titledaccruedretirement.TheseamountsrepresentcurrentpaymentsforDecemberpaidinJanuary.Netpensionasset.Theemployer’snetpensionassetwasmeasuredasofDecember31,2019,andthe totalpensionassetusedtocalculatethenetpensionliabilitywasdeterminedbyanannualactuarialvaluationasofthatdate.Actuarialassumptions.ThetotalpensionliabilityintheDecember31,2019,annualactuarialvaluationwasdeterminedusingthefollowingactuarialassumptions,appliedtoallperiodsincludedinthemeasurement:
Inflation:2.5%Salaryincreases:3.5%to10.1%includinginflationInvestmentrateofreturn:6.75%,netofinvestmentexpense,includinginflation
Although no specific price inflation assumptions are needed for the valuation, the 2.5% long‐term wageinflationassumptionwouldbeconsistentwithapriceinflationof3%‐4%.Mortality rates used were based on the RP‐2014 Mortality Table with 2‐dimensional fully generationalimprovementsusingMP‐2018projectionscale.
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NOTE6‐PENSIONPLANS(continued)BenefitsProvided(continued)Thelong‐termexpectedrateofreturnonpensionplaninvestmentswasdeterminedusingamodelmethodinwhichthebest‐estimaterangesofexpectedfuturerealratesofreturn(expectedreturns,netofinvestmentandadministrativeexpensesandinflation)aredevelopedforeachmajorassetclass.Theserangesarecombinedtoproduce the long‐termexpected rate of returnbyweighting the expected future real rates of returnby thetargetassetallocationpercentageandbyaddingexpectedinflation.Thetargetallocationandbestestimatesofarithmeticrealratesofreturnforeachmajorassetclassaresummarizedinthefollowingtable:
AssetClassTarget
Allocation
Long‐termExpectedGrossRateofReturn
InflationAssumption
Long‐termExpectedRealRateofReturn
CoreBonds 27% 5.36% 2.75% 2.61%CorePlus 13% 5.62% 2.75% 2.87%USLargeCapEquity 35% 9.87% 2.75% 7.12%USSmallCapEquity 10% 11.18% 2.75% 8.43%InternationalDevelopedEquity 15% 10.90% 2.75% 8.15%
Total 100%
Discountrate.Thediscountrateusedtomeasurethetotalpensionliabilityis6.75%.Theprojectionofcashflowsusedtodeterminethediscountrateassumesthatemployerandemployeecontributionswillbemadeatthe rates agreed upon for employees and the actuarially determined rates for employers. Based on theseassumptions,thepensionplan’sfiduciarynetpositionwasprojectedtobeavailabletopayallprojectedfuturebenefitpaymentsofcurrentactiveandinactiveemployees. Therefore,thelong‐termexpectedrateofreturnonpensionplaninvestmentswasappliedtoallperiodsofprojectedbenefitpaymentstodeterminethetotalpensionliability.
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NOTE6‐PENSIONPLANS(continued)
ChangesinNetPensionLiability
TotalPensionLiability
PlanFiduciaryNetPosition
NetPensionAsset
(a) (b) (a)‐(b)
Balancesat12/31/2018 42,934,546$ 46,706,708$ (3,772,162)$
Changesfortheyear Servicecost 711,765 ‐ 711,765Interestontotalpensionliability 2,849,092 ‐ 2,849,092Differencebetweenexpectedandactualexperience (249,701) ‐ (249,701)Changesofassumptions ‐ ‐ ‐Employercontributions ‐ 535,203 (535,203)Employeecontributions ‐ 155,932 (155,932)Netinvestmentincome ‐ 9,656,071 (9,656,071)Benefitpaymentsincludingemployeerefunds (2,163,327) (2,163,327) ‐Administrativeexpense ‐ (110,664) 110,664Othercharges ‐ (2,957) 2,957
Netchanges 1,147,829 8,070,258 (6,922,429)
Balancesasof12/31/2019 44,082,375$ 54,776,966$ (10,694,591)$
Increase(Decrease)
Sensitivityofthenetpensionassettochangesinthediscountrate.Thefollowingpresentsthenetpensionliability of the employer, calculated using the discount rate of 6.75%, as well as what the employer’s netpension liabilitywould be using a discount rate that is 1% lower (5.75%) or 1% higher (7.75%) than thecurrentrate.
1%Decrease CurrentDiscount 1%increase
Netpensionassetat12/31/2019 ‐$ (10,694,591)$ ‐$
Changeinnetpensionasset 5,378,562 ‐ (4,539,760)
Calculatednetpensionasset (5,316,029)$ (10,694,591)$ (15,234,351)$
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NOTE6‐PENSIONPLANS(continued)PensionExpenseandDeferredOutflowsofResourcesandDeferredInflowsofResourcesRelatedtoPensionsFortheyearendedDecember31,2019theemployerrecognizedareductionofpensionexpenseof$625,003on the governmental‐wide financial statements. The employer reported deferred outflows and inflows ofresourcesrelatedtopensionsfromthefollowingsources:
DeferredOutflowsofResources
DeferredInflowsofResources
Differencesbetweenexpectedandactualexperience ‐$ 461,409$
Differencesinassumptions 131,422 ‐
Netdifferencebetweenprojectedandactualearningson‐ 3,345,026
131,422$ 3,806,435$
Amounts reported as deferred outflows and inflows of resources related to pensionswill be recognized inpensionexpenseasfollows:
YearEndDecember31,
2020 (1,150,163)$2021 (1,121,050)2022 (92,422)2023 (1,311,378)
(3,675,013)$
NOTE7‐COMMITMENTSANDCONTINGENCIESTheLibrary isexposedtovariousrisksof lossrelatedtotorts; theftof,damagetoanddestructionofassets;errorsandomissions;injuriestoemployees;andnaturaldisasters.TheLibrarycarriescommercialinsurancetocoveranylossesthatmayresultfromtheabovedescribedactivities.Nosettlementshaveincurredinexcessofcoveragein2019oranyoftheprior3years.
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NOTE8‐OPERATINGLEASEThe Library had entered intomultiple operating lease for branch locations and equipment. The scheduledfutureminimumleasepaymentsundertheseagreementsasofDecember31,2019,aresummarizedasfollows:
2020 386,580$2021 386,5802022 384,756
1,157,916$
YearEndingDecember31,
NOTE9‐TAXABATEMENTSIndustrialFacilitiesExemptionMunicipalities within the Library boundaries entered into property tax abatement agreements with localbusinesses under the Plant Rehabilitation and Industrial Development Districts Act, (known as the IndustrialFacilities Exemption) PA 198 of 1974, as amended. An Industrial Facilities Tax Exemption (IFT) certificateentitlesthefacilitytoexemptionfromadvaloremrealand/orpersonalpropertytaxesforatermof1‐12yearsasdeterminedbythelocalunitofgovernment.TheIFTonnewplantandnewindustrialpropertyiscomputedat50%ofthetaxeslevied.Themunicipalitiescanelecttofreezethetaxablevaluesforrehabilitationproperties.FortheyearendedDecember31,2019,theLibrary’spropertytaxrevenueforgeneraloperationswerereducedby$150,180underthisprogram.Theabatementsissuedbyothergovernmentalunitsisasfollows:
GovernmentalUnit Amount
AdaTownship 14,765$AlgomaTownship 953AlpineTownship 5,208ByronTownship 6,235CaledoniaTownship 3,313CascadeTownship 14,500GainesTownship 897PlainfieldTownship 1,170TyroneTownship 83VergennesTownship 1,515CityofGrandville 5,246CityofKentwood 35,533CityofLowell 2,539CityofRockford 843CityofWalker 21,249CityofWyoming 36,131
Total 150,180$
TherearenoabatementsmadebytheLibrary.
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42
NOTE10‐SUBSEQUENTEVENTTheextent of the impact of COVID‐19onouroperational and financial performancewilldependon certaindevelopments, including thedurationand spreadof theoutbreak, impactonour customers, employeesandvendorsallofwhichareuncertainandcannotbepredicted.Atthispoint,theextenttowhichCOVID‐19mayimpactourfinancialconditionandresultsofoperationsisuncertain.NOTE11‐UPCOMINGACCOUNTINGPRONOUNCEMENTGovernmentalAccountingStandardsBoard (GASB) StatementNo. 84,FiduciaryActivities,was issuedby theGASBinJanuary2017andwillbeeffectivefortheLibrary’s2020yearend.TheobjectiveofthisStatementistoimprove guidance regarding the identification of fiduciary activities for accounting and financial reportingpurposes and how those activities should be reported. This Statement establishes criteria for identifyingfiduciaryactivitiesforallstateandlocalgovernments.Thefocusonthecriteriagenerallyison(1)whetheragovernmentiscontrollingtheassetsofthefiduciaryactivity,and(2)thebeneficiarieswithwhomafiduciaryrelationshipexists.Anactivitymeetingthecriteriashouldbereportedinafiduciaryfundinthebasicfinancialstatements. Governments with activities meeting the criteria should present a statement of fiduciary netpositionandastatementofchangesinfiduciarynetposition.GovernmentalAccountingStandardsBoard(GASB)StatementNo.87,Leases,wasissuedbytheGASBinJune2017andwillbeeffectivefortheLibrary’s2022yearend. TheobjectiveofthisStatementistoincreasetheusefulnessofgovernments’financialstatementsbyrequiringrecognitionofcertainleaseassetsandliabilitiesfor leases that previously were classified as operating leases and recognized as inflows of resources oroutflowsofresourcesbasedonthepaymentprovisionsofthecontract.Itestablishesasinglemodelforleaseaccountingbasedon the foundationalprinciple that leases are financings of the right touse theunderlyingasset. Under thisStatement,a lessee is required torecognizea lease liabilityandan intangible right‐to‐useleaseasset,andalessorisrequiredtorecognizealeasereceivableandadeferredinflowofresources,therebyenhancingtherelevanceandconsistencyofinformationaboutgovernments’leasingactivities.
43
REQUIREDSUPPLEMENTARYINFORMATION
KENTDISTRICTLIBRARYREQUIREDSUPPLEMENTARYINFORMATION
BUDGETARYCOMPARISONSCHEDULEGENERALFUND
YEARENDEDDECEMBER31,2019
44
VarianceOriginal Final withFinalBudget Budget Actual Budget
REVENUESLocalsourcesPropertytaxes 22,093,560$ 22,093,560$ 22,130,099$ 36,539$Penalfines 797,644 797,644 787,989 (9,655)Chargesforservices 100,000 100,000 192,717 92,717Interestincomeandrentals 76,000 300,000 369,488 69,488Donations 442,000 442,000 332,221 (109,779)Other 663,210 663,210 985,039 321,829
Totallocalsources 24,172,414 24,396,414 24,797,553 401,139
Statesources 634,067 884,067 905,003 20,936
Totalrevenues 24,806,481 25,280,481 25,702,556 422,075
EXPENDITURESCurrentRecreationandcultureSalariesandwages 11,753,570 11,853,570 11,751,783 101,787Employeebenefits 3,732,138 3,832,138 3,727,249 104,889Collections‐digital 1,539,498 1,739,498 1,611,377 128,121Collections‐physical 2,121,387 2,151,387 2,087,267 64,120Supplies 779,255 604,255 489,120 115,135Contractualandprofessionalservices 1,776,121 1,351,121 1,163,801 187,320Programmingandoutreach 333,277 333,277 290,140 43,137Maintenanceandutilities 1,999,046 1,799,046 1,603,552 195,494Staffdevelopment 257,883 182,883 160,546 22,337Boarddevelopment 14,833 14,833 9,248 5,585Otherservicesandcharges 781,730 656,730 587,156 69,574Capitaloutlay 601,224 1,037,224 884,875 152,349
Totalexpenditures 25,689,962 25,555,962 24,366,114 1,189,848
NETCHANGEINFUNDBALANCE (883,481)$ (275,481)$ 1,336,442 1,611,923$
FUNDBALANCEBeginningofyear 12,190,133
Endofyear 13,526,575$
KENTDISTRICTLIBRARYREQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFCHANGESINEMPLOYER’SNETPENSIONLIABILITYANDRELATEDRATIOSLAST10FISCALYEARS
45
2019 2018 2017 2016 2015 2014TotalpensionliabilityServicecost 711,765$ 744,402$ 842,900$ 873,137$ 654,695$ 662,374$Interest 2,849,092 2,854,033 2,747,634 2,696,884 2,496,342 2,417,794Changesofbenefitterms ‐ ‐ ‐ ‐ ‐ 50,877Differencebetweenexpectedandactualexperience (249,701) (455,101) (122,509) (1,043,296) 1,259,648 (468,054)
Assumptionchanges ‐ 355,636 ‐ ‐ ‐ ‐Benefitpaymentsincludingemployeerefunds (2,163,327) (1,928,245) (1,869,329) (1,707,766) (1,598,411) (1,475,674)
Netchangeintotalpensionliability 1,147,829 1,570,725 1,598,696 818,959 2,812,274 1,187,317
Totalpensionliabilitybeginning 42,934,546 41,363,821 39,765,125 38,946,166 36,133,892 34,946,575Totalpensionliabilityending 44,082,375$ 42,934,546$ 41,363,821$ 39,765,125$ 38,946,166$ 36,133,892$
PlanfiduciarynetpositionContributions‐employer 535,203$ 92,147$ 45,485$ 52,169$ 57,424$ 54,888$Contributions‐employee 155,932 167,920 160,947 185,207 193,544 249,681Netinvestmentincome 9,656,071 (2,582,796) 7,820,036 2,318,926 410,599 3,581,104Benefitpaymentsincludingemployeerefunds (2,163,327) (1,928,245) (1,869,329) (1,707,766) (1,598,411) (1,475,674)
Administrativeexpense (110,664) (50,000) (36,850) (74,473) (47,962) (44,671)Other (2,957) (45,326) (122,502) ‐ ‐ ‐
Netchangeinplanfiduciarynetposition 8,070,258 (4,346,300) 5,997,787 774,063 (984,806) 2,365,328
Planfiduciarynetpositionbeginning 46,706,708 51,053,008 45,055,221 44,281,158 45,265,964 42,900,636
Planfiduciarynetpositionending 54,776,966$ 46,706,708$ 51,053,008$ 45,055,221$ 44,281,158$ 45,265,964$
Employernetpensionasset 10,694,591$ 3,772,162$ 9,689,187$ 5,290,096$ 5,334,992$ 9,132,072$
Planfiduciarynetpositionasapercentageofthetotalpensionliability 124.26% 108.79% 123.42% 113.30% 113.70% 125.27%
Coveredemployeepayroll 4,346,715$ 4,627,864$ 4,765,699$ 5,093,052$ 5,450,295$ 5,220,856$
Employer'snetpensionassetasapercentageofcoveredemployeepayroll 246.04% 81.51% 203.31% 103.87% 97.88% 174.92%
This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10 year trend is compiled, reporting unitsshouldpresentinformationforthoseyearsforwhichinformationisavailable.
KENTDISTRICTLIBRARYREQUIREDSUPPLEMENTARYINFORMATION
SCHEDULEOFEMPLOYERPENSIONCONTRIBUTIONSLAST10FISCALYEARS
46
2019 2018 2017 2016 2015 2014
Actuarialdeterminedcontributions 535,203$ 92,147$ 45,485$ 52,169$ 57,424$ 55,071$Contributionsinrelationtotheactuariallydeterminedcontribution 535,203 92,147 45,485 52,169 57,424 55,071
Contributiondeficiency(excess) ‐$ ‐$ ‐$ ‐$ ‐$ ‐$
Coveredemployeepayroll 4,346,715$ 4,627,864$ 4,765,699$ 5,093,052$ 5,450,295$ 5,220,856$
Contributionsasapercentageofcoveredemployeepayroll 12.31% 1.99% 0.95% 1.02% 1.05% 1.05%
This schedule is presented to illustrate the requirement to show information for 10 years. However, until a full 10 year trend is compiled,reportingunitsshouldpresentinformationforthoseyearsforwhichinformationisavailable.
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SUPPLEMENTARYINFORMATION
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NotestotheScheduleofChangesinEmployer’sNetPensionLiabilityBenefitchanges‐therewerenochangesinbenefitsin2019.Changesinassumptions‐therewerenochangesinassumptionsin2019.NotestoScheduleofEmployerContributions
Actuarialcostmethod EntryageAmortizationmethod Levelpercentageofpayroll,openRemainingamortizationperiod 10yearsAssetvaluationmethod 4yearsmoothedInflation 2.75%Salaryincreases 4.5%to11.1%,includinginflationInvestmentrateofreturn 7.0%Retirementage Experiencebasedtableofratesthatare
specifictothetypeofeligibilityconditionMortality RP2000combinedmortalitytableprojected
toyear2020usingScaleBB