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Home My WebLink About2015 - Department of Finance - Comprehensive Annual Financial Report City of Lansing, Michigan cHI � � Year Ended Comprehensive June 30, 2015 V Annual Financial Report . • Prepared by: Department of Finance 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 8 GFOA Certificate of Achievement 9 FINANCIAL SECTION 11 Independent Auditors' Report 13 Management's Discussion and Analysis 17 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 34 Statement of Activities 35 Fund Financial Statements: Balance Sheet - Governmental Funds 40 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 41 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 42 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 43 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Fund 44 Statement of Net Position - Proprietary Funds 48 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 49 Statement of Cash Flows - Proprietary Funds 50 Statement of Fiduciary Net Position - Fiduciary Funds 54 Statement of Changes in Fiduciary Net Position - Pension and Other Postemployment Benefits Trust Funds 55 Combining Statement of Net Position - Discretely Presented Component Units 60 Combining Statement of Activities - Discretely Presented Component Units 62 Notes to Financial Statements 63 CITY OF LANSING, MICHIGAN Table of Contents Page Required Supplementary Information 117 Schedule of Changes in Net Pension Liability and Related Ratios - Employees' Retirement System 118 Schedule of the Net Pension Liability - Employees' Retirement System 119 Schedule of Contributions - Employees' Retirement System 120 Schedule of Investment Returns - Employees' Retirement System 121 Schedule of Changes in Net Pension Liability and Related Ratios - Police and Fire Retirement System 122 Schedule of the Net Pension Liability - Police and Fire Retirement System 123 Schedule of Contributions - Police and Fire Retirement System 124 Schedule of Investment Returns - Police and Fire Retirement System 125 Schedule of Funding Progress - Other Postemployment Benefit Plans 126 Schedule of Employer Contributions - Other Postemployment Benefit Plans 126 Combining and Individual Fund Financial Statements and Schedules 127 Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 128 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 129 Combining Balance Sheet - Nonmajor Special Revenue Funds 132 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 134 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 136 Combining Balance Sheet - Nonmajor Debt Service Funds 144 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 145 Combining Balance Sheet - Nonmajor Capital Projects Funds 148 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 149 Combining Balance Sheet - Nonmajor Permanent Funds 152 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 153 Nonmajor Enterprise Funds: Combining Statement of Net Position - Nonmajor Enterprise Funds 156 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 157 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 158 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 162 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 163 Combining Statement of Cash Flows - Internal Service Funds 164 CITY OF LANSING, MICHIGAN Table of Contents Page Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 168 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds 169 STATISTICAL SECTION (UNAUDITED) 171 TABLE 1 Net Assets / Net Position by Component 175 2 Change in Net Assets / Net Position 176 3 Fund Balances, Governmental Funds 178 4 Changes in Fund Balances of Governmental Funds 179 5 Assessed and Estimated Actual Value of Taxable Property 180 6 Direct and Overlapping Property Tax Rates 181 7 Profile of Ten Largest Ad Valorem Taxpayers 182 8 Property Tax Levies and Collections 183 9 Ratios of Outstanding Debt by Type 184 10 Ratios of General Bonded Debt Outstanding 185 11 Direct and Overlapping Governmental Activities Debt 186 12 Legal Debt Margin Information 187 13 Pledged-Revenue Coverage 188 14 Demographic and Economic Statistics 189 15 Principal Employers 190 16 Full-Time Equivalent City Governmental Employees by Function/Program 191 17 Operating Indicators by Function/Program 192 18 Capital Asset Statistics by Function/Program 193 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN ELECTED AND APPOINTED OFFICERS For the Year Ended June 30, 2015 MAYOR Virg Bernero CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson, Chief Judge Patrick F. Cherry Hugh B. Clarke, Jr. Frank J. Deluca CITY COUNCIL AT LARGE BY WARDS Judi Brown Clarke Jody Washington - 1st Ward Vincent Delgado Tina Houghton - 2nd Ward Kathie Dunbar A'Lynne Boles - 3rd Ward Carol Wood Jessica Yorko - 4th Ward OFFICERS Randy Hannan Executive Assistant/Chief of Staff Chad Gamble Chief Operating Officer/Public Service Director Janene McIntyre City Attorney, Interim Human Resources Director Angela Bennett Finance Director William Fowler City Assessor Antonia Kraus City Treasurer Randy Talifarro Fire Chief Michael Yankowski Police Chief Joan Jackson Johnson Human Relations Et Community Services Director Brett Kaschinske Parks Et Recreation Director Robert Johnson Planning Et Neighborhood Development Director Jim DeLine Internal Auditor 2 h Ai FINANCE DEPARTMENT 124 VV. Michigan Ave.: 0'Floor Lansing, Michigan 48933 (51Tj 4834500 December 21, 2015 Council President Tina Houghton and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Houghton 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, 2015. 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 2014/2015 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, 2015, 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, 2015, the City operated police headquarters and a precinct with over 190 sworn police officers; six fire stations with a fire protection force of over 170; over 350 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, 2015 are discussed in the Management Discussion and Analysis (MDEtA), located immediately following the Independent Auditor's Report. 4 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. 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 2015 is the culmination of an historic turning point of a ten year (2006- 2015) re-birth and growth decade for the city of Lansing. In 2015, the City's economic development projects surpassed the $2 billion level in new private investment. Never before, in that type of time period, has the City experienced that type of growth. And it is moving the needle: The City, for two straight years, according to the US Census Bureau, states that the City has grown in population. In the 2010 US Census, the Lansing area was one of only two regions that grew in population in the state of Michigan. • Jackson National Life, a Fortune 500 company and the nation's #1 individual annuities company, completed construction on its $130 million new expansion of its national headquarters, creating 1,000 new jobs (average $76,000 salary) project. • Niowave completed construction on its new $79 million medical isotope production facility, creating 120 jobs and producing the nation's only Molly 99 isotope. • General Motors completed construction on its new $40 million Logistics Center (200 jobs), its new $162 million Stamping plant (65 jobs), its new $520 million Lansing Delta Car Assembly plant expansion, culminating in the new Camaro production, moved here from Canada. The Camaro was just named as the 2015 Motor Trend Car of the Year, and production has resulted in the addition of a second shift at the Lansing Grand River plant. • Sparrow Health System began construction on its new $44 million Cancer Center on Michigan Avenue. • The $12 million, downtown riverfront mixed use Market Place building opened and had 100% occupancy immediately, and the $10 million mixed use Midtown mixed-use development on Michigan Avenue also opened. • The $12 million Outfield project (the only one like it in the entire United States - a mixed use building built inside a professional baseball stadium) commenced construction. • Neogen's purchase and rehabilitation of an additional building as part of their biotechnology campus was completed. • The $2 million Lansing Brewing Company opened, creating 70 new jobs, along with the Beer Grotto, Arcadia and Zoobies which were begun and/or completed as well in 2015. • The Hope Soccer Complex completed construction and improvements to the Hope Soccer Complex valued at $2 million, making it a Midwest-wide multi-sport attraction complex. • Lansing Community College completed construction, interior and exterior, on its $65 million downtown campus investment. 5 New announcements during 2015 include: • An $80 million, nine-story mixed use new building, in a key stretch of Michigan Avenue, the gateway between the cities of Lansing and East Lansing, as well as a $3.5 million expansion of the Bud Kouts auto dealership, on that same stretch of Michigan Avenue. • The $6 million East Town Flats mixed use building. • The rehabilitation of the eight-story vacant downtown Oliver Towers building into an $11 million mixed use structure. • A$12 million 616 downtown/1-496 mixed use building. • Redevelopment of the Snethkamp Chevrolet auto dealership site, starting as a $3 million expansion on the southside of the City, with a potential hotel on site as yet undetermined. Further 2015 updates, accomplishments, and awards include: • Planning and design for the Downtown Lansing casino continues, prevailing in lawsuits thus far, including two important US Supreme Court decisions. • The City's new fashion incubator, the Runway, enjoyed its grand re-opening in the recently rehabilitated Knapps building in downtown. • Downtown Lansing was named a National Main Street certified community. • The City received a special SW Lansing grant to help redevelop that portion of the south city. • The Beacon Soccer Field opened, one of the few urban, downtown specialized soccer fields open 24 hours a day to the public. • Work continues toward the $250 million Red Cedar global village project on Michigan Avenue, with the development agreement being adopted by Lansing City Council in late 2014. • The City received a new $500,000 EPA brownfield assessment grant. • The US-127 bridge over Michigan Avenue received $100,000 in grants/contributions for a complete place making upgrade. The City of Lansing is one of the leading communities in the state of Michigan, in terms of development, hope and future growth opportunities. Lansing is an environment for high-growth, a place where one can expect a good return on investment. Lansing is also poised to benefit from a new generation of young people, entrepreneurs: its economy is diverse; its workforce 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, 2014. This was the 37th 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. 6 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 37th consecutive GFOA award, recognizing their efforts, is well deserved indeed. Sincerely, Virg Bernero Mayor Angela Bennett Finance Director 7 Citizens of Lansing City Clerk City Council Mayor 54-A District Court Internal City Attorney's Office of Office of Audit Office Community Financial Media Empowerment Police Fire Planning & Economic Public Parks & Human Relations Neighborhood Development Service Recreation and Community Development Services Patrol Suppression Planning Economic Dev. Corp. Roads/Sidewalks Parks Design/Programs Grant Writing Assist. Crime Investigation Prevention Zoning LEPFA Sewers/Treatment Recreation Programs Human Serv.Grants Community Policing Code Compliance Housing/Neighborhoods Downtown Lansing,Inc. Trash/Recycling Community Centers Police Internal Inv. Detention Emergency Mgmt Building Safety TIFA Grounds Maintenance Cemeteries Parking Enforcement Parking System Engineering Golf Property Management Fleet Services Information Technology Finance Human Resources Treasury/Incot Tax Recruitment Assessing Training Accounting/Budget Labor Relations Retirement Services Payroll/Benefits 8 CITY OF LANSING, MICHIGAN GFOA Certificate of Achievement Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Lansing Michigan For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2014 Executive Director/CEO 9 This page intentionally left blank. 10 FINANCIAL SECTION 11 This page intentionally left blank. 12 �a Fie h m a n n Rebmann Robson 2330 East Paris Ave.SE Grand Rapids,MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 rehmann.com INDEPENDENT AUDITORS' REPORT December 21, 2015 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, 2015, 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. 13 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, 2015, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Implementation of G4SR Statement No. 68 As described in Note 19, the City implemented the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the current year. Accordingly, beginning net position of governmental activities, the Sewage Disposal System, Municipal Parking System and nonmajor enterprise funds, and business-type activities was restated. Our opinion is not modified with respect to this matter. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the schedules for the pension and other postemployment benefits 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, and the introductory section and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. 14 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. Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 21, 2015, 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. -n�- L LC 15 This page intentionally left blank. 16 MANAGEMENT'S DISCUSSION AND ANALYSIS 17 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, 2015 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MDiW') 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 The City implemented Governmental Accounting Standards Board (GASB) Statement 68, resulting in full recognition of a net pension liability (i.e. unfunded pension liability) on its balance sheet. This implementation, as required by the Standard, resulted in the retroactive restatement of FY 2014/2015 beginning net position, amounting to a total of $226.6 million, $199.8 million for governmental activities and $26.8 million in business- type activities. Because pension liabilities are long-term, government-wide balances were impacted, as were enterprise funds which use full accrual accounting. Because individual governmental funds utilize modified accrual accounting, governmental fund statements were not affected. Total government-wide assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year by $151.6 million (reported as net position), a decrease of $635,560 from fiscal year 2013/2014. As of the close of the 2014/2015 fiscal year, the City's governmental funds reported combined ending fund balances of $26.7 million, a $4.0 million increase from fiscal year 2013/2014. Of the $26.7 million fiscal year 2014/2015 combined ending fund balance, $9.5 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $7.9 million is committed for designated projects, leaving $9.3 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 $9.8 million, an increase of $2.7 million from FY 2013/2014. 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 $238.9 million, an increase of $4.7 million during the year. The City's total bonded and loaned debt was $237.1 million at June 30, 2015, an increase of $1.3 million (or 0.6%), which represents the net difference between new issuances and payments. More detailed information regarding these activities and funds can be found in footnote 9, Long-Term Debt of the Notes to the Financial Statements section of the CAFR. Overview of the Financial Statements This MDFtA 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. 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the these categories 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, but can also change as a result of governmental accounting standards, as is the case for fiscal year 2014/2015. 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). 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 inflows of resources 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. 19 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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. Pension and other postemployment benefits liabilities and related deferrals. 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 General Fund, Other Capital Projects Fund Sewage Disposal System Fund, and it's Municipal Parking System Fund. Data for all other funds, termed "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. 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. 20 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefits 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. 21 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Government-Wide Financial Analysis The City's combined net position decreased $635,560 over the course of this fiscal year's operations, and including the restatement for the implementation of GASB 68, came to a total of $151.6 million. Net position of governmental activities decreased $5.3 million or 4.5%, and business-type activities increased $4.6 million or 1.8%. Explanations for those changes are described below under the Governmental Activities and Business-Type Activities sections of this Management Discussion and Analysis. Net Position Governmental Activities Business-type Activities Total 2015 2014 2015 2014 2015 2014 Current and other assets $ 55,267,321 $ 47,595,049 $ 72,710,863 $ 71,988,749 $127,978,184 $119,583,798 Capital assets, net 200,588,271 187,934,084 382,581,922 389,610,713 583,170,193 577,544,797 Total assets 255,855,592 235,529,133 455,292,785 461,599,462 711,148,377 697,128,595 Deferred outflows of resources 19,319,368 201,592 4,220,635 3,163,496 23,540,003 3,365,088 Long-term liabilities 63,089,729 53,568,260 189,410,522 201,061,382 252,500,251 254,629,642 Other liabilities 295,991,635 64,397,873 30,325,950 2,605,586 326,317,585 67,003,459 Total liabilities 359,081,364 117,966,133 219,736,472 203,666,968 578,817,836 321,633,101 Deferred inflows of resources 3,449,346 - 832,207 - 4,281,553 - Net position Net investment in capital assets 151,785,916 150,976,010 218,813,478 214,458,841 370,599,394 365,434,851 Restricted 12,311,541 13,133,137 2,889,096 8,746,096 15,200,637 21,879,233 Unrestricted (251,453,207) (46,344,555) 17,242,167 37,891,053 (234,211,040) (8,453,502) Total net position $ (87,355,750) $117,764,592 $238,944,741 $261,095,990 $151,588,991 $378,860,582 The largest component 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. 22 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 2015 2014 2015 2014 2015 2014 Program revenues Charges for services $ 12,770,559 $ 11,939,026 $ 44,787,903 $ 45,042,043 $ 57,558,462 $ 56,981,069 Operating grants 24,658,955 28,234,803 1,143,085 2,574,949 25,802,040 30,809,752 Capital grants 2,910,660 3,365,682 - - 2,910,660 3,365,682 General revenues Taxes 71,318,305 69,530,461 71,318,305 69,530,461 State shared revenues 13,919,567 13,630,527 13,919,567 13,630,527 Unrestricted grants and contributions 22,411,409 22,047,383 22,411,409 22,047,383 Unrestricted investment earnings 26,353 36,836 17,874 246,616 44,227 283,452 Gain (loss)on sale of capital assets 280,280 - - 2,600 280,280 2,600 Total revenues 148,296,088 148,784,718 45,948,862 47,866,208 194,244,950 196,650,926 Expenses General government 25,225,893 24,771,054 - - 25,225,893 24,771,054 Public safety 81,827,437 78,142,897 81,827,437 78,142,897 Public works 27,815,970 37,243,516 27,815,970 37,243,516 Recreation and culture 6,515,590 8,670,918 6,515,590 8,670,918 Community development 10,270,404 7,602,229 10,270,404 7,602,229 Interest on long-term debt 1,291,846 1,340,818 1,291,846 1,340,818 Sewage disposal system - - 27,506,843 28,682,809 27,506,843 28,682,809 Municipal parking system 7,605,461 7,851,702 7,605,461 7,851,702 Cemetery 632,485 722,270 632,485 722,270 Golf 852,634 935,671 852,634 935,671 Garbage and rubbish - 1,722,843 collection 1,712,671 1,722,843 1,712,671 3,263,553 Recycling 3,623,276 3,263,553 3,623,276 3,263,553 Total expenses 152,947,140 157,771,432 41,933,370 43,178,848 194,880,510 200,950,280 Change in net position, before transfers (4,651,052) (8,986,714) 4,015,492 4,687,360 (635,560) (4,299,354) Transfers (644,485) (705,637) 644,485 705,637 Change in net position (5,295,537) (9,692,351) 4,659,977 5,392,997 (635,560) (4,299,354) Net position: Beginning of year, 117,764,592 $127,456,943 261,095,990 255,702,993 378,860,582 383,159,936 Restatement for implementation of GASB 68 (199,824,805) - (26,811,226) - (226,636,031) - End of year $ (87,355,750) $117,764,592 $238,944,741 $261,095,990 $151,588,991 $378,860,582 23 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, 2015 Property Tax and Special Assessments Income Tax 26.7% 21.3% Gain on Sale of Capital Assets — 0.2% Unrestricted Investment ` Earnings Charges for Services 0.0% 8.6% Unrestricted Grants and Contributions Operating Grants and 15 1% Contributions(restricted) Capital Grants and 16.6% Contributions State Shared Revenue 2 0% 9.4% In total, Governmental Activity revenue decreased $488,630 from FY 2013/2014 to FY 2014/2015, with trends of the major revenue categories as follows: Property taxes and special assessments comprised the largest portion of Governmental Activity revenue at 26.7%, or $39.7 million, a $1.6 million, or 4.1% increase from fiscal year 2013/2014. The increase resulted from increases in property values, although revenue increases were constrained from the true amount of growth by State-imposed limitations on growth in taxable value. Income taxes comprised 21.3%, or $31.7 million, of Governmental Activity revenue, the full amount of which is revenue to the General Fund. This represents a $210,010, or 0.7%, increase from fiscal year 2013/2014. 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. Restricted Operating and Capital Grants and Contributions made up $27.6 million, or 18.6% of Governmental Activity revenue for fiscal year 2014/2015, a $4.0 million, or 12.8% decrease from fiscal year 2013/2014. In this category, $15.2 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 $12.4 million is attributable to non-entitlement grants. The decrease from FY 2013/2014 is the result of a reduction in non-entitlement grants with the conclusion of much of the federal ARRA grants. Unrestricted Grants and Contributions (including state shared sales tax revenue) comprised 24.5%, or $36.3 million, of revenues, a $653,000 or 1.8% increase from fiscal year 2013/2014. A little more than one-third of this category, $13.9 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 $20.8 million of the category, with remaining $1.6 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. The $653,000 increase from the prior year was attributable to a $289,000 increase in State revenue sharing, a $232,000 increase in equity payments, and a $132,000 increase in other revenues. 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Charges for Services are program-specific revenues generated for services provided. Governmental activity charges for services increased $831,533 from FY 2013/2014 to FY 2014/2015. The majority of the increase is attributable to a decrease in deferred ambulance service charges. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2015 Community Interest on Long-term Development Debt 6.7% 0.8% General Government Recreation and Culture (administrative) 16.5/ 4.3% 00 Public Works — — 18 2% Public Safety 53.5% Total expenses for Governmental Activities decreased $4.8 million from FY 2013/2014 to FY 2014/2015. The reduction is largely attributable to a $8.9 million reduction in infrastructure capital asset investment. That $8.9 million decrease was offset by a $3.7 million increase from FY 2013/2014 in public safety operations and a $400,000 increase in other general government operating expenditures. Business-type Activities. Net position of the business-type activities increased by $4.7 million from FY 2013/2104, as restated for pension liabilities in accordance with GASB 68, to $238.9 million. The increase was mainly attributable to a $4.3 million increase in sewer system operations during the fiscal year which, is necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years, and a $300,000 increase in parking system operations. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $26.7 million. Of this, $9.5 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $7.9 million is committed for designated projects, leaving $9.3 million unassigned. The unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund), was $9.8 million, an increase of $2.7 million from FY 2013/2014, which is further described in the next section, General Fund Budgetary Highlights. 25 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis General Fund Budgetary Highlights The FY 2014/2015 General Fund budget was adopted as a balanced budget, based on projected revenues, with a $500,000 addition to reserves (fund balance). 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 as a single line item of the General Fund and allocated to various departments through a budget amendment during the year. During the course of the fiscal year, the budget was amended to allocate the vacancy factor and to adjust expenditures in response to higher- than-expected special election costs and facility maintenance and improvement needs. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $1.46 million from FY 2014/2015 from $9.2 million to $10.7 million. However, $1.27 million of expenditures were from restricted (committed) reserves. As a result, unassigned fund balance increased $2.73 million, or 38.7% from fiscal year 2013/2014. This $2.7 million increase was attributable to General Fund revenues exceeding budget by $1.3 million, most notably lesser-than expected property tax adjustment losses and higher-than-budgeted income tax receipts, as well as expenditures coming in under budget $1.6 million, largely due to position vacancies during the year. The FY 2015/2016 budget, adopted at levels commensurate with projected decreases in property values and other revenue levels experienced in FY 2014/2015, is budgeted to increase unassigned reserves by $500,000. Sewage Disposal Fund Net position increased $4.1 million (after restatement for implementation of GASB 68) to $228.5 million in FY 2014/2015. Unrestricted net position decreased $7.7 million, from $26.5 million to $18.8 million. The increase in total net positions was partially the result of sewer operations which are necessary to fund the debt associated with the Combined Sewer Overflow (CSO) program in future years. As a result of implementation of GASB 68 to record the net pension liability, unrestricted net position decreased $13.8 million, including the restatement of beginning net position by $13.5 million. This decrease was partially offset by a reduction in debt restrictions, for a net reduction of$7.7 million, from $26.5 million to $18.8 million. Municipal Parking Fund The Municipal Parking Fund net position increased $322,591, from $14.5 million (after restatement for implementation of GASB 68) to $14.9 million. Unrestricted net position went from $10.0 million to $5.3 million. As a result of implementation of GASB 68 to record the net pension liability, unrestricted net position decreased $4.8 million, including the restatement of beginning net position by $4.7 million. This decrease was partially offset by a reduction in capital restrictions for a net reduction of$4.6 million, from $10.0 million to $5.3 million. 26 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Capital Assets. At the end of the fiscal year 2015, the City had invested $583.2 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 Footnote 6 of the of the Notes to the Financial Statements section of the CAFR. Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2015 2014 2015 2014 2015 2014 Land $ 25,838,193 $ 25,725,672 $ 13,483,910 $ 13,483,910 $ 39,322,103 $ 39,209,582 Land improvements 11,074,077 9,140,079 11,457,282 11,907,987 22,531,359 21,048,066 Buildings and improvements 49,325,202 53,049,485 96,312,347 101,100,446 145,637,549 154,149,931 Equipment 7,000,277 5,708,965 1,790,500 1,955,426 8,790,777 7,664,391 Infrastructure 92,983,289 92,028,470 247,182,984 253,517,068 340,166,273 345,545,538 Construction in progress 14,367,233 2,281,413 12,354,899 7,645,876 26,722,132 9,927,289 Total capital assets, net $200,588,271 $187,934,084 $382,581,922 $389,610,713 $583,170,193 $577,544,797 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. 27 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Outstanding Debt 2015 2014 Governmental activities General obligation bonds $ 25,755,000 $ 27,145,000 Installment purchase contracts 16,387,327 3,100,563 Loans 7,872,600 7,062,234 Compensated absences 9,568,555 10,153,254 Workers compensation 3,418,805 5,967,593 Tax settlement 52,161 104,322 Deferred amounts: For issuance discounts (79,821) (86,654) For issuance premiums 115,102 121,948 Total governmental activities 63,089,729 53,568,260 Business-type activities General obligation bonds 165,352,984 175,033,286 Revenue bonds 20,275,000 21,765,000 Installment purchase agreements 1,459,431 1,668,080 Compensated absences 718,149 866,003 Deferred amounts: For issuance discounts (709,367) (782,377) For issuance premiums 2,314,325 2,511,390 Total business-type activities 189,410,522 201,061,382 Total outstanding debt $252,500,251 $254,629,642 The City procured a $986,300 loan from the State of Michigan for street and bridge repairs, entered into a $13.5 million installment purchase agreement for stadium improvements and $491,241 for police patrol vehicles, as well as issuing $2.275 million in bonds for technology improvements, which are all categorized as Governmental activity debt. The City also issued $2.9 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 which is considered Business-type activity debt. Reductions in the categories listed above are due debt payments made during the course of the fiscal year. More detailed information regarding these activities and funds can be found in Footnote 9 of the of the Notes to the Financial Statements section of the CAFR. Economic Condition and Outlook Emerging from the Great Recession, property values began in increase in FY 2015, and unemployment levels in the City are on the decline, resulting in more income tax revenue. Lansing's financial picture as a whole has stabilized and is improving -- the 2014/2015 fiscal year resulted in a $2.7 million addition to General Fund unassigned reserves and a surplus is again expecting in FY 2015/2016, but significant challenges remain in the longer-term. Going forward, State-imposed limitations on municipal revenues, most notably property tax growth, will continue to constrain resources, which in context of projected increases in pension, healthcare, and infrastructure funding, will present significant budgetary challenges. 28 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Strengthening the City's economic base, building back up General Fund reserves to pre-Recession levels, and addressing long-term pension and retiree healthcare obligations are top priorities. The City continues to work diligently with its employees and unions to address the ongoing structural imbalance between projected revenues and long-term pension and retiree health care costs and has been successful in achieving significant agreements over the past several years on a wide range of cost-saving measures. The City, with the assistance of the Mayor-appointed Financial Health Team made up of volunteer community leaders, will issue a request of proposal in the coming year for recommendations for addressing long-term pension and retiree healthcare funding obligations in context of revenue growth limitations. The City continues to pursue regional approaches to providing the same or enhanced levels of services to its residents. This past year, the City's purchasing operations were successfully merged with the purchasing operations at the Board of Water and Light; a county ballot proposal to fund maintenance of a key regional asset, the Lansing River Trail, was approved by voters; and the City continues to pursue regional approaches to providing public safety and other services. In terms of economic development, even during the Recession, which included a historic credit crisis in the private sector, the City saw significant economic development announcements, and those successes have continued (see Economic Condition and Outlook in the Transmittal Letter). 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. Copies of this financial report, as well as other financial reports, are available on the City's website, www.lansingmi.gov. If you have any questions about this report or need additional financial information, please feel free to contact the Finance Department at (517)483-4500. 29 This page intentionally left blank. 30 BASIC FINANCIAL STATEMENTS 31 This page intentionally left blank. 32 GOVERNMENT-WIDE FINANCIAL STATEMENTS 33 CITY OF LANSING, MICHIGAN Statement of Net Position June 30, 2015 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 32,526,213 $ 37,767,986 $ 70,294,199 $ 4,618,713 Receivables, net 23,238,484 28,564,402 51,802,886 5,023,631 Internal balances (2,239,511) 2,239,511 - - Due from primary government - - - 2,349,530 Inventories, prepaids and other assets 1,742,135 387,921 2,130,056 145,558 Restricted assets: Cash and investments - 3,751,043 3,751,043 1,555,649 Capital assets not being depreciated 40,205,426 25,838,809 66,044,235 - Capital assets being depreciated, net 160,382,845 356,743,113 517,125,958 6,239 Total assets 255,855,592 455,292,785 711,148,377 13,699,320 Deferred outflows of resources Deferred refunding loss 167,649 2,766,021 2,933,670 4,318,519 Deferred pension amounts 19,151,719 1,454,614 20,606,333 - Total deferred outflows of resources 19,319,368 4,220,635 23,540,003 4,318,519 Liabilities Accounts payable and accrued liabilities 17,340,800 1,683,150 19,023,950 5,693,266 Accrued interest payable 353,219 1,022,475 1,375,694 17,147,057 Unearned revenue 431,694 185,729 617,423 305,799 Due to component units 2,349,530 - 2,349,530 - Long-term liabilities: Due within one year 6,593,647 14,380,172 20,973,819 676,850 Due in more than one year 56,496,082 175,030,350 231,526,432 29,526,326 Net pension liability 218,532,256 27,434,596 245,966,852 - Net other postemployment benefit obligation 56,984,136 - 56,984,136 Total liabilities 359,081,364 219,736,472 578,817,836 53,349,298 Deferred inflows of resources Deferred pension amounts 3,449,346 832,207 4,281,553 - Net position Net investment in capital assets 151,785,916 218,813,478 370,599,394 6,239 Restricted for: Public safety 1,402,622 - 1,402,622 - Public works 5,669,183 5,669,183 Community development 3,447,473 3,447,473 Federal and state programs 35,737 35,737 Donations 10,044 - 10,044 Debt service - 2,360,269 2,360,269 Capital projects - 528,827 528,827 Endowments(nonexpendable) 1,746,482 - 1,746,482 Unrestricted (deficit) (251,453,207) 17,242,167 (234,211,040) (35,337,698) Total net position (deficit) $ (87,355,750) $ 238,944,741 $ 151,588,991 $ (35,331,459) The accompanying notes are an integral part of the financial statements. 34 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2015 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 $ 25,225,893 $ 6,815,975 $ 2,739,285 $ $ (15,670,633) Public safety 81,827,437 3,344,183 7,532,501 (70,950,753) Public works 27,815,970 1,923,303 8,053,350 2,910,660 (14,928,657) Recreation and culture 6,515,590 619,834 588,407 - (5,307,349) Community development 10,270,404 67,264 5,745,412 (4,457,728) Interest on long-term debt 1,291,846 - - - (1,291,846) Total governmental activities 152,947,140 12,770,559 24,658,955 2,910,660 (112,606,966) Business-type activities: Sewage disposal system 27,506,843 31,730,416 196,792 - 4,420,365 Municipal parking system 7,605,461 6,988,879 939,173 322,591 Cemetery 632,485 335,379 - (297,106) Golf 852,634 363,559 7,120 (481,955) Garbage and rubbish collection 1,712,671 1,744,999 - 32,328 Recycling 3,623,276 3,624,671 1,395 Total business-type activities 41,933,370 44,787,903 1,143,085 - 3,997,618 Total primary government $ 194,880,510 $ 57,558,462 $ 25,802,040 $ 2,910,660 $ (108,609,348) Component units Brownfield redevelopment authority $ 1,613,850 $ - $ 441,857 $ - $ (1,171,993) Tax increment finance authority 3,821,379 - - (3,821,379) Lansing entertainment Et public facilities authority 7,745,185 6,477,993 1,189,900 (77,292) Total component units $ 13,180,414 $ 6,477,993 $ 1,631,757 $ $ (5,070,664) continued... 35 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2015 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(112,606,966) $ 3,997,618 $(108,609,348) $ (5,070,664) General revenues: Property taxes 39,657,382 - 39,657,382 5,013,973 Income taxes 31,660,923 31,660,923 - Grants and contributions not restricted to specific programs 36,330,976 36,330,976 - Unrestricted investment earnings 26,353 17,874 44,227 5,993 Gain on sale of capital assets 280,280 - 280,280 - Transfers - internal activities (644,485) 644,485 - - Total general revenues and transfers 107,311,429 662,359 107,973,788 5,019,966 Change in net position (5,295,537) 4,659,977 (635,560) (50,698) Net position, beginning of year, as restated (82,060,213) 234,284,764 152,224,551 (35,280,761) Net position, end of year $ (87,355,750) $ 238,944,741 $ 151,588,991 $ (35,331,459) concluded The accompanying notes are an integral part of the financial statements. 36 FUND FINANCIAL STATEMENTS 37 This page intentionally left blank. 38 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 Other Capital Projects fund accounts for miscellaneous capital projects, most significantly the 2015 ballpark improvements. Nonmajor Funds Nonmajor governmental funds are presented, by fund type, beginning on the pages listed below: Special revenue funds, page 132. Debt service funds, page 144. Capital projects funds, page 148. Permanent funds, page 152. CITY OF LANSING, MICHIGAN Balance Sheet Governmental Funds June 30, 2015 Other Nonmajor Capital Governmental General Projects Funds Totals Assets Cash and cash equivalents $ 516,794 $ - $ 52,637 $ 569,431 Equity in pooled cash and investments 8,526,931 8,534,486 11,368,384 28,429,801 Accounts receivable, net 9,463,278 149,438 75,820 9,688,536 Taxes receivable 630,504 - - 630,504 Special assessments receivable - 501,212 501,212 Loans receivable 1,430,356 1,430,356 Accrued interest receivable - 2,217,117 2,217,117 Due from other funds 2,722,723 - 2,722,723 Due from other governments 2,502,880 5,406,009 7,908,889 Inventories 32,624 872,009 904,633 Prepaids 2,800 - 574 3,374 Total assets $ 24,398,534 $ 8,683,924 $ 21,924,118 $ 55,006,576 Liabilities Accounts payable $ 3,421,497 $ 3,710,320 $ 1,498,394 $ 8,630,211 Deposits payable - - 178,285 178,285 Accrued payroll 2,041,703 41,734 2,083,437 Retainage payable 418,345 - 418,345 Indemnity bonds - 9,411 9,411 Due to other funds 120,144 3,800,000 3,920,144 Due to component units 2,349,530 - 2,349,530 Advance from other funds - 342,090 342,090 Due to other governments 3,016,619 811,056 3,827,675 Unearned revenue 179,984 251,710 431,694 Other 591,026 - - 591,026 Total liabilities 12,138,848 3,710,320 6,932,680 22,781,848 Deferred inflows of resources Unavailable revenue-fees 1,592,546 - - 1,592,546 Unavailable revenue- loans and accrued interest receivable - 3,447,473 3,447,473 Unavailable revenue-special assessments - 450,583 450,583 Total deferred inflows of resources 1,592,546 3,898,056 5,490,602 Fund balances Nonspendable 35,424 - 2,619,065 2,654,489 Restricted 10,044 1,025,670 5,839,910 6,875,624 Committed 837,761 3,947,934 3,162,551 7,948,246 Unassigned (deficit) 9,783,911 - (528,144) 9,255,767 Total fund balances 10,667,140 4,973,604 11,093,382 26,734,126 Total liabilities, deferred inflows of resources and fund balances $ 24,398,534 $ 8,683,924 $ 21,924,118 $ 55,006,576 The accompanying notes are an integral part of the financial statements. 40 CITY OF LANSING, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2015 Fund balances-total governmental funds $ 26,734,126 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 40,205,426 Capital assets being depreciated, net 160,382,845 Capital assets accounted for in internal service funds, net (13,055,723) 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 inflows of resources in the governmental funds and, therefore, are not included in fund balance. Deferred ambulance fees receivable 967,913 Deferred nuisance fees receivable 364,797 Deferred loans receivable 1,230,356 Deferred long-term interest receivable 2,217,117 Deferred long-term special assessments receivable 450,583 Deferred long-term taxes and tax settlement receivables 259,836 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. 9,352,060 Long-term liabilities and related deferred outflows are not due and payable in the current period and therefore are not reported in the funds. Bonds, loans and leases payable (44,270,557) Deferred loss on refunding 164,210 Accrued interest on bonds, loans and leases payable (312,526) Net other postemployment benefit obligation (56,984,136) Compensated absences and other long-term liabilities (12,232,194) Certain pension-related amounts, such as the net pension liability and deferred amounts are not due and payable in the current period or do not represent current financial resources and therefore are not reported in the funds. Net pension liability (218,532,256) Deferred outflows related to the net pension liability 19,151,719 Deferred inflows related to the net pension liability (3,449,346) Net position of governmental activities $ (87,355,750) 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 Governmental Funds For the Year Ended June 30, 2015 Other Nonmajor Capital Governmental General Projects Funds Totals Revenues Taxes and special assessments $ 38,495,554 $ $ 974,695 $ 39,470,249 Income taxes 31,660,923 - 31,660,923 Licenses and permits 1,551,125 - 1,551,125 Intergovernmental 15,395,891 20,646,486 36,042,377 Charges for services 8,665,489 566,055 3,668,946 12,900,490 Fines and forfeits 2,619,082 - 456,345 3,075,427 Interest and rents 82,460 4,575 87,035 Contributions 21,055,173 506,276 21,561,449 Otherrevenues 221,911 - 1,379,586 1,601,497 Total revenues 119,747,608 566,055 27,636,909 147,950,572 Expenditures Current expenditures: General government 18,598,287 - 3,121,919 21,720,206 Public safety 72,207,198 3,303,545 75,510,743 Public works 10,291,976 2,981,356 13,273,332 Highways and streets - 10,357,488 10,357,488 Recreation and culture 7,583,085 - 7,583,085 Community development - 3,910,924 3,910,924 Other functions 2,704,982 - 2,704,982 Debt service: Principal 785,363 2,830,934 3,616,297 Interest 229,737 - 701,342 931,079 Capital outlay - 16,333,164 4,683,644 21,016,808 Total expenditures 112,400,628 16,333,164 31,891,152 160,624,944 Revenues over(under)expenditures 7,346,980 (15,767,109) (4,254,243) (12,674,372) Other financing sources(uses) Transfers in 827,127 2,603,320 6,304,125 9,734,572 Transfers out (6,825,562) (2,621,076) (556,134) (10,002,772) Proceeds on sale of capital assets 110,533 - 110,533 Issuance of long-term debt - 16,761,300 16,761,300 Bond premium 40,945 40,945 Total other financing sources(uses) (5,887,902) 16,784,489 5,747,991 16,644,578 Net change in fund balances 1,459,078 1,017,380 1,493,748 3,970,206 Fund balances, beginning of year 9,208,062 3,956,224 9,599,634 22,763,920 Fund balances,end of year $ 10,667,140 $ 4,973,604 $ 11,093,382 $ 26,734,126 The accompanying notes are an integral part of the financial statements. 42 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, 2015 Net change in fund balances-total governmental funds $ 3,970,206 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 19,647,134 Depreciation expense (6,568,121) Loss on sale of capital assets (43,080) Proceeds on sale of capital assets (110,533) 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 (38,866) Change in deferred nuisance fees receivable (219,011) Change in deferred loans receivable (1,986) Change in deferred long-term interest receivable 69,250 Change in deferred special assessments receivable 5,987 Change in deferred taxes and tax settlement receivables 197,701 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 income from governmental activities in internal service funds 1,441,824 Gain on sale of capital assets from governmental internal service funds 280,280 Interest expense from governmental internal service funds (194,548) Transfers in from governmental internal service funds 825,210 Transfers out of governmental internal service funds (1,201,495) 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 (16,761,300) Principal payments on long-term liabilities 3,616,297 Premium on bond issuances (40,945) 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 2,548,788 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 (178,329) Amortization of issuance premiums and discounts,and deferred refunding losses 12,110 Change in net other postemployment benefit obligation (10,420,339) Change in net pension liability and related deferral amounts (2,758,989) Change in the accrual for compensated absences 575,057 Change in the accrual for tax settlement agreement 52,161 Change in net position of governmental activities $ (5,295,537) The accompanying notes are an integral part of the financial statements. 43 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2015 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 37,605,000 $ 37,605,000 $ 38,495,554 $ 890,554 Income taxes 31,180,000 31,180,000 31,660,923 480,923 Licenses and permits 1,507,500 1,496,500 1,551,125 54,625 Intergovernmental 15,464,595 15,554,595 15,395,891 (158,704) Charges for services 8,305,670 8,726,670 8,665,489 (61,181) Fines and forfeits 2,585,600 2,585,600 2,619,082 33,482 Interest and rents 31,172 31,172 82,460 51,288 Contributions - 21,147,613 21,055,173 (92,440) Otherrevenues 20,953,500 100,500 221,911 121,411 Total revenues 117,633,037 118,427,650 119,747,608 1,319,958 Expenditures General government: Attorney's office 1,605,970 1,573,970 1,568,162 (5,808) City clerk 949,360 1,039,360 1,069,714 30,354 Council 666,400 666,400 631,898 (34,502) Courts 5,979,450 5,904,450 5,816,737 (87,713) Internal audit 204,650 204,650 202,336 (2,314) Finance 5,014,120 4,594,120 4,565,108 (29,012) Library rental 155,000 155,000 153,620 (1,380) LEPFA support 331,400 1,189,900 1,189,900 Human resources 1,817,300 1,772,300 1,370,845 (401,455) Mayor 875,130 875,130 878,708 3,578 Office of community media 355,750 370,750 357,808 (12,942) Planning / neighborhood development 825,500 797,500 793,451 (4,049) Budgetary savings from attrition (800,000) - - Total general government 17,980,030 19,143,530 18,598,287 (545,243) Public safety: Police 38,076,900 38,811,145 38,483,338 (327,807) Fire 33,406,600 34,183,682 33,723,860 (459,822) Total public safety 71,483,500 72,994,827 72,207,198 (787,629) Public works 10,130,100 10,130,100 10,291,976 161,876 Recreation and culture 7,420,800 7,420,800 7,583,085 162,285 continued... 44 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2015 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Other functions: Human relations / community services $ 1,045,750 $ 946,287 $ 956,313 $ 10,026 Human services / community support 1,480,000 1,911,249 1,748,669 (162,580) Total other functions 2,525,750 2,857,536 2,704,982 (152,554) Debt service: Principal 786,000 786,000 785,363 (637) Interest 230,000 659,000 229,737 (429,263) Total debt service 1,016,000 1,445,000 1,015,100 (429,900) Total expenditures 110,556,180 113,991,793 112,400,628 (1,591,165) Revenues over expenditures 7,076,857 4,435,857 7,346,980 2,911,123 Other financing sources (uses) Transfers in 866,963 827,127 827,127 - Transfers out (7,943,820) (6,809,593) (6,825,562) 15,969 Proceeds on sale of capital assets 8,000 110,533 102,533 Total other financing sources (uses) (7,076,857) (5,974,466) (5,887,902) 86,564 Net change in fund balance - (1,538,609) 1,459,078 2,997,687 Fund balance, beginning of year 9,208,062 9,208,062 9,208,062 - Fund balance, end of year $ 9,208,062 $ 7,669,453 $ 10,667,140 $ 2,997,687 concluded The accompanying notes are an integral part of the financial statements. 45 This page intentionally left blank. 46 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: Nonmajor enterprise funds, page 156. Internal service funds, page 162. 47 CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds June 30, 2015 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 $ 5,424,425 $ 684,338 $ 500 $ 6,109,263 $ 57,842 Equity in pooled cash and investments 20,927,895 8,534,438 2,196,390 31,658,723 3,469,139 Accounts receivable,net 5,489,567 325,921 65,957 5,881,445 861,870 Accrued interest receivable 49,440 79,850 - 129,290 - Lease receivable,current 621,442 - 621,442 Loans receivable,current - 259,707 - 259,707 - Inventories 287,474 - 100,047 387,521 427,884 Prepaids - 400 - 400 406,244 Due from other funds 4,578,040 25,180 - 4,603,220 - Total current assets 37,378,283 9,909,834 2,362,894 49,651,011 5,222,979 Noncurrent assets: Restricted cash and cash equivalents 3,222,216 528,827 - 3,751,043 Advances to other funds - 342,090 342,090 Lease receivable,net of current portion 8,786,435 12,750,031 21,536,466 Loans receivable,net of current portion - 136,052 136,052 - Capital assets not being depreciated 12,775,648 12,558,920 504,241 25,838,809 92,892 Capital assets being depreciated,net 333,888,921 19,332,473 3,521,719 356,743,113 12,962,831 Total noncurrent assets 358,673,220 45,648,393 4,025,960 408,347,573 13,055,723 Total assets 396,051,503 55,558,227 6,388,854 457,998,584 18,278,702 Deferred outflows of resources Deferred refunding loss 1,289,069 1,472,158 4,794 2,766,021 3,439 Deferred pension amounts 734,487 255,993 464,134 1,454,614 - Total deferred outflows of resources 2,023,556 1,728,151 468,928 4,220,635 3,439 Liabilities Current liabilities: Accounts payable 1,361,013 51,743 94,392 1,507,148 791,970 Deposits payable - 58,375 4,140 62,515 - Accrued interest payable 861,947 152,967 7,561 1,022,475 40,693 Accrued payroll 65,042 29,792 18,653 113,487 105,535 Claims incurred but not reported - - - - 704,905 Due to other funds 2,591,138 9,390 105,271 2,705,799 700,000 Unearned revenues - - 185,729 185,729 - Bonds and notes payable,current portion 12,146,284 1,795,000 312,759 14,254,043 1,026,148 Compensated absences,current portion 103,409 22,720 - 126,129 41,350 Total current liabilities 17,128,833 2,119,987 728,505 19,977,325 3,410,601 Noncurrent liabilities: Bonds and notes payable,net of current portion 137,883,295 35,203,363 1,351,672 174,438,330 4,753,503 Compensated absences,net of current portion 273,682 84,640 233,698 592,020 765,977 Net pension liability 13,852,705 4,828,132 8,753,759 27,434,596 - Total noncurrent liabilities 152,009,682 40,116,135 10,339,129 202,464,946 5,519,480 Total liabilities 169,138,515 42,236,122 11,067,634 222,442,271 8,930,081 Deferred inflows of resources Deferred pension amounts 420,211 146,458 265,538 832,207 - Net position Net investment in capital assets 207,331,936 9,115,219 2,366,323 218,813,478 7,279,511 Restricted for debt retirement 2,360,269 - - 2,360,269 - Restricted for capital projects - 528,827 528,827 - Unrestricted(deficit) 18,824,128 5,259,752 (6,841,713) 17,242,167 2,072,549 Total net position $ 228,516,333 $ 14,903,798 $ (4,475,390) $ 238,944,741 $ 9,352,060 The accompanying notes are an integral part of the financial statements. 48 CITY OF LANSING, MICHIGAN Statement of Reve es Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30,2015 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 $ 31,730,416 $ 6,988,879 $ 6,068,608 $ 44,787,903 $ 77,660,448 Operating expenses Personal services 5,860,738 2,638,492 3,710,089 12,209,319 7,774,216 Purchase of goods and services 7,434,836 1,065,442 2,455,024 10,955,302 66,501,036 Depreciation 10,319,698 2,102,875 394,075 12,816,648 1,943,372 Total operating expenses 23,615,272 5,806,809 6,559,188 35,981,269 76,218,624 Operating income(loss) 8,115,144 1,182,070 (490,580) 8,806,634 1,441,824 Nonoperating revenues(expenses) Interest revenue 214,666 - 7,120 221,786 - Gain on sale of capital assets - - - 280,280 Interest expense and fees (3,891,571) (1,798,652) (47,392) (5,737,615) (194,548) Capital contribution to others - (214,486) (214,486) Other revenue(expense) 939,173 939,173 - Total nonoperating revenue(expenses) (3,676,905) (859,479) (254,758) (4,791,142) 85,732 Income(loss)before transfers 4,438,239 322,591 (745,338) 4,015,492 1,527,556 Transfers Transfers in - - 972,372 972,372 825,210 Transfers out (300,000) (27,887) (327,887) (1,201,495) Total transfers (300,000) - 944,485 644,485 (376,285) Change in net position 4,138,239 322,591 199,147 4,659,977 1,151,271 Net position,beginning of year,as restated 224,378,094 14,581,207 (4,674,537) 234,284,764 8,200,789 Net position,end of year $ 228,516,333 $ 14,903,798 $ (4,475,390) $ 238,944,741 $ 9,352,060 The accompanying notes are an integral part of the financial statements. 49 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2015 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Service Funds Cash flows from operating activities Cash received from customers $ 45,105,392 $ 10,327,465 $ 6,136,709 $ 61,569,566 $ - Cash received from interfund services - - - - 77,223,777 Cash payments for goods and services (10,725,254) (1,213,467) (2,421,416) (14,360,137) (67,633,147) Cash payments to employees (5,972,585) (2,647,096) (3,717,424) (12,337,105) (7,896,400) Net cash provided by(used in)operating activities 28,407,553 6,466,902 (2,131) 34,872,324 1,694,230 Cash flows from noncapital financing activities Transfers in - - 972,372 972,372 825,210 Transfers out (300,000) - (27,887) (327,887) (1,201,495) Cash received on interfund advances 20,134 - 20,134 Net cash provided by(used in) noncapital financing activities (300,000) 20,134 944,485 664,619 (376,285) Cash flows from capital and related financing activities Proceeds from sale of capital assets - - - 285,355 Acquisition and construction of capital assets (5,479,860) (302,054) (5,943) (5,787,857) (1,677,234) Capital contributions to others - (214,486) (214,486) - Proceeds from issuance of long-term debt 2,914,585 - 2,914,585 491,241 Principal paid on long-term debt (12,239,886) (1,745,000) (308,650) (14,293,536) (929,114) Interest paid on long-term debt (4,005,577) (1,459,007) (46,118) (5,510,702) (194,382) Payments received on capital lease 613,322 613,322 Net cash used in capital and related financing activities (18,197,416) (3,506,061) (575,197) (22,278,674) (2,024,134) Cash flows from investing activities Interest and dividends received 217,822 - 7,120 224,942 Payments received on loans made to others - 352,852 - 352,852 Net cash provided by investing activities 217,822 352,852 7,120 577,794 Net change in cash and cash equivalents 10,127,959 3,333,827 374,277 13,836,063 (706,189) Cash and cash equivalents,beginning of year 19,446,577 6,413,776 1,822,613 27,682,966 4,233,170 Cash and cash equivalents,end of year $ 29,574,536 $ 9,747,603 $ 2,196,890 $ 41,519,029 $ 3,526,981 Reconciliation to statement of net position Cash and cash equivalents $ 5,424,425 $ 684,338 $ 500 $ 6,109,263 $ 57,842 Equity in pooled cash and investments 20,927,895 8,534,438 2,196,390 31,658,723 3,469,139 Restricted cash and cash equivalents 3,222,216 528,827 - 3,751,043 - $ 29,574,536 $ 9,747,603 $ 2,196,890 $ 41,519,029 $ 3,526,981 continued... 50 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2015 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(used in)operating activities Operating income(loss) $ 8,115,144 $ 1,182,070 $ (490,580) $ 8,806,634 $ 1,441,824 Adjustments to reconcile operating income(loss)to net cash provided by(used in)operating activities: Depreciation expense 10,319,698 2,102,875 394,075 12,816,648 1,943,372 Change in operating assets and liabilities that provided(used)cash: Accounts receivable (432,858) 104,725 (10,081) (338,214) (436,671) Inventories 58,535 - (11,869) 46,666 44,644 Prepaids - (400) (400) 143,969 Due from other funds 13,807,834 3,232,841 17,040,675 - Accounts payable 445,506 (157,015) (54,523) 233,968 (715,724) Deposits payable - 1,020 - 1,020 - Accrued payroll 11,016 5,892 2,197 19,105 14,365 Claims incurred but not reported - - - - (126,903) Due to other funds (3,794,459) 9,390 100,000 (3,685,069) (605,000) Unearned revenues - 78,182 78,182 Compensated absences (123,349) (14,666) (9,839) (147,854) (9,646) Net pension liability and related deferred amounts 486 170 307 963 - Net cash provided by(used in)operating activities $ 28,407,553 $ 6,466,902 $ (2,131) $ 34,872,324 $ 1,694,230 concluded The accompanying notes are an integral part of the financial statements. 51 This page intentionally left blank. 52 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 168. 53 CITY OF LANSING, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds June 30, 2015 Pension and Other Postemployment Benefits Trust Agency Funds Funds Assets Cash and cash equivalents $ 40,169,248 $ Equity in pooled cash and investments - 69,307 Investments: Money market funds 24,076,624 Government obligations 76,949,067 - Corporate bonds 571543,044 Common stocks 113,495,428 Mutualfunds 23411827002 Contribution receivable 12,384 Dividends and interest receivable 496,309 Total assets 546,924,106 $ 69,307 Liabilities Accounts payable 1,257,970 $ - Undistributed receipts - 69,307 Total liabilities 1,257,970 $ 69,307 Net position restricted for Pension benefits 475,772,700 Other postemployment benefits 69,893,436 Total net position $ 545,666,136 The accompanying notes are an integral part of the financial statements. 54 CITY OF LANSING, MICHIGAN Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefits Trust Funds For the Year Ended June 30, 2015 Additions Investment income: Net appreciation in fair value of investments $ 15,425,008 Interest income 3,508,235 Dividend income 1,803,795 Investment expenses (6,260) Net investment income 20,730,778 Contributions: Employer 43,030,572 Plan members 4,106,707 Total contributions 47,137,279 Total additions 67,868,057 Deductions Participant benefits 70,596,865 Administrative expense 2,223,741 Total deductions 72,820,606 Change in net position (4,952,549) Net position restricted for pension and other postemployment benefits Beginning of year 550,618,685 End of year $ 545,666,136 The accompanying notes are an integral part of the financial statements. 55 This page intentionally left blank. 56 COMPONENT UNITS 57 This page intentionally left blank. 58 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 SmartZone Complete financial statements for each of the individual component units, excluding SmartZone, may be obtained from the entity's administrative offices. Separately-issued financial statements are not prepared for the SmartZone. 59 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Discretely Presented Component Units June 30, 2015 Lansing Tax Entertainment Brownfield Increment 8 Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Assets Cash and cash equivalents $ 954,688 $ 3,399,023 $ 265,002 $ $ 4,618,713 Receivables, net 722,703 - 4,300,928 5,023,631 Due from primary government 1,548,668 798,250 - 2,612 2,349,530 Inventories, prepaids and other assets - - 145,558 - 145,558 Restricted cash and cash equivalents 634,760 920,889 1,555,649 Capital assets being depreciated, net - - 6,239 - 6,239 Total assets 3,226,059 4,832,033 5,638,616 2,612 13,699,320 Deferred outflows of resources Deferred refunding loss - 4,318,519 - - 4,318,519 Liabilities Accounts payable and accrued liabilities 1,431,066 65,037 4,197,163 5,693,266 Accrued interest payable - 16,948,143 198,914 17,147,057 Unearned revenues - - 305,799 305,799 Long-term debt: Due within one year 259,707 417,143 - 676,850 Due in more than one year 136,052 29,390,274 - 29,526,326 Total liabilities 1,826,825 46,820,597 4,701,876 53,349,298 Net position Net investment in capital assets - - 6,239 6,239 Unrestricted (deficit) 1,399,234 (37,670,045) 930,501 2,612 (35,337,698) Total net position $ 1,399,234 $ (37,670,045) $ 936,740 $ 2,612 $ (35,331,459) The accompanying notes are an integral part of the financial statements. 60 This page intentionally left blank. 61 CITY OF LANSING, MICHIGAN Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2015 Lansing Tax Entertainment Brownfield Increment 8 Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Expenses Brownfield redevelopment $ 1,613,850 $ - $ $ $ 1,613,850 Community development - 3,821,379 3,821,379 Recreation and culture - - 7,745,185 7,745,185 Total expenses 1,613,850 3,821,379 7,745,185 13,180,414 Program revenues Charges for services - - 6,477,993 6,477,993 Operating grants and contributions 441,857 1,189,900 1,631,757 Total program revenues 441,857 7,667,893 8,109,750 Net program revenue(expense) (1,171,993) (3,821,379) (77,292) (5,070,664) General revenues Property taxes 1,964,162 2,729,735 320,076 5,013,973 Unrestricted investment earnings 1,907 3,916 170 5,993 Total general revenues 1,966,069 2,733,651 320,246 5,019,966 Changes in net position 794,076 (1,087,728) 242,954 (50,698) Net position, beginning of year 605,158 (36,582,317) 693,786 2,612 (35,280,761) Net position, end of year $ 1,399,234 $ (37,670,045) $ 936,740 $ 2,612 $ (35,331,459) The accompanying notes are an integral part of the financial statements. 62 NOTES TO FINANCIAL STATEMENTS 63 This page intentionally left blank. 64 CITY OF LANSING, MICHIGAN Index - Notes to Financial Statements Page 1. Summary of Significant Accounting Policies 66 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 76 3. Deficit Fund Equity 77 4. Deposits and Investments 78 5. Receivables 85 6. Capital Assets 86 7. Accounts Payable and Accrued Liabilities 88 8. Interfund Receivables, Payables and Transfers 88 9. Long-Term Debt 90 10.Fund Balances - Governmental Funds 94 11.Net Investment in Capital Assets 95 12.Segment Information - Enterprise Funds 95 13.Risk Management 96 14.Property Taxes 97 15.Contingent Liabilities 97 16.Pension Plans 97 17.Other Postemployment Benefits 111 18.Operating Leases 115 19.Adoption of New Accounting Pronouncement 116 20.Subsequent Event 116 65 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: 66 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Lansing Brownfield Redevelopment Authority ("LBRA") 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 LBRA 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 LBRA 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 LBRA 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. 67 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 SmartZone. 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 Joint Venture In 1998, the City entered into an agreement with Ingham County (the "County") to form the City of Lansing and County of Ingham Joint Building Authority (JBA) for the purpose of constructing and managing a building in downtown Lansing that houses the courts, prosecuting attorney and other related departments. The JBA is governed by a three-member board composed of one member each appointed by the City and the County and one appointed jointly by the two units. Both the County and the City contribute cash and/or property to the JBA. Bonds were issued in 1999 by the JBA to provide the funding necessary to construct the building. Because the joint venture agreement does not provide an explicit contractual formula outlining the City's claim to the JBA's assets, it is considered to be a "joint venture with no equity interest" and accordingly, no amounts are reported in the accompanying financial statements for an equity interest. Financial information for the JBA may be obtained by writing the Ingham County Financial Services Division, P.O. Box 319, Mason, Michigan 48854. Government-wide and Fund Financial Statements The government wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. For the most part, the effect of interfund activity has been removed from these statements. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities, which rely to a significant extent on fees and charges for support. Likewise, the primary government is reported separately from certain component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase, use, or directly benefit from goods, services, or privileges provided by a given function or segment and (2) grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. 68 CITY OF LANSING, MICHIGAN Notes to Financial Statements Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. 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. 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. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental funds: General fund. This fund is the City's primary operating fund. It accounts for all the financial resources of the primary government, except those accounted for and reported in another fund. Other Capital Projects fund. This fund accounts for miscellaneous capital projects, most significantly the 2014 ballpark improvements. 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. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, health care and self-insurance services, and information technology. 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 fiduciary capacity for the 54-A District Court. 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. 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. 70 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Restricted net position are assets that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 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 City to invest in: Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or instrumentality of the United States. Certificates of deposit, savings accounts, deposit accounts or depository receipts of a qualified financial institution. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of purchase. Bankers' acceptances of United States banks. Obligations of the State of Michigan and its political subdivisions, that, at the time of purchase are rated as investment grade by at least one standard rating service. Mutual funds registered under the Investment Company Act of 1940 with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. External investment pools as authorized by Public Act 20 as amended through December 31, 1997. 71 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either "due to/from other funds" (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 activities and business-type activities are reported in the government-wide financial statements as "internal balances." Amounts due from other governments include amounts due from grantors for specific programs and capital projects. Program grants and capital grants for capital assets are recorded as receivables and revenues at the time reimbursable project costs are incurred. Amounts received in advance of project costs being incurred are reported as unearned revenue. Certain receivables in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Leases receivable consist of amounts collectible from local municipalities for which the City has irrevocably pledged its full faith and credit as collateral for certain construction and improvement bonds. In accordance with contractual agreements, these entities will provide all future amounts due for bond principal and accrued interest payable. The receivable has been reported as current based on the amounts to be collected next year to satisfy obligations. Inventories and Prepaids 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. 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 are defined by the government as assets having a useful life in excess of three years and whose costs exceed $5,000 ($100,000 for buildings). Capital assets are stated at historical cost or estimated historical cost where actual cost information is not available. Donated capital assets are recorded at their market value as of the donation date. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the asset constructed. Capital assets 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 In addition to land and construction in progress, the amount presented as capital assets not being depreciated includes intangible assets consisting of land development rights acquired for the purpose of farmland and ranch preservation. Land development rights are deemed to have an indefinite useful life, and therefore are not being amortized. The City reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its fair value. If it is determined that an impairment loss has occurred the asset is written down to its net realizable value and a current charge to income is recognized. Landfill costs are amortized as engineered sections of the landfill are utilized. 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 reports deferred outflows of resources for change in expected and actual investment returns, assumptions, and benefits provided in its pension plans as well as for the deferred loss on refunding. A deferred refunding loss results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. 73 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pa yabl es 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. 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% 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. Unearned Revenue Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure on allowable costs. 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, 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 expenses when incurred. 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 governmental funds also report unavailable revenues, which arise only under a modified accrual basis of accounting that are reported as deferred inflows of resources. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. In addition, the City reports deferred inflows of resources for changes in expected and actual investment returns, assumptions, and benefits provided in its pension plans. 74 CITY OF LANSING, MICHIGAN Notes to Financial Statements Fund Balances 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 Council has not delegated the authority to assign fund balance. 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, assigned, and finally unassigned. Interfund Transactions During the course of normal operations, the City has numerous transactions between funds, including expenditures and transfers of resources to provide services, construct assets, and service debt. The accompanying financial statements generally reflect such transactions as transfers. Operating subsidies are also recorded as transfers. The amounts recorded as subsidies or advances are determined by the City. Balances outstanding at year-end are reported as due to/from other funds. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Internal service funds are used to record charges for services to all City departments and funds as transfers or operating revenue. All City funds record these payments to the internal service funds as transfers or operating expenditures/expenses. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the Plan and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The City utilizes various investment instruments which are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near-term and that such changes could materially affect the amounts reported in the financial statements. 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Public hearings are conducted to obtain taxpayer comments. Not later than the third Monday in May, the Council adopts a budget through passage of a resolution. 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. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars, but not in excess of 15% of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. 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, 2015. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2015, 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: City clerk $ 1,039,360 $ 1,069,714 $ 30,354 Mayor 875,130 878,708 3,578 Public works 10,130,100 10,291,976 161,876 Recreation and culture 7,420,800 7,583,085 162,285 Other functions: Human relations / community services 946,287 956,313 10,026 Transfers out 6,809,593 6,825,562 15,969 Nonmajor governmental funds: Major streets fund: Capital outlay 2,002,227 2,032,087 29,860 State and federal grants fund: Public works 5,330 2,981,356 2,976,026 Transfers out - 24 24 The above budgeted amounts are presented at the activity level, which is the required minimum level of control per the Michigan Uniform Budget Manual. The budget variance in the state and federal grants fund was caused by recording donated infrastructure (constructed by the State of Michigan Department of Transportation) in the fund. This transaction included both intergovernmental revenue and expenditures (and so had no effect on ending fund balance), but was not reflected in the amended budget, as it was attributable to amounts recorded for in-kind roadwork performed by the State, and therefore not subject to appropriation. 3. DEFICIT FUND EQUITY Governmental activities reported a deficit in unrestricted net position in the amount of $253,948,870 at June 30, 2015. Total net position amounted to a deficit of $87,355,750, inclusive of $218,532,256 net pension liability. 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 committed related to a long. term advance), was $0. The special assessments capital projects fund reported a deficit fund balance of $328,144. 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. 77 CITY OF LANSING, MICHIGAN Notes to Financial Statements The cemetery, golf, garbage and rubbish collection and recycling enterprise funds reported deficits in unrestricted fund net position of $782,633, $1,026,510, $2,420,409, and $2,612,161, respectively, as a result of the net pension liability. Excluding the net pension liability, unrestricted net positions were $253,997, $67,395, $97,452, and $1,493,202, respectively. Total fund net position amounted to deficits of $594,912, $2,420,409, and $2,717,037 for the cemetery, garbage and rubbish collection, and recycling funds, respectively. Excluding the net pension liability, total net positions were $441,718 for the cemetery fund, $97,452 for the garbage and rubbish fund, and $1,388,326 for the recycling fund. Total fund net position for the golf fund was positive at $1,256,968, inclusive of the net pension liability and the net investment in capital assets. The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of $37,670,045 at June 30, 2015. 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). 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, 2015: Primary Component Government Units Totals Statement of net position Cash and investments $ 70,294,199 $ 4,618,713 $ 74,912,912 Restricted cash and investments 3,751,043 1,555,649 5,306,692 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 40,169,248 - 40,169,248 Investments 506,246,165 506,246,165 Agency funds: Equity in pooled cash 69,307 69,307 Total $ 620,529,962 $ 6,174,362 $ 626,704,324 Deposits and investments Bank deposits: Checking/savings accounts $ 116,436,924 Investments - money markets 1,206,209 Investment in securities and mutual funds: Pooled investments 2,660,549 Pension and OPEB investments 506,246,165 Cash on hand 154,477 Total $ 626,704,324 78 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, $113,870,841 of the City's bank balance of $116,314,269 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, 2015, the City's pooled investments consisted entirely of mutual funds totaling $2,660,549. 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: S&P AAAm $ 655,821 SItP AA+ 1,999,450 Unrated 5,278 Total $ 2,660,549 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 more than 1 year $ 1,999,450 No maturity 661,099 Total $ 2,660,549 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. 79 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. 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, 2015: 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 $ 4,393,568 $ 9,535,383 $ 10,842 $ $ 13,939,793 On securities loan 1,898,705 1,046,680 - 2,945,385 U.S. agencies: Not on securities loan 14,977,106 19,795,934 34,773,040 On securities loan 1,587,853 644,177 2,232,030 Domestic corporate securities: Not on securities loan 22,768,372 33,879,662 56,648,034 Domestic equities: Not on securities loan 17,179,492 37,976,406 55,155,898 On securities loan 16,047,312 21,885,641 37,932,953 International equities: Not on securities loan 689,976 1,194,211 1,884,187 Emerging markets equities 7,269,110 11,253,280 560,886 19,083,276 80 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 Investments at fair value, as determined by quoted market price (concluded) Collateralized mortgage obligations $ 413,699 $ 481,311 $ $ $ 895,010 Real estate investment funds 16,047,120 19,178,265 35,225,385 Equity mutual funds - 30,960,961 30,960,961 International equity mutual funds 41,822,899 47,104,777 105,132 2,312,014 91,344,822 Domestic equity mutual funds 17,069,549 33,534,416 1,261,480 8,472,730 60,338,175 Domestic debt securities mutual funds - - 538,834 9,098,013 9,636,847 International debt securities mutual funds - 28,464,015 - - 28,464,015 Money market funds 21,496,885 2,579,739 - 709,730 24,786,354 Total investments $ 183,661,646 $ 299,514,858 $ 1,916,288 $ 21,153,373 $ 506,246,165 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 AAA $ - $ - $ 6,498 $ $ 6,498 AA 2,010,615 1,955,156 125,312 4,091,083 A - - - 4,547,458 4,547,458 BBB 19,924,810 28,464,015 - 4,550,555 52,939,380 BB - - 44,175 - 44,175 US government guaranteed 20,857,259 28,950,138 - 49,807,397 Not rated 28,330,840 36,740,454 - 65,071,294 Assets not subject to credit risk 112,538,122 203,405,095 1,740,303 12,055,360 329,738,880 $ 183,661,646 $ 299,514,858 $ 1,916,288 $ 21,153,373 $ 506,246,165 81 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Concentration of Credit Risk. At June 30, 2015, 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 Bank, N.A. 9.3% 11.2% Corporate bonds Legg Mason Fund Advisor, Inc. 14.0% 11.3% International equity mutual funds Franklin Templeton 10.8% 9.5% International equity mutual funds SEI Trust Company 7.1% 0.0% International equity mutual funds Mondrian 0.0% 7.8% International equity mutual funds Artisan 0.0% 8.0% Domestic equity mutual funds Private Advisors 0.0% 10.3% 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. 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 $ 296,764 $ 521,559 $ $ $ 818,323 India 113,393 181,606 294,999 The Netherlands 51,848 83,084 134,932 Puerto Rico 64,839 104,806 169,645 Switzerland 11,425 24,483 35,908 United Kingdom 136,464 249,171 385,635 France 15,243 29,502 44,745 International equity mutual funds 41,822,899 47,104,777 105,132 2,312,014 91,344,822 International debt security mutual funds - 28,464,015 - - 28,464,015 Total $ 42,5127875 $ 76,763,003 $ 105,132 $ 2,312,014 $ 121,693,024 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, 2015, maturities of the City's pension and other postemployment benefits trust debt securities and collateralized mortgage obligations 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. agencies $ 146,146 $ 2,016,327 $ 552,763 $ - $ 2,715,236 U.S. government bonds 141,158 3,638,633 2,243,842 268,640 6,292,273 U.S. government mortgage backed securities 97947 478,461 2,303,075 10,330,524 13,122,007 U.S. government issued commercial mortgage backed securities - 24,312 329,481 373,923 727,716 Commercial mortgage backed securities - - 101,580 312,119 413,699 Total $ 297,251 $ 6,157,733 $ 5,530,741 $ 11,285,206 $ 23,270,931 83 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Police and Fire Retirement System U.S. agencies $ 407,121 $ 1,756,839 $ 765,877 $ - $ 2,929,837 U.S. government bonds 302,482 5,907,370 3,848,362 523,849 10,582,063 U.S. government mortgage backed securities 12,842 1,095,744 2,041,898 13,485,934 16,636,418 U.S. government issued commercial mortgage backed securities - 30,808 386,657 456,391 873,856 Commercial mortgage backed securities - - 130,603 350,708 481,311 Total $ 722,445 $ 8,790,761 $ 7,173,397 $ 14,816,882 $ 31,503,485 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% of the fair value of the securities lent, and may not fall below 95% 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. 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, 2015, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $19,533,870 and $23,576,498, respectively, for which the Plans' received cash collateral of $19,957,941 and $24,101,452, respectively. The contract with the pension and other postemployment 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. 84 CITY OF LANSING, MICHIGAN Notes to Financial Statements 5. RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 10,967,172 $ 6,200,538 $ 4,300,928 Taxes receivable 783,944 - - Special assessments receivable 501,212 - - Loansreceivable 1,430,356 395,759 708,262 Accrued interest receivable 2,217,117 129,290 - Due from other governments 8,093,255 - 14,441 Lease receivable - 22,157,908 - Allowance for uncollectible accounts (754,572) (319,093) - $ 23,238,484 $ 28,564,402 $ 5,023,631 Amount not expected to be collected within one year $ 4,098,056 $ 21,672,518 $ 708,262 85 CITY OF LANSING, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2015 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,725,672 $ 135,619 $ (23,098) $ - $ 25,838,193 Construction in progress 2,281,413 13,708,608 (1,622,788) 14,367,233 28,007,085 13,844,227 (23,098) (1,622,788) 40,205,426 Capital assets, being depreciated: Land improvements 17,272,931 2,672,420 19,945,351 Equipment and vehicles 35,387,815 1,948,891 (2,893,719) 1,622,788 36,065,775 Buildings 123,353,011 123,353,011 Infrastructure 302,992,318 2,858,830 (2,543,158) - 303,307,990 479,006,075 7,480,141 (5,436,877) 1,622,788 482,672,127 Less accumulated depreciation for: Land improvements (8,132,852) (738,422) - - (8,871,274) Equipment and vehicles (29,678,850) (2,234,797) 2,848,149 (29,065,498) Buildings (70,303,526) (3,724,283) - (74,027,809) Infrastructure (210,963,848) (1,813,991) 2,453,138 (210,324,701) (319,079,076) (8,511,493) 5,301,287 (322,289,282) Total capital assets being depreciated, net 159,926,999 (1,031,352) (135,590) 1,622,788 160,382,845 Governmental activities capital assets, net $ 187,934,084 $ 12,812,875 $ (158,688) $ - $ 200,588,271 At June 30, 2015, the City's governmental activities had outstanding commitments through construction contracts of approximately $810,000. 86 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Balance Additions Disposals Transfers Balance Business-type activities Capital assets, not being depreciated: Land $ 13,483,910 $ - $ $ - $ 13,483,910 Construction in progress 7,645,876 5,040,916 (331,893) 12,354,899 21,129,786 5,040,916 (331,893) 25,838,809 Capital assets, being depreciated: Land improvements 24,585,130 24,585,130 Equipment and vehicles 7,282,646 242,057 (380,084) 7,144,619 Buildings 215,869,809 275,668 - 216,145,477 Sewers 335,008,083 229,216 331,893 335,569,192 582,745,668 746,941 (380,084) 331,893 583,444,418 Less accumulated depreciation for: Land improvements (12,677,143) (450,705) - - (13,127,848) Equipment and vehicles (5,327,220) (406,983) 380,084 (5,354,119) Buildings (114,769,363) (5,063,767) - (119,833,130) Sewers (81,491,015) (6,895,193) - (88,386,208) (214,264,741) (12,816,648) 380,084 (226,701,305) Total capital assets being depreciated, net 368,480,927 (12,069,707) - 331,893 356,743,113 Business-type activities capital assets, net $ 389,610,713 $ (7,028,791) $ $ - $ 382,581,922 At June 30, 2015, the City's business-type activities had outstanding commitments through construction contracts of approximately $1,400,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 482,621 Public safety 571,383 Public works 1,813,991 Recreation and culture 1,887,774 Community development 1,812,352 Internal service funds 1,943,372 Total depreciation expense - governmental activities $ 8,511,493 Depreciation of business-type activities by function Sewage disposal system $ 10,319,698 Municipal parking system 2,102,875 Cemetery 14,723 Golf 78,340 Recycling 301,012 Total depreciation expense - business-type activities $ 12,816,648 87 CITY OF LANSING, MICHIGAN Notes to Financial Statements 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 9,422,181 $ 1,507,148 $ 5,693,266 Deposits payable 178,285 62,515 - Accrued payroll 2,188,972 113,487 Contract retainage payable 418,345 - Due to other governments 3,827,675 Other 1,305,342 - - $ 17,340,800 $ 1,683,150 $ 5,693,266 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2015, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ 2,722,723 $ 120,144 Nonmajor governmental funds - 3,800,000 Sewage disposal system 4,578,040 2,591,138 Municipal parking system 25,180 9,390 Nonmajor enterprise funds - 105,271 Internal service funds - 700,000 Total $ 7,325,943 $ 7,325,943 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. 88 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 $ - $ 342,090 Municipal parking system 342,090 - Total $ 342,090 $ 342,090 Due to and from component units Due from Due to primary component government unit General fund $ - $ 2,349,530 Brownfield Redevelopment Authority 1,548,668 - Tax Increment Finance Authority 798,250 SmartZone 2,612 - Total $ 2,349,530 $ 2,349,530 For the year ended June 30, 2015, interfund transfers consisted of the following: Transfers In Other Nonmajor Nonmajor Internal capital projects governmental enterprise service Transfers Out General fund fund funds funds funds Total General fund $ - $ 2,603,320 $ 3,396,765 $ 477 $ 825,000 $ 6,825,562 Other capital projects fund 100,000 - 1,553,546 967,320 210 2,621,076 Nonmajor governmental funds - 551,559 4,575 - 556,134 Sewage disposal system 300,000 - - 300,000 Nonmajor enterprise funds - 27,887 - 27,887 Internal service funds 427,127 - 774,368 - 1,201,495 Total $ 827,127 $ 2,603,320 $ 6,304,125 $ 972,372 $ 825,210 $ 11,532,154 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. 89 CITY OF LANSING, MICHIGAN Notes to Financial Statements 9. 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 $ 2,080,000 2005 Building Authority Refunding Bonds 3.50-5.00% 1,470,000 475,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 1,137,600 270,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 3,602,400 855,000 2007 Fire Station Refunding Bonds 3.625-5.00% 1,780,000 795,000 2008 Michigan Transportation Fund Limited Tax Bonds 3.00-4.00% 3,500,000 1,460,000 2009 Capital Improvement Bonds - Limited Tax General 3.15-6.85% 10,197,000 9,105,000 2010 Refunding Bonds - Limited Tax General Obligation 2.60-2.65% 2,470,000 1,230,000 2013 Refunding Bonds - Limited Tax General Obligation Energy Efficiency Refunding Bonds 2.40% 5,645,000 4,905,000 2013 Refunding Bonds - Limited Tax General Obligation Phone System Refunding Bonds 2.40% 240,000 120,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,780,000 2013 Operations and Maintenance Limited Tax Refunding 2.40% 465,000 155,000 2014 Capital Improvement Bonds - Limited Tax General Obligation 1.25-2.00% 2,275,000 1,525,000 $ 39,982,000 $ 25,755,000 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Original Rate Amount Amount Business-type activities: 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 6,405,000 2005 Building Authority Refunding Bonds 3.50-5.00% 15,975,000 7,960,000 2007 Building Authority Refunding Bonds 3.625-5.00% 7,965,000 7,740,000 2013 Building Authority Golf Course Refunding Bonds 2.40% 405,000 205,000 2014 Building Authority Refunding Bonds 4.75% 7,245,000 7,245,000 1994 Limited Tax Sewer Bond - 5005-03 2.50% 3,234,722 185,000 1994 Limited Tax Sewer Bond - 5005-04 2.00% 3,727,138 121,804 1994 Limited Tax Sewer Bond - 5005-06 2.25% 7,595,611 340,000 1996 Limited Tax Sewer Bond - 5005-07 2.25% 3,365,073 395,073 1996 Limited Tax Sewer Bond - 5005-08 2.25% 3,995,000 720,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 1,101,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 3,034,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 3,025,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 3,292,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 4,268,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 6,211,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,259,826 5,675,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,070,277 2,267,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 8,003,778 4,673,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 8,144,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 12,301,346 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 17,329,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,494,933 21,734,933 2008 Limited Tax Sewer Bond - 5005-22 2.50% 15,615,000 12,630,604 2009 Capital Improvement Bonds 4.10-7.05% 9,803,000 9,420,000 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 7,848,000 2015 Limited Tax Sewer Bond - 5211-01 2.50% 2,914,584 2,914,584 $ 268,237,813 $ 165,352,984 On July 9, 2014, the City issued $2,360,000 of Limited Tax General Obligation bonds under the state drinking water revolving fund to be used for sanitary sewer system improvements. Payments of amounts drawn are to be made semi-annually over a 20 year period, beginning on April 1, 2016. Interest is charged on the outstanding balance at 2.50 percent. As of June 30, 2015, no amounts had been drawn on this loan. Refunded and Defeased Debt As of June 30, 2015, the Tax Increment Financing Authority component unit had defeased bonds outstanding consisted of $10,415,000 related to the 1990 Tax Increment Finance Authority Bonds. This amount is scheduled to be paid by the escrow agent in installments on May 1 of years 2016 through 2020 and $1,500,000 of 1994 Tax Increment Revenue Bonds, scheduled to be paid by the escrow agent on May 1, 2016. 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 2013 Sewer Revenue and Refunding Bond 2.40% $ 21,765,000 $ 20,275,000 Pledged Revenues The City has pledged future sewer customer revenues, net of specified operating expenses, to repay $21,765,000 in sewer revenue and refunding bonds issued in 2013. Proceeds from the bonds provided financing for the construction for various sewer infrastructure projects. The bonds are payable solely from sewer customer net revenues and are payable through 2028. Annual principal and interest payments on the bonds are expected to require less than 14% of net revenues. The total principal and interest paid for the current year and total customer net revenues were $2,410,788 and $18,649,508 respectively. 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 Equipment 4.24% $ 81,500 $ 4,955 2012 Lease Purchase Agreement - Snowmobile 2.40% 147,046 12,893 2013 Lease Purchase Agreement - Garage 2.40% 1,892,332 1,156,143 2014 Lease Purchase Agreement - Recycling Trucks 1.96% 1,550,855 1,302,507 2015 Ballpark Improvements Installment Purchase 3.00% 13,500,000 13,500,000 2014 SIB Loan 1.44% 491,241 410,829 $ 17,662,974 $ 16,387,327 Business-type activities: 2014 Lease Purchase Agreement - Recycling Carts 1.96% $ 1,737,000 $ 1,459,431 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: HUD Section 108 Loan 1.52% $ 5,900,000 $ 5,900,000 2014 SIB Loan 3.00% 1,972,600 1,972,600 $ 7,872,600 $ 7,872,600 92 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in long-term debt. Long-term liability activity for the year ended June 30, 2015, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 27,145,000 $ 2,275,000 $ 3,665,000 $ 25,755,000 $ 3,800,000 Installment purchase agreements 3,100,563 13,991,241 704,477 16,387,327 1,119,010 Loans payable 7,062,234 986,300 175,934 7,872,600 - Total installment debt 37,307,797 17,252,541 4,545,411 50,014,927 4,919,010 Deferred amounts: For issuance discounts (86,654) - (6,833) (79,821) - For issuance premiums 121,948 40,945 47,791 115,102 - Compensated absences 10,153,254 9,568,555 10,153,254 9,568,555 973,871 Accrued workers compensation 5,967,593 1,328,263 3,877,051 3,418,805 648,605 Accrued tax settlement 104,322 - 52,161 52,161 52,161 $ 53,568,260 $ 28,190,304 $ 18,668,835 $ 63,089,729 $ 6,593,647 Business-type activities General obligation bonds $ 175,033,286 $ 2,914,585 $ 12,594,887 $ 165,352,984 $ 12,491,284 Revenue bonds 21,765,000 - 1,490,000 20,275,000 1,550,000 Installment purchase agreements 1,668,080 - 208,649 1,459,431 212,759 Total installment debt 198,466,366 2,914,585 14,293,536 187,087,415 14,254,043 Deferred amounts: For issuance discounts (782,377) - (73,010) (709,367) - For issuance premiums 2,511,390 - 197,065 2,314,325 - Compensated absences 866,003 718,149 866,003 718,149 126,129 $ 201,061,382 $ 3,632,734 $ 15,283,594 $ 189,410,522 $ 14,380,172 For the governmental activities, compensated absences and other long-term debt are generally liquidated by the general fund. 93 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 2016 $ 4,919,010 $ 1,648,744 $ 6,567,754 $ 14,254,043 $ 8,070,811 $ 22,324,854 2017 5,340,785 1,547,222 6,888,007 13,897,020 7,664,403 21,561,423 2018 4,430,797 1,374,362 5,805,159 13,896,223 7,262,871 21,159,094 2019 3,544,718 1,232,934 4,777,652 13,922,360 6,887,192 20,809,552 2020 3,250,169 1,119,223 4,369,392 13,964,973 6,465,486 20,430,459 2021-2025 14,838,513 3,972,489 18,811,002 65,262,285 25,128,443 90,390,728 2026-2030 12,115,934 1,546,882 13,662,816 37,902,323 13,209,548 51,111,871 2031-2035 1,575,001 85,844 1,660,845 10,033,188 5,995,861 16,029,049 2036-2040 - - 3,955,000 4,676,050 8,631,050 $ 50,014,927 $ 12,527,700 $ 62,542,627 $ 187,087,415 $ 85,360,665 $ 272,448,080 10. 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: Other Nonmajor General Capital Governmental Fund Projects Fund Funds Totals Nonspendable Inventories $ 32,624 $ $ 872,009 $ 904,633 Prepaids 2,800 574 3,374 Corpus of permanent fund - 1,746,482 1,746,482 35,424 2,619,065 2,654,489 Restricted Lansing police department donations 10,044 - 10,044 Major and local streets - 4,346,591 4,346,591 Drug law and narcotics enforcement 1,402,622 1,402,622 Various state and federal grants 3,779 3,779 Shopping district events and maintenance 21,383 21,383 Building permit activity 10,001 10,001 Capital improvements (unexpended bond proceeds) - 1,025,670 54,534 1,080,204 10,044 1,025,670 5,839,910 6,875,624 94 CITY OF LANSING, MICHIGAN Notes to Financial Statements Other Nonmajor General Capital Governmental Fund Projects Fund Funds Totals Committed Police and fire services $ 346,672 $ $ - $ 346,672 By ordinance (budgetcarryforwards) 162,581 2,495,663 2,658,244 Stadium events 328,508 - 328,508 Community development - 200,000 200,000 City parks 466,888 466,888 Capital improvements - 3,947,934 - 3,947,934 837,761 3,947,934 3,162,551 7,948,246 Unassigned (deficit) 9,783,911 - (528,144) 9,255,767 Total fund balances - governmental funds $ 10,667,140 $ 4,973,604 $ 11,093,382 $ 26,734,126 11. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30, 2015, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 40,205,426 $ 25,838,809 $ - Capital assets being depreciated, net 160,382,845 356,743,113 6,239 Total capital assets 200,588,271 382,581,922 6,239 Related debt: General obligation bonds 25,755,000 165,352,984 - Revenue bonds - 20,275,000 Installment purchase agreements 16,387,327 1,459,431 Loans payable 7,872,600 - Unamortized bond discounts (79,821) (709,367) Unamortized bond premiums 115,102 2,314,325 Deferred loss on bond refunding (167,649) (2,766,021) Amounts under leases receivable - (22,157,908) Unexpended bond proceeds (1,080,204) - Totalrelated debt 48,802,355 163,768,444 - Net investment in capital assets $ 151,785,916 $ 218,813,478 $ 6,239 12. 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. 95 CITY OF LANSING, MICHIGAN Notes to Financial Statements 13. 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, 2015 2014 Estimated liability, beginning of year $ 831,808 $ 814,014 Estimated claims incurred, including changes in estimates 10,048,116 11,756,639 Claim payments (10,175,019) (11,738,845) Estimated liability, end of year $ 704,905 $ 831,808 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, 2015 2014 Estimated liability, beginning of year $ 5,967,593 $ 6,986,062 Estimated claims incurred, including changes in estimates 1,328,263 6,875 Claim payments (3,877,051) (1,025,344) Estimated liability, end of year $ 3,418,805 $ 5,967,593 96 CITY OF LANSING, MICHIGAN Notes to Financial Statements 14. 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, 2015 was $19.44 per $1,000 of taxable value. 15. CONTINGENT LIABILITIES Federal Grant Programs. 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. Risk Management. 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. 16. PENSION PLANS Employees'Retirement System Plan Description. The City sponsors and administers the Employees' Retirement System (the "Plan"), a single-employer, defined benefit pension plan that 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 defined benefit pension plan. The Plan was established and may be amended by the City Council and is administered by 9-member Board of Trustees. The Board is comprised of The Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, the City Human Resources Director, three members of the retirement system to be elected by the members of the system under rules adopted by the board, two residents of the State of Michigan appointed by the Mayor, by and with the consent of the City Council, one of which is a retiree of the retirement system. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. 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. 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 prior to retirement will receive their benefit as a life annuity beginning at age 58. 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported 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. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. Plan Membership. At December 31, 2014, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 901 Terminated employees entitled to but not yet receiving benefits 74 Vested and non-vested active participants 361 Total membership 1,336 Benefits Provided. Employees who retire with minimum age and years of service requirements are entitled to annual retirement benefits, payable in monthly installments for life, in an amount equal to a percentage of their final average compensation times years of credited service. Final average compensation is defined as the average of the highest annual compensation paid over 2 consecutive years of credited service within the last 10 years of credited service immediately preceding a member's termination of employment. The benefit payments are calculated using the following rates for the various groups of general employees: Bargaining Unit/Employee Multiplier Group Percentage United Auto Workers (UAW): Hired after October 18, 2013 1.70% All others 2.75% Teamsters Local 214: Hired after September 2012 1.25% All others 1.80% Teamsters Local 580: Hired after May 19, 2014 1.25% All others 1.80% Non-bargaining and all others Hired after April 1, 2014 1.25% All others 1.60% 98 CITY OF LANSING, MICHIGAN Notes to Financial Statements Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Employees are required to make contributions to the Plan in rates from 3.00 to 6.50 percent depending on bargaining unit and hire date. The City is required to contribute at actuarially determined rates expressed as a percentage of covered payroll. The City's contribution rate for the plan for the year ended June 30, 2015 was 53.4 percent of projected valuation payroll. Bargaining Unit/Employee Contribution Group Percentage United Auto Workers (UAW) 3.00% Teamsters Local 214: Hired after September 2012 5.00% All others 6.50% Teamsters Local 580: Hired after May 9, 2014 5.00% All others 6.35% District court Teamsters: Hired after April 2014 5.00% All others 5.50% District court exempt 5.50% All others 6.50% Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 2.43 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2015, the Plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the Plan's fiduciary net position. Please see Note 4 for the details of these concentrations. 99 CITY OF LANSING, MICHIGAN Notes to Financial Statements Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2015 is as follows: Reserve/Group Balance Employee savings fund $ 31,648,132 Retirement reserve fund 135,312,668 Pension accumulation fund (7,355,354) Members benefit fund 18,951,028 Health insurance fund 23584,949 Net Pension Liability. The components of the net pension liability for the employees' retirement system at June 30, 2015 were as follows: Total pension liability $ 319,702,427 Plan fiduciary net position 178,556,474 Net pension liability $ 141,145,953 Plan fiduciary net position as percentage of total pension liability 55.85% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2014, rolled forward to June 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50%of Scale BB. The actuarial assumptions used in the December 31, 2014 valuation were based on the results of actuarial experience analysis conducted in 2012. The next assumption review is scheduled for 2016. 100 CITY OF LANSING, MICHIGAN Notes to Financial Statements The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015, and the final investment return assumption, are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 36.00% 5.70% 2.05% International equity - Developed 14.00% 5.77% 0.81% International equity - Emerging 4.00% 6.70% 0.27% Fixed income 32.00% 2.66% 0.85% Real estate 11.00% 4.11% 0.45% Equity Long/Short 3.00% 7.79% 0.23% 100.00% 4.66% Inflation 3.10% Risk adjustments -0.16% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.35%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2056. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2056, and discounting with the 20-year AA municipal bond index rate of 3.78% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. 101 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2014 $ 323,057,487 $ 185,118,660 $ 137,938,827 Changes for the year: Service cost 2,857,948 - 2,857,948 Interest 22,671,909 22,671,909 Differences between expected and actual experience (6,422,330) (6,422,330) Employer contributions 10,547,556 (10,547,556) Employee contributions 1,128,120 (1,128,120) Net investment income 4,399,543 (4,399,543) Benefit payments, including refunds of employee contributions (22,462,587) (22,462,587) - Administrative expense (174,818) 174,818 Net changes (3,355,060) (6,562,186) 3,207,126 Balances at June 30, 2015 $ 319,702,427 $ 178,556,474 $ 141,145,953 Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.35 percent, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.35 percent) or 1-percentage-point higher (8.35 percent) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.35%) (7.35%) (8.35%) Net pension liability $ 175,988,388 $ 141,145,953 $ 109,641,044 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2015, the City recognized pension expense of $10,552,503. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Changes in benefit terms $ $ - $ Difference between expected and actual experience 4,281,553 (4,281,553) Changes in assumptions - - Net difference between projected and actual earnings on pension plan investments 7,483,732 - 7,483,732 7,483,732 4,281,553 3,202,179 Contributions subsequent to measurement date - - - Total $ 7,483,732 $ 4,281,553 $ 3,202,179 The amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended June 30, Amount 2016 $ (269,844) 2017 (269,843) 2018 1,870,933 2019 1,870,933 Total $ 3,202,179 Police and Fire Retirement System Plan Description. The City sponsors and administers the Police and Fire Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers all police officers and fire fighters who are full- time employees of the City. The Plan was established and may be amended by the City Council and is administered by an 8-member Board of Trustees. The Board is comprised of The Mayor of the City, one member of the City Council appointed by the City Council, a resident of the City who shall be appointed by the Mayor, by and with the consent of Council, two members each of the police and fire departments, to be elected by all the members of their respective departments. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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). 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. Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported 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. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. Plan Membership. At December 31, 2014, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 711 Terminated employees entitled to but not yet receiving benefits 39 Vested and non-vested active participants 362 Total membership 1,112 Benefits Provided. 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. Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Fire members are required to contribute 9.08 percent of their annual wages to the plan. Police supervisors are required to contribute 9.52 percent and police non-supervisors, 8.50 percent. 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. The City's contribution rate for the plan for the year ended June 30, 2015 was 45.3 percent of projected valuation payroll. 104 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2015, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 3.04 percent. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2015, the Plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government, mutual funds, external investment pools, or other pooled investments) in certain organizations that represent 5 percent or more of the Plan's fiduciary net position. Please see Note 4 for the details of these concentrations. Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2015 is as follows: Reserve/Group Balance Retirement reserve fund $ 295,296,649 Health insurance fund 25,151,536 Net Pension Liability. The components of the net pension liability for the police and fire retirement system at June 30, 2015, were as follows: Total pension liability $ 400,117,548 Plan fiduciary net position 295,296,649 Net pension liability $ 104,820,899 Plan fiduciary net position as percentage of total pension liability 73.80% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2014, rolled forward to June 30, 2015, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation 105 CITY OF LANSING, MICHIGAN Notes to Financial Statements Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50% of Scale BB. The actuarial assumptions used in the December 31, 2014 valuation were based on the results of actuarial experience analysis conducted in 2012. The next assumption review is scheduled for 2016. The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2015, and the final investment return assumption, are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 36.00% 5.70% 2.05% International equity - Developed 14.00% 5.77% 0.81% International equity - Emerging 4.00% 6.70% 0.27% Fixed income 32.00% 2.66% 0.85% Real estate 11.00% 4.11% 0.45% Equity Long/Short 3.00% 7.79% 0.23% 100.00% 4.66% Inflation 3.10% Risk adjustments -0.16% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.57%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2071. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2071, and discounting with the 20-year AA municipal bond index rate of 3.78% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. 106 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2014 $ 389,416,813 $ 300,473,516 $ 88,943,297 Changes for the year: Service cost 6,350,378 - 6,350,378 Interest 29,159,382 29,159,382 Differences between expected and actual experience 3059,996 3,159,996 Employer contributions - 11,050,091 (11,050,091) Employee contributions 2,950,832 (2,950,832) Net investment income 8,965,080 (8,965,080) Benefit payments, including refunds of employee contributions (27,969,021) (27,969,021) Administrative expense - (173,849) 173,849 Net changes 10,700,735 (5,176,867) 15,877,602 Balances at June 30, 2015 $ 400,117,548 $ 295,296,649 $ 104,820,899 Sensitivity of the Net Pension Liability to Changes in the Discount Rate. The following presents the net pension liability of the City, calculated using the discount rate of 7.57 percent, as well as what the City's net pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower (6.57 percent) or 1-percentage-point higher (8.57 percent) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.57%) (7.57%) (8.57%) Net pension liability $ 144,472,483 $ 104,820,899 $ 62,811,223 107 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2015, the City recognized pension expense of $13,805,092. At June 30, 2015, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Changes in benefit terms $ - $ $ - Difference between expected and actual experience 2,369,997 2,369,997 Changes in assumptions - - Net difference between projected and actual earnings on pension plan investments 10,752,604 10,752,604 13,122,601 13,122,601 Contributions subsequent to measurement date - - Total $ 13,122,601 $ $ 13,122,601 The amount reported as deferred outflows of resources resulting from contributions subsequent to the measurement date will be recognized as a reduction in the net pension liability for the year ending June 30, 2016. Other amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended June 30, Amount 2016 $ 3,478,150 2017 3,478,150 2018 3,478,150 2019 2,688,151 Total $ 13,122,601 108 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 $ 19,029,146 $ - $ 21,140,102 $ - $ $ $ 40,169,248 Investments: Money market funds 18,736,358 2,760,527 2,363,107 216,632 24,076,624 Government obligations 19,922,016 2,935,216 28,417,110 2,605,064 1,916,288 21,153,373 76,949,067 Corporate bonds 20,205,140 2,976,931 31,475,536 2,885,437 - - 57,543,044 Common stocks 35,896,995 5,288,895 66,237,399 6,072,139 113,495,428 Mutualfunds 65,316,188 9,623,380 145,870,170 13,372,264 234,182,002 Contribution receivable 1,854 - 3,668 - 3,289 3,573 12,384 Dividends and interest receivable 248,152 - 248,152 - 5 496,309 Total assets 179,355,849 23,584,949 295,755,244 25,151,536 1,919,577 21,156,951 546,924,106 Liabilities Accounts payable 799,375 - 458,595 - - - 1,257,970 Net position restricted for Pension benefits 178,556,474 - 295,296,649 - 1,919,577 - 475,772,700 Other postemployment benefits - 23,584,949 - 25,151,536 - 21,156,951 69,893,436 Total net position $ 178,556,474 $ 23,584,949 $ 295,296,649 $ 25,151,536 $ 1,919,577 $ 21,156,951 $ 545,666,136 109 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 $ 3,440,340 $ 2,970,402 $ 7,884,944 $ 1,129,322 $ - $ - $ 15,425,008 Interest income 1,005,587 - 1,105,031 - 73,679 1,323,938 3,508,235 Dividend income 695,980 1,107,815 - - 1,803,795 Investment expenses - - - (6,260) - (6,260) Net investment income 5,141,907 2,970,402 10,097,790 1,129,322 67,419 1,323,938 20,730,778 Contributions: Employer 10,547,556 9,212,322 11,050,091 11,561,406 44,197 615,000 43,030,572 Plan members 1,128,120 - 2,950,832 - 27,755 - 4,106,707 Total contributions 11,675,676 9,212,322 14,000,923 11,561,406 71,952 615,000 47,137,279 Total additions 16,817,583 12,182,724 24,098,713 12,690,728 139,371 1,938,938 67,868,057 Deductions Participant benefits 22,462,587 9,012,322 27,969,021 10,976,406 176,529 - 70,596,865 Administrative expense 917,182 - 1,306,559 - - 2,223,741 Total deductions 23,379,769 9,012,322 29,275,580 10,976,406 176,529 72,820,606 Change in net position (6,562,186) 3,170,402 (5,176,867) 1,714,322 (37,158) 1,938,938 (4,952,549) Net position restricted for pension and other postemployment benefits: Beginning of year 185,118,660 20,414,547 300,473,516 23,437,214 1,956,735 19,218,013 550,618,685 End of year $178,556,474 $ 23,584,949 $295,296,649 $ 25,151,536 $ 1,919,577 $ 21,156,951 $545,666,136 110 CITY OF LANSING, MICHIGAN Notes to Financial Statements 17. 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 their respective pension plans, with the exception of Teamster 580 employees hired after May, 2014. 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. 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 Employees 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 $615,000 to the Plan. Employees'Retirement System 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, with the exception of Teamster 580 employees hired after May, 2014. 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 eligible dependent(s) eligible for retiree healthcare. The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. 111 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at December 31, 2013, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 852 Terminated plan members entitled to but not yet receiving benefits 45 Active plan members 370 Total 1,267 During the year, the City contributed $9,212,322 (direct benefit payments of $9,012,322 and City contributions of$200,000) to the Plan. Annual required contribution $ 13,194,531 Interest on net OPEB obligation 530,015 Adjustment to annual required contribution (453,845) Net OPEB cost (expense) 13,270,701 Contributions made (9,212,322) Increase in net OPEB obligation 4,058,379 Net OPEB obligation, beginning of year 6,973,885 Net OPEB obligation, end of year $ 11,032,264 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 2013 $ 12,775,667 79.4% $ 3,965,258 2014 14,057,619 78.6% 6,973,885 2015 13,270,701 69.4% 11,032,264 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. 112 CITY OF LANSING, MICHIGAN Notes to Financial Statements Funded Status and Funding Progress. As of December 31, 2013, the most recent actuarial valuation date, the Plan was 18.8 percent funded. The actuarial accrued liability for benefits was $199,704,566, and the actuarial value of assets was $37,629,546, resulting in an unfunded actuarial accrued liability (UAAL) of $162,075,502. The covered payroll (annual payroll of active employees covered by the Plan) was $20,874,143, and the ratio of the UAAL to the covered payroll was 776.4 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, 2013 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 7.6 percent investment rate of return (net of administrative expenses), which includes a 3.1 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, 2013, was 28 years. Poiice and Fire Retirement System 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. 113 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at December 31, 2013, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 646 Terminated plan members entitled to but not yet receiving benefits 15 Active plan members 349 Total 1,010 During the year, the City contributed $11,561,406 (direct benefit payments of $10,976,406 and City contributions of $585,000) to the Plan. Annual required contribution $ 17,490,956 Interest on net OPEB obligation 3,008,833 Adjustment to annual required contribution (2,576,423) Net OPEB cost (expense) 17,923,366 Contributions made (11,561,406) Increase in net OPEB obligation 6,361,960 Net OPEB obligation, beginning of year 39,589,912 Net OPEB obligation, end of year $ 45,951,872 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 2013 $ 17,489,692 63.9% $ 33,843,009 2014 17,489,692 63.9% 39,589,912 2015 17,923,366 64.5% 45,951,872 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. 114 CITY OF LANSING, MICHIGAN Notes to Financial Statements Funded Status and Funding Progress. As of December 31, 2013, the most recent actuarial valuation date, the Plan was 9.6 percent funded. The actuarial accrued liability for benefits was $242,413,796, and the actuarial value of assets was $23,197,213, resulting in an unfunded actuarial accrued liability (UAAL) of $219,216,583. The covered payroll (annual payroll of active employees covered by the Plan) was $25,636,626, and the ratio of the UAAL to the covered payroll was 855.1 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, 2013 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 7.6 percent investment rate of return (net of administrative expenses), which includes a 3.1 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, 2013, was 28 years. 18. OPERATING LEASES During fiscal year 2014, the City entered into an operating lease with the Lansing School District (the "District"), for approximately 86,900 square feet of the Hill Center for Academics and Technology for the purpose of operating a police precinct. The term of the lease runs through June 30, 2018. The City is required to make approximately $800,000 worth of improvements to the leased space, the cost of which will be capitalized by the District. In addition, beginning July 1, 2016, rent payments will be made to the District by the City in monthly installments of $2,083 ($25,000 annually) and $10,417 ($125,000 annually) for the years ended June 1, 2017 and 2018, respectively. 115 CITY OF LANSING, MICHIGAN Notes to Financial Statements The City has entered into an operating lease with the City of Lansing and County of Ingham Joint Building Authority (the "Joint Authority") related to the City's use of a building constructed by the Joint Authority. The payments related to this lease are paid by the TIFA, pursuant to a payment agreement between the City and the TIFA. The total of such payments amounted to $573,375 for the year ended June 30 2015. Future minimum lease payments for this lease are as follows: Year Ending June 30 Amount 2016 $ 573,237 2017 572,644 2018 570,913 2019 573,367 2020 571,900 19. ADOPTION OF NEW ACCOUNTING PRONOUNCEMENT The City adopted the provisions of GASB Statement No. 68, Accounting and Financial Reporting for Pensions, in the current year. The implementation of this standard also resulted in the elimination of the prior reported net pension obligation. As a result of this change, beginning net position of governmental activities, the sewage disposal system enterprise fund, the municipal parking system enterprise fund, and non major enterprise funds were decreased by $199,824,805, $13,537,943, $4,718,427, and $8,554,856, respectively. The net decrease in beginning net position of business-type activities was $26,811,226. 20. SUBSEQUENT EVENT On December 17, 2015, the City issued $8,855,000 of Limited Tax General Obligation bonds for sanitary sewer system improvements. Payments are to be made semi-annually over a 6 year period, beginning on June 1, 2017. Interest is charged on the outstanding balance at rates varying between 2 and 3 percent. ■ ■ ■ ■ ■ 116 REQUIRED SUPPLEMENTARY INFORMATION 117 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2015 2014 Total pension liability Service cost $ 2,857,948 $ 2,982,624 Interest on total pension liability 22,671,909 22,722,630 Difference between expected and actual experience (6,422,330) - Benefit payments, including refunds (22,462,587) (22,790,522) Net change in total pension liability (3,355,060) 2,914,732 Total pension liability, beginning of year 323,057,487 320,142,754 Total pension liability, end of year 319,702,427 323,057,486 Plan fiduciary net position Employer contributions 10,547,556 9,361,009 Employee contributions 1,128,120 1,290,678 Pension plan net investment income 4,399,543 17,887,635 Benefit payments (22,462,587) (22,957,379) Pension plan administrative expense (174,818) (741,037) Net change in plan fiduciary net position (6,562,186) 4,840,906 Plan fiduciary net position, beginning of year 185,118,660 180,277,754 Plan fiduciary net position, end of year 178,556,474 185,118,660 Net pension liability $ 141,145,953 $ 137,938,826 Plan fiduciary net position as a percentage of total pension liability 55.9% 57.3% Covered employee payroll $ 19,769,460 $ 20,874,143 Net pension liability as a percentage of covered employee payroll 713.96% 660.81 Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 118 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedule of the Net Pension Liability Plan Net Net Pension Position as Liability as Fiscal Year Percentage of Percentage of Ending Total Pension Plan Net Net Pension Total Pension Covered Covered June 30, Liability Position Liability Liability Payroll Payroll 2014 $323,057,486 $185,118,660 $137,938,826 57.3% $ 20,874,143 660.81% 2015 319,702,427 178,556,474 141,145,953 55.9% 19,769,460 713.96% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 119 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2006 $ 4,900,000 $ 4,900,000 $ $ 31,944,000 15.3% 2007 5,231,000 5,231,000 31,797,000 16.5% 2008 6,022,000 6,022,000 29,688,000 20.3% 2009 6,048,000 6,477,000 429,000 30,602,000 21.2% 2010 6,472,349 6,043,861 (428,488) 27,766,628 21.8% 2011 7,297,083 7,297,083 - 26,068,735 28.0% 2012 7,596,879 7,523,534 (73,345) 22,838,598 32.9% 2013 8,586,536 8,586,536 20,874,143 41.1% 2014 9,361,009 9,361,009 21,521,242 43.5% 2015 10,547,556 10,547,556 19,769,460 53.4% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2014 (rolled forward to June 30, 2015) Notes Actuarially determined contribution rates are calculated as of the June 30 that is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 27 years Asset valuation method Open; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2011 valuation. The next study is scheduled for 2016. Mortality RP2000 Combined Healthy Tables set back one year for females. For Disabled members, the disabled version of these tables are assumed. 120 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return (') 2014 13.67% 2015 2.43% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 121 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2015 2014 Total pension liability Service cost $ 6,350,378 $ 6,614,784 Interest on total pension liability 29,159,382 27,896,927 Difference between expected and actual experience 3,159,996 - Benefit payments, including refunds (27,969,021) (26,270,724) Net change in total pension liability 10,700,735 8,240,987 Total pension liability, beginning of year 389,416,813 381,175,826 Total pension liability, end of year 400,117,548 389,416,813 Plan fiduciary net position Employer contributions 11,050,091 11,248,857 Employee contributions 2,950,832 2,911,896 Pension plan net investment income 8,965,080 34,016,621 Benefit payments (27,969,021) (26,852,038) Pension plan administrative expense (173,849) (1,141,506) Net change in plan fiduciary net position (5,176,867) 20,183,830 Plan fiduciary net position, beginning of year 300,473,516 280,289,686 Plan fiduciary net position, end of year 295,296,649 300,473,516 Net pension liability $ 104,820,899 $ 88,943,297 Plan fiduciary net position as a percentage of total pension liability 73.8% 77.2% Covered employee payroll $ 24,407,740 $ 25,611,974 Net pension liability as a percentage of covered employee payroll 429.46% 347.27% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 122 CITY OF LANSING, MICHIGAN Required Supplementary Information police and Fire Retirement System Schedule of the Net Pension Liability Plan Net Position as Net Pension Fiscal Year Percentage of Liability as Ending Total Pension Plan Net Net Pension Total Pension Covered Percentage of June 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $389,416,813 $300,473,516 $ 88,943,297 77.2% $ 25,611,974 347.27% 2015 400,117,548 295,296,649 104,820,899 73.8% 24,407,740 429.46% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 123 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2006 $ 4,658,703 $ 4,658,703 $ $ 29,582,000 15.7% 2007 5,385,960 5,385,960 29,600,000 18.2% 2008 6,520,974 6,520,974 30,161,000 21.6% 2009 6,094,397 6,483,000 388,603 30,443,000 21.3% 2010 7,179,360 6,790,757 (388,603) 28,536,056 23.8% 2011 8,240,688 8,240,688 - 25,128,835 32.8% 2012 9,242,173 9,057,080 (185,093) 26,121,411 34.7% 2013 10,133,599 10,133,599 25,636,626 39.5% 2014 11,248,857 11,248,857 26,405,725 42.6% 2014 11,050,091 11,050,091 24,407,740 45.3% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. 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 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2014 (rolled forward to June 30, 2015) Notes Actuarially determined contribution rates are calculated as of the June 30 that is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 27 years Asset valuation method Open; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60% Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2011 valuation. The next study is scheduled for 2016. Mortality RP2000 Combined Healthy Tables set back one year for females. For Disabled members, the disabled version of these tables are assumed. 124 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return (') 2014 17.28% 2015 3.04% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 125 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) 12/31/2009 $ 24,364 $ 203,400 $ 179,036 12.0% $ 30,602 585.0% 12/31/2011 28,690 226,915 198,225 12.6% 24,813 798.9% 12/31/2013 37,629 199,705 162,076 18.8% 20,874 776.4% 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) 12/31/2009 $ 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% 12/31/2013 23,197 242,414 219,217 9.6% 25,637 855.1% Employees' Retirement System and VEBA-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2013 $ 12,770 79.5% 2014 14,040 78.7% 2015 13,195 69.8% Police and Fire Retirement System-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2013 $ 17,414 64.1 2014 16,852 66.5% 2015 17,491 66.1 126 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 127 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2015 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 52,637 $ - $ - $ - $ 52,637 Equity in pooled cash and investments 9,543,017 1,000 77,885 1,746,482 11,368,384 Accounts receivable, net 75,820 - - - 75,820 Special assessments receivable - 501,212 501,212 Loans receivable 1,430,356 - 1,430,356 Accrued interest receivable 2,217,117 - 2,217,117 Due from other governments 5,404,939 1,070 5,406,009 Inventories 872,009 - 872,009 Prepaids 574 - - - 574 Total assets $ 19,596,469 $ 1,000 $ 580,167 $ 1,746,482 $ 21,924,118 Liabilities Accounts payable $ 1,437,290 $ - $ 61,104 $ - $ 1,498,394 Deposits payable 178,285 - 178,285 Accrued payroll 41,734 41,734 Indemnity bonds 9,411 9,411 Due to other funds 3,800,000 - 3,800,000 Advances from other funds - 342,090 342,090 Due to other governments 811,056 - 811,056 Unearned revenue 251,710 - 251,710 Total liabilities 6,529,486 403,194 6,932,680 Deferred inflows of resources Unavailable revenue - loans and accrued interest receivable 3,447,473 - 3,447,473 Unavailable revenue - special assessments - 450,583 450,583 Total deferred inflows of resources 3,447,473 450,583 - 3,898,056 Fund balances Nonspendable 872,583 - - 1,746,482 2,619,065 Restricted 5,784,376 1,000 54,534 - 5,839,910 Committed 3,162,551 - - 3,162,551 Unassigned (deficit) (200,000) - (328,144) - (528,144) Total fund balances 9,619,510 1,000 (273,610) 1,746,482 11,093,382 Total liabilities, deferred inflows of resources and fund balances $ 19,596,469 $ 1,000 $ 580,167 $ 1,746,482 $ 21,924,118 128 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2015 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Taxes and special assessments $ 408,931 $ 503,035 $ 62,729 $ $ 974,695 Intergovernmental 20,646,486 - - 20,646,486 Charges for services 3,668,946 3,668,946 Fines and forfeits 456,345 456,345 Interest - 4,575 4,575 Contributions 506,276 - 506,276 Otherrevenues 1,379,586 - - - 1,379,586 Total revenues 27,066,570 503,035 62,729 4,575 27,636,909 Expenditures Current expenditures: General government 3,121,919 - - - 3,121,919 Public safety 3,303,545 3,303,545 Public works 2,981,356 2,981,356 Highways and streets 10,357,488 10,357,488 Community development 3,910,924 - 3,910,924 Debt service: Principal 1,425,934 1,405,000 2,830,934 Interest 561,451 139,891 - 701,342 Capital outlay 4,486,037 - 197,607 4,683,644 Total expenditures 30,148,654 1,544,891 197,607 - 31,891,152 Revenues over (under) expenditures (3,082,084) (1,041,856) (134,878) 4,575 (4,254,243) Other financing sources (uses) Transfers in 5,233,382 1,042,856 27,887 6,304,125 Transfers out (551,559) - (4,575) (556,134) Proceeds on sale of capital assets - - - - Total other financing sources (uses) 4,681,823 1,042,856 23,312 5,747,991 Net change in fund balances 1,599,739 1,000 (134,878) 27,887 1,493,748 Fund balances, beginning of year 8,019,771 - (138,732) 1,718,595 9,599,634 Fund balances, end of year $ 9,619,510 $ 1,000 $ (273,610) $ 1,746,482 $ 11,093,382 129 This page intentionally left blank. 130 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 Federal Fund - This fund accounts for federal revenues, from the Departmens of Justice and Treasury, set aside for drug law enforcement under the provisions of Federal Grant Agreements. Drug Law Enforcement State and Local Fund - This fund accounts for state and local revenues, from the Departmens of Justice and Treasury, 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. The State and Federal Grants 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. Tri-County Metro Fund - This fund accounts for the operations of the Tri-County Metro Narcotics Squad. 131 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2015 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Assets Cash and cash equivalents $ - $ - $ - $ 23,000 $ - Equity in pooled cash and investments 3,800,741 1,787,325 319,156 642,105 467,310 Accounts receivable, net - - - - - Loans receivable 1,385,000 Accrued interest receivable - - 2,217,117 Due from other governments 1,485,408 311,115 883,980 Inventories 872,009 - - Prepaids - - - - - Total assets $ 6,158,158 $ 2,098,440 $ 319,156 $ 665,105 $ 4,953,407 Liabilities Accounts payable $ 460,727 $ 72,197 $ 12,345 $ 263,957 $ 46,266 Deposits payable - - - - - Accrued payroll - 5,024 Indemnity bonds 9,411 - Due to other funds - 1,500,000 Due to other governments - Unearned revenue - - - - - Total liabilities 470,138 72,197 12,345 263,957 1,551,290 Deferred inflows of resources Unavailable revenue - loans and accrued interest receivable - - - - 3,402,117 Fund balances Nonspendable 872,009 - - - - Restricted 3,663,994 682,597 306,811 401,148 - Committed 11152,017 1,343,646 - - 200,000 Unassigned (deficit) - - - - (200,000) Total fund balances 5,688,020 2,026,243 306,811 401,148 - Total liabilities, deferred inflows of resources and fund balances $ 6,158,158 $ 2,098,440 $ 319,156 $ 665,105 $ 4,953,407 132 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ - $ - $ - $ - $ 29,637 $ 52,637 29,238 12,155 466,888 790,830 1,227,269 9,543,017 - 39,305 - - 36,515 75,820 - 45,356 - 1,430,356 - - 2,217,117 2,700,889 23,547 5,404,939 - - 872,009 - - - 574 - 574 $ 29,238 $ 51,460 $ 466,888 $ 3,537,649 $ 1,316,968 $ 19,596,469 $ 3,669 $ 782 $ - $ 538,600 $ 38,747 $ 1,437,290 - - - 178,285 178,285 4,186 19,477 12,137 910 41,734 - - - - 9,411 2,300,000 - 3,800,000 - 406,693 404,363 811,056 - 21,200 230,510 - 251,710 7,855 41,459 3,487,940 622,305 6,529,486 - - 45,356 - 3,447,473 - - 574 - 872,583 21,383 10,001 - 3,779 694,663 5,784,376 - - 466,888 - - 3,162,551 - - - - - (200,000) 21,383 10,001 466,888 4,353 694,663 9,619,510 $ 29,238 $ 51,460 $ 466,888 $ 3,537,649 $ 1,316,968 $ 19,596,469 133 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2015 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Revenues Taxes and special assessments $ - $ - $ - $ $ - Intergovernmental 8,038,760 1,940,986 366,028 1,262,382 Charges for services 823,667 752,592 - - Fines and forfeits - - 207,577 - Contributions - - 496,276 Otherrevenues 186,759 - - 365,736 Total revenues 9,049,186 2,693,578 366,028 207,577 2,124,394 Expenditures Current expenditures: General government - - - - - Public safety 149,310 46,696 Public works - - - - Highways and streets 5,668,539 4,688,949 Community development - - Debt service: Principal 475,934 950,000 Interest 144,106 417,345 - - Capital outlay 2,032,087 291,744 - 37,812 2,124,394 Total expenditures 8,320,666 6,348,038 149,310 84,508 2,124,394 Revenues over (under) expenditures 728,520 (3,654,460) 216,718 123,069 - Other financing sources (uses) Transfers in 1,529,281 3,357,600 - - Transfers out (530,000) - (21,535) Total other financing sources (uses) 999,281 3,357,600 - (21,535) Net change in fund balances 1,727,801 (296,860) 216,718 101,534 Fund balances, beginning of year 3,960,219 2,323,103 90,093 299,614 Fund balances, end of year $ 5,688,020 $ 2,026,243 $ 306,811 $ 401,148 $ 134 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ 408,931 $ $ $ - $ - $ 408,931 - 8,359,229 679,101 20,646,486 5,400 2,087,287 - - 3,668,946 - - 248,768 456,345 10,000 - - 506,276 238,347 - 588,744 - 1,379,586 662,678 2,087,287 8,947,973 927,869 27,066,570 721,804 2,245,515 154,600 - 3,121,919 - - 2,158,135 949,404 3,303,545 2,981,356 - 2,981,356 - 10,357,488 3,910,924 3,910,924 - 1,425,934 561,451 - - - - 4,486,037 721,804 2,245,515 9,205,015 949,404 30,148,654 (59,126) (158,228) (257,042) (21,535) (3,082,084) 67,900 257,066 21,535 5,233,382 - (24) - (551,559) 67,900 257,042 21,535 4,681,823 8,774 (158,228) - - - 1,599,739 12,609 168,229 466,888 4,353 694,663 8,019,771 $ 21,383 $ 10,001 $ 466,888 $ 4,353 $ 694,663 $ 9,619,510 135 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, 2015 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ - $ - $ Intergovernmental 7,371,171 8,038,760 667,589 Charges for services 750,000 823,667 73,667 Fines and forfeits - - - Contributions - - Otherrevenues 558,500 186,759 (371,741) Total revenues 8,679,671 9,049,186 369,515 Expenditures Current expenditures: General government - - - Public safety Public works - - Highways and streets 6,256,769 5,668,539 (588,230) Recreation and culture - - Community development - - Debt service: Principal 475,934 475,934 Interest 191,897 144,106 (47,791) Capital outlay 2,002,227 2,032,087 29,860 Total expenditures 8,926,827 8,320,666 (606,161) Revenues over (under) expenditures (247,156) 728,520 975,676 Other financing sources (uses) Transfers in 1,529,281 1,529,281 Transfers out (530,000) (530,000) - Proceeds on sale of capital assets - - Total other financing sources (uses) (530,000) 999,281 1,529,281 Net change in fund balances (777,156) 1,727,801 2,504,957 Fund balances, beginning of year 3,960,219 3,960,219 - Fund balances (deficit), end of year $ 3,183,063 $ 5,688,020 $ 2,504,957 136 Local Streets Drug Law Enforcement Federal Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 1,919,586 1,940,986 21,400 366,028 366,028 750,000 752,592 2,592 - - 2,669,586 2,693,578 23,992 366,028 366,028 201,600 149,310 (52,290) 4,916,418 4,688,949 (227,469) 950,000 950,000 - 417,482 417,345 (137) 1,635,390 291,744 (1,343,646) - 7,919,290 6,348,038 (1,571,252) 201,600 149,310 (52,290) (5,249,704) (3,654,460) 1,595,244 (201,600) 216,718 418,318 3,357,600 3,357,600 - - - 3,357,600 3,357,600 - - - (1,892,104) (296,860) 1,595,244 (201,600) 216,718 418,318 2,323,103 2,323,103 - 90,093 90,093 - $ 430,999 $ 2,026,243 $ 1,595,244 $ (111,507) $ 306,811 $ 418,318 continued... 137 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, 2015 Drug Law Enforcement State and Local Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services - Fines and forfeits 207,577 207,577 Contributions - - Otherrevenues - - Total revenues 207,577 207,577 Expenditures Current expenditures: General government - - Public safety 47,660 46,696 (964) Public works - - - Highways and streets Recreation and culture Community development Debt service: Principal Interest - - Capital outlay 60,000 37,812 (22,188) Total expenditures 107,660 84,508 (23,152) Revenues over (under) expenditures (107,660) 123,069 230,729 Other financing sources (uses) Transfers in - - Transfers out (21,535) (21,535) Proceeds on sale of capital assets Total other financing sources (uses) (21,535) (21,535) - Net change in fund balances (129,195) 101,534 230,729 Fund balances, beginning of year 299,614 299,614 - Fund balances (deficit), end of year $ 170,419 $ 401,148 $ 230,729 138 Community Development Block Grant Program Downtown Lansing, Inc. Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ $ $ $ 409,000 $ 408,931 $ (69) 3,455,998 1,262,382 (2,193,616) - - - - - 4,800 5,400 600 496,276 496,276 10,000 10,000 - 365,736 365,736 270,056 238,347 (31,709) 3,455,998 2,124,394 (1,331,604) 693,856 662,678 (31,178) - - 759,000 721,804 (37,196) 3,455,998 2,124,394 (1,331,604) - 3,455,998 2,124,394 (1,331,604) 759,000 721,804 (37,196) - - (65,144) (59,126) 6,018 67,900 67,900 - 67,900 67,900 - 2,756 8,774 6,018 12,609 12,609 - $ $ $ $ 15,365 $ 21,383 $ 6,018 continued... 139 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, 2015 Building Department Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services 2,285,700 2,087,287 (198,413) Fines and forfeits - - Contributions Otherrevenues - - Total revenues 2,285,700 2,087,287 (198,413) Expenditures Current expenditures: General government 2,434,800 2,245,515 (189,285) Public safety - - Public works Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 2,434,800 2,245,515 (189,285) Revenues over (under) expenditures (149,100) (158,228) (9,128) Other financing sources (uses) Transfers in 149,100 (149,100) Transfers out - Proceeds on sale of capital assets Total other financing sources (uses) 149,100 (149,100) Net change in fund balances - (158,228) (158,228) Fund balances, beginning of year 168,229 168,229 Fund balances (deficit), end of year $ 168,229 $ 10,001 $ (158,228) 140 Parks Department State and Federal Grants Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 13,772,504 8,359,229 (5,413,275) (194,535) 588,744 783,279 13,577,969 8,947,973 (4,629,996) 268,696 154,600 (114,096) 2,949,948 2,158,135 (791,813) 5,330 2,981,356 2,976,026 41,175 (41,175) 59,555 - (59,555) - 7,050,311 3,910,924 (3,139,387) 41,175 (41,175) 10,333,839 9,205,015 (1,128,824) (41,175) 41,175 3,244,130 (257,042) (3,501,172) - 235,388 257,066 21,678 - (24) (24) - 235,388 257,042 21,654 (41,175) - 41,175 3,479,518 - (3,479,518) 466,888 466,888 - 4,353 4,353 $ 425,713 $ 466,888 $ 41,175 $ 3,483,871 $ 4,353 (3,479,518) continued... 141 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, 2015 Tri-County Metro Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ - $ - $ Intergovernmental 679,101 679,101 Charges for services - - Fines and forfeits 435,000 248,768 (186,232) Contributions - - Otherrevenues - - Total revenues 1,114,101 927,869 (186,232) Expenditures Current expenditures: General government - - Public safety 1,132,700 949,404 (183,296) Public works - - Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 1,132,700 949,404 (183,296) Revenues over (under) expenditures (18,599) (21,535) (2,936) Other financing sources (uses) Transfers in 18,599 21,535 2,936 Transfers out - - - Proceeds on sale of capital assets - - - Total other financing sources (uses) 18,599 21,535 2,936 Net change in fund balances - - - Fund balances, beginning of year 694,663 694,663 Fund balances (deficit), end of year $ 694,663 $ 694,663 $ concluded 142 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. 2014 Technology Bond Fund - This fund accounts for the accumulation of resources for payment of the 2014 $2,275,000 Limited Tax Capital Improvement Bonds issued for technology improvements. 143 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2015 1998 1999 2001 2014 Building Fire Fire Technology Authority Station Station Bond Totals Assets Equity in pooled cash and investments $ $ $ 1,000 $ $ 1,000 Fund balances Restricted $ $ $ 1,000 $ $ 1,000 144 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2015 1998 1999 2001 2014 Building Fire Fire Technology Authority Station Station Bond Totals Revenues Taxes and special assessments $ - $ 249,513 $ 253,522 $ - $ 503,035 Expenditures Debt service: Principal 140,000 205,000 310,000 750,000 1,405,000 Interest 29,350 44,513 41,660 24,368 139,891 Total expenditures 169,350 249,513 351,660 774,368 1,544,891 Revenues over (under) expenditures (169,350) - (98,138) (774,368) (1,041,856) Other financing sources Transfers in 169,350 99,138 774,368 1,042,856 Net change in fund balances - 1,000 - 1,000 Fund balances, beginning of year - - Fund balances, end of year $ $ $ 1,000 $ $ 1,000 145 This page intentionally left blank. 146 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. 147 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2015 1990 1990 Lansing Environ- Environ- Special Center mental mental11 Assessments Improvements Totals Assets Equity in pooled cash and investments $ $ 51,317 $ - $ 26,568 $ 77,885 Special assessments receivable: Current - 50,629 - 50,629 Deferred 450,583 450,583 Due from other governments - 1,070 - 1,070 Total assets $ $ 51,317 $ 502,282 $ 26,568 $ 580,167 Liabilities Accounts payable $ $ - $ 37,753 $ 23,351 $ 61,104 Advance from other funds 342,090 - 342,090 Total liabilities 379,843 23,351 403,194 Deferred inflows of resources Unavailable revenue - specialassessments - 450,583 - 450,583 Fund balances Restricted 51,317 - 3,217 54,534 Unassigned (deficit) - (328,144) - (328,144) Total fund balances (deficit) 51,317 (328,144) 3,217 (273,610) Total liabilities, deferred inflows of resources and fund balances $ $ 51,317 $ 502,282 $ 26,568 $ 580,167 148 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2015 1990 1990 Lansing Environ- Environ- Special Center mental mental11 Assessments Improvements Totals Revenues Special assessments $ - $ - $ 62,729 $ - $ 62,729 Expenditures Capital outlay 382 105,158 68,716 23,351 197,607 Net change in fund balances (382) (105,158) (5,987) (23,351) (134,878) Fund balances (deficit), beginning of year 382 156,475 (322,157) 26,568 (138,732) Fund balances (deficit), end of year $ $ 51,317 $ (328,144) $ 3,217 $ (273,610) 149 This page intentionally left blank. 150 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. 151 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2015 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash and investments $ 1,745,231 $ 1,251 $ 1,746,482 Fund balances Nonspendable $ 1,745,231 $ 1,251 $ 1,746,482 152 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2015 Cemetery Perpetual Parks Care Trust Totals Revenues Interest $ 4,575 $ $ 4,575 Other financing sources (uses) Transfers in 27,887 27,887 Transfers out (4,575) (4,575) Total other financing sources (uses) 23,312 23,312 Net change in fund balances 27,887 27,887 Fund balances, beginning of year 1,717,344 1,251 1,718,595 Fund balances, end of year $ 1,745,231 $ 1,251 $ 1,746,482 153 This page intentionally left blank. 154 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. 155 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2015 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash and investments 220,553 133,105 266,664 1,576,068 2,196,390 Accounts receivable, net - 2,327 62,165 1,465 65,957 Inventories 55,273 4,202 40,572 - 100,047 Total current assets 276,026 139,934 369,401 1,577,533 2,362,894 Noncurrent assets: Capital assets not being depreciated 57,740 446,501 - - 504,241 Capital assets being depreciated, net 129,981 2,037,183 1,354,555 3,521,719 Total noncurrent assets 187,721 2,483,684 - 1,354,555 4,025,960 Total assets 463,747 2,623,618 369,401 2,932,088 6,388,854 Deferred outflows of resources Deferred refunding loss - 4,794 - - 4,794 Deferred pension amounts 54,963 58,000 133,500 217,671 464,134 Total deferred outflows of resources 54,963 62,794 133,500 217,671 468,928 Liabilities Current liabilities: Accounts payable 25,197 9,730 4,210 55,255 94,392 Deposits payable - - 4,140 - 4,140 Accrued interest payable - 410 - 7,151 7,561 Accrued payroll 1,196 17,457 - - 18,653 Due to other funds - 5,271 100,000 105,271 Unearned revenues 35,830 149,899 - 185,729 Current portion of: Bonds and notes payable - 100,000 - 212,759 312,759 Total current liabilities 26,393 168,698 258,249 275,165 728,505 Noncurrent liabilities: Bonds and notes payable, net of current portion - 105,000 - 1,246,672 1,351,672 Compensated absences, net of current portion 19,154 28,658 70,823 115,063 233,698 Net pension liability 1,036,630 1,093,905 2,517,861 4,105,363 8,753,759 Total noncurrent liabilities 1,055,784 1,227,563 2,588,684 5,467,098 10,339,129 Total liabilities 1,082,177 1,396,261 2,846,933 5,742,263 11,067,634 Deferred outflows of resources Deferred pension amounts 31,445 33,183 76,377 124,533 265,538 Net position Net investment in capital assets 187,721 2,283,478 - (104,876) 2,366,323 Unrestricted (deficit) (782,633) (1,026,510) (2,420,409) (2,612,161) (6,841,713) Total net position $ (594,912) $ 1,256,968 $ (2,420,409) $ (2,717,037) $ (4,475,390) 156 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2015 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 335,379 $ 363,559 $ 1,744,999 $ 3,624,671 $ 6,068,608 Operating expenses Personal services 360,798 492,506 974,116 1,882,669 3,710,089 Purchase of goods and services 256,964 265,051 738,555 1,194,454 2,455,024 Depreciation 14,723 78,340 - 301,012 394,075 Total operating expenses 632,485 835,897 1,712,671 3,378,135 6,559,188 Operating income (loss) (297,106) (472,338) 32,328 246,536 (490,580) Nonoperating revenues (expenses) Interest revenue 7,120 - - 7,120 Interest expense and fees (16,737) (30,655) (47,392) Capital contribution to others (214,486) (214,486) Total nonoperating revenues (expenses) (9,617) - (245,141) (254,758) Income (loss) before transfers (297,106) (481,955) 32,328 1,395 (745,338) Transfers in 416,695 555,677 - - 972,372 Transfers out (27,887) - - - (27,887) Change in net position 91,702 73,722 32,328 1,395 199,147 Net position, beginning of year, as restated (686,614) 1,183,246 (2,452,737) (2,718,432) (4,674,537) Net position, end of year $ (594,912) $ 1,256,968 $ (2,420,409) $ (2,717,037) $ (4,475,390) 157 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2015 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 335,379 $ 362,484 $ 1,815,640 $ 3,623,206 $ 6,136,709 Cash payments for goods and services (267,664) (256,199) (701,716) (1,195,837) (2,421,416) Cash payments to employees (373,311) (519,749) (953,075) (1,871,289) (3,717,424) Net cash provided by (used in) operating activities (305,596) (413,464) 160,849 556,080 (2,131) Cash flows from noncapital financing activities Transfers in 416,695 555,677 - - 972,372 Transfers out (27,887) - (27,887) Net cash provided by noncapital financing activities 388,808 555,677 944,485 Cash flows from capital and related financing activities Acquisition of capital assets - (5,943) (5,943) Capital contributions to others (214,486) (214,486) Principal paid on long-term debt (100,000) (208,650) (308,650) Interest paid on long-term debt (14,440) (31,678) (46,118) Net cash used in capital and related financing activities (120,383) (454,814) (575,197) Cash flows from investing activities Interest and dividends received - 7,120 - - 7,120 Net change in cash and cash equivalents 83,212 28,950 160,849 101,266 374,277 Cash and cash equivalents: Beginning of year 137,541 104,455 105,815 1,474,802 1,822,613 End of year $ 220,753 $ 133,405 $ 266,664 $ 1,576,068 $ 2,196,890 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ 300 $ - $ - $ 500 Equity in pooled cash and investments 220,553 133,105 266,664 1,576,068 2,196,390 $ 220,753 $ 133,405 $ 266,664 $ 1,576,068 $ 2,196,890 continued... 158 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2015 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) $ (297,106) $ (472,338) $ 32,328 $ 246,536 $ (490,580) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation expense 14,723 78,340 301,012 394,075 Changes in operating assets and liabilities that provided (used) cash: Accounts receivable - 2,965 (11,581) (1,465) (10,081) Inventories 3,566 2,012 (17,447) (11,869) Accounts payable (14,266) 6,840 (45,714) (1,383) (54,523) Accrued payroll 181 2,016 - 2,197 Due to other funds - - 100,000 100,000 Unearned revenues (4,040) 82,222 - 78,182 Compensated absences (12,730) (29,298) 20,953 11,236 (9,839) Net pension liability and related deferred amounts 36 39 88 144 307 Net cash provided by (used in) operating activities $ (305,596) $ (413,464) $ 160,849 $ 556,080 $ (2,131) concluded 159 This page intentionally left blank. 160 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. Information Technology Fund - This fund accounts for the operations of the City's information technology department. 161 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2015 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Assets Current assets: Cash and cash equivalents $ 57,842 $ - $ - $ - $ 57,842 Equity in pooled cash and investments 1,040,388 651,301 683,555 1,093,895 3,469,139 Accounts receivable, net - 861,870 - - 861,870 Inventories 427,884 - 427,884 Prepaids - 406,244 - - 406,244 Total current assets 1,526,114 1,919,415 683,555 1,093,895 5,222,979 Noncurrent assets: Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated, net 11,311,065 1,651,766 12,962,831 Total noncurrent assets 11,403,957 1,651,766 - 13,055,723 Total assets 12,930,071 1,919,415 2,335,321 1,093,895 18,278,702 Deferred outflows of resources Deferred refunding loss - - 3,439 - 3,439 Liabilities Current liabilities: Accounts payable 108,589 329,144 2,857 351,380 791,970 Accrued interest payable 40,383 - 310 - 40,693 Accrued payroll 49,182 5,706 36,279 14,368 105,535 Claims incurred but not reported - 704,905 - - 704,905 Due to other funds 500,000 - - 200,000 700,000 Current portion of: Bonds and notes payable 871,148 155,000 - 1,026,148 Compensated absences 41,350 - - - 41,350 Total current liabilities 1,610,652 1,039,755 194,446 565,748 3,410,601 Noncurrent liabilities: Bonds and notes payable, net of current portion 4,753,503 - - - 4,753,503 Compensated absences, net of current portion 147,145 44,739 428,978 145,115 765,977 Total noncurrent liabilities 4,900,648 44,739 428,978 145,115 5,519,480 Total liabilities 6,511,300 1,084,494 623,424 710,863 8,930,081 Net position Net investment in capital assets 5,779,306 - 1,500,205 - 7,279,511 Unrestricted 639,465 834,921 215,131 383,032 2,072,549 Total net position $ 6,418,771 $ 834,921 $ 1,715,336 $ 383,032 $ 9,352,060 162 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Position Internal Service Funds For the Year Ended June 30, 2015 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Operating revenues Charges for services $ 8,588,437 $ 61,059,957 $ 3,846,804 $ 4,165,250 $ 77,660,448 Operating expenses Personal services 3,330,442 250,739 2,894,874 1,298,161 7,774,216 Purchase of goods and services 3,541,907 60,117,493 1,057,090 1,784,546 66,501,036 Depreciation 1,897,942 - 45,430 - 1,943,372 Total operating expenses 8,770,291 60,368,232 3,997,394 3,082,707 76,218,624 Operating income (loss) (181,854) 691,725 (150,590) 1,082,543 1,441,824 Nonoperating revenues (expenses) Gain on sale of capital assets 280,280 - - 280,280 Interest expense and fees (183,979) (10,569) (194,548) Total nonoperating revenues (expenses) 96,301 - (10,569) - 85,732 Income (loss) before transfers (85,553) 691,725 (161,159) 1,082,543 1,527,556 Transfers Transfers in 825,000 - 210 - 825,210 Transfers out - (427,127) - (774,368) (1,201,495) Total transfers 825,000 (427,127) 210 (774,368) (376,285) Change in net position 739,447 264,598 (160,949) 308,175 1,151,271 Net position, beginning of year 5,679,324 570,323 1,876,285 74,857 8,200,789 Net position, end of year $ 6,418,771 $ 834,921 $ 1,715,336 $ 383,032 $ 9,352,060 163 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2015 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Cash flows from operating activities Cash received from interfund services $ 8,588,437 $ 60,623,286 $ 3,846,804 $ 4,165,250 $ 77,223,777 Cash payments for goods and services (4,340,695) (60,540,203) (980,994) (1,771,255) (67,633,147) Cash payments to employees (3,373,368) (370,095) (2,861,364) (1,291,573) (7,896,400) Net cash provided by (used in) operating activities 874,374 (287,012) 4,446 1,102,422 1,694,230 Cash flows from noncapital financing activities Transfers in 825,000 210 - 825,210 Transfers out - (427,127) - (774,368) (1,201,495) Net cash provided by (used in) noncapital financing activities 825,000 (427,127) 210 (774,368) (376,285) Cash flows from capital and related financing activities Proceeds on sale of capital assets 285,355 - 285,355 Acquisition and construction of capital assets (1,677,234) (1,677,234) Proceeds from issuance of long-term debt 491,241 491,241 Principal paid on long-term debt (774,114) (155,000) (929,114) Interest paid on long-term debt (186,943) (7,439) (194,382) Net cash used in capital and related financing activities (1,861,695) (162,439) - (2,024,134) Net change in cash and cash equivalents (162,321) (714,139) (157,783) 328,054 (706,189) Cash and cash equivalents, beginning of year 1,260,551 1,365,440 841,338 765,841 4,233,170 Cash and cash equivalents, end of year $ 1,098,230 $ 651,301 $ 683,555 $ 1,093,895 $ 3,526,981 Reconciliation to statement of net position Cash and cash equivalents $ 57,842 $ - $ - $ - $ 57,842 Equity in pooled cash and investments 1,040,388 651,301 683,555 1,093,895 3,469,139 $ 1,098,230 $ 651,301 $ 683,555 $ 1,093,895 $ 3,526,981 continued... 164 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2015 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Reconciliation of operating income (loss)to net cash provided by (used in) operating activities Operating income (loss) $ (181,854) $ 691,725 $ (150,590) $ 1,082,543 $ 1,441,824 Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation expense 1,897,942 45,430 1,943,372 Change in operating assets and liabilities that provided (used) cash: Accounts receivable - (436,671) - (436,671) Inventories 44,644 - - 44,644 Prepaids - 64,269 79,700 143,969 Accounts payable (43,432) (486,979) 1,396 (186,709) (715,724) Accrued payroll 3,949 1,268 7,036 2,112 14,365 Claims incurred but not reported reported - (126,903) - - (126,903) Due to other funds (800,000) - (5,000) 200,000 (605,000) Compensated absences (46,875) 6,279 26,474 4,476 (9,646) Net cash provided by (used in) operating activities $ 874,374 $ (287,012) $ 4,446 $ 1,102,422 $ 1,694,230 concluded 165 This page intentionally left blank. 166 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. 167 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2015 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash and investments $ 37,800 $ 31,507 $ 69,307 Liabilities Undistributed receipts $ 37,800 $ 31,507 $ 69,307 168 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2015 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash and investments $ 63,131 $ 431,964 $ 457,295 $ 37,800 Liabilities Undistributed receipts $ 63,131 $ 431,964 $ 457,295 $ 37,800 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash and investments $ 31,395 $ 290,042 $ 289,930 $ 31,507 Liabilities Undistributed receipts $ 31,395 $ 290,042 $ 289,930 $ 31,507 Total - all agency funds Assets Equity in pooled cash and investments $ 94,526 $ 722,006 $ 747,225 $ 69,307 Liabilities Undistributed receipts $ 94,526 $ 722,006 $ 747,225 $ 69,307 169 This page intentionally left blank. 170 STATISTICAL SECTION 171 This page intentionally left blank. 172 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. 175 Revenue Capacity These schedules contain information to help the reader assess the factors affecting the City's ability to generate its property taxes. 180 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. 184 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. 189 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. 191 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 173 This page intentionally left blank. 174 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Assets/Net Position by Component Last Ten Fiscal Years 2�— ——' 201'EV2010-1 2009 2008 .—— Governmental activities Net investment in capital assets $ 151,785,916 $ 150,976,010 $ 154,372,604 $ 163,723,249 $ 180,571,237 $ 186,536,428 $ 191,516,475 $ 187,054,852 $ 184,150,439 $ 190,243,447 Restricted 12,311,541 13,133,137 12,552,011 14,524,584 14,777,571 14,304,689 17,139,090 34,554,539 37,642,784 36,706,345 Unrestricted (251,453,207) (46,344,555) (39,467,672) (34,371,855) (18,840,717) (7,649,432) 6,589,790 (3,124,027) 2,776,006 514,601 Total governmental activities net assets/ net position $ (87,355,750) $ 117,764,592 $ 127,456,943 $ 143,875,978 $ 176,508,091 $ 193,191,685 $ 215,245,355 $ 218,485,364 $ 224,569,229 $ 227,464,393 Business-type activities Net investment in capital assets $ 218,813,478 $ 214,458,841 $ 212,682,278 $ 209,584,457 $ 204,149,751 $ 194,854,140 $ 185,430,669 $ 178,526,049 $ 166,320,408 $ 161,324,071 Restricted 2,889,096 8,746,096 11,077,134 12,382,060 13,080,302 19,917,341 19,454,812 30,892,739 35,777,715 35,945,848 Unrestricted 17,242,167 37,891,053 31,943,581 32,196,598 34,177,453 30,193,568 23,730,694 16,330,517 28,929,677 28,208,193 Total business-type activities net assets/ net position $ 238,944,741 $ 261,095,990 $ 255,702,993 $ 254,163,115 $ 251,407,506 $ 244,965,049 $ 228,616,175 $ 225,749,305 $ 231,027,800 $ 225,478,112 Primary government Net investment in capital assets $ 370,599,394 $ 365,434,851 $ 367,054,882 $ 373,307,706 $ 384,720,988 $ 381,390,568 $ 376,947,144 $ 365,580,901 $ 350,470,847 $ 351,567,518 Restricted 15,200,637 21,879,233 23,629,145 26,906,644 27,857,873 34,222,030 36,593,902 65,447,278 73,420,499 72,652,193 Unrestricted(deficit) (234,211,040) (8,453,502) (7,524,091) (2,175,257) 15,336,736 22,544,136 30,320,484 13,206,490 31,705,683 28,722,794 Total primary government net assets/ net position $ 151,588,991 $ 378,860,582 $ 383,159,936 $ 398,039,093 $ 427,915,597 $ 438,156,734 $ 443,861,530 $ 444,234,669 $ 455,597,029 $ 452,942,505 (1)no discretely presented component units shown (2)GASB Statement No.68 was implemented for the fiscal year ended June 30,2015.This resulted in presentation of the City's net pension liability on the statement of net position.Prior years were not restated, 175 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Assets/Net Position - Last Ten Fiscal Years ---------- Expenses Governmental activities: General government $ 25,225,893 $ 24,771,054 $ 27,438,065 $ 30,841,776 $ 25,665,269 $ 30,326,671 $ 26,426,242 $ 28,901,548 $ 22,043,283 $ 34,375,762 Public safety 81,827,437 78,142,897 77,133,469 82,369,004 83,546,997 84,566,215 71,236,947 76,211,756 62,570,888 60,047,271 Public works 27,815,970 37,243,516 29,984,955 33,144,303 26,355,375 29,252,516 37,588,680 40,032,746 40,517,063 31,790,944 Recreation and culture 6,515,590 8,670,918 7,713,098 8,889,142 8,245,451 7,312,480 7,298,385 7,677,083 6,198,462 7,881,212 Community development 10,270,404 7,602,229 16,939,572 13,623,946 12,825,028 9,715,087 6,378,286 6,382,336 6,232,406 7,124,491 Interest on long-term debt 1,291,846 1,340,818 1,475,051 1,949,825 2,116,535 2,229,288 1,803,125 1,481,658 1,658,708 1,197,851 Total governmental activities expenses 152,947,140 157,771,432 160,684,210 170,817,996 158,754,655 163,402,257 150,731,665 160,687,127 139,220,810 142,417,531 Business-type activities: Sewage disposal system 27,506,843 28,682,809 26,298,964 26,836,597 26,444,741 24,931,075 26,247,188 27,382,736 24,725,229 21,706,537 Municipal parking system 7,605,461 7,851,702 8,108,373 9,491,376 9,896,498 8,305,095 8,353,063 10,188,065 10,275,379 18,403,163 Cemetery 632,485 722,270 633,050 639,000 755,766 659,584 689,979 675,672 692,510 753,151 Golf 852,634 935,671 892,117 810,372 846,817 869,003 927,200 1,072,505 1,358,008 1,398,963 Garbage and rubbish collection 1,712,671 1,722,843 1,557,708 1,558,024 1,515,600 1,451,059 1,547,372 1,436,642 1,372,266 1,412,620 Recycling 3,623,276 3,263,553 3,650,292 3,041,328 2,809,353 2,804,047 3,008,750 2,940,366 2,777,068 2,981,730 Potter Park Zoo - - - - - - - (156,270) 2,968,236 2,718,759 Total business-type activities expenses 41,933,370 43,178,848 41,140,504 42,376,697 42,268,775 39,019,863 40,773,552 43,539,716 44,168,696 49,374,923 Total primary government expenses 194,880,510 200,950,280 201,824,714 213,194,693 201,023,430 202,422,120 191,505,217 204,226,843 183,389,506 191,792,454 Program revenues Governmental activities: Charges for services: General government 6,815,975 6,162,713 6,162,713 6,428,110 6,742,306 6,565,263 5,188,510 5,938,911 6,251,032 6,416,850 Public safety 3,344,183 4,083,222 4,083,222 8,525,524 8,975,173 8,589,146 9,817,421 12,705,181 13,014,934 13,087,372 Public works 1,923,303 1,622,738 1,622,738 2,797,443 2,449,606 2,788,112 4,565,013 4,364,525 3,805,739 3,891,646 Recreation and culture 619,834 594,349 594,349 557,609 685,120 587,906 1,217,445 1,556,260 1,259,373 1,405,584 Community development 67,264 67,349 67,349 67,344 122,326 69,250 50,132 66,308 66,161 66,486 Operating grants and contributions 24,658,955 29,322,435 29,322,435 31,928,983 30,154,681 27,515,892 26,462,211 20,356,292 16,524,178 16,158,496 Capital grants and contributions 2,910,660 3,124,288 3,124,288 260,656 189,414 3,109,410 2,571,741 2,531,974 2,179,870 3,659,169 Total governmental activities program revenues 40,340,174 44,977,094 44,977,094 50,565,669 49,318,626 49,224,979 49,872,473 47,519,451 43,101,287 44,685,603 Business-type activities: Charges for services: Sewage disposal system 31,730,416 30,825,174 30,825,174 29,915,799 29,205,945 28,907,772 27,446,304 28,023,322 26,926,202 26,867,610 Municipal parking system 6,988,879 5,267,627 5,267,627 6,858,606 7,539,179 7,396,219 7,539,611 10,090,566 10,838,270 10,289,830 Cemetery 335,379 314,913 314,913 240,394 225,947 226,973 248,314 218,688 264,255 237,564 Golf 363,559 373,000 373,000 390,134 382,546 438,315 448,067 607,922 754,995 890,190 Garbage and rubbish collection 1,744,999 1,131,659 1,131,659 1,459,101 1,507,577 1,677,428 1,486,531 1,617,717 1,378,562 1,295,053 Recycling 3,624,671 3,434,622 3,434,622 2,818,364 2,609,423 2,651,309 2,945,061 3,039,089 2,903,092 2,816,277 Potter Park Zoo - - - - - - - (115) 553,999 471,703 Operating grants and contributions 1,143,085 1,193,571 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 Total business-type activities program revenues 45,930,988 42,540,566 42,540,566 45,697,792 47,366,369 54,762,031 41,716,119 43,793,506 43,802,387 44,237,000 Total primary government program revenues 86,271,162 87,517,660 87,517,660 96,263,461 96,684,995 103,987,010 91,588,592 91,312,957 86,903,674 88,922,603 Net(expenses)revenues Governmental activities (112,606,966) (112,794,338) (115,707,116) (120,252,327) (109,436,029) (114,177,278) (100,859,192) (113,167,676) (96,119,523) (97,731,928) Business-type activities 3,997,618 (638,282) 1,400,062 3,321,095 5,097,594 15,742,168 942,567 253,790 (366,309) (5,137,923) Total primary government net expense (108,609,348) (113,432,620) (114,307,054) (116,931,232) (104,338,435) (98,435,110) (99,916,625) (112,913,886) (96,485,832) (102,869,851) 176 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 $ 39,657,382 $ 38,668,837 $ 38,668,837 $ 33,506,860 $ 37,233,590 $ 39,010,960 $ 39,141,928 $ 38,607,761 $ 38,371,105 $ 37,506,017 Income taxes 31,660,923 29,850,755 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 Unrestricted grants and contributions 36,330,976 31,425,718 31,425,718 26,441,961 27,254,574 25,847,423 27,318,313 28,180,799 27,258,536 26,817,633 Investment earnings 26,353 58,588 58,588 69,265 89,735 246,495 978,034 1,706,572 2,483,162 1,634,608 Miscellaneous 280,280 - - 123,066 108,601 75,094 32,310 - - 774,822 Transfers (644,485) (583,117) (583,117) (464,008) (633,814) (464,807) (509,728) 7,420,667 (3,098,357) (3,132,465) Total governmental activities 107,311,429 99,420,781 99,420,781 87,620,214 92,752,435 92,123,608 96,273,619 107,083,811 93,224,359 90,632,791 Business-type activities: Investment earnings 17,874 356,467 356,467 271,067 689,883 141,899 413,850 1,883,034 2,815,480 1,453,076 Miscellaneous - - - (1,300,561) 21,166 - 725 5,348 2,160 1,248 Transfers 644,485 583,117 583,117 464,008 633,814 464,807 509,728 (7,420,667) 3,098,357 3,132,465 Total business-type activities 662,359 939,584 939,584 (565,486) 1,344,863 606,706 924,303 (5,532,285) 5,915,997 4,586,789 Total primary government 107,973,788 100,360,365 100,360,365 87,054,728 94,097,298 92,730,314 97,197,922 101,551,526 99,140,356 95,219,580 Changes in net assets/net position Governmental activities $ (5,295,537) $ (13,373,557) $ (16,286,335) $ (32,632,113) $ (16,683,594) $ (22,053,670) $ (4,585,573) $ (6,083,865) $ (2,895,164) $ (7,099,137) Business-type activities 4,659,977 301,302 2,339,646 2,755,609 6,442,457 16,348,874 1,866,870 (5,278,495) 5,549,688 (551,134) Total primary government $ (635,560) $ (13,072,255) $ (13,946,689) $ (29,876,504) $ (10,241,137) $ (5,704,796) $ (2,718,703) $ (11,362,360) $ 2,654,524 $ (7,650,271) (1)No discretely presented component units shown 177 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances,governmental Funds - Last Ten Fiscal Years ' 2015 -— —————— 2007 2— (2) General fund Nonspendable $ 35,424 $ 75,738 $ 75,738 $ 92,538 $ 171,586 $ $ $ $ $ - Restricted 10,044 9,400 9,400 16,256 41,129 Committed 837,761 2,976,408 2,976,408 65,373 178,081 Unassigned 9,783,911 5,633,528 5,633,528 5,198,032 4,939,691 - Reserved - - - - - 102,732 1,320,375 1,765,288 1,848,021 2,443,224 Unreserved - - - - 389,061 3,755,862 5,465,164 5,036,129 4,634,961 Total general fund 10,667,140 8,695,074 8,695,074 5,372,199 5,330,487 491,793 5,076,237 7,230,452 6,884,150 7,078,185 All other governmental funds Nonspendable 2,619,065 2,671,151 2,671,151 2,852,004 3,006,507 - - - - - Restricted 6,865,580 4,368,983 4,368,983 5,566,421 7,412,008 Committed 7,110,485 4,035,145 4,035,145 4,109,131 4,908,740 Unassigned(deficit) (528,144) (619,931) (619,931) (543,774) (371,285) - - - - - Reserved 1,177,998 324,366 365,351 2,544,339 613,533 Unreserved,reported in: Special revenue funds 12,029,680 13,394,485 14,716,755 14,523,146 18,798,291 Capital projects funds 11,614,644 12,010,219 17,862,441 18,978,360 15,717,371 Debt service funds 126,434 186,636 256,144 144,518 88,826 Permanent funds 1,649,550 1,630,098 1,609,992 1,596,939 1,577,150 Total all other governmental funds 16,066,986 10,455,348 10,455,348 11,983,782 14,955,970 26,598,306 27,545,804 34,810,683 37,787,302 36,795,171 Total all governmental funds $ 26,734,126 $ 19,150,422 $ 19,150,422 $ 17,355,981 $ 20,286,457 $ 27,090,099 $ 32,622,041 $ 42,041,135 $ 44,671,452 $ 43,873,356 (2)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 178 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years 2015'- -- ----- Revenues Property taxes $ 39,470,249 $ 38,717,552 $ 38,717,552 $ 33,583,448 $ 37,371,885 $ 39,279,343 $ 39,258,893 $ 38,775,722 $ 38,681,928 $ 37,957,773 Income taxes 31,660,923 29,850,755 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 27,032,176 Licenses and permits 1,551,125 1,509,402 1,509,402 1,538,325 1,598,804 1,414,906 1,325,119 1,429,075 1,101,550 860,647 Intergovernmental 36,042,377 40,639,183 40,639,183 41,431,793 40,304,785 39,137,217 38,998,039 38,556,616 34,699,908 34,964,225 Charges for services 12,900,490 11,754,381 11,754,381 18,676,398 18,606,304 18,323,158 20,355,642 19,116,593 18,415,612 19,436,267 Fines and forfeits 3,075,427 3,694,351 3,694,351 2,884,328 3,325,728 4,579,175 4,143,000 4,090,397 4,349,642 4,515,951 Interest and rents 87,035 53,179 53,179 63,571 88,516 249,464 1,196,559 1,836,485 2,607,388 1,710,674 Contributions 21,561,449 16,247,403 16,247,403 12,369,733 11,821,388 10,606,368 10,372,056 10,894,573 9,980,854 9,385,831 Donations from private sources - - - 5,000 - 9,000 44,000 326,768 114,954 549,055 Otherrevenue 1,601,497 510,515 510,515 400,074 504,856 473,123 1,054,209 331,248 1,019,476 1,082,283 Total revenues 147,950,572 142,976,721 142,976,721 138,895,740 142,322,015 141,480,197 146,060,279 146,525,489 139,181,225 137,494,882 Expenditures General government 21,720,206 23,595,321 23,595,321 25,038,589 26,396,516 27,839,564 28,951,805 29,209,458 28,905,058 34,956,037 Public safety 75,510,743 63,943,082 63,943,082 66,161,872 70,397,235 70,820,184 70,082,462 67,715,160 65,218,515 59,143,629 Public works 13,273,332 8,908,673 8,908,673 6,225,177 6,002,823 Highways and streets 10,357,488 9,937,423 9,937,423 8,589,298 8,494,233 14,506,982 14,723,311 14,860,390 13,501,747 10,879,004 Recreation and culture 7,583,085 6,629,453 6,629,453 6,996,562 7,464,193 8,127,700 8,452,768 8,038,290 7,676,600 7,509,183 Community development 3,910,924 - - - - - - - - - Other functions 2,704,982 23,699,202 23,699,202 17,999,264 15,675,003 15,182,675 12,599,072 11,805,843 9,847,925 8,259,415 Capital outlay 21,016,808 5,489,617 5,489,617 6,466,084 9,956,103 14,781,728 14,855,863 16,228,127 20,001,659 13,306,810 Debt service: Interest 931,079 1,378,856 1,378,856 1,836,218 3,210,220 3,270,068 1,801,394 1,607,703 1,285,436 1,145,588 Principal 3,616,297 3,137,159 3,137,159 3,448,080 2,070,552 2,165,237 4,743,146 4,721,581 3,875,909 3,244,879 Issuance costs - 42,744 42,744 - 48,804 - - - - - Total expenditures 160,624,944 146,761,530 146,761,530 142,761,144 149,715,682 156,694,138 156,209,821 154,186,552 150,312,849 138,444,545 Excess of revenues over under expenditures (12,674,372) (3,784,809) (3,784,809) (3,865,404) (7,393,667) (15,213,941) (10,149,542) (7,661,063) (11,131,624) (949,663) Other financing sources(uses) Proceeds from borrowing 16,761,300 11,932,046 11,932,046 - 2,470,000 10,146,117 - 4,052,979 15,190,077 6,087,507 Proceeds from sale of capital assets 110,533 497,833 497,833 1,398,936 1,210,046 689 1,587,216 - - 774,822 Payment to escrow agent - (6,015,112) (6,015,112) - (2,456,207) - - - Insurance proceeds - - - - - 120,960 - - - Transfers in 9,734,572 7,056,932 7,056,932 7,893,879 9,602,095 16,181,590 11,601,871 13,507,521 6,908,259 8,170,998 Transfers out (10,002,772) (1,892,449) (1,892,449) (8,357,887) (10,235,909) (16,646,397) (12,579,599) (12,529,754) (10,168,616) (11,303,463) Bond premium 40,945 - - - - - - - - Total other financing sources(uses) 16,644,578 11,579,250 11,579,250 934,928 590,025 9,681,999 730,448 5,030,746 11,929,720 3,729,864 Net change in fund balance $ 3,970,206 $ 7,794,441 $ 7,794,441 $ (2,930,476) $ (6,803,642) $ (5,531,942) $ (9,419,094) $ (2,630,317) $ 798,096 $ 2,780,201 Debt service as a percentage of noncapital expenditures 3.2% 3.2% 3.2% 3.8% 3.7% 3.9% 4.5% 4.6% 4.0% 3.4% 179 CITY OF LANSING, MICHIGAN Table 5 - Unaudited Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (rate per $1,000 of assessed value) Fiscal Total Assessed Year Personal Total Taxable Direct Estimated Value as a Ended Residential Commercial Industrial Agricultural Developmental Property Assessed Tax Actual Percentage of June 30, Property Property Property Property Property Valuation Valuation Rate Value Actual Value 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% 2014 1,152,931,800 580,539,700 85,938,200 151,900 2,900 182,024,000 2,001,408,500 19.70 4,002,817,000 50.0% 2015 1,144,848,592 602,472,030 15,934,800 158,100 2,900 183,420,400 2,086,836,822 19.70 4,173,673,644 50.0% Source: Lansing City Assessor 180 CITY OF LANSING, MICHIGAN Table 6- Unaudited 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 (1) (2) 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 8.73 20.18 6.00 3.81 8.15 62.70 2009 2008 15.01 .82 15.83 8.87 20.15 6.00 3.81 9.04 63.70 2010 2009 15.44 .26 15.70 8.85 19.95 6.00 3.81 9.93 64.24 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 8.85 21.44 6.00 3.81 9.96 65.76 2013 2012 19.44 .26 19.70 9.49 21.73 6.00 3.81 9.96 70.68 2014 2013 19.44 .26 19.70 9.50 21.91 6.00 3.81 9.96 70.88 2015 2014 19.44 .26 19.70 10.20 21.77 6.00 3.81 9.96 71.44 (1)rates for Lansing School District only (2)includes Intermediate School,Airport Authority, Capital Area Transit Authority and Capital Area District Library. Source: Lansing City Treasurer 181 CITY OF LANSING, MICHIGAN Table 7-Unaudited Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2015 2006 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $ 67,187,581 1 3.22% $ 161,917,774 1 6.85% Consumers Energy 27,753,984 2 1.33% 21,227,570 3 0.90% Jackson National Life Insurance Company 26,421,671 3 1.27% 32,393,347 2 1.37% Phoenix Development Part I LLC 16,754,856 4 0.80% Sprint Spectrum L.P. 15,414,225 5 0.74% 12,932,265 6 0.55% Demmer Corporation 14,112,268 6 0.68% Emergent Biodefense Operations 13,116,394 7 0.63% Lansing Retail Center LLC 11,673,448 8 0.56% 12,670,707 7 0.54% Phoenix Development Part II LLC 8,004,962 9 0.38% Blue Cross Blue Shield 7,693,800 10 0.37% Emergent Biodefense Operations Quality Dairy Co#17 Capital Outlook LLC 18,095,407 4 0.77% Delta Township Utilities 12,999,700 5 0.55% Trappers Cove LTD Partners 12,117,127 8 0.51% Accident Fund Company 11,921,155 9 0.50% Heart of the City Association 9,923,613 10 0.42% Data furnished from City of Lansing Assessor 182 CITY OF LANSING, MICHIGAN Table 8 - Unaudited 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 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% 2014 39,336,952 39,238,902 99.75% 20,866 39,259,768 99.80% 2015 38,329,032 38,258,272 99.82% 49,590 38,307,862 99.94% 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 183 CITY OF LANSING, MICHIGAN Table 9-Unaudited Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities _ General e Special Installment General Total Percentage >; Fiscal Obligation Assessment Purchase Obligation Revenue Lease Primary of Personal aPer Year Bonds I Debt Agreements E Loans Bonds Bonds 0 Purchases Government Income (2)2006 $ 17,255,582 $ 25,000 $ 7,351,126 $ 1,409,844 $ 158,320,227 $ 48,772,782 $ $ 4,180,000 $ 237,314,561 11.14%11) $ 1,993 119,100 (2)2007 20,128,052 10,000 15,721,844 1,772,049 156,536,857 44,787,045 4,180,000 243,135,847 11.42%(Z) 2,041 119,100 (2)2008 20,914,466 - 14,037,885 1,534,822 175,578,524 41,921,307 4,180,000 258,167,004 12.13%11) 2,168 119,100 (3)2009 17,899,203 12,394,082 1,290,479 189,210,199 39,045,570 4,180,000 264,019,533 12.41%(Z) 2,217 119,100 (3)2010 26,329,157 10,925,689 1,038,804 199,063,758 36,122,872 4,180,000 277,660,280 13.05%11) 2,331 119,100 (3)2011 27,804,224 9,564,693 779,580 197,000,901 33,209,092 1,574,209 269,932,699 12.17% 2,362 114,297 (3)2012 25,816,914 8,193,615 512,577 189,536,530 30,135,311 1,637,177 255,832,124 11.32% 2,238 114,297 (3)2013 29,994,604 2,807,838 6,246,743 180,359,931 27,528,327 1,702,664 248,640,107 11.010) 2,175 114,298 (3)2014 27,180,294 3,100,563 7,062,234 174,471,861 24,055,438 1,668,081 - 237,538,471 10.69% 2,078 114,298 (3)2015 25,790,281 16,387,327 7,872,600 167,787,460 19,445,482 1,459,431 - 238,742,581 10.74% 2,089 114,297 (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 184 CITY OF LANSING, MICHIGAN Table 10 - Unaudited 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 2006 119,100 $ 2,429,206,976 $ 175,600,809 $ 88,826 $ 159,920,227 $ 15,591,756 0.0064 131 2007 119,100 2,500,894,289 176,674,909 309,363 162,596,857 13,768,689 0.0055 116 2008 119,100 2,619,195,965 196,492,990 256,144 184,442,624 11,794,222 0.0045 99 2009 119,100 2,658,126,184 207,109,402 186,636 197,225,199 9,697,567 0.0036 81 2010 119,100 2,662,792,292 225,392,915 126,434 206,198,758 19,067,723 0.0072 160 2011 114,297 2,446,969,549 224,805,125 46,029 203,225,901 21,533,195 0.0088 188 2012 114,297 2,297,591,331 215,353,444 - 194,911,530 20,441,914 0.0089 179 2013 114,298 2,088,692,281 210,354,535 178 184,849,931 25,504,427 0.0122 223 2014 114,298 2,001,408,500 201,652,155 - 178,031,861 23,620,294 0.0118 207 2015 114,297 2,086,836,622 193,577,741 1,000 170,372,460 23,204,281 0.0111 203 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 185 CITY OF LANSING, MICHIGAN Table 11 - Unaudited Direct and Overlapping Governmental Activities Debt As of June 30, 2015 Net General Obligation Amount Name of Debt %Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 52,050,208 100.00% $ 52,050,208 Share of County-issued bonds Joint Building Authority 2,108,229 100.00% 2,108,229 Drain Commission 223,300 100.00% 223,300 $ 2,331,529 Overlapping debt Eaton Intermediate School District $ 740,000 0.58% $ 4,292 Ingham Intermediate School District 1,836,000 22.81% 418,792 Waverly School District 29,760,000 0.22% 65,472 Lansing School District 39,930,000 81.04% 32,359,272 East Lansing School District 41,068,377 3.74% 1,535,957 Holt School District 70,412,946 2.38% 1,675,828 Ingham County 30,064,178 26.07% 7,837,731 Eaton County 30,395,466 1.60% 486,327 Clinton County 2,053,375 0.28% 5,749 Lansing Community College 72,720,000 18.82% 13,685,904 Okemos School District 17,629,329 2.76% 486,569 Mason School District 13,365,000 0.35% 46,778 Grand Ledge School District 51,650,000 1.22% 630,130 Total overlapping debt 59,238,801 Total direct and overlapping debt $ 113,620,538 Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 186 CITY OF LANSING, MICHIGAN Table 12-Unaudited Legal Debt Margin Information - Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2014 Assessed value,real and personal property $2,027,060,822 Assessed value equivalents 59,776,000 Total valuation 2,086,836,822 Legal debt margin Debt limitation- 10 percent of total valuation 208,683,682 Debt applicable to limit Total City Bonded Debt 213,023,223 City Share: Drain Commission-County Issued 223,300 Joint Building Authority-County Issued 2,108,229 TIF Supported Bonds 17,074,155 232,428,907 Less: Michigan Transportation(MTF)Bonds (2,585,000) Sewage Disposal Revenue Bonds (20,275,000) Pollution Abatement(CSO Project)Bonds (118,216,293) (141,076,293) Total net debt applicable to limit 91,352,614 Legal debt margin $ 117,331,068 ----�10 ----- Debt Limit $ 314,307,611 $ 324,987,531 $ 318,810,868 $ 298,581,799 $ 298,052,683 $ 268,975,768 $ 233,669,637 $ 208,869,228 $ 205,138,999 $ 208,683,682 Total net debt applicable to limit 103,095,986 84,276,312 87,966,365 79,513,756 98,368,804 100,923,863 92,357,575 91,833,157 93,062,835 91,352,614 Legal debt margin $ 211,211,625 $ 240,711,219 $ 230,844,503 $ 219,068,043 $ 199,683,880 $ 168,051,905 $ 141,312,062 $ 117,036,071 $ 112,076,164 $ 117,331,068 Total net debt applicable to the limit as a percentage of debt limit 32.80% 25.93% 27.59% 26.63% 33.00% 37.52% 39.52% 43.97% 45.37% 43.78% 187 CITY OF LANSING, MICHIGAN Table 13 - Unaudited 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) 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 3,040,000 1,448,856 4,488,856 3.92 2013 31,169,428 12,112,994 19,056,434 3,160,000 1,111,390 4,271,390 4.46 2014 31,996,794 13,424,901 18,571,893 3,265,000 1,054,878 4,319,878 4.30 2015 31,945,082 13,295,574 18,649,508 1,490,000 920,788 2,410,788 7.74 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 188 CITY OF LANSING, MICHIGAN Table 14- Unaudited 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) 2006 119,100 $ 2,130,460,800 $ 17,888 32.4 16,014 8.4% 67,023 2007 119,100 2,129,750,646 17,882 32.5 15,178 8.9% 66,224 2008 119,100 2,129,040,730 17,876 32.7 14,475 10.2% 65,833 2009 119,100 2,128,331,049 17,870 32.8 14,482 16.2% 66,822 2010 119,100 2,127,621,606 17,864 32.9 14,098 15.0% 64,074 2011 114,297 2,218,237,360 19,408 30.4 13,465 13.1% 63,130 2012 114,297 2,259,194,502 19,766 32.4 13,236 11.3% 63,374 2013 114,298 2,259,194,502 19,766 32.2 12,544 11.9% 63,181 2014 114,298 2,221,933,680 19,440 32.0 12,088 9.1% 63,102 2015 114,297 2,221,933,600 19,440 32.1 11,587 7.4% 57,432 (')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 189 CITY OF LANSING, MICHIGAN Table 15-Unaudited Principal Employers Current Year and Nine Years Ago 2015 2006 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 13,700 1 6.01% 13,000 1 6.09% Michigan State University 10,725 2 4.70% 10,500 2 4.45% Sparrow Health System 5,735 3 2.52% 6,000 4 2.54% General Motors 5,222 4 2.29% 6,300 3 2.67% Lansing Community College 2,990 5 1.31% 3,800 5 1.35% McClaren Greater Lansing 2,400 6 1.05% 2,500 7 0.89% Lansing School District 1,613 7 0.71% 3,000 6 1.06% Meijer 1,500 8 0.66% 2,000 8 0.85% Auto Owners Insurance 1,400 9 0.61% 1,500 9 0.64% Jackson National Life Insurance 1,400 10 0.61% Ingham County 1,200 10 0.52% Greater Lansing metropolitan area employment 227,995 Data is representative of the Greater Lansing Region Z Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 190 CITY OF LANSING, MICHIGAN Table 16-Unaudited Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2015 2014 2013 2012 2011 2010 2009 20M-opfft- General government City council 10 10 10 10 11 11 11 11 11 11 Mayors office 5 5 5 5 5 5 5 5 5 7 City clerk 5 5 5 5 6 7 7 7 7 7 54-A district court 46 43 43 48 50 53 53 53 55 55 City attorneys office 11 10 10 10 11 12 12 12 12 11 City TV 2 2 2 2 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 1 1 1 2 Human resources 10 10 9 9 11 12 13 14 14 (1) 12 Information technology 11 11 10 10 14 15 17 18 18 18 Finance Accounting/Budget/Purchasing 9 10 10 13 14 16 17 16 18 (1) 21 Tax services 20 20 20 21 22 24 25 26 29 30 Property management - (6) 18 20 21 23 24 26 (3) 28 Fleet management - (6) 27 29 30 31 33 37 (2) 20 29 30 30 79 99 106 113 117 128 117 Planning Et neighborhood development Administration 2 2 2 2 2 2 2 2 2 2 Code compliance - a) 15 15 16 16 16 17 19 15 Building safety 13 13 12 13 15 15 15 15 16 17 Planning 4 4 4 4 5 5 4 5 7 7 Development 10 11 9 9 9 9 10 10 10 11 Parking 23 transportation 14 15 20 20 20 (5) 40 41 41 43 49 43 45 62 63 66 87 88 90 97 101 Police 234 234 (") 229 (') 260 327 344 342 341 338 339 Fire 181 188 180 179 207 218 219 219 219 220 Code compliance 14 14 (") Public services - Administration 8 engineering 19 19 19 21 21 17 18 18 18 19 Operations Et maintenance 117 117 120 121 135 (5) 110 113 113 119 122 Service garage - - - - - - - - 17 Wastewater 41 41 41 41 41 44 50 50 51 61 Property Management 18 18 18 (61 Fleet Management 27 27 27 (6) 222 222 225 183 197 171 181 181 188 219 Human relations 8 community services 7 6 5 5 5 5 6 8 9 9 Parks 8 recreation Administration 8 design 6 6 5 5 5 7 7 8 8 9 Grounds&forestry 27 31 32 32 (`) 32 Leisure 8 special recreation 6 6 8 10 12 15 19 17 19 (3) 20 Cemeteries 1 1 1 1 1 3 4 4 5 5 Golf/ice arena 3 3 3 3 4 4 4 4 4 6 Zoo(4) - - - 18 19 16 16 17 19 22 56 65 65 86 91 847 852 843 888 1,034 1,105 1,135 1,144 1,190 1,221 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 (2)Operations Of the City's three fleet garages was consolidated in Finance (3)Four custodial positions were transferred from Parks tt Recreation to Finance (4)on Jury 1,2007,Potter Park Zoo employees were transferred to Ingham County In FY 2011,the following restructuring of departments occurred: (5)Grounds Maintenance positions were moved from Parks Ft Recreation and Planning @ 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 In FY 2014,the following restructuring g of departments occurred: (8)Fourteen(14)positions are transferred from PND to Fire;four(4)to Police,and one(1)to Public Service for FY 2014 191 CITY OF LANSING, MICHIGAN Table 17-Unaudited Operating Indicators by Function/Program - Last Ten Fiscal Years Function/Program 2015 i 2013 _ 2011 --L 2007.- Public safety Fire department responses 20,170 19,427 18,444 17,093 16,974 16,659 15,852 15,780 15,267 14,869 EMS related 17,376 16,235 15,918 14,851 14,628 14,398 13,447 13,151 12,779 12,152 Fire related 2,794 3,012 2,526 2,242 2,346 2,261 2,405 2,629 2,488 2,117 Police department responses 79,331 76,855 73,087 74,058 78,112 87,724 89,958 87,634 97,466 87,551 Arrests 4,510 5,656 7,196 8,043 8,858 11,644 11,559 12,810 13,260 7,479 Traffic violations 10,781 7,756 14,905 8,829 15,585 18,297 20,122 25,398 29,047 30,948 Public works Potholes filled 53,281 55,193 33,155 30,116 32,918 24,945 43,601 40,790 28,122 36,522 Streets resurfaced(miles) 4 4.60 6.00 5.01 8.99 20.70 16.20 20.92 22.11 27 Recreation Recreation participation 122,639 50,859 55,122 66,836 66,254 70,529 39,060 37,783 ' 41,069 38,878 Pavilion rentals 206 185 199 198 161 288 315 341 254 255 Sewage disposal Average amount processed daily(gal) 13.28 millio 14.49 million 14.75 million 12.82 million 12.83 million 15.01 million 18.15 million 16.73 million 16.00 millior 15.00 millioi Parking system Average number of monthly permits 3,077 2,891 2,718 2,735 3,122 3,480 3,783 4,059 3,905 4,073 Parking tickets issued 30,888 34,373 38,127 41,829 45,176 63,610 66,183 57,153 75,637 82,221 Cemetery Lots sold 138 93 113 115 143 142 119 98 114 104 Golf Annual rounds played 22,998 22,786 25,554 28,560 26,084 30,936 41,588 43,605 Z 59,244 57,256 Garbage and rubbish Yards sent to landfill 19,667 18,829 17,985 18,705 20,334 21,805 29,322 29,869 30,402 30,517 Recycling Recycled goods sold(tons) 5,691 5,075 3,562 3,149 2,446 2,163 2,591 2,818 2,269 2,441 Yards composted 21,685 25,260 21,832 20,413 15,725 21,819 21,871 21,928 17,189 21,304 Source: The City of Lansing The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 201( ` Two golf course were closed in FY 2008 with one of those being converted to a driving range Source: City of Lansing 192 CITY OF LANSING, MICHIGAN Table 18-Unaudited Capital Assets Statistics by Function/Program Last Ten Fiscal Years Function/Program 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Public safety Police stations 2 2 2 2 3 3 3 3 3 3 Police patrol units 60 61 60 60 58 61 61 58 55 55 Fire stations 6 6 6 6 8 9 9 9 9 9 Public works Streets(miles) 414.00 411.00 411.00 407.80 410.80 410.63 410.15 410.15 410 409.89 Traffic signals 200 200 204 204 208 203 196 203 188 194 Recreation Park acreage 2,363.45 2,364.85 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 72 72 75 73 71 71 82 82 80 76 Baseball/softball fields 47 61 61 61 61 61 61 61 61 61 Soccer/football fields 6 6 6 6 6 6 6 6 6 6 Community centers 4 4 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 361 359 359 359 359 357 354 347.4 341.0 338.0 Storm sewers(miles) 235 234 234 234 234 233 230 225.1 220.0 217.0 Combined sewers(miles) 188 188 188 188 188 191 192 197.4 203.0 208.0 Parking system Ramps 4 4 4 4 4 4 4 6 6 5 Lots 17 17 18 15 15 16 16 15 15 15 Meters 2,166 2,452 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 3 3 Golf Number of courses 1 1 1 1 1 1 1 1 ° 3 3 Acreage 115 115 115 115 115 115 115 115° 318 318 Garbage and rubbish Refuse collection trucks 17 17 17 19 22 18 16 21 21 20 Recycling Recycling trucks 7 7 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 N/A N/A a 398 403 Source: The City of Lansing a.Zoo operations were transferred to Ingham County in FY2008 b.Two municipal golf courses were non-operational beginning in 2008 193