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HomeMy WebLinkAbout2018 - City of Lansing-FS Comprehasive Annual Finacial Report City of Lansing, .� Michigan Year Ended Comprehensive June 30, 2018 a 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 7 GFOA Certificate of Achievement 8 FINANCIAL SECTION 9 Independent Auditors' Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 30 Statement of Activities 31 Fund Financial Statements: Balance Sheet - Governmental Funds 36 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 37 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 38 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual: General Fund 40 Statement of Net Position - Proprietary Funds 44 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 45 Statement of Cash Flows - Proprietary Funds 46 Statement of Fiduciary Net Position - Fiduciary Funds 50 Statement of Changes in Fiduciary Net Position - Pension and Other Postemployment Benefits Trust Funds 51 Combining Statement of Net Position - Discretely Presented Component Units 56 Combining Statement of Activities - Discretely Presented Component Units 57 Notes to Financial Statements 59 CITY OF LANSING, MICHIGAN Table of Contents Page Required Supplementary Information 123 Employees' Retirement System Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios 124 Schedule of the Net Pension Liability 125 Schedule of Contributions 126 Schedule of Investment Returns 127 Police and Fire Retirement System Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios 128 Schedule of the Net Pension Liability 129 Schedule of Contributions 130 Schedule of Investment Returns 131 Employees' Retirement System OPEB Plan: Schedule of Changes in Net OPEB Liability and Related Ratios 132 Schedule of the Net OPEB Liability 133 Schedule of Contributions 134 Schedule of Investment Returns 135 Police and Fire Retirement System OPEB Plan: Schedule of Changes in Net OPEB Liability and Related Ratios 136 Schedule of the Net OPEB Liability 137 Schedule of Contributions 138 Schedule of Investment Returns 139 Combining and Individual Fund Financial Statements and Schedules 141 Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 142 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 143 Combining Balance Sheet - Nonmajor Special Revenue Funds 146 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 148 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 150 Combining Balance Sheet - Nonmajor Debt Service Funds 158 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 159 Combining Balance Sheet - Nonmajor Capital Projects Funds 162 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 163 Combining Balance Sheet - Nonmajor Permanent Funds 166 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 167 CITY OF LANSING, MICHIGAN Table of Contents Page Combining and Individual Fund Financial Statements and Schedules (concluded) Nonmajor Enterprise Funds: Combining Statement of Net Position - Nonmajor Enterprise Funds 170 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 171 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 172 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 176 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 177 Combining Statement of Cash Flows - Internal Service Funds 178 Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 182 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds 183 STATISTICAL SECTION (UNAUDITED) 185 TABLE 1 Net Position by Component 189 2 Change in Net Position 190 3 Fund Balances, Governmental Funds 192 4 Changes in Fund Balances of Governmental Funds 193 5 Assessed and Estimated Actual Value of Taxable Property 194 6 Direct and Overlapping Property Tax Rates 195 7 Profile of Ten Largest Ad Valorem Taxpayers 196 8 Property Tax Levies and Collections 197 9 Ratios of Outstanding Debt by Type 198 10 Ratios of General Bonded Debt Outstanding 199 11 Direct and Overlapping Governmental Activities Debt 200 12 Legal Debt Margin Information 201 13 Pledged-Revenue Coverage 202 14 Demographic and Economic Statistics 203 15 Principal Employers 204 16 Full-Time Equivalent City Governmental Employees by Function/Program 206 17 Operating Indicators by Function/Program 210 18 Capital Asset Statistics by Function/Program 212 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN LANSING CITY GOVERNMENT Fiscal Year Ended June 30, 2018 MAYOR Andy Schor CITY COUNCIL Carol Wood, Council President, At Large Jody Washington, Council Vice President, 1st Ward Kathie Dunbar, At Large Patricia Spitzley, At Large Peter Spadafore, At Large Jeremy Garza, 2nd Ward Adam Hussain, 3rd Ward Brian T. Jackson, 4th Ward CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson, Chief Judge Frank J. Deluca Hugh B. Clarke, Jr. Stacia Buchanan OFFICERS Samantha Harkins Executive Assistant/Chief of Staff James D. Smiertka City Attorney Angela Bennett Finance Director Tammy Good City Treasurer Sharon Frischman City Assessor Michael Yankowski Police Chief Randy Talifarro Fire Chief Andrew Kilpatrick Public Service Director Brian McGrain Economic Development Et Planning Director Andrea Crawford Neighborhood Et Citizen Engagement Director Brett Kaschinske Parks Et Recreation Director Anethia Brewer Court Administrator Joan Jackson Johnson Human Relations Et Community Services Director Linda Sanchez-Gazella Human Resources Director Eric Brewer Internal Auditor 2 FINANCE DEPARTMENT 124 W. Michigan Ave., 8'Floor Lansing: Michigan 48933 (51 Tj 4834500 J HlC ® December 21, 2018 Council President Carol Wood and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Wood and Council Members: We are pleased to submit the comprehensive annual financial report of the City of Lansing, Michigan for the fiscal year ended June 30, 2018. 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 2017/2018 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, 2018, 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 (MDEtA) 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 116,986, according to 2017 census estimates, and offers a full range of services. During the fiscal year ended June 30, 2018, the City operated police headquarters and a precinct with 202 sworn police officers; six fire stations with a fire protection force of 178; over 350 miles of sanitary sewers, 230 miles of storm sewers, and 180 miles of combined sewers; over 400 miles of roads; 114 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 unit, the Lansing Building Authority. 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. 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 &t Public Facilities Authority, Tax Increment Finance Authority, and Brownfield Redevelopment Authority are reported as 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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards (Uniform Guidance). 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, 2018 are discussed in the Management Discussion and Analysis (MDEtA), located immediately following the Independent Auditor 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. Local Economy The City of Lansing is the seat of Michigan state government and the local economy is comprised of a diversified mix of business and industries. With Michigan State University, Davenport University, Cooley Law School and Lansing Community College, the region has a strong higher education presence. The metro Lansing region is also home to several national insurance company headquarters, healthcare services with two major hospitals in the City, and a wide variety of technology firms. Manufacturing also has a strong presence, especially in the automotive and biotech engineering sectors, with two General Motors assembly plants and related facilities located in the City with recent investments of over $277 million in plant expansions and retooling, $40 million in a new Logistics Center, and $162 million in a new regional stamping plant; automotive suppliers throughout the region; production of particle accelerators, and vaccine research and production. Currently under construction and scheduled for completion in 2022, Michigan State University will be home to the $174 million Facility for Rare Isotope Beams (FRIB), which will enable scientific discovery of rare isotope properties, will employ top nuclear physicists, and is expected to create approximately 1,000 jobs. Even before the plant is completed, Niowave, Inc. established its operations in Lansing as commercial spinoff from Michigan State University's nuclear cyclotron facility. MSU has been named #1 in Nuclear Physics, ahead of MIT, by U.S. News &t World Report for five consecutive years. Lansing serves as the cultural and commercial center for the region, and recent major investments have revitalized downtown Lansing into an entertainment and residential destination, with renovations to historic buildings and brand new developments. The former Lansing Board of Water Light downtown plant was transformed in 2011 into the corporate headquarters for Accident Fund Insurance Company of America (now AF Group), followed by Blue Cross Blue Shield of Michigan moving into Accident Fund's former downtown location. Recent renovations of the former downtown Knapp's department store into apartments and commercial space have attracted technology firms. Highly successful, recently-completed new developments, including Marketplace, Midtown, and Skyview residential developments have added significant additional residential units near and within downtown. The Outfield Ballpark Lofts development, which opened in 2017, was the first in the nation to feature apartments located right in the outfield of a Class-A minor league baseball stadium and has received national and international awards. 5 Contributing to the revitalization of the City's REO Town district, the Lansing Board of Water and Light opened a $182 million cogeneration plan and relocated its headquarters to the new facility in 2013, including the rehabilitation of a vacant train depot. Continuing that synergy, the Board of Water and Light broke ground this year on an attractive, $28 million central substation in a key REO Town gateway corridor. In its commitment to regional partnerships, the City of Lansing has contracted with the Lansing Economic Area Partnership (LEAP) since 2012. This arrangement allows for a cost-effective, regional-based approach to economic development. As testament to its success, this past year, LEAP received the prestigious Excellence in Economic Development Award by the International Economic Development Council (IEDC). Over the past decade, LEAP and the Lansing Economic Development Corporation have attracted more than $2.3 billion in new private investment to the City. 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, 2017. This was the 40th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Department, as well as support by other departments. All those who contributed to this document, especially Accounting Manager Randy Endsley, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 40th consecutive GFOA award, recognizing their efforts, is well deserved indeed. Sincerely, Andy Schor Mayor 4 ��� Angela Bennett Finance Director 6 v� 4 rr+ , v V s a N v N_ y.y on O N V v H � v � o Tj b Pi o �a chi v � u Q a Government Finance Officers Association r-tifieate of Achievement for Excellence in Financial .Repoirting Presented to City of Lansing Michigan For its Comprehensive .Annual Financial Report for the Fiscal Year Ended June 30, 2017 �r Executive Dtmtor/CEO 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 RidRebmann Robson Rehmann 2330 East Paris Ave.SE Grand Rapids,MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 rehmann.com INDEPENDENT AUDITORS' REPORT December 21, 2018 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, 2018, 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. 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. 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, 2018, 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 GASB Statement No. 75 As described in Note 20, the City implemented the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, in the current year. Accordingly, beginning net position of governmental activities, business-type activities, the sewage disposal system enterprise fund, the municipal parking system enterprise fund, and nonmajor enterprise funds was restated. Our opinion is not modified with respect to this matter. 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. 12 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&andards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 21, 2018, 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 13 This page intentionally left blank. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The management of the City of Lansing, Michigan ("the City") provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2018 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MD&A") is intended to assist the reader in focusing on significant financial issues and provide an overview of the City's financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section. Financial Highlights Total government-wide liabilities and deferred inflows of resources of the City exceeded its assets and deferred outflows of resources at the close of the fiscal year by $227.9 million (reported as net position), an increase of $7.9 million in net position from fiscal year 2016/2017 (as restated to take into account implementation of Governmental Accounting Standards Board Statement 75 Accounting and Financial Reporting for Postemployment Benefits Other than Pensions). As of the close of the 2017/2018 fiscal year, the City's governmental funds reported combined ending fund balances of $37.9 million, a $4.8 million increase from fiscal year 2016/2017. Of the $37.9 million fiscal year 2017/2018 combined ending fund balance, $2.9 million is unavailable to spend (i.e. amounts tied up in inventories and endowments), $9.0 million is legally restricted, and $9.1 million is committed for designated projects, leaving $16.9 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 $17.0 million, an increase of $1.7 million from FY 2016/2017. Please see the "General Fund and Budgetary Highlights" section of this Management Discussion and Analysis for further detail. Business-type activities reported net position at year-end of $215.2 million, an increase of $5.0 million during the year. The increase was mainly attributable to the increase in sewer fund net position for the fiscal year, which is necessary to fund future debt needs associated with U.S. Environmental Projection Agency and Michigan Department of Environmental Quality-mandated sewer separation projects. The City's total long-term debt was $203.2 million at June 30, 2018, a decrease of $13.1 million, 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 Comprehensive Annual Financial Report ("CAFR"). Overview of the Financial Statements This MDBA is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. 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". 16 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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. 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 other general 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 various discretely presented units: the Brownfield Redevelopment Authority, the Tax Increment Finance Authority, and the Lansing Entertainment and Public Facilities Authority. 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. 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, and others only appear as liabilities in the government-wide statements. 17 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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 relating to governmental funds are only reported in the government-wide statements. The Notes to the 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 the General Fund, Sewage Disposal System Fund, and 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 projects, debt service, and permanent funds. Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefit 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 postemployment 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. 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. 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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. Government-Wide Financial Analysis The City's combined net position increased $7.9 million over the course of this fiscal year's operations, and came to a total of $(227.9) million. Net position of governmental activities increased $2.9 million, and business-type activities increased $5.0 million. 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 2018 2017 2018 2017 2018 2017 Current and other assets $ 60,223,657 $ 55,942,975 $ 84,766,314 $ 81,676,247 $ 144,989,971 $ 137,619,222 Capital assets,net 183,112,603 188,807,551 354,396,144 362,595,277 537,508,747 551,402,828 Total assets 243,336,260 244,750,526 439,162,458 444,271,524 682,498,718 689,022,050 Deferred outflows of resources 36,024,546 48,237,654 6,400,785 4,877,793 42,425,331 53,115,447 Long-term debt outstanding 47,341,836 51,709,198 155,876,426 164,568,715 203,218,262 216,277,913 Other liabilities 638,249,867 332,505,634 72,354,918 30,502,474 710,604,785 363,008,108 Total liabilities 685,591,703 384,214,832 228,231,344 195,071,189 913,823,047 579,286,021 Deferred inflows of resources 36,845,515 25,036,395 2,172,678 2,682,266 39,018,193 27,718,661 Net position Net investment in capital assets 148,263,240 149,533,948 227,127,434 224,161,744 375,390,674 373,695,692 Restricted 15,189,723 10,993,950 1,886,620 1,818,671 17,076,343 12,812,621 Unrestricted(deficit) (606,529,375) (276,790,945) (13,854,833) 25,415,447 (620,384,208) (251,375,498) Total net position $ (443,076,412) $ (116,263,047) $ 215,159,221 $ 251,395,862 $ (227,917,191) $ 135,132,815 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. The large decreases in net position in FY 2018 are due to the implementation of Governmental Accounting Standards Board (GASB) Statement 75 Accounting and Financial Reporting for Postempioyment Benefits Other than Pensions. 19 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City's net position changed during the fiscal year: Change in Net Position Governmental Activities Business-type Activities Total 1 2017 2018 2017 20180 2017 Program revenues Charges for services $ 12,727,522 $ 13,293,904 $ 48,926,712 $ 47,889,559 $ 61,654,234 $ 61,183,463 Operating grants 28,983,936 25,157,629 1,603,942 1,391,326 30,587,878 26,548,955 Capital grants 855,760 63,488 - 100,000 855,760 163,488 General revenues Taxes 78,028,764 76,262,288 - 78,028,764 76,262,288 State shared revenues 14,748,491 14,412,644 14,748,491 14,412,644 Unrestricted grants and contributions 24,671,167 23,695,900 24,671,167 23,695,900 Unrestricted investment earnings 216,239 125,539 216,239 125,539 Gain on sale of capital assets - 135,270 - 135,270 Total revenues 160,231,879 153,146,662 50,530,654 49,380,885 210,762,533 202,527,547 Expenses General government 16,995,976 21,778,154 - - 16,995,976 21,778,154 Public safety 87,352,251 91,829,441 87,352,251 91,829,441 Public works 26,485,877 28,983,891 26,485,877 28,983,891 Recreation and culture 8,302,243 9,441,519 8,302,243 9,441,519 Community development 16,150,417 12,349,663 16,150,417 12,349,663 Interest on long-term debt 1,137,561 1,201,846 1,137,561 1,201,846 Sewage disposal system - 28,552,143 27,567,228 28,552,143 27,567,228 Municipal parking system 9,888,246 6,866,747 9,888,246 6,866,747 Cemetery 1,379,877 886,579 1,379,877 886,579 Golf (372,775) 802,564 (372,775) 802,564 Garbage and rubbish collection 3,101,893 1,543,380 3,101,893 1,543,380 Recycling - - 3,859,496 3,667,899 3,859,496 3,667,899 Total expenses 156,424,325 165,584,514 46,408,880 41,334,397 202,833,205 206,918,911 Change in net position, before transfers 3,807,554 (12,437,852) 4,121,774 8,046,488 7,929,328 (4,391,364) Transfers (912,186) (746,209) 912,186 746,209 - Change in net position 2,895,368 (13,184,061) 5,033,960 8,792,697 7,929,328 (4,391,364) Net position: Beginning of year (116,263,047) (103,078,986) 251,395,862 242,603,165 135,132,815 139,524,179 Restatement for implementation of GASB 75 (329,708,733) - (41,270,601) (370,979,334) - End of year $ (443,076,412) $ (116,263,047) $ 215,159,221 $ 251,395,862 $ (227,917,191) $ 135,132,815 20 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues - Governmental Activities Fiscal Year Ending June 30, 2018 Property tax and special assessments 24.7% Income tax 24.1% Otherrevenues 0.1% Charges for services 7.9% Unrestricted grants and contributions 15.4% Operating grants Capital grants 18.1% State shared revenues 0.5% 9.2% In total, governmental activity revenues increased $7.1 million from FY 2016/2017 to FY 2017/2018, with trends of the major revenue categories as follows: Property taxes and special assessments comprised the largest portion of governmental activity revenue at 24.7%, or $39.6 million, a $1.0 million, or 2.5% decrease from fiscal year 2016/2017, due to a change in classification for state reimbursement for a state-wide personal property tax phase-out to intergovernmental revenue. Income taxes comprised 24.1%, or $38.5 million, of governmental activity revenue, the full amount of which is revenue to the General Fund. This represents a $2.8 million, or 7.7%, increase from fiscal year 2016/2017. 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 $29.8 million, or 18.6% of governmental activity revenue for fiscal year 2017/2018, a $4.6 million, or 18.3% increase from fiscal year 2016/2017. This increase was largely attributable to an increase in State gas and weight tax revenue distributions. Unrestricted grants and contributions (including state shared sales tax revenue) comprised 24.6%, or $39.4 million, of revenues, a $1.3 million, or 3.4% increase from fiscal year 2016/2017, resulting from the above-referenced change in classification for state reimbursement of state-wise personal property tax phase-out to intergovernmental revenue. A little more than one-third of this category, $14.7 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. Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services decreased $0.6 million from FY 2016/2017 to FY 2017/2018. 21 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2018 Interest on long-term Community development debt 10.3% 0.7% General government 10.9% Recreation and culture 5.3% Public works 16.9% Public safety 55.9% Total expenses for governmental activities decreased $9.2 million, 5.5%, from FY 2016/2017 to FY 2017/2018, with trends of the major revenue categories as follows: The largest component of governmental activities was public safety, accounting for 55.9%, or $87.4 million, a 4.9% ($4.5 million) decrease from FY 2016/2017, resulting from a change in Code Compliance operations from the Fire Department (public safety) to the Economic Development and Planning Department (community development) and a reduction in public safety grants. Public works comprises the next largest component of governmental activity expenses, at 16.9%, or $26.5 million, a 8.6% ($2.5 million) decrease from FY 2016/2017, due to largely to a decrease in signalization and road projects from FY 2016/2017 due some road project delays. At $17.0 million, general government expenses, representing general and internal City services, comprised 10.9% of governmental activities. This category increased by $1.9 million in operational costs, but experienced a $4.8 million, or 22.0% overall decrease from FY 2016/2017, due to significant decreases in net pension and Other Post Employment Benefits (retiree healthcare) expenses. Community development represented 10.3% expenses. This category increased $3.8 million, or 30.8% from FY 2016/2017, due mainly to a change in Code Compliance operations from the Fire Department (public safety) to the Economic Development and Planning Department (community development). Business-type Activities. Net position of the business-type activities increased by $5.0 million from FY 2016/2017 to $215.2 million. The increase was mainly attributable to the increase in sewer fund net position for the fiscal year, which is necessary to fund future debt needs associated with U.S. Environmental Projection Agency and Michigan Department of Environmental Quality-mandated sewer separation projects. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $37.9 million, a $4.8 million increase from fiscal year 2016/2017. Of the $37.9 million fiscal year 2017/2018 combined ending fund balance, $2.9 million is unavailable to spend (i.e. amounts tied up in inventories and endowments), $9.0 million is legally restricted, and $9.1 million is committed for designated projects, leaving $16.8 million unassigned. 22 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund) was $17.0 million, an increase of $1.7 million from FY 2016/2017, which is further described in the General Fund Budgetary Highlights section. Sewage Disposal Fund Net position increased $7.1 million to $222.8 million in FY 2017/2018. Unrestricted net position decreased $21.3 million, from $27.0 million to $5.7 million. The decrease in unrestricted net position was the result of the implementation of Governmental Accounting Standards Board (GASB) Statement 75 Accounting and Financial Reporting for Postempioyment Benefits Other than Pensions in the current year. Municipal Parking Fund The Municipal Parking Fund net position decreased $1.4 million to $7.8 million. Unrestricted net position decreased $7.5 million, from $5.5 million to a deficit $2.0 million. The decrease in unrestricted net position was the result of the implementation of Governmental Accounting Standards Board (GASB) Statement 75 Accounting and Financial Reporting for Postemployment Benefits Other than Pensions in the current year. General Fund Budgetary Highlights The FY 2017/2018 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 cannot 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 General Fund revenue budget was amended from $129.5 million to $130.3 million to recognize additional income tax, licensing, and State Revenue Sharing revenues, as well as to appropriate additional funds for license processing needs, playground equipment, vehicle needs, and a $500,000 supplementary pension contribution. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $1.6 million from FY 2016/2017 from $15.7 million to $17.3 million. Unassigned fund balance increased $1.7 million, or 10.6% from fiscal year 2016/2017. The $1.7 million increase in total General Fund reserves was mostly attributable to expenditures coming in under budget by $1.5 million, largely due to position vacancies that occurred during the fiscal year. Capital Assets. At the end of the fiscal year 2018, the City had invested $537.5 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. 23 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2018 2017 2018 2017 2018 2017 Land $ 25,302,787 $ 25,880,189 $ 13,292,491 $ 13,292,491 $ 38,595,278 $ 39,172,680 Land improvements 11,799,044 10,968,327 14,265,778 11,006,206 26,064,822 21,974,533 Buildings and improvements 50,058,975 54,462,360 84,746,261 88,022,794 134,805,236 142,485,154 Equipment 7,559,948 7,291,993 1,187,130 1,203,507 8,747,078 8,495,500 Infrastructure 88,391,849 90,204,682 234,662,935 240,205,647 323,054,784 330,410,329 Construction in progress - - 6,241,549 8,864,632 6,241,549 8,864,632 Total capital assets, net $ 183,112,603 $ 188,807,551 $354,396,144 $362,595,277 $ 537,508,747 $551,402,828 The decrease in the above-noted capital asset amounts from the prior year is due to depreciation; no significant asset sales or disposals occurred during FY 2018. 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 structures, golf courses, and other related 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. Outstanding Debt 2018 2017 Governmental activities General obligation bonds $ 15,330,000 $ 18,065,000 Installment purchase contracts 12,289,396 13,757,531 Loans 7,476,545 7,728,428 Compensated absences 9,957,856 9,725,419 Workers compensation 2,292,221 2,417,780 Deferred amounts: For issuance discounts (59,321) (66,154) For issuance premiums 55,139 81,194 Total governmental activities 47,341,836 51,709,198 Business-type activities General obligation bonds 137,182,606 144,016,807 Revenue bonds 15,625,000 17,175,000 Installment purchase agreements 808,500 1,029,723 Compensated absences 871,120 794,830 Deferred amounts: For issuance discounts (490,338) (563,347) For issuance premiums 1,879,538 2,115,702 Total business-type activities 155,876,426 164,568,715 Total outstanding debt $203,218,262 $216,277,913 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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 Employment levels and personal income in the City continued to increase in FY 2016/2017, resulting in increased income tax revenue. Property values increased; however growth in corresponding property tax revenue is limited by State of Michigan Statute to the rate of inflation for property that does not change hands. Lansing's financial picture as a whole has stabilized over the past few years and continues to improve. The 2017/2018 fiscal year resulted in a $1.7 million addition to General Fund unassigned reserves, bringing unassigned General Fund reserves up to $17.0 million, or 13.2% of General Fund expenditures, within the City's 12%-15% fund balance policy. However, significant challenges remain in the longer-term. Going forward, State-imposed limitations on municipal revenues, most notably those on property tax growth, will continue to constrain resources, which in context of projected increases in pension, healthcare, and infrastructure needs, will present budgetary challenges. Subsequent to the FY 2018 year-end, an income tax was adopted by the City of East Lansing, which will begin January 1, 2019, and which impacts income tax revenues for the City of Lansing for its residents that work in East Lansing. While that potential was anticipated for FY 2019 and is not expected to result in any budgetary adjustments for FY 2019, the East Lansing income tax is expected to result in a reduction in Lansing's income tax revenues by about $800,000 annually. Strengthening the City's economic base, building back up General Fund reserves, 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, in conjunction with the Mayor-appointed Financial Health Team engaged a consultant for studies of its long-term pension and retiree healthcare obligations, and those studies were completed in FY 2018. The City continues to experience significant economic development and national recognition of its economic development efforts and accomplishments. For more information, please see the "Local Economy" section of 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. 25 This page intentionally left blank. 26 BASIC FINANCIAL STATEMENTS 27 This page intentionally left blank. 28 GOVERNMENT-WIDE FINANCIAL STATEMENTS 29 CITY OF LANSING, MICHIGAN Statement of Net Position June 30, 2018 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 36,432,307 $ 51,884,752 $ 88,317,059 $ 5,181,761 Receivables, net 23,281,611 28,694,540 51,976,151 1,233,225 Internal balances (1,221,785) 1,221,785 - - Due from primary government - - - 1,375 Inventories, prepaids and other assets 1,731,524 396,664 2,128,188 143,243 Restricted cash and investments - 2,568,573 2,568,573 4,357,726 Capital assets not being depreciated 25,302,787 19,534,040 44,836,827 - Capital assets being depreciated, net 157,809,816 334,862,104 492,671,920 1,008 Total assets 243,336,260 439,162,458 682,498,718 10,918,338 Deferred outflows of resources Deferred charge on refunding 84,687 4,605,828 4,690,515 2,434,795 Deferred pension amounts 35,939,859 1,794,957 37,734,816 - Total deferred outflows of resources 36,024,546 6,400,785 42,425,331 2,434,795 Liabilities Accounts payable and accrued liabilities 11,982,594 1,333,264 13,315,858 2,274,801 Accrued interest payable: Due within one year 341,719 1,016,266 1,357,985 341,347 Due in more than one year - 1,850,892 1,850,892 3,677,929 Unearned revenue 855,979 171,255 1,027,234 382,017 Due to component units - 1,375 1,375 - Long-term debt: Due within one year 5,036,772 14,160,771 19,197,543 305,534 Due in more than one year 42,305,064 141,715,655 184,020,719 41,794,641 Net pension liability(due in more than one year) 260,413,220 29,676,728 290,089,948 - Net other postemployment benefit liability(due in more than one year) 364,656,355 38,305,138 402,961,493 Total liabilities 685,591,703 228,231,344 913,823,047 48,776,269 Deferred inflows of resources Deferred pension amounts 12,181,027 698,945 12,879,972 - Deferred other postemployment benefit amounts 24,664,488 1,473,733 26,138,221 Total deferred inflows of resources 36,845,515 2,172,678 39,018,193 Net position Net investment in capital assets 148,263,240 227,127,434 375,390,674 1,008 Restricted for: Public safety 1,496,968 - 1,496,968 - Public works 8,473,317 8,473,317 Community development 3,381,934 3,381,934 Debt service - 1,734,755 1,734,755 Capital projects - 151,865 151,865 Endowments(nonexpendable) 1,837,504 - 1,837,504 Unrestricted (deficit) (606,529,375) (13,854,833) (620,384,208) (35,424,144) Total net position $(443,076,412) $ 215,159,221 $(227,917,191) $ (35,423,136) The accompanying notes are an integral part of the financial statements. 30 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2018 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 $ 16,995,976 $ 7,038,702 $ 2,741,608 $ $ (7,215,666) Public safety 87,352,251 4,140,682 3,751,209 (79,460,360) Public works 26,485,877 716,322 15,544,442 855,760 (9,369,353) Recreation and culture 8,302,243 831,816 114,979 - (7,355,448) Community development 16,150,417 - 6,831,698 (9,318,719) Interest on long-term debt 1,137,561 - - (1,137,561) Total governmental activities 156,424,325 12,727,522 28,983,936 855,760 (113,857,107) Business-type activities: Sewage disposal system 28,552,143 35,107,570 500,884 - 7,056,311 Municipal parking system 9,888,246 7,436,552 1,081,224 (1,370,470) Cemetery 1,379,877 351,204 - (1,028,673) Golf (372,775) 179,464 2,715 554,954 Garbage and rubbish collection 3,101,893 2,072,454 - (1,029,439) Recycling 3,859,496 3,779,468 19,119 (60,909) Total business-type activities 46,408,880 48,926,712 1,603,942 - 4,121,774 Total primary government $ 202,833,205 $ 61,654,234 $ 30,587,878 $ 855,760 $ (109,735,333) Component units Brownfield redevelopment authority $ 1,872,065 $ - $ 76,012 $ - $ (1,796,053) Tax increment finance authority 2,433,526 - - (2,433,526) Lansing entertainment Et public facilities authority 10,811,604 9,586,265 1,411,050 185,711 Total component units $ 15,117,195 $ 9,586,265 $ 1,487,062 $ $ (4,043,868) continued... 31 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2018 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(113,857,107) $ 4,121,774 $(109,735,333) $ (4,043,868) General revenues: Property taxes 39,573,468 - 39,573,468 5,733,352 Income taxes 38,455,296 38,455,296 - State shared revenues 14,748,491 14,748,491 Grants and contributions not restricted to specific programs 24,671,167 24,671,167 - Unrestricted investment earnings 216,239 216,239 16,661 Transfers - internal activities (912,186) 912,186 - - Total general revenues and transfers 116,752,475 912,186 117,664,661 5,750,013 Change in net position 2,895,368 5,033,960 7,929,328 1,706,145 Net position, beginning of year, as restated (445,971,780) 210,125,261 (235,846,519) (37,129,281) Net position, end of year $ (443,076,412) $ 215,159,221 $ (227,917,191) $ (35,423,136) concluded The accompanying notes are an integral part of the financial statements. 32 FUND FINANCIAL STATEMENTS 33 This page intentionally left blank. 34 CITY OF LANSING, MICHIGAN Governmental Fund Financial Statements Major Fund General Fund - This 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. Nonmajor Funds Nonmajor governmental funds are presented, by fund type, within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 35 CITY OF LANSING, MICHIGAN Balance Sheet Governmental Funds June 30, 2018 Nonmajor Governmental General Funds Totals Assets Cash and cash equivalents $ 2,480,337 $ 181,739 $ 2,662,076 Equity in pooled cash and investments 9,381,498 18,202,782 27,584,280 Accounts receivable, net 8,663,232 308,638 8,971,870 Taxes receivable, net 166,977 - 166,977 Special assessments receivable - 237,499 237,499 Loans receivable 1,224,460 1,224,460 Accrued interest receivable - 2,113,196 2,113,196 Due from other governments, net 5,051,411 4,964,156 10,015,567 Inventories 17,660 967,676 985,336 Prepaids 21,777 37,309 59,086 Total assets $ 25,782,892 $ 28,237,455 $ 54,020,347 Liabilities Accounts payable $ 3,375,118 $ 1,630,069 $ 5,005,187 Deposits payable - 89,147 89,147 Accrued payroll 1,810,790 72,230 1,883,020 Indemnity bonds - 43,867 43,867 Due to other funds 272,825 752,358 1,025,183 Advances from other funds - 196,602 196,602 Due to other governments 996,663 571,506 1,568,169 Unearned revenue 42,124 813,855 855,979 Other 731,068 - 731,068 Total liabilities 7,228,588 4,169,634 11,398,222 Deferred inflows of resources Unavailable revenues-fees 1,227,792 - 1,227,792 Unavailable revenues- loans and accrued interest receivable - 3,337,656 3,337,656 Unavailable revenues- special assessments - 196,158 196,158 Total deferred inflows of resources 1,227,792 3,533,814 4,761,606 Fund balances Nonspendable 39,437 2,842,489 2,881,926 Restricted - 9,009,438 9,009,438 Committed 283,815 8,837,341 9,121,156 Unassigned (deficit) 17,003,260 (155,261) 16,847,999 Total fund balances 17,326,512 20,534,007 37,860,519 Total liabilities, deferred inflows of resources and fund balances $ 25,782,892 $ 28,237,455 $ 54,020,347 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2018 Fund balances-total governmental funds $ 37,860,519 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 25,302,787 Capital assets being depreciated, net 157,809,816 Capital assets accounted for in internal service funds, net (12,215,609) 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 889,268 Deferred nuisance fees receivable 316,024 Deferred loans receivable 1,224,460 Deferred long-term interest receivable 2,113,196 Deferred long-term special assessments receivable 196,158 Deferred long-term taxes and tax settlement receivables 22,500 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. 13,087,767 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, and deferred discounts/premiums (32,060,054) Deferred charge on refunding 84,687 Accrued interest on bonds, loans and leases payable (322,661) Compensated absences and other long-term liabilities (11,410,039) Certain pension and other postemployment benefit-related amounts, such as the net pension and other postemployment benefit liabilities 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 (260,413,220) Deferred outflows related to the net pension liability 35,939,859 Deferred inflows related to the net pension liability (12,181,027) Net other postemployment benefit liability (364,656,355) Deferred inflows related to the net other postemployment benefit liability (24,664,488) Net position of governmental activities $ (443,076,412) The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2018 Nonmajor Governmental General Funds Totals Revenues Property taxes and special assessments $ 38,485,677 $ 1,143,628 $ 39,629,305 Income taxes 38,455,296 - 38,455,296 Licenses and permits 2,113,824 - 2,113,824 Intergovernmental 18,851,971 22,996,101 41,848,072 Charges for services 9,268,198 3,164,572 12,432,770 Fines and forfeits 2,134,860 466,203 2,601,063 Interest and rents 154,898 129,267 284,165 Contributions 20,688,205 10,000 20,698,205 Otherrevenues 209,605 1,194,107 1,403,712 Total revenues 130,362,534 29,103,878 159,466,412 Expenditures Current expenditures: General government 18,838,243 3,442,993 22,281,236 Public safety 74,307,165 1,551,900 75,859,065 Public works 11,087,884 - 11,087,884 Highways and streets - 10,104,034 10,104,034 Recreation and culture 8,236,872 - 8,236,872 Community development 8,302,397 7,645,107 15,947,504 Debt service: Principal 1,725,169 1,896,884 3,622,053 Interest 494,028 455,290 949,318 Capital outlay - 5,146,742 5,146,742 Total expenditures 122,991,758 30,242,950 153,234,708 Revenues over(under)expenditures 7,370,776 (1,139,072) 6,231,704 Other financing sources (uses) Transfers in 100,000 7,621,661 7,721,661 Transfers out (5,970,506) (3,313,341) (9,283,847) Proceeds from sale of capital assets 128,976 - 128,976 Total other financing sources (uses) (5,741,530) 4,308,320 (1,433,210) Net changes in fund balances 1,629,246 3,169,248 4,798,494 Fund balances, beginning of year 15,697,266 17,364,759 33,062,025 Fund balances, end of year $ 17,326,512 $ 20,534,007 $ 37,860,519 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING, MICHIGAN Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2018 Net changes in fund balances-total governmental funds $ 4,798,494 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 4,565,390 Donated capital assets 829,383 Depreciation expense (10,159,901) Loss on sale of capital assets (513,324) Proceeds from sale of capital assets (128,976) 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. Changein deferred ambulance fees receivable 443,691 Changein deferred nuisance fees receivable (216,865) Changein deferred loans receivable (1,980) Changein deferred long-term interest receivable (242,421) Changein deferred special assessments receivable (46,341) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase (decrease)in the net position of the internal service funds is reported with governmental activities. Net operating loss from governmental activities in internal service funds (106,412) Gain on sale of capital assets from governmental internal service funds 47,550 Interest expense from governmental internal service funds (118,129) Transfers in reported in governmental internal service funds 650,000 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. Principal payments on long-term liabilities 3,622,053 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 125,559 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 (59,271) Amortization of issuance premiums and discounts, and deferred charge on refunding (10,843) Change in the accrual for compensated absences (228,110) Change in the net pension liability and related deferred amounts (7,423,999) Change in the net other postemployment benefit liability and related deferred amounts 7,069,820 Change in net position of governmental activities $ 2,895,368 The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2018 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 40,505,000 $ 39,405,000 $ 38,485,677 $ (919,323) Income taxes 35,600,000 36,400,000 38,455,296 2,055,296 Licenses and permits 1,906,500 1,969,500 2,113,824 144,324 Intergovernmental 15,764,500 16,889,500 18,851,971 1,962,471 Charges for services 10,077,900 10,099,900 9,268,198 (831,702) Fines and forfeits 2,961,600 2,961,600 2,134,860 (826,740) Interest and rents 38,500 38,500 154,898 116,398 Contributions 22,300,000 22,374,355 20,688,205 (1,686,150) Otherrevenues 351,000 153,000 209,605 56,605 Total revenues 129,505,000 130,291,355 130,362,534 71,179 Expenditures General government: Attorney's office 2,026,500 1,956,500 1,869,415 (87,085) City clerk 1,062,800 1,147,800 1,129,514 (18,286) Council 698,000 709,828 677,783 (32,045) Courts 6,579,900 6,579,900 6,187,312 (392,588) Internal audit 180,700 183,700 181,964 (1,736) Finance 5,806,300 5,101,500 5,033,567 (67,933) Library rental 165,000 165,000 138,867 (26,133) Human resources 2,254,000 2,194,000 2,159,045 (34,955) Mayor 1,044,600 1,104,600 1,063,146 (41,454) Office of community media 437,400 437,400 397,630 (39,770) Budgetary savings from attrition (500,000) - - Total general government 19,755,200 19,580,228 18,838,243 (741,985) Public safety: Police 41,295,000 41,307,460 41,256,596 (50,864) Fire 34,983,000 32,974,439 33,050,569 76,130 Total public safety 76,278,000 74,281,899 74,307,165 25,266 Public works 11,115,500 11,115,500 11,087,884 (27,616) Recreation and culture 8,350,300 8,250,300 8,236,872 (13,428) continued... 40 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2018 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Community development: Economic development and planning $ 1,129,500 $ 5,002,136 $ 4,701,276 $ (300,860) Neighborhood and community engagement 481,400 484,800 441,347 (43,453) Human relations / community services 1,332,700 1,282,700 1,191,644 (91,056) Human services / community support 1,600,000 2,249,692 1,968,130 (281,562) Total community development 4,543,600 9,019,328 8,302,397 (716,931) Debt service: Principal 1,725,200 1,725,200 1,725,169 (31) Interest 495,900 495,900 494,028 (1,872) Total debt service 2,221,100 2,221,100 2,219,197 (1,903) Total expenditures 122,263,700 124,468,355 122,991,758 (1,476,597) Revenues over expenditures 7,241,300 5,823,000 7,370,776 1,547,776 Other financing sources (uses) Transfers in 100,000 271,000 100,000 (171,000) Transfers out (6,841,300) (6,152,800) (5,970,506) (182,294) Proceeds from sale of capital assets 125,000 128,976 3,976 Total other financing sources (uses) (6,741,300) (5,756,800) (5,741,530) 15,270 Net changes in fund balance 500,000 66,200 1,629,246 1,563,046 Fund balance, beginning of year 15,697,266 15,697,266 15,697,266 - Fund balance, end of year $ 16,197,266 $ 15,763,466 $ 17,326,512 $ 1,563,046 concluded The accompanying notes are an integral part of the financial statements. 41 This page intentionally left blank. 42 CITY OF LANSING, MICHIGAN Proprietary Fund Financial Statements Major 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. Nonmajor Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 43 CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds June 30,2018 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 $ 785 $ 3,951,350 $ 17,556 $ 3,969,691 $ - Equity in pooled cash and investments 39,365,253 7,077,072 1,472,736 47,915,061 6,185,951 Accounts receivable,net 4,832,638 479,124 125,363 5,437,125 552,042 Accrued interest receivable 38,885 87,762 - 126,647 - Lease receivable,current 644,654 - - 644,654 - Inventories 344,171 52,493 396,664 342,145 Prepaids - - - - 344,957 Due from other funds 2,942 1,388,053 - 1,390,995 - Total current assets 45,229,328 12,983,361 1,668,148 59,880,837 7,425,095 Noncurrent assets: Restricted cash and cash equivalents 2,416,708 151,865 - 2,568,573 Advances to other funds - 196,602 196,602 Lease receivable,net of current portion 6,745,125 15,740,989 - 22,486,114 - Capital assets not being depreciated 6,662,298 12,367,501 504,241 19,534,040 92,892 Capital assets being depreciated,net 317,678,620 14,739,447 2,444,037 334,862,104 12,122,717 Total noncurrent assets 333,502,751 43,196,404 2,948,278 379,647,433 12,215,609 Total assets 378,732,079 56,179,765 4,616,426 439,528,270 19,640,704 Deferred outflows of resources Deferred charge on refunding 988,820 3,617,008 - 4,605,828 - Deferred pension amounts 881,274 342,694 570,989 1,794,957 Total deferred outflows of resources 1,870,094 3,959,702 570,989 6,400,785 Liabilities Current liabilities: Accounts payable 777,627 234,986 118,262 1,130,875 1,612,706 Deposits payable - 66,815 - 66,815 - Accrued interest payable 681,953 330,351 3,962 1,016,266 19,058 Accrued payroll 86,513 47,238 1,823 135,574 149,430 Claims incurred but not reported - - - - 900,000 Due to other funds 362,870 2,942 365,812 - Due to component units - 1,375 - 1,375 Unearned revenues - - 171,255 171,255 - Bonds and notes payable,current portion 11,891,780 2,005,000 225,580 14,122,360 361,324 Compensated absences,current portion 17,094 1,416 19,901 38,411 38,785 Total current liabilities 13,817,837 2,690,123 540,783 17,048,743 3,081,303 Noncurrent liabilities: Accrued interest payable,net of current portion - 1,850,892 - 1,850,892 - Bonds and notes payable,net of current portion 105,495,167 34,804,859 582,920 140,882,946 2,670,381 Compensated absences,net of current portion 494,205 175,323 163,181 832,709 801,253 Net pension liability 14,570,451 5,665,898 9,440,379 29,676,728 - Net other postemployment benefit liability 22,237,228 6,783,393 9,284,517 38,305,138 Total noncurrent liabilities 142,797,051 49,280,365 19,470,997 211,548,413 3,471,634 Total liabilities 156,614,888 51,970,488 20,011,780 228,597,156 6,552,937 Deferred inflows of resources Deferred pension amounts 343,163 133,443 222,339 698,945 - Deferred other postemployment benefit amounts 855,544 260,981 357,208 1,473,733 Total deferred inflows of resources 1,198,707 394,424 579,547 2,172,678 Net position Net investment in capital assets 215,332,570 9,655,086 2,139,778 227,127,434 9,183,904 Restricted for debt retirement 1,734,755 - - 1,734,755 - Restricted for capital projects - 151,865 151,865 - Unrestricted(deficit) 5,721,253 (2,032,396) (17,543,690) (13,854,833) 3,903,863 Total net position $ 222,788,578 $ 7,774,555 $ (15,403,912) $ 215,159,221 $ 13,087,767 The accompanying notes are an integral part of the financial statements. 44 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30,2018 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 $ 35,107,570 $ 7,436,552 $ 6,382,590 $ 48,926,712 $ 84,040,270 Operating expenses Personal services 6,422,033 2,979,840 4,578,298 13,980,171 8,339,660 Purchase of goods and services 8,572,838 2,095,206 2,769,001 13,437,045 73,787,845 Depreciation 10,415,638 1,302,124 388,686 12,106,448 2,019,177 Total operating expenses 25,410,509 6,377,170 7,735,985 39,523,664 84,146,682 Operating income(loss) 9,697,061 1,059,382 (1,353,395) 9,403,048 (106,412) Nonoperating revenues(expenses) Interest revenue 500,884 1,081,224 21,834 1,603,942 - Gain(loss)on sale of capital assets - (108,078) - (108,078) 47,550 Interest expense and fees (3,141,634) (3,402,998) (18,020) (6,562,652) (118,129) Capital contribution to others - (214,486) (214,486) Total nonoperating revenue(expenses) (2,640,750) (2,429,852) (210,672) (5,281,274) (70,579) Income(loss)before transfers 7,056,311 (1,370,470) (1,564,067) 4,121,774 (176,991) Transfers Transfers in - 941,290 941,290 650,000 Transfers out (29,104) (29,104) - Total transfers - 912,186 912,186 650,000 Change in net position 7,056,311 (1,370,470) (651,881) 5,033,960 473,009 Net position,beginning of year,as restated 215,732,267 9,145,025 (14,752,031) 210,125,261 12,614,758 Net position,end of year $ 222,788,578 $ 7,774,555 $ (15,403,912) $ 215,159,221 $ 13,087,767 The accompanying notes are an integral part of the financial statements. 45 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30,2018 I 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 $ 46,817,990 $ 6,193,206 $ 6,373,042 $ 59,384,238 $ - Cash received from interfund services - - - - 83,559,231 Cash payments for goods and services (9,378,285) (1,957,645) (2,758,107) (14,094,037) (72,859,244) Cash payments to employees (6,634,295) (2,434,347) (4,411,431) (13,480,073) (8,334,038) Net cash provided by(used in)operating activities 30,805,410 1,801,214 (796,496) 31,810,128 2,365,949 Cash flows from noncapital financing activities Transfers in - - 941,290 941,290 650,000 Transfers out (29,104) (29,104) - Net cash provided by noncapital financing activities 912,186 912,186 650,000 Cash flows from capital and related financing activities Proceeds from sale of capital assets - - 47,550 Acquisition and construction of capital assets (3,558,264) (457,129) - (4,015,393) (1,731,657) Capital contributions to others - (214,486) (214,486) Proceeds from issuance of long-term debt 10,805,000 - 10,805,000 Principal paid on long-term debt (11,825,000) (1,970,000) (221,223) (14,016,223) (832,965) Interest paid on long-term debt (3,276,279) (1,203,359) (19,104) (4,498,742) (123,669) Amount paid to refunding bond escrow agent - (7,786,593) (7,786,593) Payments received on capital tease 765,572 765,572 Net cash used in capital and related financing activities (17,893,971) (612,081) (454,813) (18,960,865) (2,640,741) Cash flows from investing activities Interest and dividends received 504,977 83,207 21,834 610,018 Payments received on loans made to others - 60,875 - 60,875 Net cash provided by investing activities 504,977 144,082 21,834 670,893 Net change in cash and cash equivalents 13,416,416 1,333,215 (317,289) 14,432,342 375,208 Cash and cash equivalents,beginning of year 28,366,330 9,847,072 1,807,581 40,020,983 5,810,743 Cash and cash equivalents,end of year $ 41,782,746 $ 11,180,287 $ 1,490,292 $ 54,453,325 $ 6,185,951 Reconciliation to statement of net position Cash and cash equivalents $ 785 $ 3,951,350 $ 17,556 $ 3,969,691 $ - Equity in pooled cash and investments 39,365,253 7,077,072 1,472,736 47,915,061 6,185,951 Restricted cash and cash equivalents 2,416,708 151,865 - 2,568,573 - $ 41,782,746 $ 11,180,287 $ 1,490,292 $ 54,453,325 $ 6,185,951 continued... 46 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30,2018 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) $ 9,697,061 $ 1,059,382 $ (1,353,395) $ 9,403,048 $ (106,412) Adjustments to reconcile operating income(loss)to net cash provided by(used in)operating activities: Depreciation 10,415,638 1,302,124 388,686 12,106,448 2,019,177 Changein: Accounts receivable 10,113,362 (218,263) (51,931) 9,843,168 (481,039) Inventories (21,994) - (1,169) (23,163) 139,369 Prepaids - 5,000 5,000 (45,342) Due from other funds 1,597,058 (1,025,183) 571,875 Due from component units 1,109,931 - - 1,109,931 Deferred outflows-pension 297,676 83,313 255,277 636,266 - Accounts payable (487,961) 133,936 12,063 (341,962) 834,574 Deposits payable 100 - 100 - Accrued payroll (3,319) 4,590 (17,158) (15,887) (13,705) Claims incurred but not reported - - - 15,000 Due to other funds 2,942 2,942 - Due to component units (1,408,365) (1,375) - (1,409,740) Unearned revenues - - 42,383 42,383 - Compensated absences 56,371 37,417 (17,498) 76,290 4,327 Net pension liability 1,351,330 1,024,358 902,792 3,278,480 - Deferred inflows-pension (1,048,328) (340,017) (594,976) (1,983,321) Net other postemployment benefit liability (1,721,536) (525,149) (718,778) (2,965,463) Deferredinflows-OPEB 855,544 260,981 357,208 1,473,733 - Net cash provided by(used in)operating activities $ 30,805,410 $ 1,801,214 $ (796,496) $ 31,810,128 $ 2,365,949 concluded The accompanying notes are an integral part of the financial statements. 47 This page intentionally left blank. 48 CITY OF LANSING, MICHIGAN Fiduciary Fund Financial Statements 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, within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 49 CITY OF LANSING, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds June 30, 2018 Pension and Other Postemployment Benefits Trust Agency Funds Funds Assets Cash and cash equivalents $ 10,026,859 $ Equity in pooled cash and investments - 84,608 Investments: U.S. treasuries 19,177,602 - U.S. agencies 291780,815 Collateralized mortgage obligations 892,841 Mutualfunds 356,633,559 Domestic equities 127,077,908 International equities 1,942,694 Emerging market equities 729,285 Money market funds 15,167,519 Contribution receivable 10,150 Dividends and interest receivable 416,878 - Total assets 561,856,110 $ 84,608 Liabilities Accounts payable 806,012 $ Undistributed receipts - 84,608 Total liabilities 806,012 $ 84,608 Net position restricted for Pension benefits 463,026,592 Other postemployment benefits 98,023,506 Total net position $ 561,050,098 The accompanying notes are an integral part of the financial statements. 50 CITY OF LANSING, MICHIGAN Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefits Trust Funds For the Year Ended June 30, 2018 Additions Investment income: Net appreciation in fair value of investments $ 21,857,420 Interest income 206,779 Dividend income 17,313,295 Investment expenses (1,668,185) Net investment income 37,709,309 Contributions: Employer 48,256,071 Plan members 3,996,093 Total contributions 52,252,164 Total additions 89,961,473 Deductions Participant benefits 77,286,373 Administrative expense 1,180,676 Total deductions 78,467,049 Change in net position 11,494,424 Net position restricted for pension and other postemployment benefits Beginning of year 549,555,674 End of year $ 561,050,098 The accompanying notes are an integral part of the financial statements. 51 This page intentionally left blank. 52 COMPONENT UNITS 53 This page intentionally left blank. 54 CITY OF LANSING, MICHIGAN Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has three discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Lansing Entertainment and Public Facilities Authority Complete financial statements for each of the individual component units may be obtained from the entity's administrative offices. 55 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Discretely Presented Component Units June 30, 2018 Lansing Tax Entertainment Brownfield Increment Et Public Redevelopment Finance Facilities Authority Authority Authority Totals Assets Cash and cash equivalents $ 3,777,577 $ 947,034 $ 457,150 $ 5,181,761 Receivables, net 2301129 - 1,003,096 1,233,225 Due from primary government - 1,375 - 1,375 Inventories, prepaids and other assets - 143,243 143,243 Restricted cash and cash equivalents 3,436,754 920,972 4,357,726 Capital assets being depreciated, net - - 1,008 1,008 Total assets 4,007,706 4,385,163 2,525,469 10,918,338 Deferred outflows of resources Deferred charge on refunding - 2,434,795 - 2,434,795 Liabilities Accounts payable and accrued liabilities 1,317,824 22,306 934,671 2,274,801 Accrued interest payable: Due within one year - 341,347 - 341,347 Due in more than one year 3,677,929 - 3,677,929 Unearned revenues - 382,017 382,017 Long-term debt: Due within one year 305,534 - 305,534 Due in more than one year - 41,794,641 - 41,794,641 Total liabilities 1,317,824 46,141,757 1,316,688 48,776,269 Net position Investment in capital assets - - 1,008 1,008 Unrestricted (deficit) 2,689,882 (39,321,799) 1,207,773 (35,424,144) Total net position $ 2,689,882 $ (39,321,799) $ 1,208,781 $ (35,423,136) The accompanying notes are an integral part of the financial statements. 56 CITY OF LANSING, MICHIGAN Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2018 Lansing Tax Entertainment Brownfield Increment Et Public Redevelopment Finance Facilities Authority Authority Authority Totals Expenses Brownfield redevelopment $ 1,872,065 $ - $ $ 1,872,065 Community development - 2,433,526 2,433,526 Recreation and culture - - 10,811,604 10,811,604 Total expenses 1,872,065 2,433,526 10,811,604 15,117,195 Program revenues Charges for services - - 9,586,265 9,586,265 Operating grants and contributions 76,012 1,411,050 1,487,062 Total program revenues 76,012 10,997,315 11,073,327 Net program expense (revenue) (1,796,053) (2,433,526) 185,711 (4,043,868) General revenues Property taxes 2,393,997 2,950,103 389,252 5,733,352 Unrestricted investment earnings 2,593 14,068 - 16,661 Total general revenues 2,396,590 2,964,171 389,252 5,750,013 Changes in net position 600,537 530,645 574,963 1,706,145 Net position, beginning of year, as restated 2,089,345 (39,852,444) 633,818 (37,129,281) Net position, end of year $ 2,689,882 $ (39,321,799) $ 1,208,781 $ (35,423,136) The accompanying notes are an integral part of the financial statements. 57 This page intentionally left blank. 58 NOTES TO FINANCIAL STATEMENTS 59 This page intentionally left blank. 60 CITY OF LANSING, MICHIGAN Index - Notes to Financial Statements Page 1. Summary of Significant Accounting Policies 62 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 71 3. Deficit Fund Equity 72 4. Deposits and Investments 73 5. Receivables 82 6. Capital Assets 83 7. Accounts Payable and Accrued Liabilities 85 8. Interfund Receivables, Payables and Transfers 85 9. Long-Term Debt 87 10.Fund Balances - Governmental Funds 92 11.Net Investment in Capital Assets 93 12.Segment Information - Enterprise Funds 93 13.Risk Management 93 14.Property Taxes 94 15.Contingent Liabilities 95 16.Pension Plans 95 17.Other Postemployment Benefits 110 18.Operating Leases 121 19.Tax Abatements 121 20.Restatements 122 2 1.Subsequent Event 122 61 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 enterprise fund and the 2015 Refunding 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 discretely presented component units are as follows: 62 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, Michigan 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. Component Unit Financial Statements Complete financial statements for the individual component units may be obtained from each entity's administrative offices. 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 63 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. 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. 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. 64 CITY OF LANSING, MICHIGAN Notes to 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 fund: 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. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally, the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest and related costs. 65 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. 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. 66 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Investments are stated at fair value. Short-term investments are reported at cost, which 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. 67 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. In governmental funds, prepaid items are charged to expenditures using the consumption method. 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 City 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 estimated acquisition cost 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. 68 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. 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 a future period(s) and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports a deferred charge on advance bond refunding for 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. The City also reports deferred outflows of resources for changes in expected and actual investments returns, assumptions, and benefits provided, related to the net pension and other postemployment benefit liabilities. 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 City'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. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 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 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. The City also reports deferred inflows of resources for changes in expected and actual investments returns, assumptions, and benefits provided, related to the net pension and other postemployment benefit liabilities. 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. In other funds, the unassigned classification is used to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted, committed, or assigned. When the City incurs an expenditure for purposes for which various fund balance classifications can be used, it is the City's policy to use restricted fund balance first, then committed, assigned, and finally unassigned. 70 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Pension and Other Postemployment Benefits Plans For purposes of measuring the net pension and other postemployment benefit liabilities, deferred outflows of resources and deferred inflows of resources related pensions and other postemployment benefits, and pension and other postemployment benefit 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. 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. 71 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2018. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. During the year ended June 30, 2018, 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: Public safety: Fire $ 32,974,439 $ 33,050,569 $ 76,130 Nonmajor governmental funds: Major streets fund: Principal 457,900 487,084 29,184 State and federal grants fund: Transfers out - 22,051 22,051 The above budgeted amounts are presented at the activity level, which is the required minimum level of control per the Michigan Uniform Budget Manual. 3. DEFICIT FUND EQUITY The Special Assessments Capital Projects Fund reported a deficit fund balance of $155,261. 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. 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Municipal Parking System, Cemetery, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $2,032,396, $2,694,184, $5,864,791, and $9,059,282, respectively, as a result of the net pension and net other postemployment benefit liabilities. Excluding the net pension and net other postemployment benefit liabilities, unrestricted net positions would be $10,416,895, $54,628, $68,874, and $983,137, respectively. Total fund net position amounted to deficits of $2,539,393, $5,864,791, and $9,416,263 for the Cemetery, Garbage and Rubbish Collection, and Recycling funds, respectively. The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of $39,321,799 at June 30, 2018. 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, 2018: Primary Component Government Units Totals Statement of net position Cash and investments $ 88,317,059 $ 5,181,761 $ 93,498,820 Restricted cash and investments 2,568,573 4,357,726 6,926,299 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 10,026,859 - 10,026,859 Investments 551,402,223 551,402,223 Agency funds: Equity in pooled cash and investments 84,608 84,608 Total $ 652,399,322 $ 9,539,487 $ 661,938,809 Deposits and investments Bank deposits: Checking/savings accounts $ 81,315,398 Investment in securities and mutual funds: Pooled investments 28,649,198 Employees' retirement system investments 195,917,479 Police and fire retirement system investments 324,770,215 Employees' money purchase pension plan investments 2,583,165 Retiree health care VEBA investments 28,131,364 Total investment in securities and mutual funds 580,051,421 Cash on hand 571,990 Total $ 661,938,809 73 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, $80,109,050 of the City's bank balance of $83,446,529 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. 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: SDP AAAm $ 20,283,544 SEW AA+ 1,944,594 SttP Al 2,986,300 Unrated 826,504 Assets not subject to credit risk 2,608,256 Total $ 28,649,198 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. For investments held at year-end maturities are as follows: Due within 1 year $ 23,649,716 1-5 years 1,972,548 6-10 years 418,678 No maturity 2,608,256 Total $ 28,649,198 74 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the City's investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing, which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark securities, (e) bids or offers, and (f) reference data. The City's level 2 investments as noted in the table below are valued using significant other observable inputs of the underlying securities. Level Level Level Total U.S. treasuries $ - $ 2,771,098 $ $ 2,771,098 Commercial paper 2,986,300 - 2,986,300 Michigan Cooperative Liquid Assets Securities System - 20,283,544 20,283,544 Money market funds 2,175,656 432,600 2,608,256 $ 5,161,956 $ 23,487,242 $ $ 28,649,198 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. 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds' assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30, 2018: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Investments U.S. treasuries: Not on securities loan $ 7,059,478 $ 7,891,968 $ $ $ 14,951,446 On securities loan 1,740,462 2,485,694 4,226,156 U.S. agencies: Not on securities loan 13,211,059 16,569,756 29,780,815 Collateralized mortgage obligations 247,486 645,355 892,841 Domestic corporate securities mutual funds: Not on securities loan 23,053,916 30,817,918 53,871,834 Real estate investment funds 19,433,461 24,374,542 43,808,003 International equity mutual funds 64,984,717 93,229,189 99,427 2,990,430 161,303,763 Domestic equity mutual funds 16,077,013 38,451,229 2,192,550 11,235,502 67,956,294 Domestic debt securities mutual funds - - 291,188 12,415,991 12,707,179 International debt securities mutualfunds - 16,986,486 - - 16,986,486 Domestic equities: Not on securities loan 30,494,950 68,258,894 98,753,844 On securities loan 11,240,585 17,083,479 28,324,064 International equities: Not on securities loan 612,972 1,329,722 - 1,942,694 Emerging markets equities - - 729,285 729,285 Money market funds 7,761,380 6,645,983 760,156 15,167,519 Total investments $ 195,917,479 $ 324,770,215 $ 2,583,165 $ 28,131,364 $ 551,402,223 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 $ 140,313 $ 172,659 $ - $ $ 312,972 AA - - 214,784 214,784 A - 4,153,126 4,153,126 BBB - 8,262,865 8,262,865 BB - - 76,404 - 76,404 US government guaranteed 21,884,097 26,768,676 - 48,652,773 Not rated 31,049,371 38,115,339 - 69,164,710 Assets not subject to credit risk 142,843,698 259,713,541 2,291,977 15,715,373 420,564,589 $ 195,917,479 $ 324,770,215 $ 2,583,165 $ 28,131,364 $ 551,402,223 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, 2018, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employees' Police and Fire Retirement Retirement Investment Type Issuer System System Corporate bonds Western Asset Funds, Inc. 11.8% 9.5% Common stock Northern Trust Bank, N.A. 8.4% 11.9% U.S. government securities United State of America 6.0% 4.3% 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. 77 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 $ 379,842 $ 795,157 $ $ $ 1,174,999 Peru 13,077 28,778 41,855 The Netherlands 30,814 79,002 109,816 United Kingdom 52,778 134,618 187,396 France 46,389 119,182 165,571 Israel 90,072 172,985 263,057 International mutual funds 64,984,717 110,215,675 99,427 2,990,430 178,290,249 Total $ 65,597,689 $ 111,545,397 $ 99,427 $ 2,990,430 $ 180,232,943 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, 2018, maturities of the City's pension and other postemployment benefits trust debt securities, money market funds 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. government bonds $ 70,000 $ 3,026,128 $ 4,831,986 $ 871,826 $ 8,799,940 U.S. agencies - 808,320 - - 808,320 U.S. government mortgage backed securities 256,235 963,663 9,656,014 10,875,912 U.S. government issued commercial mortgage backed securities 746,080 365,453 415,294 1,526,827 Commercial mortgage backed securities - 55,757 - 191,729 247,486 Total $ 70,000 $ 4,892,520 $ 6,161,102 $ 11,134,863 22,258,485 Fixed income investments with no maturity: Domestic corporate securities mutual funds 23,053,916 Money market funds 7,761,380 Total investments $ 53,073,781 78 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. government bonds $ 90,000 $ 3,753,548 $ 5,492,925 $ 1,041,189 $ 10,377,662 U.S. agencies - 1,068,167 - - 1,068,167 U.S. government mortgage backed securities 4,633 310,628 1,704,502 11,341,238 13,361,001 U.S. government issued commercial mortgage backed securities - 1,209,782 449,773 481,033 2,140,588 Commercial mortgage backed securities - 71,688 - 573,667 645,355 Total $ 94,633 $ 6,413,813 $ 7,647,200 $ 13,437,127 27,592,773 Fixed income investments with no maturity: Domestic corporate securities mutual funds 30,817,918 Money market funds 6,645,983 Total investments $ 65,056,674 Investment Maturities (Fair Value) 1-5 years Not available Total Employees'Money Purchase Pension Pan Domestic debt securities $ 270,610 $ 20,578 $ 291,188 Investment Maturities (Fair Value) 1-5 years Retiree Health Care VEBA Domestic debt securities $ 12,415,991 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. 79 CITY OF LANSING, MICHIGAN Notes to Financial Statements Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end, the pension trust funds have no credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2018, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $12,981,047 and $19,569,173, respectively, for which the Plans' received cash collateral of $13,299,880 and $20,051,605, 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. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the Plans' investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing, which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark securities, (e) bids or offers, and (f) reference data. Asset-backed and mortgage-backed securities funds are valued based on the future cash flows of the principal and interest payments of the underlying collateral of mortgages on various assets. The Plans' level 2 investments as noted in the tables below are valued using significant other observable inputs of the underlying securities. The City has the following recurring fair value measurements as of June 30, 2018: Level Level Level Total Employees' Retirement System U.S. treasuries $ $ 8,799,940 $ $ 8,799,940 U.S. agencies 13,211,059 13,211,059 Collateralized mortgage obligations 247,486 - 247,486 Mutualfunds 104,115,646 19,433,461 123,549,107 Domestic equities 41,735,535 - 41,735,535 International equities 612,972 612,972 Money market funds 7,761,380 - 7,761,380 $ 154,473,019 $ 41,444,460 $ $ 195,917,479 80 CITY OF LANSING, MICHIGAN Notes to Financial Statements Level Level Level Total Police and Fire Retirement System U.S. treasuries $ $ 10,377,662 $ $ 10,377,662 U.S. agencies 16,569,756 16,569,756 Collateralized mortgage obligations 645,355 - 645,355 Mutualfunds 157,318,078 21,911,504 179,229,582 Domestic equities 85,342,373 - 85,342,373 International equities 1,329,722 1,329,722 Money market funds 6,645,983 - 6,645,983 $ 251,281,511 $ 48,858,922 $ 300,140,433 Investments carried at net asset value: Real estate investment trusts 2,463,038 International equity mutual funds 22,166,744 Total investments $ 324,770,215 Net Asset Value Investments. Certain investments noted above are carried at net asset value as these are not actively traded. The fair value is estimated based on the dollar value per share as of June 30, 2018. These investments are able to be liquidated as needed, to the extent there is a willing buyer in the market. There are not any restrictions related to the sale of these investments. At June 30, 2018, the City had $2,473,290 outstanding on initial commitments of $8,600,000 with the Invesco Mortgage Recovery Fund (the "Fund"). The Fund has a seven year life, and the intent is to sell all of the investments prior to the Fund's maturity. The other investments at net asset value do not contain required redemption periods. Level Level Level Total Employees'Money Purchase Pension Plan Mutualfunds $ 27583,165 $ $ $ 2,583,165 Level1 Leve12 Level3 Total Retiree Health Care VEBA Emerging market equities $ 729,285 $ $ $ 729,285 Mutualfunds 26,641,923 26,641,923 Money market funds 760,156 760,156 $ 28,131,364 $ $ $ 28,131,364 81 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 $ 9,855,678 $ 5,870,952 $ 1,003,096 Taxes receivable 264,614 - - Special assessments receivable 237,499 - Loans receivable 1,224,460 - 216,964 Accrued interest receivable 2,113,196 126,647 - Due from other governments 10,199,933 - 13,165 Lease receivable - 23,130,768 - Allowance for uncollectible accounts (613,769) (433,827) $ 23,281,611 $ 28,694,540 $ 1,233,225 Amount not expected to be collected within one year $ 3,591,933 $ 22,486,114 $ 212,464 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2018 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,880,189 $ 60,727 $ (638,129) $ $ 25,302,787 Capital assets, being depreciated: Land improvements 21,458,598 1,740,238 23,198,836 Equipment and vehicles 37,923,418 2,528,621 (479,577) 39,972,462 Buildings 136,275,787 - 136,275,787 Infrastructure 302,537,699 2,796,844 (2,790,954) 302,543,589 498,195,502 7,065,703 (3,270,531) 501,990,674 Less accumulated depreciation for: Land improvements (10,490,271) (909,521) - (11,399,792) Equipment and vehicles (30,631,425) (2,260,666) 479,577 (32,412,514) Buildings (81,813,427) (4,403,385) - (86,216,812) Infrastructure (212,333,017) (4,605,506) 2,786,783 (214,151,740) (335,268,140) (12,179,078) 3,266,360 (344,180,858) Total capital assets being depreciated, net 162,927,362 (5,113,375) (4,171) 157,809,816 Governmental activities capital assets, net $ 188,807,551 $ (5,052,648) $ (642,300) $ $ 183,112,603 At June 30, 2018, the City's governmental activities had outstanding commitments through construction contracts of approximately $3,389,000. 83 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Balance Additions Disposals Transfers Balance Business-type activities Capital assets, not being depreciated: Land $ 13,292,491 $ - $ $ - $ 13,292,491 Construction in progress 8,864,632 2,009,129 (4,632,212) 6,241,549 22,157,123 2,009,129 (4,632,212) 19,534,040 Capital assets, being depreciated: Land improvements 25,336,226 124,473 (37,622) 3,631,244 29,054,321 Equipment and vehicles 7,333,063 181,458 256,695 7,771,216 Buildings 217,321,022 332,657 (7,596,755) 744,273 210,801,197 Sewers 342,332,577 1,367,676 343,700,253 592,322,888 2,006,264 (7,634,377) 4,632,212 591,326,987 Less accumulated depreciation for: Land improvements (14,330,020) (496,145) 37,622 - (14,788,543) Equipment and vehicles (6,129,556) (454,530) - (6,584,086) Buildings (129,298,228) (4,245,385) 7,488,677 (126,054,936) Sewers (102,126,930) (6,910,388) - (109,037,318) (251,884,734) (12,106,448) 7,526,299 (256,464,883) Total capital assets being depreciated, net 340,438,154 (10,100,184) (108,078) 4,632,212 334,862,104 Business-type activities capital assets, net $ 362,595,277 $ (8,091,055) $ (108,078) $ - $ 354,396,144 At June 30, 2018, the City's business-type activities had outstanding commitments through construction contracts of approximately $9,447,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 397,373 Public safety 587,208 Public works 4,611,632 Recreation and culture 2,751,336 Community development 1,812,352 Internal service funds 2,019,177 Total depreciation expense - governmental activities $ 12,179,078 Depreciation of business-type activities by function Sewage disposal system $ 10,415,638 Municipal parking system 1,302,124 Cemetery 9,827 Golf 77,847 Recycling 301,012 Total depreciation expense - business-type activities $ 12,106,448 84 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 $ 6,300,519 $ 1,098,459 $ 2,101,029 Deposits payable 89,147 66,815 - Accrued payroll 2,032,450 135,574 173,772 Contract retainage payable 317,374 32,416 - Due to other governments 1,568,169 - Claims incurred but not reported 900,000 Other 774,935 - $ 11,982,594 $ 1,333,264 $ 2,274,801 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2018, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ $ 272,825 Nonmajor governmental funds 752,358 Sewage disposal system 2,942 362,870 Municipal parking system 1,388,053 2,942 Total $ 1,390,995 $ 1,390,995 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. Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ - $ 196,602 Municipal parking system 196,602 - Total $ 196,602 $ 196,602 Advances are made to the Special Assessments Fund to prevent a negative equity in pooled cash. 85 CITY OF LANSING, MICHIGAN Notes to Financial Statements Due to and from component units Due from Due to primary component government unit Municipal parking system $ - $ 1,375 Tax increment finance authority 1,375 Total $ 1,375 $ 1,375 For the year ended June 30, 2018, interfund transfers consisted of the following: Transfers In Nonmajor Nonmajor Internal governmental enterprise service Transfers Out General fund funds funds funds Total General fund $ - $ 5,320,506 $ - $ 650,000 $ 5,970,506 Nonmajor governmental funds 100,000 2,272,051 941,290 - 3,313,341 Nonmajor enterprise funds - 29,104 - - 29,104 Total $ 100,000 $ 7,621,661 $ 941,290 $ 650,000 $ 9,312,951 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. 86 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 General obligation bonds Rate Amount Amount Governmental activities: 2007 Fire Station Refunding Bonds - Unlimited Tax 3.625-5.00% $ 1,780,000 $ 195,000 2009 Capital Improvement Bonds - Limited Tax 3.15-6.85% 10,197,000 8,065,000 2010 Fire Station Refunding Bonds - Unlimited Tax 2.60-2.65% 2,470,000 305,000 2013 Energy Efficiently Refunding Bonds - Limited Tax 2.40% 5,645,000 3,230,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,330,000 2015 Lansing Center Refunding Bonds - Limited Tax 2.00-3.00% 1,770,000 1,205,000 $ 25,062,000 $ 15,330,000 Business-type activities: 2009 Building Authority Refunding Bonds - Limited Tax 6.014-6.584% $ 8,161,691 $ 2,767,490 2012 Building Authority Refunding Bonds - Limited Tax 0.55-3.70% 7,200,000 5,190,000 2007 Building Authority Refunding Bonds - Limited Tax 3.625-5.00% 7,965,000 6,435,000 2014 Building Authority Refunding Bonds - Limited Tax 4.75% 7,245,000 7,245,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 281,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 1,254,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 1,255,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 1,702,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 2,528,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 4,291,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,145,688 4,110,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,842,649 1,697,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 8,003,778 3,503,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 6,109,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 9,601,346 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 13,759,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,494,933 18,010,453 2008 Limited Tax Sewer Bond - 5005-22 2.50% 14,455,604 10,770,604 2009 Capital Improvement Bonds 4.10-7.05% 9,803,000 8,595,000 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 6,718,000 2015 Limited Tax Sewer Bond - 5211-01 2.50% 3,372,405 2,962,405 87 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Original General obligation bonds (concluded) Rate Amount Amount Business-type activities (concluded): 2015 Limited Tax Sewer Bond - 5211-02 2.50% $ 1,977,487 $ 1,697,487 2016 Limited Tax Sewer Bond - 5581-01 2.50% 1,309,872 1,309,872 2014 Building Authority Refunding Bonds - Limited Tax 2.00-3.00% 6,765,000 4,580,000 2017 Building Authority Refunding - Limited Tax 3.31-4.08% 10,805,000 10,805,000 $ 250,754,287 $ 137,182,606 Advance Refunding. In December 2017, the City issued $10,805,000 of General Obligation Limited Tax Refunding Bonds to partially advance refund $5,394,201 of the City's 2009 Building Authority Refunding Bonds reported in its and business-type activities. The proceeds of the bonds were used to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on the refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The bonds are to be called on May 1, 2021 through 2024. Accordingly, $5,394,200 of defeased debt remains outstanding at year-end. The refunding resulted in a cash loss of $6,490,894 and an economic loss of $771,240. 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 $ 15,625,000 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 $2,287,188 and $20,613,583 respectively. 88 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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: 2014 Lease Purchase Agreement - Recycling Trucks 1.96% $ 1,550,855 $ 721,567 2015 Ballpark Improvements Installment Purchase 3.00% 13,500,000 11,567,829 $ 15,050,855 $ 12,289,396 Business-type activities: 2014 Lease Purchase Agreement - Recycling Carts 1.96% $ 1,737,000 $ 808,500 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% 1,828,428 1,576,545 $ 7,728,428 $ 7,476,545 89 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in Long-term Debt. Long-term liability activity for the year ended June 30, 2018, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 18,065,000 $ $ 2,735,000 $ 15,330,000 $ 2,295,000 Installment purchase agreements 13,757,531 1,468,135 12,289,396 1,015,376 Loans payable 7,728,428 251,883 7,476,545 234,543 Total installment debt 39,550,959 4,455,018 35,095,941 3,544,919 Deferred amounts: For issuance discounts (66,154) (6,833) (59,321) - For issuance premiums 81,194 26,055 55,139 - Compensated absences 9,725,419 1,194,026 961,589 9,957,856 961,589 Accrued workers compensation 2,417,780 1,031,123 1,156,682 2,292,221 530,264 $ 51,709,198 $ 2,225,149 $ 6,592,511 $ 47,341,836 $ 5,036,772 Business-type activities General obligation bonds $ 144,016,807 $ 10,805,000 $ 17,639,201 $ 137,182,606 $ 12,346,780 Revenue bonds 17,175,000 - 1,550,000 15,625,000 1,550,000 Installment purchase agreements 1,029,723 - 221,223 808,500 225,580 Total installment debt 162,221,530 10,805,000 19,410,424 153,616,106 14,122,360 Deferred amounts: For issuance discounts (563,347) - (73,009) (490,338) - For issuance premiums 2,115,702 - 236,164 1,879,538 - Compensated absences 794,830 114,701 38,411 871,120 38,411 $ 164,568,715 $ 10,919,701 $ 19,611,990 $ 155,876,426 $ 14,160,771 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements For the governmental activities, compensated absences and other long-term debt are generally liquidated by the General Fund. 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 2019 $ 3,544,919 $ 1,204,862 $ 4,749,781 $ 14,122,360 $ 8,355,934 $ 22,478,294 2020 3,245,527 1,097,291 4,342,818 14,129,973 7,774,848 21,904,821 2021 3,762,075 995,597 4,757,672 13,934,233 8,103,844 22,038,077 2022 3,452,029 881,508 4,333,537 13,360,297 7,451,294 20,811,591 2023 2,456,002 772,177 3,228,179 11,576,080 5,610,736 17,186,816 2024-2028 12,504,431 2,506,496 15,010,927 51,494,488 15,587,159 67,081,647 2029-2033 6,130,958 404,855 6,535,813 20,761,270 5,740,393 26,501,663 2034-2038 - - - 10,847,405 1,481,109 12,328,514 2039-2042 - - - 3,390,000 54,425 3,444,425 $ 35,095,941 $ 7,862,786 $ 42,958,727 $ 153,616,106 $ 60,159,742 $ 213,775,848 Long-term debt disclosures, as applicable, for the City's component units are available in the separately issued financial statements. Subsequent borrowings In September 2018, the City issued $6,210,000 in general obligation limited tax refunding bonds and $1,665,000 in Michigan transportation fund bonds. 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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: Nonmajor General Governmental Fund Funds Totals Nonspendable Inventories $ 17,660 $ 967,676 $ 985,336 Prepaids 21,777 37,309 59,086 Corpus of permanent fund - 1,837,504 1,837,504 39,437 2,842,489 2,881,926 Restricted Major and local streets - 7,309,483 7,309,483 Drug law and narcotics enforcement 1,496,968 1,496,968 Downtown Lansing 44,278 44,278 Debt service 1,000 1,000 Capital improvements (unexpended bond proceeds) 157,709 157,709 - 9,009,438 9,009,438 Committed Police and fire services 265 - 265 By ordinance (budgetcarryforwards) 283,550 3,800,166 4,083,716 Shopping district events and maintenance - - - City parks 475,702 475,702 Capital improvements - 4,561,473 4,561,473 283,815 8,837,341 9,121,156 Unassigned (deficit) 17,003,260 (155,261) 16,847,999 Total fund balances - governmental funds $ 17,326,512 $ 20,534,007 $ 37,860,519 92 CITY OF LANSING, MICHIGAN Notes to Financial Statements 11. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30, 2018, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 25,302,787 $ 19,534,040 $ Capital assets being depreciated, net 157,809,816 334,862,104 1,008 Total capital assets 183,112,603 354,396,144 1,008 Related debt: General obligation bonds 15,330,000 137,182,606 - Revenue bonds - 15,625,000 Installment purchase agreements 12,289,396 808,500 Loans payable 7,476,545 - Unamortized bond discounts (59,321) (490,338) Unamortized bond premiums 55,139 1,879,538 Deferred charge on bond refunding (84,687) (4,605,828) Amounts under leases receivable - (23,130,768) Unexpended bond proceeds (157,709) - Total related debt 34,849,363 127,268,710 Net investment in capital assets $ 148,263,240 $ 227,127,434 $ 1,008 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. 13. RISK MANAGEMENT The City of Lansing, Michigan 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. 93 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2018 2017 Estimated liability, beginning of year $ 885,000 $ 656,064 Estimated claims incurred, including changes in estimates 9,664,043 9,903,853 Claim payments (9,649,043) (9,674,917) Estimated liability, end of year $ 900,000 $ 885,000 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, 2018 2017 Estimated liability, beginning of year $ 2,417,780 $ 2,297,914 Estimated claims incurred, including changes in estimates 1,031,123 952,439 Claim payments (1,156,682) (832,573) Estimated liability, end of year $ 2,292,221 $ 2,417,780 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 $20.00 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, 2018 was $19.44 per $1,000 of taxable value. 94 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, Michigan 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 a nine 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. 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. 95 CITY OF LANSING, MICHIGAN Notes to Financial Statements Plan Membership. At December 31, 2017, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 902 Terminated employees entitled to but not yet receiving benefits 75 Vested and non-vested active participants 394 Total membership 1,371 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 January 9, 2017 1.50% 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% District court exempt Hired after June 1, 2014 1.25% All others 1.60% 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% 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, 2018 was 47.8% of projected valuation payroll. 96 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 5.87%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2018, 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% or more of the Plan's fiduciary net position. Please see Footnote 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, 2018 is as follows: Reserve/Group Balance Employee savings fund $ 14,403,826 Retirement reserve fund 109,230,841 Pension accumulation fund 28,184,102 Members benefit fund 16,740,047 Health insurance fund 31,583,522 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Net Pension Liability. The components of the net pension liability for the employees' retirement system at June 30, 2018 were as follows: Total pension liability $ 305,528,755 Plan fiduciary net position 168,558,816 Net pension liability $ 136,969,939 Plan fiduciary net position as percentage of total pension liability 55.2% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2017, rolled forward to June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% (previous year: 2.925%) Salary increases 2.75%, plus service based increases (previous year: 2.925%) Investment rate of return 7.25%, net of investment expense and including inflation (previous year: 7.40%) Mortality is based on the RP-2000 tables for males and females. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected to 2026 using Scale BB and a 50% factor is applied for pre-retirement deaths. The actuarial assumptions used in the December 31, 2017 valuation were based on the results of actuarial experience analysis conducted in December 2016. Current year changes reflect changes made to actuarial assumptions, assumed return of 7.25%, with 2.75% underlying inflation. Changes in Actuarial Assumptions. There was one change in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return. These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates. 98 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, 2018, 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 27.00% 5.75% 1.53% International equity - developed 12.00% 5.85% 0.70% International equity - emerging 4.00% 6.25% 0.25% Fixed income 25.00% 2.65% 0.66% Real estate 10.00% 4.75% 0.48% Global opportunistic fixed income 6.00% 4.10% 0.25% Global equity long/short 10.00% 4.50% 0.45% Absolute return 6.00% 4.25% 0.27% 100.00% 4.59% Inflation 2.75% Risk adjustments -0.09% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total pension liability was 7.25% (down from 7.37% in 2017). 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, each plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rates of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 99 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, 2017 $ 307,450,034 $ 169,965,440 $ 137,484,594 Changes for the year: Service cost 2,538,487 - 2,538,487 Interest 21,994,837 21,994,837 Differences between expected and actual experience (6,451,827) (6,451,827) Changes in assumptions 3,099,448 3,099,448 Employer contributions - 10,843,000 (10,843,000) Employee contributions 1,230,857 (1,230,857) Net investment income 9,679,565 (9,679,565) Benefit payments, including refunds of employee contributions (23,102,224) (23,102,224) - Administrative expense (57,822) 57,822 Net changes (1,921,279) (1,406,624) (514,655) Balances at June 30, 2018 $ 305,528,755 $ 168,558,816 $ 136,969,939 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 7.25%, 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 (6.25%) or 1-percentage-point higher (8.25%) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.25%) (7.25%) (8.25%) Net pension liability $ 163,649,909 $ 136,969,939 $ 114,074,452 100 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, 2018, the City recognized pension expense of $5,277,438. At June 30, 2018, 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 Difference between expected and actual experience $ - $ 3,225,913 $ (3,225,913) Changes in assumptions 1,549,724 - 1,549,724 Net difference between projected and actual earnings on pension plan investments 6,734,713 - 6,734,713 Total $ 8,284,437 $ 3,225,913 $ 5,058,524 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 2019 $ 2,732,052 2020 2,537,306 2021 (666,089) 2022 455,255 Total $ 5,058,524 Payable to the Pension Plan. At June 30, 2018, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2018. 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 eight 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, 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. 101 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, 2017, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 740 Terminated employees entitled to but not yet receiving benefits 20 Vested and non-vested active participants 365 Total membership 1,125 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 10.0% of their annual wages to the plan. Police supervisors are required to contribute 9.52% and police non-supervisors, 9.0%. 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, 2018 was 44.6% of projected valuation payroll. 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. 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements Rate of Return. For the year ended June 30, 2018, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 7.10%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2018, 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% or more of the Plan's fiduciary net position. Please see Footnote 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, 2018 is as follows: Reserve/Group Balance Retirement reserve fund $ 291,879,983 Health insurance fund 38,308,203 Net Pension Liability. The components of the net pension liability for the police and fire retirement system at June 30, 2018, were as follows: Total pension liability $ 444,999,992 Plan fiduciary net position 291,879,983 Net pension liability $ 153,120,009 Plan fiduciary net position as percentage of total pension liability 65.6% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2017, rolled forward to June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% (previous year: 2.85%) Salary increases 2.75%, plus service based increases (previous year: 2.85%) Investment rate of return 7.25%, net of investment expense and including inflation (previous year: 7.35%) 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. Each of these tables is projected to 2026 using Scale BB and a 50%factor is applied for pre-retirement deaths. 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements The actuarial assumptions used in the December 31, 2017 valuation were based on the results of actuarial experience analysis conducted in December 2016. Current year changes reflect changes made to actuarial assumptions, assumed return of 7.25%, with 2.75% underlying inflation. Changes in Actuarial assumptions. There was one change in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return. These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates. 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, 2018, 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 32.00% 5.75% 1.83% International equity - developed 12.00% 5.85% 0.70% International equity - emerging 4.00% 6.25% 0.25% Fixed income 22.00% 2.65% 0.58% Real estate 10.00% 4.75% 0.48% Global opportunistic fixed income 5.00% 4.10% 0.21 Global equity long/short 10.00% 4.50% 0.45% Absolute return 5.00% 4.25% 0.22% 100.00% 4.72% Inflation 2.75% Risk adjustments -0.22% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total pension liability was 7.25% (down from 7.29% in 2017). 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, each plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore, the long-term expected rates of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. 104 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, 2017 $ 429,670,098 $ 288,441,203 $ 141,228,895 Changes for the year: Service cost 6,533,877 - 6,533,877 Interest 30,641,722 30,641,722 Changes in benefit terms 779 779 Differences between expected and actual experience 8,263,623 8,263,623 Changes in assumptions 1,647,044 - 1,647,044 Employer contributions - 12,686,000 (12,686,000) Employee contributions 2,650,019 (2,650,019) Net investment income 19,937,149 (19,937,149) Benefit payments, including refunds of employee contributions (31,757,151) (31,757,151) - Administrative expense - (77,237) 77,237 Net changes 15,329,894 3,438,780 11,891,114 Balances at June 30, 2018 $ 444,999,992 $ 291,879,983 $ 153,120,009 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 7.25%, 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 (6.25%) or 1-percentage-point higher (8.25%) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.25%) (7.25%) (8.25%) Net pension liability $ 197,368,900 $ 153,120,009 $ 111,892,938 105 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, 2018, the City recognized pension expense of $27,606,986. At June 30, 2018, 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 Difference between expected and actual experience $ 8,168,758 $ 9,654,059 $ (1,485,301) Changes in assumptions 14,594,915 - 14,594,915 Net difference between projected and actual earnings on pension plan investments 6,686,706 - 6,686,706 Total $ 29,450,379 $ 9,654,059 $ 19,796,320 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 2019 $ 12,570,020 2020 7,090,490 2021 51,914 2022 83,896 Total $ 19,796,320 Payable to the Pension Plan. At June 30, 2018, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2018. For governmental activities, pension liabilities are expected to be liquidated by the general fund. Summary Pension Information The table below summarizes the net pension liability and related deferrals for the Employees' Retirement System and the Police and Fire Retirement System as presented in the Statement of Net Position. Employees' Police Et Fire Retirement Retirement System System Total Net pension liability $ 136,969,939 $ 153,120,009 $ 290,089,948 Deferred outflows - pension 8,284,437 29,450,379 37,734,816 Deferred inflows - pension 3,225,913 9,654,059 12,879,972 106 CITY OF LANSING, MICHIGAN Notes to Financial Statements Employees'Money Purchase Pension Plan Newly hired employees are eligible to participate in the City's defined contribution plan. Eligible employees include those normally scheduled to work at least 1,000 hours during a plan year. To receive benefits under the plan, the participant must have met the age and service requirements outline in his or her applicable bargaining unit agreement. Distributions are calculated based on the employee's vesting percentage and the individual's allocation of investment funds. In accordance with the Plan agreement, the City contributes 4% of employees' base pay to the plan. The defined contribution plan is administered by the Board of Trustees as designed in the City of Lansing Defined Contribution Plan which stipulates that the trustees have such authority. All amendments to the plan, including funding requirements, must be approved by the City Council subject to the terms of collective bargaining agreements. City contributions for the year ended June 30, 2018 were $127,648 for plan members. Employee contributions for the year ended June 30, 2018 were $115,217. All amendments to the Plan, including funding requirements, must be approved by the City Council. The assets of the plan are held in trust for the exclusive benefit of participants and their beneficiaries. 107 CITY OF LANSING, MICHIGAN Notes to Financial Statements Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Net Position OEM Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 4,316,042 $ - $ 5,710,817 $ - $ $ $ 10,026,859 Investments: U.S. treasuries 7,381,317 1,418,623 9,153,567 1,224,095 19,177,602 U.S. agencies 11,081,327 2,129,732 14,615,274 1,954,482 29,780,815 Collateralized mortgage obligations 207,589 39,897 569,232 76,123 892,841 Mutualfunds 103,631,966 19,917,141 179,813,176 24,046,188 2,583,165 26,641,923 356,633,559 Domestic equities 35,007,421 6,728,114 75,275,831 10,066,542 - - 127,077,908 International equities 514,156 98,816 1,172,875 156,847 - 1,942,694 Emerging market equities - - - 729,285 729,285 Money market funds 6,510,181 1,251,199 5,862,057 783,926 - 760,156 15,167,519 Contribution receivable 1,854 - 3,668 - 4,628 - 10,150 Dividends and interest receivable 179,835 - 236,626 - 417 416,878 Total assets 168,831,688 31,583,522 292,413,123 38,308,203 2,587,793 28,131,781 561,856,110 Liabilities Accounts payable 272,872 - 533,140 - - - 806,012 Net position restricted for Pension benefits 168,558,816 - 291,879,983 - 2,587,793 - 463,026,592 Other postemployment benefits - 31,583,522 - 38,308,203 - 28,131,781 98,023,506 Total net position $ 168,558,816 $ 31,583,522 $ 291,879,983 $ 38,308,203 $ 2,587,793 $ 28,131,781 $ 561,050,098 108 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 Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income: Net appreciation in fair value of investments $ 7,532,983 $ 2,630,990 $ 6,421,895 $ 3,572,965 $ - $ 1,698,587 $ 21,857,420 Interest income - - 8,326 - 198,453 - 206,779 Dividend income 2,771,355 14,541,940 - 17,313,295 Investment expenses (624,773) (1,035,012) (8,400) (1,668,185) Net investment income 9,679,565 2,630,990 19,937,149 3,572,965 190,053 1,698,587 37,709,309 Contributions: Employer 10,843,000 10,921,222 12,686,000 13,163,201 127,648 515,000 48,256,071 Plan members 1,230,857 - 2,650,019 - 115,217 - 3,996,093 Total contributions 12,073,857 10,921,222 15,336,019 13,163,201 242,865 515,000 52,252,164 Total additions 21,753,422 13,552,212 35,273,168 16,736,166 432,918 2,213,587 89,961,473 Deductions Participant benefits 23,102,224 10,286,249 31,757,151 11,960,557 180,192 - 77,286,373 Administrative expense 57,822 444,973 77,237 600,644 - 1,180,676 Total deductions 23,160,046 10,731,222 31,834,388 12,561,201 180,192 78,467,049 Change in net position (1,406,624) 2,820,990 3,438,780 4,174,965 252,726 2,213,587 11,494,424 Net position restricted for pension and other postemployment benefits: Beginning of year 169,965,440 28,762,532 288,441,203 34,133,238 2,335,067 25,918,194 549,555,674 End of year $168,558,816 $ 31,583,522 $291,879,983 $ 38,308,203 $ 2,587,793 $ 28,131,781 $561,050,098 109 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(VEBL) The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit postemployment 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 $515,000 to the Plan. It is accounted for as a separate OPEB trust fund. Employees'Retirement System Plan Description. 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 Plan was established and may be amended by the City Council and is administered by a nine 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 OPEB trust fund. 110 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at January 1, 2018, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 848 Terminated plan members entitled to but not yet receiving benefits 77 Active plan members 404 Total 1,329 Benefits Provided. 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 $134.00 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. Contributions. The contribution requirements of the Plan members and the City are established and may be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under the various contracts. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined through the bi-annual actuarial valuation. For the year ended June 30, 2018, the City contributed $11,436,222 (direct benefit payments of$10,731,222 and City contributions of$705,000) to the Plan. Rate of Return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 7.10%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net OPEB Liability of the City. The components of the net OPEB liability of the City at June 30, 2018, were as follows: Total OPEB liability $ 223,906,447 Plan fiduciary net position 59,715,303 City's net OPEB liability $ 164,191,144 Plan fiduciary net position as percentage of total OPEB liability 26.7% 111 CITY OF LANSING, MICHIGAN Notes to Financial Statements Actuarial Assumptions. The total OPEB liability was determined by an actuarial valuation as of January 1, 2018, rolled forward to June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% Investment rate of return 7.25%, net of OPEB plan investment expense, including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition Healthcare cost trend rate Year Beginning July 1, Pre-Medicare Medicare 2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022+ 4.50% 4.00% Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement: 50% of base rates Post-disablement: RP2000 disabled tables with Scale BB The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial experience study conducted in 2016. Changes in Actuarial assumptions. There were no changes in actuarial assumptions, except the change in discount rate. 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 as of June 30, 2018 is summarized in the table on the following page. 112 CITY OF LANSING, MICHIGAN Notes to Financial Statements The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of OPEB 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 OPEB plan's target asset allocation as of June 30, 2018 are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 27.00% 5.75% 1.54% International equity - developed 12.00% 5.85% 0.70% International equity - emerging 4.00% 6.25% 0.25% Fixed income - U.S. 25.00% 2.65% 0.66% Real assets 10.00% 4.75% 0.48% Global opportunistic fixed income 6.00% 4.10% 0.25% Global equity long/short 10.00% 4.50% 0.45% Absolute return 6.00% 4.25% 0.26% 100.00% 4.59% Inflation 2.75% Risk adjustment -0.09% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total OPEB liability was 5.90% (up from 5.80% in 2017). The City's funding expectations/policy is to contribute a percentage of payroll each year to their OPEB trust, in addition to paying the annual benefits directly. The City has also assumed that benefits will begin being paid from trust assets once the funding ratio exceeds 40%. Based on this information, the City projects that benefits will be paid from the trust from 2028 through 2054. This is done on a closed group basis. Therefore, the expected trust return of 7.25% (between 2028 and 2054) is blended with the 20-year Aa bond rate of 3.62% (before 2028 and after 2054). 113 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net OPEB Liability. The components of the change in the net OPEB liability are summarized as follows: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2017 $ 231,583,031 $ 54,680,726 $ 176,902,305 Changes for the year: Service cost 1,438,197 - 1,438,197 Interest on total OPEB liability 13,221,134 13,221,134 Differences between expected and actual experience (9,321,837) (9,321,837) Changes in assumptions (2,727,829) - (2,727,829) Employer contributions 11,436,222 (11,436,222) Net investment income 4,329,577 (4,329,577) Benefit payments (10,286,249) (10,286,249) - Administrative expense (444,973) 444,973 Net changes (7,676,584) 5,034,577 (12,711,161) Balances at June 30, 2018 $ 223,906,447 $ 59,715,303 $ 164,191,144 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate. The following presents the net OPEB liability of the City, calculated using the discount rate of 5.90%, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.90%) or 1% higher (6.90%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (4.90%) (5.90%) (6.90%) City's net OPEB liability $ 193,014,545 $ 164,191,144 $ 138,655,002 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption. The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of 6.0% pre-Medicare / 4.5% Medicare, trending to an ultimate rate of 4.5% pre-Medicare / 4.0% Medicare, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (5.0% pre-Medicare / 3.5% Medicare, trending to an ultimate rate of 3.5% pre-Medicare / 3.0% Medicare) or 1% higher (7.0% pre-Medicare / 5.5%Medicare, trending to an ultimate rate of 5.5% pre- Medicare / 5.0%Medicare) than the current healthcare cost trend rates: Healthcare Ultimate Cost 1% Decrease Trend Rates 1% Increase (3.5%/ 3.0%) (4.5%/4.0%) (5.5%/ 3.0%) City's net OPEB liability $ 139,753,010 $ 164,191,144 $ 193,620,218 114 CITY OF LANSING, MICHIGAN Notes to Financial Statements OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB. For the year ended June 30, 2018, the City recognized OPEB expense of $5,042,072. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Difference between expected and actual experience $ $ 4,660,918 $ (4,660,918) Changes in assumptions 1,363,914 (1,363,914) Net difference between projected and actual earnings on OPEB plan investments 292,179 (292,179) Total $ $ 6,317,011 $ (6,317,011) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended June 30, Amount 2019 $ (6,097,877) 2020 (73,045) 2021 (73,045) 2022 (73,044) Total $ (6,317,011) OPEB Plan Fiduciary Net Position. Detailed information about the OPEB plan's fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds preceding this footnote. Payable to the OPEB Plan. At June 30, 2018, the City reported had no amount payable to the OPEB plan. Police and Fire Retirement System Plan Description. 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 Plan was established and may be amended by the City Council and is administered by an eight 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, 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. 115 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at January 1, 2018, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 652 Terminated plan members entitled to but not yet receiving benefits 20 Active plan members 365 Total 1,037 Benefits Provided. 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 $121.90 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. Contributions. The contribution requirements of the Plan members and the City are established and may be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under the various contracts. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined through the bi-annual actuarial valuation. For the year ended June 30, 2018, the City contributed $13,163,201 (direct benefit payments of$12,561,201 and City contributions of$602,000) to the Plan. Rate of Return. For the year ended June 30, 2018, the annual money-weighted rate of return on investments, net of investment expense, was 8.71%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Net OPEB Liability of the City. The components of the net OPEB liability of the City at June 30, 2018, were as follows: Total OPEB liability $ 277,078,552 Plan fiduciary net position 38,308,203 City's net OPEB liability $ 238,770,349 Plan fiduciary net position as percentage of total OPEB liability 13.8% 116 CITY OF LANSING, MICHIGAN Notes to Financial Statements Actuarial Assumptions. The total OPEB liability was determined by an actuarial valuation as of January 1, 2018, rolled forward to June 30, 2018, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% Investment rate of return 7.25%, net of OPEB plan investment expense, including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition Healthcare cost trend rate Year Beginning July 1, Pre-Medicare Medicare 2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022 4.50% 4.00% 2023+ 4.50% 4.00% Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement: 50% of base rates Post-disablement: RP2000 disabled tables with Scale BB The actuarial assumptions used in the January 1, 2018 valuation were based on the results of an actuarial experience study conducted in 2016. Changes in Actuarial assumptions. There were no changes in actuarial assumptions, except the change in discount rate. 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 as of June 30, 2018 is summarized in the table below. 117 CITY OF LANSING, MICHIGAN Notes to Financial Statements The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of OPEB 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 OPEB plan's target asset allocation as of June 30, 2018 are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 32.00% 5.75% 1.84% International equity - developed 12.00% 5.85% 0.70% International equity - emerging 4.00% 6.25% 0.25% Fixed income - U.S. 22.00% 2.65% 0.58% Real assets 10.00% 4.75% 0.48% Global opportunistic fixed income 5.00% 4.10% 0.21% Global equity long/short 10.00% 4.50% 0.45% Absolute return 5.00% 4.25% 0.21% 100.00% 4.72% Inflation 2.75% Risk adjustment -0.22% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total OPEB liability was 5.67% (up from 5.47% in 2017). The City's funding expectations/policy is to contribute a percentage of payroll each year to their OPEB trust, in addition to paying the annual benefits directly. The City has assumed that benefits will be paid from trust assets once the funding ratio exceeds 30%, and until the fund is depleted. Based on this information, the City projects that benefits will be paid from the trust from 2031 to 2060. This is done on a closed group basis. Therefore, the expected trust return of 7.25% (after 2037) is blended with the 20-year Aa bond rate of 3.62% (before 2037). 118 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net OPEB Liability. The components of the change in the net OPEB liability are summarized as follows: Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2017 $ 294,892,197 $ 34,133,238 $ 260,758,959 Changes for the year: Service cost 3,409,339 - 3,409,339 Interest on total OPEB liability 15,994,328 15,994,328 Differences between expected and actual experience (17,811,401) (17,811,401) Changes in assumptions (7,445,354) (7,445,354) Employer contributions 13,163,201 (13,163,201) Net investment income 3,572,965 (3,572,965) Benefit payments (11,960,557) (11,960,557) - Administrative expense (600,644) 600,644 Net changes (17,813,645) 4,174,965 (21,988,610) Balances at June 30, 2018 $ 277,078,552 $ 38,308,203 $ 238,770,349 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate. The following presents the net OPEB liability of the City, calculated using the discount rate of 5.67%, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.67%) or 1% higher (6.67%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (4.67%) (5.67%) (6.67%) City's net OPEB liability $ 278,052,239 $ 238,770,349 $ 204,366,019 Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption. The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of 6.0% pre-Medicare / 4.5% Medicare, trending to an ultimate rate of 4.5% pre-Medicare / 4.0% Medicare, as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1% lower (5.0% pre-Medicare / 3.5% Medicare, trending to an ultimate rate of 3.5% pre-Medicare / 3.0% Medicare) or 1% higher (7.0% pre-Medicare / 5.5%Medicare, trending to an ultimate rate of 5.5% pre- Medicare / 5.0%Medicare) than the current healthcare cost trend rates: Healthcare Ultimate Cost 1% Decrease Trend Rates 1% Increase (3.5%/ 3.0%) (4.5%/4.0%) (5.5%/ 3.0%) City's net OPEB liability $ 207,365,842 $ 238,770,349 $ 277,135,365 119 CITY OF LANSING, MICHIGAN Notes to Financial Statements OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB. For the year ended June 30, 2018, the City recognized OPEB expense of $10,995,801. At June 30, 2018, the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Difference between expected and actual experience $ $ 13,358,551 $ (13,358,551) Changes in assumptions 5,584,015 (5,584,015) Net difference between projected and actual earnings on OPEB plan investments 878,644 (878,644) Total $ $ 19,821,210 $ (19,821,210) Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ended June 30, Amount 2019 $ (6,533,850) 2020 (6,533,850) 2021 (6,533,849) 2022 (219,661) Total $ (19,821,210) OPEB Plan Fiduciary Net Position. Detailed information about the OPEB plan's fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds preceding this footnote. Payable to the OPEB Plan. At June 30, 2018, the City reported had no amount payable to the OPEB plan. For governmental activities, other postemployment benefit liabilities are expected to be liquidated by the generalfund. 120 CITY OF LANSING, MICHIGAN Notes to Financial Statements Summary OPEB Information The table below summarizes the net OPEB liability and related deferrals for the Employees' Retirement System and the Police and Fire Retirement System as presented in the Statement of Net Position. Employees' Police £t Fire Retirement Retirement System System Total Net OPEB liability $ 164,191,144 $ 238,770,349 $ 402,961,493 Deferred inflows - OPEB 6,317,011 19,821,210 26,138,221 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 and is currently being negotiated. 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. Rent payments were made to the District by the City in monthly installments of $10,417 ($125,000 annually) for the year ended June 30, 2018. 19. TAX ABATEMENTS Because Lansing is an older city, vacant land, or "green space" for new buildings is scarce, the City offers tax abatements to make redevelopment and rehabilitation of existing buildings economically viable for developers, who must consider the cost of rehabilitating existing, often older, buildings which may involve environmental remediation, against the generally lesser cost of building on vacant land outside the City. These tax abatements are designed to level the "playing field" for urban communities to encourage redevelopment of vacant buildings, and to attract and retain private investment and jobs within the City. The City of Lansing provides tax abatements under several different programs: Industrial property tax abatements are granted in the State of Michigan under Public Act 198 to promote economic development, creation of jobs, and new or improved facilities. The Industrial Facilities Tax (IFT) Exemption must be approved by both the City (after a public hearing is held) and the State of Michigan. IFT exemptions can cover real and/or personal property. By State law, the exemption must be applied for no later than six months after commencement of the project and must be accompanied by a written agreement between the taxpayer and the local unit. An exemption allows for taxation on IFT property at 50% of the local property tax millage rate for up to 12 years. A certificate may be revoked and taxes recaptured for noncompliance with the terms of the agreement. Property taxes abated by the City under this program for fiscal year 2018 amounted to $511,765. The State of Michigan allows for Commercial Rehabilitation Exemption under Public Act 210 if making substantial improvements to a business or multi-family residential facility. The City had no Commercial Rehabilitation Exemptions for fiscal year 2018. 121 CITY OF LANSING, MICHIGAN Notes to Financial Statements To incentivize new or expanded businesses, Public Act 328 allows for Personal Property Tax Exemptions for qualified businesses located within eligible distressed communities. The exemption must be approved by the City Commission and the State Treasurer. Once approved, the taxpayer is exempt from personal property tax on new investments after the date of the exemption. The City can recapture the taxes if the business defaults on the terms of the written agreement. Property taxes abated by the City under this program for fiscal year 2018 amounted to $6,529,341. The Brownfield Redevelopment Authority encourages environmental cleanup and economic development through its Brownfield Redevelopment Plan under Public Act 318. A developer performs redevelopment and cleanup activities at a site that is obsolete or blighted. The increased tax revenues resulting from the increase in taxable value are captured by the City and used to repay the developer for qualifying expenses. There is no provision for recovery of abated taxes because the developer is only paid for eligible expenses on a reimbursement-basis. Property taxes abated by the Authority under this program for fiscal year 2018, through direct reimbursement to developers from current tax captures, amounted to $219,490. In addition, there are reserve liabilities reported in the financial statements that represent tax captures set aside for future developer reimbursements. Property taxes abated by the Authority under this program for fiscal year 2018 amounted to $265,468. 20. RESTATEMENTS The City adopted the provisions of GASB Statement No. 75, Accounting and Financial Reporting for Postemployment Benefits Other than Pensions, in the current year. As a result of this change, beginning net position of governmental activities, business-type activities, the sewage disposal system enterprise fund, the municipal parking system enterprise fund, and nonmajor enterprise funds was decreased by $329,708,733, $41,270,601, $23,958,764, $7,308,542, and 10,003,295, respectively. The Lansing Entertainment and Public Facilities Authority, a component unit of the City, adopted the provisions of GASB Statement No. 80, Blending Requirements for Certain Component Units, in the current year. As a result of this change, beginning net position was decreased by $587,397. 21. SUBSEQUENT EVENT Subsequent to the fiscal year-end, an income tax was adopted by the City of East Lansing, which will begin January 1, 2019, and which impacts income tax revenues for the City of Lansing for its residents that work in East Lansing. While that potential was anticipated for fiscal year 2019 and is not expected to result in any budgetary adjustments for fiscal year 2019, the East Lansing income tax is expected to result in a reduction in Lansing's income tax revenues by about $800,000 annually. ■ ■ ■ ■ ■ 122 REQUIRED SUPPLEMENTARY INFORMATION 123 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Employees' Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2018 2017 2016 2015 2014 Total pension liability Service cost $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest on total pension liability 21,994,837 22,403,009 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience (6,451,827) (23,183,264) (4,937,823) (6,422,330) - Assumption changes 3,099,448 3,706,512 7,575,775 Benefit payments, including refunds (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net change in total pension liability (1,921,279) (17,275,496) 5,023,103 (3,355,060) 2,914,732 Total pension liability, beginning of year 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755 Total pension liability,end of year 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 Plan fiduciary net position Employer contributions 10,843,000 10,246,872 10,181,620 10,547,556 9,361,009 Employee contributions 1,230,857 1,216,519 1,088,943 1,128,120 1,290,678 Pension plan net investment income(loss) 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,635 Benefit payments(including refunds) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) Pension plan administrative expense (57,822) (47,217) (126,486) (174,818) (741,037) Net change in plan fiduciary net position (1,406,624) 5,915,528 (14,506,562) (6,562,186) 4,840,906 Plan fiduciary net position, beginning of year 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754 Plan fiduciary net position,end of year 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 Net pension liability $136,969,939 $137,484,594 $160,675,618 $ 141,145,953 $137,938,827 Plan fiduciary net position as a percentage of total pension liability 55.2% 55.3% 50.5% 55.9% 57.3% Covered payroll $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 20,874,143 Net pension liability as a percentage of covered payroll 604.1% 657.8% 696.0% 714.0% 660.8% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Assumption changes: There was one change in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return.These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates. There were changes in actuarial assumptions during fiscal year 2017 based on the experience study completed in December 2016. There was a change in the discount rate due to a higher bond rate. There were no changes in actuarial assumptions during fiscal year 2016, except for the change in discount rate due to a lower bond rate. 124 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan 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 $ 323,057,487 $ 185,118,660 $ 137,938,827 57.3% $ 20,874,143 660.8% 2015 319,702,427 178,556,474 141,145,953 55.9% 19,769,460 714.0% 2016 324,725,530 164,049,912 160,675,618 50.5% 23,085,894 696.0% 2017 307,450,034 169,965,440 137,484,594 55.3% 20,901,389 657.8% 2018 305,528,755 168,558,816 136,969,939 55.2% 22,672,891 604.1% 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 Pension Plan Employees' Retirement System Schedule of Contributions Actual Contribution as Fiscal Year Actuarially Contribution Percentage of Ending Determined Actual Deficiency Covered Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 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% 2016 10,181,620 10,181,620 23,085,894 44.1% 2017 10,246,872 10,246,872 20,901,389 49.0% 2018 10,185,060 10,843,000 (657,940) 22,672,891 47.8% * The City contributed in excess of its FY 2009 Actuarially Determined Contribution (ADC). 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 ADC 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, 2016 Notes Actuarially determined contribution rates are calculated as of the December 31 that is 6 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 25 years Asset valuation method Closed; 5-year smooth market Inflation 2.925% (previous year: 3.10%) Salary increases 2.925% (previous year: 3.10%) Investment rate of return 7.40%, net of investment expense and including inflation (previous year: 7.60%) Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality is based on the RP-2000 tables for males and females. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected to 2026 using Scale BB and a 50%factor is applied for pre-retirement deaths. 126 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, ReturA'I 2014 13.67% 2015 2.43% 2016 -1.60% 2017 10.91% 2018 5.87% 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. 127 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Police and Fire Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2018 2017 2016 2015 2014 Total pension liability Service cost $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest on total pension liability 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 Benefit changes 779 - - - - Difference between expected and actual experience 8,263,623 (19,308,117) 7,884,167 3,159,996 Assumption changes 1,647,044 25,078,592 3,281,341 - Benefit payments,including refunds (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,270,724) Net change in total pension liability 15,329,894 11,321,648 18,230,902 10,700,735 8,240,987 Total pension liability, beginning of year 429,670,098 418,348,450 400,117,548 389,416,813 381,175,826 Total pension liability,end of year 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 Plan fiduciary net position Employer contributions 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 Employee contributions 2,650,019 2,840,914 2,608,214 2,950,832 2,911,896 Pension plan net investment income(loss) 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments(including refunds) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,852,038) Pension plan administrative expense (77,237) (50,996) (128,903) (173,849) (1,141,506) Net change in plan fiduciary net position 3,438,780 15,325,805 (22,181,251) (5,176,867) 20,183,830 Plan fiduciary net position, beginning of year 288,441,203 273,115,398 295,296,649 300,473,516 280,289,686 Plan fiduciary net position,end of year 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 Net pension liability $153,120,009 $ 141,228,895 $145,233,052 $ 104,820,899 $ 88,943,297 Plan fiduciary net position as a percentage of total pension liability 65.6% 67.1% 65.3% 73.8% 77.2% Covered payroll $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974 Net pension liability as a percentage of covered payroll 538.5% 512.0% 536.3% 429.5% 347.3% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Assumption changes: There was one change in actuarial assumptions during fiscal year 2018, a decrease in the assumed rates of inflation and investment return.These changes, along with updated projections of fund solvency, also resulted in changes to the discount rates. There were changes in actuarial assumptions during fiscal year 2017 based on the experience study completed in December 2016.There was a change in the discount rate due to a higher bond rate. There were no changes in actuarial assumptions during fiscal year 2016, except for the change in discount rate due to a lower bond rate. 128 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Police and Fire 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 $ 389,416,813 $ 300,473,516 $ 88,943,297 77.2% $ 25,611,974 347.3% 2015 400,117,548 295,296,649 104,820,899 73.8% 24,407,740 429.5% 2016 418,348,450 273,115,398 145,233,052 65.3% 27,078,405 536.3% 2017 429,670,098 288,441,203 141,228,895 67.1% 27,585,521 512.0% 2018 444,999,992 291,879,983 153,120,009 65.6% 28,435,952 538.5% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 129 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Police and Fire Retirement System Schedule of Contributions Actual Contribution as Fiscal Year Actuarially Contribution Percentage of Ending Determined Actual Deficiency Covered Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 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% 2015 11,050,091 11,050,091 24,407,740 45.3% 2016 10,884,312 10,884,312 27,078,405 40.2% 2017 11,521,768 11,521,768 27,585,521 41.8% 2018 12,562,547 12,686,000 (123,453) 28,435,952 44.6% * The City contributed in excess of its FY 2009 Actuarially Determined Contribution (ADC). 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 ADC 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, 2016 Notes Actuarially determined contribution rates are calculated as of the December 31 that is 6 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 25 years Asset valuation method Closed; 5-year smooth market Inflation 2.85% (previous year: 3.10%) Salary increases 2.85% (previous year: 3.10%) Investment rate of return 7.35%, net of investment expense and including inflation (previous year: 7.60%) Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality 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. Each of these tables is projected to 2026 using Scale BB and a 50% factor is applied for pre-retirement deaths. 130 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Police and Fire Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return(') 2014 17.28% 2015 3.04% 2016 -2.09% 2017 12.06% 2018 7.10% 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. 131 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Employees' Retirement System Schedule of Changes in Net OPEB Liability and Related Ratios Fiscal Year Ending June 30, 2018 2017 Total OPEB liability Service cost $ 1,438,197 $ 1,550,428 Interest on total OPEB liability 13,221,134 12,976,683 Difference between expected and actual experience (9,321,837) - Changes in assumptions (2,727,829) Benefit payments (10,286,249) (10,116,593) Net change in total OPEB liability (7,676,584) 4,410,518 Total OPEB liability, beginning of year 231,583,031 227,172,513 Total OPEB liability, end of year 223,906,447 231,583,031 Plan fiduciary net position Employer contributions 11,436,222 11,305,756 OPEB plan net investment income 4,329,577 5,209,669 Benefit payments (10,286,249) (10,116,593) Administrative expense (444,973) (389,163) Net change in plan fiduciary net position 5,034,577 6,009,669 Plan fiduciary net position, beginning of year 54,680,726 48,671,057 Plan fiduciary net position, end of year 59,715,303 54,680,726 Net OPEB liability $ 164,191,144 $ 176,902,305 Plan fiduciary net position as a percentage of total OPEB liability 26.7% 23.6% Covered payroll $ 21,251,418 $ 20,901,389 Net OPEB liability as a percentage of covered payroll 772.6% 846.4% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Assumption changes: There were no changes in actuarial assumptions during fiscal year 2018, except the change in discount rate. 132 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Employees' Retirement System Schedule of the Net OPEB Liability Plan Net Net OPEB Position as Liability as Fiscal Year Percentage of Percentage of Ending Total OPEB Plan Net Net OPEB Total OPEB Covered Covered June 30, Liability Position Liability Liability Payroll Payroll 2017 $ 231,583,031 $ 54,680,726 $ 176,902,305 23.6% $ 20,901,389 846.4% 2018 223,906,447 59,715,303 164,191,144 26.7% 21,251,418 772.6% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 133 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Employees' Retirement System Schedule of Contributions Actual Contribution as Fiscal Year Actuarially Contribution Percentage of Ending Determined Actual Deficiency Covered Covered June 30, Contribution Contribution (Excess) Payroll Payroll 2009 $ 9,021,963 $ 10,855,711 $ (1,833,748) $ 30,602,000 35.5% 2010 10,608,281 9,782,538 825,743 27,766,628 35.2% 2011 8,819,018 9,773,601 (954,583) 26,068,735 37.5% 2012 14,915,958 10,363,847 4,552,111 22,838,598 45.4% 2013 12,775,667 10,147,780 2,627,887 20,874,143 48.6% 2014 14,057,619 11,048,992 3,008,627 21,521,242 51.3% 2015 13,270,701 9,212,322 4,058,379 19,769,460 46.6% 2016 11,447,334 8,814,471 2,632,863 23,085,894 38.2% 2017 10,582,235 11,305,756 (723,521) 20,901,389 54.1% 2018 10,910,284 11,436,222 (525,938) 21,251,418 53.8% Notes to Schedule of Contributions Valuation Date January 1, 2016 Notes Actuarially determined contribution rates are calculated as of the January 1 that is 18 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 percentage of pay Remaining amortization period 24 years Asset valuation method Market value Inflation 2.75% (previously 2.85%) Investment rate of return 7.25% (previously 7.40%) Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement: 50% of base rates; Post-disablement: RP2000 disabled tables with Scale BB Health care trend rates Year Beginning July 1, Pre-Medicare Medicare 2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022+ 4.50% 4.00% 134 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return 2017 9.90% 2018 7.10% Annual money-weighted rate of return, net of investment expenses Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 135 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Police and Fire Retirement System Schedule of Changes in Net OPEB Liability and Related Ratios Fiscal Year Ending June 30, 2018 2017 Total OPEB liability Service cost $ 3,409,339 $ 3,749,359 Interest on total OPEB liability 15,994,328 15,584,783 Difference between expected and actual experience (17,811,401) - Changes in assumptions (7,445,354) Benefit payments (11,960,557) (11,065,440) Net change in total OPEB liability (17,813,645) 8,268,702 Total OPEB liability, beginning of year 294,892,197 286,623,495 Total OPEB liability, end of year 277,078,552 294,892,197 Plan fiduciary net position Employer contributions 13,163,201 12,290,749 OPEB plan net investment income 3,572,965 3,487,200 Benefit payments (11,960,557) (11,065,440) Administrative expense (600,644) (525,309) Net change in plan fiduciary net position 4,174,965 4,187,200 Plan fiduciary net position, beginning of year 34,133,238 29,946,038 Plan fiduciary net position, end of year 38,308,203 34,133,238 Net OPEB liability $ 238,770,349 $ 260,758,959 Plan fiduciary net position as a percentage of total OPEB liability 13.8% 11.6% Covered payroll $ 20,667,007 $ 27,585,521 Net OPEB liability as a percentage of covered payroll 1155.3% 945.3% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. Assumption changes: There were no changes in actuarial assumptions during fiscal year 2018, except the change in discount rate. 136 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Police and Fire Retirement System Schedule of the Net OPEB Liability Plan Net Net OPEB Position as Liability as Fiscal Year Percentage of Percentage of Ending Total OPEB Plan Net Net OPEB Total OPEB Covered Covered June 30, Liability Position Liability Liability Payroll Payroll 2017 $ 294,892,197 $ 34,133,238 $ 260,758,959 11.6% $ 27,585,521 945.3% 2018 277,078,552 38,308,203 238,770,349 13.8% 20,667,007 1155.3% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 137 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Police and Fire Retirement System Schedule of Contributions Actual Contribution as Fiscal Year Actuarially Contribution Percentage of Ending Determined Actual Deficiency Covered Covered June 30, Contribution Contribution (Excess) Payroll Payroll 2009 $ 12,258,018 $ 9,673,825 $ 2,584,193 $ 30,443,000 31.8% 2010 16,563,477 9,585,692 6,977,785 28,536,056 33.6% 2011 16,474,153 9,844,226 6,629,927 25,128,835 39.2% 2012 17,844,155 9,888,796 7,955,359 26,121,411 37.9% 2013 17,489,692 11,170,202 6,319,490 25,636,626 43.6% 2014 16,945,536 11,198,663 5,746,873 26,405,725 42.4% 2015 17,923,366 11,561,406 6,361,960 24,407,740 47.4% 2016 17,276,901 12,879,016 4,397,885 27,078,405 47.6% 2017 19,759,521 12,290,749 7,468,772 27,585,521 44.6% 2018 15,968,029 13,163,201 2,804,828 20,667,007 63.7% Notes to Schedule of Contributions Valuation Date January 1, 2016 Notes Actuarially determined contribution rates are calculated as of the January 1 that is 18 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 percentage of pay Remaining amortization period 24 years Asset valuation method Market value Inflation 2.75% (previously 2.85%) Investment rate of return 7.25% (previously 7.35%) Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality Mortality rates are assumed to be in accordance with the Retired Pensioners (RP) 2000 Combined Healthy tables, with Blue Collar adjustments projected Scale BB, to account for anticipated future improvements in life expectancy. Adjustments to these rates are as follows: Pre-retirement:50% of base rates; Post-disablement: RP2000 disabled tables with Scale BB Health care trend rates Year Beginning July 1, Pre-Medicare Medicare 2018 6.00% 4.50% 2019 5.50% 4.50% 2020 5.00% 4.25% 2021 4.50% 4.00% 2022 4.50% 4.00% 2023+ 4.50% 4.00% 138 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefits Plan Police and Fire Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return 2017 9.89% 2018 8.71% Annual money-weighted rate of return, net of investment expenses Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 139 This page intentionally left blank. 140 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 141 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2018 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 92,029 $ - $ 89,710 $ - $ 181,739 Equity in pooled cash and investments 11,775,911 1,000 4,588,367 1,837,504 18,202,782 Accounts receivable, net 96,627 - 212,011 - 308,638 Special assessments receivable - 237,499 237,499 Loans receivable 1,224,460 - 1,224,460 Accrued interest receivable 2,113,196 2,113,196 Due from other governments, net 4,964,156 4,964,156 Inventories 967,676 - 967,676 Prepaids - - 37,309 - 37,309 Total assets $ 21,234,055 $ 1,000 $ 5,164,896 $ 1,837,504 $ 28,237,455 Liabilities Accounts payable $ 1,459,163 $ - $ 170,906 $ - $ 1,630,069 Deposits payable 89,147 - 89,147 Accrued payroll 72,230 72,230 Indemnity bonds 43,867 43,867 Due to other funds 752,358 - 752,358 Advances from other funds - 196,602 196,602 Due to other governments 571,506 - 571,506 Unearned revenue 813,855 - 813,855 Total liabilities 3,802,126 367,508 4,169,634 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable 3,337,656 - 3,337,656 Unavailable revenues - special assessments - 196,158 196,158 Total deferred inflows of resources 3,337,656 196,158 - 3,533,814 Fund balances Nonspendable 967,676 - 37,309 1,837,504 2,842,489 Restricted 8,850,729 1,000 157,709 - 9,009,438 Committed 4,275,868 - 4,561,473 8,837,341 Unassigned (deficit) - - (155,261) - (155,261) Total fund balances 14,094,273 1,000 4,601,230 1,837,504 20,534,007 Total liabilities, deferred inflows of resources and fund balances $ 21,234,055 $ 1,000 $ 5,164,896 $ 1,837,504 $ 28,237,455 142 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2018 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Property taxes and special assessments $ 552,751 $ 535,040 $ 55,837 $ $ 1,143,628 Intergovernmental 22,996,101 - - 22,996,101 Charges for services 2,607,004 557,568 3,164,572 Fines and forfeits 466,203 - 466,203 Interest and rents 92,566 12,961 23,740 129,267 Contributions 10,000 - - 10,000 Other revenues 1,194,107 - - 1,194,107 Total revenues 27,918,732 535,040 626,366 23,740 29,103,878 Expenditures Current expenditures: General government 3,442,993 - - - 3,442,993 Public safety 1,551,900 1,551,900 Highways and streets 10,104,034 10,104,034 Community development 7,645,107 - 7,645,107 Debt service: Principal 1,231,884 665,000 1,896,884 Interest 420,125 35,165 - 455,290 Capital outlay 2,260,912 - 2,885,830 5,146,742 Total expenditures 26,656,955 700,165 2,885,830 - 30,242,950 Revenues over (under) expenditures 1,261,777 (165,125) (2,259,464) 23,740 (1,139,072) Other financing sources (uses) Transfers in 4,644,432 165,125 2,783,000 29,104 7,621,661 Transfers out (2,272,051) - (1,017,559) (23,731) (3,313,341) Total other financing sources (uses) 2,372,381 165,125 1,765,441 5,373 4,308,320 Net change in fund balances 3,634,158 - (494,023) 29,113 3,169,248 Fund balances, beginning of year 10,460,115 1,000 5,095,253 1,808,391 17,364,759 Fund balances, end of year $ 14,094,273 $ 1,000 $ 4,601,230 $ 1,837,504 $ 20,534,007 143 This page intentionally left blank. 144 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. State and Federal Grants Fund - This fund accounts for all revenues received from miscellaneous grants and 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. 145 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2018 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 7,624,031 1,459,744 297,514 750,807 Accounts receivable, net 21,520 68,148 - - - Loans receivable - - 1,185,000 Accrued interest receivable - - 2,113,196 Due from other governments, net 2,081,810 483,336 856,590 Inventories 967,676 - - - - Total assets $ 10,695,037 $ 2,011,228 $ 297,514 $ 773,807 $ 4,154,786 Liabilities Accounts payable $ 193,624 $ 391,449 $ - $ 34,518 $ 131,282 Deposits payable - - - - Accrued payroll - 15,924 Indemnity bonds 43,867 - Due to other funds - 709,384 Due to other governments - Unearned revenue - - - - Total liabilities 237,491 391,449 34,518 856,590 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable - - - 3,298,196 Fund balances Nonspendable 967,676 - - - - Restricted 6,949,670 359,813 297,514 739,289 Committed 2,540,200 1,259,966 - - Total fund balances 10,457,546 1,619,779 297,514 739,289 - Total liabilities, deferred inflows of resources and fund balances $ 10,695,037 $ 2,011,228 $ 297,514 $ 773,807 $ 4,154,786 146 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ - $ - $ - $ - $ 69,029 $ 92,029 84,855 29,541 475,702 208,164 845,553 11,775,911 - 6,959 - - - 96,627 - 39,460 1,224,460 - - 2,113,196 1,496,879 45,541 4,964,156 - - - - - 967,676 $ 84,855 $ 36,500 $ 475,702 $ 1,744,503 $ 960,123 $ 21,234,055 $ 34,484 $ 483 $ - $ 603,647 $ 69,676 $ 1,459,163 - - - 89,147 89,147 6,093 33,102 16,166 945 72,230 - - - - 43,867 42,974 - 752,358 - 231,316 340,190 571,506 - 2,915 810,940 - 813,855 40,577 36,500 1,705,043 499,958 3,802,126 - - 39,460 - 3,337,656 - - - 967,676 44,278 - 460,165 8,850,729 - 475,702 - 4,275,868 44,278 - 475,702 460,165 14,094,273 $ 84,855 $ 36,500 $ 475,702 $ 1,744,503 $ 960,123 $ 21,234,055 147 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2018 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Revenues Property axes and special assessments $ 141,983 $ - $ $ $ - Intergovernmental 11,907,199 2,826,068 1,490,748 Charges for services 208,333 207,196 - Fines and forfeits - - 427,602 Interest and rents 40,669 28,151 2,679 7,003 Contributions - - - - - Otherrevenues 536,957 3,052 563,008 Total revenues 12,835,141 3,061,415 5,731 434,605 2,053,756 Expenditures Current expenditures: General government - - - - - Public safety - - 57,867 159,284 Highways and streets 5,037,731 5,066,303 - - - Community development - - 2,054,406 Debt service: Principal 487,084 744,800 - Interest 123,765 296,360 Capital outlay 11250,740 1,010,172 - - - Total expenditures 61899,320 7,117,635 57,867 159,284 2,054,406 Revenues over (under) expenditures 5,935,821 (4,056,220) (52,136) 275,321 (650) Other financing sources (uses) Transfers in - 4,151,000 - 650 Transfers out (2,250,000) - - Total other financing sources (uses) (2,250,000) 4,151,000 - 650 Net changes in fund balances 31685,821 94,780 (52,136) 275,321 - Fund balances, beginning of year 6,771,725 1,524,999 349,650 463,968 Fund balances, end of year $ 10,457,546 $ 1,619,779 $ 297,514 $ 739,289 $ 148 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ 410,768 $ $ $ - $ - $ 552,751 - 6,370,689 401,397 22,996,101 4,650 2,012,707 174,118 - 2,607,004 - - - 38,601 466,203 1,989 4,134 7,941 92,566 10,000 - - 10,000 367,454 - - (276,364) 1,194,107 794,861 2,012,707 4,134 6,268,443 447,939 27,918,732 1,005,907 2,437,086 - - - 3,442,993 - - 700,801 633,948 1,551,900 - - 10,104,034 5,590,701 7,645,107 - 1,231,884 420,125 - - - - 2,260,912 1,005,907 2,437,086 - 6,291,502 633,948 26,656,955 (211,046) (424,379) 4,134 (23,059) (186,009) 1,261,777 221,000 226,672 - 45,110 4,644,432 - - (22,051) (2,272,051) 221,000 226,672 - 23,059 2,372,381 9,954 (197,707) 4,134 - (186,009) 3,634,158 34,324 197,707 471,568 646,174 10,460,115 $ 44,278 $ - $ 475,702 $ $ 460,165 $ 14,094,273 149 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, 2018 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ 115,000 $ 141,983 $ 26,983 Intergovernmental 9,919,700 11,907,199 1,987,499 Charges for services 600,000 208,333 (391,667) Fines and forfeits - - - Interest and rents 40,669 40,669 Contributions - - - Otherrevenues 94,900 536,957 442,057 Total revenues 10,729,600 12,835,141 2,105,541 Expenditures Current expenditures: General government - - - Public safety - - Highways and streets 7,217,367 5,037,731 (2,179,636) Recreation and culture - - Community development - - - Debt service: Principal 457,900 487,084 29,184 Interest 162,000 123,765 (38,235) Capital outlay 5,477,326 1,250,740 (4,226,586) Total expenditures 13,314,593 6,899,320 (6,415,273) Revenues over (under) expenditures (2,584,993) 5,935,821 8,520,814 Other financing sources (uses) Transfers in - - Transfers out (2,250,000) (2,250,000) Total other financing sources (uses) (2,250,000) (2,250,000) - Net change in fund balances (4,834,993) 3,685,821 8,520,814 Fund balances, beginning of year 6,771,725 6,771,725 - Fund balances, end of year $ 1,936,732 $ 10,457,546 $ 8,520,814 150 Local Streets Drug Law Enforcement Federal Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 2,966,700 2,826,068 (140,632) 600,000 207,196 (392,804) 28,151 28,151 2,679 2,679 - - 3,052 3,052 3,566,700 3,061,415 (505,285) 5,731 5,731 - - 58,500 57,867 (633) 5,467,900 5,066,303 (401,597) - - - 744,800 744,800 308,300 296,360 (11,940) 2,309,099 1,010,172 (1,298,927) - - 8,830,099 7,117,635 (1,712,464) 58,500 57,867 (633) (5,263,399) (4,056,220) 1,207,179 (58,500) (52,136) 6,364 4,151,000 4,151,000 - - 4,151,000 4,151,000 - - (1,112,399) 94,780 1,207,179 (58,500) (52,136) 6,364 1,524,999 1,524,999 - 349,650 349,650 - $ 412,600 $ 1,619,779 $ 1,207,179 $ 291,150 $ 297,514 $ 6,364 continued... 151 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, 2018 Drug Law Enforcement State and Local Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ $ $ Intergovernmental Charges for services - Fines and forfeits 427,602 427,602 Interest and rents 7,003 7,003 Contributions - - Otherrevenues - - Total revenues 434,605 434,605 Expenditures Current expenditures: General government - - Public safety 196,500 159,284 (37,216) Highways and streets - - Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 196,500 159,284 (37,216) Revenues over (under) expenditures (196,500) 275,321 471,821 Other financing sources (uses) Transfers in - - Transfers out Total other financing sources (uses) - - Net change in fund balances (196,500) 275,321 471,821 Fund balances, beginning of year 463,968 463,968 - Fund balances, end of year $ 267,468 $ 739,289 $ 471,821 152 Community Development Block Grant Program Downtown Lansing, Inc. Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ $ $ $ 407,000 $ 410,768 $ 3,768 1,852,300 1,490,748 (361,552) - - - - - 5,250 4,650 (600) - 1,989 1,989 - - - 10,000 10,000 - 501,700 563,008 61,308 384,250 367,454 (16,796) 2,354,000 2,053,756 (300,244) 806,500 794,861 (11,639) - - 1,027,500 1,005,907 (21,593) 2,509,000 2,054,406 (454,594) 2,509,000 2,054,406 (454,594) 1,027,500 1,005,907 (21,593) (155,000) (650) 154,350 (221,000) (211,046) 9,954 155,000 650 (154,350) 221,000 221,000 - 155,000 650 (154,350) 221,000 221,000 - - - 9,954 9,954 34,324 34,324 - $ $ $ $ 34,324 $ 44,278 $ 9,954 continued... 153 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, 2018 Building Department Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ $ $ Intergovernmental Charges for services 2,539,600 2,012,707 (526,893) Fines and forfeits - - Interest and rents Contributions Otherrevenues - - Total revenues 2,539,600 2,012,707 (526,893) Expenditures Current expenditures: General government 2,557,000 2,437,086 (119,914) Public safety - - Highways and streets Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 2,557,000 2,437,086 (119,914) Revenues over (under) expenditures (17,400) (424,379) (406,979) Other financing sources (uses) Transfers in 226,672 226,672 Transfers out - - Total other financing sources (uses) 226,672 226,672 Net change in fund balances (17,400) (197,707) (180,307) Fund balances, beginning of year 197,707 197,707 Fund balances, end of year $ 180,307 $ $ (180,307) 154 Parks Department State and Federal Grants Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 12,024,882 6,370,689 (5,654,193) - 174,118 174,118 4,134 4,134 - - - (276,364) (276,364) 4,134 4,134 12,024,882 6,268,443 (5,756,439) 1,011,338 700,801 (310,537) 41,175 (41,175) - - - 10,979,717 5,590,701 (5,389,016) 41,175 - (41,175) 11,991,055 6,291,502 (5,699,553) (41,175) 4,134 45,309 33,827 (23,059) (56,886) - - 70,000 45,110 (24,890) - (22,051) 22,051 - - 70,000 23,059 (46,941) (41,175) 4,134 45,309 103,827 - (103,827) 471,568 471,568 - - $ 430,393 $ 475,702 $ 45,309 $ 103,827 $ (103,827) continued... 155 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, 2018 Tri-County Metro Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ - $ - $ Intergovernmental 415,000 401,397 (13,603) Charges for services - - Fines and forfeits 415,000 38,601 (376,399) Interest and rents - 7,941 7,941 Contributions - - Otherrevenues - - Total revenues 830,000 447,939 (382,061) Expenditures Current expenditures: General government - - Public safety 830,000 633,948 (196,052) Highways and streets - - Recreation and culture Community development Debt service: Principal Interest Capital outlay - - Total expenditures 830,000 633,948 (196,052) Revenues over (under) expenditures - (186,009) (186,009) Other financing sources (uses) Transfers in Transfers out Total other financing sources (uses) Net change in fund balances - (186,009) (186,009) Fund balances, beginning of year 646,174 646,174 Fund balances, end of year $ 646,174 $ 460,165 $ (186,009) concluded 156 CITY OF LANSING, MICHIGAN Nonmajor Debt Service Funds 2015 Refunding Debt Service Fund - This fund accounts for the accumulation of resources for payment of the 2015 $320,000 Refunding 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 (which was refunding in 2007 in the amont of $1,780,000). 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 (which was refunding in 2010 in the amont of $2,470,000). 157 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2018 2015 Refunding 1999 2001 Debt Fire Fire Service Station Station Totals Assets Equity in pooled cash and investments $ $ $ 1,000 $ 1,000 Fund balances Restricted $ $ $ 1,000 $ 1,000 158 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2018 2015 Refunding 1999 2001 Debt Fire Fire Service Station Station Totals Revenues Taxes and special assessments $ - $ 215,800 $ 319,240 $ 535,040 Expenditures Debt service: Principal 160,000 200,000 305,000 665,000 Interest 3,200 15,800 16,165 35,165 Total expenditures 163,200 215,800 321,165 700,165 Revenues under expenditures (163,200) - (1,925) (165,125) Other financing source Transfers in 163,200 1,925 165,125 Net changes in fund balances - - - Fund balances, beginning of year 1,000 1,000 Fund balances, end of year $ $ $ 1,000 $ 1,000 159 This page intentionally left blank. 160 CITY OF LANSING, MICHIGAN Nonmajor Capital Projects Funds 1990 Environmental II 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. Other Capital Projects Fund - This fund accounts for accounts for miscellaneous capital projects. 161 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2018 1990 Other Environ- Special Capital mental11 Assessments Projects Totals Assets Cash and cash equivalents $ $ $ 89,710 $ 89,710 Equity in pooled cash and investments 4,588,367 4,588,367 Accounts receivable, net 212,011 212,011 Special assessments receivable: Current 41,341 - 41,341 Deferred 196,158 - 196,158 Prepaids - 37,309 37,309 Total assets $ $ 237,499 $ 4,927,397 $ 5,164,896 Liabilities Accounts payable $ $ - $ 170,906 $ 170,906 Advance from other funds 196,602 - 196,602 Total liabilities 196,602 170,906 367,508 Deferred inflows of resources Unavailable revenues - special assessments 196,158 - 196,158 Fund balances Nonspendable - 37,309 37,309 Restricted 157,709 157,709 Committed 4,561,473 4,561,473 Unassigned (deficit) (155,261) - (155,261) Total fund balances (deficit) (155,261) 4,756,491 4,601,230 Total liabilities, deferred inflows of resources and fund balances $ $ 237,499 $ 4,927,397 $ 5,164,896 162 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2018 1990 Other Environ- Special Capital mentalll Assessments Projects Totals Revenues Special assessments $ $ 55,837 $ - $ 55,837 Charges for services - 557,568 557,568 Interest and rents - 12,961 12,961 Total revenues 55,837 570,529 626,366 Expenditures Capital outlay 688 - 2,885,142 2,885,830 Revenues over (under) expenditures (688) 55,837 (2,314,613) (2,259,464) Other financing sources (uses) Transfers in - - 2,783,000 2,783,000 Transfers out (1,017,559) (1,017,559) Total other financing sources (uses) - - 1,765,441 1,765,441 Net changes in fund balances (688) 55,837 (549,172) (494,023) Fund balances (deficit), beginning of year 688 (211,098) 5,305,663 5,095,253 Fund balances (deficit), end of year $ - $ (155,261) $ 4,756,491 $ 4,601,230 163 This page intentionally left blank. 164 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. 165 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2018 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash and investments $ 1,836,236 $ 1,268 $ 1,837,504 Fund balances Nonspendable $ 1,836,236 $ 1,268 $ 1,837,504 166 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2018 Cemetery Perpetual Parks Care Trust Totals Revenues Interest and rents $ 23,731 $ 9 $ 23,740 Other financing sources (uses) Transfers in 29,104 - 29,104 Transfers out (23,731) (23,731) Total other financing sources (uses) 5,373 - 5,373 Net change in fund balances 29,104 9 29,113 Fund balances, beginning of year 1,807,132 1,259 1,808,391 Fund balances, end of year $ 1,836,236 $ 1,268 $ 1,837,504 167 This page intentionally left blank. 168 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. 169 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2018 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ - $ 17,356 $ - $ 17,556 Equity in pooled cash and investments 62,143 74,567 140,298 1,195,728 1,472,736 Accounts receivable, net - - 116,500 8,863 125,363 Inventories 52,493 - - - 52,493 Total current assets 114,836 74,567 274,154 1,204,591 1,668,148 Noncurrent assets: Capital assets not being depreciated 57,740 446,501 - - 504,241 Capital assets being depreciated, net 97,051 1,895,467 451,519 2,444,037 Total noncurrent assets 154,791 2,341,968 - 451,519 2,948,278 Total assets 269,627 2,416,535 274,154 1,656,110 4,616,426 Deferred outflows of resources Deferred pension amounts 96,415 - 211,883 262,691 570,989 Liabilities Current liabilities: Accounts payable 50,059 21,964 46,239 118,262 Accrued interest payable - - 3,962 3,962 Accrued payroll 1,823 - - 1,823 Unearned revenues - 171,255 - 171,255 Current portion of: Bonds and notes payable - - 225,580 225,580 Compensated absences 2,475 5,210 12,216 19,901 Total current liabilities 54,357 198,429 287,997 540,783 Noncurrent liabilities: Bonds and notes payable, net of current portion - - 582,920 582,920 Compensated absences, net of current portion 20,296 42,717 100,168 163,181 Net pension liability 1,594,056 3,503,143 4,343,180 9,440,379 Net other postemployment benefit liability 1,154,756 2,430,522 5,699,239 9,284,517 Total noncurrent liabilities 2,769,108 5,976,382 10,725,507 19,470,997 Total liabilities 2,823,465 6,174,811 11,013,504 20,011,780 Deferred inflows of resources Deferred pension amounts 37,543 82,506 102,290 222,339 Deferred other postemployment benefit amounts 44,427 93,511 219,270 357,208 Total deferred inflows of resources 81,970 - 176,017 321,560 579,547 Net position Net investment in capital assets 154,791 2,341,968 - (356,981) 2,139,778 Unrestricted (deficit) (2,694,184) 74,567 (5,864,791) (9,059,282) (17,543,690) Total net position $ (2,539,393) $ 2,416,535 $ (5,864,791) $ (9,416,263) $ (15,403,912) 170 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2018 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 351,204 $ 179,464 $ 2,072,454 $ 3,779,468 $ 6,382,590 Operating expenses Personal services 1,124,541 (798,266) 2,356,509 1,895,514 4,578,298 Purchase of goods and services 245,509 347,644 745,384 1,430,464 2,769,001 Depreciation 9,827 77,847 - 301,012 388,686 Total operating expenses 1,379,877 (372,775) 3,101,893 3,626,990 7,735,985 Operating income (loss) (1,028,673) 552,239 (1,029,439) 152,478 (1,353,395) Nonoperating revenues(expenses) Interest revenue - 2,715 19,119 21,834 Interest expense and fees - (18,020) (18,020) Capital contribution to others - (214,486) (214,486) Total nonoperating revenues(expenses) - 2,715 (213,387) (210,672) Income(loss)before transfers (1,028,673) 552,239 (1,026,724) (60,909) (1,564,067) Transfers Transfers in 487,731 453,559 941,290 Transfers out (29,104) - (29,104) Total transfers 458,627 453,559 912,186 Change in net position (570,046) 1,005,798 (1,026,724) (60,909) (651,881) Net position, beginning of year, as restated (1,969,347) 1,410,737 (4,838,067) (9,355,354) (14,752,031) Net position, end of year $ (2,539,393) $ 2,416,535 $ (5,864,791) $ (9,416,263) $ (15,403,912) 171 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2018 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 351,204 $ 159,064 $ 2,084,003 $ 3,778,771 $ 6,373,042 Cash payments for goods and services (264,106) (348,414) (728,452) (1,417,135) (2,758,107) Cash payments to employees (638,364) (316,993) (1,547,333) (1,908,741) (4,411,431) Net cash provided by (used in)operating activities (551,266) (506,343) (191,782) 452,895 (796,496) Cash flows from noncapital financing activities Transfers in 487,731 453,559 - 941,290 Transfers out (29,104) - (29,104) Net cash provided by noncapital financing activities 458,627 453,559 912,186 Cash flows from capital and related financing activities Capital contributions to others - - (214,486) (214,486) Principal paid on long-term debt (221,223) (221,223) Interest paid on long-term debt (19,104) (19,104) Net cash used in capital and related financing activities - (454,813) (454,813) Cash flows from investing activities Interest and dividends received 2,715 19,119 21,834 Net change in cash and cash equivalents (92,639) (52,784) (189,067) 17,201 (317,289) Cash and cash equivalents, beginning of year 154,982 127,351 346,721 1,178,527 1,807,581 Cash and cash equivalents, end of year $ 62,343 $ 74,567 $ 157,654 $ 1,195,728 $ 1,490,292 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ - $ 17,356 $ - $ 17,556 Equity in pooled cash and investments 62,143 74,567 140,298 1,195,728 1,472,736 $ 62,343 $ 74,567 $ 157,654 $ 1,195,728 $ 1,490,292 continued... 172 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2018 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) $ (1,028,673) $ 552,239 $ (1,029,439) $ 152,478 $ (1,353,395) Adjustments to reconcile operating income (loss)to net cash provided by (used in)operating activities: Depreciation 9,827 77,847 301,012 388,686 Changes in: Accounts receivable - - (51,234) (697) (51,931) Inventories (3,631) 2,462 - - (1,169) Deferred outflows- pension 5,990 104,962 62,594 81,731 255,277 Accounts payable (14,966) (3,232) 16,932 13,329 12,063 Accrued payroll 215 (17,373) - - (17,158) Unearned revenues - (20,400) 62,783 - 42,383 Compensated absences 8,017 (31,253) 1,716 4,022 (17,498) Net pension liability 572,694 (1,070,764) 964,014 436,848 902,792 Deferred inflows- pension (55,768) (100,831) (124,496) (313,881) (594,976) Net other postemployment benefit liability (89,398) (188,163) (441,217) (718,778) Deferred inflows-OPEB 44,427 93,511 219,270 357,208 Net cash provided by (used in)operating activities $ (551,266) $ (506,343) $ (191,782) $ 452,895 $ (796,496) concluded 173 This page intentionally left blank. 174 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. 175 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2018 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Assets Current assets: Equity in pooled cash and investments $ 2,075,198 $ 1,734,185 $ 676,132 $ 1,700,436 $ 6,185,951 Accounts receivable, net 35,521 516,521 - - 552,042 Inventories 342,145 - 342,145 Prepaids - 344,957 - - 344,957 Total current assets 2,452,864 2,595,663 676,132 1,700,436 7,425,095 Noncurrent assets: Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated, net 10,601,838 1,520,879 12,122,717 Total noncurrent assets 10,694,730 1,520,879 - 12,215,609 Total assets 13,147,594 2,595,663 2,197,011 1,700,436 19,640,704 Liabilities Current liabilities: Accounts payable 106,441 638,277 105 867,883 1,612,706 Accrued interest payable 19,058 - - - 19,058 Accrued payroll 57,353 9,139 54,453 28,485 149,430 Claims incurred but not reported - 900,000 - - 900,000 Current portion of: Bonds and notes payable 361,324 - - - 361,324 Compensated absences 35,696 2,922 167 38,785 Total current liabilities 579,872 1,547,416 57,480 896,535 3,081,303 Noncurrent liabilities: Bonds and notes payable, net of current portion 2,670,381 - - - 2,670,381 Compensated absences, net of current portion 131,656 57,366 436,322 175,909 801,253 Total noncurrent liabilities 2,802,037 57,366 436,322 175,909 3,471,634 Total liabilities 3,381,909 1,604,782 493,802 1,072,444 6,552,937 Net position Net investment in capital assets 7,663,025 - 1,520,879 - 9,183,904 Unrestricted 2,102,660 990,881 182,330 627,992 3,903,863 Total net position $ 9,765,685 $ 990,881 $ 1,703,209 $ 627,992 $ 13,087,767 176 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2018 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Operating revenues Charges for services $ 9,214,250 $ 64,804,417 $ 4,302,603 $ 5,719,000 $ 84,040,270 Operating expenses Personal services 3,342,923 295,981 3,098,324 1,602,432 8,339,660 Purchase of goods and services 4,025,458 64,790,803 1,130,785 3,840,799 73,787,845 Depreciation 1,973,256 - 45,921 - 2,019,177 Total operating expenses 9,341,637 65,086,784 4,275,030 5,443,231 84,146,682 Operating income (loss) (127,387) (282,367) 27,573 275,769 (106,412) Nonoperating revenues (expenses) Gain on sale of capital assets 47,550 - - 47,550 Interest expense and fees (118,129) (118,129) Total nonoperating revenues (expenses) (70,579) - - (70,579) Income (loss) before transfers (197,966) (282,367) 27,573 275,769 (176,991) Transfers in 150,000 500,000 - - 650,000 Change in net position (47,966) 217,633 27,573 275,769 473,009 Net position, beginning of year 9,813,651 773,248 1,675,636 352,223 12,614,758 Net position, end of year $ 9,765,685 $ 990,881 $ 1,703,209 $ 627,992 $ 13,087,767 177 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2018 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Cash flows from operating activities Cash received from interfund services $ 9,186,807 $ 64,350,821 $ 4,302,603 $ 5,719,000 $ 83,559,231 Cash payments for goods and services (3,858,843) (64,657,182) (1,129,945) (3,213,274) (72,859,244) Cash payments to employees (3,357,607) (284,534) (3,122,589) (1,569,308) (8,334,038) Net cash provided by (used in) operating activities 1,970,357 (590,895) 50,069 936,418 2,365,949 Cash flows from noncapital financing activities Transfers in 150,000 500,000 - - 650,000 Cash flows from capital and related financing activities Proceeds from sale of capital assets 47,550 47,550 Acquisition and construction of capital assets (1,725,762) (5,895) (1,731,657) Principal paid on long-term debt (832,965) (832,965) Interest paid on long-term debt (123,669) (123,669) Net cash used in capital and related financing activities (2,634,846) (5,895) - (2,640,741) Net change in cash and cash equivalents (514,489) (90,895) 44,174 936,418 375,208 Cash and cash equivalents, beginning of year 2,589,687 1,825,080 631,958 764,018 5,810,743 Cash and cash equivalents, end of year $ 2,075,198 $ 1,734,185 $ 676,132 $ 1,700,436 $ 6,185,951 continued... 178 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2018 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) $ (127,387) $ (282,367) $ 27,573 $ 275,769 $ (106,412) Adjustments to reconcile operating income (loss) to net cash provided by (used in) operating activities: Depreciation 11973,256 45,921 2,019,177 Change in: Accounts receivable (27,443) (453,596) - (481,039) Inventories 139,369 - 139,369 Prepaids 625 (47,217) 1,250 - (45,342) Accounts payable 26,621 180,838 (410) 627,525 834,574 Accrued payroll (3,518) (8,795) (4,491) 3,099 (13,705) Claims incurred but not reported reported 15,000 - 15,000 Compensated absences (11,166) 5,242 (19,774) 30,025 4,327 Net cash provided by (used in) operating activities $ 1,970,357 $ (590,895) $ 50,069 $ 936,418 $ 2,365,949 concluded 179 This page intentionally left blank. 180 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. 181 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2018 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash and investments $ 75,812 $ 8,796 $ 84,608 Liabilities Undistributed receipts $ 75,812 $ 8,796 $ 84,608 182 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2018 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash and investments $ 65,651 $ 438,257 $ 428,096 $ 75,812 Liabilities Undistributed receipts $ 65,651 $ 438,257 $ 428,096 $ 75,812 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash and investments $ 4,240 $ 146,730 $ 142,174 $ 8,796 Liabilities Undistributed receipts $ 4,240 $ 146,730 $ 142,174 $ 8,796 Total - all agency funds Assets Equity in pooled cash and investments $ 69,891 $ 584,987 $ 570,270 $ 84,608 Liabilities Undistributed receipts $ 69,891 $ 584,987 $ 570,270 $ 84,608 183 This page intentionally left blank. 184 STATISTICAL SECTION 185 This page intentionally left blank. 186 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 (Tables 1-4) understand how the City's financial performance and well-being have changed over time. 189 Revenue Capacity These schedules contain information to help the reader assess (Tables 5-8) the factors affecting the City's ability to generate its property taxes. 194 Debt Capacity These schedules present information to help the reader assess (Tables 9-13) the affordability of the City's current levels of outstanding debt and the City's ability to issue additional debt in the future. 198 Demographic and These schedules offer demographic and economic indicators to Economic Information help the reader understand the environment within which the (Tables 14-15) City's financial activities take place and to help make comparisons over time and with other governments. 203 Operating Information These schedules contain information about the City's operations (Tables 16-18) 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. 206 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 187 This page intentionally left blank. 188 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Position by Component - Last Ten Fiscal Years 2018111-— — ` 20150) 20�EL 2013'`2012 2010 — Governmental activities Net investment in capital assets $ 148,263,240 $ 149,533,948 $ 149,676,860 $ 151,785,916 $ 150,976,010 $ 154,372,604 $ 163,723,249 $ 180,571,237 $ 186,536,428 $ 191,516,475 Restricted 15,189,723 10,993,950 12,922,525 12,311,541 13,133,137 12,552,011 14,524,584 14,777,571 14,304,689 17,139,090 Unrestricted(deficit) (606,529,375) (276,790,945) (265,678,371) (251,453,207) (46,344,555) (39,467,672) (34,371,855) (18,840,717) (7,649,432) 6,589,790 Total governmental activities net position $(443,076,412) $(116,263,047) $(103,078,986) $ (87,355,750) $ 117,764,592 $ 127,456,943 $ 143,875,978 $ 176,508,091 $ 193,191,685 $ 215,245,355 Business-type activities Net investment in capital assets $ 227,127,434 $ 224,161,744 $ 220,436,882 $ 218,813,478 $ 214,458,841 $ 212,682,278 $ 209,584,457 $ 204,149,751 $ 194,854,140 $ 185,430,669 Restricted 1,886,620 1,818,671 2,764,963 2,889,096 8,746,096 11,077,134 12,382,060 13,080,302 19,917,341 19,454,812 Unrestricted (13,854,833) 25,415,447 19,401,320 17,242,167 37,891,053 31,943,581 32,196,598 34,177,453 30,193,568 23,730,694 Total business-type activities net position $ 215,159,221 $ 251,395,862 $ 242,603,165 $ 238,944,741 $ 261,095,990 $ 255,702,993 $ 254,163,115 $ 251,407,506 $ 244,965,049 $ 228,616,175 Primary government Net investment in capital assets $ 375,390,674 $ 373,695,692 $ 370,113,742 $ 370,599,394 $ 365,434,851 $ 367,054,882 $ 373,307,706 $ 384,720,988 $ 381,390,568 $ 376,947,144 Restricted 17,076,343 12,812,621 15,687,488 15,200,637 21,879,233 23,629,145 26,906,644 27,857,873 34,222,030 36,593,902 Unrestricted(deficit) (620,384,208) (251,375,498) (246,277,051) (234,211,040) (8,453,502) (7,524,091) (2,175,257) 15,336,736 22,544,136 30,320,484 Total primary government net position $(227,917,191) $ 135,132,815 $ 139,524,179 $ 151,588,991 $ 378,860,582 $ 383,159,936 $ 398,039,093 $ 427,915,597 $ 438,156,734 $ 443,861,530 Note:No discretely presented component units shown (1)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. (2)GASB Statement No.75 was implemented for the fiscal year ended June 30,2018.This resulted in presentation of the City's net OPEB liability on the statement of net position.Prior years were not restated. 189 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Position Last Ten Fiscal Years 2014 2013 2011 -1 Expenses Governmental activities: General government $ 16,995,976 $ 21,778,154 $ 27,993,414 $ 25,225,893 $ 24,771,054 $ 27,438,065 $ 30,841,776 $ 25,665,269 $ 30,326,671 $ 26,426,242 Public safety 87,352,251 91,829,441 85,739,408 81,827,437 78,142,897 77,133,469 82,369,004 83,546,997 84,566,215 71,236,947 Public works 26,485,877 28,983,891 28,212,049 27,815,970 37,243,516 29,984,955 33,144,303 26,355,375 29,252,516 37,588,680 Recreation and culture 8,302,243 9,441,519 10,336,168 6,515,590 8,670,918 7,713,098 8,889,142 8,245,451 7,312,480 7,298,385 Community development 16,150,417 12,349,663 10,642,102 10,270,404 7,602,229 16,939,572 13,623,946 12,825,028 9,715,087 6,378,286 Interest on long-term debt 1,137,561 1,201,846 1,424,215 1,291,846 1,340,818 1,475,051 1,949,825 2,116,535 2,229,288 1,803,125 Total governmental activities expenses 156,424,325 165,584,514 164,347,356 152,947,140 157,771,432 160,684,210 170,817,996 158,754,655 163,402,257 150,731,665 Business-type activities: Sewage disposal system 28,552,143 27,567,228 28,487,957 27,506,843 28,682,809 26,298,964 26,836,597 26,444,741 24,931,075 26,247,188 Municipal parking system 9,888,246 6,866,747 7,651,077 7,605,461 7,851,702 8,108,373 9,491,376 9,896,498 8,305,095 8,353,063 Cemetery 1,379,877 886,579 708,545 632,485 722,270 633,050 639,000 755,766 659,584 689,979 Golf (372,775) 802,564 845,575 852,634 935,671 892,117 810,372 846,817 869,003 927,200 Garbage and rubbish collection 3,101,893 1,543,380 2,085,728 1,712,671 1,722,843 1,557,708 1,558,024 1,515,600 1,451,059 1,547,372 Recycling 3,859,496 3,667,899 4,092,278 3,623,276 3,263,553 3,650,292 3,041,328 2,809,353 2,804,047 3,008,750 Total business-type activities expenses 46,408,880 41,334,397 43,871,160 41,933,370 43,178,848 41,140,504 42,376,697 42,268,775 39,019,863 40,773,552 Total primary government expenses 202,833,205 206,918,911 208,218,516 194,880,510 200,950,280 201,824,714 213,194,693 201,023,430 202,422,120 191,505,217 Program revenues Governmental activities: Charges for services: General government 7,038,702 7,295,556 7,279,427 6,815,975 6,820,261 6,162,713 6,428,110 6,742,306 6,565,263 5,188,510 Public safety 4,140,682 3,476,966 2,909,054 3,344,183 2,122,023 4,083,222 8,525,524 8,975,173 8,589,146 9,817,421 Public works 716,322 1,836,466 3,011,894 1,923,303 2,129,126 1,622,738 2,797,443 2,449,606 2,788,112 4,565,013 Recreation and culture 831,816 617,604 673,840 619,834 800,293 594,349 557,609 685,120 587,906 1,217,445 Community development - 67,312 67,272 67,264 67,323 67,349 67,344 122,326 69,250 50,132 Operating grants and contributions 28,983,936 25,157,629 24,561,960 24,658,955 28,234,803 29,322,435 31,928,983 30,154,681 27,515,892 26,462,211 Capital grants and contributions 855,760 63,488 904,298 2,910,660 3,365,682 3,124,288 260,656 189,414 3,109,410 2,571,741 Total governmental activities program revenues 42,567,218 38,515,021 39,407,745 40,340,174 43,539,511 44,977,094 50,565,669 49,318,626 49,224,979 49,872,473 Business-type activities: Charges for services: Sewage disposal system 35,107,570 34,755,896 32,368,491 31,730,416 31,759,698 30,825,174 29,915,799 29,205,945 28,907,772 27,446,304 Municipal parking system 7,436,552 6,906,091 7,090,335 6,988,879 7,453,476 5,267,627 6,858,606 7,539,179 7,396,219 7,539,611 Cemetery 351,204 403,663 312,929 335,379 289,565 314,913 240,394 225,947 226,973 248,314 Golf 179,464 256,218 313,164 363,559 366,567 373,000 390,134 382,546 438,315 448,067 Garbage and rubbish collection 2,072,454 1,952,897 1,871,665 1,744,999 1,664,201 1,131,659 1,459,101 1,507,577 1,677,428 1,486,531 Recycling 3,779,468 3,614,794 3,627,070 3,624,671 3,508,536 3,434,622 2,818,364 2,609,423 2,651,309 2,945,061 Operating grants and contributions 1,603,942 1,391,326 1,312,362 1,143,085 2,574,949 1,193,571 1,331,737 4,456,708 1,535,907 1,541,913 Capital grants and contributions - 100,000 - - - - 2,683,657 1,439,044 11,928,108 60,318 Total business-type activities program revenues 50,530,654 49,380,885 46,896,016 45,930,988 47,616,992 42,540,566 45,697,792 47,366,369 54,762,031 41,716,119 Total primary government program revenues 93,097,872 87,895,906 86,303,761 86,271,162 91,156,503 87,517,660 96,263,461 96,684,995 103,987,010 91,588,592 Net(expenses)revenues Governmental activities (113,857,107) (127,069,493) (124,939,611) (112,606,966) (114,231,921) (115,707,116) (120,252,327) (109,436,029) (114,177,278) (100,859,192) Business-type activities 4,121,774 8,046,488 3,024,856 3,997,618 4,438,144 1,400,062 3,321,095 5,097,594 15,742,168 942,567 Total primary government net expense (109,735,333) (119,023,005) (121,914,755) (108,609,348) (109,793,777) (114,307,054) (116,931,232) (104,338,435) (98,435,110) (99,916,625) 190 CITY OF LANSING, MICHIGAN Change in Net Position Last Ten Fiscal Years -------� 2011 -- General revenues and other changes in net position Governmental activities: Taxes: Property taxes $ 39,573,468 $ 40,568,278 $ 38,578,548 $ 39,657,382 $ 38,079,548 $ 38,668,837 $ 33,506,860 $ 37,233,590 $ 39,010,960 $ 39,141,928 Income taxes 38,455,296 35,694,010 34,573,130 31,660,923 31,450,913 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 Unrestricted grants and contributions 39,419,658 38,108,544 36,532,275 36,330,976 35,677,910 31,425,718 26,441,961 27,254,574 25,847,423 27,318,313 Investment earnings 216,239 125,539 99,058 26,353 36,836 58,588 69,265 89,735 246,495 978,034 Miscellaneous - 135,270 63,079 280,280 - - 123,066 108,601 75,094 32,310 Transfers (912,186) (746,209) (629,715) (644,485) (705,637) (583,117) (464,008) (633,814) (464,807) (509,728) Total governmental activities 116,752,475 113,885,432 109,216,375 107,311,429 104,539,570 99,420,781 87,620,214 92,752,435 92,123,608 96,273,619 Business-type activities: Investment earnings - - - 17,874 246,616 356,467 271,067 689,883 141,899 413,850 Miscellaneous - - 3,853 - 2,600 - (1,300,561) 21,166 - 725 Transfers 912,186 746,209 629,715 644,485 705,637 583,117 464,008 633,814 464,807 509,728 Total business-type activities 912,186 746,209 633,568 662,359 954,853 939,584 (565,486) 1,344,863 606,706 924,303 Total primary government 117,664,661 114,631,641 109,849,943 107,973,788 105,494,423 100,360,365 87,054,728 94,097,298 92,730,314 97,197,922 Changes in net position Governmental activities 2,895,368 (13,184,061) (15,723,236) (5,295,537) (9,692,351) (16,286,335) (32,632,113) (16,683,594) (22,053,670) (4,585,573) Business-type activities 5,033,960 8,792,697 3,658,424 4,659,977 5,392,997 2,339,646 2,755,609 6,442,457 16,348,874 1,866,870 Total primary government $ 7,929,328 $ (4,391,364) $ (12,064,812) $ (635,560) $ (4,299,354) $ (13,946,689) $ (29,876,504) $ (10,241,137) $ (5,704,796) $ (2,718,703) 191 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances, Governmental Funds - Last Ten Fiscal Years 2018 2017 2016 2015 2014 . 2012 -' 2011MM` 2010 2— General fund Nonspendable $ 39,437 $ 28,342 $ 492,549 $ 35,424 $ 75,738 $ 75,738 $ 92,538 $ 171,586 $ $ Restricted - - - 10,044 9,400 9,400 16,256 41,129 Committed 283,815 385,067 428,106 837,761 2,976,408 2,976,408 65,373 178,081 Unassigned 17,003,260 15,283,857 12,407,748 9,783,911 5,633,528 5,633,528 5,198,032 4,939,691 Reserved - - - - - - - 102,732 1,320,375 Unreserved - - - - - - - - 389,061 3,755,862 Total general fund 17,326,512 15,697,266 13,328,403 10,667,140 8,695,074 8,695,074 5,372,199 5,330,487 491,793 5,076,237 All other governmental funds Nonspendable 2,842,489 2,618,884 2,578,331 2,619,065 2,671,151 2,671,151 2,852,004 3,006,507 - - Restricted 9,009,438 4,730,012 6,934,665 6,865,58C 4,368,983 4,368,983 5,566,421 7,412,008 Committed 8,837,341 10,426,961 8,427,253 7,110,485 4,035,145 4,035,145 4,109,131 4,908,740 Unassigned(deficit) (155,261) (411,098) (410,252) (528,144) (619,931) (619,931) (543,774) (371,285) - - Reserved 1,177,998 324,366 Unreserved,reported in: Special revenue funds 12,029,680 13,394,485 Capital projects funds 11,614,644 12,010,219 Debt service funds 126,434 186,636 Permanent funds 1,649,550 1,630,098 Total all other governmental funds 20,534,007 17,364,759 17,529,997 16,066,986 10,455,348 10,455,348 11,983,782 14,955,970 26,598,306 27,545,804 Total all governmental funds $ 37,860,519 $ 33,062,025 $ 30,858,400 $ 26,734,126 $ 19,150,422 $ 19,150,422 $ 17,355,981 $ 20,286,457 $ 27,090,099 $ 32,622,041 (1)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 192 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds - Last Ten Fiscal Years 2018 �p,�7AW 1 ;p10 21 Revenues Taxes and special assessments $ 39,629,305 $ 40,691,325 $ 38,782,759 $ 39,470,249 $ 38,717,552 $ 38,717,552 $ 33,583,448 $ 37,371,885 $ 39,279,343 $ 39,258,893 Income taxes 38,455,296 35,694,010 34,573,130 31,660,923 29,850,755 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 Licenses and permits 2,113,824 1,494,298 1,559,638 1,551,125 1,509,402 1,509,402 1,538,325 1,598,804 1,414,906 1,325,119 Intergovernmental 41,848,072 36,391,761 34,175,112 36,042,377 40,639,183 40,639,183 41,431,793 40,304,785 39,137,217 38,998,039 Charges for services 12,432,770 13,230,822 14,102,447 12,900,490 11,754,381 11,754,381 18,676,398 18,606,304 18,323,158 20,355,642 Fines and forfeits 2,601,063 2,510,945 3,455,541 3,075,427 3,694,351 3,694,351 2,884,328 3,325,728 4,579,175 4,143,000 Interest and rents 284,165 201,367 145,011 87,035 53,179 53,179 63,571 88,516 249,464 1,196,559 Contributions 20,698,205 21,983,270 21,663,690 21,561,449 16,247,403 16,247,403 12,369,733 11,821,388 10,606,368 10,372,056 Donations from private sources - - - - - - 5,000 - 9,000 44,000 Otherrevenue 1,403,712 969,317 1,190,624 1,601,497 510,515 510,515 400,074 504,856 473,123 1,054,209 Total revenues 159,466,412 153,167,115 149,647,952 147,950,572 142,976,721 142,976,721 138,895,740 142,322,015 141,480,197 146,060,279 Expenditures General government 22,281,236 23,948,368 23,386,445 21,720,206 23,595,321 23,595,321 25,038,589 26,396,516 27,839,564 28,951,805 Public safety 75,859,065 73,683,246 72,264,468 75,510,743 63,943,082 63,943,082 66,161,872 70,397,235 70,820,184 70,082,462 Public works 11,087,884 11,201,515 11,715,510 13,273,332 8,908,673 8,908,673 6,225,177 6,002,823 Highways and streets 10,104,034 10,969,516 10,838,473 10,357,488 9,937,423 9,937,423 8,589,298 8,494,233 14,506,982 14,723,311 Recreation and culture 8,236,872 7,749,245 7,719,906 7,583,085 6,629,453 6,629,453 6,996,562 7,464,193 8,127,700 8,452,768 Community development 15,947,504 4,142,612 3,442,110 3,910,924 - - - - - - Other functions - 2,710,979 2,927,391 2,704,982 23,699,202 23,699,202 17,999,264 15,675,003 15,182,675 12,599,072 Debt service: Interest 949,318 1,120,518 1,275,957 931,079 1,378,856 1,378,856 1,836,218 3,210,220 3,270,068 1,801,394 Principal 3,622,053 4,596,159 3,892,862 3,616,297 3,137,159 3,137,159 3,448,080 2,070,552 2,165,237 4,743,146 Issuance costs - - - - 42,744 42,744 - 48,804 - - Capital outlay 5,146,742 9,328,278 7,221,346 21,016,808 5,489,617 5,489,617 6,466,084 9,956,103 14,781,728 14,855,863 Total expenditures 153,234,708 149,450,436 144,684,468 160,624,944 146,761,530 146,761,530 142,761,144 149,715,682 156,694,138 156,209,821 Excess of revenues over(under)expenditures 6,231,704 3,716,679 4,963,484 (12,674,372) (3,784,809) (3,784,809) (3,865,404) (7,393,667) (15,213,941) (10,149,542) Other financing sources(uses) Proceeds from borrowing - - 2,090,000 16,761,300 11,932,046 11,932,046 - 2,470,000 10,146,117 - Proceeds from sale of capital assets 128,976 97,255 268 110,533 497,833 497,833 1,398,936 1,210,046 689 1,587,216 Payment to escrow agent - - (2,162,163) - (6,015,112) (6,015,112) - (2,456,207) - - Insurance proceeds - - - - - - - - - 120,960 Transfers in 7,721,661 9,887,627 9,207,856 9,734,572 7,056,932 7,056,932 7,893,879 9,602,095 16,181,590 11,601,871 Transfers out (9,283,847) (11,497,936) (10,055,346) (10,002,772) (1,892,449) (1,892,449) (8,357,887) (10,235,909) (16,646,397) (12,579,599) Bond premium 80,175 40,945 - - - - Total other financing sources(uses) (1,433,210) (1,513,054) (839,210) 16,644,578 11,579,250 11,579,250 934,928 590,025 9,681,999 730,448 Net change in fund balance $ 4,798,494 $ 2,203,625 $ 4,124,274 $ 3,970,206 $ 7,794,441 $ 7,794,441 $ (2,930,476) $ (6,803,642) $ (5,531,942) $ (9,419,094) Debt service as a percentage of noncapital expenditures 3.1% 3.9% 3.7% 3.2% 3.2% 3.2% 3.8% 3.7% 3.9% 4.5% 193 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 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 4,595,182,662 53.3% 2012 1,387,390,250 639,535,400 87,432,000 183,233,681 2,297,591,331 15.70 4,177,384,562 55.0% 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 2,001,588,500 19.70 4,002,817,000 50.0% 2015 1,144,848,592 602,472,030 155,934,800 158,100 2,900 183,420,400 2,086,836,822 19.70 4,173,673,644 50.0% 2016 1,162,708,909 643,816,600 162,544,200 175,600 2,900 196,143,891 2,165,392,100 19.70 4,330,784,200 50.0% 2017 1,212,816,985 691,032,435 175,090,600 172,500 2,900 157,759,500 2,236,874,920 19.70 4,473,749,840 50.0% 2018 1,297,946,576 710,853,825 179,884,100 172,500 - 147,207,000 2,336,064,001 19.70 4,672,128,002 50.0% Source: Lansing City Assessor 194 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(l) Education Millage Millage(2) Total 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 2016 2015 19.44 .26 19.70 9.83 21.83 6.00 3.81 9.96 71.12 2017 2016 19.44 .26 19.70 10.06 22.57 6.00 3.81 9.96 72.10 2018 2017 19.44 .26 19.70 10.07 22.60 6.00 3.81 11.25 73.43 (1) rates for Lansing School District only, using non-principal residency rates (2) includes Intermediate School, Airport Authority, Capital Area Transit Authority and Capital Area District Library. Source: Lansing City Treasurer 195 CITY OF LANSING, MICHIGAN Table 7-Unaudited Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2018 2009 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $ 63,769,268 1 2.73% $ 130,243,563 1 4.90% Jackson National Life Insurance Company 45,936,293 2 1.97% 38,430,144 2 1.45% Consumers Energy 32,123,801 3 1.38% 22,249,503 3 0.84% Phoenix Development Part I LLC 25,458,523 4 1.09% Emergent Biodefense Operations 12,999,054 5 0.56% Lansing Retail Center LLC 11,423,364 6 0.49% 14,032,728 6 0.53% Lansing Properties LLC 9,944,400 7 0.43% Eyde Knapp Development LLC 8,035,645 8 0.34% Demmer Corporation 7,840,602 9 0.34% 13,829,400 7 0.52% Edward Rose Realty, Inc. 6,998,978 10 0.30% Delta Township Utilities 19,875,800 4 0.75% Accident Fund Company 14,178,118 5 0.53% Trappers Cove LTD Partners 12,952,449 8 0.49% Heart of the City LLC 10,341,600 9 0.39% Sprint Spectrum L.P. 8,974,000 10 0.34% Data furnished from City of Lansing Assessor 196 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 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 39,259,768 102.43% 2016 38,538,226 38,461,152 99.80% 52,758 38,307,862 99.40% 2017 38,431,072 38,370,929 99.84% 50,344 38,421,273 99.97% 2018 39,234,692 39,232,925 99.99% 67,348 39,300,273 100.17% 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 197 CITY OF LANSING, MICHIGAN Table 9-Unaudited Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities General Special Installment General Total Percentage Fiscal Obligation Assessment Purchase Obligation Revenue Lease Primary of Personal APe.r Year Bonds Debt Agreements Loans Bonds Bonds Purchases Loans Government Income M 2009 $ 17,899,203 $ $ 12,394,082 $ 1,290,479 $ 189,210,199 $ 39,045,570 $ $ 4,180,000 $ 264,019,533 12.41%(2) $ 2,217 119,100 2010 26,329,157 10,925,689 1,038,804 199,063,758 36,122,872 4,180,000 277,660,280 13.05%(2) 2,331 119,100 2011 27,804,224 9,564,693 779,580 197,000,901 33,209,092 1,574,209 269,932,699 12.17%(2) 2,362 114,297 2012 25,816,914 8,193,615 512,577 189,536,530 30,135,311 1,637,177 255,832,124 11.32%(3) 2,238 114,297 2013 29,994,604 2,807,838 6,246,743 180,359,931 27,528,327 1,702,664 248,640,107 11.01%(3) 2,175 114,298 2014 27,180,294 3,100,563 7,062,234 174,471,861 24,055,438 1,668,081 - 237,538,471 10.69%(3) 2,078 114,298 2015 27,790,281 16,387,327 7,872,600 167,787,460 19,445,482 1,459,431 240,742,581 10.83%(3) 2,106 114,297 2016 21,968,330 15,268,317 7,872,600 154,303,563 20,671,135 1,246,673 221,330,618 9.88%(3) 1,924 115,056 2017 18,080,040 13,757,531 7,728,428 143,761,916 18,982,246 1,029,723 203,339,884 8.63%(3) 1,753 116,020 2018 15,325,818 12,289,396 7,476,545 136,938,668 17,258,138 808,500 190,097,065 7.61%(3) 1,625 116,986 (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 198 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 Taxable Service Debt Payable Debt to Bonded Ended Assessed Gross Bonded Monies From Restricted Net Bonded Taxable Debt per June 30, Population(') Value(3) Debt(') Available Revenues Debt Value Capita 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 2,001,588,500 201,652,155 - 178,031,861 23,620,294 0.0118 207 2015 114,297 2,086,836,822 195,577,741 1,000 170,372,460 25,204,281 0.0121 221 2016 115,056 2,165,392,100 176,271,893 1,000 155,873,563 20,397,330 0.0094 177 2017 116,020 2,236,874,920 161,841,956 1,000 144,271,916 17,569,040 0.0079 151 2018 116,986 2,336,064,001 152,264,486 1,000 136,938,668 15,324,818 0.0066 131 Source: 2000 and 2010 Census by the U.S. Census Bureau includes all general obligation debt and special assessment debt with governmental obligation the tax assessment day is December 31 prior to beginning of fiscal year 199 CITY OF LANSING, MICHIGAN Table 11 - Unaudited Direct and Overlapping Governmental Activities Debt As of June 30, 2018 Net General Obligation Amount Name of Debt % Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 35,091,759 100.00% $ 35,091,759 Share of County-issued bonds Joint Building Authority 1,098,540 100.00% 1,098,540 Drain Commission 1,141,503 100.00% 1,141,503 Other overlapping debt Eaton Intermediate School District 3,480,000 0.78% 27,144 Ingham Intermediate School District 1,336,000 21.89% 292,450 Waverly School District 22,605,000 0.24% 54,252 Lansing School District 72,140,000 80.01% 57,719,214 East Lansing School District 88,618,377 4.60% 4,076,445 Holt School District 52,887,706 2.36% 1,248,150 Ingham County 501711,697 25.42% 12,890,913 Eaton County 22,485,617 1.79% 402,493 Clinton County 555,400 0.28% 1,555 Lansing Community College 68,565,000 18.15% 12,444,548 Okemos School District 12,068,561 3.44% 415,158 Mason School District 40,500,000 2.85% 1,154,250 Grand Ledge School District 39,855,000 1.59% 634,172 Total overlapping debt 93,600,787 Total direct and overlapping debt $ 128,692,546 Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 200 CITY OF LANSING, MICHIGAN Table 12-Unaudited Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2018 Assessed value,real and personal property $2,336,064,001 Legal debt margin Debt limitation-10 percent of total valuation 233,606,400 Debt applicable to limit Total City Bonded Debt 168,137,606 City Share: Drain Commission-County Issued 1,141,503 Joint Building Authority-County Issued 1,098,540 TIF Supported Bonds 26,348,459 Lansing Board of Water and Light 312,175,000 508,901,108 Less: Lansing Board of Water and Light $(312,175,000) Sewage Disposal Revenue Bonds (15,625,000) Pollution Abatement(CSO Project)Bonds (91,565,116) Share of County-issued bonds (2,240,043) (421,605,159) Total net debt applicable to limit 87,295,949 Legal debt margin $ 146,310,451 - 2017 2016 ME 2015 2014 2013 2012 2011 -. 2009 Debt limit $ 233,606,400 $ 223,687,492 $ 216,539,210 $ 208,683,682 $ 205,138,999 $ 208,869,228 $ 233,669,637 $ 268,975,768 $ 298,052,683 $ 298,581,799 Total net debt applicable to limit 87,295,949 81,398,300 86,432,459 91,352,614 93,062,835 91,833,157 92,357,575 100,923,863 98,368,804 79,513,756 Legal debt margin $ 146,310,451 $ 142,289,192 $ 130,106,751 $ 117,331,068 $ 112,076,164 $ 117,036,071 $ 141,312,062 $ 168,051,905 $ 199,683,880 $ 219,068,043 Total net debt applicable to the limit as a percentage of debt limit 37.37% 36.39% 39.92% 43.78% 45.37% 43.97% 39.52% 37.52% 33.00% 26.63% 201 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) 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 2016 32,676,182 14,066,527 18,609,655 1,550,000 861,188 2,411,188 7.72 2017 35,053,701 13,843,649 21,210,052 1,550,000 799,188 2,349,188 9.03 2018 35,608,454 14,994,871 20,613,583 1,550,000 737,188 2,287,188 9.01 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 202 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(') Age(') Enrollment(Z) %Rate(3) Force(3) 2009 119,100 $ 2,128,321,923 $ 17,870 32.84 14,482 16.2% 66,822 2010 119,100 2,127,607,561 17,864 32.92 14,098 15.0% 64,074 2011 114,297 2,218,276,176 19,408 30.40 13,465 13.1% 63,130 2012 114,297 2,259,194,502 19,766 32.40 13,236 11.3% 63,374 2013 114,298 2,259,214,268 19,766 32.20 12,544 11.9% 63,181 2014 114,298 2,221,953,120 19,440 32.00 12,088 9.1% 63,102 2015 114,297 2,221,933,680 19,440 32.10 11,587 7.4% 57,432 2016 115,056 2,240,255,376 19,471 32.10 11,112 6.0% 57,633 2017 116,020 2,356,830,280 20,314 32.00 10,962 6.5% 56,668 2018 116,986 2,498,236,030 21,355 32.30 10,813 5.8% 59,396 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 203 CITY OF LANSING, MICHIGAN Table 15-Unaudited Principal Employers Current Year and Nine Years Ago 2018 2009 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 13,700 1 5.73% 14,355 1 6.72% Michigan State University 10,725 2 4.49% 10,500 2 4.91% Liberty National Life Insurance 10,000 3 4.18% Sparrow Health System 6,000 4 2.51% 5,500 3 2.57% General Motors 5,027 5 2.10% 5,000 4 2.34% Auto Owners Insurance 3,400 6 1.42% 1,400 10 0.66% Meijer 3,000 7 1.26% 1,800 8 0.84% McClaren Greater Lansing 2,500 8 1.05% 2,500 6 1.17% Lansing Community College 2,143 9 0.90% 3,180 5 1.49% John Henry Company 2,100 10 0.88% Peckham, Inc. 1,540 9 0.72% Lansing School District 2,106 7 0.99% Greater Lansing metropolitan area employment 239,003 (1) Data is representative of the Greater Lansing Region (2)Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 204 This page intentionally left blank. 205 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2018 2017 2016 2015 2014 2013 General government City council 10 10 10 10 10 10 Mayor's office 7 (9) 6 6 5 5 5 City clerk 5 5 5 5 5 5 54-A district court 45 45 45 46 43 43 City attorney's office 11 11 11 11 10 10 City TV 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 Human resources 11 12 12 10 10 9 Information technology 16 11 11 11 11 10 Finance Accounting/budget/purchasing 8 8 8 (7) 9 10 10 Treasury/income tax 11 11 10 9 9 20 Assessing 11 11 11 11 11 Property management - - - - - - (4) Fleet management - - - - - - (4) 30 30 29 29 30 30 Planning Et neighborhood development Administration 2 2 2 2 2 2 Code compliance 14 (g) - - - - (6) 15 Building safety 13 13 13 13 13 12 Planning 3 (9) 4 4 4 4 4 Development 9 9 10 10 11 9 Parking Et transportation 14 14 14 14 15 20 55 42 43 43 45 62 Neighborhood &Citizen Engagement 1 (9) - - - - - Police 241 240 239 239 234 (6) 229 cs� Fire 181 181 181 181 188 180 Code compliance - (g) 14 14 14 14 (6) 181 195 195 195 202 180 Public services Administration Et engineering 20 20 20 19 19 19 Operations Et maintenance 118 117 117 117 117 (6) 120 Service garage - - - - - - Wastewater 42 41 41 41 41 41 Property Management 16 16 18 18 18 18 (4) Fleet Management 30 30 26 27 27 27 (4) 226 224 222 222 222 225 Human relations Et community services 9 8 7 7 6 5 206 Table 16 - Unaudited 2012 2011 2010 2009 10 11 11 11 5 5 5 5 5 6 7 7 48 50 53 53 10 11 12 12 2 2 2 2 1 1 1 1 9 11 12 13 10 14 15 17 13 14 16 17 10 11 12 13 11 11 12 12 18 20 21 23 (2) 27 29 30 31 79 85 91 96 2 2 2 2 15 16 16 16 13 15 15 15 4 5 5 4 9 9 9 10 20 20 (3) 40 41 63 66 87 88 260 327 344 342 179 207 218 219 179 207 218 219 21 21 17 18 121 135 (3) 110 113 41 41 44 50 183 197 171 181 5 5 5 6 207 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2018 2017 2016 2015 2014 2013 Parks Et recreation Administration Et design 6 6 6 6 6 5 Grounds Et forestry - - - - - - Leisure Et special recreation 6 6 6 6 6 8 Cemeteries 1 1 1 1 1 1 Golf/ice arena 3 3 3 3 3 3 16 16 16 16 16 17 867 858 854 852 852 843 Source: The City of Lansing, Michigan The following restructuring of departments have occurred: (1)A payroll position was transferred from Finance to Human Resources (2) Four custodial positions were transferred from Parks Et Recreation to Finance (3) Grounds Maintenance positions were moved from Parks Et Recreation and Planning Et Neighborhood Development and consolidated with Public Service staff. (4) Fleet and Property Management were moved from the Finance Department to the Public Service Department (5) On June 27, 2012, 911 Dispatch employees were transferred from the City to Ingham County. (6) Code Compliance (14 positions) were transferred from EDEtP to Fire; four (4) positions to Police, and one (1) position to Public Service for FY 2014. (7) Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. (8) Code Compliance was transferred from Fire to EDEtP. (9) One (1) position was transferred from Human Resources to Mayor's Office and one (1) position was transferred from EDEtP to NEtCE in FY 2018. 208 2012 2011 2010 2009 5 5 7 7 - - (3) 27 31 10 12 15 19 (2) 1 1 3 4 3 4 4 4 19 22 56 65 888 1,020 1,090 1,118 209 CITY OF LANSING, MICHIGAN Table 17-Unaudited Operating Indicators by Function/Program - Last Ten Fiscal Years _Action/Program 2018 i 2017 2016 _ 2015 2010 - Public safety Fire department responses 22,768 21,902 21,115 20,170 19,427 18,444 17,093 16,974 16,659 15,852 EMS related 19,264 18,827 18,275 17,376 16,235 15,918 14,851 14,628 14,398 13,447 Fire related 3,063 3,075 2,840 2,794 3,012 2,526 2,242 2,346 2,261 2,405 Police department responses 107,379 82,722 71,468 79,331 76,855 73,087 74,058 78,112 87,724 89,958 Arrests 4,507 5,710 3,880 4,510 5,656 7,196 8,043 8,858 11,644 11,559 Traffic violations 6,496 9,385 7,334 10,781 7,756 14,905 8,829 15,585 18,297 20,122 Public works Potholes filled 54,773 53,332 53,488 53,281 55,193 33,155 30,116 32,918 24,945 43,601 Streets resurfaced(miles) 6.0 8.7 8.8 4.0 4.6 6.0 5.0 9.0 20.7 16.2 Recreation Recreation participation 120,245 98,978 101,335 122,639 50,859 55,122 66,836 66,254 70,529 ' 39,060 Pavilion rentals 202 180 242 206 185 199 198 161 288 315 Sewage disposal Average amount processed daily(gal) 14.45 million 16.32 million 15.46 million 13.28 million 14.49 million 14.75 million 12.82 million 12.83 million 15.01 million 18.15 million Parking system Average number of monthly permit 3,310 2,581 3,218 3,077 2,891 2,718 2,735 3,122 3,480 3,783 Parking tickets issued 32,857 33,492 32,990 30,888 34,373 38,127 41,829 45,176 63,610 66,183 Cemetery Lots sold 88 162 115 138 93 113 115 143 142 119 Garbage and rubbish Yards sent to landfill 20,492 20,007 20,115 19,667 18,829 17,985 18,705 20,334 21,805 29,322 Recycling Recycled goods sold(tons) 5,593 5,834 5,940 5,691 5,075 3,562 3,149 2,446 2,163 2,591 Yards composted 20,031 24,223 24,413 21,685 25,260 21,832 20,413 15,725 21,819 21,871 Source: The City of Lansing,Michigan " The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 210 This page intentionally left blank. 211 CITY OF LANSING, MICHIGAN Capital Assets Statistics by Function/Program Last Ten Fiscal Years Function/Program 2018 2017 2016 2015 2014 2013 Public safety Police stations 2 2 2 2 2 2 Police patrol units 60 60 60 60 61 60 Fire stations 6 6 6 6 6 6 Public works Streets (miles) 414.00 414.00 414.00 414.00 411.00 411.00 Traffic signals 200 200 200 200 200 204 Recreation Park acreage 2,017.56 2,134.26 2,134.26 2,363.45 2,364.85 2,364.85 Playgrounds 74 74 74 72 72 75 Baseball/softballfields 25 25 25 47 61 61 Soccer/football fields 15 15 14 6 6 6 Community centers 4 4 4 4 4 4 Sewage disposal Sanitary sewers (miles) 363 361 361 361 359 359 Storm sewers (miles) 237 235 235 235 234 234 Combined sewers (miles) 187 188 188 188 188 188 Parking system Ramps 4 4 4 4 4 4 Lots 16 16 16 17 17 18 Meters 2,166 2,166 2,166 2,166 2,452 2,452 Cemetery Number of cemeteries 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 Acreage 115 115 115 115 115 115 Garbage and rubbish Refuse collection trucks 16 14 14 17 17 17 Recycling Recycling trucks 7 5 5 7 7 7 Source: The City of Lansing, Michigan 212 Table 18 - Unaudited 2012 2011 2010 2009 2 3 3 3 60 58 61 61 6 8 9 9 407.80 410.80 410.63 410.15 204 208 203 196 2,434.88 2,422.63 2,422.63 2,422.63 73 71 71 82 61 61 61 61 6 6 6 6 4 4 4 4 359 359 357 354 234 234 233 230 188 188 191 192 4 4 4 4 15 15 16 16 2,452 2,452 2,493 2,493 3 3 3 3 1 1 1 1 115 115 115 115 19 22 18 16 7 9 10 10 213