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HomeMy WebLinkAbout2013 - Department of Finance - Comprehensive Annual Financial Report City of Lansing, Michigan cHI � � Year Ended Comprehensive June 30, 2013 K Annual Financial Report . • Prepared by: Department of Finance Interim Finance Director Angela Bennett Accounting Manager Randy Endsley CITY OF LANSING, MICHIGAN Table of Contents Page INTRODUCTORY SECTION 1 Elected and Appointed Officers 2 Letter of Transmittal 3 Table of Organization 7 GFOA Certificate of Achievement 8 FINANCIAL SECTION 9 Independent Auditors' Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 30 Statement of Activities 31 Fund Financial Statements: Balance Sheet - Governmental Funds 36 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 37 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 38 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Fund 40 State and Federal Programs Special Revenue Fund 42 Statement of Net Position - Proprietary Funds 44 Statement of Revenues, Expenses and Changes in Fund Position - Proprietary Funds 45 Statement of Cash Flows - Proprietary Funds 46 Statement of Fiduciary Net Position - Fiduciary Funds 50 Statement of Changes in Fiduciary Net Position - Pension and Other Postemployment Benefits Trust Funds 51 Combining Statement of Net Position - Discretely Presented Component Units 56 Combining Statement of Activities - Discretely Presented Component Units 57 Notes to Financial Statements 59 CITY OF LANSING, MICHIGAN Table of Contents Page Required Supplementary Information Schedule of Funding Progress - Employees' Retirement System 106 Schedule of Employer Contributions - Employees' Retirement System 106 Schedule of Funding Progress - Police and Fire Retirement System 107 Schedule of Employer Contributions - Police and Fire Retirement System 107 Schedule of Funding Progress - Other Postemployment Benefit Plans 108 Schedule of Employer Contributions - Other Postemployment Benefit Plans 108 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 110 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 111 Combining Balance Sheet - Nonmajor Special Revenue Funds 114 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 116 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 118 Combining Balance Sheet - Nonmajor Debt Service Funds 126 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 127 Combining Balance Sheet - Nonmajor Capital Projects Funds 130 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 132 Combining Balance Sheet - Nonmajor Permanent Funds 136 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 137 Nonmajor Enterprise Funds: Combining Statement of Net Position - Nonmajor Enterprise Funds 140 Combining Statement of Revenues, Expenses and Changes in Fund Position - Nonmajor Enterprise Funds 141 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 142 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 146 Combining Statement of Revenues, Expenses and Changes in Fund Position - Internal Service Funds 147 Combining Statement of Cash Flows - Internal Service Funds 148 CITY OF LANSING, MICHIGAN Table of Contents Page Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 152 Combining Statement of Changes in Assets and Liabilities - Agency Funds 153 STATISTICAL SECTION (UNAUDITED) 155 TABLE 1 Net Assets / Net Position by Component 157 2 Change in Net Assets / Net Position 158 3 Fund Balances, Governmental Funds 160 4 Changes in Fund Balances of Governmental Funds 161 5 Assessed and Estimated Actual Value of Taxable Property 162 6 Direct and Overlapping Property Tax Rates 163 7 Profile of Ten Largest Ad Valorem Taxpayers 164 8 Property Tax Levies and Collections 165 9 Ratios of Outstanding Debt by Type 166 10 Ratios of General Bonded Debt Outstanding 167 11 Direct and Overlapping Governmental Activities Debt 168 12 Legal Debt Margin Information 169 13 Pledged-Revenue Coverage 170 14 Demographic and Economic Statistics 171 15 Principal Employers 172 16 Full-Time Equivalent City Governmental Employees by Function/Program 173 17 Operating Indicators by Function/Program 174 18 Capital Asset Statistics by Function/Program 175 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN ELECTED AND APPOINTED OFFICERS For the Year Ended June 30, 2013 MAYOR Virg Bernero CLERK Chris Swope DISTRICT COURT JUDGES Frank J. Deluca Patrick F. Cherry Charles F. Filice Hugh B. Clarke, Jr. Louise Alderson CITY COUNCIL AT LARGE BY WARDS Brian Jeffries Jody Washington - 1st Ward Kathie Dunbar Tina Houghton - 2nd Ward Derrick Quinney A'Lynne Robinson - 3rd Ward Carol Wood Jessica Yorko - 4th Ward OFFICERS William Fowler City Assessor Janene McIntyre City Attorney Antonia Kraus City Treasurer Chad Gamble Chief Operating Officer Angela Bennett Interim Finance Director Randy Talifarro Fire Chief Joan Jackson Johnson Human Relations Et Community Services, Director of Vacant Internal Auditor Brett Kaschinske Parks Et Recreation, Director of Terri Taylor Human Resources, Director of Robert Johnson Planning Et Neighborhood Development, Director of Michael Yankowski Interim Police Chief Chad Gamble Public Service, Director of 2 h FINANCE DEPARTMENT 124 W. Michigan Ave., 0 'Floor Lansing: Michigan 48933 (517)4834500 HI ® December 20, 2013 Council President Carol Wood and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Wood and Council Members: We are pleased to submit the comprehensive annual financial report of the City of Lansing, Michigan for the fiscal year ended June 30, 2013. The City assumes full responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations government wide and of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The City's fiscal year 2012/2013 financial statements have been audited by Rehmann Robson, an independent firm of licensed, certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City of Lansing for the fiscal year-ended June 30, 2013, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures contained in the financial statements; assessing the accounting principles used; and evaluating the overall financial statement presentation. The independent audit concluded with the rendering of an unmodified opinion on the statements, meaning the financial statements present, fairly and accurately in all material respects, the financial position of the City in conformity with Generally Accepted Accounting Principles ("GAAP"). The independent auditors repot is presented as the first component of the financial section of this report. This letter of transmittal is designed to complement the Management Discussion and Analysis (MDBA) and should be read in conjunction with it. The Management Discussion and Analysis can be found immediately following the Independent Auditor Report. Profile of the City of Lansing Serving as Michigan's capital since 1848, the City of Lansing was incorporated in 1859 and operates under provisions of Public Act 279 of 1909, as amended (the "Home Rule City Act"). The City incorporates 34.7 square miles and is located in the lower middle of Michigan's Lower Peninsula and operates under a strong mayor form of government established by 1978 Charter revision. 3 Lansing is a mature core city with a population of 114,297, according to the 2010 census, and offers a full range of services. During the fiscal year ended June 30, 2013, the City operated police headquarters and a precinct with over 180 sworn police officers; six fire stations with a fire protection force of over 170; over 300 miles of sanitary sewers, 230 miles of storm sewers, and 180 miles of combined sewers; over 400 miles of roads; 113 parks; a District Court; and support for human services and cultural events. The City's main sources of revenue are property taxes, income taxes, State revenue sharing, Federal entitlement grants, and charges for services, including utility billings. Reporting Entity The financial reporting entity (the City) includes all of the funds and of the primary government (i.e., the City as legally defined), as well as its blended component units. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. The Lansing Building Authority is a blended component unit. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position, results of operations and cash flows from those of the primary government. The Lansing Entertainment Et Public Facilities Authority, Tax Increment Finance Authority, Brownfield Redevelopment Authority, and Smart Zone are reported as a discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls designed to ensure that the assets of the government are protected from loss, theft, or misuse and to assure that adequate accounting data is compiled to allow for the accurate presentation of financial statements in conformity with generally accepted accounting principles. To provide a reasonable basis for making these presentations, management has established a comprehensive system of internal controls designed to reasonably ensure that assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of these financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment, and monitoring and review processes which are communicated throughout City operations. Because the cost of internal controls generally should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that these objectives are met. Because the City is a recipient of federal grant dollars, the independent audit of the financial statements of the City of Lansing was part of a broader, federally-mandated "single audit" in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States. Local Governments, and Non-profit Organizations. The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately-issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year-ended June 30, 2013 are discussed in the Management Discussion and Analysis (MDEtA), located immediately following the Independent Auditor Report. Budgeting Controls The annual budget serves as the foundation for the City's financial planning, policy-making, and control. The City Charter requires that the Mayor submit to the City Council a proposed budget by the fourth Monday in March. Budgetary controls and limitations are noted in the Note Disclosure Section of the financial statements. 4 The City also maintains an encumbrance accounting system, whereby purchase orders amounts are deducted from the available budget, as one technique of accomplishing budgetary control. Encumbered amounts lapse at year end and require Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. Economic Condition and Outlook Acknowledging the need for comprehensive, integrated economic development efforts on a regional basis, the City began contracting with the Lansing Economic Area Partnership (LEAP) this past year. It is expected that this move will strengthen economic development efforts and opportunities, both for the City and the region as a whole, while decreasing economic development costs to the City. Through this arrangement, aggressive economic development activities have resulted in a number of economic projects that have happened in 2013 and several more are slated to break ground in 2014: Niowave has announced a 50,000-square-foot, $200 million medical isotope production facility in the City of Lansing, resulting in the creation of 127 jobs with an average wage of$60,000. Construction is slated to begin in the fall of 2014. This $3 billion cutting edge, pharmaceutical industry is produced primarily in Europe and Canada, thus this facility is one of America's first. Niowave has now completed its Prototype Development/Research and Development building, adding 25 jobs at average salary of $60,000 with over $10 million in machinery and equipment. Jackson National Life, a Fortune 500 company and the nation's #1 individual annuities company, has announced that they will double the size of their national headquarters in the City, adding $114 million in new structure as well as adding 1000 new, very high paying, white collar jobs. Construction should begin in the spring of 2014. General Motors announced the construction of a 400,000-square-foot, $40 million Logistics Center to be built as part of their Grand River Lansing Car Assembly plant. 200 new jobs are expected to be created, and the center is expected to be operational for 2015. General Motors also announced the re-location of the Camaro production from Canada to the City of Lansing's Grand River Car Assembly plant. This will move the plant from the current two, to three around- the-clock, full shifts and more and is expected to result in the creation of 600 - 1,000 new jobs. The downtown Knapps department store, a $36 million rehabilitation project that will create over 100 jobs as well as fully redeveloping an entire city block, is slated for full completion and opening in February 2014. This building and block have been abandoned and unused for several decades. It will also house the City's new Fashion Incubator, called the Runway, which is attracting interest from over 36 tenants across Michigan and has received its first sponsorship of $10,000. The Market Place project's is currently under construction. This $10 million market rate, mixed use/residential building is the City's first on its downtown riverfront. It will bring 80 units on line and is in Phase I with two more phases to be completed in the next five years. It is slated to open in the late fall of 2014. The MidTown market rate, mixed use residential building's foundation is in place and will be completed by early 2015. Located on Michigan Ave, at the border of Lansing, East Lansing and Michigan State University, it is targeting the ever-growing Chinese population of Michigan State University, with nearly 100 units as well as a PNC bank branch on the first floor. The "Red Cedar Renaissance" mixed use project was announced in 2013 and is set to begin in 2014. This signature project was put together by one of North America's top developers, Continental Groups. The $200 million, 1,000-j ob-and-resident project will develop the former City-owned Red Cedar Golf Course and act as a catalyst for the entire Michigan Avenue corridor, which connects, Lansing, East Lansing, the capitol building of Michigan and Michigan State University. The publicly-owned utility Lansing Board of Water and Light completed and opened its $180 million co- generation natural gas plant in Lansing's REO Town. It also moved its corporate headquarters and 180 employees to this new site, sparking a whole revitalization effort within the REO Town area of Lansing. The plant recently received recognition by the Pew Institute as one of the "cleanest and most efficient" energy facilities in the nation and "Best Project of the Year" by Engineering News-Record Midwest magazine. The Sabori project is rehabilitating and building a new, $3 million, mixed use development in Lansing's Old Town. 5 The High Grade project will demolish a decades-old blighted building and silos in the City and construct a new, efficient $2 million plant. In partnership with the City, the Sault Ste. Marie Tribe of Chippewa Indians announced plans for a 125,000 squre-foot Kewadin tribal casino to be located next to the City's convention center. The casino is planned to have 3,000 slot machines and 48 gambling tables and is projected to generate 1,500 jobs. Revenue sharing from the operations of the casino are planned to fund four-year college scholarships for Lansing School District graduates, modeled after the Kalamazoo Promise. The development has met some legal challenges, but is progressing. Lansing is an environment of high-growth and a good return on investment. Lansing is poised to benefit from the new generation of young people, entrepreneurs and new economy businesses who are now demanding an urban environment for living and working. Its economy is diverse. Its work force creative. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2012. This was the 35th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Department, as well as support by other departments. All those who contributed to this document, especially Accounting Manager Randy Endsley, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 35th consecutive GFOA award, recognizing their efforts, is well deserved indeed. Sincerely, Virg Bernero Mayor 1 Angela Bennett Interim Finance Director 6 CITY OF LANSING, MICHIGAN Table of Organization Citizens of Lansing City Clerk City Council Mayor 54-A District Court Interval City Attorneys Office of Audit Office Comnvunity Media Police Fire Pl & Eco c Public Parks& Humm Rdations Nei bofhood Devel uxnt smice Recreation and conununity Development Services Patrol Suppre„ron Planning Eco--c Der-Corp- Road sidewalks Parks De,ApuW* ams Gtaw Writing srst- Cnme lacxstrption Fre.,—uoa Zoning LEPFA $curets Treatment Recreation Progams Homan Sen•.Grants Cou muntm Pohciug Emergency Mguv Code Compl-- Dower—L—u=g.luc. TmIrRecylmg Commu r Center Police Internal Im, Deteanoa Howmg,Nerghbothoods TIFA Ground:Maintenance Ceroeterres Buddmg Safety Engineering Golf Parking Property bfaoff—t Fleet Finance L Human Resources Treasury 1--Tax Recruitment mg Tnining Acc mung'Budget Payroll Labor Relations Purcba:-g Paproll.menefits Infotmatron Technology Retirement Sere. 7 CITY OF LANSING, MICHIGAN GFOA Certificate of Achievement Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Prescntcd to City of Lansing Michigan For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2012 Executive Director/CE0 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 �a Re h m a n n 2330 East Paris Ave.,SE PO Box 6547 Grand Rapids,MI 49516 Ph:616.975.4100 Fx:616.975.4400 www.rehmann.com INDEPENDENT AUDITORS' REPORT December 20, 2013 Honorable Mayor and Members of the City Council City of Lansing, Michigan Report on the Financial Statements We have audited the accompanying financial statements of the governmental activities, the business- type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan (the "City"), as of and for the year ended June 30, 2013, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. 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. Independent Auditors'Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' 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 entity'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 entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 11 Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan, as of June 30, 2013, and the respective changes in financial position and, where applicable, cash flows thereof and the respective budgetary comparison for the General Fund and each major special revenue fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the Management's Discussion and Analysis and the Schedules of Funding Progress and Employer Contributions for the pension and other postemployment benefit plans, as listed in the table of contents, 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 Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such 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 combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. 12 Other Reporting Required by Government Auditing&andards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 20, 2013, on our consideration of the City of Lansing, Michigan's internal control over financial reporting and 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 the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. uc 13 This page intentionally left blank. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The management of the City of Lansing, Michigan ("the City") provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2013 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MD&A") is intended to assist the reader in focusing on significant financial issues and provide an overview of the City's financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section. Financial Highlights Total government-wide assets of the City exceeded its liabilities at the close of the fiscal year by $384.2 million (reported as net position), a decrease of $13.8 million from fiscal year 2011/2012. Component units of the City reported a deficit of net position of $34.3 million, a decrease of $763,181 from the previous year. This component unit deficit is planned to be covered by future tax revenue captures in the TIFA component unit. As of the close of the 2012/2013 fiscal year, the City's governmental funds reported combined ending fund balances of$19.2 million. Of this, $7.1 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $7.0 million is committed for designated projects, leaving $5.0 million unassigned. At the end of the fiscal year, unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund), was $5.6 million, an increase of $435,496 from FY 2011/12. Please see the "General Fund and Budgetary Highlights" section of this Management Discussion and Analysis for further detail. The business-type activities reported net position at year-end of$256.6 million, an increase of$2.5 million during the year. The City's total bonded and loaned debt was $247.8 million at June 30, 2013, a decrease of $9.9 million (or 3.8%), which represents the net difference between new issuances and payments. More detailed information regarding these activities and funds can be found in footnote 10, Long-Term Debt. Overview of the Financial Statements This MDEtA is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. These statements include all non-fiduciary assets and liabilities but exclude assets and liabilities related to pensions. The Statement of Net Position and the Statement of Activities are two financial statements that report information about the City, as a whole, and about its activities, which provide measurements of long term trends that should help answer this question: Is the City, as a whole, better off or worse off as a result of this year's activities? Unlike the governmental funds, the current year's revenues and expenses are taken into account regardless of when cash is received or paid, known as "full accrual accounting". The Statement of Net Position presents all of the City's assets and liabilities with the difference between the two reported as "net position". Over time, increases and decreases in net position are an indicator of whether the City's long term financial position is improving or deteriorating. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). 16 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The Statement of Net Position and the Statement of Activities report three activities, as follows: Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch), the District Court (judicial branch), and general operations of the executive branch departments, such as police, fire, parks, public works, and staff departments fall within the governmental activities. Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has four such discretely presented units; the Lansing Entertainment and Public Facilities Authority, the Tax Increment Finance Authority, the Brownfield Redevelopment Authority, and the SmartZone. These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements (modified accrual accounting) with governmental activities (full accrual accounting) on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: Capital assets used in governmental activities are not reported on governmental fund statements. Certain revenues that are earned, but not available for use within the reporting period, are reported as revenues for governmental activities, but are reported as deferred revenue on the governmental fund statements. Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements, but not deferred on the government-wide statements. Internal service funds are reported as governmental activities, but reported as proprietary funds in the fund financial statements. Bond discounts and premiums in the issuance of long term debt, are reported as expenditures in governmental fund statements, but are capitalized and amortized in the government-wide statements. Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, litigation, and others only appear as liabilities in the government-wide statements. Capital outlay spending in excess of capitalization thresholds are recorded as capital assets on the government- wide statements, but are reported as expenditures on the governmental fund statements. Bond and note proceeds result in liabilities on the government-wide statements, but are recorded as other financing sources on the governmental fund statements. Certain other outflows, such as debt service principal payments, represent decreases in liabilities on the government-wide statements, but are reported as expenditures on the governmental fund statements. The Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Fund Financial Statements. The City's Major Funds are identified as its Sewage Disposal Fund, and it's Municipal Parking System Fund, along with its General Fund and State and Federal Programs Fund. Data for the nonmajor funds are combined into a single, aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. 17 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital project, debt service, and permanent funds. Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension plans. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. These funds, which include pension and other employee benefit funds, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Additional Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. Other Supplementary Information Other supplementary information includes combining financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental fund financial statements. 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Government-Wide Financial Analysis The City's combined net position decreased $13.8 million over the course of this fiscal year's operations to a total of $384.2 million. Net position of governmental activities decreased $16.3 million or 11.3%, and business-type activities increased $2.5 million or 1.0%. Net Position Governmental Activities Business-type Activities Total 2013 2012 2013 2012 2013 2012 Current and other assets $ 45,903,914 $ 43,411,053 $ 68,710,568 $ 72,606,690 $114,614,482 $116,017,743 Capital assets, net 192,940,938 197,254,093 397,911,962 405,148,276 590,852,900 602,402,369 Total assets 238,844,852 240,665,146 466,622,530 477,754,966 705,467,382 718,420,112 Long-term liabilities 56,095,096 52,369,642 207,917,160 220,788,105 264,012,256 273,157,747 Other liabilities 55,132,372 44,419,526 2,077,592 2,803,746 57,209,964 47,223,272 Total liabilities 111,227,468 96,789,168 209,994,752 223,591,851 321,222,220 320,381,019 Net position Net investment in capital assets 154,372,604 163,723,249 212,682,278 209,584,457 367,054,882 373,307,706 Restricted 12,552,011 14,524,584 11,077,134 12,382,060 23,629,145 26,906,644 Unrestricted (39,307,231) (34,371,855) 32,868,366 32,196,598 (6,438,865) (2,175,257) Total net position $127,617,384 $143,875,978 $256,627,778 $254,163,115 $384,245,162 $398,039,093 The largest component (95.5%) of the City's net position reflects its net investment in capital assets (e.g. land, buildings, equipment, infrastructure, and others). Restricted net position is the next largest component, which represents amounts subject to external restrictions such as bond covenants, City Charter, State legislation or Constitutional provision. The remaining portion, unrestricted net position are resources that may be used at the City's discretion, but often have limitations based on policy action. 19 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City's net position changed during the fiscal year: Change in Net Position Governmental Activities Business-type Activities Total 2013 2012 2013 2012 2013 2012 Program revenues Charges for services $ 12,530,371 $ 18,376,030 $ 41,346,995 $ 41,682,398 $ 53,877,366 $ 60,058,428 Operating grants 29,322,435 31,928,983 1,193,571 1,331,737 30,516,006 33,260,720 Capital grants 3,124,288 260,656 - 2,683,657 3,124,288 2,944,313 General revenues Taxes 68,519,592 61,449,930 - 68,519,592 61,449,930 State shared revenues 13,201,648 12,710,114 13,201,648 12,710,114 Unrestricted grants and contributions 18,224,070 13,731,847 18,224,070 13,731,847 Unrestricted investment earnings 58,588 69,265 356,467 271,067 415,055 340,332 Gain (loss)on sale of capital assets - 123,066 - (1,300,561) - (1,177,495) Total revenues 144,980,992 138,649,891 42,897,033 44,668,298 187,878,025 183,318,189 Expenses General government 27,438,065 30,841,776 - - 27,438,065 30,841,776 Public safety 77,133,469 82,369,004 77,133,469 82,369,004 Public works 29,984,955 33,144,303 29,984,955 33,144,303 Recreation and culture 7,713,098 8,889,142 7,713,098 8,889,142 Community development 16,939,572 13,623,946 16,939,572 13,623,946 Interest on long-term debt 1,447,310 1,949,825 1,447,310 1,949,825 Sewage disposal system - - 26,159,576 26,836,597 26,159,576 26,836,597 Municipal parking system 8,126,036 9,491,376 8,126,036 9,491,376 Cemetery 633,050 639,000 633,050 639,000 Golf 888,825 810,372 888,825 810,372 Garbage and refuse - 1,558,024 collection 1,557,708 1,558,024 1,557,708 3,041,328 Recycling 3,650,292 3,041,328 3,650,292 3,041,328 Total expenses 160,656,469 170,817,996 41,015,487 42,376,697 201,671,956 213,194,693 Change in net position, before transfers (15,675,477) (32,168,105) 1,881,546 2,291,601 (13,793,931) (29,876,504) Transfers (583,117) (464,008) 583,117 464,008 Change in net position (16,258,594) (32,632,113) 2,464,663 2,755,609 (13,793,931) (29,876,504) Net position: Beginning of year 143,875,978 176,508,091 254,163,115 251,407,506 398,039,093 427,915,597 End of year $127,617,384 $143,875,978 $256,627,778 $254,163,115 $384,245,162 $398,039,093 20 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues - Governmental Activities Fiscal Year Ending June 30, 2013 Property Tax and Special Assessments Income Tax 26.7% 20.6% Gain on Sale of Capital Assets —- - -. 0.0% Unrestricted Investment Earnings Charges for Services 0.0% 8.6% Unrestricted Grants and Contributions Operating Grants and 12.6% Capital Grants and Contributions(restricted) p 20.2% State Shared Revenue Contributions 9.1% 2.2% In total, Governmental Activity revenue increased $6.5 million from FY 2011/2012 to FY 2012/2013. Trends of the major revenue categories are described in the following pargraphs. Total expenses for Governmental Activities decreased $10.2 million during that time. $3.4 million of that decrease occured in the Public Safety category largely due to the transfer of 911 Dispatch Center operations to Ingham County in June, 2012; without that transfer, Public Safety expenses would have increased by $2.2 million. Governmental Activity expenses decreased from FY 2011/2012 to FY 2012/2013 in all other categories, with the exception of Community development and Interest on Long-term Debt, due to budgeted decreases in operational expenditures in response to the effects of the Great Recession. The increase Community Development expenses resulted from a Section 108, grant-secured development loan issued during the course of the year, and the decrease in interest expense resulted from scheduled bond maturities. Income taxes comprised 20.6%, or $29.9 million, of Governmental Activity revenue, the full amount of which is revenue to the General Fund. Local income tax rates are prescribed by State law, and limited in Lansing's case to 1% of resident income and 0.5% of the income of persons working in the City, but living outside of its corporate boundaries. Unrestricted Grants and Contributions account for the next-largest category of Governmental Activity Revenue, comprising 21.7%, or $31.4 million, of revenues. Just-less-than-half of this category, $13.2 million, is attributed to State revenue sharing, an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Equity payments from the independently-managed-and-operated Board of Water and Light account for $16.1 million of the category, with remaining $2.1 million coming from payments from the State of Michigan for a payment in lieu of tax for its fire protection for its properties, bad driver revenues, and reimbursement of liquor license enforcement costs. An increase in the equity payment from the Board of Water and Light, as well as increase in State Bad Driver revenue receipts, amounted to a $5.0 million increase in unrestricted grants and contributions from FY 2011/2012 to FY 2012/2013. 21 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Restricted Operating Grants and Contributions made up $29.3 million, or 20.2% of Governmental Activity revenue. In this category, $11.3 million are recurring revenues from: State Gas Et Weight tax revenues restricted for streets; Community Development, HOME, and Emergency Shelter entitlement grants; and drug forfeiture funds restricted for drug enforcement efforts. The remaining $18.0 million is attributable to non-entitlement grants. Charges for Services are program-specific revenues generated for services provided. Governmental activity charges for services decreased $5.9 million from FY 2011/2012 to FY 2012/2013, due to the fact that 911 Dispatch operations were transferred to Ingham County in June, 2012. This transfer of operations also resulted a $5.6 million decrease in Public Safety expenses from FY 2011/2012 to FY 2012/2013, which was, in the chart "Change in Net Positions" above, partilally offset by $2.2 million in total Public Safety (police and fire) operational increases and a $2.0 million decrease in Public Safety grant funding. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2013 Interest on Long-term Community Debt Development 0.9% 10.5% General Government (administrative) Recreation and Culture 17.1% 4.8% 0 Public Safety 48.0% Public Works 18.7% Business-type Activities. Net position of the business-type activities increased by $2.5 million during the fiscal year to $256.6 million. The increase was mainly attributable to sewer system operations during the fiscal year which are necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $19.2 million. Of this, $7.1 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $7.0 million is committed for designated projects, leaving $5.0 million unassigned. 22 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis General Fund Budgetary Highlights The FY 2012/2013 budget was adopted as a balanced budget, based on projected revenues, without any use of reserves. The City budgeted a vacancy factor in its General Fund to account for anticipated positions that would become vacant during the course of the year. Because vacancies that will occur within each department can not be projected, the vacancy factor is budgeted in a "non-departmental" section of the General Fund and allocated to various departments through a budget amendment during the year. The majority of budgetary changes between the original and final budget are due to the allocation of the vacancy factor. Another significant budget amendment funded the replacement of two fire trucks. General Fund Revenues, in total, ended the fiscal year approximately $518,000 less than budgeted, a 0.5% variance. General Fund expenditures, in total, were $4.5 million less than budgeted, due largely to position vacancies. Approximately $3.0 million of expenditure residuals are committed for future-year use. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $3.3 million from FY 2011/2012 from $5.4 million to $8.7 million. As previously noted, $3.0 million is committed for future-year use, and $85,138 is restricted, leaving an unassigned fund balance of $5.6 million, a $435,496increase from FY 2011/2012. The FY 2013/2014 budget, adopted at levels commensurate with projected decreases in property values and other revenue levels experienced in FY 2012/2013, does not include any use of reserves. Sewage Disposal Fund Net position increased $4.7 million to $235.4 million in FY 2013, with $2.5 million of the increase due to the addition of sewer system assets which will be depreciated over time. Unrestricted net position increased $2.2 million, from $21.7 million to $23.9 million, which was attritable to the refinancing of an outstanding bond issuance during fiscal year 2013 and from operations during the fiscal year which are necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years. Municipal Parking Fund The Municipal Parking Fund net position decreased $1.7 million, from $19.2 million to $17.5 million. Unrestricted net position also decreased $1.7 million, from $9.5 mllion to $7.8 million. 23 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Capital Assets. At the end of the fiscal year 2013, the City had invested $590.9 million, net of accumulated depreciation, in a broad range of capital assets (see the table below). Additional information regarding the City's capital assets can be found in the notes to the basic financial statements. For more detailed information, please refer to footnote 7. Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2013 2012 2013 2012 2013 2012 Land $ 25,690,735 $ 25,084,983 $ 13,483,909 $ 13,503,321 $ 39,174,644 $ 38,588,304 Land improvements 8,565,261 8,976,263 12,179,183 12,754,115 20,744,444 21,730,378 Buildings and improvements 51,236,128 54,304,128 105,232,796 95,812,441 156,468,924 150,116,569 Equipment 5,460,316 6,399,147 286,281 473,899 5,746,597 6,873,046 Infrastructure 96,698,897 102,158,566 258,219,955 233,737,519 354,918,852 335,896,085 Construction in progress 5,289,601 331,006 8,509,838 48,866,981 13,799,439 49,197,987 Total capital assets, net $192,940,938 $197,254,093 $397,911,962 $405,148,276 $590,852,900 $602,402,369 Debt Administration. The City, along with the Lansing Building Authority (LBA), a blended component unit of the City, is empowered by law to authorize, issue, and sell debt obligations. Limited tax and unlimited tax general obligation bonds are backed by the full faith and credit of the City. The City also issues revenue-dedicated bonded debt, whose payment for principal and interest comes solely out of funds that receive legally-restricted revenues. The Sewage Disposal fund has the City's only dedicated revenue bonds currently outstanding. LBA's bonds financed the construction of parking, golf course, and firing range improvements. Revenues derived from user fees from persons using parking and golf facilities fund the debt service requirements for related improvements, but they are also backed by a limited tax pledge. More detailed information regarding the City's long-term obligations is presented in footnote 10 (Long-Term Debt) to the financial statements. 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Outstanding Debt 2013 2012 Governmental activities General obligation bonds $ 29,932,000 $ 25,727,000 Installment purchase contracts 2,807,838 8,193,616 Loans 6,246,743 512,577 Deferred amounts (172,930) (4,524) Compensated absences 10,138,900 10,601,091 Workers compensation 6,986,062 7,131,238 Tax settlement 156,483 208,644 Total governmental activities 56,095,096 52,369,642 Business-type activities General obligation bonds 182,127,578 192,125,645 Revenue bonds 25,030,000 29,525,000 Loans 1,702,664 1,637,177 Deferred amounts (1,676,990) (3,321,270) Compensated absences 733,908 821,553 Total business-type activities 207,917,160 220,788,105 Total outstanding debt $264,012,256 $273,157,747 During the year, the City issued $4.4 million in State revolving loan fund debt for the City's Wet Weather (formerly Combined Sewer Overflow/Sanitary Sewer Overflow) environmental program in the sewer (proprietary) fund. Also during the fiscal year, $21.7 million of sewer debt, $7.9 million of parking system debt, and $6.7 million in General Fund and Golf Fund debt were refinanced. The refinancings result in long-term savings over the remaining life of the bonds of $2.5 million for the sewer fund, $2.0 million for the parking fund, $15,000 for the Golf fund, and $524,000 for the General Fund. More detailed information regarding these activities and funds can be found in footnote 10, Long-Term Debt. Economic Condition and Outlook The State of Michigan's economic challenges, including the national recession, American automobile industry crisis, housing market and foreclosure impacts on property tax revenues, combined with rising labor force and retiree pension and healthcare costs, continues to place budgetary and fiscal constraints on the City of Lansing. To address these budgetary challenges, and to protect vital services to the public, since his inauguration in January, 2006, Mayor Bernero has implemented a budgetary strategy of maximizing revenues; reducing expenses; improving operational and technological efficiencies; consolidating like functions; collaborating with neighboring municipalities, counties, and non-profit entities to provide funding for City-owned assets that benefit the entire region. The Mayor also continues to work with the City's unions to contain the rising cost of healthcare, pension, and other compensation costs. The Mayor remains committed to directing the City in a fiscally responsible manner -- living within the City's available resources, and not relying on reserves to balance the budget. For this reason, last fall Mayor Bernero appointed a Financial Health Team composed of area business and community leaders to assess the city's financial challenges, identify potential partnerships, and to make recommendations, both in the near and long-term. The Financial Health Team report, issued in March of 2013, is available on the City's website at www.lansingmi.gov. 25 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Lansing is expected to see another year of declining property values (see Property Tax analysis in the Governmental Activities section of this Management Discussion and Analysis); however those losses are significantly less than the past several years -- revenues are showing signs of stabilizing. Due to state limitations on property tax growth, revenues are projected to grow at a slow pace in the near future, and the City needs to make continued investments in its long-term liabilities and infrastructure needs. This makes regional partnerships and new models of doing business all the more important going forward. In this historic economic downturn, including the credit crisis in the private sector, the City has seen significant economic development announcements (see Economic Condition and Outlook in the Transmittal Letter) and has received national recognition. The City is poised to experience continued, significant economic growth in the next several years. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Finance Department at (517) 483 4500. 26 BASIC FINANCIAL STATEMENTS 27 This page intentionally left blank. 28 GOVERNMENT-WIDE FINANCIAL STATEMENTS 29 CITY OF LANSING, MICHIGAN Statement of Net Position June 30, 2013 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 22,931,891 $ 13,202,009 $ 36,133,900 $ 2,377,272 Receivables, net 32,682,953 27,299,611 59,982,564 1,611,254 Internal balances (14,781,494) 14,781,494 - - Due from primary government - - - 794,288 Due from component units 723,308 - 723,308 - Inventories, prepaids and other assets 2,454,718 1,379,823 3,834,541 235,182 Restricted assets: Cash and investments 1,892,538 11,987,575 13,880,113 1,591,303 Receivables, net - 60,056 60,056 - Capital assets not being depreciated 30,980,336 21,993,747 52,974,083 - Capital assets being depreciated, net 161,960,602 375,918,215 537,878,817 30,695 Total assets 238,844,852 466,622,530 705,467,382 6,639,994 Liabilities Accounts payable and accrued liabilities 15,839,189 894,305 16,733,494 2,038,885 Accrued interest payable 204,262 1,118,623 1,322,885 16,724,644 Unearned revenue 243,238 64,664 307,902 381,470 Due to component units 794,288 - 794,288 - Due to primary government - - - 723,308 Long-term liabilities: Due within one year 6,288,365 19,525,617 25,813,982 1,939,007 Due in more than one year 49,806,731 188,391,543 238,198,274 19,153,537 Net pension obligation 243,128 - 243,128 - Net other postemployment benefit obligation 37,808,267 - 37,808,267 Total liabilities 111,227,468 209,994,752 321,222,220 40,960,851 Net position Net investment in capital assets 154,372,604 212,682,278 367,054,882 27,962 Restricted for: Public safety 699,949 - 699,949 - Public works 4,705,164 4,705,164 Community development 3,512,886 3,512,886 State mandated programs 28,951 28,951 Donations 9,400 - 9,400 Debt service 1,892,716 10,112,271 12,004,987 Capital projects - 964,863 964,863 Endowments (nonexpendable) 1,702,945 - 1,702,945 Unrestricted (deficit) (39,307,231) 32,868,366 (6,438,865) (34,348,819) Total net position (deficit) $ 127,617,384 $ 256,627,778 $ 384,245,162 $ (34,320,857) The accompanying notes are an integral part of the financial statements. 30 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2013 Program Revenues Operating Capital Net Charges Grants and Grants and (Expense) Functions/Programs Expenses for Services Contributions Contributions Revenues Primary government Governmental activities: General government $ 27,438,065 $ 6,162,713 $ 2,556,645 $ 562,854 $ (18,155,853) Public safety 77,133,469 4,083,222 9,867,925 - (63,182,322) Public works 29,984,955 1,622,738 8,688,324 2,561,434 (17,112,459) Recreation and culture 7,713,098 594,349 247,718 - (6,871,031) Community development 16,939,572 67,349 7,961,823 (8,910,400) Interest on long-term debt 1,447,310 - - - (1,447,310) Total governmental activities 160,656,469 12,530,371 29,322,435 3,124,288 (115,679,375) Business-type activities: Sewage disposal system 26,159,576 30,825,174 - - 47665,598 Municipal parking system 8,126,036 5,267,627 17193,571 (17664,838) Cemetery 633,050 314,913 - (318,137) Golf 888,825 373,000 (515,825) Garbage and rubbish collection 1,557,708 1,131,659 (426,049) Recycling 3,650,292 3,434,622 - (215,670) Total business-type activities 41,015,487 41,346,995 17193,571 - 17525,079 Total primary government $ 201,671,956 $ 53,877,366 $ 30,516,006 $ 3,124,288 $ (114,154,296) Component units Brownfield redevelopment $ 1,504,818 $ - $ 630,475 $ - $ (874,343) Community development 4,068,610 - - (4,068,610) Recreation and culture 6,500,806 5,344,083 17102,795 (53,928) Total component units $ 12,074,234 $ 5,344,083 $ 1,733,270 $ $ (4,996,881) continued... 31 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2013 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(115,679,375) $ 1,525,079 $(114,154,296) $ (4,996,881) General revenues: Property taxes 38,668,837 - 38,668,837 4,226,805 Income taxes 29,850,755 29,850,755 - Grants and contributions not restricted to specific programs 31,425,718 31,425,718 - Unrestricted investment earnings 58,588 356,467 415,055 6,895 Transfers - internal activities (583,117) 583,117 - - Total general revenues and transfers 99,420,781 939,584 100,360,365 4,233,700 Change in net position (16,258,594) 2,464,663 (13,793,931) (763,181) Net position (deficit), beginning of year 143,875,978 254,163,115 398,039,093 (33,557,676) Net position (deficit), end of year $ 127,617,384 $ 256,627,778 $ 384,245,162 $ (34,320,857) concluded The accompanying notes are an integral part of the financial statements. 32 FUND FINANCIAL STATEMENTS 33 This page intentionally left blank. 34 CITY OF LANSING, MICHIGAN Governmental Fund Financial Statements Major Funds The General Fund is the general operating fund of the City. It is used to account for and report all financial resources not accounted for and reported in another fund. The State and Federal Programs fund accounts for all revenues received from miscellaneous grants and local contributions. These revenues are used for projects as detailed in individual grant applications. Nonmajor Funds Nonmajor governmental funds are presented, by fund type, beginning on the pages listed below: Special revenue funds, page 114. Debt service funds, page 126. Capital projects funds, page 130. Permanent funds, page 136. 35 CITY OF LANSING, MICHIGAN Balance Sheet Governmental Funds June 30, 2013 State and Nonmajor Federal Governmental General Programs Funds Totals Assets Cash and cash equivalents $ 921,040 $ - $ 650,496 $ 1,571,536 Equity in pooled cash 11,420,007 376,214 6,451,619 18,247,840 Investments - - 425,957 425,957 Accounts receivable, net 16,880,504 154,212 17,034,716 Taxes receivable 1,036,180 - 1,036,180 Special assessments receivable - - 607,881 607,881 Loans receivable 49,269 1,385,000 1,434,269 Accrued interest receivable - - 2,078,617 2,078,617 Due from other funds 8,490,554 4,307,416 12,797,970 Due from component units 723,308 - 723,308 Interfund receivable 6,309 - - 6,309 Due from other governments 2,737,274 5,503,511 1,812,543 10,053,328 Inventories 38,346 - 966,331 1,004,677 Prepaids 37,392 - 1,875 39,267 Total assets $ 42,290,914 $ 5,928,994 $ 18,841,947 $ 67,061,855 Liabilities Accounts payable $ 3,381,914 $ 1,867,187 $ 1,208,954 $ 6,458,055 Deposits payable - - 87,134 87,134 Accrued payroll 1,584,233 7,884 34,446 1,626,563 Retainage payable 827,405 - - 827,405 Indemnity bonds - - 5,050 5,050 Due to other funds 20,952,814 3,170,000 2,437,567 26,560,381 Due to component units 794,288 - - 794,288 Interfund payable - 6,309 6,309 Advance from other funds - - 469,327 469,327 Due to other governments 2,707,896 576,925 346,316 3,631,137 Deferred revenue 2,863,748 292,507 3,805,987 6,962,242 Other 483,542 - - 483,542 Total liabilities 33,595,840 5,914,503 8,401,090 47,911,433 Fund balances Nonspendable 75,738 - 2,671,151 2,746,889 Restricted 9,400 14,491 4,354,492 4,378,383 Committed 2,976,408 - 4,035,145 7,011,553 Unassigned (deficit) 5,633,528 - (619,931) 5,013,597 Total fund balances 8,695,074 14,491 10,440,857 19,150,422 Total liabilities and fund balances $ 42,290,914 $ 5,928,994 $ 18,841,947 $ 67,061,855 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2013 Fund balances-total governmental funds $ 19,150,422 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital assets not being depreciated 30,980,336 Capital assets being depreciated, net 161,960,602 Capital assets accounted for in internal service funds, net (10,202,512) Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current expenditures. Those assets (i.e., receivables) are offset by deferred revenues in the governmental funds and, therefore, are not included in fund balance. Deferred ambulance fees receivable 2,160,125 Deferred nuisance fees receivable 615,487 Deferred loans receivable 1,234,269 Deferred long-term interest receivable 2,078,617 Deferred long-term special assessments receivable 542,370 Deferred long-term taxes and tax settlement receivables 88,136 Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 7,126,020 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Bonds, loans and leases payable (33,429,775) Unamortized deferred bond issuance costs 107,711 Accrued interest on bonds, loans and leases payable (167,154) Net pension obligation (243,128) Net other postemployment benefit obligation (37,808,267) Compensated absences and other long-term liabilities (16,575,875) Net position of governmental activities $ 127,617,384 The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2013 State and Nonmajor Federal Governmental General Programs Funds Totals Revenues Taxes and special assessments $ 37,712,674 $ $ 1,004,878 $ 38,717,552 Income taxes 29,850,755 - 29,850,755 Licenses and permits 1,509,402 - 1,509,402 Intergovernmental 15,268,934 14,758,456 10,611,793 40,639,183 Charges for services 8,310,415 - 3,443,966 11,754,381 Fines and forfeits 2,452,124 - 1,242,227 3,694,351 Interest and rents 33,498 2,974 16,707 53,179 Contributions 16,237,403 - 10,000 16,247,403 Otherrevenues 86,769 - 423,746 510,515 Total revenues 111,461,974 14,761,430 16,753,317 142,976,721 Expenditures Current expenditures: General government 20,930,446 - 2,664,875 23,595,321 Public safety 61,999,850 1,943,232 63,943,082 Public works 8,908,673 - 8,908,673 Highways and streets - 9,937,423 9,937,423 Recreation and culture 6,629,218 - 235 6,629,453 Other functions 2,302,662 21,396,540 - 23,699,202 Debt service: Principal 1,191,325 - 1,945,834 3,137,159 Interest 562,884 815,972 1,378,856 Issuance costs 42,744 - 42,744 Capital outlay - - 5,489,617 5,489,617 Total expenditures 102,567,802 21,396,540 22,797,188 146,761,530 Revenues over(under)expenditures 8,894,172 (6,635,110) (6,043,871) (3,784,809) Other financing sources (uses) Transfers in 365,000 280,407 6,411,525 7,056,932 Transfers out (5,827,825) (21,733) (2,042,891) (7,892,449) Proceeds on sale of capital assets 21,640 476,193 - 497,833 Issuance of long-term debt 5,885,000 5,900,000 147,046 11,932,046 Payment to refunded bond escrow agent (6,015,112) - - (6,015,112) Total other financing sources (uses) (5,571,297) 6,634,867 4,515,680 5,579,250 Net change in fund balances 3,322,875 (243) (1,528,191) 1,794,441 Fund balances, beginning of year 5,372,199 14,734 11,969,048 17,355,981 Fund balances, end of year $ 8,695,074 $ 14,491 $ 10,440,857 $ 19,150,422 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING, MICHIGAN Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2013 Net change in fund balances-total governmental funds $ 1,794,441 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital assets purchased/constructed 5,731,688 Depreciation expense (13,831,595) Gain on sale of capital assets 232,637 Proceeds on sale of capital assets (497,833) Capital contributions 562,854 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred to subsequent fiscal years. Change in deferred ambulance fees receivable 782,533 Change in deferred nuisance fees receivable (73,892) Change in deferred loans receivable (1,901) Change in deferred long-term interest receivable 69,250 Change in deferred special assessments receivable (73,287) Change in deferred taxes and tax settlement receivables (26,001) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase(decrease)in the net position of the internal service funds is reported with governmental activities. Net operating loss from governmental activities in internal service funds (339,534) Interest revenue from governmental internal service funds 5,409 Loss on sale of capital assets from governmental internal service funds (583,364) Interest expense from governmental internal service funds (153,790) Capital contributions from governmental internal service funds 854,188 Transfers in from governmental internal service funds 252,400 Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net position. Issuance of long-term debt (11,932,046) Principal payments on long-term liabilities 3,137,159 Payments to refunded bond escrow agent 6,015,112 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purposes of the statement of net position. Change in estimated liability for workers'compensation 145,176 Some expenses reported in the statement of activates do not require the use of current financial resources and therefore are not reported as expenditures in the funds. Change in accrued interest payable on long-term liabilities 100,742 Amortization of debt-related costs (15,406) Issuance costs related to long-term debt 42,744 Change in net other postemployment benefit obligation (8,947,377) Change in net pension obligation (4,573) Change in the accrual for compensated absences 443,511 Change in the accrual for tax settlement agreement 52,161 Change in net position of governmental activities $ (16,258,594) The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2013 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 38,023,752 $ 38,023,752 $ 37,712,674 $ (311,078) Income taxes 29,050,000 29,050,000 29,850,755 800,755 Licenses and permits 1,503,190 1,503,190 1,509,402 6,212 Intergovernmental 13,882,048 13,882,048 15,268,934 1,386,886 Charges for services 9,716,390 9,716,390 8,310,415 (1,405,975) Fines and forfeits 2,485,520 2,485,520 2,452,124 (33,396) Interest and rents 108,000 108,000 33,498 (74,502) Contributions 17,034,000 17,084,142 16,237,403 (846,739) Otherrevenues 127,100 127,100 86,769 (40,331) Total revenues 111,930,000 111,980,142 111,461,974 (518,168) Expenditures General government: Attorney's office 1,422,589 1,312,589 1,280,480 (32,109) City clerk 906,125 886,125 848,513 (37,612) Council 592,050 536,050 481,827 (54,223) Courts 5,639,759 5,459,759 5,350,942 (108,817) Internal audit 161,692 167,692 161,524 (6,168) Finance 7,294,841 6,964,841 6,769,201 (195,640) Library rental 165,000 165,000 155,374 (9,626) LEPFA support 1,102,795 1,102,795 1,136,634 33,839 Human resources 1,437,274 1,437,274 1,375,560 (61,714) Mayor 713,433 713,433 713,202 (231) Office of community media 300,858 300,858 303,067 2,209 Planning / neighborhood development 2,550,051 2,470,051 2,354,122 (115,929) Budgetary savings from attrition (800,000) - - Total general government 21,486,467 21,516,467 20,930,446 (586,021) Public safety: Police 34,025,030 34,051,369 32,574,119 (1,477,250) Fire 31,063,390 31,064,274 29,425,731 (1,638,543) Total public safety 65,088,420 65,115,643 61,999,850 (3,115,793) Public works 9,195,779 9,195,779 8,908,673 (287,106) continued... 40 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2013 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Recreation and culture $ 6,673,801 $ 6,673,801 $ 6,629,218 $ (44,583) Other functions: Human relations / community services 799,648 769,648 752,481 (17,167) Human services / community support 1,731,400 1,672,319 1,550,181 (122,138) Total other functions 2,531,048 2,441,967 2,302,662 (139,305) Debt service: Principal 1,259,545 1,259,545 1,191,325 (68,220) Interest 782,119 782,119 562,884 (219,235) Issuance costs - 42,744 42,744 Total debt service 2,041,664 2,084,408 1,796,953 (287,455) Total expenditures 107,017,179 107,028,065 102,567,802 (4,460,263) Revenues over expenditures 4,912,821 4,952,077 8,894,172 3,942,095 Other financing sources (uses) Transfers in 365,000 365,000 365,000 - Transfers out (5,287,821) (5,590,687) (5,827,825) (237,138) Proceeds on sale of capital assets 10,000 10,000 21,640 11,640 Issuance of long-term debt - 5,885,000 5,885,000 - Payment to refunded bond escrow agent (5,842,256) (6,015,112) (172,856) Total other financing sources (uses) (4,912,821) (5,172,943) (5,571,297) (398,354) Net change in fund balance - (220,866) 3,322,875 3,543,741 Fund balance, beginning of year 5,372,199 5,372,199 5,372,199 - Fund balance, end of year $ 5,372,199 $ 5,151,333 $ 8,695,074 $ 3,543,741 concluded The accompanying notes are an integral part of the financial statements. 41 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - State and Federal Programs For the Year Ended June 30, 2013 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Intergovernmental $ $ 27,503,103 $ 14,758,456 $ (12,744,647) Interest and rents - 2,974 2,974 Total revenues 27,503,103 14,761,430 (12,741,673) Expenditures Other functions 22,225,693 21,396,540 (829,153) Revenues over (under) expenditures 5,277,410 (6,635,110) (11,912,520) Other financing sources (uses) Transfers in 554,756 280,407 (274,349) Transfers out - (21,733) (21,733) Proceeds on sale of capital assets 476,193 476,193 Issuance of long-term debt - 5,900,000 5,900,000 Total other financing sources (uses) 554,756 6,634,867 6,080,111 Net change in fund balance 5,832,166 (243) (5,832,409) Fund balance, beginning of year 14,734 14,734 14,734 Fund balance, end of year $ 14,734 $ 5,846,900 $ 14,491 $ (5,832,409) Note: This fund accounts for a variety of individual grant programs that are adopted as awarded. As the fund expenditures are adopted upon grant award during the fiscal year, there is no original budget required for this fund. The accompanying notes are an integral part of the financial statements. 42 CITY OF LANSING, MICHIGAN Proprietary Fund Financial Statements Major Funds The Sewage Disposal System Fund accounts for the provision of sewage disposal services to the residents of the City. The Municipal Parking System Fund accounts for the operation of City-owned parking facilities. Nonmajor Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, beginning on the pages listed below: Enterprise funds, page 140. Internal service funds, page 146. 43 CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds June 30, 2013 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Assets Current assets: Cash and cash equivalents $ - $ 659,732 $ 500 $ 660,232 $ - Equity in pooled cash 6,096,590 4,357,617 2,087,570 12,541,777 2,686,558 Accounts receivable, net 4,007,674 408,755 43,383 4,459,812 437,962 Accrued interest receivable 54,694 84,079 - 138,773 - Lease receivable,current 611,593 1,731,051 2,342,644 Loans receivable, current - 283,453 283,453 - Inventories 361,939 - 87,176 449,115 843,718 Prepaids - 5,923 - 5,923 406,615 Due from other funds 20,396,248 1,026,461 21,422,709 950,244 Restricted accounts receivable - 60,056 60,056 - Totalcurrent assets 31,528,738 8,617,127 2,218,629 42,364,494 5,325,097 Noncurrent assets: Restricted cash and cash equivalents 11,0827768 904,807 - 11,9877575 1,892,538 Advances to other funds - 469,327 469,327 - Lease receivable, net of current portion 10,1737312 9,298,839 19,4727151 Loans receivable - 602,778 602,778 - Bond issue costs, net 524,852 396,641 3,292 924,785 52,730 Capital assets not being depreciated 8,591,698 12,897,808 504,241 21,993,747 4,778,135 Capital assets being depreciated, net 351,0417287 22,515,336 2,361,592 375,9187215 5,4247377 Total non-current assets 381,413,917 47,085,536 2,869,125 431,368,578 12,147,780 Total assets 412,942,655 55,702,663 5,087,754 473,733,072 17,472,877 Liabilities Current liabilities: Accounts payable 493,186 158,133 122,828 774,147 1,841,727 Deposits payable - 39,500 4,410 43,910 - Accrued interest payable 970,497 147,316 810 1,118,623 37,108 Accrued payroll 43,806 18,051 14,391 76,248 64,562 Claims incurred but not reported - - - - 814,014 Due to other funds 6,535,271 575,271 7,1107542 1,500,000 Unearned revenues - - 64,664 64,664 - Bonds and notes payable,current portion 14,199,930 5,149,372 100,000 19,449,302 668,702 Compensated absences,current portion 70,614 5,701 - 76,315 69,568 Total current liabilities 22,313,304 5,5187073 882,374 28,7137751 4,995,681 Noncurrent liabilities: Bonds and notes payable, net of current portion 154,849,441 32,589,297 295,212 187,733,950 4,715,174 Compensated absences, net of current portion 353,006 78,341 226,246 657,593 636,002 Total noncurrent liabilities 155,202,447 32,667,638 521,458 188,391,543 5,351,176 Total liabilities 177,515,751 38,185,711 1,403,832 217,105,294 10,346,857 Net position Net investment in capital assets 201,423,213 8,7887444 2,4707621 212,6827278 4,8187636 Restricted for debt retirement 10,112,271 - - 10,112,271 1,892,538 Restricted for capital projects - 964,863 - 964,863 - Unrestricted 23,891,420 7,763,645 1,213,301 32,868,366 414,846 Total net position $ 235,426,904 $ 17,516,952 $ 3,683,922 $ 256,6277778 $ 7,126,020 The accompanying notes are an integral part of the financial statements. 44 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenses and Changes in Fund Position Proprietary Funds For the Year Ended June 30, 2013 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Operating revenues Charges for services $ 30,825,174 $ 5,267,627 $ 5,254,194 $ 41,346,995 $ 67,502,769 Operating expenses Personal services 5,858,748 1,962,017 3,374,433 11,195,198 5,864,616 Purchase of goods and services 6,254,246 1,197,589 2,512,662 9,964,497 60,595,877 Depreciation 9,807,439 2,325,653 108,281 12,241,373 1,381,810 Total operating expenses 21,920,433 5,485,259 5,995,376 33,401,068 67,842,303 Operating income(loss) 8,904,741 (217,632) (741,182) 7,945,927 (339,534) Nonoperating revenues(expenses) Interest revenue 344,254 12,213 356,467 5,409 Loss on sale of capital assets - - - (583,364) Capital transfer out (707,145) (707,145) Interest expense and fees (4,239,143) (2,640,777) (27,354) (6,907,274) (153,790) Otherrevenue 1,193,571 1,193,571 Total nonoperating expenses (3,894,889) (1,447,206) (722,286) (6,064,381) (731,745) Income(loss)before contributions and transfers 5,009,852 (1,664,838) (1,463,468) 1,881,546 (1,071,279) Capital contributions - - - 854,188 Transfers in 1,152,769 1,152,769 252,400 Transfers out (300,000) (269,652) (569,652) - Change in net position 4,709,852 (1,664,838) (580,351) 2,464,663 35,309 Net position, beginning of year 230,717,052 19,181,790 4,264,273 254,163,115 7,090,711 Net position,end of year $ 235,426,904 $ 17,516,952 $ 3,683,922 $ 256,627,778 $ 7,126,020 The accompanying notes are an integral part of the financial statements. 45 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2013 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Cash flows from operating activities Cash received from customers $ 31,147,597 $ 9,851,753 $ 5,753,649 $ 46,752,999 $ - Cash received from interfund services - - - - 68,309,237 Cash payments for goods and services (8,654,519) (1,171,690) (2,221,698) (12,047,907) (59,503,380) Cash payments to employees (5,859,831) (1,965,954) (3,374,095) (11,199,880) (5,865,022) Net cash provided by operating activities 16,633,247 6,714,109 157,856 23,505,212 2,940,835 Cash flows from noncapital financing activities Transfers in - - 1,152,769 1,152,769 252,400 Transfers out (300,000) (269,652) (569,652) - Net cash provided by(used in) noncapital financing activities (300,000) 883,117 583,117 252,400 Cash flows from capital and related financing activities Proceeds from sale of capital assets - - 185,659 Acquisition and construction of capital assets (4,445,606) (1,266,598) (5,712,204) (4,785,739) Cash received for finance charges 1,193,571 1,193,571 Principal paid on revenue and general obligation bonds (13,489,038) (4,355,000) (85,000) (17,929,038) (295,000) Interest paid on revenue and general obligation bonds (2,032,049) (1,558,462) (28,330) (3,618,841) (149,281) Proceeds from issuance of long-term debt 26,140,971 8,000,487 405,000 34,546,458 465,000 Loan proceeds - - - - 1,892,332 Amount paid to refunding bond escrow agent (24,639,277) (7,773,856) (401,037) (32,814,170) (462,038) Payments received on capital lease 785,779 1,705,082 - 2,490,861 Net cash used in capital and related financing activities (17,679,220) (4,054,776) (109,367) (21,843,363) (3,149,067) Cash flows from investing activities Interest and dividends received 344,254 12,213 356,467 5,409 Loans made to others - (192,079) - (192,079) - Net cash provided by(used in) investing activities 344,254 (192,079) 12,213 164,388 5,409 Net change in cash and cash equivalents (1,001,719) 2,467,254 943,819 2,409,354 49,577 Cash and cash equivalents, beginning of year 18,181,077 3,454,902 1,144,251 22,780,230 4,529,519 Cash and cash equivalents,end of year $ 17,179,358 $ 5,922,156 $ 2,088,070 $ 25,189,584 $ 4,579,096 Reconciliation to statement of net position Cash and cash equivalents $ - $ 659,732 $ 500 $ 660,232 $ - Equity in pooled cash 6,096,590 4,357,617 2,087,570 12,541,777 2,686,558 Restricted cash and cash equivalents 11,082,768 904,807 - 11,987,575 1,892,538 $ 17,179,358 $ 5,922,156 $ 2,088,070 $ 25,189,584 $ 4,579,096 continued... 46 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2013 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income(loss)to net cash provided by operating activities Operating income(loss) $ 8,904,741 $ (217,632) $ (741,182) $ 7,945,927 $ (339,534) Adjustments to reconcile operating income(loss)to net cash provided by(used in)operating activities: Depreciation expense 9,807,439 2,325,653 108,281 12,241,373 1,381,810 Change in assets and liabilities: Accounts receivable 774,062 488,169 499,455 1,761,686 1,756,712 Accrued interest receivable (54,694) 12,998 - (41,696) - Inventories (276,410) - 41,044 (235,366) 60,353 Prepaids (5,890) - (5,890) 97,601 Due from other funds (1,366,796) 4,082,959 2,716,163 (950,244) Advances to other funds 58,488 58,488 - Accounts payable (626,658) 27,447 29,845 (569,366) 128,179 Deposits payable (2,115) 4,410 2,295 - Accrued interest payable (69,943) (23,622) (5,915) (99,480) 8,076 Accrued payroll (1,083) (3,937) 338 (4,682) (174) Retainage payable (200) - (200) - Claims incurred but not reported - - - (83,509) Due to other funds (396,945) 275,271 (121,674) 900,244 Unearned revenues (54,721) (54,721) - Compensated absences (60,466) (28,209) 1,030 (87,645) (18,679) Net cash provided by operating activities $ 16,633,247 $ 6,714,109 $ 157,856 $ 23,505,212 $ 2,940,835 concluded Non-cash transactions The nonmajor enterprise funds made a non-cash capital contribution out of$707,145 for the year ended June 30,2013. The internal service funds received non-cash capital contributions of$854,188 for the year ended June 30,2013. The accompanying notes are an integral part of the financial statements. 47 This page intentionally left blank. 48 CITY OF LANSING, MICHIGAN Fiduciary Fund Financial Statement Pension and Other Postemployment Benefit Trust Funds - Employee pension and other postemployment benefit trust funds accept payments made by the City, invest fund resources, calculate and pay pensions to retirees (or beneficiaries), and account for postemployment healthcare coverage. Combining schedules for fiduciary funds are presented in the notes to the financial statements. Agency Funds - These funds account for resources held in a trustee or agent capacity for the 54-A District Court. Combining statements for agency funds are presented, by fund type, beginning on page 152. 49 CITY OF LANSING, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds June 30, 2013 Pension and Other Postemployment Trust Agency Funds Funds Assets Cash and cash equivalents $ 30,141,634 $ Equity in pooled cash - 94,526 Investments: Money market funds 15,892,340 Government obligations 58,275,140 - Corporate bonds 601216,542 Common stocks 125,304,202 Mutualfunds 23212697512 Contribution receivable 1,017 Dividends and interest receivable 627,948 Total assets 522,728,335 $ 94,526 Liabilities Accounts payable 7,621,564 $ - Undistributed receipts - 94,526 Total liabilities 7,621,564 $ 94,526 Net position held in trust for Pension benefits 458,303,048 Other postemployment benefits 56,803,723 Total net position $ 515,106,771 The accompanying notes are an integral part of the financial statements. 50 CITY OF LANSING, MICHIGAN Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefit Trust Funds For the Year Ended June 30, 2013 Additions Investment income: Net appreciation in fair value of investments $ 62,375,634 Interest income 9,840,431 Dividend income 2,443,218 Investment expenses (7,112) Net investment income 74,652,171 Contributions: Employer 40,755,207 Plan members 3,626,639 Total contributions 44,381,846 Total additions 119,034,017 Deductions Participant benefits 67,372,587 Administrative expense 1,831,720 Total deductions 69,204,307 Net change in net position held in trust 49,829,710 Net position held in trust for pension and other postemployment benefits Beginning of year 465,277,061 End of year $ 515,106,771 The accompanying notes are an integral part of the financial statements. 51 This page intentionally left blank. 52 COMPONENT UNITS 53 This page intentionally left blank. 54 CITY OF LANSING, MICHIGAN Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has four discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Lansing Entertainment and Public Facilities Authority Smart Zone Complete financial statements for each of the individual component units, excluding Smart Zone, may be obtained from the entity's administrative offices. Separately-issued financial statements are not prepared for the Smart Zone. 55 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Discretely Presented Component Units June 30, 2013 Lansing Tax Entertainment Brownfield Increment £t Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Assets Cash and cash equivalents $ 950,877 $ 1,155,963 $ 270,432 $ $ 2,377,272 Receivables, net 969,379 - 641,875 1,611,254 Due from primary government 791,676 - - 2,612 794,288 Inventories, prepaids and other assets - 143,468 91,714 - 235,182 Restricted cash and cash equivalents 1,173,791 417,512 1,591,303 Capital assets being depreciated, net - - 30,695 - 30,695 Total assets 2,711,932 2,473,222 1,452,228 2,612 6,639,994 Liabilities Accounts payable and accrued liabilities 1,501,941 - 536,944 - 2,038,885 Accrued interest payable 53,174 16,671,470 - 16,724,644 Unearned revenues - - 381,470 381,470 Due to primary government - 723,308 - 723,308 Long-term debt: Due within one year 230,279 1,705,995 2,733 1,939,007 Due in more than one year 588,079 18,565,458 - 19,153,537 Total liabilities 2,373,473 37,666,231 921,147 40,960,851 Net position Net investment in capital assets - - 27,962 27,962 Unrestricted (deficit) 338,459 (35,193,009) 503,119 2,612 (34,348,819) Total net position (deficit) $ 338,459 $ (35,193,009) $ 531,081 $ 2,612 $ (34,320,857) The accompanying notes are an integral part of the financial statements. 56 CITY OF LANSING, MICHIGAN Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2013 Lansing Tax Entertainment Brownfield Increment Ft Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Expenses Brownfield redevelopment $ 1,504,818 $ - $ $ $ 1,504,818 Community development - 4,068,610 4,068,610 Recreation and culture - - 6,500,806 6,500,806 Total expenses 1,504,818 4,068,610 6,500,806 12,074,234 Program revenues Charges for services - - 5,344,083 5,344,083 Operating grants and contributions 630,475 1,102,795 1,733,270 Total program revenues 630,475 6,446,878 7,077,353 Net program expense (874,343) (4,068,610) (53,928) (4,996,881) General revenues Property taxes 1,287,423 2,939,382 - 4,226,805 Unrestricted investment earnings 1,897 4,958 40 6,895 Total general revenues 1,289,320 2,944,340 40 4,233,700 Changes in net position 414,977 (1,124,270) (53,888) - (763,181) Net position (deficit), beginning of year (76,518) (34,068,739) 584,969 2,612 (33,557,676) Net position (deficit), end of year $ 338,459 $ (35,193,009) $ 531,081 $ 2,612 $ (34,320,857) The accompanying notes are an integral part of the financial statements. 57 This page intentionally left blank. 58 NOTES TO FINANCIAL STATEMENTS 59 CITY OF LANSING, MICHIGAN Index - Notes to Financial Statements Pape 1. Summary of Significant Accounting Policies 61 Reporting entity Government-wide and fund financial statements Measurement focus, basis of accounting, and financial statement presentation Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and equity 2. Budgetary Information 69 3. Deficit Fund Equity 70 4. Deposits and Investments 71 5. Receivables 77 6. Deferred Revenue 77 7. Capital Assets 78 8. Accounts Payable and Accrued Liabilities 80 9. Interfund Receivables, Payables and Transfers 80 10.Long-Term Debt 83 11.Fund Balances - Governmental Funds 87 12.Net Investment in Capital Assets 88 13.Segment Information - Enterprise Funds 88 14.Risk Management 89 15.Property Taxes 90 16.Contingent Liabilities 90 17.Pension Plans 90 18.Other Postemployment Benefits 99 19.Adoption of New Accounting Pronouncement 104 20.Subsequent Event 104 60 CITY OF LANSING, MICHIGAN Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lansing (the "City") was incorporated in 1859. In 1909, the City came under the provisions of Act 279, P.A. 1909, as amended ("Home Rule City Act"). The City operates under a strong Mayor form of government in which the Mayor is responsible for implementation and administration of City policy as established by City Council. The accounting and reporting policies of the City conform in all material respects to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: Reporting Entity As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Unit A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and its financial data is combined with data of the appropriate funds. The City has one blended component unit, the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended unit is described as follows: The Building Authority (the "Authority") was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's governing body and designates management. The Authority uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities and equity of the Authority are incorporated within the City's Municipal Parking System and Golf enterprise funds, and the 1998 Building Authority Debt Service Fund. Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has four discretely presented component units, the Brownfield Redevelopment Authority, the Tax Increment Financing Authority, the Lansing Entertainment and Public Facilities Authority, and the Smart Zone, each with a fiscal June 30 year-end. The discretely presented component units are as follows: 61 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Brownfield Redevelopment Authority was established by the City on August 17, 1997, under the authority contained in Act 381, Michigan Public Acts of 1996 (the "Act"). The Act authorizes the City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Brownfield Redevelopment Authority is appointed by City Council to preside over such a zone, and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows the Brownfield Redevelopment Authority to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property value deterioration. Tax increment financing plans must be approved by the City. Tax increment financing permits the Brownfield Redevelopment Authority to capture tax revenues which are attributable to increases in the value of real and personal property located within an approved project area. Current activities of the Brownfield Redevelopment Authority include collections of property tax revenues on project areas for the Rite Aid Pharmacy and the former Motor Wheel Site Plant. The Tax Increment Finance Authority ("TIFA") was established by the City under the authority contained in Act 450, Michigan Public Acts of 1981 ("Act 450"). Act 450 authorizes the City to designate specific districts within its corporate limits as TIFA districts. The TIFA presides over such districts, formulating plans for public improvements, economic development, neighborhood revitalization, and historic preservation within the districts. Act 450 allows the TIFA to participate in a broad range of improvement activities intended to contribute to economic growth and prevent property value deterioration. The TIFA's governing body is appointed by the Mayor with the advice and consent of the City Council. Bond issuances, to fund the above activities, are approved by the City Council and the legal liability for the debt remains with the City. The Lansing Entertainment and Public Facilities Authority ("LEPFA") was established under the charter of the City of Lansing in February 1996, replacing the former Greater Lansing Convention/Exhibition Authority, which had been responsible for operating and managing the Lansing Center and the Lansing Civic Arena (the latter through the fiscal year ended June 30, 1995). LEPFA was established to oversee the management and operations of the Lansing Center, the City Market and the Cooley Law School stadium. LEPFA is chartered as a building authority under the provisions of Act 31, Public Acts of Michigan, 1948. In the event of dissolution or termination of LEPFA, all assets and rights of the Authority shall revert to the City. LEPFA's Board of Commissioners consists of thirteen members appointed by the Mayor of the City of Lansing and approved by the City Council. The Lansing Regional SmartZone ("SmartZone") was established by the City of Lansing and the City of East Lansing under the authority contained in Act 281, Public Act of Michigan of 1986 ("Act 281"). Act 281 authorizes the Cities to create a multi-jurisdictional local development finance authority. The SmartZone shall be known and exercise its powers under title of the Local Development Finance Authority of the Cities of Lansing and East Lansing. The SmartZone is fiscally dependent on the City of Lansing; the City approves the annual budget and is responsible for managing the SmartZone. The SmartZone was created in order to eliminate the conditions of unemployment, underemployment and joblessness, and to promote economic growth in the City. The SmartZone's Board of Commissioners consists of seven members, three of which are appointed by the City of Lansing, three are appointed by the City of East Lansing, and one is appointed by the Ingham County Board of Commissioners. 62 CITY OF LANSING, MICHIGAN Notes to Financial Statements Component Unit Financial Statements Complete financial statements for the individual component units may be obtained from each entity's administrative offices. Separate financial statements are not prepared for the Smart Zone. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing, Michigan 48933 Brownfield Redevelopment Authority / Tax Increment Finance Authority 1000 S Washington Avenue, Suite 201 Lansing, Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing, Michigan 48933 Government-Wide and Fund Financial Statements The statements of net position and activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. These statements distinguish between the City's governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the City and for each function of the City's governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees, fines and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. Measurement Focus Basis of Accounting, and Financial Statement Presentation The fund financial statements provide information about the City's funds, including its fiduciary funds and blended component unit. Separate statements for each fund category - governmental, proprietary and fiduciary - are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. 63 CITY OF LANSING, MICHIGAN Notes to Financial Statements The City reports the following major governmental funds: General fund. This fund is the City's primary operating fund. It accounts and reports all financial resources not accounted for and reported in another fund. State and Federal Programs fund. This fund accounts for all revenues received from miscellaneous grants and local contributions. These revenues are used for projects as detailed in individual grant applications. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally, the City reports the following fund types: Special revenue funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt service funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest and related costs. Capital projects funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent funds account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the government's programs. Enterprise funds account for those operations that are financed and operated in a manner similar to private business or where the City has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Internal service funds account for operations that provide services to other departments or agencies of the City, or to other governments, on a cost-reimbursement basis. This includes operating a maintenance facility for trucks and equipment used by the Public Service Department, and health care self-insurance services. Pension and other postemployment benefit trust funds account for the accumulation of resources to be used for retirement annuity payments to eligible full-time employees of the City, certain healthcare costs, and other retirement distributions. The agency fund account for resources held in a trustee or agent capacity for the 54-A District Court. 64 CITY OF LANSING, MICHIGAN Notes to Financial Statements Government-wide, proprietary and fiduciary fund financial statements. The government-wide, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting. Agency funds, a type of fiduciary fund, are unlike all other types of funds, reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Property taxes are recognized as revenues in the year for which they are levied. After March 1, any delinquent taxes on real property are paid by the county which is responsible for collecting any outstanding taxes on real property as of that date. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Proprietary funds distinguish operating revenues and expenses from nonoperating 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 City's enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental fund financial statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues reported in the governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60-day collection period, and reimbursement-based grants that use one year. Property taxes, income taxes, franchise taxes, licenses and interest are considered to be susceptible to accrual. All other revenue items are considered to be measurable and available only when cash is received by the City. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases, if any, are reported as other financing sources. 65 CITY OF LANSING, MICHIGAN Notes to Financial Statements Under the terms of grant agreements, the City funds certain programs by a combination of specific cost- reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net position available to finance the program. It is the City's policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues, subject to satisfying any grant program matching provisions. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Assets, deferred outflows of resources, liabilities, deferred inflows of resources, and equity Deposits and investments The City maintains an investment pool for all City funds. Each fund's portion of the investment pool is displayed on the statement of net position/balance sheet as "equity in pooled cash." The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants. State statutes authorize the government to deposit in the accounts of federally insured banks, credit unions, and savings and loan associations, and to invest in obligations of the U.S. Treasury, certain commercial paper, repurchase agreements, bankers' acceptances, and mutual funds composed of otherwise legal investments. Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have established market values are reported at estimated fair value. Cash deposits are reported at carrying amounts, which reasonably approximates fair value. Unrealized appreciation or depreciation on pension and other postemployment benefit trust fund investments due to changes in fair value are recognized each year. Receivables and payables All trade and delinquent property tax receivables are shown net of an allowance for uncollectibles, as applicable. Certain notes receivable in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Certain restricted receivables in business type funds are for an external agreement related to the effective sale of land. 66 CITY OF LANSING, MICHIGAN Notes to Financial Statements Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as internal balances. Inventories, prepaids and other assets All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Costs related to the issuance of long-term debt are amortized over the term of the related debt on a straight-line basis. Capital assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets that are used for governmental activities are only reported in the government-wide statements. Infrastructure ("public domain") assets, including roads, bridges, sanitary sewers, drains, curbs, and gutters are capitalized. With this measurement focus, all assets and liabilities (whether current or noncurrent) associated with the operations of these funds are included on the government-wide statement of net position. All land and non-depreciable land improvements are capitalized, regardless of cost. Equipment and vehicles are capitalized when the cost of individual items exceed $5,000. The road and sewer networks are all capitalized regardless of cost. Buildings are capitalized over $100,000, and the recreational facilities' thresholds range from $25,000 to $50,000. Capital assets of the primary government are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 67 CITY OF LANSING, MICHIGAN Notes to Financial Statements Deferred outflows 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 one or more future periods and so will not be recognized as an outflow of resources (expense/ expenditure) until then. The City currently has no items that qualify for reporting in this category. Compensated absences It is the government's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to accumulate earned but unused sick leave. All vacation and compensatory time pay and 50 percent of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Long-term obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long term debt and other long term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net position. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the straight-line basis. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Deferred inflows of resources 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 one or more future periods and so will not be recognized as an inflow of resources (revenue) until that time. The City currently has no items that qualify for reporting in this category. 68 CITY OF LANSING, MICHIGAN Notes to Financial Statements Fund equity Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority, the City Council. A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. The City currently has no assigned fund balance, as the City Council has not yet given the authority for the making of such assignments. Unassigned fund balance is the residual classification for the general fund. When the City incurs an expenditure for purposes for which various fund balance classifications can be used, it is the government's policy to use restricted fund balance first, then committed fund balance, assigned fund balance, and finally unassigned fund balance. 2. BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: On or before the fourth Monday in March, the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. A public hearing on the proposed use of funds is held by the Mayor, and a public hearing on the annual appropriations as proposed by the City Council is held no later than one week prior to adoption of the annual appropriation measure. Not later than the third Monday in May, the Council adopts a budget for the ensuing fiscal year, makes an appropriation of the money needed therefore, and sets the property tax rate necessary to support the appropriations measure. The appropriated budget is prepared by fund, department and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts except for the state and federal programs special revenue fund which is adopted on a project basis. The legal level of budgetary control is the mandatory account level. The mandatory accounts are personal services, supplies and operating expense, capital outlay, debt service, transfers and contingency. Transfers of appropriations between the mandatory accounts require the approval of the City Council. However, the Mayor may authorize budget transfers between mandatory accounts in a department, but the additional amount may not exceed fifteen (15%) of the Council's appropriation being added to, or five thousand dollars, whichever is less. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements Copies of the City's separately issued Budget report may be obtained from the Finance Department, 124 West Michigan Avenue, Lansing, Michigan 48933. The City formally adopts operating budgets for the general fund and all special revenue funds. Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the general fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the general fund, capital lease payments / installment payments are budgeted, but capital lease acquisitions are not. There were no capital lease acquisitions during the year ended June 30, 2013. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. During the year ended June 30, 2013, the City incurred expenditures in certain budgetary funds which were in excess of the amounts appropriated, as follows: Total Amount of Budget Appropriations Expenditures Variance General fund: General government: LEPFA support $ 1,102,795 $ 1,136,634 $ 33,839 Office of community media 300,858 303,067 2,209 Transfers out 5,590,687 5,827,825 237,138 State and federal programs - transfers out - 21,733 21,733 Major streets - interest expense 165,569 169,309 3,740 Localstreets - interest expense 475,608 483,857 8,249 Drug law enforcement - public safety 838,201 918,655 80,454 Tri-County metro - public safety 780,214 1,024,577 244,363 3. DEFICIT FUND EQUITY Governmental activities reported a deficit in unrestricted net position in the amount of $39,307,231 at June 30, 2013. Total net position amounted to a positive $127,617,384. The community development block grant program special revenue fund reported a deficit unassigned fund balance of $200,000. Total fund balance (which included $200,000 classified as restricted related to a long-term advance), was $0. The special assessments capital projects fund reported a deficit fund balance of $419,931. The fund received a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. The deficit is the result of deferred special assessments receivable. As special assessments are collected, this deficit will be eliminated, and the advance repaid. The Tax Increment Finance Authority reported a deficit in unrestricted net position of $35,193,009 at June 30, 2013. The deficit is a result of full-accrual accounting for long-term debt, without reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). 70 CITY OF LANSING, MICHIGAN Notes to Financial Statements 4. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances for the primary government (including both pooled cash and investments as well as pension and other postemployment benefit (OPEB) trust fund balances) as of June 30, 2013: Primary Component Government Units Totals Statement of net position Cash and investments $ 36,133,900 $ 2,377,272 $ 38,511,172 Restricted cash and investments 13,880,113 1,591,303 15,471,416 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 30,141,634 - 30,141,634 Investments 491,957,736 491,957,736 Agency funds: Equity in pooled cash 94,526 94,526 Total $ 572,207,909 $ 3,968,575 $ 576,176,484 Deposits and investments Bank deposits: Checking/savings accounts $ 82,574,690 Investments - money markets 335,698 Investment in securities and mutual funds: Pooled investments 1,168,859 Pension and OPEB investments 491,957,736 Cash on hand 139,501 Total $ 576,176,484 Custodial Credit Risk - Deposits. Custodial credit risk is the risk that in the event of a bank failure, the City's deposits may not be returned. State law does not require and the City does not have a policy for deposit custodial credit risk. As of year-end, $77,717,563 of the City's bank balance of $79,227,399 was exposed to custodial credit risk because it was uninsured and uncollateralized. The City's investment policy does not specifically address this risk, although the City believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank deposits. As a result, the City evaluates each financial institution with which it deposits City funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. Custodial Credit Risk - Investments. As of June 30, 2013, the City's pooled investments consisted entirely of mutual funds and money makrkets totaling $335,698 and $1,168,859 respectively. 71 CITY OF LANSING, MICHIGAN Notes to Financial Statements For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require and the City does not have a policy for investment custodial credit risk. On the investments listed above, there is no custodial credit risk, as these investments are uncategorized as to credit risk. Credit Risk. State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment credit risk. Credit risk ratings, where applicable, are summarized as follows: SEtP AAAm $ 251,283 U n rated 917,576 Total $ 1,168,859 Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable investments as identified in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Maturity dates for investments held at year-end are summarized as follows: Due in 1 to 5 years $ 917,576 No maturity 251,283 Total $ 1,168,859 Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year end are reported above. Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments, and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. Deposits The pension and OPEB trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net position are composed entirely of short-term investments in money market accounts. 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds' assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30, 2013: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Investments at fair value, as determined by quoted market price U.S. treasuries: Not on securities loan $ 655,863 $ 2,441,691 $ $ $ 3,097,554 On securities loan 3,169,756 2,842,048 6,011,804 U.S. agencies: Not on securities loan 22,128,656 26,558,737 48,687,393 On securities loan 14 - 14 Foreign government bonds: Not on securities loan 151,948 325,602 477,550 Domestic corporate securities: Not on securities loan 25,984,632 34,231,910 60,216,542 Domestic equities: Not on securities loan 29,541,901 48,769,232 78,311,133 On securities loan 16,291,818 20,565,251 36,857,069 International equities: Not on securities loan 497,570 736,401 1,233,971 Emerging markets equities 3,540,580 5,361,449 8,902,029 Collateralized mortgage obligations 539,887 665,144 1,205,031 Real estate investment funds 7,703,150 9,601,737 17,304,887 73 CITY OF LANSING, MICHIGAN Notes to Financial Statements Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Equity mutual funds $ - $ 7,514,911 $ $ - $ 7,514,911 International equity mutual funds 40,891,480 61,904,978 486,230 103,282,688 Domestic equity mutual funds 34,035,983 52,051,018 1,701,330 7,965,836 95,754,167 Domestic debt securities mutual funds - - - 7,617,357 7,617,357 Venture capital and partnerships 17,331 - - 17,331 Money market funds 3,192,607 12,273,698 - - 15,466,305 Total investments $ 188,343,176 $ 285,843,807 $ 1,701,330 $ 16,069,423 $ 491,957,736 Credit Risk. The City's pension investment policies provide that at least 90% of its investments in fixed income securities be rated BBB- or better by a nationally recognized statistical rating organization and the remaining 10% be rated at least B- or better. The City's pension and other postemployment benefits investments were rated by Standard Et Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AA $ 4,159,438 $ 4,609,796 $ $ $ 8,769,234 US government guaranteed 21,864,806 27,766,708 49,631,514 Not rated 29,738,641 46,812,070 76,550,711 Assets not subject to credit risk 132,580,291 206,655,233 1,701,330 16,069,423 357,006,277 $ 188,343,176 $ 285,843,807 $ 1,701,330 $ 16,069,423 $ 491,957,736 Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City's pension investment policies require that investment securities be held in trust by a third-party institution in the name of the pension trust fund. As such, although uninsured and unregistered, the City's pension investments are not exposed to custodial credit risk since the securities are held by the counterparty's trust department in the name of the pension trust fund. Short-term investments in money market funds and open-end mutual funds are not exposed to custodial credit risk because their existence is not evidenced by securities that exist in physical or book form. 74 CITY OF LANSING, MICHIGAN Notes to Financial Statements Concentration of Credit Risk. At June 30, 2013, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employees' Police and Fire Retirement Retirement Investment Type Issuer System System Common stock Northern Trust Back, N.A. 15.0% 15.6% Corporate bonds Western Asset Funds, Inc. 13.8% 11.9% U.S. agencies Federal Home Loan Mortgage Corporation 5.5% - The City's pension and other postemployment benefits investment policies require diversification of fixed income securities; however, they do not specify percentages of dollar amounts by industry or issuer. Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Investment Retirement Retirement Money Purchase Health Care (currency in U.S. dollar) System System Pension Plan VEBA Totals International equities: Canada $ 328,935 $ 488,645 $ $ $ 817,580 Israel 74,520 109,296 183,816 India 94,115 138,460 232,575 Foreign government bonds: Egypt 151,948 325,602 477,550 International equity mutual funds 44,432,060 67,266,427 110,976 486,230 112,295,693 Total $ 45,081,578 $ 68,328,430 $ 110,976 $ 486,230 $ 114,007,214 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fair market value of an investment. The City's pension investment policies provide that the average duration of fixed income securities shall not deviate from the Lehman Brothers Aggregate Index duration by +/-20%. As of June 30, 2013, maturities of the City's pension and other postemployment benefits trust debt securities were as follows: Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Employees' Retirement System U.S. treasuries $ $ - $ 423,908 $ 3,401,711 $ 3,825,619 U.S. agencies 2,872,018 1,948,706 3,416,004 13,891,942 22,128,670 International government bonds - 151,948 - - 151,948 Domestic corporate securities 25,984,632 - - - 25,984,632 Collateralized mortgage obligations - - 128,462 411,425 539,887 Total $ 28,856,650 $ 2,100,654 $ 3,968,374 $ 17,705,078 $ 52,630,756 Police and Fire Retirement System U.S. treasuries $ $ - $ 1,115,153 $ 4,168,586 $ 5,283,739 U.S. agencies 2,182,188 2,880,328 4,717,321 16,778,900 26,558,737 International government bonds - 325,602 - - 325,602 Domestic corporate securities 34,009,133 222,777 - - 34,231,910 Collateralized mortgage obligations - - 165,166 499,978 665,144 Total $ 36,191,321 $ 3,428,707 $ 5,997,640 $ 21,447,464 $ 67,065,132 Securities Lending. Under contracts approved by the City, the pension and other postemployment benefits trust funds are permitted to lend their securities to broker-dealers and banks (borrowers) for collateral that will be returned for the same securities in the future. The pension trust and other postemployment benefits funds' custodial banks manage the securities lending programs and receive cash as collateral. Collateral cash is initially pledged at 100 percent of the fair value of the securities lent, and may not fall below 95 percent of the market value of the loaned security during the term of the loan. At all times, collateral cannot be more than $100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned. 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end, the pension trust funds have no credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2013, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $19,461,588 and $23,407,299, respectively, for which the Plans' received cash collateral of $19,925,318 and $23,983,701, respectively. The contract with the pension and other postem ployment benefits trust fund custodians require them to indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the City for income distributions by the securities' issuers while the securities are on loan. 5. RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 18,112,268 $ 4,820,545 $ 643,635 Taxes receivable 1,036,180 - - Special assessments receivable 607,881 - - Loansreceivable 1,434,269 886,231 403,481 Accrued interest receivable 2,078,617 138,773 - Due from other governments 10,053,328 - 564,138 Lease receivable - 21,814,795 - Allowance for uncollectible accounts (639,590) (360,733) - $ 32,682,953 $ 27,299,611 $ 1,611,254 Amount not expected to be collected within one year $ 4,053,375 $ 20,074,929 $ 403,481 6. DEFERRED REVENUE Governmental funds report deferred revenue in connection with receivables for revenues that are not considered to be available to liquidate liabilities of the current period. All governmental activities defer revenue recognition in connection with resources that have been received, but not earned. At the end of the current fiscal year, the various components of deferred revenue reported in governmental funds were as follows: Unavailable Unearned Total Governmental funds Ambulance fees receivable $ 2,160,125 $ $ 2,160,125 Nuisance fees receivable 615,487 615,487 Loans receivable 1,234,269 1,234,269 Interest on loans receivable 2,078,617 2,078,617 Special assessments receivable 542,370 542,370 Tax settlement receivable 88,136 88,136 Grant funds received in advance - 243,238 243,238 Total $ 6,719,004 $ 243,238 $ 6,962,242 77 CITY OF LANSING, MICHIGAN Notes to Financial Statements 7. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2013 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,084,983 $ 586,340 $ - $ 19,412 $ 25,690,735 Construction in progress 331,006 5,051,158 (92,563) - 5,289,601 25,415,989 5,637,498 (92,563) 19,412 30,980,336 Capital assets, being depreciated: Land improvements 15,850,979 199,766 - 16,050,745 Equipment and vehicles 42,811,011 952,993 (3,389,977) - 40,374,027 Buildings 118,401,636 598,426 (1,358,664) 1,127,425 118,768,823 Infrastructure 300,314,490 3,838,641 (2,603,951) - 301,549,180 477,378,116 5,589,826 (7,352,592) 1,127,425 476,742,775 Less accumulated depreciation for: Land improvements (6,874,716) (610,768) - - (7,485,484) Equipment and vehicles (36,411,864) (1,891,824) 3,389,977 (34,913,711) Buildings (64,097,508) (3,677,700) 682,205 (439,692) (67,532,695) Infrastructure (198,155,924) (9,033,113) 2,338,754 - (204,850,283) (305,540,012) (15,213,405) 6,410,936 (439,692) (314,782,173) Total capital assets being depreciated, net 171,838,104 (9,623,579) (941,656) 687,733 161,960,602 Governmental activities capital assets, net $ 197,254,093 $ (3,986,081) $ (1,034,219) $ 707,145 $ 192,940,938 At June 30, 2013, the City's governmental activities had outstanding commitments through construction contracts of approximately $2,435,000. 78 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Balance Additions Disposals Transfers Balance Business-type activities Capital assets, not being depreciated: Land $ 13,503,321 $ - $ $ (19,412) $ 13,483,909 Construction in progress 48,866,981 4,314,505 (44,671,648) 8,509,838 62,370,302 4,314,505 (44,691,060) 21,993,747 Capital assets, being depreciated: Land improvements 24,219,932 26,309 24,246,241 Equipment and vehicles 5,673,556 - - 5,673,556 Buildings 200,951,539 901,401 12,989,025 214,841,965 Sewers 301,782,096 469,989 30,555,198 332,807,283 532,627,123 1,397,699 43,544,223 577,569,045 Less accumulated depreciation for: Land improvements (11,465,817) (601,241) - (12,067,058) Equipment and vehicles (5,199,657) (187,618) - (5,387,275) Buildings (105,139,098) (4,909,763) 439,692 (109,609,169) Sewers (68,044,577) (6,542,751) (74,587,328) (189,849,149) (12,241,373) 439,692 (201,650,830) Total capital assets being depreciated, net 342,777,974 (10,843,674) 43,983,915 375,918,215 Business-type activities capital assets, net $ 405,148,276 $ (6,529,169) $ $ (707,145) $ 397,911,962 At June 30, 2013, the City's business-type activities had outstanding commitments through construction contracts of approximately $1,088,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 612,775 Public safety 566,448 Public works 9,033,113 Recreation and culture 1,806,907 Community development 1,812,352 Internal service funds 1,381,810 Total depreciation expense - governmental activities $ 15,213,405 79 CITY OF LANSING, MICHIGAN Notes to Financial Statements Depreciation of business-type activities by function Sewage disposal system $ 9,807,439 Municipal parking system 2,325,653 Golf 92,092 Other 16,189 Total depreciation expense - business-type activities $ 12,241,373 8. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 8,299,782 $ 774,147 $ 2,038,885 Deposits payable 87,134 43,910 - Accrued payroll 1,691,125 76,248 Contract retainage payable 827,405 - Due to other governments 3,631,137 Other 1,302,606 - - $ 15,839,189 $ 894,305 $ 2,038,885 9. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2013, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ 8,490,554 $ 20,952,814 State and federal programs - 3,170,000 Nonmajor governmental funds 4,307,416 2,437,567 Sewage disposal system 20,396,248 6,535,271 Municipal parking system 1,026,461 - Nonmajor enterprise funds - 575,271 Internal service funds 950,244 1,500,000 Total $ 35,170,923 $ 35,170,923 The above balances generally resulted from a time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. 80 CITY OF LANSING, MICHIGAN Notes to Financial Statements Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ - $ 469,327 Municipal parking system 469,327 - Total $ 469,327 $ 469,327 Due to and from component units Due from Due to Due to Due from primary primary component component government government unit unit General fund $ - $ $ 794,288 $ 723,308 Brownfield Redevelopment Authority 791,676 - - Tax Increment Finance Authority - 723,308 Smart Zone 2,612 - - - Total $ 794,288 $ 723,308 $ 794,288 $ 723,308 In addition, at June 30, 2013, the following interfund receivables/payables were reported for funds with negative equity in pooled cash and investments: Interfund Interfund Receivable Payable General fund $ 6,309 $ - Nonmajor governmental funds - 6,309 Total $ 6,309 $ 6,309 81 CITY OF LANSING, MICHIGAN Notes to Financial Statements For the year ended June 30, 2013, interfund transfers consisted of the following: Transfers In State and Nonmajor Nonmajor federal governmental enterprise Transfers Out General fund programs funds funds General fund $ $ 270,110 $ 5,180,722 $ 376,993 State and federal programs - 21,733 - Nonmajor governmental funds 65,000 10,297 1,189,418 775,776 Sewage disposal system 300,000 - - - Nonmajor enterprise funds - - 19,652 - Total $ 365,000 $ 280,407 $ 6,411,525 $ 1,152,769 Transfers In Internal service Transfers Out funds Total General fund $ $ 5,827,825 State and federal programs 21,733 Nonmajor governmental funds 2,400 2,042,891 Sewage disposal system - 300,000 Nonmajor enterprise funds 250,000 269,652 $ 252,400 $ 8,462,101 Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements 10. LONG-TERM DEBT General obligation bonds. The government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Interest Original Rate Amount Amount General obligation bonds Governmental activities: 2006 Lansing Center Limited Tax Bonds 3.50-4.30% $ 4,000,000 $ 2,570,000 2005 Building Authority Refunding Bonds 3.50-5.00% 1,470,000 750,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 1,137,600 516,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 3,602,400 1,634,000 2007 Fire Station Refunding Bonds 3.625-5.00% 1,780,000 1,205,000 2008 Michigan Transportation Fund Limited Tax Bonds 3.00-4.00% 3,500,000 2,340,000 2009 Capital Improvement Bonds - Limited Tax General 3.15-6.85% 10,197,000 9,652,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 3,065,000 2010 Refunding Bonds - Limited Tax General Obligation 2.60-2.65% 2,470,000 1,850,000 2013 Refunding Bonds - Limited Tax General Obligation Energy Efficiency Refunding Bonds 2.40% 5,645,000 5,645,000 2013 Refunding Bonds - Limited Tax General Obligation Phone System Refunding Bonds 2.40% 240,000 240,000 2013 Operations and Maintenance Limited Tax Refunding 2.40% 465,000 465,000 $ 37,707,000 $ 29,932,000 Business-type activities: 1990 Building Authority Municipal Parking System Limited Taxable Bond 0.00% $ 64,635,000 $ 4,975,000 2005 Building Authority Refunding Bonds 3.50-5.00% 15,975,000 9,795,000 2007 Building Authority Refunding Bonds 3.625-5.00% 7,965,000 7,805,000 1992 Limited Tax Sewer Bond - 5005-01 2.50% 7,128,800 425,000 1993 Limited Tax Sewer Bond - 5005-02 2.50% 8,150,050 930,000 1994 Limited Tax Sewer Bond - 5005-03 2.50% 3,234,722 550,000 1994 Limited Tax Sewer Bond - 5005-04 2.00% 3,727,138 358,100 1994 Limited Tax Sewer Bond - 5005-06 2.25% 7,595,611 1,000,000 1996 Limited Tax Sewer Bond - 5005-07 2.25% 3,365,073 780,073 1996 Limited Tax Sewer Bond - 5005-08 2.25% 3,995,000 1,175,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 1,616,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 4,159,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 4,130,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 4,287,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 5,358,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 7,416,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,259,826 6,655,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,070,277 2,627,649 83 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Original Rate Amount Amount General obligation bonds Business-type activities (concluded): 2005 Limited Tax Sewer Bond - 5005-17 2.13% $ 4,739,023 $ 5,413,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 9,494,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 14,056,346 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 19,699,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,500,453 24,075,453 2009 Limited Tax Sewer Bond - 5005-22 2.50% 15,615,000 12,566,528 2010 Limited Tax Sewer Bond - 5411-01 2.50% 2,095,468 6,471,438 2009 Capital Improvement Bonds 4.10-7.05% 9,803,000 9,803,000 2009 Building Authority Refunding Bonds 6.014-6.584% 8,161,691 8,161,691 2012 Building Authority Refunding Bonds 0.55-3.70% 7,200,000 7,200,000 2013 Building Authority Refunding Bonds 2.40% 735,000 735,000 2013 Building Authority Golf Course Refunding Bonds 2.40% 405,000 405,000 $ 329,015,312 $ 182,127,578 At year end, defeased bonds outstanding consisted of $3,305,000 of 1990 Building Authority Bonds, scheduled to be paid by the escrow agent in installments on June 1 of years 2014 through 2015; $23,100,000 of 2003 Sewer Revenue and Refunding Bonds scheduled to be paid by the escrow agent in one payment on May 1 of 2014; and $10,415,000 of 1990 Tax Increment Finance Authority Bonds, scheduled to be paid by the escrow agent in installments on May 1 of years 2016 through 2020. During fiscal year 2013, the City advance refunded $5,625,892 of 2006 lease purchase agreement - energy efficiencies bonds, $227,939 of 2007 lease purchase agreement - phone system bonds, $450,000 of 2001 lease purchase agreement - oEtm facility bonds, $715,000 of 2003 building authority municipal parking system limited tax bonds and $390,000 of 1996 building authority golf course limited tax bonds to provide resources to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on $7,408,831 of refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price of the refunding bonds exceeded the carrying amount of the refunded debt by $199,514 and, accordingly, is being amortized of the remaining years of the refunded debt. The refunding resulted in a savings of $547,885 and an economic gain of$504,344. During fiscal year 2013, the City advance refunded $6,840,000 of 2003 building authority municipal parking system taxable bonds to provide resources to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on $6,840,000 of refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price of the refunding bonds exceeded the carrying amount of the refunded debt by $203,698 and, accordingly, is being amortized of the remaining years of the refunded debt. The refunding resulted in a savings of $1,957,476 and an economic gain of $1,567,505. 84 CITY OF LANSING, MICHIGAN Notes to Financial Statements During fiscal year 2013, the City advance refunded $23,100,000 of 2003 sewage revenue and refunding bonds to provide resources to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on $23,100,000 of refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The reacquisition price of the refunding bonds exceeded the carrying amount of the refunded debt by $1,539,278 and, accordingly, is being amortized of the remaining years of the refunded debt. The refunding resulted in a savings of$2,490,664 and an economic gain of$2,049,034. Revenue bonds. The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Interest Original Rate Amount Amount Revenue bonds - business type activities 2003 Sewer Revenue and Refunding Bond 2.50% $ 39,880,000 $ 2,365,000 2010 Sewage Disposal System Refunding Bond 1.76% 2,685,000 900,000 2013 Sewer Revenue and Refunding Bond 2.40% 21,765,000 21,765,000 $ 64,330,000 $ 25,030,000 Installment purchase agreements. The government enters into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Interest Original Rate Amount Amount Installment purchase agreements Governmental activities: 2005 Lease Purchase Agreement - LEPFA Carpet 4.51% $ 126,418 $ 30,213 2005 Lease Purchase Agreement - LEPFA Equipment 4.24% 81,500 23,750 2006 Lease Purchase Agreement - Oldsmobile Park 6.86% 2,000,000 500,000 2007 Lease Purchase Agreement - Oldsmobile Park 5.72% 1,000,000 250,000 2012 Lease Purchase Agreement - Snowmobile 2.40% 147,046 111,543 2013 Lease Purchase Agreement - Garage 2.40% 1,892,332 1,892,332 $ 5,247,296 $ 2,807,838 Loans payable. The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Interest Original Rate Amount Amount Loans payable Governmental activities: 2004 Michigan Department of Transportation Loan 3.00% $ 1,266,000 $ 346,743 HUD Section 108 Loan 2.40% 5,900,000 5,900,000 $ 7,166,000 $ 6,246,743 Business-type activities 2003 MEDC loan 3.93% $ 4,180,000 $ 1,702,664 85 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in long-term debt. Long-term liability activity for the year ended June 30, 2013, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 25,727,000 $ 6,350,000 $ 2,145,000 $ 29,932,000 $ 2,787,000 Installment purchase agreements 8,193,616 2,039,378 7,425,156 2,807,838 1,195,997 Loans payable 512,577 5,900,000 165,834 6,246,743 170,809 Total installment debt 34,433,193 14,289,378 9,735,990 38,986,581 4,153,806 Compensated absences 10,601,091 10,138,900 10,601,091 10,138,900 1,123,684 Accrued workers compensation 7,131,238 1,118,901 1,264,077 6,986,062 958,714 Accrued tax settlement 208,644 - 52,161 156,483 52,161 Deferred amounts: For issuance discounts (100,320) (6,833) (93,487) - For issuance premiums 190,234 34,143 156,091 On refunding (94,438) (173,319) (32,223) (235,534) $ 52,369,642 $ 25,373,860 $ 21,648,406 $ 56,095,096 $ 6,288,365 Business-type activities General obligation bonds $ 192,125,645 $ 12,715,971 $ 22,714,038 $ 182,127,578 $ 15,459,930 Revenue bonds 29,525,000 21,765,000 26,260,000 25,030,000 3,265,000 Loans payable 1,637,177 65,487 - 1,702,664 724,372 Total installment debt 223,287,822 34,546,458 48,974,038 208,860,242 19,449,302 Compensated absences 821,553 733,908 821,553 733,908 76,315 Deferred amounts: For issuance discounts (2,874,620) - (853,745) (2,020,875) - For issuance premiums 895,816 2,677,789 822,050 2,751,555 On refunding (1,342,466) (1,769,171) (703,967) (2,407,670) - $ 220,788,105 $ 36,188,984 $ 49,059,929 $ 207,917,160 $ 19,525,617 For the governmental activities, compensated absences and other long-term debt are generally liquidated by the general fund. 86 CITY OF LANSING, MICHIGAN Notes to Financial Statements Debt service requirements to maturity for all installment debt of the City are as follows: Year Governmental Activities Business-type Activities Ending June 30 Principal Interest Total Principal Interest Total 2014 $ 4,153,806 $ 1,273,128 $ 5,426,934 $ 19,449,302 $ 5,871,091 $ 25,320,393 2015 3,528,783 1,122,984 4,651,767 16,521,855 5,414,741 21,936,596 2016 3,436,549 1,005,427 4,441,976 14,145,193 4,689,029 18,834,222 2017 3,445,262 881,115 4,326,377 13,814,597 4,314,318 18,128,915 2018 3,137,180 753,035 3,890,215 13,815,905 3,939,925 17,755,830 2019-2023 10,225,000 2,500,623 12,725,623 69,744,645 13,950,704 83,695,349 2024-2028 7,155,000 1,126,923 8,281,923 50,905,325 5,291,345 56,196,670 2029-2033 3,905,001 90,460 3,995,461 9,678,420 781,598 10,460,018 2034 - - - 785,000 35,973 820,973 $ 38,986,581 $ 8,753,695 $ 47,740,276 $ 208,860,242 $ 44,288,724 $ 253,148,966 11. FUND BALANCES - GOVERNMENTAL FUNDS In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: State and Nonmajor General Federal Governmental Fund Programs Funds Totals Nonspendable Inventories $ 38,346 $ $ 966,331 $ 1,004,677 Prepaids 37,392 1,875 39,267 Corpus of permanent fund - 1,702,945 1,702,945 75,738 2,671,151 2,746,889 Restricted Donations 9,400 - 9,400 Major and local streets - 3,196,463 3,196,463 Drug law and narcotics enforcement 699,949 699,949 Various state and federal grants 14,491 200,000 214,491 Shopping district events and maintenance - 12,585 12,585 Debt service 178 178 Capital improvements (unexpended bond proceeds) - - 245,317 245,317 9,400 14,491 4,354,492 4,378,383 87 CITY OF LANSING, MICHIGAN Notes to Financial Statements State and Nonmajor General Federal Governmental Fund Programs Funds Totals Committed Unspent human services ordinance $ 119,663 $ $ - $ 119,663 Unspent police millage 1,219,082 1,219,082 Unspent fire millage 1,637,663 - 1,637,663 City parks - 466,888 466,888 Capital improvements - 3,568,257 3,568,257 2,976,408 4,035,145 7,011,553 Unassigned (deficit) 5,633,528 (619,931) 5,013,597 Total fund balances - governmental funds $ 8,695,074 $ 14,491 $ 10,440,857 $ 19,150,422 12. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30, 2013, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 30,980,336 $ 21,993,747 $ - Capital assets being depreciated, net 161,960,602 375,918,215 30,695 Total capital assets 192,940,938 397,911,962 30,695 Related debt: General obligation bonds 29,932,000 182,127,578 - Revenue bonds - 25,030,000 14,218,165 Installment purchase agreements 2,807,838 - 11,032,622 Loans payable 6,246,743 1,702,664 818,358 Unamortized bond discounts (93,487) (2,020,875) (108,696) Unamortized bond premiums 156,091 2,751,555 Deferred loss on bond refunding (235,534) (2,407,670) (4,867,905) Amounts under leases receivable (21,814,795) Amounts under leases receivable - accrued interest (138,773) Amounts related to non-capital debt (21,089,811) Unexpended bond proceeds (245,317) - - Totalrelated debt 38,568,334 185,229,684 2,733 Net investment in capital assets $ 154,372,604 $ 212,682,278 $ 27,962 13. SEGMENT INFORMATION - ENTERPRISE FUNDS The government issued revenue bonds to finance certain improvements to its sewage disposal system. Because the Sewage Disposal System, an individual fund that accounts entirely for the government's sewage activities, is a segment and is reported as a major fund in the fund financial statements, separate segment disclosures herein are not required. 88 CITY OF LANSING, MICHIGAN Notes to Financial Statements 14. RISK MANAGEMENT The City of Lansing is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries. The City carries commercial insurance for claims relating to general liability, property, electronic data processing, boiler and machinery, police professional and errors and omissions. The City has not experienced settlements in excess of insurance coverage during the past three years. The City is uninsured for acts of nature and environmental clean-up costs. The City is self-funded for Blue Cross Blue Shield healthcare coverage for employees and retirees. The City maintains stop/loss coverage that limits its per-case exposure to $250,000. The City estimates healthcare claims that are incurred but not reported as of year-end, which is accounted for in the City's Fringe Benefits Internal Service Fund. Changes in the estimated liability were as follows: Fiscal Year Ended June 30, 2013 2012 Estimated liability, beginning of year $ 897,523 $ 1,402,760 Estimated claims incurred, including changes in estimates 11,130,338 12,051,055 Claim payments (11,213,847) (12,556,292) Estimated liability, end of year $ 814,014 $ 897,523 The City is self-insured for workers' compensation costs. The City estimates the liability for workers' compensation claims that have been incurred through the end of the fiscal year, including those claims that have been reported as well as those that have not yet been reported to the City. The current liability is accounted for in the general fund, with long term liabilities accounted for in the Statement of Net Position. The City has liability insurance coverage up to a maximum amount of $16,000,000 per occurrence with a $350,000 deductible. Changes in the estimated long-term liability as well as the total estimated cost of claims for the past two fiscal years were as follows: Fiscal Year Ended June 30, 2013 2012 Estimated liability, beginning of year $ 7,131,238 $ 6,861,277 Estimated claims incurred, including changes in estimates 1,118,901 1,454,736 Claim payments (1,264,077) (1,184,775) Estimated liability, end of year $ 6,986,062 $ 7,131,238 89 CITY OF LANSING, MICHIGAN Notes to Financial Statements 15. PROPERTY TAXES Property taxes attach as an enforceable lien on property as of the date they are levied. City, community college, and 50% of school taxes are levied and due July 1 and become delinquent after August 31. County taxes and the balance of school taxes are levied and due December 1 and become delinquent after February 14. In March, taxes on real property still delinquent are purchased by the County's tax revolving funds. Collections of community college, school, and county taxes and remittances are accounted for in the general fund. City property tax revenues are recognized in the fiscal year for which the taxes are levied to the extent that they result in current receivables (i.e., are collected within 60 days after fiscal year-end). The City is permitted by charter and state law to levy taxes up to $20.000 per $1,000 of assessed valuation for general operations other than the payment of principal and interest on long-term debt. The tax rate to finance general governmental services other than the payment of principal and interest on long-term debt for the year ended June 30, 2013 was $19.44 per $1,000 of taxable value. 16. CONTINGENT LIABILITIES Amounts received or receivable from grantor agencies are subject to audit and potential adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The government is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the government's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the government. 17. PENSION PLANS Employees'Retirement System The City sponsors and administers the Employees' Retirement System (the "Plan"), a single-employer, defined-benefit pension plan. It is accounted for as a separate pension trust fund. No stand-alone financial reports are issued. It covers general full-time employees of the City of Lansing and employees of the 54-A District Court. It does not include elected officials, who are members of the Employees' Money Purchase Pension Plan, nor does it include police officers and firefighters, who are members of a separate City pension plan. The payroll for employees covered by the plan for the year ended December 31, 2011, was $26,068,735; the City's total payroll was $51,197,570. Administration of the plan is funded through the general fund. 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements As of December 31, 2011, employee membership data was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 844 Active members: Vested 361 Nonvested 120 481 All members may retire at age 50 with 25 or more years of credited service, or age 58 with 8 or more years of credited service. Members are vested after completing 8 years of credited service. For all members, annual regular retirement allowances are determined by multiplying total credited service times 1.8% to 2.75% times final average compensation. Final average compensation is the member's highest wages for two consecutive years during the last 10 years. Retirement options that provide for survivor benefits are available to members. The plan also provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferring retirement benefits until age 58 or withdrawing their contribution, thereby forfeiting any future benefits. Active members contribute between 5.5% and 6.5% of wages as determined by individual labor agreements. Chapter 292 of the City of Lansing's Code of Ordinances establishes benefit provisions and requires that the annuity and pension reserves (which are determined annually by the City's actuary) not financed by member contributions shall be financed by annual appropriations. The City's funding policy provides for periodic employer contributions at actuarially determined rates that expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and amortization payment for the year ended June 30, 2013, was determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over a closed period of 30 years. Contributions are recognized when due pursuant to formal commitments, as well as statutory or contractual requirements. The fund is accounted for in essentially the same manner as the proprietary funds and uses the full accrual method of accounting. Plan valuation assets are equal to the reported market value of assets except that only 20% of the difference between the mark-to-market rate of return and the 7.8% actuarial rate of return is recognized each year. This five year smoothing method reduces the fluctuation in the City's computed contribution rate which might otherwise be caused by market value fluctuations. The entry-age actuarial cost method is used to determine plan liabilities. Significant actuarial assumptions used in determining the entry-age actuarial accrued liability include (a) a rate of return on investments of 7.8% per year compounded annually (b) projected salary increases of 3.56% to 5.37% per year (including 3.3% attributable to inflation) depending on age attributable to seniority/merit and (c) assumption that benefits generally will not increase after retirement. 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements During the year ended June 30, 2013, total contributions of $9,833,898 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of December 31, 2011. The City contributed $8,586,536 (32.94% of projected valuation payroll), excluding contributions for health insurance; employees contributed $1,247,364 (4.78% of projected valuation payroll). The City's contribution consisted of (a) $1,955,155 normal cost (7.5% of projected valuation payroll) and (b) $6,631,379 amortization of the unfunded actuarial accrued liability (25.44% of projected valuation payroll). At December 31, 2011, the unfunded actuarial accrued liability was determined as follows: Actuarial accrued liability for: Active participants (361 vested and 120 non-vested) $ 58,111,273 Retired participants and beneficiaries currently receiving benefits (844 recipients) 207,928,773 Vested terminated participants not yet receiving benefits (67) 5,507,600 Member benefit reserve 15,759,061 Total actuarial accrued liability 287,306,707 Actuarial value of assets (smoothed market value) 177,100,863 Unfunded actuarial accrued liability $ 110,205,844 Covered payroll $ 26,068,735 Unfunded actuarial accrued liability as a percentage of covered payroll 423% * Excluding reserve for health insurance Annual required contribution $ 8,586,536 Interest on net pension obligtion 4,907 Adjustment to annual required contribution (3,701) Annual net pension cost 8,587,742 Contributions made (8,586,536) Change in net pension obligation 1,206 Net pension obligation, beginning of year 62,909 Net pension obligation, end of year $ 64,115 The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. 92 CITY OF LANSING, MICHIGAN Notes to Financial Statements Three-Year Trend Information (amounts in thousands) Annual Net Pension Years Ended Pension Cost Percentage (Asset) June 30, (APC) Contributed Obligation 2011 $ 7,297 100% (10) 2012 7,597 99% 63 2013 8,588 100% 64 (1) The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by International United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. Police and Fire Retirement System The City sponsors and administers the Police and Fire Retirement System (the "Plan"), a single-employer defined-benefit pension plan. It is accounted for as a separate pension trust fund. No stand-alone financial reports are issued. It covers all police officers and firefighters who are full-time employees of the City. The City's payroll for employees covered by the plan for the year ended December 31, 2011, was $25,128,835, the City's total payroll was $51,197,570. Administration of the plan is funded through the general fund. As of December 31, 2011, employee membership data related to the plan was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 671 Active members: Vested 280 Nonvested 82 362 Members may retire at age 55, or at any age with 25 or more years of credited service. Members are vested after completing 10 years of credited service. Members are required to retire at age 60 (Police) or 70 (Fire). Annual retirement allowances are determined by multiplying final average compensation by 3.2% for the first 25 years of credited service. The maximum allowance is 80% of final average compensation. Final average compensation is the member's highest wages for 2 consecutive years. 93 CITY OF LANSING, MICHIGAN Notes to Financial Statements When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. The plan provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Fire members are required to contribute 9.08% of their annual wages to the plan. Police supervisors are required to contribute 9.52% and police non-supervisors, 8.50%. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City's actuary) not financed by member contributions shall be financed by annual appropriations. In addition to the payments under this plan, the City made payments from the general fund to provide benefits for the beneficiaries of a prior pension plan. This prior plan was superseded by the present plan as of January 1, 1944. There were no payments made to beneficiaries under that plan. The City's funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and amortization payment for the year ended June 30, 2013, was determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over a closed period of 30 years. Plan valuation assets are equal to the reported market value of assets except that only 20% of the difference between the mark-to-market rate of return and the 7.8% actuarial rate of return is recognized each year. This five year smoothing method reduces the fluctuation in the City's computed contribution rate which might otherwise be caused by market value fluctuations. The entry-age actuarial cost method is used to determine plan liabilities. Significant actuarial assumptions used in determining the entry-age actuarial accrued liability include (a) a rate of return on investments of 7.8% per year compounded annually (b) projected salary increases of 4.1% to 10.5% (including 3.3% attributable to inflation) depending on age attributable to seniority/merit and (c) assumption that benefits generally will not increase after retirement. During the year ended June 30, 2013, total contributions of $12,512,874 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of December 31, 2011. The City contributed $10,133,599 (40.33% of projected valuation payroll), excluding contributions for health insurance; employees contributed $2,379,275 (9.47% of projected valuation payroll). The City's contribution consisted of (a) $3,585,885 normal cost (14.27% of projected valuation payroll) and (b) $6,547,714 amortization of the unfunded actuarial accrued liability (26.06% of projected valuation payroll). 94 CITY OF LANSING, MICHIGAN Notes to Financial Statements At December 31, 2011, the actuarial accrued liability in excess of assets was determined as follows: Actuarial accrued liability for: Active participants (280 vested and 82 non-vested) $ 116,327,833 Retired participants and beneficiaries currently receiving benefits (671 recipients) 253,223,779 Vested terminated participants not yet receiving benefits (16) 2,995,898 Total actuarial accrued liability 372,547,510 Actuarial value of assets (smoothed market value) * 264,492,738 Unfunded actuarial accrued liability $ 108,054,772 Covered payroll $ 25,128,835 Unfunded actuarial accrued liability as a percentage of covered payroll 430% Excluding reserve for health insurance Annual required contribution $ 10,133,599 Interest on net pension obligation 13,700 Adjustment to annual required contribution (10,333) Annual net pension cost 10,136,966 Contributions made (10,133,599) Change in net pension obligation 3,367 Net pension obligation, beginning of year 175,646 Net pension obligation, end of year $ 179,013 Significant actuarial assumptions used to compute contribution requirements were the same as those used to compute the standardized measure of the actuarial accrual liability. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. 95 CITY OF LANSING, MICHIGAN Notes to Financial Statements Three-Year Trend Information (amounts in thousands) Annual Net Pension Years Ended Pension Cost Percentage (Asset) June 30, (APC) Contributed Obligation 2011 $ 8,240 100% (9) 2012 9,242 98% 176 2013 10,137 100% 179 (1) The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. Employees'Money Purchase Pension Plan The City of Lansing sponsors and contributes to the Employees' Money Purchase Pension Plan (the "Plan"), which is a single-employer defined - contribution pension plan. Administration of the plan is funded by the general fund. A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account and the returns earned on investments of those contributions. As established by Chapter 292.30 of the City of Lansing's Code of Ordinances, this plan includes all elected officials hired subsequent to September 20, 1990 and prior to July 1, 2009. The City contributes an amount equal to 6.0% of the employees' wages for retirement benefits. Contributions made by employees vest immediately, and contributions made by the City vest after three years of full-time employment. During the year, the City's required and actual contributions amounted to $16,692, which was approximately 6% of covered payroll of$278,197. There were no employee contributions. Also included are members of Teamsters local 214 hired subsequent to September 16, 2012. Employees are required to contribute 3% of their wages and the City contributes 3% of their wages for retirement benefits. Contributions made by employees vest immediately, and contributions made by the City vest after seven years of full-time employment. During the year, the City's required and actual contributions amounted to $398, which was approximately 3% of covered payroll of$13,279. The plan does not issue stand-alone financial statements. 96 CITY OF LANSING, MICHIGAN Notes to Financial Statements Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 13,145,701 $ $ 16,995,933 $ $ - $ $ 30,141,634 Investments: Money market funds 2,915,096 276,686 11,228,858 1,044,840 426,860 15,892,340 Government obligations 23,852,097 2,254,964 29,429,663 2,738,416 - 58,275,140 Corporate bonds 23,740,242 2,244,390 31,317,803 2,914,107 60,216,542 Common stocks 45,564,250 4,307,619 69,010,901 6,421,432 - 125,304,202 Mutualfunds 76,002,588 7,185,243 120,523,164 11,214,624 1,274,470 16,069,423 232,269,512 Contribution receivable - - - - 1,017 - 1,017 Dividends and interest receivable 215,055 - 280,914 - - 131,979 627,948 Total assets 185,435,029 16,268,902 278,787,236 24,333,419 1,702,347 16,201,402 522,728,335 Liabilities Accounts payable 4,233,253 - 3,388,311 - - - 7,621,564 Net position held in trust for Pension benefits 181,201,776 - 275,398,925 - 1,702,347 - 458,303,048 Other postem ployment benefits - 16,268,902 - 24,333,419 - 16,201,402 56,803,723 Total net position $ 181,201,776 $ 16,268,902 $ 275,398,925 $ 24,333,419 $ 1,702,347 $ 16,201,402 $ 515,106,771 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income: Net appreciation in fair value of investments $ 23,086,826 $ 860,170 $ 32,951,031 $ 5,477,607 $ - $ - $ 62,375,634 Interest income 3,882,842 - 4,304,204 - 202,506 1,450,879 9,840,431 Dividend income 961,807 1,481,411 - - 2,443,218 Investment expenses - - - (7,112) - (7,112) Net investment income 27,931,475 860,170 38,736,646 5,477,607 195,394 1,450,879 74,652,171 Contributions: Employer 8,586,536 10,147,780 10,133,599 11,170,202 17,090 700,000 40,755,207 Plan members 1,247,364 - 2,379,275 - - - 3,626,639 Total contributions 9,833,900 10,147,780 12,512,874 11,170,202 17,090 700,000 44,381,846 Total additions 37,765,375 11,007,950 51,249,520 16,647,809 212,484 2,150,879 119,034,017 Deductions Participant benefits 21,128,444 9,847,780 25,736,483 10,470,202 189,678 - 67,372,587 Administrative expense 755,916 - 1,075,804 - - 1,831,720 Total deductions 21,884,360 9,847,780 26,812,287 10,470,202 189,678 69,204,307 Net change in net position held in trust 15,881,015 1,160,170 24,437,233 6,177,607 22,806 2,150,879 49,829,710 Net position held in trust for pension and other postemployment benefits: Beginning of year 165,320,761 15,108,732 250,961,692 18,155,812 1,679,541 14,050,523 465,277,061 End of year $181,201,776 $ 16,268,902 $275,398,925 $ 24,333,419 $ 1,702,347 $ 16,201,402 $515,106,771 98 CITY OF LANSING, MICHIGAN Notes to Financial Statements 18. OTHER POSTEMPLOYMENT BENEFITS Primary Government Plan Description. The City of Lansing contributes to the Employees' Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees' Retirement System and the Police and Fire Retirement System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under the respective pension plans. OPEB plan provisions are established and may be amended by the City Council, subject to the City's various collective bargaining agreements. Separate financial statements are not prepared for the plans. Basis of Accounting. The Plans' financial statements are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period in which the contributions are due. Employer contributions are recognized when due and the employer has made a formal commitment to provide the contributions. Benefits and refunds are recognized when due and payable in accordance with the terms of the plans. Method Used to Value Investments. Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of each plans' board of trustees, with the assistance of a valuation service. Voluntary Employment Beneficiary Association(VEBA) The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit post employment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City's pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During the year, the City contributed $700,000 to the Plan. 99 CITY OF LANSING, MICHIGAN Notes to Financial Statements Employees'Retirement &1stem The City provides postemployment health care benefits, in accordance with labor agreements, to full- time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees' Retirement System are also eligible to receive health care benefits. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $96.40 per month for each covered retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Membership of the Plan consisted of the following at December 31, 2011, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 675 Terminated plan members entitled to but not yet receiving benefits 65 Active plan members 481 Total 1,221 During the year, the City contributed $10,147,780 (direct benefit payments of $9,147,780 and City contributions of$1,000,000) to the Plan. Annual required contribution $ 12,769,739 Interest on net OPEB obligation 57,507 Adjustment to annual required contribution (51,579) Net OPEB cost (expense) 12,775,667 Contributions made (10,147,780) Increase in net OPEB obligation 2,627,887 Net OPEB obligation, beginning of year 1,337,371 Net OPEB obligation, end of year $ 3,965,258 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Net OPEB Annual OPEB OPEB Cost (Asset) Year Ended Cost Contributed Obligation 2011 $ 8,819,018 110.8% $ (3,214,740) 2012 14,915,958 69.5% 1,337,371 2013 12,775,667 79.4% 3,965,258 100 CITY OF LANSING, MICHIGAN Notes to Financial Statements The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date, the Plan was 12.6 percent funded. The actuarial accrued liability for benefits was $226,915,143, and the actuarial value of assets was $28,680,151, resulting in an unfunded actuarial accrued liability (UAAL) of $198,234,992. The covered payroll (annual payroll of active employees covered by the Plan) was $24,813,423, and the ratio of the UAAL to the covered payroll was 798.9 percent. The Employees' Retirement System and VEBA were combined in the actuarial valuation. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2011 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.3 percent investment rate of return (net of administrative expenses), which includes a 3.3 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five- year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2011, was thirty years. 101 CITY OF LANSING, MICHIGAN Notes to Financial Statements Police and Fire Retirement &1stem The City also provides postemployment health care benefits, in accordance with labor agreements, to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $104.90 per month for each covered retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Membership of the Plan consisted of the following at December 31, 2011, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 478 Terminated plan members entitled to but not yet receiving benefits 16 Active plan members 362 Total 856 During the year, the City contributed $11,170,202 (direct benefit payments of $10,470,202 and City contributions of$700,000) to the Plan. Annual required contribution $ 17413,968 Interest on net OPEB obligation 1:183,511 Adjustment to annual required contribution (1,107,787) Net OPEB cost (expense) 17,489,692 Contributions made (11,170,202) Increase in net OPEB obligation 6,319,490 Net OPEB obligation, beginning of year 27,523,519 Net OPEB obligation, end of year $ 33,843,009 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Annual OPEB OPEB Cost Net OPEB Year Ended Cost Contributed Obligation 2011 $ 16,474,153 59.8% $ 27,523,519 2012 17,844,115 55.4% 27,523,519 2013 17,489,692 63.9% 33,843,009 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Funded Status and Funding Progress. As of December 31, 2011, the most recent actuarial valuation date, the Plan was 7.4 percent funded. The actuarial accrued liability for benefits was $252,220,445, and the actuarial value of assets was $18,678,699, resulting in an unfunded actuarial accrued liability (UAAL) of $233,541,746. The covered payroll (annual payroll of active employees covered by the Plan) was $25,128,835, and the ratio of the UAAL to the covered payroll was 929.4 percent. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2011 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 4.3 percent investment rate of return (net of administrative expenses), which includes a 3.0 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five- year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2011, was thirty years. 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements 19. ADOPTION OF NEW ACCOUNTING PRONOUCEMENT The City adopted the provisions of GASB Statement No. 63, Financial Reporting of Deferred Outflows of Resources, Deferred Inflows of Resources, and Net Position in the current year. Implementation established new account classifications, however the implementation of this standard had no effect on total equity. 20. SUBSEQUENT EVENT On September 12, 2013, the City signed an installment purchase agreement for the purchase of recycling trucks and carts for a total of $3,288,555. Payments are to be made semi-annually over a 9 year period, beginning on April 1, 2014. The agreement includes interest at a rate of 1.96 percent. ■ ■ ■ ■ ■ 104 REQUIRED SUPPLEMENTARY INFORMATION 105 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System (amounts in thousands) Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 208,765 $ 251,427 $ 42,662 83.0% $ 31,944 133.6% 12/31/2007 208,572 254,356 45,784 82.0% 31,797 144.0% 12/31/2008 200,600 258,331 57,731 77.7% 29,688 194.5% 12/31/2009 193,324 262,298 68,974 73.7% 30,602 225.4% 12/31/2010 187,441 269,462 82,021 69.6% 27,767 295.4% 12/31/2011 177,101 287,307 110,206 61.6% 26,069 422.7% Schedule of Employer Contributions Annual Required Year Ended Contribution Percentage June 30, (ARC) Contributed 2008 $ 6,022 100.0% 2009 6,048 105.0% 2010 6,472 93.4% " 2011 7,297 100.0% 2012 7,597 99.0% (2) 2013 8,587 100.0% (1) The City contributed in excess of its fiscal year 2009 ARC. The City's fiscal year 2010 contribution was reduced by the dollar amount of the fiscal year 2009 overpayment. (2) The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by International United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. 106 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System (amounts in thousands) Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 278,839 $ 308,193 $ 29,354 90.5% $ 29,582 99.2% 12/31/2007 293,571 315,635 22,064 93.0% 29,600 74.5% 12/31/2008 287,394 326,673 39,279 88.0% 30,161 130.2% 12/31/2009 280,342 337,315 56,973 83.1% 30,443 187.1% 12/31/2010 276,377 359,293 82,916 76.9% 28,536 290.6% 12/31/2011 264,493 372,548 108,055 71.0% 25,129 430.0% Schedule of Employer Contributions Annual Required Year Ended Contribution Percentage June 30, (ARC) Contributed 2008 $ 6,521 100.0% 2009 6,094 106.0% 2010 7,179 94.6% 2011 8,241 100.0% 2012 9,242 98.0% '2) 2013 10,134 100.0% (1) The City contributed in excess of its fiscal year 2009 ARC. The City's fiscal year 2010 contribution was reduced by the dollar amount of the fiscal year 2009 overpayment. (2) The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ARC from the December 31, 2010 valuation. 107 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefit Plans (amounts in thousands) Employees' Retirement System and VEBA- Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 14,337 $ 147,388 $ 133,051 9.7% $ 31,944 416.5% 12/31/2009 24,364 203,400 179,036 12.0% 30,602 585.0% 12/31/2011 28,680 226,915 198,235 12.6% 24,813 798.9% Police and Fire Retirement System - Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 $ 13,064 $ 155,559 $ 142,495 8.4% $ 29,582 481.7% 12/31/2009 17,477 214,899 197,422 8.1% 30,443 648.5% 12/31/2011 18,679 252,220 233,541 7.4% 25,129 929.4% Employees' Retirement System and VEBA- Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2011 $ 8,867 110.2% 2012 14,981 69.2% 2013 12,770 79.5% Police and Fire Retirement System - Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2011 $ 16,202 60.8% 2012 17,450 56.7% 2013 17,414 64.1 108 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 109 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2013 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 62,577 $ - $ 587,919 $ - $ 650,496 Equity in pooled cash 3,664,645 178 1,083,851 1,702,945 6,451,619 Investments - - 425,957 - 425,957 Accounts receivable, net 14,775 139,437 154,212 Special assessments receivable - 607,881 607,881 Loans receivable 1,385,000 - 1,385,000 Accrued interest receivable 2,078,617 - 2,078,617 Due from other funds 1,500,000 2,807,416 4,307,416 Due from other governments 1,811,473 1,070 1,812,543 Inventories 966,331 - 966,331 Prepaids 1,875 - - 1,875 Total assets $ 11,485,293 $ 178 $ 5,653,531 $ 1,702,945 $ 18,841,947 Liabilities Accounts payable $ 974,639 $ - $ 234,315 $ - $ 1,208,954 Deposits payable 87,134 - 87,134 Accrued payroll 34,446 34,446 Indemnity bonds 5,050 - 5,050 Due to other funds 1,430,000 1,007,567 2,437,567 Interfund payable - 6,309 6,309 Advances from other funds - 469,327 469,327 Due to other governments 346,316 - 346,316 Deferred revenue 3,263,617 542,370 3,805,987 Total liabilities 6,141,202 2,259,888 - 8,401,090 Fund balances Nonspendable 968,206 - - 1,702,945 2,671,151 Restricted 4,108,997 178 245,317 - 4,354,492 Committed 466,888 - 3,568,257 4,035,145 Unassigned (deficit) (200,000) (419,931) - (619,931) Total fund balances 5,344,091 178 3,393,643 1,702,945 10,440,857 Total liabilities and fund balances $ 11,485,293 $ 178 $ 5,653,531 $ 1,702,945 $ 18,841,947 110 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2013 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Taxes and special assessments $ 407,264 $ 522,739 $ 74,875 $ $ 1,004,878 Intergovernmental 10,611,793 - - 10,611,793 Charges for services 2,879,021 564,945 3,443,966 Fines and forfeits 1,242,227 - 1,242,227 Interest - 11,496 5,211 16,707 Contributions 10,000 - - 10,000 Otherrevenues 423,746 - - 423,746 Total revenues 15,574,051 522,739 651,316 5,211 16,753,317 Expenditures Current expenditures: General government 2,664,875 - - - 2,664,875 Public safety 1,943,232 1,943,232 Highways and streets 9,937,423 9,937,423 Recreation and culture 235 - 235 Debt service: Principal 1,325,834 620,000 1,945,834 Interest 653,166 162,806 - 815,972 Capital outlay 3,149,263 - 2,340,354 5,489,617 Total expenditures 19,674,028 782,806 2,340,354 - 22,797,188 Revenues over (under) expenditures (4,099,977) (260,067) (1,689,038) 5,211 (6,043,871) Other financing sources (uses) Transfers in 3,842,454 260,245 2,289,174 19,652 6,411,525 Transfers out (613,336) - (1,424,344) (5,211) (2,042,891) Issuance of long-term debt - - 147,046 - 147,046 Total other financing sources (uses) 3,229,118 260,245 1,011,876 14,441 4,515,680 Net change in fund balances (870,859) 178 (677,162) 19,652 (1,528,191) Fund balances, beginning of year 6,214,950 - 4,070,805 1,683,293 11,969,048 Fund balances, end of year $ 5,344,091 $ 178 $ 3,393,643 $ 1,702,945 $ 10,440,857 111 This page intentionally left blank. 112 CITY OF LANSING, MICHIGAN Nonmajor Special Revenue Funds Major Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of major streets. Local Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of local streets. Drug Law Enforcement Fund - This fund accounts for revenues set aside for drug law enforcement under the provisions of State of Michigan Public Act 135 of 1985, as amended. Community Development Block Grant Program Fund - This fund accounts for revenues received from the Department of Housing and Urban Development. These revenues are restricted to accomplishing the various objectives of Community Development Block Grant Programs, within specific target areas. Downtown Lansing, Inc. Fund - This fund accounts for assessments received from businesses located in the district. The revenues are used for special events and maintenance of the district. Building Department Fund - This fund accounts for revenues and expenditures resulting from the enforcement of the State Construction Code Act of 1999 (PA 245 of 1999). Parks Department Fund - This fund accounts for contributions and transfers which are restricted for park expenditures. Tri-County Metro Fund - This fund accounts for the operations of the Tri-County Metro Narcotics Squad. 113 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2013 Community Development Major Local Drug Law Block Grant Downtown Streets Streets Enforcement Program Lansing, Inc. Assets Cash and cash equivalents $ - $ - $ 20,000 $ - $ Equity in pooled cash 974,248 647,413 58,597 143,886 21,490 Accounts receivable, net - - 7,210 - - Loans receivable - 1,385,000 Accrued interest receivable - 2,078,617 Due from other funds 1,500,000 - - Due from other governments 1,119,952 305,076 342,950 Inventories 966,331 - - - Prepaids - - - - 1,275 Total assets $ 4,560,531 $ 952,489 $ 85,807 $ 3,950,453 $ 22,765 Liabilities Accounts payable $ 646,298 $ 68,878 $ 71,489 $ 81,663 $ 6,006 Deposits payable - - - - - Accrued payroll - 14,318 5,173 2,899 Indemnity bonds 5,050 - - - - Due to other funds - 630,000 600,000 Due to other governments - - Deferred revenue - - - 3,263,617 - Total liabilities 651,348 698,878 85,807 3,950,453 8,905 Fund balances Nonspendable 966,331 - - - 1,275 Restricted 2,942,852 253,611 200,000 12,585 Committed - - - - Unassigned (deficit) - - (200,000) - Total fund balances 3,909,183 253,611 - - 13,860 Total liabilities and fund balances $ 4,560,531 $ 952,489 $ 85,807 $ 3,950,453 $ 22,765 114 Building Parks Tri-County Department Department Metro Totals $ - $ - $ 42,577 $ 62,577 205,984 466,888 1,146,139 3,664,645 7,565 - - 14,775 - 1,385,000 2,078,617 - 1,500,000 43,495 1,811,473 - - 966,331 600 - - 1,875 $ 214,149 $ 466,888 $ 1,232,211 $ 11,485,293 $ 1,816 $ - $ 98,489 $ 974,639 - 87,134 87,134 11,733 323 34,446 - - 5,050 200,000 - 1,430,000 - 346,316 346,316 - - 3,263,617 213,549 532,262 6,141,202 600 - 968,206 - - 699,949 4,108,997 466,888 - 466,888 - - - (200,000) 600 466,888 699,949 5,344,091 $ 214,149 $ 466,888 $ 1,232,211 $ 11,485,293 115 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2013 Community Development Major Local Drug Law Block Grant Downtown Streets Streets Enforcement Program Lansing, Inc. Revenues Taxes and special assessments $ - $ - $ $ - $ 407,264 Intergovernmental 7,322,425 1,842,536 679,929 - Charges for services 579,627 565,654 - 5,120 Fines and forfeits - - 1,019,089 - Contributions - - - - 10,000 Otherrevenues 172,117 68 - 69,870 181,691 Total revenues 8,074,169 2,408,258 1,019,089 749,799 604,075 Expenditures Current expenditures: General government - - - - 650,661 Public safety - - 918,655 - Highways and streets 5,839,266 4,098,157 - Recreation and culture - - Debt service: Principal 444,234 881,600 Interest 169,309 483,857 - Capitaloutlay 1,988,165 411,299 - 749,799 - Total expenditures 8,440,974 5,874,913 918,655 749,799 650,661 Revenues over (under) expenditures (366,805) (3,466,655) 100,434 - (46,586) Other financing sources (uses) Transfers in 266,951 3,224,441 - 39,180 Transfers out (587,648) - (25,688) - Total other financing sources (uses) (320,697) 3,224,441 (25,688) 39,180 Net change in fund balances (687,502) (242,214) 74,746 (7,406) Fund balances (deficit), beginning of year 4,596,685 495,825 (74,746) 21,266 Fund balances, end of year $ 3,909,183 $ 253,611 $ - $ $ 13,860 116 Building Parks Tri-County Department Department Metro Totals $ $ $ - $ 407,264 766,903 10,611,793 1,728,620 - 2,879,021 - 223,138 1,242,227 - 10,000 - - 423,746 1,728,620 990,041 15,574,051 2,014,214 - 2,664,875 - 1,024,577 1,943,232 - 9,937,423 235 235 - 1,325,834 653,166 - - - 3,149,263 2,014,214 235 1,024,577 19,674,028 (285,594) (235) (34,536) (4,099,977) 286,194 - 25,688 3,842,454 - - (613,336) 286,194 - 25,688 3,229,118 600 (235) (8,848) (870,859) - 467,123 708,797 6,214,950 $ 600 $ 466,888 $ 699,949 $ 5,344,091 117 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2013 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ - Intergovernmental 7,299,600 7,322,425 22,825 Charges for services 390,600 579,627 189,027 Fines and forfeits - - - Contributions - - - Otherrevenues 90,000 172,117 82,117 Total revenues 7,780,200 8,074,169 293,969 Expenditures Current expenditures: General government - - - Public safety - - Highways and streets 5,888,160 5,839,266 (48,894) Recreation and culture - - Debt service: Principal 444,234 444,234 - Interest 165,569 169,309 3,740 Capital outlay 3,826,977 1,988,165 (1,838,812) Total expenditures 10,324,940 8,440,974 (1,883,966) Revenues over (under) expenditures (2,544,740) (366,805) 2,177,935 Other financing sources (uses) Transfers in 360,642 266,951 (93,691) Transfers out (637,648) (587,648) 50,000 Total other financing sources (uses) (277,006) (320,697) (43,691) Net change in fund balances (2,821,745) (687,502) 2,134,243 Fund balances (deficit), beginning of year 4,596,685 4,596,685 - Fund balances, end of year $ 1,774,940 $ 3,909,183 $ 2,134,243 118 Local Streets Drug Law Enforcement Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 2,832,809 1,842,536 (990,273) 346,054 565,654 219,600 - - - - - 1,149,500 1,019,089 (130,411) 2,000 68 (1,932) - - 3,180,863 2,408,258 (772,605) 1,149,500 1,019,089 (130,411) - - 838,201 918,655 80,454 4,579,070 4,098,157 (480,913) - - - 881,600 881,600 - 475,608 483,857 8,249 716,113 411,299 (304,814) - - - 6,652,391 5,874,913 (777,478) 838,201 918,655 80,454 (3,471,528) (3,466,655) 4,873 311,299 100,434 (210,865) 3,275,713 3,224,441 (51,272) - - - - (25,688) (25,688) 3,275,713 3,224,441 (51,272) (25,688) (25,688) (195,815) (242,214) (46,399) 285,611 74,746 (210,865) 495,825 495,825 (74,746) (74,746) $ 300,010 $ 253,611 $ (46,399) $ 210,865 $ $ (210,865) continued... 119 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2013 Community Development Block Grant Program Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental 4,283,985 679,929 (3,604,056) Charges for services - - Fines and forfeits Contributions - - Otherrevenues (250,370) 69,870 320,240 Total revenues 4,033,615 749,799 (3,283,816) Expenditures Current expenditures: General government - - Public safety Highways and streets Recreation and culture Debt service: Principal Interest - - Capital outlay 4,033,615 749,799 (3,283,816) Total expenditures 4,033,615 749,799 (3,283,816) Revenues over (under) expenditures - - Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances Fui Fund balances (deficit), beginning of year Fu Fund balances, end of year $ $ $ 120 Downtown Lansing, Inc. Building Department Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ 395,000 $ 407,264 $ 12,264 $ $ $ 4,800 5,120 320 1,921,343 1,728,620 (192,723) 10,000 10,000 197,955 181,691 (16,264) - 607,755 604,075 (3,680) 1,921,343 1,728,620 (192,723) 668,118 650,661 (17,457) 2,114,500 2,014,214 (100,286) 668,118 650,661 (17,457) 2,114,500 2,014,214 (100,286) (60,363) (46,586) 13,777 (193,157) (285,594) (92,437) 39,180 39,180 - 193,157 286,194 93,037 39,180 39,180 193,157 286,194 93,037 (21,183) (7,406) 13,777 600 600 21,266 21,266 - - - $ 83 $ 13,860 $ 13,777 $ $ 600 $ 600 continued... 121 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2013 Parks Department _ Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services Fines and forfeits Contributions Otherrevenues Total revenues Expenditures Current expenditures: General government Public safety Highways and streets Recreation and culture 41,175 235 (40,940) Debt service: Principal - - Interest Capital outlay - - Total expenditures 41,175 235 (40,940) Revenues over (under) expenditures (41,175) (235) 40,940 Other financing sources (uses) Transfers in - - Transfers out Total other financing sources (uses) - - Net change in fund balances (41,175) (235) 40,940 Fund balances (deficit), beginning of year 467,123 467,123 - Fund balances, end of year $ 425,948 $ 466,888 $ 40,940 122 Tri-County Metro Totals Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ - $ - $ $ 395,000 $ 407,264 $ 12,264 584,927 766,903 181,976 15,001,321 10,611,793 (4,389,528) - - - 2,662,797 2,879,021 216,224 200,000 223,138 23,138 1,349,500 1,242,227 (107,273) - - - 10,000 10,000 - - - 39,585 423,746 384,161 784,927 990,041 205,114 19,458,202 15,574,051 (3,884,151) - - - 2,782,618 2,664,875 (117,743) 780,214 1,024,577 244,363 1,618,415 1,943,232 324,817 - - - 10,467,230 9,937,423 (529,807) 41,175 235 (40,940) 1,325,834 1,325,834 - 641,177 653,166 11,989 - - - 8,576,704 3,149,263 (5,427,441) 780,214 1,024,577 244,363 25,453,153 19,674,028 (5,779,125) 4,713 (34,536) (39,249) (5,994,951) (4,099,977) 1,894,974 25,688 25,688 3,894,380 3,842,454 (51,926) - - (663,336) (613,336) 50,000 25,688 25,688 37231,044 3,229,118 (1,926) 30,401 (8,848) (39,249) (2,763,906) (870,859) 1,893,047 708,797 708,797 6,214,950 6,214,950 - $ 739,198 $ 699,949 $ (39,249) $ 3,451,044 $ 5,344,091 $ 1,893,047 concluded 123 This page intentionally left blank. 124 CITY OF LANSING, MICHIGAN Nonmajor Debt Service Funds 1998 Building Authority Fund - This fund accounts for the accumulation of resources for payment of the 1998 $2,175,000 Building Authority Bonds. 1999 Fire Station Fund - This fund accounts for the accumulation of resources for payment of the 1999 $3,000,000 Unlimited Tax General Obligation Bonds. 2001 Fire Station Fund - This fund accounts for the accumulation of resources for the payment of the 2001 $4,000,000 Unlimited Tax General Obligation Bonds. 125 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2013 1998 1999 2001 Building Fire Fire Authority Station Station Totals Assets Equity in pooled cash $ $ 178 $ $ 178 Fund balances Restricted $ $ 178 $ $ 178 126 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2013 1998 1999 2001 Building Fire Fire Authority Station Station Totals Revenues Taxes and special assessments $ - $ 244,042 $ 278,697 $ 522,739 Expenditures Debt service: Principal 130,000 180,000 310,000 620,000 Interest 41,300 63,864 57,642 162,806 Total expenditures 171,300 243,864 367,642 782,806 Revenues over (under) expenditures (171,300) 178 (88,945) (260,067) Other financing sources Transfers in 171,300 - 88,945 260,245 Net change in fund balances - 178 - 178 Fund balances, beginning of year - - Fund balances, end of year $ $ 178 $ $ 178 127 This page intentionally left blank. 128 CITY OF LANSING, MICHIGAN Nonmajor Capital Projects Funds 1990 Environmental 1 Fund - This fund accounts for the proceeds of the 1990 $7,000,000 environmental bonds. 1990 Environmental 11 Fund - This fund accounts for the proceeds of the 1990 $6,300,000 environmental bonds. Special Assessments Fund - This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Lansing Center Improvements Fund - This fund accounts for the proceeds of the 2006 $4,000,000 Lansing Center limited tax bonds. MTF Bonds Fund - This fund accounts for the proceeds of the $1,600,000 Michigan Transportation Fund limited tax bonds. 2009 Build America Construction Fund - This fund accounts for the proceeds of the 2009 $10,197,000 capital improvement limited tax general obligation bonds. Other Capital Projects Fund - This fund accounts for miscellaneous capital projects. 129 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2013 1990 1990 Lansing Environ- Environ- Special Center mental mentalll Assessments Improvements Assets Cash and cash equivalents $ - $ - $ $ - Equity in pooled cash 382 175,406 141,144 Investments - - - Accounts receivable, net Special assessments receivable: Current 65,511 Deferred 542,370 Due from other funds - Due from other governments - - 1,070 - Total assets $ 382 $ 175,406 $ 608,951 $ 141,144 Liabilities Accounts payable $ $ 4,714 $ 17,185 $ 66,901 Due to other funds - - - Interfund payables - Advance from other funds 469,327 Deferred revenue - 542,370 - Total liabilities 4,714 1,028,882 66,901 Fund balances Restricted 382 170,692 - 74,243 Committed - - - Unassigned (deficit) - - (419,931) - Total fund balances (deficit) 382 170,692 (419,931) 74,243 Total liabilities and fund balances $ 382 $ 175,406 $ 608,951 $ 141,144 130 2009 Build MTF America Bonds Construction Other Totals $ 587,919 $ $ - $ 587,919 - 766,919 1,083,851 425,957 - 425,957 - 139,437 139,437 - 65,511 - 542,370 2,807,416 2,807,416 - - - 1,070 $ 587,919 $ 425,957 $ 3,713,772 $ 5,653,531 $ $ - $ 145,515 $ 234,315 587,919 419,648 - 1,007,567 - 6,309 6,309 - 469,327 - - - 542,370 587,919 425,957 145,515 2,259,888 - - - 245,317 3,568,257 3,568,257 - (419,931) - - 3,568,257 3,393,643 $ 587,919 $ 425,957 $ 3,713,772 $ 5,653,531 131 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2013 1990 1990 Lansing Environ- Environ- Special Center mental mental11 Assessments Improvements Revenues Special assessments $ $ $ 74,875 $ Charges for services - Interest - Total revenues 74,875 - Expenditures Capital outlay 764 5,643 25,778 71,780 Revenues over (under) expenditures (764) (5,643) 49,097 (71,780) Other financing sources (uses) Transfers in - - Transfers out Issuance of long-term debt Total other financing sources (uses) - - Net change in fund balances (764) (5,643) 49,097 (71,780) Fund balances (deficit), beginning of year 1,146 176,335 (469,028) 146,023 Fund balances (deficit), end of year $ 382 $ 170,692 $ (419,931) $ 74,243 132 2009 MTF Build America Bonds Construction Other Totals $ $ $ - $ 74,875 564,945 564,945 893 850 9,753 11,496 893 850 574,698 651,316 - - 2,236,389 2,340,354 893 850 (1,661,691) (1,689,038) 18 - 2,289,156 2,289,174 (265,679) (310,403) (848,262) (1,424,344) 147,046 147,046 (265,661) (310,403) 1,587,940 1,011,876 (264,768) (309,553) (73,751) (677,162) 264,768 309,553 3,642,008 4,070,805 $ $ - $ 3,568,257 $ 3,393,643 133 This page intentionally left blank. 134 CITY OF LANSING, MICHIGAN Nonmajor Permanent Funds Cemetery Perpetual Care Fund - This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested, and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund - This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. 135 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2013 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash $ 1,701,694 $ 1,251 $ 1,702,945 Fund balances Nonspendable $ 1,701,694 $ 1,251 $ 1,702,945 136 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2013 Cemetery Perpetual Parks Care Trust Totals Revenues Interest $ 5,211 $ $ 5,211 Other financing sources (uses) Transfers in 19,652 19,652 Transfers out (5,211) (5,211) Total other financing sources (uses) 14,441 14,441 Net change in fund balances 19,652 19,652 Fund balances, beginning of year 1,682,042 1,251 1,683,293 Fund balances, end of year $ 1,701,694 $ 1,251 $ 1,702,945 137 This page intentionally left blank. 138 CITY OF LANSING, MICHIGAN Nonmajor Enterprise Funds Cemetery Fund - This fund accounts for the operation of City-owned cemeteries. Golf Fund - This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund - This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund - This fund accounts for the provision of recycling services to participating residents of the City. 139 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2013 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash 120,348 167,500 615,624 1,184,098 2,087,570 Accounts receivable, net - 2,070 41,313 - 43,383 Inventories 63,216 7,087 16,873 - 87,176 Total current assets 183,764 176,957 673,810 1,184,098 2,218,629 Noncurrent assets: Bond issue costs, net - 3,292 - - 3,292 Capital assets not being depreciated 57,740 446,501 504,241 Capital assets being depreciated, net 160,894 2,200,698 2,361,592 Total noncurrent assets 218,634 2,650,491 - - 2,869,125 Total assets 402,398 2,827,448 673,810 1,184,098 5,087,754 Liabilities Current liabilities: Accounts payable 54,888 8,903 21,550 37,487 122,828 Deposits payable - - 4,410 - 4,410 Accrued interest payable - 810 - 810 Accrued payroll 727 13,664 - 14,391 Due to other funds - 75,271 500,000 575,271 Unearned revenues 30,110 34,554 64,664 Current portion of: Bonds and notes payable - 100,000 - - 100,000 Total current liabilities 55,615 228,758 560,514 37,487 882,374 Noncurrent liabilities: Bonds and notes payable, net of current portion - 295,212 - - 295,212 Compensated absences, net of current portion 30,069 512491 46,741 97,945 226,246 Total noncurrent liabilities 30,069 346,703 46,741 97,945 521,458 Total liabilities 85,684 575,461 607,255 135,432 1,403,832 Net position Net investment in capital assets 218,634 2,251,987 - - 2,470,621 Unrestricted 98,080 - 66,555 1,048,666 1,213,301 Total net position $ 316,714 $ 2,251,987 $ 66,555 $ 1,048,666 $ 3,683,922 140 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Position Nonmajor Enterprise Funds For the Year Ended June 30, 2013 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 314,913 $ 373,000 $ 1,131,659 $ 3,434,622 $ 5,254,194 Operating expenses Personal services 413,405 444,536 830,219 1,686,273 3,374,433 Contractual and materials 203,456 325,892 727,471 1,255,843 2,512,662 Depreciation 16,189 92,092 - - 108,281 Total operating expenses 633,050 862,520 1,557,690 2,942,116 5,995,376 Operating income (loss) (318,137) (489,520) (426,031) 492,506 (741,182) Nonoperating expenses Interest revenue 12,213 - 12,213 Capital transfer out - - (707,145) (707,145) Interest expense and fees (26,305) (18) (1,031) (27,354) Total nonoperating revenues (expenses) (14,092) (18) (708,176) (722,286) Income (loss) before transfers (318,137) (503,612) (426,049) (215,670) (1,463,468) Transfers in 419,680 483,089 250,000 1,152,769 Transfers out (19,652) - - (250,000) (269,652) Change in net position 81,891 (20,523) (176,049) (465,670) (580,351) Net position, beginning of year 234,823 2,272,510 242,604 1,514,336 4,264,273 Net position, end of year $ 316,714 $ 2,251,987 $ 66,555 $ 1,048,666 $ 3,683,922 141 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2013 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 314,913 $ 370,930 $ 1,607,871 $ 3,459,935 $ 5,753,649 Cash payments for goods and services (238,593) (247,082) (451,440) (1,284,583) (2,221,698) Cash payments to employees (413,561) (444,042) (830,219) (1,686,273) (3,374,095) Net cash provided by (used in) operating activities (337,241) (320,194) 326,212 489,079 157,856 Cash flows from noncapital financing activities Transfers in 419,680 483,089 250,000 - 1,152,769 Transfers out (19,652) - - (250,000) (269,652) Net cash provided by (used in) noncapital financing activities 400,028 483,089 250,000 (250,000) 883,117 Cash flows from capital and related financing activities Amount paid to refunding bond escrow agent (401,037) (401,037) Bond proceeds 405,000 405,000 Principal paid on bonds (85,000) - (85,000) Interest paid on bonds (27,281) (18) (1,031) (28,330) Net cash used in capital and related financing activities (108,318) (18) (1,031) (109,367) Cash flows from investing activities Interest and dividends received - 12,213 - - 12,213 Net change in cash and cash equivalents 62,787 66,790 576,194 238,048 943,819 Cash and cash equivalents: Beginning of year 57,761 101,010 39,430 946,050 1,144,251 End of year $ 120,548 $ 167,800 $ 615,624 $ 1,184,098 $ 2,088,070 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash 120,348 167,500 615,624 1,184,098 2,087,570 $ 120,548 $ 167,800 $ 615,624 $ 1,184,098 $ 2,088,070 continued... 142 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2013 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Reconciliation of operating income (loss) to net cash provided by (used in) operating activities Operating income (loss) $ (318,137) $ (489,520) $ (426,031) $ 492,506 $ (741,182) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation expense 16,189 92,092 - - 108,281 Changes in assets and liabilities: Accounts receivable - (2,070) 476,212 25,313 499,455 Inventories 12,101 (4,238) 33,181 - 41,044 Accounts payable 53,308 6,772 (3,273) (26,962) 29,845 Deposits payable - - 4,410 4,410 Accrued interest payable - (5,915) - (5,915) Accrued payroll (156) 494 - 338 Due to other funds (100,000) 75,271 300,000 275,271 Unearned revenues - 2,717 (57,438) (54,721) Compensated absences (546) 4,203 (849) (1,778) 1,030 Net cash provided by (used in) operating activities $ (337,241) $ (320,194) $ 326,212 $ 489,079 $ 157,856 concluded Non-cash transactions The Recycling fund made a non-cash capital contribution out of$707,145 for the year ended June 30, 2013. 143 This page intentionally left blank. 144 CITY OF LANSING, MICHIGAN Internal Service Funds Fleet Maintenance Fund - This fund accounts for the costs of maintaining the City's fleet of vehicles and heavy equipment. Fringe Benefits Fund - This fund accounts for the costs of the City's fringe benefits. Engineering Fund - This fund accounts for the operations of the City's engineering department. 145 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2013 Fleet Fringe Maintenance Benefits Engineering Totals Assets Current assets: Equity in pooled cash $ 1,760,762 $ 47,239 $ 878,557 $ 2,686,558 Accounts receivable, net - 437,962 - 437,962 Due from other funds - 950,244 950,244 Inventories 843,718 - 843,718 Prepaids - 406,615 - 406,615 Total current assets 2,604,480 1,842,060 878,557 5,325,097 Noncurrent assets: Restricted cash and cash equivalents 1,892,538 - - 1,892,538 Bond issuance costs, net 48,608 4,122 52,730 Capital assets not being depreciated 4,778,135 - 4,778,135 Capital assets being depreciated, net 3,681,750 1,742,627 5,424,377 Total noncurrent assets 10,401,031 1,746,749 12,147,780 Total assets 13,005,511 1,842,060 2,625,306 17,472,877 Liabilities Current liabilities: Accounts payable 892,773 948,668 286 1,841,727 Accrued interest payable 18,154 - 18,954 37,108 Accrued payroll 37,779 3,461 23,322 64,562 Claims incurred but not reported - 814,014 - 814,014 Due to other funds 1,500,000 - - 1,500,000 Current portion of: Bonds and notes payable 513,702 155,000 668,702 Compensated absences 69,568 - - 69,568 Total current liabilities 3,031,976 1,766,143 197,562 4,995,681 Noncurrent liabilities: Bonds and notes payable, net of current portion 4,415,492 - 299,682 4,715,174 Compensated absences, net of current portion 120,182 48,114 467,706 636,002 Total noncurrent liabilities 4,535,674 48,114 767,388 5,351,176 Total liabilities 7,567,650 1,814,257 964,950 10,346,857 Net position Net investment in capital assets 3,530,691 - 1,287,945 4,818,636 Restricted for debt retirement 1,892,538 - - 1,892,538 Unrestricted 14,632 27,803 372,411 414,846 Total net position $ 5,437,861 $ 27,803 $ 1,660,356 $ 7,126,020 146 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Position Internal Service Funds For the Year Ended June 30, 2013 Fleet Fringe Maintenance Benefits Engineering Totals Operating revenues Charges for services $ 6,427,619 $ 57,466,812 $ 3,608,338 $ 67,502,769 Operating expenses Personal services 2,926,873 263,956 2,673,787 5,864,616 Purchase of goods and services 3,058,815 57,175,053 362,009 60,595,877 Depreciation 1,337,143 - 44,667 1,381,810 Total operating expenses 7,322,831 57,439,009 3,080,463 67,842,303 Operating income (loss) (895,212) 27,803 527,875 (339,534) Nonoperating revenues (expenses) Interest revenue 5,409 - - 5,409 Loss on sale of capital assets (583,364) (583,364) Interest expense and fees (118,131) (35,659) (153,790) Total nonoperating revenues (expenses) (696,086) - (35,659) (731,745) Income (loss) before contributions and transfers (1,591,298) 27,803 492,216 (1,071,279) Capital contributions 854,188 - - 854,188 Transfers in 252,400 - - 252,400 Change in net position (484,710) 27,803 492,216 35,309 Net position, beginning of year 5,922,571 - 1,168,140 7,090,711 Net position, end of year $ 5,437,861 $ 27,803 $ 1,660,356 $ 7,126,020 147 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2013 Fleet Fringe Maintenance Benefits Engineering Totals Cash flows from operating activities Cash received from interfund services $ 6,427,619 $ 58,273,280 $ 3,608,338 $ 68,309,237 Cash payments for goods and services (1,157,069) (58,005,811) (340,500) (59,503,380) Cash payments to employees (2,926,026) (263,956) (2,675,040) (5,865,022) Net cash provided by operating activities 2,344,524 3,513 592,798 2,940,835 Cash flows from noncapital financing activities Transfers in 252,400 - - 252,400 Cash flows from capital and related financing activities Proceeds on sale of capital assets 185,659 185,659 Acquisition and construction of capital assets (4,776,585) (9,154) (4,785,739) Amount paid to refunding bond escrow agent (462,038) (462,038) Principal paid (135,000) (160,000) (295,000) Interest paid (113,617) (35,664) (149,281) Loan proceeds 1,892,332 - 1,892,332 Bond proceeds - 465,000 465,000 Net cash used in capital and related financing activities (2,947,211) (201,856) (3,149,067) Cash flows from investing activities Interest and dividends received 5,409 - - 5,409 Net change in cash and cash equivalents (344,878) 3,513 390,942 49,577 Cash and cash equivalents, beginning of year 3,998,178 43,726 487,615 4,529,519 Cash and cash equivalents, end of year $ 3,653,300 $ 47,239 $ 878,557 $ 4,579,096 Reconciliation to statement of net position Equity in pooled cash $ 1,760,762 $ 47,239 $ 878,557 $ 2,686,558 Restricted cash and cash equivalents 1,892,538 - - 1,892,538 $ 3,653,300 $ 47,239 $ 878,557 $ 4,579,096 continued... 148 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2013 Fleet Fringe Maintenance Benefits Engineering Totals Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ (895,212) $ 27,803 $ 527,875 $ (339,534) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation expense 1,337,143 - 44,667 1,381,810 Change in assets and liabilities: Accounts receivable - 1,756,712 - 1,756,712 Due from other funds - (950,244) (950,244) Inventories 60,353 - 60,353 Prepaids - 97,601 - 97,601 Accounts payable 403,503 (275,280) (44) 128,179 Accrued interest payable - - 8,076 8,076 Accrued payroll 847 232 (1,253) (174) Claims incurred but not reported - (83,509) (83,509) Due to other funds 1,500,000 (599,756) - 900,244 Compensated absences (62,110) 29,954 13,477 (18,679) Net cash provided by operating activities $ 2,344,524 $ 3,513 $ 592,798 $ 2,940,835 concluded Non-cash transactions The Fleet Maintenance fund received non-cash capital contributions of $854,188 for the year ended June 30, 2013, including $707,145 from business-type activities and $147,043 from other governmental funds. 149 This page intentionally left blank. 150 CITY OF LANSING, MICHIGAN Agency Funds Bail Bonds Fund - This fund is used to hold cash received by the District Court for bail bonds. Garnishment, Indemnity Bond and Restitution Fund - This fund is used to hold cash received by the District Court for garnishment payments until claimed, and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. 151 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2013 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash $ 63,131 $ 31,395 $ 94,526 Liabilities Undistributed receipts $ 63,131 $ 31,395 $ 94,526 152 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2013 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash $ 46,676 $ 290,970 $ 274,515 $ 63,131 Liabilities Undistributed receipts $ 46,676 $ 290,970 $ 274,515 $ 63,131 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash $ 12,487 $ 184,587 $ 165,679 $ 31,395 Liabilities Undistributed receipts $ 12,487 $ 184,587 $ 165,679 $ 31,395 Total - all agency funds Assets Equity in pooled cash $ 59,163 $ 475,557 $ 440,194 $ 94,526 Liabilities Undistributed receipts $ 59,163 $ 475,557 $ 440,194 $ 94,526 153 This page intentionally left blank. 154 STATISTICAL SECTION 155 CITY OF LANSING, MICHIGAN Statistical Section Table of Contents This part of the City of Lansing, Michigan's (the "City") comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page Financial Trends These schedules contain trend information to help the reader understand how the City's financial performance and well-being have changed over time. 157 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property taxes. 162 Debt Capacity These schedules present information to help the reader assess the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 166 Demographic and These schedules offer demographic and economic indicators to Economic Information help the reader understand the environment within which the City's financial activities take place and to help make comparisons over time and with other governments. 171 Operating Information These schedules contain information about the City's operations and resources to help the reader understand how the City's financial information relates to the services the City provides and the activities it performs. 173 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 156 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Assets/Net Position by Component Last Ten Fiscal Years 1 2013" 2012 2007 1 (2) Governmental activities Net investment in capital assets $ 154,372,604 $ 163,723,249 $ 180,571,237 $ 186,536,428 $ 191,516,475 $ 187,054,852 $ 184,150,439 $ 190,243,447 $ 198,338,788 $ 197,530,605 Restricted 12,552,011 14,524,584 14,777,571 14,304,689 17,139,090 34,554,539 37,642,784 36,706,345 33,900,657 - Unrestricted (39,307,231) (34,371,855) (18,840,717) (7,649,432) 6,589,790 (3,124,027) 2,776,006 514,601 1,632,040 15,331,622 Total governmental activities net assets/ net position $ 127,617,384 $ 143,875,978 $ 176,508,091 $ 193,191,685 $ 215,245,355 $ 218,485,364 $ 224,569,229 $ 227,464,393 $ 233,871,485 $ 212,862,227 Business-type activities Net investment in capital assets $ 212,682,278 $ 209,584,457 $ 204,149,751 $ 194,854,140 $ 185,430,669 $ 178,526,049 $ 166,320,408 $ 161,324,071 $ 163,834,290 $ 138,830,169 Restricted 11,077,134 12,382,060 13,080,302 19,917,341 19,454,812 30,892,739 35,777,715 35,945,848 39,493,526 718,828 Unrestricted 32,868,366 32,196,598 34,177,453 30,193,568 23,730,694 16,330,517 28,929,677 28,208,193 22,701,430 64,268,351 Total business-type activities net assets/ net position $ 256,627,778 $ 254,163,115 $ 251,407,506 $ 244,965,049 $ 228,616,175 $ 225,749,305 $ 231,027,800 $ 225,478,112 $ 226,029,246 $ 203,817,348 Primary government Net investment in capital assets $ 367,054,882 $ 373,307,706 $ 384,720,988 $ 381,390,568 $ 376,947,144 $ 365,580,901 $ 350,470,847 $ 351,567,518 $ 362,173,078 $ 336,360,774 Restricted 23,629,145 26,906,644 27,857,873 34,222,030 36,593,902 65,447,278 73,420,499 72,652,193 73,394,183 718,828 Unrestricted (6,438,865) (2,175,257) 15,336,736 22,544,136 30,320,484 13,206,490 31,705,683 28,722,794 24,333,470 79,599,973 Total primary government net assets/ net position $ 384,245,162 $ 398,039,093 $ 427,915,597 $ 438,156,734 $ 443,861,530 $ 444,234,669 $ 455,597,029 $ 452,942,505 $ 459,900,731 $ 416,679,575 (1)no discretely presented component units shown (2)in 2005 the City's definition of'restricted net assets"was changed to include assets in funds set up to account for activities outside of the General Fund,for Governmental Activities,and to include restricted cash for debt retirement for Business-type Activities. 157 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Assets/Net Position Last Ten Fiscal Years ---------- Expenses Governmental activities: General government $ 27,438,065 $ 30,841,776 $ 25,665,269 $ 30,326,671 $ 26,426,242 $ 28,901,548 $ 22,043,283 $ 34,375,762 $ 53,533,838 $ 53,353,559 Public safety 77,133,469 82,369,004 83,546,997 84,566,215 71,236,947 76,211,756 62,570,888 60,047,271 38,668,349 41,292,750 Public works 29,984,955 33,144,303 26,355,375 29,252,516 37,588,680 40,032,746 40,517,063 31,790,944 30,670,483 22,118,173 Recreation and culture 7,713,098 8,889,142 8,245,451 7,312,480 7,298,385 7,677,083 6,198,462 7,881,212 5,464,143 7,979,953 Community development 16,939,572 13,623,946 12,825,028 9,715,087 6,378,286 6,382,336 6,232,406 7,124,491 6,996,000 8,387,559 Interest on long-term debt 1,447,310 1,949,825 2,116,535 2,229,288 1,803,125 1,481,658 1,658,708 1,197,851 1,033,078 2,041,758 Total governmental activities expenses 160,656,469 170,817,996 158,754,655 163,402,257 150,731,665 160,687,127 139,220,810 142,417,531 136,365,891 135,173,752 Business-type activities: Sewage disposal system 26,159,576 26,836,597 26,444,741 24,931,075 26,247,188 27,382,736 24,725,229 21,706,537 20,631,611 20,864,079 Municipal parking system 8,126,036 9,491,376 9,896,498 8,305,095 8,353,063 10,188,065 10,275,379 18,403,163 10,151,018 9,196,910 Cemetery 633,050 639,000 755,766 659,584 689,979 675,672 692,510 753,151 802,949 828,073 Golf 888,825 810,372 846,817 869,003 927,200 1,072,505 1,358,008 1,398,963 1,446,615 1,620,669 Garbage and rubbish collection 1,557,708 1,558,024 1,515,600 1,451,059 1,547,372 1,436,642 1,372,266 1,412,620 1,421,617 1,321,760 Recycling 3,650,292 3,041,328 2,809,353 2,804,047 3,008,750 2,940,366 2,777,068 2,981,730 2,862,003 2,768,307 Potter Park Zoo - - - - - (156,270) 2,968,236 2,718,759 2,690,943 2,542,065 Total business-type activities expenses 41,015,487 42,376,697 42,268,775 39,019,863 40,773,552 43,539,716 44,168,696 49,374,923 40,006,756 39,141,863 Total primary government expenses $ 201,671,956 $ 213,194,693 $ 201,023,430 $ 202,422,120 $ 191,505,217 $ 204,226,843 $ 183,389,506 $ 191,792,454 $ 176,372,647 $ 174,315,615 Program revenues Governmental activities: Charges for services: General government $ 6,162,713 $ 6,428,110 $ 6,742,306 $ 6,565,263 $ 5,188,510 $ 5,938,911 $ 6,251,032 $ 6,416,850 $ 6,264,142 $ 4,686,901 Public safety 4,083,222 8,525,524 8,975,173 8,589,146 9,817,421 12,705,181 13,014,934 13,087,372 12,400,853 11,682,187 Public works 1,622,738 2,797,443 2,449,606 2,788,112 4,565,013 4,364,525 3,805,739 3,891,646 2,646,007 2,713,258 Recreation and culture 594,349 557,609 685,120 587,906 1,217,445 1,556,260 1,259,373 1,405,584 1,598,968 1,581,607 Community development 67,349 67,344 122,326 69,250 50,132 66,308 66,161 66,486 66,788 - Operating grants and contributions 29,322,435 31,928,983 30,154,681 27,515,892 26,462,211 20,356,292 16,524,178 16,158,496 16,673,481 15,746,181 Capital grants and contributions 3,124,288 260,656 189,414 3,109,410 2,571,741 2,531,974 2,179,870 3,659,169 3,479,536 3,033,891 Total governmental activities program revenues 44,977,094 50,565,669 49,318,626 49,224,979 49,872,473 47,519,451 43,101,287 44,685,603 43,129,775 39,444,025 Business-type activities: Charges for services: Sewage disposal system 30,825,174 29,915,799 29,205,945 28,907,772 27,446,304 28,023,322 26,926,202 26,867,610 26,890,756 26,529,842 Municipal parking system 5,267,627 6,858,606 7,539,179 7,396,219 7,539,611 10,090,566 10,838,270 10,289,830 9,628,690 7,510,354 Cemetery 314,913 240,394 225,947 226,973 248,314 218,688 264,255 237,564 230,716 226,631 Golf 373,000 390,134 382,546 438,315 448,067 607,922 754,995 890,190 929,266 951,923 Garbage and rubbish collection 1,131,659 1,459,101 1,507,577 1,677,428 1,486,531 1,617,717 1,378,562 1,295,053 1,322,111 1,315,413 Recycling 3,434,622 2,818,364 2,609,423 2,651,309 2,945,061 3,039,089 2,903,092 2,816,277 2,636,002 2,115,917 Potter Park Zoo - - - - - (115) 553,999 471,703 558,654 505,666 Operating grants and contributions 1,193,571 1,331,737 4,456,708 1,535,907 1,541,913 - - - - - Capital grants and contributions - 2,683,657 1,439,044 11,928,108 60,318 196,317 183,012 1,368,773 731,575 93,207 Total business-type activities program revenues 42,540,566 45,697,792 47,366,369 54,762,031 41,716,119 43,793,506 43,802,387 44,237,000 42,927,770 39,248,953 Total primary government program revenues $ 87,517,660 $ 96,263,461 $ 96,684,995 $ 103,987,010 $ 91,588,592 $ 91,312,957 $ 86,903,674 $ 88,922,603 $ 86,057,545 $ 78,692,978 Net(expenses)revenues Governmental activities $(115,679,375) $(120,252,327) $(109,436,029) $(114,177,278) $(100,859,192) $(113,167,676) $ (96,119,523) $ (97,731,928) $ (93,236,116) $ (95,729,727) Business-type activities 1,525,079 3,321,095 5,097,594 15,742,168 942,567 253,790 (366,309) (5,137,923) 2,921,014 107,090 Total primary government net expense $(114,154,296) $(116,931,232) $(104,338,435) $ (98,435,110) $ (99,916,625) $(112,913,886) $ (96,485,832) $(102,869,851) $ (90,315,102) $ (95,622,637) continued... 158 CITY OF LANSING, MICHIGAN Change in Net Assets/Net Position Last Ten Fiscal Years ---------- General revenues and other changes in net assets/net position Governmental activities: Taxes: Property taxes $ 38,668,837 $ 33,506,860 $ 37,233,590 $ 39,010,960 $ 39,141,928 $ 38,607,761 $ 38,371,105 $ 37,506,017 $ 36,181,408 $ 40,354,088 Income taxes 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 27,435,047 27,437,494 Unrestricted grants and contributions 31,425,718 26,441,961 27,254,574 25,847,423 27,318,313 28,180,799 27,258,536 26,817,633 26,355,710 26,338,413 Investment earnings 58,588 69,265 89,735 246,495 978,034 1,706,572 2,483,162 1,634,608 715,608 312,069 Miscellaneous - 123,066 108,601 75,094 32,310 - - 774,822 104,563 2,903,792 Transfers (583,117) (464,008) (633,814) (464,807) (509,728) 7,420,667 (3,098,357) (3,132,465) (2,123,435) (2,668,510) Total governmental activities 99,420,781 87,620,214 92,752,435 92,123,608 96,273,619 107,083,811 93,224,359 90,632,791 88,668,901 94,677,346 Business-type activities: Investment earnings 356,467 271,067 689,883 141,899 413,850 1,883,034 2,815,480 1,453,076 1,298,407 249,855 Miscellaneous - (1,300,561) 21,166 - 725 5,348 2,160 1,248 23,736 387,551 Transfers 583,117 464,008 633,814 464,807 509,728 (7,420,667) 3,098,357 3,132,465 2,123,435 2,668,510 Total business-type activities 939,584 (565,486) 1,344,863 606,706 924,303 (5,532,285) 5,915,997 4,586,789 3,445,578 3,305,916 Total primary government $ 100,360,365 $ 87,054,728 $ 94,097,298 $ 92,730,314 $ 97,197,922 $ 101,551,526 $ 99,140,356 $ 95,219,580 $ 92,114,479 $ 97,983,262 Changes in net assets/net position Governmental activities $ (16,258,594) $ (32,632,113) $ (16,683,594) $ (22,053,670) $ (4,585,573) $ (6,083,865) $ (2,895,164) $ (7,099,137) $ (4,567,215) $ (1,052,381) Business-type activities 2,464,663 2,755,609 6,442,457 16,348,874 1,866,870 (5,278,495) 5,549,688 (551,134) 6,366,592 3,413,006 Total primary government $ (13,793,931) $ (29,876,504) $ (10,241,137) $ (5,704,796) $ (2,718,703) $ (11,362,360) $ 2,654,524 $ (7,650,271) $ 1,799,377 $ 2,360,625 concluded (1)No discretely presented component units shown 159 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances, Governmental Funds Last Ten Fiscal Years 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 (2) (1) General fund Nonspendable $ 75,738 $ 92,538 $ 171,586 $ $ $ $ $ $ $ Restricted 9,400 16,256 41,129 Committed 2,976,408 65,373 178,081 Unassigned 5,633,528 5,198,032 4,939,691 - Reserved - - - 102,732 1,320,375 1,765,288 1,848,021 2,443,224 2,482,589 1,324,109 Unreserved - - - 389,061 3,755,862 5,465,164 5,036,129 4,634,961 4,709,909 5,606,958 Total general fund 8,695,074 5,372,199 5,330,487 491,793 5,076,237 7,230,452 6,884,150 7,078,185 7,192,498 6,931,067 All other governmental funds Nonspendable $ 2,671,151 $ 2,852,004 $ 3,006,507 $ - $ - $ - $ - $ - $ - $ - Restricted 4,368,983 5,566,421 7,412,008 Committed 4,035,145 4,109,131 4,908,740 Unassigned(deficit) (619,931) (543,774) (371,285) - - - - - - - Reserved 1,177,998 324,366 365,351 2,544,339 613,533 2,139,438 3,688,795 Unreserved,reported in: Special revenue funds 12,029,680 13,394,485 14,716,755 14,523,146 18,798,291 17,635,170 17,950,570 Capital projects funds 11,614,644 12,010,219 17,862,441 18,978,360 15,717,371 12,563,759 15,293,862 Debt service funds 126,434 186,636 256,144 144,518 88,826 4,400 - Permanent funds 1,649,550 1,630,098 1,609,992 1,596,939 1,577,150 1,557,890 - Total all other governmental funds 10,455,348 11,983,782 14,955,970 26,598,306 27,545,804 34,810,683 37,787,302 36,795,171 33,900,657 36,933,227 Total all governmental funds $ 19,150,422 $ 17,355,981 $ 20,286,457 $ 27,090,099 $ 32,622,041 $ 42,041,135 $ 44,671,452 $ 43,873,356 $ 41,093,155 $ 43,864,294 (1)In 2005 the City's definition for Permanent Funds fund balance changed to"unreserved"due to the nature of the funds being set up as a reserved fund (2)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 160 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years 2013-- ---� --- Revenues Property taxes $ 38,717,552 $ 33,583,448 $ 37,371,885 $ 39,279,343 $ 39,258,893 $ 38,775,722 $ 38,681,928 $ 37,957,773 $ 36,527,417 $ 40,354,088 Income taxes 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 27,497,542 27,413,270 Licenses and permits 1,509,402 1,538,325 1,598,804 1,414,906 1,325,119 1,429,075 1,101,550 860,647 791,655 814,989 Intergovernmental 40,639,183 41,431,793 40,304,785 39,137,217 38,998,039 38,556,616 34,699,908 34,964,225 35,624,372 36,312,111 Charges for services 11,754,381 18,676,398 18,606,304 18,323,158 20,355,642 19,116,593 18,415,612 19,436,267 17,931,572 16,745,202 Fines and forfeits 3,694,351 2,884,328 3,325,728 4,579,175 4,143,000 4,090,397 4,349,642 4,515,951 4,351,977 4,870,577 Interest and rents 53,179 63,571 88,516 249,464 1,196,559 1,836,485 2,607,388 1,710,674 720,707 357,382 Contributions 16,247,403 12,369,733 11,821,388 10,606,368 10,372,056 10,894,573 9,980,854 9,385,831 8,966,289 8,744,295 Donations from private sources - 5,000 - 9,000 44,000 326,768 114,954 549,055 126,182 22,031 Otherrevenue 510,515 400,074 504,856 473,123 1,054,209 331,248 1,019,476 1,082,283 1,320,064 1,285,903 Total revenues 142,976,721 138,895,740 142,322,015 141,480,197 146,060,279 146,525,489 139,181,225 137,494,882 133,857,777 136,919,848 Expenditures General government 23,595,321 25,038,589 26,396,516 27,839,564 28,951,805 29,209,458 28,905,058 34,956,037 55,746,807 54,420,735 Public safety 63,943,082 66,161,872 70,397,235 70,820,184 70,082,462 67,715,160 65,218,515 59,143,629 38,121,596 40,145,137 Public works 8,908,673 6,225,177 6,002,823 Highways and streets 9,937,423 8,589,298 8,494,233 14,506,982 14,723,311 14,860,390 13,501,747 10,879,004 10,467,860 9,216,004 Recreation and culture 6,629,453 6,996,562 7,464,193 8,127,700 8,452,768 8,038,290 7,676,600 7,509,183 5,517,980 6,229,014 Other functions 23,699,202 17,999,264 15,675,003 15,182,675 12,599,072 11,805,843 9,847,925 8,259,415 8,520,848 6,971,380 Capital outlay 5,489,617 6,466,084 9,956,103 14,781,728 14,855,863 16,228,127 20,001,659 13,306,810 12,614,723 11,917,608 Debt service: Interest 1,378,856 1,836,218 3,210,220 3,270,068 1,801,394 1,607,703 1,285,436 1,145,588 1,187,673 2,331,276 Principal 3,137,159 3,448,080 2,070,552 2,165,237 4,743,146 4,721,581 3,875,909 3,244,879 3,592,766 6,874,234 Issuance costs 42,744 - 48,804 - - - - - - - Total expenditures 146,761,530 142,761,144 149,715,682 156,694,138 156,209,821 154,186,552 150,312,849 138,444,545 135,770,253 138,105,388 Excess of revenues over under expenditures (3,784,809) (3,865,404) (7,393,667) (15,213,941) (10,149,542) (7,661,063) (11,131,624) (949,663) (1,912,476) (1,185,540) Other financing sources(uses) Proceeds from borrowing 11,932,046 - 2,470,000 10,146,117 - 4,052,979 15,190,077 6,087,507 1,784,465 570,000 Proceeds from sale of capital assets 497,833 1,398,936 1,210,046 689 1,587,216 - - 774,822 74,565 799,497 Payment to escrow agent (6,015,112) - (2,456,207) - - - - - Insurance proceeds - - - - 120,960 - - - - - Transfers in 7,056,932 7,893,879 9,602,095 16,181,590 11,601,871 13,507,521 6,908,259 8,170,998 8,274,929 13,628,444 Transfers out (7,892,449) (8,357,887) (10,235,909) (16,646,397) (12,579,599) (12,529,754) (10,168,616) (11,303,463) (10,398,364) (16,321,156) Total other financing sources(uses) 5,579,250 934,928 590,025 9,681,999 730,448 5,030,746 11,929,720 3,729,864 (264,405) (1,323,215) Net change in fund balance $ 1,794,441 $ (2,930,476) $ (6,803,642) $ (5,531,942) $ (9,419,094) $ (2,630,317) $ 798,096 $ 2,780,201 $ (2,176,881) $ (2,508,755) Debt service as a percentage of noncapital expenditures 3.2% 3.8% 3.7% 3.9% 4.5% 4.6% 4.0% 3.4% 3.8% 7.1% 161 CITY OF LANSING, MICHIGAN Table 5 Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years Fiscal Total Assessed Year Personal Total Taxable Direct Estimated Value as a Ended Residential Commercial Industrial Agricultural Property Assessed Tax Actual Percentage of June 30, Property Property Property Property Valuation Valuation Rate Value Actual Value 2004 $ 1,135,019,090 $ 686,609,099 $ 178,744,095 $ $ 287,439,600 $2,287,811,884 $15.93 $4,575,623,768 50.0% 2005 1,196,695,728 702,969,958 175,906,035 288,421,700 2,363,993,421 15.88 4,727,986,842 50.0% 2006 1,266,935,505 730,413,466 180,564,805 251,293,200 2,429,206,976 15.88 4,858,413,952 50.0% 2007 1,354,989,247 728,343,561 195,703,073 221,858,408 2,500,894,289 15.88 5,001,788,578 50.0% 2008 1,437,051,392 765,233,437 192,915,386 223,995,750 2,619,195,965 15.83 5,238,391,930 50.0% 2009 1,479,089,611 719,463,319 254,539,254 205,034,000 2,658,126,184 15.83 5,316,252,368 50.0% 2010 1,480,467,389 713,807,797 248,288,931 220,228,175 2,662,792,292 15.70 5,325,584,584 50.0% 2011 1,407,920,589 624,406,132 215,099,428 199,543,400 2,446,969,549 15.70 4,893,939,098 50.0% 2012 1,387,390,250 639,535,400 87,432,000 183,233,681 2,297,591,331 15.70 4,595,182,662 50.0% 2013 1,232,109,181 587,002,900 86,884,400 151,900 182,543,900 2,088,692,281 19.70 4,177,384,562 50.0% (1) tax rates are per$1,000 of assessed value Source: Lansing City Assessor 162 CITY OF LANSING, MICHIGAN Table 6 Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per$1,000 of assessed value) Fiscal City Direct Rates Overlapping Rates Year Ended Tax Operating Service City County School State College Other June 30, Year Millage Millage Millage Millage Millage Education Millage Millage Total 2004 2003 14.90 1.03 15.93 8.11 19.06 5.00 3.85 8.89 60.84 2005 2004 14.90 .98 15.88 8.10 20.65 6.00 3.84 8.83 63.30 2006 2005 14.90 .98 15.88 8.18 20.40 6.00 3.81 8.78 63.04 2007 2006 14.95 .93 15.88 8.72 20.32 6.00 3.81 9.15 63.88 2008 2007 14.95 .88 15.83 9.41 20.18 6.00 3.81 8.15 63.38 2009 2008 15.01 .82 15.83 10.83 20.15 6.00 3.81 9.04 65.66 2010 2009 15.44 .26 15.70 8.84 19.95 6.00 3.81 9.93 64.23 2011 2010 15.44 .26 15.70 8.84 19.95 6.00 3.81 9.93 64.23 2012 2011 15.44 .26 15.70 8.84 21.44 6.00 3.81 9.96 65.75 2013 2012 19.44 .26 19.70 9.08 21.73 6.00 3.81 10.37 70.68 (1)rates for Ingham County and Lansing School District only (2)since 1995 this is the Non-homestead rate (3)includes Intermediate School,Airport Authority, Capital Area Transit Authority and Capital Area District Library(began in FY 98) Source: Lansing City Treasurer 163 CITY OF LANSING, MICHIGAN Table 7 Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2013 2004 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $81,468,000 1 4.01% $ 223,100,800 1 7.71% Jackson National Life Insurance Company 32,771,500 2 1.61% 31,786,400 2 1.10% Consumers Energy 22,283,300 3 1.10% 22,043,400 5 0.76% Demmer Corporation 14,898,600 4 0.73% Comcast of Michigan LLC 11,644,000 5 0.57% Lansing Retail Center LLC 10,661,000 6 0.52% 15,544,200 6 0.54% Heart of the City Assoc 7,271,400 7 0.36% Sprint Spectrum L.P. 9,496,000 8 0.47% 13,454,600 8 0.46% Emergent Biodefense Operations 6,881,400 9 0.34% Quality Dairy Co#17 6,759,700 10 0.33% Accident Fund Company 13,724,200 7 0.47% 525 Redevco Inc 25,976,200 3 0.90% Capital Outlook LLC 23,029,300 4 0.80% Cricket Communications 13,391,600 9 0.46% Trappers Cove LTD Partners 13,198,200 10 0.46% Data furnished from City of Lansing Assessor formerly Capital Outlook LLC 164 CITY OF LANSING, MICHIGAN Table 8 Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Taxes Levied Current Percent of Delinquent Total Collections Ended for the Tax Levy Tax Tax as Percent June 30, Fiscal Year Collection Collected Collection Collection of Levy 2004 $ 38,267,514 $ 37,826,436 98.85% $ 59,200 $ 37,885,636 99.00% 2005 40,051,303 39,429,093 98.45% 140,123 39,569,216 98.80% 2006 41,261,397 41,022,735 99.42% 83,419 41,106,154 99.62% 2007 42,627,042 42,516,696 99.74% 107,322 42,624,018 99.99% 2008 44,286,657 44,125,517 99.64% 144,587 44,270,104 99.96% 2009 45,567,556 45,468,639 99.78% 72,779 45,541,418 99.94% 2010 44,997,919 44,844,495 99.66% 33,012 44,877,507 99.73% 2011 41,460,916 41,375,354 99.79% 24,416 41,399,770 99.85% 2012 39,948,762 39,863,393 99.79% 19,647 39,883,040 99.84% 2013 40,450,767 39,716,932 98.19% 55,532 39,772,464 98.32% Note: Amounts are net of chargebacks from the County Tax Revolving Funds for taxes still delinquent after three years. Note: Delinquent Tax Collection represents amounts received in the indicated fiscal year Source: City of Lansing Treasurer 165 CITY OF LANSING, MICHIGAN Table 9 Ratios of Outstanding Debt by Type - Last Ten Fiscal Years Governmental Activities Business-Type Activities General Special Installment General Total Percentage Fiscal Obligation Assessment Purchase Obligation Revenue Primary of Personal Pe >; g Y Year Bonds Debt Agreements E j Loans 1 Bonds E Bonds E j Loans 1 Government Income Population(1) 2004 $ 25,078,133 $ 45,000 $ 9,858,752 $ 408,283 $ 158,303,225 $ 55,375,000 $ 4,179,649 $ 253,248,042 11.88%1�� $ 2,126 119,100 2005 13,320,000 35,000 8,396,154 1,543,195 165,029,785 51,710,000 4,180,000 244,214,134 11.46%1" 2,050 119,100 2006 17,245,000 25,000 7,351,126 1,409,844 168,824,004 47,905,000 4,180,000 246,939,974 11.59%�') 2,073 119,100 2007 19,845,000 10,000 15,721,844 1,772,049 165,173,386 43,955,000 4,180,000 250,657,280 11.77%1" 2,105 119,100 2008 20,624,100 - 14,037,885 1,534,822 182,419,608 41,125,000 4,180,000 263,921,415 12.40%�') 2,216 119,100 2009 17,640,000 12,394,082 1,290,479 194,429,701 38,285,000 4,180,000 268,219,262 12.60%1" 2,252 119,100 2010 26,152,000 10,925,689 1,038,804 202,818,098 35,445,000 4,180,000 280,559,591 13.18% `� 2,356 119,100 2011 27,687,000 9,564,693 779,580 200,539,634 32,565,000 1,574,209 272,710,116 12.29% ' 2,386 114,297 2012 25,727,000 8,193,615 512,577 192,125,645 29,525,000 1,637,177 257,721,014 11.41% 2,255 114,297 2013 29,932,000 2,807,838 6,246,743 182,127,578 25,030,000 1,702,664 247,846,823 10.97% ' 2,168 114,298 (1)population per decennial census by the U.S.Census Bureau (2)personal income data comes from U.S.Census Bureau,American Community Survey 2005 (3)personal income data comes from U.S.Census Bureau,American Community Survey 2009 166 CITY OF LANSING, MICHIGAN Table 10 Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Ratio of Fiscal Debt Net Bonded Net Year Service Debt Payable Debt to Bonded Ended Taxable Gross Bonded Monies From Restricted Net Bonded Taxable Debt per June 30, Population(') Value(3) Debt(') Available Revenues Debt Value Capita 2004 119,128 $ 2,287,811,884 $ 166,581,000 $ 42,852 $ 145,505,724 $ 21,032,424 0.0092 $ 177 2005 119,128 2,363,993,421 178,349,785 4,400 165,029,785 13,315,600 0.0056 112 2006 119,128 2,429,206,976 186,094,004 88,826 168,849,004 17,156,174 0.0071 144 2007 119,128 2,500,894,289 185,028,386 309,363 165,183,386 19,535,637 0.0078 164 2008 119,128 2,619,195,965 203,043,708 256,144 182,419,608 20,367,956 0.0078 171 2009 119,128 2,658,126,184 212,069,701 186,636 194,429,701 17,453,364 0.0066 147 2010 119,128 2,662,792,292 228,970,098 126,434 202,818,098 26,025,566 0.0098 218 2011 114,297 2,446,969,549 230,666,786 46,029 200,539,634 30,081,123 0.0123 263 2012 114,297 2,297,591,331 217,852,645 - 192,125,645 25,727,000 0.0112 225 2013 114,297 2,088,692,281 212,059,578 178 186,617,578 25,441,822 0.0122 223 Source:2000 and 2010 Census by the U.S. Census Bureau includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year 167 CITY OF LANSING, MICHIGAN Table 11 Direct and Overlapping Governmental Activities Debt As of June 30, 2013 Net General Obligation Bonded Amount Name of Debt %Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 25,441,822 (1) 100.00% $ 25,441,822 Share of County-issued bonds Joint Building Authority $ 3,484,097 100.00% $ 3,484,097 Drain Commission 164,850 100.00% 164,850 $ 3,648,947 Overlapping debt Eaton Intermediate School District 985,000 0.55% $ 5,418 Ingham Intermediate School District 2,168,000 23.31% 505,361 Waverly School District 28,530,000 0.23% 65,619 Lansing School District 47,175,000 81.35% 38,376,863 East Lansing School District 58,821,784 3.73% 2,194,053 Holt School District 80,626,025 2.46% 1,983,400 Ingham County 40,836,062 27.08% 11,058,406 Eaton County 39,643,830 1.67% 662,052 Clinton County 6,559,156 0.29% 19,022 Lansing Community College 82,565,000 19.27% 15,910,276 Okemos School District 15,239,000 2.32% 353,545 Mason School District 10,305,000 0.10% 10,305 Grand Ledge School District 62,320,000 1.18% 735,376 Total overlapping debt 71,879,696 Total direct and overlapping debt $ 100,970,465 (') Excludes Michigan Transportation Fund Bonds, Unlimited Tax Bonds, Pollution Abatement Bonds, and Revenue Bonds Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 168 CITY OF LANSING, MICHIGAN Table 12 Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2012 Assessed value,real and personal property $2,043,510,601 Assessed value equivalents 45,181,680 Total valuation 2,088,692,281 Legal debt margin Debt limitation- 10 percent of total valuation 208,869,228 Debt applicable to limit Total City Bonded Debt 237,089,578 City Share: Drain Commission-County Issued 164,850 Joint Building Authority-County Issued 3,484,097 TIF Supported Bonds 14,218,164 254,956,689 Less: Michigan Transportation(MTF)Bonds (4,490,000) Sewage Disposal Revenue Bonds (25,030,000) Pollution Abatement(CSO Project)Bonds (133,247,887) (162,767,887) Total net debt applicable to limit 92,188,802 Legal debt margin $ 116,680,426 -� 2005 -�7 ----- Debt limit $ 289,486,027 $ 302,811,105 $ 314,307,611 $ 324,987,531 $ 318,810,868 $ 298,581,799 $ 298,052,683 $ 268,975,768 $ 233,669,637 $ 207,362,623 Total net debt applicable to limit 87,171,139 75,882,359 103,095,986 84,276,312 87,966,365 79,513,756 98,368,804 100,923,863 92,357,575 92,188,802 Legal debt margin $ 202,314,888 $ 226,928,746 $ 211,211,625 $ 240,711,219 $ 230,844,503 $ 219,068,043 $ 199,683,880 $ 168,051,905 $ 141,312,062 $ 115,173,821 Total net debt applicable to the limit as a percentage of debt limit 30.11% 25.06% 32.80% 25.93% 27.59% 26.63% 33.00% 37.52% 39.52% 44.46% 169 CITY OF LANSING, MICHIGAN Table 13 Pledged-Revenue Coverage Last Ten Fiscal Years Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(') Debt Service Principal Interest Total Coverage(2) 2004 $ 26,196,518 $ 11,543,509 $ 14,653,009 $ 3,475,000 $ 1,723,253 $ 5,198,253 2.82 2005 26,601,646 12,775,001 13,826,645 3,715,000 1,786,328 5,501,328 2.51 2006 27,932,464 12,867,761 15,064,703 3,805,000 2,036,736 5,841,736 2.58 2007 29,292,698 13,494,658 15,798,040 3,950,000 2,152,990 6,102,990 2.59 2008 29,356,299 15,997,449 13,358,850 2,830,000 2,002,400 4,832,400 2.76 2009 27,759,684 14,206,961 13,552,723 2,840,000 1,900,000 4,740,000 2.86 2010 28,613,004 12,358,472 16,254,532 2,840,000 1,803,425 4,643,425 3.50 2011 29,865,648 12,616,100 17,249,548 2,925,000 1,621,221 4,546,221 3.79 2012 30,178,511 12,562,663 17,615,848 3,160,000 1,448,856 4,608,856 3.82 2013 31,169,428 12,112,994 19,056,434 3,265,000 1,111,390 4,271,390 4.46 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 170 CITY OF LANSING, MICHIGAN Table 14 Demographic and Economic Statistics Last Ten Fiscal Years Per capita Lansing School Personal Personal Median District Unemployment Labor Year Population(') Income Income(z) Age(3) Enrollment(4) %Rate(5) Force(5) 2004 119,100 $ 2,131,893,732 $ 17,900 32 16,927 7 63,750 2005 119,100 2,131,183,101 17,894 32.20 16,201 9.0 68,041 2006 119,100 2,130,460,800 17,888 32.36 16,014 8.4 67,023 2007 119,100 2,129,750,646 17,882 33 15,178 9 66,224 2008 119,100 2,129,040,730 17,876 33 14,475 10.2 65,833 2009 119,100 2,128,331,049 17,870 33 14,482 16.2 66,822 2010 119,100 2,127,621,606 17,864 33 14,098 15.0 64,074 2011 114,297 2,218,237,360 19,408 30 13,465 13.1 63,130 2012 114,297 2,259,194,502 19,766 32 13,236 11.3 63,374 2013 114,297 2,259,194,502 19,766 32 12,544 11.9 63,181 (')Source: U.S. Census Bureau �L Source: personal income for 2000 and 2005 from the U.S. Census Bureau; other years were extrapolated from 2000 and 2005 Source: 2000 data from U.S. Census Bureau. Data for other years estimated by City of Lansing Finance Department (4)Source: Lansing School District (')Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 171 CITY OF LANSING, MICHIGAN Table 15 Principal Employers Current Year and Seven Years Ago 2013 2006 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 13,700 1 6.23% 13,000 1 6.09% Michigan State University 10,725 2 4.88% 10,500 2 4.45% Sparrow Health System 5,735 3 2.61% 6,000 4 2.54% Liberty National Life Insurance 5,000 4 2.28% General Motors 5,522 5 2.51% 6,300 3 2.67% Lansing Community College 2,990 6 1.36% 3,800 5 1.35% McClaren Greater Lansing 2,400 7 1.09% 2,500 7 1.06% Meijer 1,880 8 0.86% 2,000 8 0.85% Lansing School District 1,613 9 0.73% 3,000 6 0.89% Southern-Owners Insurance 1,500 10 0.68% 1,500 9 0.64% Ingham County 1,200 10 0.52% Greater Lansing metropolitan area employment 219,761 Data is representative of the Greater Lansing Region Z Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information Data prior to 2006 is unavailable 172 CITY OF LANSING, MICHIGAN Table 16 Full-time Equivalent City Governmental Employees by Function/Program Last Eight Fiscal Years - Function/Program 2013 2012 2011 2010 2009 2008 2007 General government City council 10 10 11 11 11 11 11 11 Mayors office 5 5 5 5 5 5 5 7 City clerk 5 5 6 7 7 7 7 7 54-A district court 43 48 50 53 53 53 55 55 City attorneys office 10 10 11 12 12 12 12 11 City TV 2 2 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 1 2 Human resources 9 9 11 12 13 14 14 (1) 12 Finance Accounting/Budget/Purchasing 10 13 14 16 17 16 18 (1) 21 Tax services 20 21 22 24 25 26 29 30 Information technology 10 10 14 15 17 18 18 18 Property management (6) 18 20 21 23 24 26 (3) 28 Fleet management °) 27 29 30 31 33 37 (L) 20 40 89 99 106 113 117 128 117 Planning Et neighborhood development Administration 2 2 2 2 2 2 2 2 Code compliance 15 15 16 16 16 17 19 15 Building safety 12 13 15 15 15 15 16 17 Planning 4 4 5 5 4 5 7 7 Development 9 9 9 9 10 10 10 11 Parking&transportation 20 20 20 (5) 40 41 41 43 49 62 63 66 87 88 90 97 101 Police 229 260 327 344 342 341 338 339 Fire 180 179 207 218 219 219 219 220 Public services Administration 8 engineering 19 21 21 17 18 18 18 19 Operations Et maintenance 120 121 135 (') 110 113 113 119 122 Service garage - - - - - - 17 Wastewater 41 41 41 44 50 50 51 61 Property Management 18 (6) Fleet Management 27 (b) 225 183 197 171 181 181 188 219 Human relations 8 community services 5 5 5 5 6 8 9 9 Parks&recreation Administration 8 design 5 5 5 7 7 8 8 9 Grounds&forestry °) 27 31 32 32 (L) 32 Leisure 13 special recreation 8 10 12 15 19 17 19 (3) 20 Cemeteries 1 1 1 3 4 4 5 5 Golf/ice arena 3 3 4 4 4 4 4 6 Zoo(4) - - - - 18 19 17 19 22 56 65 65 86 91 843 888 1,020 1,090 1,118 1,126 1,172 1,203 Source: The City of Lansing In FY 2007,the following restructuring of departments occurred: (1)A payroll position was transferred from Finance to Human Resources v)operations of the Litys three fleet garages was consolidated in Finance (3)Four CUStodial positions were transferred from Parks&Recreation to Finance (4)un JULY 1,LUU1,Potter Park LOO employees were transferred to Ingham LOunty In FY 2011,the following restructuring of departments occurred: (5)Grounds Maintenance positions were moved from Parks a Recreation and Planning Ft Neighborhood Development and consolidated with Public Service staff In FY 2013,the following restructuring g of departments occurred: (6)Fleet and Property Management were moved from the Finance Department to the Public service Department (7)On June 27,2012,911 Dispatch employees were transferred from the City to Ingham County 173 CITY OF LANSING, MICHIGAN Table 17 Operating Indicators by Function/Program Last Eight Fiscal Years Function/Program 2013 , 2012.---ft 2008 E, 2007-- Public safety Fire department responses 18,444 17,093 16,974 16,659 15,852 15,780 15,267 14,869 EMS related 15,918 14,851 14,628 14,398 13,447 13,151 12,779 12,152 Fire related 2,526 2,242 2,346 2,261 2,405 2,629 2,488 2,117 Police department responses 73,087 74,058 78,112 87,724 89,958 87,634 97,466 87,551 Arrests 7,196 8,043 8,858 11,644 11,559 12,810 13,260 7,479 Traffic violations 14,905 8,829 15,585 18,297 20,122 25,398 29,047 30,948 Public works Potholes filled 33,155 30,116 32,918 24,945 43,601 40,790 28,122 36,522 Streets resurfaced(miles) 6.00 5.01 8.99 20.70 16.20 20.92 22.11 27.16 Recreation Recreation participation 55,122 66,836 66,254 70,529 39,060 37,783 ' 41,069 38,878 Pavilion rentals 199 198 161 288 315 341 254 255 Sewage disposal Average amount processed daily(gal) 14.75 million 12.82 million 12.83 million 15.01 million 18.15 million 16.73 million 16.00 million 15.00 million Parking system Average number of monthly permits 2,718 2,735 3,122 3,480 3,783 4,059 3,905 4,073 Parking tickets issued 38,127 41,829 45,176 63,610 66,183 57,153 75,637 82,221 Cemetery Lots sold 113 115 143 142 119 98 114 104 Golf Annual rounds played 25,554 28,560 26,084 30,936 41,588 43,605 "1 59,244 57,256 Garbage and rubbish Yards sent to landfill 17,985 18,705 20,334 21,805 29,322 29,869 30,402 30,517 Recycling Recycled goods sold(tons) 3,562 3,149 2,446 2,163 2,591 2,818 2,269 2,441 Yards composted 21,832 20,413 15,725 21,819 21,871 21,928 17,189 21,304 Source: The City of Lansing Data available back eight years only " The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 " Two golf course were closed in FY 2008 with one of those being converted to a driving range Source: City of Lansing 174 CITY OF LANSING, MICHIGAN Table 18 Capital Assets Statistics by Function/Program Last Eight Fiscal Years Function/Program 2013 2012 2011 2010 2009 2008 2007 2006 Public safety Police stations 2 2 3 3 3 3 3 3 Police patrol units 60 60 58 61 61 58 55 55 Fire stations 6 6 8 9 9 9 9 9 Public works Streets(miles) 411.00 407.80 410.80 410.63 410.15 410.15 410 409.89 Traffic signals 204 204 208 203 196 203 188 194 Recreation Park acreage 2,364.85 2,434.88 2,422.63 2,422.63 2,422.63 2,422.63 2,219.63 2,219.63 Playgrounds 75 73 71 71 82 82 80 76 Baseball/softball fields 61 61 61 61 61 61 61 61 Soccer/football fields 6 6 6 6 6 6 6 6 Community centers 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 359 359 359 357 354 347.4 341.0 338.0 Storm sewers(miles) 234 234 234 233 230 225.1 220.0 217.0 Combined sewers(miles) 188 188 188 191 192 197.4 203.0 208.0 Parking system Ramps 4 4 4 4 4 6 6 5 Lots 18 15 15 16 16 15 15 15 Meters 2,452 2,452 2,452 2,493 2,493 2,489 2,489 2,489 Cemetery Number of cemeteries 3 3 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 b 3 3 Acreage 115 115 115 115 115 115 b 318 318 Garbage and rubbish Refuse collection trucks 17 19 22 18 16 21 21 20 Recycling Recycling trucks 7 7 9 10 10 10 10 10 Potter park zoo Number of animals N/A N/A N/A N/A N/A N/A a 398 403 Source: The City of Lansing Data available back eight years only a. Zoo operations were transferred to Ingham County in FY2008 b.Two municipal golf courses were non-operational beginning in 2008 175