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Financial Statements Audit Report

Port of Olympia For the period January 1, 2020 through December 31, 2020

Published October 18, 2021

Report No. 1029211

Insurance Building, P.O. Box 40021 Olympia, Washington 98504-0021 (564) 999-0950 [email protected]

Office of the Washington State Auditor

Pat McCarthy

October 18, 2021

Board of Commissioners

Port of Olympia

Olympia, Washington

Report on Financial Statements

Please find attached our report on the Port of Olympia’s financial statements.

We are issuing this report in order to provide information on the Port’s financial condition.

Sincerely,

Pat McCarthy, State Auditor

Olympia, WA

Americans with Disabilities

In accordance with the Americans with Disabilities Act, we will make this document available in

alternative formats. For more information, please contact our Office at (564) 999-0950, TDD

Relay at (800) 833-6388, or email our webmaster at [email protected].

mailto:[email protected]

Office of the Washington State Auditor sao.wa.gov

TABLE OF CONTENTS

Schedule of Audit Findings and Responses .................................................................................... 4

Summary Schedule of Prior Audit Findings .................................................................................... 8

Independent Auditor's Report on Internal Control Over Financial Reporting and on Compliance

and Other Matters Based on an Audit of Financial Statements Performed in Accordance with

Government Auditing Standards..................................................................................................... 9

Independent Auditor's Report on the Financial Statements .......................................................... 12

Financial Section ........................................................................................................................... 15

About the State Auditor's Office ................................................................................................... 50


SCHEDULE OF AUDIT FINDINGS AND RESPONSES

Port of Olympia

January 1, 2020 through December 31, 2020

2020-001 The Port lacked adequate internal controls over preparing

financial statements to ensure accurate financial reporting.

Background

State and federal agencies, the Port’s Board of Commissioners and the public

rely on the information included in the financial statements and reports to make

decisions. Port management is responsible for designing, implementing and

maintaining internal controls that provide reasonable assurance financial

reporting is reliable and to ensure financial statements are fairly presented.

The Port prepares its financial statements in accordance with generally accepted

accounting principles (GAAP). These financial statements are complex and the

reporting requirements change frequently. Our audit identified deficiencies in

the Port’s internal controls over financial reporting that hindered the Port’s

ability to produce reliable financial statements.

Government Accounting Standards requires the State Auditor’s Office to

communicate significant deficiencies in internal controls as a finding.

Description of Condition

We noted the following deficiencies in internal controls over accounting and

financial reporting that, when taken together, represent a significant deficiency:

Port staff responsible for compiling financial information lacked technical

knowledge and the necessary experience to accurately prepare the financial

statements, notes to the financial statements and schedules.

The Port lacked an effective review process for ensuring amounts reported

in the financial statements, notes to the financial statements and schedules

agreed to the underlying accounting records and followed GAAP.

This issue was reported as a finding in the prior three audits.


Cause of Condition

Port management did not dedicate the time and resources necessary for developing

the technical knowledge its staff needed to prepare accurate financial statements,

notes to the financial statements and schedules. As a result, the Port’s staff lacked

awareness of financial statement reporting requirements and was not adequately

trained in GAAP reporting. Although the Port had procedures in place for

reviewing the prepared financial statements, notes to the financial statements and

schedules, the review was ineffective for ensuring they were complete and

accurate.

Effect of Condition

As a result of these deficiencies, the Port’s financial statements contain multiple

errors that diminish their reliability. Specifically, our audit identified the

following:

In the Statement of Net Position, the Port:

Overstated total cash & cash equivalents by $34,965

Understated deferred outflows for pensions by $267,944 and deferred

inflows for pensions by $146,523

Overstated total other post-employment benefit liability by $195,000

In the Notes to the Financial Statements, the Port:

Overstated pension expense by $96,694

Understated deferred outflows for pensions by $267,944 and deferred

inflows for pensions by $146,523

Overstated total other post-employment benefit liability by $195,000

In the Schedule of Changes in Total OPEB Liability and Related Ratios,

the Port overstated total other post-employment benefit liability by

$195,000.

In the Statement of Cash Flows, the Port:

Overstated net operating income by $4,492,090

Understated the total reconciling items by $6,584,364

Overstated net cash provided by operating activities by $1,075,283

Overstated net cash provided by non-capital financing activities by

$1,175,936


We also identified other, less significant errors in the financial statements, notes to

the financial statements and schedules provided for audit. The Port did not correct

these errors.

Recommendation

We recommend the Port strengthen its internal controls and dedicate the resources

necessary to ensure its staff is adequately trained to prepare and complete financial

statements in accordance with GAAP. Additionally, the Port should conduct an

effective, independent financial review that ensures the required financial statement

package is accurate and meets GAAP reporting standards.

Port’s Response

The Finance Manager was trying to create better ways to do the Statement of Cash

Flows and made errors getting incorrect data from the statements and thinking that

was correct. With help from the auditors they are now corrected. The Port now has

two people who have accounting degrees and one is a CPA. This will help with the

internal control issue.

Auditor’s Remarks

We thank the Port for its cooperation throughout the audit and the steps it is taking

to address these concerns. We will review the status of the Port’s correction action

during the next audit.

Applicable Laws and Regulations

Government Auditing Standards, July 2018 Revision, paragraphs 6.40 and 6.41

establish reporting requirements related to significant deficiencies or material

weaknesses in internal control, instances of fraud, and noncompliance with

provisions of laws, regulations, contracts, or grant agreements.

The American Institute of Certified Public Accountants defines significant

deficiencies and material weaknesses in its Codification of Statements on Auditing

Standards, section 265, Communicating Internal Control Related Matters Identified

in an Audit, paragraph 7.

RCW 43.09.200 Local government accounting – Uniform system of accounting,

requires the State Auditor to prescribe the system of accounting and reporting for

all local governments.


The Budgeting, Accounting, and Reporting System (BARS) manual, 3.1.3 Internal

Control, requires each local government to establish and maintain an effective

system of internal controls that provides reasonable assurance that the government

will achieve its objectives.


606 Columbia St NW, Suite 300 | Olympia, WA 98501

360.528.8000 | F: 360.528.8090 | portolympia.com

360.528.8000 | F: 360.528.8090 | portolympia.com

SUMMARY SCHEDULE OF PRIOR AUDIT FINDINGS

Port of Olympia


This schedule presents the status of findings reported in prior audit periods.

Audit Period:

January 1 – December 31, 2019

Report Ref. No.:

49880

Finding Ref. No.:

1026784

Finding Caption: The Port’s internal controls over accounting and financial statement

preparation were inadequate to ensure accurate and complete reporting.

Background: The Port did not have a process in place for a technical review adequate to ensure

financial statements were complete and accurate, including proper implementation of

Governmental Accounting Standards Board (GASB) standards, As a result, we noted:

Other Post-Employment Benefits (OPEB) balances were not reported in accordance

with GASB Statement No. 75 - Accounting and Financial Reporting for

Postemployment Benefits Other Than Pensions.

The financial statements contained multiple errors, including amounts reported in the

Statement of Cash Flows not agreeing to other financial statements.

Status of Corrective Action: (check one)

☐ Fully

Corrected

☒ Partially

Corrected ☐ Not Corrected

☐ Finding is considered no

longer valid

Corrective Action Taken:

Other Post-Employment Benefits balance were reconciled to General Ledger and reported

correctly on the financial statement. Prior year, when someone told me to report under prior

year adjustment and that was what Port did. Year 2020, Port report with operations expense.

Financial statement are check by the Sr. Financial Analyst and Statement of Cash flows

worksheet is corrected by getting data from Income Statement Income(Loss) not from

Operating income (loss).


INDEPENDENT AUDITOR’S REPORT

Report on Internal Control over Financial Reporting and on Compliance and Other

Matters Based on an Audit of Financial Statements Performed in Accordance with

Government Auditing Standards

Port of Olympia



Port of Olympia

Olympia, Washington

We have audited, in accordance with auditing standards generally accepted in the United States of

America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States, the financial statements of the

Port of Olympia, as of and for the year ended December 31, 2020, and the related notes to the

financial statements, which collectively comprise the Port’s basic financial statements, and have

issued our report thereon dated September 30, 2021.

As discussed in Note 13 to the financial statements, the full extent of the COVID-19 pandemic’s

direct or indirect financial impact on the Port is unknown. Management’s plans in response to this

matter are also described in Note 13.

INTERNAL CONTROL OVER FINANCIAL REPORTING

In planning and performing our audit of the financial statements, we considered the Port’s internal

control over financial reporting (internal control) to determine the audit procedures that are

appropriate in the circumstances for the purpose of expressing our opinion on the financial

statements, but not for the purpose of expressing an opinion on the effectiveness of the Port’s

internal control. Accordingly, we do not express an opinion on the effectiveness of the Port’s

internal control.

A deficiency in internal control exists when the design or operation of a control does not allow

management or employees, in the normal course of performing their assigned functions, to prevent,

or detect and correct, misstatements on a timely basis. A material weakness is a deficiency, or a

combination of deficiencies, in internal control such that there is a reasonable possibility that a

material misstatement of Port’s financial statements will not be prevented, or detected and

corrected on a timely basis. A significant deficiency is a deficiency, or a combination of

deficiencies, in internal control that is less severe than a material weakness, yet important enough

to merit attention by those charged with governance.


Our consideration of internal control was for the limited purpose described in the first paragraph

of this section and was not designed to identify all deficiencies in internal control that might be

material weaknesses or significant deficiencies and therefore, material weaknesses or significant

deficiencies may exist that were not identified. Given these limitations, during our audit we did

not identify any deficiencies in internal control that we consider to be material weaknesses. We

did identify certain deficiencies in internal control, described in the accompanying Schedule of

Audit Findings and Responses as Finding 2020-001 that we consider to be significant deficiencies.

COMPLIANCE AND OTHER MATTERS

As part of obtaining reasonable assurance about whether the Port’s financial statements are free

from material misstatement, we performed tests of the Port’s compliance with certain provisions

of laws, regulations, contracts and grant agreements, noncompliance with which could have a

direct and material effect on the determination of financial statement amounts. However, providing

an opinion on compliance with those provisions was not an objective of our audit, and accordingly,

we do not express such an opinion.

The results of our tests disclosed no instances of noncompliance or other matters that are required

to be reported under Government Auditing Standards.

PORT’S RESPONSE TO FINDINGS

The Port’s response to the findings identified in our audit is described in the accompanying

Schedule of Audit Findings and Responses. The Port’s response was not subjected to the auditing

procedures applied in the audit of the financial statements and, accordingly, we express no opinion

on the response.

PURPOSE OF THIS REPORT

The purpose of this report is solely to describe the scope of our testing of internal control and

compliance and the results of that testing, and not to provide an opinion on the effectiveness of the

Port’s internal control or on compliance. This report is an integral part of an audit performed in

accordance with Government Auditing Standards in considering the Port’s internal control and

compliance. Accordingly, this communication is not suitable for any other purpose. However, this


report is a matter of public record and its distribution is not limited. It also serves to disseminate

information to the public as a reporting tool to help citizens assess government operations.


Olympia, WA

September 30, 2021


INDEPENDENT AUDITOR’S REPORT

Report on the Financial Statements

Port of Olympia



Port of Olympia

Olympia, Washington

REPORT ON THE FINANCIAL STATEMENTS

We have audited the accompanying financial statements of the Port of Olympia, as of and for the

year ended December 31, 2020, and the related notes to the financial statements, which collectively

comprise the Port’s basic financial statements as listed on page 15.

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with accounting principles generally accepted in the United States of America; this

includes the design, implementation, and maintenance of internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We

conducted our audit in accordance with auditing standards generally accepted in the United States

of America and the standards applicable to financial audits contained in Government Auditing

Standards, issued by the Comptroller General of the United States. Those standards require that

we plan and perform the audit to obtain reasonable assurance about whether the financial

statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and

disclosures in the financial statements. The procedures selected depend on the auditor’s judgment,

including the assessment of the risks of material misstatement of the financial statements, whether

due to fraud or error. In making those risk assessments, the auditor considers internal control

relevant to the Port’s preparation and fair presentation of the financial statements in order to design

audit procedures that are appropriate in the circumstances, but not for the purpose of expressing

an opinion on the effectiveness of the Port’s internal control. Accordingly, we express no such

opinion. An audit also includes evaluating the appropriateness of accounting policies used and the


reasonableness of significant accounting estimates made by management, as well as evaluating the

overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis

for our audit opinion.

Opinion

In our opinion, the financial statements referred to above present fairly, in all material respects,

the financial position of the Port of Olympia, as of December 31, 2020, and the changes in financial

position and cash flows thereof for the year then ended in accordance with accounting principles

generally accepted in the United States of America.

Matters of Emphasis

As discussed in Note 13 to the financial statements, the full extent of the COVID-19 pandemic’s

direct or indirect financial impact on the Port is unknown. Management’s plans in response to this

matter are also described in Note 13. Our opinion is not modified with respect to this matter.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that the

management’s discussion and analysis and required supplementary information listed on page 15

be presented to supplement the basic financial statements. Such information, although not a part

of the basic financial statements, is required by the Governmental Accounting Standards Board

who considers it to be an essential part of financial reporting for placing the basic financial

statements in an appropriate operational, economic or historical context. We have applied certain

limited procedures to the required supplementary information in accordance with auditing

standards generally accepted in the United States of America, which consisted of inquiries of

management about the methods of preparing the information and comparing the information for

consistency with management’s responses to our inquiries, the basic financial statements, and

other knowledge we obtained during our audit of the basic financial statements. We do not express

an opinion or provide any assurance on the information because the limited procedures do not

provide us with sufficient evidence to express an opinion or provide any assurance.

OTHER REPORTING REQUIRED BY GOVERNMENT AUDITING

STANDARDS

In accordance with Government Auditing Standards, we have also issued our report dated

September 30, 2021 on our consideration of the Port’s internal control over financial reporting and

on our tests of its compliance with certain provisions of laws, regulations, contracts and grant


agreements and other matters. The purpose of that report is to describe the scope of our testing of

internal control over financial reporting and compliance and the results of that testing, and not to

provide an opinion on internal control over financial reporting or on compliance. That report is an

integral part of an audit performed in accordance with Government Auditing Standards in

considering the Port’s internal control over financial reporting and compliance.


Olympia, WA

September 30, 2021


FINANCIAL SECTION

Port of Olympia


REQUIRED SUPPLEMENTARY INFORMATION

Management’s Discussion and Analysis – 2020

BASIC FINANCIAL STATEMENTS

Statement of Net Position – 2020

Statement of Revenues, Expenses and Change in Net Position – 2020

Statement of Cash Flows – 2020

Notes to Financial Statements – 2020

REQUIRED SUPPLEMENTARY INFORMATION

Schedule of Proportionate Share of the Net Pension Liability – PERS 1, PERS 2/3 – 2020

Schedule of Employer Contributions – PERS 1, PERS 2/3 – 2020

Schedule of Change in Total OPEB Liability and Related Ratios – 2020

Management’s Discussion and Analysis Overview of the Financial Statements This discussion and analysis introduces the Port’s basic financial statements. It has been prepared by Port management and should be considered in conjunction with the financial statements and the notes. The Port is not required to reflect both a government-wide perspective financial report and a fund perspective financial report since the Port maintains a single enterprise fund which uses the same measurement focus (economic resources) and accounting basis (full accrual) as would be reflected in the government-wide financial statements. The following is a brief discussion of the various statements contained within the basic financial statements.

Statement of Net Position – reflects the financial position of the Port at the end of the calendar year. The statement includes all assets, deferred outflows of resources, liabilities, and deferred inflows of resources of the Port. Net position, the difference between total assets plus deferred outflows of resources and total liabilities plus deferred inflows of resources, is an indicator of the current fiscal health of the organization and the enterprise’s financial position over time. A summarized comparison of the Port’s assets, deferred outflows of resources, liabilities, deferred inflows of resources, and net position at December 31, 2020.Statement of Revenues, Expenses and Changes in Fund Net Position – reflects the change in the Port’s financial position (net position) during the current year. Changes in net position are reported as soon as the underlying event giving rise to the change occurs, regardless of the timing of related cash flows. Thus, revenues and expenses are reported in this statement for some items that will result in cash flows in future fiscal periods (e.g., uncollected taxes and unpaid liabilities owed to vendors). This statement presents net income or loss from operations as well as non-operating revenues and expenses, capital contributions and extraordinary items.Statement of Cash Flows – reflects the net increases or decreases in cash from four activities: 1) Operating Activities, with a reconciliation of cash flows from operating activities to net income or loss from operations; 2) Noncapital financing activities; 3) Capital and related activities; 4) Investing activities.

The financial statement footnotes provide additional information that is essential to a full understanding of the data provided in the financial statements and are an integral part of the basic financial statements.

Financial Highlights

Year Ended December 31, 2020: Total Net Position increased during 2020 by $2.853 million was largely due to decrease in environmental expense by $2.42 million, which bring the unrestricted net position to positive $3.601 million. Total Net Capital Assets decreased by $2.904 million was due to $1.520 million capital purchases, depreciation being $4.016 million and due to retirements & transfers. Note that Total Liability decreased by $4.148 million. The Port paid $2.995 million on bond principals in year 2020.

2020 Annual Financial Report

Condensed Comparative Financial Data

Statement of Net Position (In thousands)

Overall Analysis of Financial Position and Results of Operations for the Year Ended December 31, 2020:

Year Ended December 31, 2020: Revenues: Operating revenues increased by $1.089 million from last year $11.6 million. The one of the largest increase was from space rental revenue. The space rental revenue increase during 2020 was $255 thousand or 39% compared to 2019 revenue of$654 thousand. However, a decrease in traffic resulted decrease in fuel sales revenue of $45 thousand or 10% during 2020 compared to 2019 revenue of $442 thousand. Non-Operating: Non-Operating income (net of expense) of $4.5 million increased by $3.013 million compared to 2019 net non-operating income of $1.479 million and primarily due to decrease in environmental expense by $2.536 million or 71%. The increase in tax revenue of $0.225 was due to increase in taxable assessed value (see Note 4) not due to increase in tax rate. Bond interest expense decreased by $112 thousand or 7% compared to 2019 (see Note 8.)

Expenses: In 2020, the Port's $14.3 million total operating expenses increased by $2.4 million compared to 2019, was due to increase GASB 68 and GASB 75 expense net effects of $2.4 million. Supplies expense were increased by $0.032 million or 7% compared to 2019 expense of $480 million contributed to increased expenses. However, there are other notable decrease are other operating expense of $0.610 million and $0.230 million in maintenance and repair expenses compared to 2019.

Increase in Net Position: The Port increased its net position by $2.854 million during 2020 are results of non-operating transactions.


Statement of Revenues, Expenses and Changes in Net Position (In thousands)

Overall Analysis of Change in Port Net Position

Capital Assets: The Port’s investment in capital assets, net of depreciation, for its business activities as of December 31, 2020 amounted to $121 million. This investment in capital assets includes land, buildings, improvements, machinery and equipment, infrastructures and construction in process. The Port’s net investment in capital assets decreased $3.0 million or 2% compared to 2019 largely due to increase in accumulated depreciation. Port’s depreciation expenses were $4.0 million during 2020.

Major capital asset events during 2020 included the following:The Port invested approximately $870 thousand to comply with the Department of Ecology Agreed order for stormwater pond and $179 thousand for bark bin cover.The Port invested in four Marina projects that cost $117 thousand. Also replaced was siding for a building at New Market Industries for $57 thousand.

Additional information on the Port’s capital assets can be found in Note 5 to the financial statements.

Port of Olympia’s Capital Assets, net of accumulated depreciation (In thousands)


Bond DebtThe Port had general obligation bond debt outstanding of $39.6 million and $42.6 million at December 31, 2020 and December 31, 2019 respectively. During 2020, the Port decreased its general obligation bond debt by $3.0 million.

In April 2018, the Port issued $6.7 million of 2018A Limited Tax General Obligation (LTGO.) Bonds which have an interest rate of 4% to 5%. The Port will recognize a cash flow savings of $701,270 over the next 23 years. These bonds are callable at 2032. The Port issued $1.6 million of new refunding 2018B LTGO Bonds at 5% interest rate. These bonds are not callable until 2029. The Port will recognize a cash flow savings of $227,041 over the next 14 years.

In December 2016, the Port issued $17.3 million of fixed rate General Obligation bonds to finance the $6.6 million Lacey property acquisition, re-pay $3.0 million on the Line of Credit and the Port issued $7.7 million of new G.O. Bonds at 2.3% interest to advance refund $7.2 million of select portions of 2008A General Obligation (G.O.) Bonds which have an interest rate of 4.5%. The Port paid the proceeds into an escrow account at U.S. Bank. U.S. Bank will use the funds to pay principal and interest on the select portions of outstanding 2008A bonds. These bonds are not callable until 2019. The Port will recognize a cash flow savings of $459,258 over the next 11 years.

The Port requests bond ratings prior to issuing debt. In 2018, Moody’s rating of the Port’s debt maintains Aa2, as follows:

Description Moody’s General Obligation (Sr. Lien) Aa2

The Port has not had revenue bonds outstanding during the last five years.

Bond Debt

(In thousands)2020 2019

Limited Tax General Obligation (LTGO) bonds $ 39,565 $ 42,560

Additional information on the Port’s bond debt obligations is present in Note 8 to the financial statements.


The accompanying notes are an integral part of this statement.


Notes to Financial Statements NOTE 1 – Significant Accounting Policies

The Port of Olympia (Port) is a municipal corporation incorporated in 1922 by the voters of Thurston County and operates under the laws of Washington State applicable to a Port District. The financial statements of the Port have been prepared in conformity with the Generally Accepted Accounting Principles (GAAP) as applied to governments. The Governmental Accounting Standards Board (GASB) is the accepted standard setting body for establishing governmental accounting and financial reporting principles. The significant accounting policies are described below.

Reporting Entity

The Port is a special purpose government, which supported primarily through user charges. The Port operates a marina and boat repair facility, airport, marine terminal, and property with industrial development activities. The other revenue source is property taxes accounting for thirty-five percent of total revenues.

The Port is independent from Thurston County government and is administer by a three member Board of Commissioners elected by Thurston County voters. The Commission delegates administrative authority to an Executive Director and administrative staff to conduct operations at the Port. The County levies and collects taxes on behalf of the Port. Thurston County provides no funding to the Port. Additionally, Thurston County does not hold title to any of the Port’s assets, nor doesit have any right to the Port’s surpluses.

The financial statements represent the Port of Olympia (Primary Government) and the component unit of the Port of Olympia Economic Development Corporation. The component unit is included in the district’s reporting entity because of the significance of their operational or financial relationships with the district.

Component Unit – Port of Olympia Economic Development Corporation (EDC)

During 1981, pursuant to CH. 39.84 RCW, the Port established the Port of Olympia Economic Development Corporation, (EDC), a public corporation for the purpose of facilitating local economic development opportunities. The public corporation, with the approval of the Port Commission, has issued tax-exempt non-recourse revenue bonds to finance industrial development within the boundaries of the Port district. These bonds are not a liability, a contingent liability, or a lien on anyof the Port of Olympia property or revenues.

The EDC board consists of all three elected Port Commissioners and two Thurston County citizens appointed by the Board. This results in a Board of Directors considered under GASB Statement No. 14 to be deemed “substantively the same” as the Port Commission. Therefore, the financial position of the EDC and the results of its operations and cash flows are reflected in these financial statements using the “blending” method in accordance with GASB Statement No. 14.

Basis of Presentation

Funds are accounted for on a cost of services or an economic resources measurement focus. This means that all assets and all liabilities (whether current or non-current) associated with their activity are included on their statements of net position.The reported fund equity (total net position) is segregates into net investment in capital assets, restricted and unrestricted net position. Operating statements present increases (revenues and gains) and decreases (expenses and losses) in the net position. The Port discloses changes in cash flows by a separate statement that presents their operating, non-capital financing, capital and related financing and investing activities.


Basis of Presentation - continued The accounting records for the Port are maintained in accordance with the methods prescribed by the Washington State Auditor under authority of Chapter 43.09, revised Code of Washington. The Port uses the Budgeting, Accounting and Reporting System (BARS) for Special Purpose Districts (GAAP base) manual in the Washington State Auditor’s Office.

Measurement Focus, Basis of Accounting

Proprietary FundsThe Port’s statements are reported using the economic resources measurement focus and full-accrual basis of accounting. Revenues are recorded when earned and expenses are recorded when liability is incurred regardless of the timing of the cash flows. The Port reports unearned revenue on its balance sheet. Unearned revenue arises when potential revenue does not meet the recognition criteria in the current period. Unearned revenues also arise when the Port receives resources before it has a legal claim to them. In subsequent periods when the revenue recognition criteria is met, or when the Port has a legalclaim to the resources, the liability for the unearned revenue is removed from the balance sheet and the revenue is recognized.Capital asset purchases are capitalize and long-term liabilities are accounted in the appropriate fund.

Proprietary funds distinguish operating revenues and expenses from non-operating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the Port are land rentals, marine terminal services and marina revenues. Operating expenses for the district include the cost of services, administrative expenses, and maintenance expenses on plant, property and equipment and depreciation on capital assets. All revenues and expenses not meeting this definition are report as non-operating revenues and expenses.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted (GAAP) in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities at the date of the financial statements. Estimates also affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Significant Risks and Uncertainties

The Port is subject to certain business risks that could have a material impact on future operations and financial performance.These risks include economic conditions, collective bargaining disputes, federal, state and local government regulations, and changes in law.

Assets, Liabilities, Net Position

Cash and Cash Equivalents

The Port’s policy is to invest all temporary cash surpluses. The Thurston County Treasurer acts as the Port’s cash custodian. For the purposes of the statement of cash flows, the Port considers investments with maturity of three months or less, to be cash equivalents.

Investments

Investments, unrestricted and restricted, are stated at fair value, based on quoted market prices. Interest income on investments is recognize in non-operating revenues as earned. Changes in the fair market value of investments are recognize


in the statements of revenues, expenses and changes in net position. The Port plans to hold all of its investments (including restricted assets, if any) to maturity.

Taxes Receivable

Taxes receivable consists of property taxes and related interest and penalties. See Note 4 – Property Taxes. Because property taxes and special assessments are considers liens on property, no estimates for uncollectable amounts are established.

Accounts Receivable, Net of Allowance

Customer accounts receivable consists of amounts owed from private individuals or organizations for the normal operating charges for goods and services, including amounts owed for which billings have not been prepared. Receivables have been record as net of estimated uncollectable amounts. Estimated uncollectable amounts for receivables are $16,000 for the year ending December 31, 2020. Accounts receivable are written off when deemed uncollectible. Recoveries of receivables previously written off are recorded when received. Notes or contracts receivable based on operating activities are subject to interest application.

Due To From Other Governments

These accounts include amounts due to and from other governments for grants and entitlements. Amounts are considered 100% collectable and therefore, no estimate for the uncollectable amount has been established. Receivables from other governments related to normal operating charges for goods and services are included in accounts receivables.

Prepayments and Other Current Assets

Other current assets consist of prepaid expenses and inventory totaling $405,480 for the year ended December 31, 2020. Inventory is valuated on moving weighted average cost.

Restricted Assets

These accounts contain resources for construction and debt services.

The restricted assets are composed of the following


Capital Assets and Depreciation

All capital assets, including the cost of infrastructure, are valued at historical cost. Donations of capital assets from developers and customers are recorded at acquisition values at the date of donation. Certain capital assets have been acquire through bankruptcy proceedings from former tenants in satisfaction of amounts owed the Port. These assets are recorded at the lesser of the amount owed by the tenant to the Port or the estimated fair market value of the capital asset received.

The Port has acquired certain assets with funding provided by federal and state financial assistance programs. Depending upon the terms of the agreements involved, the funding governmental unit could retain an equity interest in these assets. However, the Port has sufficient legal interest to accomplish the purposes for which the assets were acquired, and has included such assets within the applicable account.

The Port capitalizes interest as a component of construction projects, when significant, as part of the cost of the asset. Theprocedure is intends to remove the cost of financing construction activity from the operating statements and to treat such costin the same manner as construction labor and material costs. During the year ended December 31, 2020, the Port’s interest costs on construction projects were insignificant and therefore not capitalized.

Expenditures for capital assets, including major repairs that extend the useful life of an existing asset, are capitalized. ThePort has established its capitalization threshold at $5,000 or more. Maintenance, repairs and minor renewals are accounts as expenses when incurred. Depreciation expense is charges to operations to allocate the cost of capital assets over their estimated useful lives, using the straight-line method with useful lives of 3 to 99 years.

Organizational Costs

Organizational costs, the cost of long-lived organizational master plans are expensed.


Leasehold buy out cost to terminate lease with a tenant

The leasehold buy-out is relates to property on the northern tip of the Budd Bay Peninsula. The leasehold buy-out of $340,000 represents the amount the Port paid to terminate a tenant so that the Port could use the previously leased property in a more economically beneficial venture. The Port is amortizing the lease buy-out costs using the straight-line method of amortizationover the life of the new lease. Unamortized Leasehold buy-out totaled $147,333 on December 31, 2020.

Deferred Outflows/Inflows of Resources

Deferred Outflows of Resources represent five elements totaling $1,080,076. One of deferred outflow is the leasehold purchase of $147,333. There were two bond issues, $327,357 for the 2015 advanced refunding of selected portions of the 2008A General Obligation Bonds and $255,752 for the 2016 series bonds. Other two were from implementation of GASB 68, $346,578 for the Port’s deferred contributions on its participation in the Washington State Public Employees Retirement System and GASB 75, $3,056 for Other Post-Employment Benefits.

Deferred Inflows of Resources represent the Port’s participation in the Washington State Public Employees Retirement System and the Port’s share of the difference between projected and actual investment earnings on pension plans of $503,268 for GASB 68.

Accrued Compensated Absences

Accrued compensated absences are amounts owed to employees for vacation and sick leave. The Port records unpaid leave for compensated absences as an expense and liability when incurred and vested.

Vacation pay, which may be accumulated up to 320 hours, fully vests with employees when earned and is payable upon resignation, retirement or death. Unpaid vacation leave totaled $299,618 on December 31, 2020.

Sick leave accumulates during employment. In 1991, the Port adopted a retirement benefit policy, which allows all employees with five years of continuous service to cash in unused sick leave upon retirement or death at the rate of 25 percent of the employee’s current hourly rate (30 percent if fifteen years of continuous service). 21 of the employees were currently eligiblefor retirement benefits under the post-employment benefit agreement as of December 31, 2020. The estimated liability resulting from this agreement totaled $180,866 on December 31, 2020.

Other Accrued Expenses and Current Liabilities

These accounts consist primarily of accrued wages, payroll taxes, employee benefits, leasehold taxes, other taxes, and other liabilities. Other accrued expenses totaled $1,817,530 on December 31, 2020. Other current liabilities represent security deposits and current portion of other long-term liabilities. Other current liabilities totaled $665,791 and customer security deposits amounted to $623,791 at year-end 2020.

Unearned Revenues

Unearned revenues represents amounts paid for rents or services but revenues not earned because the recognition criteria have not been met. Port’s deferred revenue information is disclosed on Note 9.

Retainage Payable

The Port enters into construction contracts that may include retainage provisions such that a certain percentage of the contractamount is held for payment until completion of the contract and acceptance by the Port. The Port pays the retainage due after both completion and acceptance have occurred per RCW 60.28.011. At December 31, 2020, retainage balance was $91,668.


Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense. Information about the fiduciary net position of all state sponsored pension plans and additions to/deductions from those plans’ fiduciary net position have been determined on the same basis as they reported by the Washington State Department of Retirement Systems. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. For additional information, see Note 6.

Net Position

Net position is reported in accordance with the three classifications.

Net Investment in Capital Assets - Represents the historical cost of the capital assets reduced for accumulated depreciation less outstanding balances of debt attributable to the acquisition, construction or improvement of those assets and restricted investments for the purpose of capital assets.

Restricted – Represents net assets that have been externally restricted by creditors, grantors, contributors, or laws or regulations of other governments, or imposed through constitutional provisions or enabling legislation. Port’s restricted assetson December 31, 2020 in the amount of $1,055,420.

Unrestricted – Represents net assets not included in either of the other two categories.

Environmental Expenditures

Environmental expenditures that related to current or future revenues are expensed or capitalized as appropriate. Expenditures that relate to an existing condition caused by past operations and do not contribute to current or future revenue generation, are expensed. Expenditures that relate to an existing condition caused by past operations are capitalized only when they provide future economic benefits or service potential. Liabilities are recorded when environmental assessments or cleanup expenses are probable, and the costs can be reasonably estimated.

Reclassification

Certain reclassifications have been made to prior year amounts to conform to the current presentation. These reclassificationshave no effect on the previously reported change in net position.

NOTE 2 – Deposits

The Port’s policy is to invest all temporary cash surpluses. On December 31, 2020, the Port was holding $9,563,010 in short-term residual investments of surplus and restricted cash. $9,563,010 is classified on the statement of net position as cash and cash equivalents for the year ended December 31, 2020. Of this amount, cash on hand amounted to $1,270 for the year ended December 31, 2020, total deposits with the State Treasurer’s Local Government Investment Pool, amounted to $9,563,010. Interest receivable on invested funds was $16,759 for the year ending December 31, 2020.

The Port’s deposits at year-end were entirely covered by Federal Depository Insurance (FDIC) or collateral held in a multiple financial institution collateral pool administered by the Washington Public Deposit Protection Commission (PDPC). The FDIC covers the state’s insured deposits. The PDPC provides collateral protection. The PDPC (established under Chapter 39.58 of the Revised Code of Washington) constitutes a multiple financial institution collateral pool. Pledged securities under the PDPC collateral pool are held by the PDPC agent in the name of the collateral pool.


NOTE 3 – Investments

The Port is a participant in the Thurston County Investment Pool, an external investment pool. The Port reports its investment in the pool as the fair value amount, which is the same as the value of the pool per share. The responsibility for managing thepool resides with the County Treasurer. The Pool is established from the RCW 36.29, which authorizes the County Treasurer to invest the funds of participants. The County’s investment policy is established by the County Finance Committee consisting of the County Treasurer, the County Auditor and the Chairman of the Board of County Commissioners. The object of the policy is to invest public funds in a manner, which will provide maximum security with the highest investment return while meeting daily cash flow demands, and conforming to all state and local statutes governing the investment of public funds.

The Thurston county Investment Pool does not have a credit rating and had a weighted average maturity of 1.91 years as of December 31, 2020

In accordance with State law, the district’s governing body has entered into a formal agreement with the district’s ex officiotreasurer, Thurston County, to have all its funds not required for immediate expenditure to be invested in the Thurston County Investment Pool (TCIP).

At December 31, 2020 the District has the following investments measured at net asset value:

Investments Measured at the net asset value (NAV) 12/31/2020Thurston County Investment Pool reported at net asset value $ 9,642,373

NOTE 4 – Property Taxes

The county treasurer acts as an agent to collect property taxes levied in the county for all taxing authorities. Collections aredistributed by the 10th day of the month following collection to the Port by the county treasurer. A revaluation of all property is required every four years.

Property Tax Calendar January 1st Taxes levied and become an enforceable lien against properties. February 14th Tax bills mailed. April 30th First of two installment payments are due. May 31st Assessed property value is established by the County Assessor for the next year’s taxes. October 31st Second installment payments are due.

Property taxes are recorded as receivable and revenues when levied. No allowance for uncollectable taxes is established because delinquent taxes are considered fully collectable. State law allows for the sale of property for failure to pay taxes.Prior year tax levies were recorded using the same principal, and delinquent taxes are evaluated annually.

The Port may levy up to $0.45 per $1,000 of assessed valuation for the general governmental services. Washington State Constitution and Washington State Law, RCW 84.55.010, limit the rate. The Port may also levy taxes at a lower rate. The amount of taxes levied may be reduced for any of the following reasons:

A. Washington State law in RCW 84.55 limits the growth of regular property taxes to one percent per year, after adjustments for new construction. If the assessed valuation increases by more than one percent due to revaluation, the levy rate will be decreased.

B. The Port may voluntarily levy taxes below the legal limit.

For taxes levied and to be collected in 2020, the Port’s regular levy was $0.1755407 per $1,000 on a total assessed valuation of approximately $38,050,054,762 for a total regular tax levy of $6,679,333.

The amount collected in 2020 was $6,658,045, which is 99.7% of the total levied tax.


NOTE 5 – Capital Assets and Depreciation

Capital asset activity for the year ended December 31, 2020 follows:

Construction Commitments

Construction in progress represents expenditures to date on authorized projects. During the year ended December 31, 2020, the Port incurred costs for construction in progress totaling $945,504. Projects included purchase of heavy equipment, property development, airport pavement improvements, marine terminal improvements and marina improvements.

On December 31, 2020, the Port’s commitments with contractors were as follows:


NOTE 6 – Defined Benefit Pension Plans

The following table represents the aggregate pension amounts for the requirements of the GASB Statement 68, Accounting and Financial Reporting for Pensions for the year 2020:

State Sponsored Pension Plans

Substantially all Port of Olympia’s full-time and qualifying part-time employees participate in one of the following statewide retirement systems administered by the Washington State Department of Retirement Systems, under cost-sharing, multiple-employer public employee defined benefit and defined contribution retirement plans. The state Legislature establishes, and amends, laws pertaining to the creation and administration of all public retirement systems.

The Department of Retirement Systems (DRS), a department within the primary government of the State of Washington, issues a publicly available comprehensive annual financial report (CAFR) that includes financial statements and required supplementary information for each plan. The DRS CAFR may be obtained by writing to:

Department of Retirement Systems Communications Unit P.O. Box 48380 Olympia, WA 98540-8380

Alternatively, the DRS CAFR may be downloaded from the DRS website at www.drs.wa.gov.

Public Employees’ Retirement System (PERS)

PERS members include elected officials; state employees; employees of the Supreme, Appeals and Superior Courts; employees of the legislature; employees of district and municipal courts; employees of local governments; and higher education employees not participating in higher education retirement programs. PERS is comprised of three separate pension plans for membership purposes. PERS plans 1 and 2 are defined benefit plans, and PERS plan 3 is a defined benefit plan with a defined contribution component.

PERS Plan 1 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service. The AFC is the average of the member’s 24 highest consecutive service months. Members are eligible for retirement from active status at any age with at least 30 years of service, at age 55 with at least 25 years of service, or at age 60 with at least five years of service. Members retiringfrom active status prior to the age of 65 may receive actuarially reduced benefits. Retirement benefits are actuarially reducedto reflect the choice of a survivor benefit. Other benefits include duty and non-duty disability payments, an optional cost-of-living adjustment (COLA), and a one-time duty-related death benefit, if found eligible by the Department of Labor and Industries. PERS 1 members were vested after the completion of five years of eligible service. The plan was closed to new entrants on September 30, 1977.


Contributions

The PERS Plan 1 member contribution rate is established by State statute at 6 percent. The employer contribution rate is developed by the Office of the State Actuary and includes an administrative expense component that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 1 employer contribution rates. The PERS Plan 1 required contribution rates (expressed as a percentage of covered payroll) for 2020 were as follows:

PERS Plan 1 Actual Contribution Rates January – August 2020: Employer Employee* PERS Plan 1 7.92% 6.00% PERS Plan 1 UAAL 4.76% Administrative Fee 0.18%

Total 12.86% 6.00%

Actual Contribution Rates September – December 2020: Employer Employee* PERS Plan 1 7.92% 6.00% PERS Plan 1 UAAL 4.87% Administrative Fee 0.18%

Total 12.97% 6.00%

PERS Plan 2/3 provides retirement, disability and death benefits. Retirement benefits are determined as two percent of the member’s average final compensation (AFC) times the member’s years of service for Plan 2 and 1 percent of AFC for Plan 3. The AFC is the average of the member’s 60 highest-paid consecutive service months. There is no cap on years of service credit. Members are eligible for retirement with a full benefit at 65 with at least five years of service credit. Retirement beforeage 65 is considered an early retirement. PERS Plan 2/3 members who have at least 20 years of service credit and are 55 years of age or older, are eligible for early retirement with a benefit that is reduced by a factor that varies according to age for each year before age 65. PERS Plan 2/3 members who have 30 or more years of service credit and are at least 55 years old can retire under one of two provisions:

With a benefit that is reduced by three percent for each year before age 65; or

With a benefit that has a smaller (or no) reduction (depending on age) that imposes stricter return-to-work rules.

PERS Plan 2/3 members hired on or after May 1, 2013 have the option to retire early by accepting a reduction of five percent for each year of retirement before age 65. This option is available only to those who are age 55 or older and have at least 30years of service credit. PERS Plan 2/3 retirement benefits are also actuarially reduced to reflect the choice of a survivor benefit. Other PERS Plan 2/3 benefits include duty and non-duty disability payments, a cost-of-living allowance (based on the CPI), capped at three percent annually and a one-time duty related death benefit, if found eligible by the Department of Labor and Industries. PERS 2 members are vested after completing five years of eligible service. Plan 3 members are vested in the defined benefit portion of their plan after ten years of service; or after five years of service if 12 months of that service are earned after age 44.

PERS Plan 3 defined contribution benefits are totally dependent on employee contributions and investment earnings on those contributions. PERS Plan 3 members choose their contribution rate upon joining membership and have a chance to change rates upon changing employers. As established by statute, Plan 3 required defined contribution rates are set at a minimum of 5 percent and escalate to 15 percent with a choice of six options. Employers do not contribute to the defined contribution benefits. PERS Plan 3 members are immediately vested in the defined contribution portion of their plan.


Contributions

The PERS Plan 2/3 employer and employee contribution rates are developed by the Office of the State Actuary to fully fund Plan 2 and the defined benefit portion of Plan 3. The Plan 2/3 employer rates include a component to address the PERS Plan 1 UAAL and an administrative expense that is currently set at 0.18 percent. Each biennium, the state Pension Funding Council adopts Plan 2 employer and employee contribution rates and Plan 3 contribution rates. The PERS Plan 2/3 required contribution rates (expressed as a percentage of covered payroll) for 2019 were as follows:

PERS Plan 2/3 Actual Contribution Rates January – August 2020: Employer 2/3 Employee 2* PERS Plan 2/3 7.92% 7.90% PERS Plan 1 UAAL 4.76% Administrative Fee 0.18% Employee PERS Plan 3 Varies

Total 12.86% 7.90%

Actual Contribution Rates September – December 2020: Employer 2/3 Employee 2* PERS Plan 2/3 7.92% 7.90% PERS Plan 1 UAAL 4.87% Administrative Fee 0.18% Employee PERS Plan 3 Varies

Total 12.97% 7.90%

The Port of Olympia’s actual contributions to the plan were ($162,874) to PERS Plan 1 and ($268,912) to PERS Plan 2/3 for the year ended December 31, 2020.

Actuarial Assumptions

The total pension liability (TPL) for each of the DRS plans was determined using the most recent actuarial valuation completed in 2020 with a valuation date of June 30, 2019. The actuarial assumptions used in the valuation were based on the results of the Office of the State Actuary’s (OSA) 2013-2018 Experience Study and the 2019 Economic Experience Study.

Additional assumptions for subsequent events and law changes are current as of the 2019 actuarial valuation report. The TPL was calculated as of the valuation date and rolled forward to the measurement date of June 30, 2020. Plan liabilities were rolled forward from June 30, 2019, to June 30, 2020, reflecting each plan’s normal cost (using the entry-age cost method), assumed interest and actual benefit payments.

Inflation: 2.75% total economic inflation; 3.50% salary inflation

Salary increases: In addition to the base 3.50% salary inflation assumption, salaries are also expected to grow by promotions and longevity.

Investment rate of return: 7.4%

Mortality rates were developed using the Society of Actuaries’ Pub. H-2020 mortality rates, which vary by member status, as the base table. The OSA applied age offsets for each system, as appropriate, to better tailor the mortality rates to the demographics of each plan. OSA applied the long-term MP-2017 generational improvement scale, also developed by the Society Actuaries, to project mortality rates for every year after the 2010 base table. Mortality rates are applied on a generational basis; meaning, each member is assumed to receive additional mortality improvements in each future year throughout his or her lifetime.


There were changes in methods and assumptions since the last valuation.

OSA updated its demographic assumptions based on the results of its latest demographic experience study. See OSA’s 2013-2018 Demographic Experience Study at leg.wa.gov/osa.

OSA updated the Early Retirement Factors and Joint-and-Survivor factors used in its model to match the ones implemented by DRS on October 1, 2020. These factors are used to value benefits for members who elect to retire early and for survivors of members that die prior to retirement.

The valuation includes liabilities and assets for Plan 3 members purchasing Total Allocation Portfolio annuities when determining contribution rates and funded status.

OSA simplified its modeling of medical premium reimbursements for survivors of duty-related deaths in LEOFF 2.

OSA changed its method of updating certain data items that change annually, including the public safety duty-related death lump sum and Washington state average wage. OSA set these values at 2018 and will project them into the future using assumptions until the next Demographic Experience Study in 2025. See leg.wa.gov/osa for more information on this method change.

Discount Rate

The discount rate used to measure the total pension liability for all DRS plans was 7.4 percent.

To determine that rate, an asset sufficiency test was completed to test whether each pension plan’s fiduciary net position was sufficient to make all projected future benefit payments for current plan members. Based on OSA’s assumptions, the pension plans’ fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rate of return of 7.4 percent was used to determine the total liability.

Long-Term Expected Rate of Return

The long-term expected rate of return on the DRS pension plan investments of 7.4 percent was determined using a building-block-method. In selecting this assumption, the Office of the State Actuary (OSA) reviewed the historical experience data, considered the historical conditions that produced past annual investment returns, and considered Capital Market Assumptions (CMA’s) and simulated expected investment returns provided by the Washington State Investment Board (WSIB). The WSIB uses the CMA’s and their target asset allocation to simulate future investment returns at various future times.

Estimated Rates of Return by Asset Class

Best estimates of arithmetic real rates of return for each major asset class included in the pension plan’s target asset allocationas of June 30, 2020, are summarized in the table below. The inflation component used to create the table is 2.2 percent and represents the WSIB’s most recent long-term estimate of broad economic inflation.

Asset Class TargetAllocation

% Long-Term Expected Real Rate of

Return Arithmetic Fixed Income 20% 2.20% Tangible Assets 7% 5.10% Real Estate 18% 5.80% Global Equity 32% 6.30% Private Equity 23% 9.30%

100%


Sensitivity of Net Pension Liability/(Asset)

The table below presents the Port of Olympia’s proportionate share of the net pension liability calculated using the discount rate of 7.4 percent, as well as what the Port of Olympia’s proportionate share of the net pension liability would be if it werecalculated using a discount rate that is 1-percentage point lower (6.4 percent) or 1-percentage point higher (8.4 percent) thanthe current rate.

1% Decrease (6.4%)

Current Discount Rate (7.4%)

1% Increase (8.4%)

PERS 1 $956,611 $763,726 $595,511 PERS 2/3 2,242,146 360,342 (1,189,324) Totals $3,198,757 $1,124,068 $(593,813)

Pension Plan Fiduciary Net Position

Detailed information about the State’s pension plans’ fiduciary net position is available in the separately issued DRS financialreport.

Pension Liabilities (Assets), Pension Expense, and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions

At June 31, 2020, the Port of Olympia reported a total pension liability of for $1,124,068 proportionate share of the net pensionliabilities.

At June 30, the Port of Olympia’s proportionate share of the collective net pension liabilities was as follows:

Employer contribution transmitters received and processed by the DRS for the fiscal year ended June 30 are used as the basis for determining each employer’s proportionated share of the collective pension amounts reported by the DRS in the Schedules of Employers and Non-employer Allocations for all plans except LEOFF Plan 1. The Port of Olympia does not have employees in LEOFF 1 plan.

The collective net pension liability (asset) was measured as of June 30, 2020, and the actuarial valuation date on which the total pension liability (asset) is based was as of June 30, 2019, which update procedures used to roll forward the total pensionliability to the measurement date.

Pension Expense

For the year ended December 31, 2020, the Port recognized pension expense as follows:


Deferred Outflows of Resources and Deferred Inflows of Resources

At December 31, 2020, the Port of Olympia reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources:

Deferred outflows of resources related to pensions resulting from the Port of Olympia’s contributions subsequent to the measurement date will be recognized as a reduction of the net pension liability in the year ended December 31, 2021. Other amounts reported as deferred outflows and deferred inflows of resources related to pensions will be recognized in pension expense as follows:


NOTE 7 – Risk Management

Port of Olympia is a member of Enduris. Chapter 48.62 RCW provides the exclusive source of local government entity authority to individually or jointly self-insure risks, jointly purchase insurance or reinsurance, and to contract for risk management, claims, and administrative services. The Pool was formed July 10, 1987 pursuant to the provisions of Chapter 48.62 RCW, Chapter 200-100 WAC, and Chapter 39.34 RCW when two counties and two cities in the State of Washington joined together by signing an interlocal governmental agreement to fund their self-insured losses and jointly purchase insurance and administrative services. As of August 31, 2020, there are 547 Enduris members representing a broad array of special purpose districts throughout the state. Enduris provides property and liability coverage as well as risk management services and other related administrative services.

Members make an annual contribution to fund the Pool and share in the self-insured retention. The self-insured retention is: $1,000,000 deductible on liability loss - the member is responsible for the first $25,000 of the deductible amount of each claim, while Enduris is responsible for the remaining $975,000 on a liability loss. $250,000 deductible on property loss - the member is responsible for the first $25,000 of the deductible amount of each claim, while Enduris is responsible for the remaining $225,000 on a property loss.

Enduris acquires reinsurance from unrelated insurance companies on a “per occurrence” basis to cover all losses over the self-insured retentions as shown on the policy maximum limits. Liability coverage is for all lines of liability coverage includingPublic Official’s Liability. The Property coverage is written on an “all risk”, blanket basis using current Statement of Values. The Property coverage includes but is not limited to mobile equipment, boiler and machinery, electronic data processing equipment, business interruption, course of construction and additions, property in transit, fine arts, cyber and automobile physical damage to insured vehicles. Liability coverage limit is $20 million per occurrence and property coverage limit is $1 billion per occurrence. Enduris offers crime coverage up to a limit of $1 million per occurrence.

Since Enduris is a cooperative program, there is a joint liability among the participating members.

The contract requires members to remain in the Pool for a minimum one year and must give notice 60 days before terminating participation. The Master Agreement (Intergovernmental Contract) is automatically renewed after the initial one (1) full fiscalyear commitment. Even after termination, a member is still responsible for contribution to Enduris for any unresolved, unreported and in-process claims for the period they were a signatory to the Master Agreement.

Enduris is fully funded by its member participants. Claims are filed by members with the Pool and are administered in house.

The Pool is governed by a Board of Directors which is comprised of seven board members. The Pool’s members elect the Board and the positions are filled on a rotating basis. The Board meets quarterly and is responsible for conducting the business affairs of Enduris.

Enduris did not have any claim settlements that exceeded the limits in the last 3 years.

NOTE 8 – Long-Term Liabilities

During the year ending December 31, 2020, the following changes occurred in long-term debt:


Equipment Financing

The Port did make payments as per its agreements.

The annual debt service requirements for the equipment debt as of December 31, 2020 are as follows:


General Obligation Bonds

The Port issues general obligation bonds to finance the acquisition and/or construction of capital assets.General obligation bonds outstanding as of December 31, 2020 are as follows:

The General Obligation Bonds were issued to facilitate making infrastructure improvements at the Port’s industrial and leasing properties in the City of Olympia, its marine terminal, marina and boatworks facilities. The principal and interest of the bondsare payable from ad valorem taxes levied upon all properties within the Port district. The Port didn’t issue bonds or incurrednew debt during 2020.

The annual debt service requirements for the general obligation bonds as of December 31, 2020 are as follows:

Premium and Discounts on General Obligation Bonds

The principal balance of the general obligation bond is netted against any related unamortized premium or discount of the bond sale. The premium or discount is amortized over the life of the bond issue as an increase (bond discounts) or decrease (bond premiums) to interest expense using the straight-line method of amortization.


Gain or Loss on General Obligation Bond Refunding

The gain or loss attributable to the difference between the carrying amount of defeased or refunded debt and its reacquisition price is deferred and amortized over the life of the new debt or the refunded debt, whichever is shorter. The unamortized portion of this gain or loss is reported as a Deferred Outflow of Resources on the Statement of Net Position.

Conduit Debt

The Port of Olympia Economic Development Corporation, a subsidiary corporation of the Port, has issued conduit debt to the following companies. The Port is by law, not allowed to make any payment on or for any of these conduit debt obligations. The outstanding balances for each of the last two years are as follows:

NOTE 9 – Unearned Revenue

In accordance with generally accepted accounting principles for regulated businesses, the Port recognized unearned receipts of $452,000 in 2001 that are being recognized as earned over a 75 year period. These receipts resulted from a 75-year long land lease prepayment for a 1992 lease to an unrelated governmental entity. In exchange for the land lease, the Port received title to another piece of land and certain infrastructure improvement payments with a value of $452,000. In 2001, the Port sold the parcel of land that was received during the 1992 lease exchange and realized a gain on the land sale.

The outstanding balances at December 31, 2020 as follows:

NOTE 10 – Defined Benefit Other Post-Employment Benefit (OPEB) Plans

The following table represents the aggregate OPEB amounts for all plans subject to the requirements of GASB Statement 75 for the year 2020:


OPEB Plan Description

The Port of Olympia provides medical, dental, life, and long-term disability insurance to its full time employees and Commissioners through the Washington State Public Employees Benefit Board (PEBB). Port employees who end public employment are eligible to continue PEBB insurance coverage as a retiree if they retire under the public employees’ retirement system and are vested in that system.The Office of the State Actuary, a department within the primary government of the State of Washington, issues a publicly available Other Post-Employment Benefits Actuarial Valuation Report. The Other Post-Employment Benefits Actuarial Valuation Report may be obtained by writing to: Office of the State Actuary, PO Box 40914, Olympia, Washington 98504-0914 or it may be downloaded from the Office of the State Actuary website at http://leg.wa.gov/osa/additionalservices/Pages/OPEB.aspx.

The Port is not able to determine the number of inactive employees entitled to but not yet receiving benefits as eligibility isdetermined by the Washington State Office of Retirement Services and the Washington State Public Employees Benefit Board. Inactive employees entitled to but not yet receiving benefits would include any former Port employee who retires under the public employees’ retirement system and who are vested in that system. Retirees may also elect alternate coverage through Medicare and a Medicare supplemental plan At 2020, the following employees were covered by the benefit terms:

The Port funds the implicit and explicit subsidies on a pay-as-you-go basis, meaning that Port pays these costs as they occur or become due. Therefore, there are no assets accumulating in a qualifying trust. Assumptions and Other Inputs

The Port used the alternative measurement method permitted under GASB Statement No. 75 and provided by the Office of the State Actuary. The Office of the State Actuary made the following assumptions: Health Plan Assumptions:

2/3 of members select a Uniform Medical Plan (UMP) and 1/3 select a Kaiser Permanente (KP) plan. UMP pre- and post-Medicare costs and premiums are equal to the UMP. The KP pre-Medicare costs and premiums are a 50/50 blend of KP Classic and KP Value. The KP post-Medicare costs and premiums are equal to KP Medicare.


The actuary estimated retirement service for each active cohort based on the average entry age of 35, with a minimum service of 1 year. For example, 47 members is assumed to have 12 years of service. Service is a component of benefit eligibility. Retirement, disablement, termination, and mortality are based on the 2018 PEEB OPEB AVR. For simplicity, the Office of the State Actuary assumed that all employees are retirement eligible at age 55. Relied on our retirement rates for members with less than 30 years of service. Assumed a 100% rate of retirement at the age of 70. Each cohort is assumed to be a 50/50 male/female split, and that eligible spouses are the same age as the primary member and selected the age-based cohort for AMM Online Tool based upon the overall distribution of State employees and retirees that participate in PEBB. The actuary did not include dental benefit when calculating to Total OPEB Liability. Dental benefits represent less than 3 percent of the accrued benefit obligations under the 2019 PEBB OPEB AVR. The actuary continue to monitor the impact and may consider including dental benefits in future updates of the tool.

The actuary believed these approaches and simplifying assumptions. Other assumptions include:

The following presents the total OPEB liability of the Port calculated using a discount rate of 5.0%, as well as what the OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.0 percent) or 1% higher (6.0 percent) that thecurrent rate. Below table shows sensitivity analysis.

The following presents the total OPEB liability of the Port calculated using a discount rate of 2.21%, as well as what the OPEBliability would be if it were calculated using a discount rate that is 1% lower (1.21 percent) or 1% higher (3.21 percent) thatthe current rate. Below table shows sensitivity analysis.


Changes in the Total OPEB Liability The following table shows the components of the Port’s annual OPEB expense for the year, the benefit payments made, and changes in the Port’s total OPEB liability as of June 30, 2020. The net OPEB liability of $2,303,444 is included as a noncurrentliability in the Statement of Net Position. Included is $6,108 of current portion of liability.

At December 31, 2020, the Port of Olympia reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources:

Deferred outflows of resources of $3,056 resulting from payments subsequent to the measurement date will be recognized as a reduction of the total OPEB liability in the year ended December 31, 2020. Defined Benefit: Medical Savings Account Contribution In addition to the pension benefits described in Note 10 above, in 2007 the Port established medical savings accounts in a voluntary employees’ beneficiary association plan in compliance with the Internal Revenue Code, Section 502 (c) (9).

The Port contributes $15,000 for the benefit of any employee who: is a member of an electing group of participating employees and who separates from service with over 15 years of employment with the Port. The plan was not funded. The discount rate assumption is 4 percent.

The Port’s accrued liability for the Medical Savings Account Contribution for the year ended December 31, 2020 is $195,000.

NOTE 11 – Environmental Remediation Obligations

The Port estimated its environmental remediation obligations at their current value. The Port methodology estimated future cash expenditures and weighted them by the probability that they would occur, and then it discounted those amounts by 4% which is its approximate cost of capital. These estimates may change as the Port works to resolve these liabilities. The Portestimates that these liabilities may increase or decrease by 15% since they are based on initial consulting estimates. The Port does not have an estimate that there may be recoveries reducing any of these liabilities.

South West Cargo Yard Site:The South West Cargo Yard Site is located on Port-owned property on the peninsula immediately south west of the Cascade Pole (CPC) Site. The Site was identified by Wash. Dept. of Ecology as a site separate from the CPC Site. Hazardous substances were discovered by the Port within the Cargo Yard Site and are suspected to be related to former bulk oil storage facilities that operated on and near the Site. Ecology notified the Port of Olympia that it is a potentially liable party for cleanup


of the Site. Other potentially liable parties associated with former oil handling facilities may also be identified. Investigationof the nature and extent of contamination has not yet commenced. An estimate of environmental liability for this Site is premature at this time.

Note 12 – Major Customers

Operating revenues for the year ended December 31, 2020 of $12,638,873 included $2,676,212, or 21% of total revenue from one customer. That customer have an accounts receivable balance of $558,760 at December 31, 2020.

Note 13 – Subsequent Events

In February 2020, the Governor of the state of Washington declared a state of emergency in response to the spread of a deadly new virus. In the weeks following the declaration, precautionary measures to slow the spread of the virus have been ordered. These measures include closing schools, colleges and universities, cancelling public events, and limiting gathering sizes.

The Port anticipates some additional costs related to operations and loss of revenue in facility use. Port leadership has met and will be monitoring expenditures for the remainder of the 2020 fiscal year and has a plan in place to budget conservatively for the 2021 fiscal year.

Note 14 – Prior Year Adjustments

The Port made a net $23,008 to prior year adjustments. During 2020 reconciliation process, the Port discover duplicate entries from prior year, and correct to prior year adjustment for $37,446 and $21,487.

The Port also reconciled fixed asset module to general ledger accounts and credit an adjustments of $17,948 to adjust accumulated depreciation.

The Port made other adjustments for prior years, credit for $7,784 prior year over accrual of annual leave and $7,388 for prioryear beginning balance and debit adjustment to PERS liabilities for $1,462.

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