Town of Sedgwick, Colorado Financial Statements For the Year ended December 31, 2023 Table of Contents Page Independent Auditors' Report 1-3 Management's Discussion and Analysis 4-9 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 12 Statement of Activities 14-15 Fund Financial Statements Balance Sheet - Governmental Funds 16 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 17 Statement of Revenues, Expenditures and Changes in Fund Balance - Governmental Funds 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 19 Statement of Net Position Proprietary Funds 20 Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds 21 Statement of Cash Flows - Proprietary Funds 22-23 Notes to Financial Statements 24-38 Required Supplementary Information General Fund - Budgetary Comparison Schedule 40 Notes to the Required Supplementary Information 41 Other Supplementary Information General Fund Budgetary Comparison Schedule Revenues 46 Budgetary Comparison Schedule - Expenditures 48-49 Nonmajor Governmental Fund Conservation Trust Fund = Budgetary Comparison Schedule 52 Table of Contents Page Enterprise Funds Water and Sewer Fund - Budgetary Comparison Schedule 54 Sanitation Fund - Budgetary Comparison Schedule 55 Colorado Department of Highways Local Highway Finance Report 58-59 LAUER, SZABO & ASSOCIATES, PC Certified Public Accountants 205 Main St. P.O. Box 1886 Sterling, CO 80751-7886 Phone 970-522-2218 . FAX 970-522-2220 Independent Auditors' Report To the Honorable Mayor and Members of Town Council Town of Sedgwick Sedgwick, Colorado Opinions We have audited the accompanying financial statements of the governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town of Sedgwick (the Town), as of and for the year ended December 31, 2023, and the related notes to the financial statements, which collectively comprise the Town's basic financial statements as listed in the table of contents. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position ofthe governmental activities, the business-type activities, each major fund, and the aggregate remaining fund information of the Town as of December 31, 2023, and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the Town, and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Responsibilities of Management for the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. -1- Auditors' Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override ofinternal control. Misstatements are considered material if there is a substantial likelihood that, individually or in the aggregate, they would influence the judgment made by a reasonable user based on the financial statements. In performing the audit in accordance with generally accepted auditing standards, we: Exercise professional judgment and maintain professional skepticism throughout the audit. Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, and design and perform audit procedures responsive to those risks. Such procedures include examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Town's internal control. Accordingly, no such opinion is expressed. Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluate the overall presentation of the financial statements. Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the Town's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and budgetary comparison information listed in the table of contents be presented to supplement the basic financial statements. Such information is the responsibility of management and, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods -2- of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the Town's basic financial statements. The other supplementary information and the local highway finance report listed in the table of contents are presented for purposes of additional analysis and are not a required part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the other supplementary information and the local highway finance report are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. Lauer, Sgabo & Aosociates, P.D. Sterling, Colorado September 21, 2024 -3- MANAGEMENT DISCUSSION AND ANALYSIS This section oft the Town of Sedgwick, Colorado's annual financial report presents the discussion and analysis oft the financial performance for the fiscal year that ended December 31, 2023. FINANCIAL HIGHLIGHTS The Town of Sedgwick remains in good financial condition. The assets ofthe Town ofSedgwick exceeded its liabilities and deferred inflows ofresources at the close of 2023 by $5,790,317 (net position). Of this amount $4,889,864 or 84% is unrestricted and may be used to meet the Town's ongoing obligations to citizens and creditors. During the year, the Town's total revenues exceeded expenses by $1,100,193. OVERVIEW OF THE FINANCIAL STATEMENTS This discussion and analysis is intended to serve as an introduction to the Town of Sedgwick's basic financial statements. The Town of Sedgwick' s basic financial statements are comprised of three components: Government-wide financial statements Fund financial statements. Notes to the financial statements. This report also contains other supplementary information in addition to the basic financial statements themselves. Government-wide financial statements The government-wide statements report information about the Town as a whole using accounting methods similar to those used by private-sector companies. The statement of net position presents information on all of the Town of Sedgwick's assets and liabilities and deferred inflows of resources, with the difference between the two reported as net position. Over time, increases or decreases in net position may serve as a useful indicator of whether the financial position ofthe Town of Sedgwick is improving or deteriorating. The statement of activities presents information showing how the Town of Sedgwick's S net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless ofthe timing of related cash flows. Thus, revenues and expenses reported in this statement for some items will result in cash flows in future fiscal periods (e.g., uncollected taxes.) The government-wide financial statements of the Town are divided into two categories: Governmental activities. Most of the Town's basic services are included here, such as public works, parks, recreation, and general administration. Property and other taxes, as well as intergovernmental revenue finance most of these activities. Business-type activities. The Town charges fees to customers to recover most of the costs of certain services provided. The Town's water, sewer and sanitation systems are included here. The government-wide financial statements can be found starting on page 12 of this report. 4- Fund Financial Statements A fund is a grouping oft related accounts that is used to maintain control over resources that have been segregated for specific activities or objectives. Some funds are required to be established by State law, however, the Town Council has established other funds to help control and manage money for particular purposes or to show that it is properly using certain revenue (the Conservation Trust Fund). All of the funds of the Town of Sedgwick can be divided into two categories: governmental and proprietary funds. Governmental funds. Most ofthe Town's basic services are reported in governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end are available for spending. The funds are reported using an accounting method called modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. The governmental funds statement provides a detailed, short-term view to cash, the governmental fund operations and the basic services it provides. Governmental fund information helps you determine whether there are more or fewer financial resources that can be spent in the near future to finance the Town's programs. Because this information does not encompass the additional long-term focus ofthe government- wide statements, additional information at the bottom of the governmental funds statement is provided, or on the subsequent page, that explains the relationship (or differences) between them. The basic governmental fund financial statements can be found starting on page 16 of this report. Proprietary funds. When the Town charges customers for the services it provides, whether to outside customers or to other units of the Town, these services are generally reported in proprietary funds. Proprietary funds are reported in the same way that all activities are reported in the Statement of Net Position and the Statement of Activities. The Town's enterprise funds (a component of proprietary funds) are the same as the business-type activities reported in the government-wide statements but provide more detail and additional information, such as cash flows, for proprietary funds. The basic proprietary fund financial statements can be found starting on page 20 of this report. Fiduciary funds. Fiduciary funds are used to account for resources held for the benefit of parties outside the government. These activities are excluded from the Town's other financial statements because the Town cannot use these assets to finance operations. The Town is responsible for ensuring that the assets reported in these funds are used for their intended purpose. The Town has no fiduciary funds to report. Notes to the Financial Statements The notes provide additional information that is essential to a full understanding of the data provided in the govemment-wide and fund financial statements. The notes to the financial statements can be found starting on page 24 oft this report. FINANCIAL ANALYSIS OF THE TOWN AS A WHOLE As noted earlier, net position may serve over time as a useful indicator of a government's financial position. In the case of the Town of Sedgwick, assets exceed liabilities and deferred inflows of resources by $5,790,317 at the close of2023. 5 Net Position Combined net position of the Town of Sedgwick as of December 31, 2023 and 2022 are shown in Table 1 below. Table 1 NET POSITION Governmental Activities Business-type Activities Total 2023 2022 2023 2022 2023 2022 Current and other assets $ 4,575,789 $ 3,500,891 $ 460,838 $ 481,748 $ 5,036,627 $ 3,982,639 Capital assets 381.324 373.907 622.696 594.770 1,004.020 968.677 Total assets $ 4,957,113 $ 3,874,798 $ 1,083,534 $ 1,076,518 $ 6,040,647 $ 4,951,316 Long-term debt outstanding $ $ $ 174,583 $ 188,550 $ 174,583 $ 188,550 Other liabilities 48.035 46.443 15,960 10.800 63.995 57.243 Total liabilities 48,035 46,443 190,543 199,350 238,578 245,793 Deferred inflows of resources 11,752 15,399 11,752 15,399 Net position: Net investment in capital assets 381,324 373,907 448,113 406,221 829,437 780,128 Restricted 50,314 49,900 20,702 22,038 71,016 71,938 Unrestricted 4,465.688 3.389,149 424.176 448.909 4,889,864 3,838,058 Total net position 4.897.326 3.812.956 892,991 877.168 5.790.317 4.690.124 Total liabilities and net position 5 4.957.113 $ 3.874,798 $ 1,083,534 $ 1.076.518 $ 6,040.647 $ 4.951,316 The second largest portion ofthe Town of Sedgwick's net position, 14%, reflects its investment in capital assets (land, buildings and equipment). The Town of Sedgwick uses these capital assets to provide services to citizens; consequently these assets are not available for future spending. In addition, a portion ofthe Town of Sedgwick' s net position, 1%, represents resources that are subject to external restrictions on how they may be used. The remaining balance ofunrestricted net position, 85%, may be used to meet the government' S ongoing obligations to citizens and creditors. At the end of 2023, the Town of Sedgwick is able to report positive balances in all three categories of net position, both for the government as a whole, as well as for its separate governmental and business-type activities. Changes in net position The Town's total revenue of$1,463,807 was more than program expenses of $363,614 for an increase in net position ofS1,100,193. Table 2 shows the summarized revenues and expenses for 2023 and 2022. -6- Table 2 CHANGES IN NET POSITION Governmental Activities Business-type Activities Total 2023 2022 2023 2022 2023 2022 Program revenues Charges for services $ 3,077 $ 2,994 $ 141,850 $ 131,622 $ 144,927 $ 134,616 Operating grants and contributions 19,472 19,994 19,472 19,994 Capital grants and contributions General revenues Property taxes 15,831 15,787 15,831 15,787 Other taxes 1,078,935 1,280,843 1,078,935 1,280,843 Interest earnings 200,402 50,656 1,949 200 202,351 50,856 Miscellaneous 2,291 9,359 2,291 9,359 Transfers Total revenues 1,320,008 1,379,633 143,799 131,822 1,463,807 1,511,455 Program expenses General government 124,453 114,026 124,453 114,026 Health and welfare 14,780 4,122 14,780 4,122 Public works 35,108 54,143 35,108 54,143 Culture and recreation 61,297 54,873 61,297 54,873 Water and sewer services 106,144 111,101 106,144 111,101 Sanitation services 21,832 22.641 21,832 22.641 Total expenses 235.638 227,164 127.976 133.742 363,614 360.906 Change in net position 1,084,370 1,152,469 15,823 (1,920) 1,100,193 1,150,549 Net position at beginning of year 3,812.956 2,660.487 877,168 879.088 4.690.124 3.539,575 Net position at end ofyear $ 4,897,326 $ 3.812.956 $ 892,991 $ 877,168 $ 5,790.317 $ 4.690.124 Governmental Activities Revenue for the Town's governmental activities totaled $1,320,008 for 2023. Tax revenue produced 83% of these revenues. Tax revenue includes property taxes, sales and other taxes. Table 3 GOVERNMENTAL ACTIVITIES Total Cost Net Cost of Services ofServices General government $ 124,453 $ 121,376 Health and welfare 14,780 14,780 Public works 35,108 17,984 Culture and recreation 61,297 58,949 Table 3 presents the cost and revenue of each of the Town's largest programs general government, health and welfare, public works, and culture recreation as well as each program' 's net cost (total cost less revenues generated by activities). The net cost shows the financial burden that was placed on the Town's taxpayers by each of these functions. -7- Business-type Activities Net position in business-type activities increased by $15,823 in 2023. Business-type activities include water and sewer services, as well as sanitation services. Table 4 BUSINESS-TYPE ACTIVITIES Total Cost Net Cost of Services of Services Water and sewer services $ 106,144 $ (7,234) Sanitation services 21,832 (6,640) Table 4, above, presents the cost and revenue of each of the Town's business-type activities water, sewer and sanitation - as well as the program net cost (total cost less revenues generated by activities). The net cost shows the financial burden that was placed on the Town' s taxpayers by each of these functions. THE TOWN'S FUNDS As the Town completed the year, its governmental funds (as presented in the balance sheet on page 16) reported a combined fund balance of $4,516,002. The general fund and other governmental fund reported fund balances of $4,505,688 and $10,314, respectively. General Fund Budgetary Highlights The actual charges to appropriations (expenditures) were $497,294 below the final budget amounts due to capital outlay expenditures and transfers out that came in less than anticipated in the original budget. Additionally, resources available for appropriation (revenues) were $6,905 less than the final budgeted amount. Revenues collected through taxes, licenses and fees and charges for services were much lower than anticipated, while interest came in much higher than anticipated. CAPITAL, ASSETS AND DEBT ADMINSTRATION Capital Assets. The Town ofSedgwick" 'S investment in capital assets for its governmental and business-type activities as of December 31, 2023, amounts to $1,004,020 (net of accumulated depreciation). This amount includes a broad range of capital assets, including public works equipment, water, sewer and other infrastructure. The Town remains committed to the upkeep and maintenance ofthe Town's largest assets. More detailed information about the Town's capital assets is presented in Table 5. -8- Table 5 CAPITAL ASSETS ON DECEMBER 31, 2023 Governmental Business-type Total Primary Activities Activities Government Land and improvements $ 6,100 $ 25,220 $ 31,320 Buildings and improvements 210,397 210,397 Equipment 164,827 1,517 166,344 Systems 595,959 595,959 Total 5 381,324 $ 622,696 $ 1,004,020 Long-term debt. The Town had $174,583 in debt outstanding at year-end. More detailed information about the Town's long-term debt is presented in Table 6 and Note F to the financial statements. Table 6 LONG-TERM DEBT ON DECEMBER 31, 2023 Governmental Business-type Total Primary Activities Activities Government Notes payable $ $ 174,583 $ 174,583 ECONOMIC FACTORS AND NEXT YEAR'S BUDGET AND RATES The 2025 Budget will show funding and expenses for the Sewer System project in the form of matching expenses and grant funds revenue. The Town sewer project has secured funding and will be reviewing bids for construction. In 2024 a Resolution was adopted and implemented to increase the base water rate by $2 with a 3% increase to the overage usages and the trash base rate increased by $2. Sales Tax Revenues are expected to decline for 2024 and years to come with other states adopting marijuana licensing, there are no new business expected. Should there be any unanticipated construction costs, there may be a need to increase water rates. The Town's employees, the Clerk and Utility Operator, continue to perform satisfactorily and provide stability in the day to day operations of the Town. In 2024 the Town gave the employees a 3% cost of living pay increase, same to be expected for 2025. The Town now has 3 full-time employees and one part-time employee. REQUESTS FOR INFORMATION This financial report is designed to provide our citizens, taxpayers, customers, investors and creditors with a general overview of the Town's finances and to show the Town's accountability for the funds and assets it receives. Ifyou have questions about this report, or should you need additional financial information, contact Town of Sedgwick, 29 Main Ave., P.O. Box 27, Sedgwick, Colorado 80749. -9- This page intentionally left blank. -10- Basic Financial Statements The basic financial statements of the Town include the following: Government-wide financial statements. The government-wide statements display information about the reporting government as a whole. Fund financial statements. The fund financial statements display information about major funds individually and nonmajor funds in the aggregate for governmental and proprietary funds. Notes to the financial statements. The notes communicate information essential for fair presentation of the financial statements that is not displayed on the face of the financial statements. As such, the notes are an integral part of the basic financial statements. -11- TOWN OF SEDGWICK, COLORADO Statement of Net Position December 31, 2023 Governmental Business-type Activities Activities Total Assets Cash $ 112,604 $ 361,889 $ 474,493 Cash with county treasurer 239 239 Certificates of deposit 67,118 67,118 Investments 4,339,623 4,339,623 Receivables 123,323 11,129 134,452 Capital assets, net of depreciation 381,324 622,696 1,004,020 Restricted cash 20,702 20,702 Total assets $ 4,957,113 $ 1,083,534 $ 6,040,647 Liabilities Current liabilities Accounts payable $ 4,687 $ 5,718 $ 10,405 Accrued salaries and benefits 8,913 5,942 14,855 Unearned grant revenue 34,435 34,435 Refundable deposits 4,300 4,300 Noncurrent liabilities Due within one year 13,967 13,967 Due in more than one year 160,616 160,616 Total liabilities 48,035 190,543 238,578 Deferred inflows of resources Deferred property tax revenues 11,752 11,752 Total deferred inflows of resources 11,752 11,752 Net position Net investment in capital assets 381,324 448,113 829,437 Restricted for: Emergencies 40,000 40,000 Culture and recreation 10,314 10,314 Debt service 20,702 20,702 Unrestricted 4,465,688 424,176 4,889,864 Total net position 4,897,326 892,991 5,790,317 Total liabilities, deferred inflows of resources and net position $ 4,957,113 $ 1,083,534 $ 6,040,647 The accompanying notes are an integral part of these financial statements. -12- This page intentionally left blank. -13- TOWN OF SEDGWICK, COLORADO Statement of Activities For the Year Ended December 31, 2023 Program Revenues Operating Capital Charges for Grants and Grants and Expenses Services Contributions Contributions Governmental activities General government $ 124,453 $ 3,077 Health and welfare 14,780 Public works 35,108 $ 17,124 Culture and recreation 61,297 2,348 Total governmental activities 235,638 3,077 19,472 $ Business-type activities Water and sewer 106,144 113,378 Sanitation 21,832 28,472 Total business-type activities 127,976 141,850 Total $ 363,614 $ 144,927 $ 19,472 $ General revenues Taxes Property taxes, levied for general purposes Other taxes Unrestricted earnings on investments Miscellaneous Total general revenues Change in net position Net position at beginning of year Net position at end of year The accompanying notes are an integral part of these financial statements. -14- Net (Expenses) Revenues and Changes in Net Position Governmental Business-type Activities Activities Total $ (121,376) $ (121,376) (14,780) (14,780) (17,984) (17,984) (58,949) (58,949) (213,089) $ (213,089) 7,234 7,234 6,640 6,640 13,874 13,874 (213,089) 13,874 (199,215) 15,831 15,831 1,078,935 1,078,935 200,402 1,949 202,351 2,291 2,291 1,297,459 1,949 1,299,408 1,084,370 15,823 1,100,193 3,812,956 877,168 4,690,124 $ 4,897,326 $ 892,991 $ 5,790,317 -15- TOWN OF SEDGWICK, COLORADO Balance Sheet Governmental Funds December 31, 2023 Other Total General Governmental Governmental Fund Fund Funds Assets Cash $ 102,290 $ 10,314 $ 112,604 Cash with county treasurer 239 239 Investments 4,339,623 4,339,623 Accounts receivable 111,571 111,571 Property taxes receivable 11,752 11,752 Total assets $ 4,565,475 $ 10,314 $ 4,575,789 Liabilities Accounts payable $ 4,687 $ 4,687 Accrued salaries and benefits 8,913 8,913 Unearned grant revenue 34,435 34,435 Total liabilities 48,035 $ 48,035 Deferred inflows of resources Deferred property tax revenues 11,752 11,752 Total deferred inflows of resources 11,752 11,752 Fund balance Restricted for emergencies 40,000 40,000 Restricted for culture and recreation 10,314 10,314 Unassigned 4,465,688 4,465,688 Total fund balance 4,505,688 10,314 4,516,002 Total liabilities, deferred inflows of resources and fund balance $ 4,565,475 $ 10,314 $ 4,575,789 The accompanying notes are an integral part of these financial statements. -16- TOWN OF SEDGWICK, COLORADO Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position December 31, 2023 Amounts reported for governmental activities in the statement of net position are different because: Total fund balances governmental funds $ 4,516,002 Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in the governmental funds. 381,324 Net position of governmental activities $ 4,897,326 The accompanying notes are an integral part of these financial statements. -17- TOWN OF SEDGWICK, COLORADO Statement of Revenues, Expenditures and Changes in Fund Balance Governmental Funds For the Year Ended December 31, 2023 Other Total General Governmental Governmental Fund Fund Funds Revenues Taxes $ 1,094,553 $ 1,094,553 Licenses and fees 3,077 3,077 Intergovernmental revenue 17,337 $ 2,348 19,685 Miscellaneous revenue 202,627 66 202,693 Total revenues ,317,594 2,414 1,320,008 Expenditures Current General government 122,779 122,779 Health and welfare 4,598 4,598 Public works 35,108 35,108 Culture and recreation 28,971 28,971 Capital outlay 51,599 51,599 Total expenditures 243,055 243,055 Net change in fund balances 1,074,539 2,414 1,076,953 Fund balance at beginning of year 3,431,149 7,900 3,439,049 Fund balance at end of year $ 4,505,688 $ 10,314 $ 4,516,002 The accompanying notes are an integral part of these financial statements. -18- TOWN OF SEDGWICK, COLORADO Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended December 31, 2023 Amounts reported for governmental activities in the statement of activities are different because: Net change in fund balances - governmental funds $ 1,076,953 Capital outlays to purchase or build capital assets are reported in governmental funds as expenditures. However, for governmental activities, those costs are shown in the statement of net position and allocated over their estimated useful lives as annual depreciation expense in the statement of activities. This is the amount by which depreciation exceeded capital outlays in the current period. 7,417 Change in net position of governmental activities $ 1,084,370 The accompanying notes are an integral part of these financial statements. -19- TOWN OF SEDGWICK, COLORADO Statement of Net Position Proprietary Funds December 31, 2023 Business-type Activities Enterprise Funds Water and Sanitation Sewer Fund Fund Total Assets Current assets Cash $ 297,891 $ 63,998 $ 361,889 Certificates of deposit 67,118 67,118 Accounts receivable 8,843 2,286 11,129 Total current assets 373,852 66,284 440,136 Restricted assets Cash 20,702 20,702 Noncurrent assets Land 25,220 25,220 Systems 1,126,203 1,126,203 Vehicles and equipment 3,758 27,585 31,343 Accumulated depreciation (534,002) (26,068) (560,070) Total noncurrent assets 621,179 1,517 622,696 Total assets $ 1,015,733 $ 67,801 $ 1,083,534 Liabilities Current liabilities Accounts payable $ 5,096 $ 622 $ 5,718 Accrued salaries and benefits 4,457 1,485 5,942 Refundable deposits 4,300 4,300 Current portion of long-term debt 13,967 13,967 Total current liabilities 27,820 2,107 29,927 Long-term liabilities Long-term debt 160,616 160,616 Total liabilities 188,436 2,107 190,543 Net position Net investment in capital assets 446,596 1,517 448,113 Restricted for debt service 20,702 20,702 Unrestricted 359,999 64,177 424,176 Total net position 827,297 65,694 892,991 Total liabilities and net position $ 1,015,733 $ 67,801 $ 1,083,534 The accompanying notes are an integral part of these financial statements. -20- TOWN OF SEDGWICK, COLORADO Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities Enterprise Funds Water and Sanitation Sewer Fund Fund Total Operating revenues Charges for services $ 113,378 $ 28,472 $ 141,850 Operating expenses Salaries 32,480 10,827 43,307 Payroll taxes 2,469 2,412 4,881 Employee insurance 4,766 4,766 Supplies and maintenance 23,502 1,741 25,243 Utilities 6,845 6,845 Landfill 3,777 3,777 Insurance and bonds 3,525 1,175 4,700 Miscellaneous 6,464 6,464 Professional fees 2,331 600 2,931 Office expense 83 83 Telephone 342 342 Depreciation 23,337 1,300 24,637 Total operating expenses 106,144 21,832 127,976 Operating income 7,234 6,640 13,874 Nonoperating revenues Interest on investments 1,949 1,949 Total nonoperating revenues 1,949 1,949 Change in net position 9,183 6,640 15,823 Net position at beginning of year 818,114 59,054 877,168 Net position at end of year $ 827,297 $ 65,694 $ 892,991 The accompanying notes are an integral part of these financial statements. -21- TOWN OF SEDGWICK, COLORADO Statement of Cash Flows Proprietary Funds For the Year Ended December 31, 2023 Business-type Activities Enterprise Funds Water and Sanitation Sewer Fund Fund Total Cash flows from operating activities Receipts from customers $ 112,768 $ 28,594 $ 141,362 Payments to suppliers (46,614) (9,387) (56,001) Payments to employees (31,595) (10,533) (42,128) Net cash provided by operating activities 34,559 8,674 43,233 Cash flows from capital and related financing activities Purchase of capital assets (52,563) (52,563) Principal paid on long-term debt obligation (13,967) (13,967) Net cash used by capital and related financing activities (66,530) (66,530) Cash flows from investing activities Earnings on investments 839 839 Net cash provided by investing activities 839 839 Net increase (decrease) in cash (31,132) 8,674 (22,458) Cash and cash equivalents at beginning of year 349,725 55,324 405,049 Cash and cash equivalents at end of year $ 318,593 $ 63,998 $ 382,591 1 The accompanying notes are an integral part of these financial statements. -22- Business-type Activities Enterprise Funds Water and Sanitation Sewer Fund Fund Total Reconciliation of operating income to net cash cash provided by operating activities Operating income $ 7,234 $ 6,640 $ 13,874 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation 23,337 1,300 24,637 Changes in assets and liabilities Receivables (560) 122 (438) Accounts payable 3,713 318 4,031 Accrued salaries and benefits 885 294 1,179 Refundable deposits (50) (50) Net cash provided by operating activities $ 34,559 $ 8,674 $ 43,233 Cash and cash equivalents consist of: Cash and investments $ 297,891 $ 63,998 $ 361,889 Restricted cash 20,702 20,702 Total cash and cash equivalents $ 318,593 $ 63,998 $ 382,591 1 -23- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies This summary ofthe Town of Sedgwick's significant accounting policies is presented to assist the reader in interpreting the financial statements and other data in this report. The policies are considered essential and should be read in conjunction with the accompanying financial statements. The financial statements of the Town have been prepared in conformity with accounting principles generally accepted in the United States of America as applied to local government units. The Governmental Accounting Standards Board (GASB) is the accepted standard- setting body for establishing governmental accounting and financial principles. The more significant of the Town's accounting policies are described below. A.1 - Reporting entity The financial reporting entity consists of (1) the primary government, (2) organizations for which the primary government is financially accountable, and (3) other organizations for which the nature and significance of their relationship with the primary government are such that exclusion would cause the reporting entity's financial statements to be misleading or incomplete. The reporting entity's financial statements should present the funds of the primary government (including its blended component units, which are, in substance, part of the primary government) and provide an overview of the discretely presented component units. The Town has examined other entities that could be included as defined in number 2 and 3 above. Based on these criteria, the Town has no component units. A.2 - Fund accounting The Town uses funds to report its financial position and results of operations. Fund accounting is designed to demonstrate legal compliance and to aid financial management by segregating transactions related to certain government functions or activities. A fund is a separate accounting entity with a self-balancing set of accounts. Funds are classified into three categories: governmental, proprietary and fiduciary. Each category, in turn, is divided into separate "fund types." Governmental funds are used to account for all or most of a government's general activities, including the collection and disbursement of earmarked funds (special revenue funds), major capital projects (capital projects fund), and the servicing of general long-term debt (debt service fund). The following is the Town's major governmental fund: -24- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies (Continued) General Fund - The General Fund is the operating fund of the Town. It is used to account for most of the day-to-day operations of the Town which are financed from sales and use taxes, property taxes and other general revenues. Activities financed by the general fund include those of line and staff departments within the Town, except for activities of the enterprise funds. The following is the Town's nonmajor governmental fund: Conservation Trust Fund - This fund is a special revenue fund established to account for state lottery proceeds and allowable expenditures. Proprietary funds focus on the determination of the changes in net position, financial position and cash flows and are classified as either enterprise or internal service. Enterprise funds may be used to account for any activity for which a fee is charged to external users for goods or services. The following are the Town's major proprietary funds: Water and Sewer Fund - This fund was established to account for all operations of the water and sewer utility services provided by the Town. Sanitation Fund - This fund was established to account for all operations of the sanitation services provided by the Town. Note A.3 - Basis of presentation Government-wide financial statements The statement of net position and the statement of activities display information about the Town as a whole. These statements include the financial activities of the primary government except for fiduciary funds. The statements distinguish between those activities of the Town that are governmental and those that are considered business-type activities. The government-wide statements are prepared using the economic resources measurement focus and the accrual basis of accounting. This is the same approach used in the preparation of the proprietary fund financial statements but differs from the manner in which governmental fund financial statements are prepared. Governmental fund financial statements therefore include reconciliations with a brief explanation to better identify the relationship between the government-wide statements and the statements for governmental funds. The government-wide statement of activities presents a comparison between direct expenses and program revenues for each segment of the business-type activities of the Town and for each function or program of the Town's governmental activities. Direct expenses are those that are specifically associated with a service, program or department and therefore are clearly identifiable to a particular function. Program revenues include charges paid by the -25- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies (Continued) recipient of the goods or services offered by the program and grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues, which are not classified as program revenues, are presented as general revenues ofthe Town, with certain limited exceptions. The comparison of direct expenses with program revenues identifies the extent to which each business segment or governmental function is self-financing or draws from the general revenues of the Town. Fund financial statements - Fund financial statements report detailed information about the Town. The focus of governmental and enterprise fund financial statements is on major funds rather than reporting funds by type. Each major fund is presented in a separate column. Nonmajor funds are aggregated and presented in a single column. The accounting and financial reporting treatment applied to a fund is determined by its measurement focus. All governmental fund types are accounted for using a flow of current financial resources management focus. The financial statements for governmental funds are a balance sheet, which generally includes only current assets, deferred outflows of resources, current liabilities and deferred inflows of resources, and a statement of revenues, expenditures and changes in fund balance, which reports the sources (revenues and other financing sources) and uses expenditures and other financing uses) of current financial resources. All proprietary fund types are accounted for on a flow of economic resources measurement focus. With this measurement focus, all assets and all liabilities associated with the operations of these funds are included on the statement of net position. The statement of revenues, expenses and changes in fund net position presents increases (revenues) and decreases (expenses) in net total assets. The statement of cash flows provides information about how the Town finances and meets the cash flow needs of its proprietary activities. A.4 = Basis of accounting Basis of accounting determines when transactions are recorded in the financial records and reported on the financial statements. Government-wide financial statements are prepared using the accrual basis of accounting. Governmental funds use the modified accrual basis of accounting. Proprietary funds also use the accrual basis of accounting. Revenues = exchange and non-exchange transactions Revenues resulting from exchange transactions, in which each party gives and receives essentially equal value, are recorded on the accrual basis when the exchange takes place. On a modified accrual basis, revenues are recorded in the fiscal year in which the resources are measurable and become available. Available means that the resources will be collected within the current fiscal year or are expected to be collected soon enough thereafter to be used to pay liabilities of the current fiscal year. For the Town, available means expected to be received within sixty days of fiscal year-end. -26- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies (Continued) Nonexchange transactions, in which the Town receives value without directly giving equal value in return, include property taxes, grants, entitlements and donations. On an accrual basis, revenues from property taxes are recognized in the fiscal year for which the taxes are levied. Revenues from grants, entitlements and donations are recognized in the fiscal year in which all eligibility requirements have been satisfied. Eligibility requirements include timing requirements, which specify the year when the resources are required to be used or the fiscal year when use is first permitted, matching requirements, in which the Town must provide local resources to be used for a specified purpose, and expenditure requirements, in which the resources are provided to the Town on a reimbursement basis. On a modified accrual basis, revenue from nonexchange transactions must also be available before it can be recognized. Property taxes, sales taxes, other taxes, licenses and fees and interest associated with the current fiscal period are all considered to be susceptible to accrual and sO have been recognized as revenues of the current fiscal period. Unearned revenue - Unearned revenues arise when potential revenue does not meet both the "measurable" and "available" criteria for recognition in the current period. Unearned revenues also arise when resources are received by the Town before it has a legal claim to them, as when grant monies are received prior to meeting eligibility requirements. In subsequent periods, when both revenue recognition criteria are met, or when the Town has a legal claim to the resources, the liability for unearned revenue is removed and the revenue is recognized. Deferred outlows/inflows of resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to a future period(s) and SO will not be recognized as an outflow of resources expense/expenditure, until then. In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net position that applies to a future period(s) and sO will not be recognized as an inflow of resources (revenue) until that time. Expenses/expenditures - On the accrual basis of accounting, expenses are recognized at the time they are incurred. The measurement focus of governmental fund accounting is on decreases in net financial resources (expenditures) rather than expenses. Expenditures are generally recognized in the accounting period in which the related fund liability is incurred, if measurable. Allocations of cost, such as depreciation and amortization, are not recognized in the governmental funds. -27- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A = Summary of significant accounting policies (Continued) A.5 - Encumbrances The Town does not utilize encumbrance accounting. A.6 - Cash and cash equivalents For the purposes of the statement of cash flows, the Town considers all highly liquid debt instruments with an original maturity of three months or less to be cash equivalents. A.7 - Short-term interfund receivables/Payables During the course of operations, numerous transactions occur between individual funds for goods provided or services rendered. These receivables and payables are classified as internal balances on the government-wide statement of net position, and are classified as due from other funds or due to other funds on the balance sheet. A.8 - Receivables Monthly charges for water, sewer and sanitation services are included with monthly utility billings. No allowance for doubtful accounts has been provided in the accompanying financial statements since substantially all accounts are deemed by management to be collectible. A.9 - Capital assets General capital assets are those assets not specifically related to activities reported in the proprietary funds. These assets generally result from expenditures in the governmental funds. These assets are reported in the governmental activities column of the government- wide statement of net position, but are not reported in the fund financial statements. Capital assets utilized by the proprietary funds are reported both in the business-type activities column ofthe government-wide statement of net position and in the respective fund financial statements. All capital assets with a unit cost greater than $1,000 are capitalized at cost (or estimated historical cost, if actual cost is not available) and updated for additions and retirements during the year. Donated capital assets are recorded at their fair value on the date received. Improvements to assets are capitalized; the cost of normal maintenance and repairs that do not add to the value of the asset or materially extend the life of the asset are not. Infrastructure assets, consisting of certain improvements other than buildings (such as parking facilities, sidewalks, landscaping and lighting systems) will be capitalized on a prospective basis beginning in 2004. -28- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies (Continued) All reported capital assets are depreciated with the exception of land costs. Improvements are depreciated over the remaining useful lives of the related capital assets. Depreciation is computed using the straight-line method over the following useful lives: Governmental Business-type Description Activities Activities Buildings 40 years 40 years Equipment 3-10 years 3-10 years Improvements other than buildings 10-50 years 25-50 years Infrastructure 50 years n/a A.10 - Compensated absences The Town reports compensated absences in accordance with the provisions of GASB Statement No. 16, Accounting for Compensated Absences." Full-time employees accrue sick leave at a rate of 8 hours per month up to 120 hours per calendar year. Upon termination of employment, an employee with unused sick leave shall not be paid unused sick hours. Full-time employees accrue leave at a rate of 40 hours per calendar year for the first two years of service, and 80 hours per calendar for the third year of service and beyond. Upon separation of employment, employees will receive pay for earned, unused vacation. No liability is shown in the financial statements due to the immateriality of the amount. A.11 - Accrued liabilities and long-term obligations All payables, accrued liabilities and long-term obligations are reported in the government- wide financial statements, and all payables, accrued liabilities and long-term obligations payable from proprietary funds are reported on the proprietary fund financial statements. In general, payables and accrued liabilities that will be paid from governmental funds are reported on the governmental fund financial statements regardless of whether they will be liquidated with current resources. However, the noncurrent portion of compensated absences that will be paid from governmental funds are reported as a liability in the fund financial statements only to the extent that they will be paid with current, expendable, available financial resources. Bonds payable and other long-term obligations that will be paid from governmental funds are not recognized as a liability in the fund financial statements until due. -29- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A - Summary of significant accounting policies (Continued) A.12 - Net position Net position represents the difference between assets and liabilities. Net investment in capital assets consists of capital assets, net of accumulated depreciation, reduced by the outstanding balances of any borrowings used for the acquisition, construction or improvement of those assets. Net position is reported as restricted when there are liabilities imposed on its use either through the enabling legislation adopted by the Town or through external restrictions imposed by creditors, grantors or laws or regulations of other governments. The Town applies restricted resources when an expense is incurred for purposes for which both restricted and unrestricted net position are available. A.13 - Operating revenues and expenses Operating revenues are those revenues that are generated directly from the primary activity of the proprietary funds. For the Town, these revenues are service charges for water, sewer and sanitation utility services. Operating expenses are necessary costs incurred to provide the goods or services that are the primary activity of the fund. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. A.14 - Interfund transactions Interfund services provided and used are accounted for as revenues, expenditures or expenses. Transactions that constitute reimbursements to a fund for xpenditures/expenses initially made from it that are properly applicable to another fund, are recorded as xpenditures/expenses in the reimbursing fund and as reductions of cxpenditures/cxpenses in the fund that is reimbursed. All other interfund transactions, except interfund services provided and used, and reimbursements, are reported as transfers. In general, the effect of interfund activity has been eliminated from the government-wide financial statements. Interfund services that are provided and used are not eliminated in the process of consolidation. A.15 - Extraordinary and special items Extraordinary items are transactions or events that are both unusual in nature and infrequent in occurrence. Special items are transactions or events that are within the control of the Town Council and that are either unusual in nature or infrequent in occurrence. Neither type of transaction occurred during the year. -30- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note A = Summary of significant accounting policies (Continued) A.16 - Fund balance The Governmental Accounting Standards Board (GASB) has issued Statement No. 54, Fund Balance Reporting and Governmenta. Fund Type Definitions (GASB 54). This Statement defines the different type of fund balances that a governmental entity must use for financial reporting purposes. GASB 54 requires the fund balance amounts to be properly reported within one of the fund balance categories listed below. Nonspendable, such as fund balance associated with inventories, prepaid expenditures, long-term loans and notes receivable, and property held for resale (unless the proceeds are restricted, committed or assigned), Restricted fund balance category includes amounts that can be spent only for the specific purposes stipulated by constitution, external resource providers, or through enabling legislation, Committed fund balance classification includes amounts that can be used only for the specific purposes determined by a formal action of the Town Council (the Town's highest level of decision-making authority), Assigned fund balance classification are intended to be used by the government for specific purposes but do not meet the criteria to be classified as restricted or committed, and Unassigned fund balance is the residual classification for the Town's general fund and includes all spendable amounts not contained in the other classifications. Committed fund balance is established by a formal passage of a resolution. This is typically done through the adoption and amendment of the budget. A fund balance commitment is further indicated in the budget document as a designation or commitment of the fund. Assigned fund balance is established by the Town Council through adoption or amendment oft the budget as intended for specific purpose (such as purchase of fixed assets, construction, debt service or for other purposes). When both restricted and unrestricted resources are available in governmental funds, the Town applies expenditures against restricted fund balance first, and followed by committed fund balance, assigned fund balance and unassigned fund balance. -31- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note B - Cash and investments Cash and deposits Colorado State statutes govern the Town's deposit of cash. The Public Deposit Protection Acts (PDPA) for banks and savings and loans require state regulators to certify eligible depositories for public deposits. The PDPA require eligible depositories with public deposits in excess of federal insurance levels to create a single institution collateral pool of defined eligible assets. Eligible collateral includes obligations of the United States, obligations oft the State of Colorado or Colorado local governments and obligations secured by first lien mortgages on real property located in the state. The pool is to be maintained by another institution or held in trust for all uninsured public deposits as a group and not held in any individual government's name. The fair value of the assets in the pool must be at least equal to 102% of the aggregate uninsured deposits. Custodial credit risk = deposits Custodial risk is the risk that in the event of a bank failure, the Town's deposits may not be returned to it. The Town does not have a deposit policy for custodial credit risk. As of year-end, the Town had total deposits of $467,955, of which $289,960 were insured and $177,995 were collateralized with securities held by the pledging institution's trust department or agent in the Town's name. Investments Authorized investments Investment policies are governed by Colorado State Statutes and the Town's own investment policies and procedures. Investments of the Town may include: Obligations of the United States Government such as treasury bills, notes and bonds Certain international agency securities General obligation and revenue bonds of United States local government entities Bankers acceptances of certain banks Commercial paper Local government investment pools Written repurchase agreements collateralized by certain authorized securities Certain money market funds Guaranteed investment contracts During the year, the Town invested in Colotrust (the Trust), an investment vehicle established for local government entities in Colorado to pool surplus funds. The State Securities Commission administers and enforces all State statutes governing the Trust. The Trust operates similarly to a money market fund and each share is equal in value to $1.00. The Trust offers shares in two portfolios, COLOTRUST PRIME and COLOTRUST PLUS+. Both portfolios may invest in U.S. Treasury securities and repurchase agreements collateralized by U.S. Treasury securities. COLOTRUST PLUS+ may also invest in certain obligations of U.S. government agencies, highest rated commercial paper and repurchase agreements collateralized by certain obligations of U.S. government agencies. A designated custodial bank serves as custodian for the Trust's portfolios pursuant to a custodian agreement. The -32- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note B = Cash and investments (Continued) custodian acts as safekeeping agent for the Trust's investment portfolios and provides services as the depository in connection with direct investments and withdrawals. As of December 31, 2023, the Town had invested $4,339,623 in COLOTRUST PLUS+, an SEC Rule 2a7-like investment pool. Investments are valued at the net asset value (NAV) of $1.00. The investment pools are routinely monitored by the Colorado Division of Securities with regard to operations and investments. At year-end, the Town had the following investments: Investment maturities (in years) Less Investment type Fair value than 1 1-5 6-10 State investment pool $ 4,339,623 $ 4,339,623 $ $ Credit risk - State law limits investments in commercial paper, corporate bonds, and mutual bond funds to the highest rating from at least one nationally recognized rating agency at the time of purchase. The Town has no investment policy that would further limit its investment choices. At year-end, the Town's investment in Colotrust was rated AAAm by Standard and Poor's. Note C- Receivables Receivables at year-end consist of the following: Governmental Business-type Total Activities Activities Receivables Accounts $ 111,571 $ 11,129 $ 122,700 Property taxes 11,752 11,752 Total $ 123,323 $ 11,129 $ 134,452 Property taxes are levied on December 15th and attach as a lien on property the following January 1st. They are payable in full by April 30th or are due in two equal installments on February 28th and June 15th. Sedgwick County bills and collects property taxes for all taxing entities within the County. The tax receipts collected by the county are remitted to the Town in the subsequent month. -33- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note D = Capital assets Capital asset activity for the year was as follows: Beginning Deletions/ Ending Balance Additions Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 6,100 $ $ $ 6,100 Total capital assets, not being depreciated 6,100 6,100 Capital assets, being depreciated: Buildings and improvements 310,541 310,541 Office equipment 2,356 2,356 Equipment 327,171 54,176 381,347 Total capital assets, being depreciated 640,068 54,176 694,244 Total capital assets 646,168 54,176 700,344 Less accumulated depreciation for: Buildings and improvements (92,076) (8,068) (100,144) Office equipment (2,070) (286) (2,356) Equipment (178,115) (38,405) (216,520) Total accumulated depreciation (272,261) (46,759) (319,020) Governmental activities capital assets, net $ 373,907 $ 7,417 $ $ 381,324 Business-type activities Capital assets, not being depreciated: Land $ $ 25,220 $ $ 25,220 Capital assets, being depreciated: Water system 975,042 8,100 983,142 Sewer system 123,818 19,243 143,061 Equipment 31,343 31,343 Less accumulated depreciation (535,433) (24,637) (560,070) Business-type activities capital assets, net $ 594,770 $ 27,926 $ $ 622,696 -34- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note D = Capital assets Continued) Depreciation expense was charged to programs of the primary government as follows: Governmental activities General government $ 4,252 Public works 10,182 Culture and recreation 32,325 Total governmental activities $ 46,759 Business-type activities Water and sewer $ 23,337 Sanitation 1,300 Total business-type activities $ 24,637 Note E = Long-term debt The following is a summary of the changes in long-term debt for the year: Beginning Ending Due within Balance Additions Reductions Balance one year Business-type activities Notes payable $ 188,550 $ $ (13,967) $ 174,583 $ 13,967 Long-term debt at year-end consists of the tollowing individual issue: CWRPDA Note payable - Water and Sewer Fund - The Town has entered into a $419,000 note agreement with the Colorado Water Resources & Power Development Authority (CWRPDA) dated May 15, 2006, due in semi-annual installments of$6,983 through 2036, bearing interest at a rate of 0%. The loan requires a reserve fund totaling three months of operations and maintenance expenses, excluding depreciation, currently $20,702, which the Town has included in "restricted cash" on the statement of net position. $ 174,583 -35- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note E - Long-term debt Continued) During the loan term, the Town shall establish, impose and collect, rents, rates and other charges for the products and services provided by the system, which shall be at least sufficient, together with other amounts available theretore, and after meeting the operation and maintenance expenses of the system, to pay 110% of the debt service coming due in such calendar year. The Town believes it has met this requirement. The Town's outstanding note with CWRPDA in the amount of $174,583 is secured with collateral of the net revenue from operation and use of the system as defined in the loan agreement. This outstanding note contains a provision that in an event of default as defined in the loan agreement, the Authority shall have the right to take any action permitted or required pursuant to the loan agreement, and to take whatever other action at law or in equity may appear necessary or desirable to collect the amounts then due and thereafter to become due hereunder, or to enforce the performance and observance of any duty, covenant, obligation, or agreement including, without limitation, appointment ex parte of a receiver of the system. The Town shall on demand pay to the Authority the reasonable fees and expenses of the attorneys, and other reasonable expenses incurred by the Authority in the collection of loan repayments or any other sum due, or in the enforcement of the performance of observation of any other duties, covenants, obligations, or agreements of the Town. The following schedule represents the Town's debt service requirements to maturity for the outstanding long-term debt at year-end: Year ended December 31, Principal Interest 2024 $ 13,967 $ 2025 13,967 2026 13,967 2027 13,967 2028 13,967 2029-2033 69,833 2034-2036 34,915 Total $ 174,583 $ -36- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note F - Risk management The Town is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets; error and omissions; injuries to employees; and natural disasters. The Town participates in the Colorado Intergovernmental Risk Sharing Agency (CIRSA/PC) and the Colorado Intergovernmental Risk Sharing Agency for Worker's Compensation (CIRSA/WC). CIRSA/PC and CIRSA/WC provide member municipalities within the State of Colorado, property, liability and workmen's compensation coverages and related services. CIRSA's general objectives are to provide member municipalities defined property and liability and/or worker's compensation coverages through self-insurance and excess insurance purchased from commercial companies. The Town pays an annual contribution to CIRSA for its insurance coverages. For the year ended, the Town's financial contribution to CIRSA/PC and CIRSA/WC was $11,812 and $3,855 respectively. Settled claims resulting from any of the above risks have not exceeded the coverages provided. There has been no significant reduction in insurance coverage from the prior year in any of the major categories of risk. Note G = Commitments and contingencies Federal and state funding The Town receives revenues from various state grant programs which are subject to final review and approval by the grantor agencies. The amount, if any, of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the Town expects such amounts, if any, to be immaterial. TABOR Amendment In November 1992, Colorado voters passed an amendment, commonly known as the Taxpayer's Bill of Rights (TABOR), to the State Constitution (Article X, Section 20) which limits the revenue raising and spending abilities of state and local governments. The limits on property taxes, revenue, and "fiscal year spending" include allowable annual increases tied to inflation and local growth. Fiscal year spending as defined by the amendment excludes spending from certain revenue and financing sources such as federal funds, gifts, property sales, fund transfers, damage awards, and fund reserves (balances). The amendment requires voter approval for any increase in mill levy or tax rates, new taxes, creation of multi-year debt. Revenue earned in excess of the "spending limit" must be refunded or approved to be retained by the Town under specified voting requirements by the entire electorate. On April 6, 2004, the voters of the Town approved a ballot initiative permitting the Town to retain, appropriate, and utilize, by retention for reserve, carryover fund balance, or expenditure, the full proceeds and revenues received from every source whatsoever, without limitation, in this fiscal year and all subsequent fiscal years notwithstanding any limitation of Article X, Section 20 of the Colorado Constitution. TABOR -37- TOWN OF SEDGWICK, COLORADO Notes to Financial Statements Note G- Commitments and contingencies (Continued) is complex and subject to judicial interpretation. The Town believes it is in compliance with the requirements OfTABOR. However, the Town has made certain interpretations OfTABOR's language in order to determine its compliance. The Town has reserved funds in the General Fund in the amount of $40,000 for the emergency reserve. -38- Required Supplementary Information Required supplementary information includes financial information and disclosures that are required by the Governmental Accounting Standards Board but are not considered a part of the basic financial statements. Such information includes: Budgetary Comparison Schedule - General Fund -39- TOWN OF SEDGWICK, COLORADO General Fund Budgetary Comparison Schedule For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Revenues Taxes $ 1,237,329 $ 1,237,329 $ 1,094,553 $ (142,776) Licenses and fees 5,000 5,000 3,077 (1,923) Intergovernmental revenue 16,170 16,170 17,337 1,167 Charges for services 1,000 1,000 (1,000) Miscellaneous revenue 65,000 65,000 202,627 137,627 Total revenues 1,324,499 1,324,499 1,317,594 (6,905) Expenditures Current General government 126,472 126,472 122,779 3,693 Health and welfare 5,000 5,000 4,598 402 Public works 44,483 44,483 35,108 9,375 Culture and recreation 44,394 44,394 28,971 15,423 Capital outlay 170,000 170,000 51,599 118,401 Total expenditures 390,349 390,349 243,055 147,294 Excess of revenues over expenditures 934,150 934,150 1,074,539 140,389 Other tinancing sources (uses) Transfers out (350,000) (350,000) 350,000 Net change in fund balance $ 584,150 $ 584,150 1,074,539 $ 490,389 Fund balance at beginning of year 3,431,149 Fund balance at end of year $ 4,505,688 -40- TOWN OF SEDGWICK, COLORADO Notes to the Required Supplementary Information Note A - Budgetary data Annual budgets are established for all funds of the Town. Budgets for all funds are adopted on a basis consistent with generally accepted accounting principles except for the enterprise funds (water and sewer and sanitation) in which capital and principal retirement expenses are treated as operating expenses and depreciation expense is not budgeted. An appropriated budget for the entity as a whole is prepared on a detailed basis. Revenues are budgeted by source. Expenditures are budgeted by department and the major divisions thereof and by each independent office and agency and by the principal objects of expenditure. The legal level of control is considered to be the entity as a whole and expenditures may not exceed appropriations at this level. All budget revisions at this level are subject to final review and approval by Town council. Within these control levels, management may transfer appropriations without Town council approval. The Town follows these procedures in establishing the budgetary data reflected in the financial statements: On or before September 20th of each year, or in conformity with the general state law, the Town budget officer submits to the Town council a budget which shall be a complete financial plan for the ensuing fiscal year. At the same time the budget is submitted, the Town budget officer shall also prepare an appropriation ordinance making a levy in mills upon all taxable property within the Town for the ensuing fiscal year. A public hearing on the budget shall be held by Town council two weeks after its submission. Notice of the time and place of said hearing shall be published within three days after the submission of the budget. Prior to December 15th, or in conformity with the general state law, the Town council shall adopt the budget and the tax levy ordinance. Any portion of any annual appropriation remaining unexpended and unencumbered at the close of the budget year shall be declared surplus and included in the budget for the ensuing year as those appropriations lapse at year-end. -41- This page intentionally left blank. -42- Other Supplementary Information Other supplementary information includes financial statements and schedules not required by the Governmental Accounting Standards Board, nor a part of the basic financial statements, but are presented for purposes of additional analysis. Such statements and schedules include: Budgetary Comparison Schedules - General Fund Budgetary Comparison Schedule - Nonmajor Governmental Fund Budgetary Comparison Schedules - Enterprise Funds -43- This page intentionally left blank. -44- Budgetary Comparison Schedules = General Fund The General Fund accounts for all transactions of the Town not required to be accounted for in other funds. This fund represents an accounting of the Town's ordinary operations financed primarily from tax dollars and intergovernmental aid. It is the most significant fund in relation to the Town's overall operations. The schedules of revenues and expenditures are included to provide a greater level of detail to the reader of the financial statements. -45- TOWN OF SEDGWICK, COLORADO General Fund Budgetary Comparison Schedule - Revenues For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Taxes Local property taxes $ 15,399 $ 15,399 $ 15,831 $ 432 Specific ownership taxes 1,830 1,830 1,797 (33) Delinquent taxes and interest 100 100 89 (11) Other taxes 1,220,000 1,220,000 1,076,836 (143,164) Total taxes 1,237,329 1,237,329 1,094,553 (142,776) Licenses and fees 5,000 5,000 3,077 (1,923) Intergovernmental revenues Highway users tax 10,400 10,400 12,880 2,480 Motor vehicle assessment 950 950 999 49 Road and bridge tax 4,500 4,500 3,246 (1,254) Cigarette tax 210 210 Mineral lease 20 20 2 (18) Miscellaneous 300 300 (300) Total intergovernmental revenues 16,170 16,170 17,337 1,167 Charges for services Community center 1,000 1,000 (1,000) Miscelaneous revenues Interest on investments 3,000 3,000 200,336 197,336 Local grants 50,000 50,000 (50,000) Other 12,000 12,000 2,291 (9,709) Total miscellaneous revenues 65,000 65,000 202,627 137,627 Total revenues $ 1,324,499 $ 1,324,499 $ 1,317,594 $ (6,905) -46- This page intentionally left blank. -47- TOWN OF SEDGWICK, COLORADO General Fund Budgetary Comparison Schedule - Expenditures For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) General government Administrative salaries $ 29,700 $ 29,700 $ 29,232 $ 468 Payroll taxes 2,272 2,272 2,222 50 Employee insurance 3,200 3,200 4,289 (1,089) Office expenses 1,800 1,800 5,170 (3,370) Professional services 33,000 33,000 28,222 4,778 Insurance and bonds 4,000 4,000 2,151 1,849 Supplies and maintenance 10,000 10,000 11,884 (1,884) Miscellaneous 16,000 16,000 17,774 (1,774) Utilities 10,000 10,000 12,003 (2,003) Telephone 1,000 1,000 2,731 (1,731) Harvest festival 6,718 (6,718) Fire department 15,000 15,000 15,000 Treasurer's fees 500 500 383 117 Total general government 126,472 126,472 122,779 3,693 Health and welfare Pest and weed control 5,000 5,000 4,598 402 Total health and welfare 5,000 5,000 4,598 402 Public works Streets and highways Salaries 22,000 22,000 21,653 347 Payroll taxes 1,683 1,683 1,646 37 Employee insurance 2,300 2,300 3,177 (877) Street maintenance 12,000 12,000 3,228 8,772 Street lighting 3,000 3,000 3,054 (54) Insurance and bonds 3,000 3,000 2,350 650 Miscellaneous 500 500 500 Total public works 44,483 44,483 35,108 9,375 -48- Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Culture and recreation Parks Salaries 14,300 14,300 14,075 225 Payroll taxes 1,094 1,094 1,070 24 Employee insurance 1,500 1,500 518 982 Supplies and maintenance 15,000 15,000 9,429 5,571 Insurance and bonds 2,000 2,000 3,075 (1,075) Miscellaneous 500 500 804 (304) Total parks 34,394 34,394 28,971 5,423 Community center Maintenance 5,000 5,000 5,000 Insurance 1,000 1,000 1,000 Utilities 4,000 4,000 4,000 Total community center 10,000 10,000 10,000 Total culture and recreation 44,394 44,394 28,971 15,423 Capital outlay 170,000 170,000 51,599 118,401 Total expenditures $ 390,349 $ 390,349 $ 243,055 $ 147,294 -49- This page intentionally left blank. -50- Budgetary Comparison Schedule - Nonmajor Governmental Fund The Town reports the following nonmajor governmental fund: Special Revenue Funds - These funds account for the proceeds of specific revenue sources that are legally restricted to expenditures for specified purposes. Conservation Trust Fund - This fund was established to account for the state lottery proceeds and allowable expenditures. -51- TOWN OF SEDGWICK, COLORADO Conservation Trust Fund Budgetary Comparison Schedule For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Revenues State lottery funds $ 2,000 $ 2,000 $ 2,348 $ 348 Interest on investments 4 4 66 62 Total revenues 2,004 2,004 2,414 410 Expenditures Culture and recreation 8,000 8,000 8,000 Net change in fund balance $ (5,996) $ (5,996) 2,414 $ 8,410 Fund balance at beginning of year 7,900 Fund balance at end of year $ 10,314 -52- Budgetary Comparison Schedules - Enterprise Funds The Town reports the following major proprietary funds: Enterprise Funds These funds are used to account for operations that provide services that are financed primarily by user charges, or activities where periodic measurement of income is appropriate for capital maintenance, public policy, management control or other purposes. Water and Sewer Fund - This fund was established to account for all operations of the water and sewer utility services provided by the Town. Sanitation Fund - This fund was established to account for all operations of the sanitation services provided by the Town. -53- TOWN OF SEDGWICK, COLORADO Water and Sewer Fund Budgetary Comparison Schedule For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Operating revenues Charges for services $ 99,100 $ 99,100 $ 113,378 $ 14,278 Operating expenses Salaries 33,000 33,000 32,480 520 Payroll taxes 2,524 2,524 2,469 55 Employee insurance 3,786 3,786 4,766 (980) Supplies and maintenance 72,000 72,000 23,502 48,498 Utilities 10,115 10,115 6,845 3,270 Insurance and bonds 4,326 4,326 3,525 801 Miscellaneous 12,525 12,525 6,464 6,061 Professional fees 2,000 2,000 2,331 (331) Office 2,250 2,250 83 2,167 Telephone 1,300 1,300 342 958 Capital outlay 356,000 356,000 52,563 303,437 Total operating expenses 499,826 499,826 135,370 364,456 Operating loss (400,726) (400,726) (21,992) 378,734 Nonoperating revenues (expenses) Interest on investments 500 500 1,949 1,449 Principal paid on capital debt (13,967) (13,967) (13,967) Total nonoperating revenues (expenses) (13,467) (13,467) (12,018) 1,449 Net loss before transfers (414,193) (414,193) (34,010) 380,183 Transfers in 350,000 350,000 (350,000) Change in net position $ (64,193) $ (64,193) (34,010) $ 30,183 Adjustments to GAAP Basis Add principal paid on debt 13,967 Add capital outlay 52,563 Deduct depreciation (23,337) Change in net position GAAP Basis 9,183 Net position at beginning of year 818,114 Net position at end of year $ 827,297 -54- TOWN OF SEDGWICK, COLORADO Sanitation Fund Budgetary Comparison Schedule For the Year Ended December 31, 2023 Variance with Budgeted Amounts Final Budget Favorable Original Final Actual (Unfavorable) Operating revenues Charges for services $ 26,000 $ 26,000 $ 28,472 $ 2,472 Operating expenses Salaries 11,000 11,000 10,827 173 Payroll taxes 842 842 2,412 (1,570) Employee insurance 1,200 1,200 1,200 Supplies and maintenance 7,000 7,000 1,741 5,259 Landfill 3,000 3,000 3,777 (777) Insurance and bonds 1,200 1,200 1,175 25 Miscellaneous 1,500 1,500 1,500 Professional fees 600 600 600 Office expense 600 600 600 Telephone 650 650 650 Utilities 300 300 300 Total operating expenses 27,892 27,892 20,532 7,360 Change in net position $ (1,892) $ (1,892) 7,940 $ 9,832 Adjustments to GAAP Basis Deduct depreciation (1,300) Change in net position GAAP Basis 6,640 Net position at beginning of year 59,054 Net position at end of year $ 65,694 -55- This page intentionally left blank. -56- Colorado Department of Highways Local Highway Finance Report This calendar-year report of receipts and expenditures is required by the Colorado Department of Highways to maintain Statewide accountability for moneys used for highway and street purposes. To ensure data accuracy, House Bill 1008 mandates that this report be included in the Town's financial statements. -57- Form Approved The publicr report burden for this information collection is estimated to average 380 hours annually. OMB No. 2125-0032 STATE: COLORADO LOCAL HIGHWAY FINANCE REPORT YEAR ENDING (mm/yy): 12/23 This Information From The Records Of: Prepared By: DANIEL M. PEDERSON, CPA TOWN OF SEDGWICK I. DISPOSITION OF HIGHWAY-USER REVENUES AVAILABLE FOR LOCAL GOVERNMENT EXPENDITURE A. Local B. Local C. Receipts from D. Receipts from ITEM Motor-Fuel Motor-Vehicle State Highway- Federal Highway Taxes Taxes User Taxes Administration 1. Total receipts available 2. Minus amount used for collection expenses 3. Minus amount usedf for nonhighway purposes 4. Minus amount used for mass transit 5. Remainder usedf for highway purposes II. RECEIPTS FOR ROAD AND STREET PURPOSES III. EXPENDITURES FOR ROAD AND STREET PURPOSES ITEM AMOUNT ITEM AMOUNT A. Receipts from local sources: A. Local highway expenditures: 1. Local highway-user taxes 1. Capital outlay (from page 2) $ a. Motor Fuel (from Item L.A.5.) 2. Maintenance: $ 31,258.00 b. Motor Vehicle (from Item L.B.5.) 3. Road and street services: C. Total (a. +b.) a. Traffic control operations $ 2. General fund appropriations $ 20,221.00 b. Snow and ice removal 3. Other local imposts (from page 2) $ C. Other $ 2,806.00 4. Miscellaneous local receipts (from page 2) $ d. Total (a. through C.) $ 2,806.00 5. Transfers from toll facilities 4. General administration & miscellaneous 6. Proceeds of sale of bonds and notes: 5. Highway law enforcement and safety a. Bonds Original Issues 6. Total (1 through 5) $ 34,064.00 b. Bonds - Refunding Issues B. Debt service on local obligations: C. Notes 1. Bonds: d. Total (a. + b. +c.) $ a. Interest 7. Total (1t through 6) $ 20,221.00 b. Redemption B. Private Contributions C. Total (a. + b.) $ C. Receipts from State government 2. Notes: (frompage 2) $ 13,843.00 a. Interest D. Receipts from Federal Government b. Redemption (from page 2) $ C. Total (a. + b.) $ E. Total receipts (A.7+ B+C+D) $ 34,064.00 3. Total (1.c + 2.c) $ C. Payments to State for highways D. Payments to toll facilities E. Total expenditures (A.6 + B.3+ C+D) $ 34,064.00 IV. LOCAL HIGHWAY DEBT STATUS (Show all entries at par) Opening Debt Amount Issued Redemptions Closing Debt A. Bonds (Total) $ 1. Bonds (Refunding Portion) $ B. Notes (Total) $ V.L LOCAL ROAD AND STREET FUND BALANCE (RECEIPTS AND DISBURSEMENTS ONLY) A. Beginning Balance B. Total Receipts C. Total Disbursements D. Ending Balance E. Reconciliation $ $ 34,064.00 $ 34,064.00 $ - $ Notes and Comments: FORM FHWA-536 Rev.06/2000) PREVIOUS EDITIONS OBSOLETE Excel (Next Page) page 1 -58- STATE: COLORADO LOCAL HIGHWAY FINANCE REPORT YEAR ENDING (mm/yy): 12/23 II. RECEIPTS FOR ROAD AND STREET PURPOSES - DETAIL ITEM AMOUNT ITEM AMOUNT A.3. Other local imposts: A.4. Miscellaneous local receipts: a. Property Taxes and Assesments a. Interest on investments b. Other local imposts: b. Traffic Fines & Penalties 1. Sales Taxes C. Parking Garage Fees 2. Infrastructure & Impact Fees d. Parking Meter Fees 3. Liens e. Sale of Surplus Property 4. Licenses f. Charges for Services 5. Specific Ownership &/or Other g. Other Misc. Receipts 6. Total (1. through 5.) $ h. Other C. Total (a. + b.) $ . Total (a. through h.) $ (Carry forward to page 1) Carry forward to page 1) ITEM AMOUNT ITEM AMOUNT C. Receipts from State Government D. Receipts from Federal Government 1. Highway-user taxes (from Item I.C.5.) $ 12,855.00 1. FHWA (from Item I.D.5.) 2. State general funds 2. Other Federal agencies: 3. Other State funds: a. Forest Service a. State bond proceeds b. FEMA b. Project Match C. HUD C. Motor Vehicle Registrations $ 988.00 d. Federal Transit Administration d. DOLA Grant e. U.S. Corps of Engineers e. Other f. Other Federal ARPA f. Total (a. through e.) $ 988.00 g. Total (a. through f.) $ 4. Total (1. + 2. + 3.f) $ 13,843.00 3. Total (1.+ 2.9) $ (Carry forward to page 1) (Carry forward to page 1) III. EXPENDITURES FOR ROAD AND STREET PURPOSES - DETAIL ON NATIONAL OFF NATIONAL HIGHWAY HIGHWAY TOTAL SYSTEM SYSTEM (a) (b) (c) A.1. Capital outlay: a. Right-Of-Way Costs $ b. Engineering Costs $ C. Construction: (1). New Facilities $ (2). Capacity Improvements $ (3). System Preservation $ (4). System Enhancement And Operation $ (5). Total Construction (1)+(2)+(3)+(4) $ $ $ d. Total Capital Outlay (Lines 1.a. + 1.b.+1 1.c.4) $ $ $ (Carry forward to page 1) Notes and Comments: FORM FHWA-536 page 2 -59-