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HomeMy WebLinkAbout2019 - City of Laning FS Final CAFR Comprehensive Annual financial Report City of INS I Michigan � HI � Year Ended Comprehensive June 30, 2019 V Annual Financial Report . • Prepared by: Department of Finance Chief Strategy Officer Shelbi Frayer Accounting Manager Jeff Scharnowske 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 Change in Fund Balances - Governmental Funds 38 Reconciliation of Net Change in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Change 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 125 Employees' Retirement System Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios 126 Schedule of the Net Pension Liability 127 Schedule of Contributions 128 Schedule of Investment Returns 129 Police and Fire Retirement System Pension Plan: Schedule of Changes in Net Pension Liability and Related Ratios 130 Schedule of the Net Pension Liability 131 Schedule of Contributions 132 Schedule of Investment Returns 133 Employees' Retirement System OPEB Plan: Schedule of Changes in Net OPEB Liability and Related Ratios 134 Schedule of the Net OPEB Liability 135 Schedule of Contributions 136 Schedule of Investment Returns 137 Police and Fire Retirement System OPEB Plan: Schedule of Changes in Net OPEB Liability and Related Ratios 138 Schedule of the Net OPEB Liability 139 Schedule of Contributions 140 Schedule of Investment Returns 141 Combining and Individual Fund Financial Statements and Schedules 143 Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 144 Combining Statement of Revenues, Expenditures and Change in Fund Balances - Nonmajor Governmental Funds 145 Combining Balance Sheet - Nonmajor Special Revenue Funds 148 Combining Statement of Revenues, Expenditures and Change in Fund Balances - Nonmajor Special Revenue Funds 150 Schedule of Revenues, Expenditures and Change in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 152 Combining Balance Sheet - Nonmajor Debt Service Funds 162 Combining Statement of Revenues, Expenditures and Change in Fund Balances - Nonmajor Debt Service Funds 163 Combining Balance Sheet - Nonmajor Capital Projects Funds 166 Combining Statement of Revenues, Expenditures and Change in Fund Balances - Nonmajor Capital Projects Funds 167 Combining Balance Sheet - Nonmajor Permanent Funds 170 Combining Statement of Revenues, Expenditures and Change in Fund Balances - Nonmajor Permanent Funds 171 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 174 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 175 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 176 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 180 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 181 Combining Statement of Cash Flows - Internal Service Funds 182 Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 186 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds 187 STATISTICAL SECTION (UNAUDITED) 189 TABLE 1 Net Position by Component 193 2 Change in Net Position 194 3 Fund Balances, Governmental Funds 196 4 Changes in Fund Balances of Governmental Funds 197 5 Assessed and Estimated Actual Value of Taxable Property 198 6 Direct and Overlapping Property Tax Rates 199 7 Profile of Ten Largest Ad Valorem Taxpayers 200 8 Property Tax Levies and Collections 201 9 Ratios of Outstanding Debt by Type 202 10 Ratios of General Bonded Debt Outstanding 203 11 Direct and Overlapping Governmental Activities Debt 204 12 Legal Debt Margin Information 205 13 Pledged-Revenue Coverage 206 14 Demographic and Economic Statistics 207 15 Principal Employers 208 16 Full-Time Equivalent City Governmental Employees by Function/Program 210 17 Operating Indicators by Function/Program 214 18 Capital Asset Statistics by Function/Program 216 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN LANSING CITY GOVERNMENT Fiscal Year Ended June 30, 2019 MAYOR Andy Schor CITY COUNCIL Carol Wood, Council President, At Large Jody Washington, Council Vice President, 1 st Ward Kathy 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 Hugh B. Clarke, Jr. Stacia Buchanan Cynthia M. Ward OFFICERS Samantha Harkins Executive Assistant/Chief of Staff James D. Smiertka City Attorney Shelbi Frayer Chief Strategy Officer Judy Kehler City Treasurer Sharon Frishman City Assessor Daryl Green Police Chief Andrew Kilpatrick Public Service Director Brian McGrain Economic Development & Planning Director Andrea Crawford Neighborhood & Citizen Engagement Director Brett Kaschinske Parks & Recreation Director Anethia Brewer Court Administrator Joan Jackson Johnson Human Relations & Community Services Director Linda Sanchez-Gazella Human Resources Director Eric Brewer Internal Auditor 2 FINANCE DEPARTMENT 124 W Michigan Ave., 811 Floor 9r, Lansing, Michigan 48933 rr i 517.483.4500 Andy Schor,Mayor December 19, 2019 Council President Carol Wood and Council Members loth Floor City Hall Lansing, Michigan 48933-1694 Dear President Wood and Council Members, We are pleased to submit the comprehensive annual financial report for the City of Lansing, Michigan for the fiscal year ended June 30, 2019. The City of Lansing assumes full responsibility for both the accuracy of the data, the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of the government operations 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 2018/2019 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-end June 30, 2019, 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 in conformity with the Generally Accepted Accounting Principles (GAAP). The independent auditors report 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 (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 the 1978 Charter revision. Lansing is a mature core city with a population of 117,388 according to the 2018 census estimates and offers a full range of services. During the fiscal year ended June 30, 2019 the City operated a police headquarters and precinct with 208 sworn police officers, six fire stations with a fire protection force of 159, over 350 miles of sanitary sewers, 230 miles of storm sewers and 180 miles of combined sewers, over 400 miles of roads, 113 parks, a District Court and support for human services and cultural events. The City's main sources of revenue are property taxes, income taxes, State revenue sharing, Federal entitlement grants and charges for services including utility billings. 3 Reporting Entity The financial reporting entity (the City) includes all of the funds 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 Ft Public Facilities Authority, Tax increment Finance Authority, Brownfield Redevelopment Authority and Smart Zone 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. These controls are 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. This allows for the accurate presentation of financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment and monitoring and review processes which are communicated throughout City operations. Because the cost of internal controls generally should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable rather than absolute assurance that these objectives are met. Because the City is a recipient of federal grant dollars the independent audit of the financial statements of the City of Lansing was part of a broader federally mandated "single audit" in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States, Local Governments and Non-profit Organizations. The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year ended June 30, 2019 are discussed in the Management Discussion and Analysis (MDFtA), located immediately following the Independent Auditor Reports. 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 order 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 the Michigan state government. 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 and healthcare services with two major hospitals in the City and a wide variety of technology firms. Manufacturing also 4 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, including a $40 million Logistics Center and a $162 million 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 2021, Michigan State University will be home to a $76 million Nuclear Research facility which will include the Facility for Rare Isotope Beams (FRIB). This will enable scientific discovery of rare isotope properties, 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 a commercial spinoff from Michigan State University's nuclear cyclotron facility. MSU has been named #1 in Nuclear Physics by U.S. News Et World Report. Surpassing MIT for the top spot in 2010 and has held its position ever since. Lansing serves as the cultural center for the region. 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 corporate headquarters for the AF Group followed by Blue Cross Blue Shield of Michigan moving into the AF Groups 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 such as Marketplace, Midtown and Skyview residential developments have added significant 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. 2018 was another great year for the Lansing Economic Development Corporation (LEDC). The LEDC continued to focus on economic development projects in the City of Lansing. For the entire 2018 calendar year, the LEDC working with the Lansing Brownfield Redevelopment Authority, Mayor Andy Schor's office and the Lansing City Council, gained approval of financing, development incentives or provided assistance to make 28 development projects possible. These 28 projects represent $218 million in private investment that will create 800 jobs and retain 65 jobs in Lansing. This $218 million of private investment is split evenly between Business Expansion and Real Estate/Place Based economic development projects. For jobs the numbers are 700 for Business Expansion projects and 165 for Real Estate/Place Based projects. Some specific notable projects in 2018 were: • The Capital City Market project located at 600 East Michigan which will provide a long-awaited urban grocery store to downtown Lansing. This great $41.5 million mixed-use project will also provide a second hotel downtown and additional apartment units. • A 286-unit market rate multifamily apartment community to be built at 3600 Dunckle Road in Lansing. The $52 million project will start with the remediation and demolition of the existing vacant 102,000 square feet former hotel building. Then construction will begin, and it is scheduled to be completed by June 30, 2021. The Developer has also agreed to fund $500,000 in public improvements at the intersection of the Dunckle and Collins Roads. • Redevelopment of the former EDS building at 930 W. Holmes Road. This project will repair and redevelop a long vacant site in south Lansing. Included in the redevelopment plans are streetscape improvements and more than $500,000 of private funds to be spent on public infrastructure improvements and turning 2 acres of impervious asphalt surface parking into green space. 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 in 2017 LEAP received the prestigious Excellence in Economic Development Award by the International Economic Development Council (IEDC). 5 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, 2018. This was the 41 It 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 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 Jeff Scharnowske, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 415t consecutive GFOA award recognizing their efforts is well deserved. Cordially, Shelbi Frayer Chief Strategy Office and Finance Director 6 y U roE-a � S ° �, 2 N � O ti 4--1 O iti O N m a; EU O � U �'w" 1 U •�� W pp N U Gi � y,y N N z �OwS•+ bA 0i x a H a O bA 4-o A by o U S Y El > WD �O N cn n A cl G� N >, W � ° � b•� � w �, � U U avMawaA g O U U ' ri aW � fy. F--I J aw O o a .i: �+ auu 7 Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Lansing Michigan For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2018 04446. P Executive Director/CEO 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 Rebmann 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 19, 2019 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, 2019, 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, 2019, 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. 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 19, 2019, on our consideration of the City of Lansing, Michigan's internal control over financial reporting and on our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on 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, 2019 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 net position $ (231,286,435) Change in total net position (3,369,244) Fund balances, governmental funds 39,054,736 Change in fund balances, governmental funds 1,194,217 Unassigned fund balance, general fund 9,992,885 Change in fund balance, general fund (7,295,022) Long-term debt outstanding 178,948,144 Change in long-term debt (24,270,118) Overview of the Financial Statements This MDEtA is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. 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". 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. 16 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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 connection with the issuance of long-term debt are reported as other financing sources/uses 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. 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. 17 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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. Other Supplementary Information Other supplementary information includes combining and individual fund financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental fund financial statements. 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Government-wide Financial Analysis The City's combined net position decreased $3.4 million over the course of this fiscal year's operations, and came to a total of $(231.3) million. Net position of governmental activities decreased $(16.9) million, and business-type activities increased $13.5 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 2019 2018 2019 2018 2019 2018 Current and other assets $ 70,031,080 $ 60,223,657 $ 91,700,607 $ 84,766,314 $ 161,731,687 $ 144,989,971 Capital assets, net 179,267,839 183,112,603 338,450,763 354,396,144 517,718,602 537,508,747 Total assets 249,298,919 243,336,260 430,151,370 439,162,458 679,450,289 682,498,718 Deferred outflows of resources 43,806,456 36,024,546 6,075,602 6,400,785 49,882,058 42,425,331 Long-term debt outstanding 45,721,172 47,341,836 133,226,972 155,876,426 178,948,144 203,218,262 Other liabilities 688,526,465 638,249,867 73,982,282 72,354,918 762,508,747 710,604,785 Total liabilities 734,247,637 685,591,703 207,209,254 228,231,344 941,456,891 913,823,047 Deferred inflows of resources 18,786,464 36,845,515 375,427 2,172,678 19,161,891 39,018,193 Net position Net investment in capital assets 146,153,309 148,263,240 233,988,263 227,127,434 380,141,572 375,390,674 Restricted 23,505,738 18,989,889 1,953,175 1,886,620 25,458,913 20,876,509 Unrestricted(deficit) (629,587,773) (610,329,541) (7,299,147) (13,854,833) (636,886,920) (624,184,374) Total net position $ (459,928,726) $ (443,076,412) $ 228,642,291 $ 215,159,221 $ (231,286,435) $ (227,917,191) 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, 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 decrease in unrestricted net position of governmental activities was primarily due to the increase in the net pension and net other postemployment benefits liabilities of $14.5 million and $28.3 million, respectively. The increase in restricted net position for governmental activities was primarily due to increases in the major and local street fund balances, as intergovernmental revenues exceeded current year projects. 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 2019 2018 2019 2018 2019 2018 Program revenues Charges for services $ 15,573,751 $ 12,727,522 $ 50,916,057 $ 48,926,712 $ 66,489,808 $ 61,654,234 Operating grants 29,663,253 28,983,936 6,648,917 1,603,942 36,312,170 30,587,878 Capital grants 3,313,872 855,760 - - 3,313,872 855,760 General revenues Taxes 78,714,366 78,028,764 78,714,366 78,028,764 State shared revenues 15,178,768 14,748,491 15,178,768 14,748,491 Unrestricted grants and contributions 24,351,305 24,671,167 24,351,305 24,671,167 Unrestricted investment earnings 463,685 216,239 463,685 216,239 Gain on sale of capital assets 64,820 _ 64,820 - Total revenues 167,323,820 160,231,879 57,564,974 50,530,654 224,888,794 210,762,533 Expenses General government 26,679,840 16,995,976 - - 26,679,840 16,995,976 Public safety 97,391,612 87,352,251 97,391,612 87,352,251 Public works 29,644,398 26,485,877 29,644,398 26,485,877 Recreation and culture 7,650,889 8,302,243 7,650,889 8,302,243 Community development 21,046,090 16,150,417 21,046,090 16,150,417 Interest on long-term debt 1,182,488 1,137,561 1,182,488 1,137,561 Sewage disposal system - - 31,939,976 28,552,143 31,939,976 28,552,143 Municipal parking system 7,081,998 9,888,246 7,081,998 9,888,246 Cemetery 470,220 1,379,877 470,220 1,379,877 Golf 278,501 (372,775) 278,501 (372,775) Garbage and rubbish collection 1,035,262 3,101,893 1,035,262 3,101,893 Recycling - - 3,856,764 3,859,496 3,856,764 3,859,496 Total expenses 183,595,317 156,424,325 44,662,721 46,408,880 228,258,038 202,833,205 Change in net position, before transfers (16,271,497) 3,807,554 12,902,253 4,121,774 (3,369,244) 7,929,328 Transfers (580,817) (912,186) 580,817 912,186 - Change in net position (16,852,314) 2,895,368 13,483,070 5,033,960 (3,369,244) 7,929,328 Net position: Beginning of year (443,076,412) (445,971,780) 215,159,221 210,125,261 (227,917,191) (235,846,519) End of year $ (459,928,726) $ (443,076,412) $ 228,642,291 $ 215,159,221 $ (231,286,435) $ (227,917,191) 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, 2019 Property tax and special assessments 24.9% Income tax 22.1% Otherrevenues 0.3% Charges for services 9.3% Unrestricted grants and contributions 14.6% Operating grants Capital grants 17.7% State shared revenues 2.0% 9.1% In total, governmental activity revenues increased $7.1 million from FY 2018 to FY 2019, with trends of the major revenue categories as follows: Property taxes comprised the largest portion of governmental activity revenue at 24.9%, or $41.7 million, a $2.1 million, or 5.4% increase from fiscal year 2018, due largely to rising property values and a decrease in taxroll adjustments from the previous year. Income taxes comprised 22.1%, or$37.0 million, of governmental activity revenue, the full amount of which is revenue to the General Fund. This represents a $1.4 million, or 3.7%, decrease from fiscal year 2018. 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. Local income tax rates are also limited to 0.5% for Lansing residents working subject to East Lansing's income tax as part of a reciprocal agreement. Restricted operating and capital grants and contributions made up $33.0 million, or 19.7% of governmental activity revenue for fiscal year 2019, a $3.1 million, or 10.5% increase from fiscal year 2018. This increase was largely attributable to an increase in State gas and weight tax revenue distributions and an increase in federal grant revenue from the Community Development Block Grant. Unrestricted grants and contributions (including state shared sales tax revenue) comprised 23.7%, or $39.5 million, of revenues, a $110.0 thousand, or 0.3% increase from fiscal year 2018. A little more than one-third of this category, $15.2 million, is attributed to State revenue sharing, an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services increased $2.8 million from FY 2018 to FY 2019. 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, 2019 Interest on long-term Community development debt 11.5% 0.6% General government 14.5% Recreation and culture 4.2% Public works 16.1% Public safety 53.1% Total expenses for governmental activities increased $27.2 million, 17.4%, from FY 2018 to FY 2019, with trends of the major expense categories as follows: The largest component of governmental activities was public safety, accounting for 53.0%, or $97.4 million, a 11.5% ($10.0 million) increase from FY 2018, largely due to investment in supplies and repairs. Public works comprises the next largest component of governmental activity expenses, at 16.1%, or $29.6 million, a 11.9% ($3.2 million) increase from FY 2018, due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. At $26.7 million, general government expenses, representing general and internal City services, comprised 14.5% of governmental activities. This category increased by $9.7 million in operational costs, a 60.0% overall increase from FY 2018, due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. Community development represented 11.5%, or $21.0 million, of total governmental activities expenses. This category increased $4.9 million, or 30.3% from FY 2018, 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 $13.5 million from FY 2018 to $228.6 million. The increase was mainly attributable to the increase in sewer and municipal parking system funds net position for the fiscal year. The increase in the sewer fund 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 increase in the municipal parking fund (operating grants and contributions) was due to the sale of the Townsend parking ramp and payoff of the corresponding debt. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $39.1 million, a $1.2 million increase from fiscal year 2018. Of the $39.1 million fiscal year 2019 combined ending fund balance, $3.0 million is unavailable to spend (i.e. amounts tied up in inventories, prepaids and endowments), $17.0 million is legally restricted, and $9.2 million is committed for designated projects, leaving $9.9 million unassigned. 22 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The unassigned fund balance for the General Fund was $10.0 million, a decrease of$7.0 million from FY 2018, which is further described in the General Fund Budgetary Highlights section. Sewage Disposal System Fund Net position increased $4.8 million to $227.5 million in FY 2019. Unrestricted net position decreased $2.0 million, from $5.7 million to $3.7 million. The decrease in unrestricted net position was the result of significant increases in net pension expenses. Municipal Parking System Fund Net position increased $7.0 million to $14.8 million. Unrestricted net position increased $6.7 million, from a deficit of $2.0 million to $4.7 million. The increase in unrestricted net position was the result of the sale of the Townsend parking ramp and payoff of the corresponding debt. General Fund Budgetary Highlights The FY 2019 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 $134.9 million to $135.4 million. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) decreased $7.3 million from FY 2018 to $10.0 million. Unassigned fund balance decreased $7.0 million, or 41.2% from fiscal year 2018. The $7.3 million decrease in total General Fund reserves was mostly attributable to actual expenditures exceeding budgeted expenditures by $2.3 million, largely due to IRS filing penalties and a litigation settlement. Capital Assets. At the end of the fiscal year 2019, the City had invested $517.7 million, net of accumulated depreciation, in a broad range of capital assets (see the table below). Additional information regarding the City's capital assets can be found in Footnote 6 of the of the Notes to the Financial Statements section of the CAFR. Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2019 2018 2019 2018 2019 2018 Land $ 25,302,787 $ 25,302,787 $ 12,470,361 $ 13,292,491 $ 37,773,148 $ 38,595,278 Land improvements 14,069,991 11,799,044 14,255,651 14,265,778 28,325,642 26,064,822 Buildings and improvement 45,632,844 50,058,975 69,089,497 84,746,261 114,722,341 134,805,236 Equipment 7,236,992 7,559,948 967,786 1,187,130 8,204,778 8,747,078 Infrastructure 87,025,225 88,391,849 228,122,636 234,662,935 315,147,861 323,054,784 Construction in progress - - 13,544,832 6,241,549 13,544,832 6,241,549 Total capital assets, net $ 179,267,839 $ 183,112,603 $338,450,763 $ 354,396,144 $ 517,718,602 $537,508,747 The decrease in the above-noted capital asset amounts from the prior year is due to depreciation and the sale of the Townsend parking ramp in FY 2019. 23 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis 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 2019 2018 Governmental activities General obligation bonds $ 14,163,699 $ 15,330,000 Deferred amounts: For issuance discounts (52,488) (59,321) For issuance premiums 814,209 55,139 Installment purchase contracts 11,274,020 12,289,396 Loans 7,242,002 7,476,545 Compensated absences 9,968,748 9,957,856 Workers compensation 2,310,982 2,292,221 Total governmental activities 45,721,172 47,341,836 Business-type activities General obligation bonds 115,616,143 137,182,606 Deferred amounts: For issuance discounts (340,815) (490,338) For issuance premiums 2,438,581 1,879,538 Revenue bonds 14,075,000 15,625,000 Installment purchase agreements 582,920 808,500 Compensated absences 855,143 871,120 Total business-type activities 133,226,972 155,876,426 Total outstanding debt $178,948,144 $ 203,2187262 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. 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Economic Condition and Outlook Employment levels and personal income in the City decreased slightly in FY 2019 resulting in decreased income tax revenue. In addition, the East Lansing income tax took effect January 1, 2019, further impacting income tax revenue for City of Lansing residents working in East Lansing. 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. The 2018/2019 fiscal year resulted in a $7.3 million decrease to General Fund unassigned reserves, bringing unassigned General Fund reserves down to $10.0 million, or 7.6% of General Fund expenditures, which is below the City's 12%-15% fund balance policy. As a result, the City's General Fund Reserve Policy requires annual appropriations of a minimum of $500,000 until the 12% target is reached. 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. The East Lansing income tax will be in effect for the full duration of FY 2020, and additional decreases in income tax may result from the General Motors strike from September to October 2019. 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, 2019 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 45,129,421 $ 59,182,174 $ 104,311,595 $ 6,251,253 Receivables, net 23,611,894 28,751,368 52,363,262 1,050,927 Internal balances (773,950) 773,950 - - Due from primary government - - - 145 Inventories, prepaids and other assets 2,063,715 415,706 2,479,421 154,302 Restricted cash and investments - 2,577,409 2,577,409 2,838,415 Capital assets not being depreciated 25,302,787 26,015,193 51,317,980 - Capital assets being depreciated, net 153,965,052 312,435,570 466,400,622 23,352 Total assets 249,298,919 430,151,370 679,450,289 10,318,394 Deferred outflows of resources Deferred charge on refunding 320,544 4,352,459 4,673,003 1,090,578 Deferred pension amounts 26,091,730 1,111,065 27,202,795 - Deferred other postemployment benefit amounts 17,394,182 612,078 18,006,260 - Total deferred outflows of resources 43,806,456 6,075,602 49,882,058 1,090,578 Liabilities Accounts payable and accrued liabilities 19,191,320 2,097,493 21,288,813 2,082,946 Accrued interest payable 333,492 3,066,968 3,400,460 214,705 Unearned revenue 1,097,724 160,119 1,257,843 501,429 Due to component units - 145 145 - Long-term debt: Due within one year 5,482,381 13,481,419 18,963,800 254,719 Due in more than one year 40,238,791 119,745,553 159,984,344 44,940,618 Net pension liability(due in more than one year) 274,907,636 30,391,923 305,299,559 - Net other postemployment benefit liability(due in more than one year) 392,996,293 38,265,634 431,261,927 Total liabilities 734,247,637 207,209,254 941,456,891 47,994,417 Deferred inflows of resources Deferred pension amounts 6,158,087 375,427 6,533,514 - Deferred other postemployment benefit amounts 12,628,377 - 12,628,377 Total deferred inflows of resources 18,786,464 375,427 19,161,891 - Net position Net investment in capital assets 146,153,309 233,988,263 380,141,572 23,352 Restricted for: Public safety 1,588,549 - 1,588,549 - Public works 16,029,533 16,029,533 Community development 3,442,457 3,442,457 Building department 531,033 531,033 Debt service - 1,800,929 1,800,929 Capital projects 152,246 152,246 - Cooley Stadium - - - 80,000 Endowments(nonexpendable) 1,914,166 1,914,166 - Unrestricted (deficit) (629,587,773) (7,299,147) (636,886,920) (36,688,797) Total net position $(459,928,726) $ 228,642,291 $(231,286,435) $ (36,585,445) 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, 2019 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 $ 26,679,840 $ 7,567,720 $ 2,881,563 $ $ (16,230,557) Public safety 97,391,612 3,935,250 4,060,020 (89,396,342) Public works 29,644,398 2,978,549 16,810,972 3,313,872 (6,541,005) Recreation and culture 7,650,889 1,092,232 102,709 - (6,455,948) Community development 21,046,090 - 5,807,989 (15,238,101) Interest on long-term debt 1,182,488 - - (1,182,488) Total governmental activities 183,595,317 15,573,751 29,663,253 3,313,872 (135,044,441) Business-type activities: Sewage disposal system 31,939,976 35,752,812 943,555 - 4,756,391 Municipal parking system 7,081,998 8,422,161 5,654,396 6,994,559 Cemetery 470,220 415,757 - (54,463) Golf 278,501 - 13,786 (264,715) Garbage and rubbish collection 1,035,262 2,243,627 - 1,208,365 Recycling 3,856,764 4,081,700 37,180 262,116 Total business-type activities 44,662,721 50,916,057 6,648,917 - 12,902,253 Total primary government $ 228,258,038 $ 66,489,808 $ 36,312,170 $ 3,313,872 $ (122,142,188) Component units Brownfield redevelopment authority $ 4,250,976 $ - $ 778,932 $ - $ (3,472,044) Tax increment finance authority 3,590,401 - - (3,590,401) Lansing entertainment Et public facilities authority 10,658,863 8,761,416 1,346,300 (551,147) Total component units $ 18,500,240 $ 8,761,416 $ 2,125,232 $ $ (7,613,592) continued... 31 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2019 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(135,044,441) $ 12,902,253 $(122,142,188) $ (7,613,592) General revenues: Property taxes 41,692,930 - 41,692,930 6,302,358 Income taxes 37,021,436 37,021,436 - State shared revenues 15,178,768 15,178,768 Grants and contributions not restricted to specific programs 24,351,305 24,351,305 - Unrestricted investment earnings 463,685 463,685 148,925 Gain on sale of capital assets 64,820 64,820 - Transfers -internal activities (580,817) 580,817 - - Total general revenues and transfers 118,192,127 580,817 118,772,944 6,451,283 Change in net position (16,852,314) 13,483,070 (3,369,244) (1,162,309) Net position, beginning of year (443,076,412) 215,159,221 (227,917,191) (35,423,136) Net position, end of year $ (459,928,726) $ 228,642,291 $ (231,286,435) $ (36,585,445) 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, 2019 Nonmajor Governmental General Funds Totals Assets Cash and cash equivalents $ 3,420,179 $ 171,739 $ 3,591,918 Equity in pooled cash and investments 10,033,485 26,955,975 36,989,460 Accounts receivable, net 8,805,431 120,891 8,926,322 Taxes receivable, net 635,163 - 635,163 Special assessments receivable - 191,201 191,201 Loans receivable 1,222,523 1,222,523 Accrued interest receivable - 2,172,446 2,172,446 Due from other funds 500 - 500 Due from other governments, net 2,761,330 7,691,569 10,452,899 Inventories 29,575 1,030,305 1,059,880 Prepaids 9,030 7,556 16,586 Total assets $ 25,694,693 $ 39,564,205 $ 65,258,898 Liabilities Negative equity in pooled cash $ - $ 2,889,204 $ 2,889,204 Accounts payable 6,299,107 2,063,759 8,362,866 Deposits payable - 35,020 35,020 Accrued payroll 2,536,288 67,198 2,603,486 Indemnity bonds - 43,867 43,867 Due to other funds 2 624,145 624,147 Advances from other funds - 150,303 150,303 Due to other governments 3,273,824 587,250 3,861,074 Unearned revenue 568,924 528,800 1,097,724 Other liabilities 821,915 - 821,915 Total liabilities 13,500,060 6,989,546 20,489,606 Deferred inflows of resources Unavailable revenues-fees 2,163,143 - 2,163,143 Unavailable revenues- loans and accrued interest receivable - 3,394,969 3,394,969 Unavailable revenues-special assessments - 156,444 156,444 Total deferred inflows of resources 2,163,143 3,551,413 5,714,556 Fund balances Nonspendable 38,605 2,952,027 2,990,632 Restricted - 17,038,777 17,038,777 Committed - 9,147,988 9,147,988 Unassigned (deficit) 9,992,885 (115,546) 9,877,339 Total fund balances 10,031,490 29,023,246 39,054,736 Total liabilities, deferred inflows of resources and fund balances $ 25,694,693 $ 39,564,205 $ 65,258,898 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, 2019 Fund balances-total governmental funds $ 39,054,736 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 153,965,052 Capital assets accounted for in internal service funds, net (11,341,206) 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 819,507 Deferred nuisance fees receivable 555,753 Deferred loans receivable 1,222,523 Deferred long-term interest receivable 2,172,446 Deferred long-term special assessments receivable 156,444 Deferred long-term taxes and tax settlement receivables 22,500 Deferred State of Michigan receivables 765,383 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. 12,777,701 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 installment purchase agreements payable, and deferred discounts/premiums (30,769,406) Deferred charge on refunding 320,544 Accrued interest on bonds, loans and leases payable (316,345) Compensated absences and other long-term liabilities (11,432,664) 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 (274,907,636) Deferred outflows related to the net pension liability 26,091,730 Deferred inflows related to the net pension liability (6,158,087) Net other postemployment benefit liability (392,996,293) Deferred outflows related to the net other postemployment benefit liability 17,394,182 Deferred inflows related to the net other postemployment benefit liability (12,628,377) Net position of governmental activities $ (459,928,726) The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Change in Fund Balances Governmental Funds For the Year Ended June 30, 2019 Nonmajor Governmental General Funds Totals Revenues Property taxes and special assessments $ 40,594,678 $ 1,137,967 $ 41,732,645 Income taxes 37,021,436 - 37,021,436 Licenses and permits 1,399,881 - 1,399,881 Intergovernmental 18,402,995 27,183,157 45,586,152 Charges for services 9,024,331 6,211,325 15,235,656 Fines and forfeitures 2,050,717 256,273 2,306,990 Interest and rents 226,344 405,468 631,812 Contributions 21,255,032 12,500 21,267,532 Otherrevenues 387,451 736,495 1,123,946 Total revenues 130,362,865 35,943,185 166,306,050 Expenditures Current expenditures: General government 24,027,129 3,313,802 27,340,931 Public safety 76,775,769 1,883,913 78,659,682 Public works 11,615,556 17,339 11,632,895 Highways and streets - 11,984,896 11,984,896 Recreation and culture 8,138,369 - 8,138,369 Community development 9,175,051 10,260,226 19,435,277 Debt service: Principal 1,859,052 1,324,543 3,183,595 Interest 448,745 551,562 1,000,307 Capital outlay - 4,798,070 4,798,070 Total expenditures 132,039,671 34,134,351 166,174,022 Revenues over(under)expenditures (1,676,806) 1,808,834 132,028 Other financing sources(uses) Transfers in 100,000 8,649,296 8,749,296 Transfers out (5,718,216) (3,611,897) (9,330,113) Issuance of long-term debt 1,665,000 1,665,000 Issuance of long-term refunding debt 6,938,699 6,938,699 Bond premium 780,670 780,670 Payment to refunding bond escrow agent (7,741,363) (7,741,363) Total other financing sources(uses) (5,618,216) 6,680,405 1,062,189 Net change in fund balances (7,295,022) 8,489,239 1,194,217 Fund balances, beginning of year 17,326,512 20,534,007 37,860,519 Fund balances,end of year $ 10,031,490 $ 29,023,246 $ 39,054,736 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING, MICHIGAN Reconciliation Net Change in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2019 Net change in fund balances-total governmental funds $ 1,194,217 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 7,499,433 Depreciation expense (10,469,794) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred to subsequent fiscal years. Change in deferred ambulance fees receivable (69,761) Change in deferred nuisance fees receivable 239,729 Change in deferred loans receivable (1,937) Change in deferred long-term interest receivable 59,250 Change in deferred special assessments receivable (39,714) Change in deferred State of Michigan receivables 765,383 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 (200,473) Gain on sale of capital assets from governmental internal service funds 64,820 Interest expense from governmental internal service funds (174,413) Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt increases long-term liabilities in the statement of net position. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net position. Issuance of long-term debt (8,603,699) Principal payments on long-term debt 3,183,595 Premium on bond issuances (780,670) Payments to refunding bond escrow agent 7,741,363 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 (18,761) 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 debt 6,316 Amortization of issuance premiums and discounts, and deferred charge on refunding (14,084) Change in the accrual for compensated absences (3,864) Change in the net pension liability and related deferred amounts (18,319,605) Change in the net other postemployment benefit liability and related deferred amounts 1,090,355 Change in net position of governmental activities $ (16,852,314) The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Change in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2019 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 40,315,000 $ 40,315,000 $ 40,594,678 $ 279,678 Income taxes 38,500,000 38,500,000 37,021,436 (1,478,564) Licenses and permits 1,677,000 1,677,000 1,399,881 (277,119) Intergovernmental 19,196,700 19,196,700 18,402,995 (793,705) Charges for services 9,672,200 9,672,200 9,024,331 (647,869) Fines and forfeitures 2,456,100 2,456,100 2,050,717 (405,383) Interest and rents 205,000 205,000 226,344 21,344 Contributions 22,500,000 22,500,000 21,255,032 (1,244,968) Otherrevenues 333,000 905,875 387,451 (518,424) Total revenues 134,855,000 135,427,875 130,362,865 (5,065,010) Expenditures General government: Attorney's office 2,168,300 2,168,300 3,181,864 1,013,564 City clerk 1,197,000 1,197,000 1,356,153 159,153 Council 714,000 714,000 695,984 (18,016) Courts 6,605,500 6,605,500 6,275,406 (330,094) Internal audit 194,900 194,900 192,655 (2,245) Finance 5,471,600 5,471,600 8,373,425 2,901,825 Library rental 150,000 150,000 151,846 1,846 Human resources 2,118,000 2,118,000 2,121,102 3,102 Mayor 1,296,800 1,296,800 1,256,114 (40,686) Office of community media 469,900 469,900 422,580 (47,320) Budgetary savings from attrition (500,000) (500,000) - 500,000 Total general government 19,886,000 19,886,000 24,027,129 4,141,129 Public safety: Police 43,193,300 43,312,596 42,832,580 (480,016) Fire 34,129,900 34,129,900 33,943,189 (186,711) Total public safety 77,323,200 77,442,496 76,775,769 (666,727) Public works 11,572,500 11,572,500 11,615,556 43,056 Recreation and culture 8,301,000 8,301,000 8,138,369 (162,631) continued... 40 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Change in Fund Balance Budget and Actual - General Fund For the Year Ended June 30, 2019 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Community development: Economic development and planning $ 5,021,300 $ 5,021,300 $ 4,918,772 $ (102,528) Neighborhood and community engagement 863,500 863,500 815,172 (48,328) Human relations / community services 1,598,300 2,343,538 1,493,554 (849,984) Human services / community support 2,041,400 2,041,400 1,947,553 (93,847) Total community development 9,524,500 10,269,738 9,175,051 (1,094,687) Debt service: Principal 1,859,100 1,859,100 1,859,052 (48) Interest 451,900 451,900 448,745 (3,155) Total debt service 2,311,000 2,311,000 2,307,797 (3,203) Total expenditures 128,918,200 129,782,734 132,039,671 2,256,937 Revenues over (under) expenditures 5,936,800 5,645,141 (1,676,806) (7,321,947) Other financing sources (uses) Transfers in 100,000 100,000 100,000 Transfers out (6,036,800) (6,036,800) (5,718,216) (318,584) Issuance of long-term debt 1,725,000 (1,725,000) Total other financing sources (uses) (5,936,800) (4,211,800) (5,618,216) (1,406,416) Net change in fund balance 1,433,341 (7,295,022) (8,728,363) Fund balance, beginning of year 17,326,512 17,326,512 17,326,512 Fund balance, end of year $ 17,326,512 $ 18,759,853 $ 10,031,490 $ (8,728,363) 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 30,2019 I 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 $ 787 $ 3,221,027 $ 23,568 $ 3,245,382 $ - Equity in pooled cash and investments 39,270,669 14,771,634 1,894,489 55,936,792 7,437,247 Accounts receivable,net 4,828,795 66,092 170,328 5,065,215 11,340 Accrued interest receivable 35,551 93,732 - 129,283 - Due from other funds 2,944 986,515 989,459 Lease receivable,current 657,988 - - 657,988 - Inventories 238,858 - 52,493 291,351 352,259 Prepaids - 124,355 - 124,355 634,990 Total current assets 45,035,592 19,263,355 2,140, 778 66,439,825 8,435,836 Noncurrent assets: Restricted cash and cash equivalents 2,425,163 152,246 - 2,577,409 Advances to other funds - 150,303 150,303 Lease receivable,net of current portion 6,087,138 16,811,744 - 22,898,882 - Capital assets not being depreciated 13,965,581 11,545,371 504,241 26,015,193 92,892 Capital assets being depreciated,net 307,826,801 2,552,762 2,056,007 312,435,570 11,248,314 Total noncurrent assets 330,304,683 31,212,426 2,560,248 364,077,357 11,341,206 Total assets 375,340,275 50,475,781 4,701,126 430,517,182 19,777,042 Deferred outflows of resources Deferred charge on refunding 1,183,607 3,168,852 - 4,352,459 - Deferred pension amounts 606,035 202,012 303,018 1,111,065 Deferred other postemployment benefit amounts 358,721 104,375 148,982 612,078 Total deferred outflows of resources 2,148,363 3,475,239 452,000 6,075,602 Liabilities Current liabilities: Accounts payable 1,529,944 178,846 181,356 1,890,146 2,553,855 Deposits payable - 66,815 - 66,815 - Accrued interest payable 624,234 2,439,877 2,857 3,066,968 17,147 Accrued payroll 90,426 48,261 1,845 140,532 159,237 Claims incurred but not reported - - - - 750,000 Due to other funds 362,870 2,942 365,812 - Due to component units - 145 - 145 Unearned revenues - - 160,119 160,119 - Bonds and notes payable,current portion 12,043,482 1,130,000 230,023 13,403,505 370,290 Compensated absences,current portion 62,571 2,022 13,321 77,914 83,804 Total current liabilities 14,713,527 3,868,908 589,521 19,171,956 3,934,333 Noncurrent liabilities: Bonds and notes payable,net of current portion 95,590,057 23,025,370 352,897 118,968,324 2,301,746 Compensated absences,net of current portion 431,530 168,283 177,416 777,229 763,262 Net pension liability 16,577,409 5,525,803 8,288,711 30,391,923 - Net other postemployment benefit liability 22,426,368 6,525,283 9,313,983 38,265,634 Total noncurrent liabilities 135,025,364 35,244,739 18,133,007 188,403,110 3,065,008 Total liabilities 149,738,891 39,113,647 18,722,528 207,575,066 6,999,341 Deferred inflows of resources Deferred pension amounts 204,778 68,259 102,390 375,427 - Net position Net investment in capital assets 222,087,576 9,923,359 1,977,328 233,988,263 8,669,170 Restricted for debt retirement 1,800,929 - - 1,800,929 - Restricted for capital projects - 152,246 152,246 - Unrestricted(deficit) 3,656,464 4,693,509 (15,649,120) (7,299,147) 4,108,531 Total net position $ 227,544,969 $ 14,769,114 $ (13,671,792) $ 228,642,291 $ 12,777,701 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 30,2019 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 $ 35,752,812 $ 8,422,161 $ 6,741,084 $ 50,916,057 $ 85,397,512 Operating expenses Personnel services 8,371,242 1,872,284 1,961,265 12,204,791 8,644,110 Purchase of goods and services 10,216,365 2,114,909 3,062,380 15,393,654 74,773,138 Depreciation 10,595,778 980,505 388,030 11,964,313 2,180,737 Total operating expenses 29,183,385 4,967,698 5,411,675 39,562,758 85,597,985 Operating income(loss) 6,569,427 3,454,463 1,329,409 11,353,299 (200,473) Nonoperating revenues(expenses) Interest revenue 943,555 1,451,501 50,966 2,446,022 - Gain on sale of capital assets - 4,202,895 - 4,202,895 64,820 Interest expense and fees (2,756,591) (2,114,300) (14,586) (4,885,477) (174,413) Capital contribution to others - (214,486) (214,486) Total nonoperating revenue(expenses) (1,813,036) 3,540,096 (178,106) 1,548,954 (109,593) Income(loss)before transfers 4,756,391 6,994,559 1,151,303 12,902,253 (310,066) Transfers Transfers in - - 613,593 613,593 Transfers out (32,776) (32,776) Totaltransfers - - 580,817 580,817 Change in net position 4,756,391 6,994,559 1,732,120 13,483,070 (310,066) Net position,beginning of year 222,788,578 7,774,555 (15,403,912) 215,159,221 13,087,767 Net position,end of year $ 227,544,969 $ 14,769,114 $ (13,671,792) $ 228,642,291 $ 12,777,701 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 30,2019 Governmental Business-type Activities-Enterprise Funds I Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal LSystem j System Funds I min Service Funds Cash flows from operating activities Cash received from customers $ 35,756,653 $ 9,236,731 $ 6,684,983 $ 51,678,367 $ - Cash received from interfund services - - - - 85,938,214 Cash payments for goods and services (9,358,735) (2,296,634) (2,999,286) (14,654,655) (74,132,136) Cash payments to employees (7,265,840) (2,565,758) (3,433,958) (13,265,556) (8,777,275) Net cash provided by operating activities 19,132,078 4,374,339 251,739 23,758,156 3,028,803 Cash flows from noncapital financing activities Transfers in - - 613,593 613,593 - Transfers out (32,776) (32,776) Net cash provided by noncapital financing activities - 580,817 580,817 - Cash flows from capital and related financing activities Proceeds from sale of capital assets 17,980,870 - 17,980,870 77,416 Acquisition and construction of capital assets (8,047,242) (1,749,665) - (9,796,907) (1,318,930) Capital contributions to others - - (214,486) (214,486) Proceeds from issuance of long-term debt 9,785,317 6,210,000 15,995,317 Premium on issuance of long-term debt 795,207 325,232 1,120,439 Principal paid on long-term debt (11,886,780) (12,515,000) (225,580) (24,627,360) (361,324) Interest paid on long-term debt (2,886,379) (1,525,898) (15,691) (4,427,968) (174,669) Amount paid to refunding bond escrow agent (8,569,870) (6,556,333) (15,126,203) Payments received on capital lease 644,653 - 644,653 Net cash provided by(used in)capital and related financing activities (20,165,094) 2,169,206 (455,757) (18,451,645) (1,777,507) Cash flows from investing activities Interest and dividends received 946,889 374,776 50,966 1,372,631 Payments received on loans made to others - 46,299 - 46,299 Net cash provided by investing activities 946,889 421,075 50,966 1,418,930 - Net change in cash and cash equivalents (86,127) 6,964,620 427,765 7,306,258 1,251,296 Cash and cash equivalents,beginning of year 41,782,746 11,180,287 1,490,292 54,453,325 6,185,951 Cash and cash equivalents,end of year $ 41,696,619 $ 18,144,907 $ 1,918,057 $ 61,759,583 $ 7,437,247 Reconciliation to statement of net position Cash and cash equivalents $ 787 $ 3,221,027 $ 23,568 $ 3,245,382 $ - Equity in pooled cash and investments 39,270,669 14,771,634 1,894,489 55,936,792 7,437,247 Restricted cash and cash equivalents 2,425,163 152,246 - 2,577,409 - $ 41,696,619 $ 18,144,907 $ 1,918,057 $ 61,759,583 $ 7,437,247 continued... 46 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30,2019 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income(loss)to net cash provided by operating activities Operating income(loss) $ 6,569,427 $ 3,454,463 $ 1,329,409 $ 11,353,299 $ (200,473) Adjustments to reconcile operating income(loss)to net cash provided by operating activities: Depreciation 10,595,778 980,505 388,030 11,964,313 2,180,737 Changein: Accounts receivable 3,843 413,032 (44,965) 371,910 540,702 Inventories 105,313 - 105,313 (10,114) Prepaids - (124,355) (124,355) (290,033) Due from other funds (2) 401,538 401,536 Deferred outflows-pension 275,239 140,682 267,971 683,892 Deferred outflows-OPEB (358,721) (104,375) (148,982) (612,078) - Accounts payable 752,317 (56,140) 63,094 759,271 941,149 Accrued payroll 3,913 1,023 22 4,958 9,807 Claims incurred but not reported - - - - (150,000) Due to component units (1,230) (1,230) Unearned revenues (11,136) (11,136) - Compensated absences (17,198) (6,434) 7,655 (15,977) 7,028 Net pension liability 2,006,958 (140,095) (1,151,668) 715,195 - Deferred inflows-pension (138,385) (65,184) (119,949) (323,518) Net other postemployment benefit liability 189,140 (258,110) 29,466 (39,504) Deferred inflows-OPEB (855,544) (260,981) (357,208) (1,473,733) - Net cash provided by operating activities $ 19,132,078 $ 4,374,339 $ 251,739 $ 23,758,156 $ 3,028,803 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, 2019 Pension and Other Postemployment Benefit Trust Agency Funds Funds Assets Cash and cash equivalents $ 10,000,828 $ Equity in pooled cash and investments 4,402,694 76,818 Investments: U.S. treasuries 19,401,838 - U.S. agencies 32,829,852 Collateralized mortgage obligations 930,732 Mutualfunds 364,216,954 Domestic equities 110,842,048 International equities 1,955,119 Emerging market equities 11,692,856 Money market funds 9,141,606 Dividends and interest receivable 445,695 - Total assets 565,860,222 $ 76,818 Liabilities Accounts payable 437,701 $ - Undistributed receipts 76,818 Total liabilities 437,701 $ 76,818 Net position restricted for Pension benefits 462,739,731 Other postemployment benefits 102,682,790 Total net position $ 565,422,521 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, 2019 Additions Investment income: Net appreciation in fair value of investments $ 30,539,239 Interest income 58,089 Dividend income 898,000 Investment expenses (1,753,200) Net investment income 29,742,128 Contributions: Employer 49,957,231 Plan members 4,869,154 Total contributions 54,826,385 Total additions 84,568,513 Deductions Participant benefits 78,923,796 Administrative expense 1,272,294 Total deductions 80,196,090 Change in net position 4,372,423 Net position restricted for pension and other postemployment benefits Beginning of year 561,050,098 End of year $ 565,422,521 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, 2019 Lansing Tax Entertainment Brownfield Increment Et Public Redevelopment Finance Facilities Authority Authority Authority Totals Assets Cash and cash equivalents $ 3,929,091 $ 1,158,738 $ 1,163,424 $ 6,251,253 Receivables, net 189,176 - 861,751 1,050,927 Due from primary government - 145 - 145 Inventories, prepaids and other assets - 154,302 154,302 Restricted cash and cash equivalents 2,758,415 80,000 2,838,415 Capital assets being depreciated, net - - 23,352 23,352 Total assets 4,118,267 3,917,298 2,282,829 10,318,394 Deferred outflows of resources Deferred charge on refunding - 1,090,578 - 1,090,578 Liabilities Accounts payable and accrued liabilities 1,345,618 - 737,328 2,082,946 Accrued interest payable - 214,705 - 214,705 Unearned revenues - 501,429 501,429 Long-term debt: Due within one year - 254,719 - 254,719 Due in more than one year 500,000 44,440,618 - 44,940,618 Total liabilities 1,845,618 44,910,042 1,238,757 47,994,417 Net position Investment in capital assets - - 23,352 23,352 Restricted for Cooley Stadium - 80,000 80,000 Unrestricted (deficit) 2,272,649 (39,902,166) 940,720 (36,688,797) Total net position $ 2,272,649 $ (39,902,166) $ 1,044,072 $ (36,585,445) 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, 2019 Lansing Tax Entertainment Brownfield Increment Et Public Redevelopment Finance Facilities Authority Authority Authority Totals Expenses Brownfield redevelopment $ 4,250,976 $ - $ $ 4,250,976 Community development - 3,590,401 3,590,401 Recreation and culture - - 10,658,863 10,658,863 Total expenses 4,250,976 3,590,401 10,658,863 18,500,240 Program revenues Charges for services - - 8,761,416 8,761,416 Operating grants and contributions 778,932 1,346,300 2,125,232 Total program revenues 778,932 10,107,716 10,886,648 Net program (expense) revenue (3,472,044) (3,590,401) (551,147) (7,613,592) General revenues Property taxes 3,036,500 2,879,420 386,438 6,302,358 Unrestricted investment earnings 18,311 130,614 - 148,925 Total general revenues 3,054,811 3,010,034 386,438 6,451,283 Changes in net position (417,233) (580,367) (164,709) (1,162,309) Net position, beginning of year 2,689,882 (39,321,799) 1,208,781 (35,423,136) Net position, end of year $ 2,272,649 $ (39,902,166) $ 1,044,072 $ (36,585,445) 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 73 4. Deposits and Investments 74 5. Receivables 84 6. Capital Assets 85 7. Accounts Payable and Accrued Liabilities 87 8. Interfund Receivables, Payables and Transfers 87 9. Long-term Debt 89 10.Fund Balances - Governmental Funds 94 11.Net Investment in Capital Assets 95 12.Segment Information - Enterprise Funds 95 13.Risk Management 95 14.Property Taxes 96 15.Contingent Liabilities 97 16.Pension Plans 97 17.Other Postemployment Benefits 112 18.Tax Abatements 123 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 City of Lansing 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. 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 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 Recei vables/Pa yables 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. 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. Unearned Revenue Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure on allowable costs. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 Benefit 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 plans and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plans. 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, 2019. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. During the year ended June 30, 2019, the City incurred expenditures in certain budgetary funds which were in excess of the amounts appropriated, as follows: Total Amount of Budget Appropriations Expenditures Variance General fund: General government: Attorney's office $ 2,168,300 $ 3,181,864 $ 1,013,564 City clerk 1,197,000 1,356,153 159,153 Finance 5,471,600 8,373,425 2,901,825 Library rental 150,000 151,846 1,846 Human resources 2,118,000 2,121,102 3,102 Public works 11,572,500 11,615,556 43,056 Nonmajor governmental funds: Major streets fund: Current expenditures: Principal 376,200 471,930 95,730 Interest 150,000 175,055 25,055 Other financing uses: Payment to refunding bond escrow agent - 1,995,908 1,995,908 Local streets fund: Current expenditures: Highways and streets 5,413,600 5,679,276 265,676 Interest 279,000 359,124 80,124 Other financing uses: Payment to refunding bond escrow agent - 5,745,455 5,745,455 State and federal grants fund: Public works 17,339 17,339 The above budgeted amounts are presented at the activity level, which is the required minimum level of control per the Michigan Uniform Budget Manual. The budget variance in the attorney's office was due to the settlement of lawsuits of $1,306,000. The variance in finance was due primarily to IRS penalties of $2,500,000 and bad debt write-offs of $287,281. 3. DEFICIT FUND EQUITY The Special Assessments Capital Projects Fund reported a deficit fund balance of $115,546. The fund received a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. The deficit is the result of deferred special assessments receivable. As special assessments are collected, this deficit will be eliminated, and the advance repaid. The Cemetery, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $2,284,746, $4,642,640, and $8,721,734, respectively, as a result of the net pension and net other postemployment benefit liabilities. 73 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of $39,902,166 at June 30, 2019. 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, 2019: Primary Component Government Units Totals Statement of net position Cash and investments $ 104,311,595 $ 6,251,253 $ 110,562,848 Restricted cash and investments 2,577,409 2,838,415 5,415,824 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 10,000,828 - 10,000,828 Equity in pooled cash and investments 4,402,694 4,402,694 Investments 551,011,005 551,011,005 Agency funds: Equity in pooled cash and investments 76,818 76,818 Total $ 672,380,349 $ 9,089,668 $ 681,470,017 Deposits and investments Bank deposits: Checking/savings accounts $ 96,412,183 Investment in securities and mutual funds: Pooled investments 31,138,994 Employees' retirement system investments 192,414,946 Police and fire retirement system investments 325,108,126 Employees' money purchase pension plan investments 2,952,671 Retiree health care VEBA investments 30,535,262 Tax increment finance authority investments 2,758,415 Total investment in securities and mutual funds 584,908,414 Cash on hand 149,420 Total $ 681,470,017 74 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, $99,363,674 of the City's bank balance of $102,118,122 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: SEtP AAAm $ 26,351,987 SEW AA+ 1,599,170 Unrated 867,005 Assets not subject to credit risk 2,320,832 Total $ 31,138,994 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 $ 26,940,233 1-5 years 1,877,929 No maturity 2,320,832 Total $ 31,138,994 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. 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 $ - $ 2,466,175 $ $ 2,466,175 Money market funds 2,221,977 - 2,221,977 $ 2,221,977 $ 2,466,175 $ $ 4,688,152 Investments carried at net asset value: Michigan CLASS government investment pool 26,450,842 Total investments $ 31,138,994 Investments in Entities that Calculate Net Asset Value per Share. The City holds shares in Michigan CLASS whereby the fair value of the investment is measured on a recurring basis using net asset value per share (or its equivalent) of the investment pool as a practical expedient. At year end, the net asset value of the City's investment in Michigan CLASS was $26,450,842. The investment pool had no unfunded commitments, specific redemption frequency or redemption notice period required. The Michigan CLASS investment pool invests in U.S. treasury obligations, federal agency obligations of the U.S. government, high-grade commercial paper (rated `A-1' or better) collateralized bank deposits, repurchase agreements (collateralized at 102% by Treasuries and agencies), and approved money- market funds. The program seeks to provide safety, liquidity, convenience, and competitive rates of return, and is designed to meet the needs of Michigan public sector investors. It purchases securities that are legally permissible under state statutes and are available for investment by Michigan counties, cities, townships, school districts, authorities and other public agencies. 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. 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements Deposits The pension and OPEB trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net position are composed entirely of short-term investments in money market accounts. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds' assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. 77 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2019: 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 $ 5,304,420 $ 7,329,275 $ $ $ 12,633,695 On securities loan 3,353,474 3,414,669 6,768,143 U.S. agencies: Not on securities loan 14,959,810 17,870,042 32,829,852 On securities loan - - - Collateralized mortgage obligations 187,346 743,386 930,732 Domestic corporate securities mutual funds: Not on securities loan 21,587,284 33,836,262 55,423,546 Real estate investment funds 19,320,190 24,877,312 44,197,502 Equity mutual funds - - - International equity mutual funds 66,559,683 92,886,663 163,248 3,346,741 162,956,335 Domestic equity mutual funds 17,329,443 37,967,428 2,525,357 12,340,479 70,162,707 Domestic debt securities mutual funds - - 264,066 13,251,852 13,515,918 International debt securities mutual funds 17,960,946 - - 17,960,946 Private equity partnerships - - Domestic equities: Not on securities loan 28,681,369 59,932,481 88,613,850 On securities loan 8,765,797 13,462,401 22,228,198 International equities: Not on securities loan 679,519 1,275,600 - 1,955,119 Emerging markets equities 3,580,659 7,283,009 829,188 11,692,856 Money market funds 2,105,952 6,268,652 767,002 9,141,606 Total investments $ 192,414,946 $ 325,108,126 $ 2,952,671 $ 30,535,262 $ 551,011,005 78 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 $ 123,687 $ 152,200 $ 23,325 $ $ 299,212 AA - - 173,252 173,252 A - 4,405,262 4,405,262 BBB - 8,846,590 8,846,590 BB - - 67,489 - 67,489 US government guaranteed 18,651,049 23,683,255 - 42,334,304 Not rated 28,723,550 45,626,831 - 74,350,381 Assets not subject to credit risk 144,916,660 255,645,840 2,688,605 17,283,410 420,534,515 $ 192,414,946 $ 325,108,126 $ 2,952,671 $ 30,535,262 $ 551,011,005 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, 2019, 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. 11.2% 10.4% Common stock Northern Trust Bank, N.A. 8.3% 11.7% U.S. government securities United State of America 6.2% 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. 79 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 $ 384,714 $ 697,551 $ $ $ 1,082,265 Italy 44,713 109,281 153,994 Netherlands 21,669 53,393 75,062 United Kingdom 15,762 38,823 54,585 France 42,233 103,100 145,333 Israel 170,428 273,452 443,880 International mutual funds 66,559,683 110,847,609 163,248 3,346,741 180,917,281 Total $ 67,239,202 $ 112,123,209 $ 163,248 $ 3,346,741 $ 182,872,400 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, 2019, 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 $ - $ 3,430,542 $ 3,978,355 $ 1,248,997 $ 8,657,894 U.S. agencies 325,448 444,959 - - 770,407 U.S. government mortgage backed securities - 248,805 742,005 12,172,320 13,163,130 U.S. government issued commercial mortgage backed securities 416,974 123,687 485,612 1,026,273 Commercial mortgage backed securities - 41,939 - 145,407 187,346 Total $ 325,448 $ 4,583,219 $ 4,844,047 $ 14,052,336 23,805,050 Fixed income investments with no maturity: Domestic corporate securities mutual funds 21,587,284 Money market funds 2,105,952 Total investments $ 47,498,286 80 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 $ - $ 5,440,390 $ 4,067,987 $ 1,235,567 $ 10,743,944 U.S. agencies 401,725 616,509 - - 1,018,234 U.S. government mortgage backed securities - 208,664 1,465,184 13,753,013 15,426,861 U.S. government issued commercial mortgage backed securities 756,084 152,200 516,663 1,424,947 Commercial mortgage backed securities - 53,922 - 689,464 743,386 Total $ 401,725 $ 7,075,569 $ 5,685,371 $ 16,194,707 29,357,372 Fixed income investments with no maturity: Domestic corporate securities mutual funds 33,836,262 Money market funds 6,268,652 Total investments $ 69,462,286 Investment Maturities (Fair Value) 1-5 years 6-10 years Total Employees'Money Purchase Pension Pan Domestic debt securities $ 173,252 $ 90,814 $ 264,066 Investment Maturities (Fair Value) 1-5 years Retiree Health Care VEBA Domestic debt securities $ 13,251,852 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. 81 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, 2019, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $12,119,271 and $16,877,070, respectively, for which the Plans' received cash collateral of $12,324,587 and $17,147,852, 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, 2019: Level Level Level Total Employees' Retirement System U.S. treasuries $ $ 8,657,894 $ $ 8,657,894 U.S. agencies 14,959,810 14,959,810 Collateralized mortgage obligations 187,346 - 187,346 Mutualfunds 105,476,410 19,320,190 124,796,600 Domestic equities 37,447,166 - 37,447,166 International equities 679,519 679,519 Emerging market equities 3,580,659 3,580,659 Money market funds 2,105,952 - 2,105,952 $ 149,477,052 $ 42,937,894 $ $ 192,414,946 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements Level Level Level Total Police and Fire Retirement System U.S. treasuries $ $ 10,743,944 $ $ 10,743,944 U.S. agencies 17,870,042 17,870,042 Collateralized mortgage obligations 743,386 - 743,386 Mutualfunds 161,618,567 22,882,772 184,501,339 Domestic equities 73,394,882 - 73,394,882 International equities 1,275,600 1,275,600 Emerging market equities 7,283,009 7,283,009 Money market funds 6,268,652 - 6,268,652 $ 250,584,096 $ 51,496,758 $ 302,080,854 Investments carried at net asset value: Real estate investment trusts 1,994,540 International equity mutual funds 21,032,732 Total investments $ 325,108,126 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, 2019. 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, 2019, the City had $2,087,085 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 $ 2,952,671 $ $ $ 2,952,671 Level1 Level2 Level3 Total Retiree Health Care VEBA Emerging market equities $ 829,188 $ $ $ 829,188 Mutualfunds 28,939,072 28,939,072 Money market funds 767,002 767,002 $ 30,535,262 $ $ $ 30,535,262 83 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 $ 9,427,662 $ 5,555,246 $ 861,751 Taxes receivable 845,163 - - Special assessments receivable 191,201 - Loansreceivable 1,222,523 - 189,176 Accrued interest receivable 2,172,446 129,283 - Due from other governments 10,488,669 - Lease receivable - 23,556,870 Allowance for uncollectible accounts (735,770) (490,031) - $ 23,611,894 $ 28,751,368 $ 1,050,927 Amount not expected to be collected within one year $ 3,549,532 $ 22,898,882 $ 160,744 84 CITY OF LANSING, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2019 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,302,787 $ - $ $ $ 25,302,787 Capital assets, being depreciated: Land improvements 23,198,836 3,390,050 26,588,886 Equipment and vehicles 39,972,462 2,233,901 (1,075,181) 41,131,182 Buildings 136,275,787 136,275,787 Infrastructure 302,543,589 3,194,412 305,738,001 501,990,674 8,818,363 (1,075,181) 509,733,856 Less accumulated depreciation for: Land improvements (11,399,792) (1,119,103) - (12,518,895) Equipment and vehicles (32,412,514) (2,544,261) 1,062,585 (33,894,190) Buildings (86,216,812) (4,426,131) - (90,642,943) Infrastructure (214,151,740) (4,561,036) (218,712,776) (344,180,858) (12,650,531) 1,062,585 (355,768,804) Total capital assets being depreciated, net 157,809,816 (3,832,168) (12,596) 153,965,052 Governmental activities capital assets, net $ 183,112,603 $ (3,832,168) $ (12,596) $ $ 179,267,839 At June 30, 2019, the City's governmental activities had outstanding commitments through construction contracts of approximately $5,543,000. 85 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 $ - $ (822,130) $ - $ 12,470,361 Construction in progress 6,241,549 7,426,147 (122,864) 13,544,832 19,534,040 7,426,147 (822,130) (122,864) 26,015,193 Capital assets, being depreciated: Land improvements 29,054,321 413,038 122,864 29,590,223 Equipment and vehicles 7,771,216 288,414 (68,548) - 7,991,082 Buildings 210,801,197 1,220,493 (25,255,312) 186,766,378 Sewers 343,700,253 448,815 344,149,068 591,326,987 2,370,760 (25,323,860) 122,864 568,496,751 Less accumulated depreciation for: Land improvements (14,788,543) (546,029) - - (15,334,572) Equipment and vehicles (6,584,086) (507,758) 68,548 (7,023,296) Buildings (126,054,936) (3,921,412) 12,299,467 (117,676,881) Sewers (109,037,318) (6,989,114) - (116,026,432) (256,464,883) (11,964,313) 12,368,015 (256,061,181) Total capital assets being depreciated, net 334,862,104 (9,593,553) (12,955,845) 122,864 312,435,570 Business-type activities capital assets, net $ 354,396,144 $ (2,167,406) $ (13,777,975) $ - $ 338,450,763 At June 30, 2019, the City's business-type activities had outstanding commitments through construction contracts of approximately $5,169,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 434,908 Public safety 673,040 Public works 4,577,035 Recreation and culture 2,972,459 Community development 1,812,352 Internal service funds 2,180,737 Total depreciation expense - governmental activities $ 12,650,531 Depreciation of business-type activities by function Sewage disposal system $ 10,595,778 Municipal parking system 980,505 Cemetery 9,827 Golf 77,191 Recycling 301,012 Total depreciation expense - business-type activities $ 11,964,313 86 CITY OF LANSING, MICHIGAN Notes to Financial Statements 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 9,778,564 $ 1,890,146 $ 1,707,790 Deposits payable 35,020 66,815 - Accrued payroll 2,762,723 140,532 375,156 Contract retainage payable 1,138,157 - - Due to other governments 3,861,074 Claims incurred but not reported 750,000 Other 865,782 - - $ 19,191,320 $ 2,097,493 $ 2,082,946 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2019, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ 500 $ 2 Nonmajor governmental funds - 624,145 Sewage disposal system 2,944 362,870 Municipal parking system 986,515 2,942 Total $ 989,959 $ 989,959 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 $ - $ 150,303 Municipal parking system 150,303 - Total $ 150,303 $ 150,303 Advances are made to the Special Assessments Fund to prevent a negative equity in pooled cash. 87 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 $ - $ 145 Tax increment finance authority 145 - Total $ 145 $ 145 For the year ended June 30, 2019, interfund transfers consisted of the following: Transfers In Nonmajor Nonmajor governmental enterprise Transfers Out General fund funds funds Total General fund $ - $ 5,716,520 $ 1,696 $ 5,718,216 Nonmajor governmental funds 100,000 2,900,000 611,897 3,611,897 Nonmajor enterprise funds - 32,776 - 32,776 Total $ 100,000 $ 8,649,296 $ 613,593 $ 9,362,889 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. 88 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: 2013 Energy Efficiently Refunding Bonds - Limited Tax 2.40% $ 5,645,000 $ 2,475,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,170,000 2015 Lansing Center Refunding Bonds - Limited Tax 2.00-3.00% 1,770,000 915,000 2018 Michigan Transportation Fund Bonds 3.50% 1,665,000 1,665,000 2019 General Obligation Refunding - Limited Tax 2.00-4.00% 6,938,699 6,938,699 $ 19,218,699 $ 14,163,699 Business-type activities: 2009 Building Authority Refunding Bonds - Limited Tax 6.014-6.584% $ 8,161,691 $ 2,767,490 2014 Building Authority Refunding Bonds - Limited Tax 4.75% 7,245,000 7,245,000 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 634,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 635,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 1,147,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 1,918,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 3,621,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,145,688 3,560,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,842,649 1,497,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 8,003,778 3,093,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 5,429,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 8,681,346 2007 Limited Tax Sewer Bond - 5005-20 1.63% 24,244,726 12,559,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,494,933 16,705,453 2008 Limited Tax Sewer Bond - 5005-22 2.50% 14,455,604 10,120,604 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 6,333,000 2015 Limited Tax Sewer Bond - 5211-01 2.50% 3,372,405 2,822,405 89 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 $ 1,810,065 2016 Limited Tax Sewer Bond - 5581-01 2.50% 1,309,872 3,081,310 2014 Building Authority Refunding Bonds - Limited Tax 2.00-3.00% 6,765,000 3,465,000 2017 Building Authority Refunding - Limited Tax 3.31-4.08% 10,805,000 10,805,000 2019 General Obligation Refunding - Limited Tax 2.00-4.00% 7,681,301 7,681,301 $ 228,720,808 $ 115,616,143 Advance Refundings In September 2018, the City issued $6,210,000 of General Obligation Limited Tax Refunding Bonds to advance refund $6,435,000 of the 2007 Building Authority Refunding Bonds. 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. The 2007 bonds were all callable during the fiscal year ended June 30, 2019, so no defeasance of prior debt resulted from this transaction. The refunding resulted in a cash gain of$491,430 and an economic gain of$425,017. In April 2019, the City issued $14,620,000 of General Obligation Limited Tax Refunding Bonds to advance refund $15,750,000 (of which $7,475,000 was allocated to governmental activities and $8,275,000 to the Sewage Disposal System enterprise fund) of the Authority's 2009 Capital Improvement Bonds. 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. The 2009 bonds were all callable during the fiscal year ended June 30, 2019, so no defeasance of prior debt resulted from this transaction. The refunding resulted in a cash gain of$2,470,450 and an economic gain of$2,015,106. In-substance Defeasance. During the year ended June 30, 2019, the City sold one of its parking structures. The construction of this structure was initially financed by bonds issued by the City. The proceeds from this sale were used to defease the remaining principal of the Authority's 2012 and 2018 Building Authority Refunding Bonds in the amounts of $4,775,000 and $5,750,000, respectively. The proceeds of the sale 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 defeased bonds mature on May 1, 2020 through 2027. Accordingly, $10,525,000 of defeased debt remains outstanding at year-end related to this transaction. Prior Year Defeased Debt As of June 30, 2019, defeased bonds related to the prior year refunding of the 2005 Building Authority Refunding Bonds were still outstanding in the amount of $3,745,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2020 through 2022. As of June 30, 2019, defeased bonds related to the prior year refunding of the 2009 Building Authority Capital Appreciation Bonds were still outstanding in the amount of $1,949,200. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2021 through 2024. 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements Revenue Bonds. The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Interest Original Rate Amount Amount Revenue bonds - business type activities 2013 Sewer Revenue and Refunding Bond 2.40% $ 21,765,000 $ 14,075,000 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 $2,240,688 and $18,108,760 respectively. Installment Purchase Agreements. The government enters into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Interest Original Rate Amount Amount Installment purchase agreements Governmental activities: 2014 Lease Purchase Agreement - Recycling Trucks 1.96% $ 1,550,855 $ 520,243 2015 Ballpark Improvements Installment Purchase 3.00% 13,500,000 10,753,777 $ 15,050,855 $ 11,274,020 Business-type activities: 2014 Lease Purchase Agreement - Recycling Carts 1.96% $ 1,737,000 $ 582,920 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 1,342,002 $ 7,728,428 $ 7,242,002 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in Long-term Debt. Long-term liability activity for the year ended June 30, 2019, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 15,330,000 $ 8,603,699 $ 9,770,000 $ 14,163,699 $ 2,371,468 Notes from direct borrowings and direct placements: Installment purchase agreements 12,289,396 1,015,376 11,274,020 1,043,947 Loans payable 7,476,545 - 234,543 7,242,002 241,580 35,095,941 8,603,699 11,019,919 32,679,721 3,656,995 Deferred amounts: For issuance discounts (59,321) - (6,833) (52,488) - For issuance premiums 55,139 780,670 21,600 814,209 - Compensated absences 9,957,856 1,287,949 1,277,057 9,968,748 1,277,057 Accrued workers compensation 2,292,221 978,209 959,448 2,310,982 548,329 $ 47,341,836 $ 11,650,527 $ 13,271,191 $ 45,721,172 $ 5,482,381 Business-type activities General obligation bonds $ 137,182,606 $ 15,995,317 $ 37,561,780 $ 115,616,143 $ 11,623,482 Revenue bonds 15,625,000 - 1,550,000 14,075,000 1,550,000 Notes from direct borrowings and direct placements: Installment purchase agreements 808,500 - 225,580 582,920 230,023 153,616,106 15,995,317 39,337,360 130,274,063 13,403,505 Deferred amounts: For issuance discounts (490,338) - (149,523) (340,815) - For issuance premiums 1,879,538 1,120,439 561,396 2,438,581 - Compensated absences 871,120 61,937 77,914 855,143 77,914 $ 155,876,426 $ 17,177,693 $ 39,827,147 $ 133,226,972 $ 13,481,419 92 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 the general obligation and revenue bonds of the City are as follows: Year Governmental Activities Business-type Activities Ending June 30, Principal Interest Total Principal Interest Total 2020 $ 2,371,468 $ 538,524 $ 2,909,992 $ 13,173,482 $ 3,510,701 $ 16,684,183 2021 2,475,452 467,133 2,942,585 12,934,227 4,083,141 17,017,368 2022 2,232,063 389,186 2,621,249 12,444,891 3,797,527 16,242,418 2023 716,302 324,172 1,040,474 10,724,778 3,553,267 14,278,045 2024 747,659 290,503 1,038,162 10,634,125 2,961,420 13,595,545 2025-2029 4,206,365 879,681 5,086,046 41,756,193 7,627,041 49,383,234 2030-2034 1,414,390 138,202 1,552,592 15,639,667 3,965,334 19,605,001 2035-2039 - - - 11,183,780 1,547,701 12,731,481 2040-2041 - - - 1,200,000 24,450 1,224,450 $ 14,163,699 $ 3,027,401 $ 17,191,100 $ 129,691,143 $ 31,070,582 $ 160,761,725 Debt service requirements to maturity for the notes from direct borrowings and direct placements of the City are as follows: Year Governmental Activities Business-type Activities Ending June 30, Principal Interest Total Principal Interest Total 2020 $ 1,285,527 $ 545,467 $ 1,830,994 $ 230,023 $ 10,304 $ 240,327 2021 1,707,075 505,109 2,212,184 234,554 5,773 240,327 2022 1,642,029 459,450 2,101,479 118,343 1,743 120,086 2023 1,581,002 413,819 1,994,821 - - - 2024 1,626,724 367,543 1,994,267 2025-2029 7,474,117 1,150,879 8,624,996 2030-2034 3,199,548 175,545 3,375,093 - - - $ 18,516,022 $ 3,617,812 $ 22,133,834 $ 582,920 $ 17,820 $ 600,740 93 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 $ 29,575 $ 1,030,305 $ 1,059,880 Prepaids 9,030 7,556 16,586 Corpus of permanent fund - 1,914,166 1,914,166 38,605 2,952,027 2,990,632 Restricted Major and local streets - 14,840,386 14,840,386 Drug law and narcotics enforcement 1,583,641 1,583,641 Downtown Lansing 47,238 47,238 Debt service 30,111 30,111 Building department 531,033 531,033 Capital improvements (unexpended bond proceeds) 6,368 6,368 17,038,777 17,038,777 Committed City parks 484,669 484,669 Capital improvements 8,663,319 8,663,319 - 9,147,988 9,147,988 Unassigned (deficit) 9,992,885 (115,546) 9,877,339 Total fund balances - governmental funds $ 10,031,490 $ 29,023,246 $ 39,054,736 94 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, 2019, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 25,302,787 $ 26,015,193 $ Capital assets being depreciated, net 153,965,052 312,435,570 23,352 Total capital assets 179,267,839 338,450,763 23,352 Related debt: General obligation bonds 14,163,699 115,616,143 - Revenue bonds - 14,075,000 Installment purchase agreements 11,274,020 582,920 Loans payable 7,242,002 - Unamortized bond discounts (52,488) (340,815) Unamortized bond premiums 814,209 2,438,581 Deferred charge on bond refunding (320,544) (4,352,459) Amounts under leases receivable - (23,556,870) Unexpended bond proceeds (6,368) - Totalrelated debt 33,114,530 104,462,500 - Net investment in capital assets $ 146,153,309 $ 233,988,263 $ 23,352 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. 95 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, 2019 2018 Estimated liability, beginning of year $ 900,000 $ 885,000 Estimated claims incurred, including changes in estimates 9,849,331 9,664,043 Claim payments (9,999,331) (9,649,043) Estimated liability, end of year $ 750,000 $ 900,000 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, 2019 2018 Estimated liability, beginning of year $ 2,292,221 $ 2,417,780 Estimated claims incurred, including changes in estimates 978,209 1,031,123 Claim payments (959,448) (1,156,682) Estimated liability, end of year $ 2,310,982 $ 2,292,221 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, 2019 was $19.44 per $1,000 of taxable value. 96 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. 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Plan Membership. At December 31, 2018, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 916 Terminated employees entitled to but not yet receiving benefits 133 Vested and non-vested active participants 405 Total membership 1,454 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, 2019 was 46.8% of projected valuation payroll. 98 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, 2019, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 5.17%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2019, 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, 2019 is as follows: Reserve/Group Balance Employee savings fund $ 12,745,315 Retirement reserve fund 132,084,679 Pension accumulation fund 5,628,058 Members benefit fund 15,127,517 Health insurance fund 32,946,254 99 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, 2019 were as follows: Total pension liability $ 303,730,647 Plan fiduciary net position 165,585,569 Net pension liability $ 138,145,078 Plan fiduciary net position as percentage of total pension liability 54.5% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% Salary increases 2.75%, plus service based increases Investment rate of return 7.25%, net of investment expense and including inflation 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, 2018 valuation were based on the results of actuarial experience analysis conducted in December 2016. Changes in Actuarial Assumptions. There were no changes in actuarial assumptions during fiscal year 2019. 100 CITY OF LANSING, MICHIGAN Notes to Financial Statements The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2019, 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%. 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. 101 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2018 $ 305,528,755 $ 168,558,816 $ 136,969,939 Changes for the year: Service cost 2,719,559 - 2,719,559 Interest 21,512,099 21,512,099 Differences between expected and actual experience (2,559,726) (2,559,726) Employer contributions 10,880,932 (10,880,932) Employee contributions 1,220,657 (1,220,657) Net investment income 8,437,568 (8,437,568) Benefit payments, including refunds of employee contributions (23,470,040) (23,470,040) - Administrative expense (42,364) 42,364 Net changes (1,798,108) (2,973,247) 1,175,139 Balances at June 30, 2019 $ 303,730,647 $ 165,585,569 $ 138,145,078 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 $ 164,697,183 $ 138,145,078 $ 115,359,996 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2019, the City recognized pension expense of $13,770,789. At June 30, 2019, 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 $ - $ 1,706,484 $ (1,706,484) Net difference between projected and actual earnings on pension plan investments 5,050,290 - 5,050,290 Total $ 5,050,290 $ 1,706,484 $ 3,343,806 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 2020 $ 2,365,018 2021 (838,377) 2022 1,136,209 2023 680,956 Total $ 3,343,806 Payable to the Pension Plan. At June 30, 2019, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2019. Poiice 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. 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements Members may retire at age 55, or at any age with 25 or more years of credited service. Members are vested after completing 10 years of credited service. Members are required to retire at age 60 (Police) or 70 (Fire). When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. The plan provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. Plan Membership. At December 31, 2018, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 750 Terminated employees entitled to but not yet receiving benefits 49 Vested and non-vested active participants 372 Total membership 1,171 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, fire members hired after May 19, 2014 are required to contribute 7.00%. Police supervisors are required to contribute 9.52%, police non-supervisors are required to contribute 9.0%, and police non supervisors hired after August 1, 2014 are required to contribute 7.00%. 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, 2019 was 45.7% of projected valuation payroll. 104 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was 6.30%. The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2019, 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, 2019 is as follows: Reserve/Group Balance Retirement reserve fund $ 294,201,491 Health insurance fund 39,200,746 Net Pension Liability. The components of the net pension liability for the police and fire retirement system at June 30, 2019, were as follows: Total pension liability $ 461,355,972 Plan fiduciary net position 294,201,491 Net pension liability $ 167,154,481 Plan fiduciary net position as percentage of total pension liability 63.8% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2018, rolled forward to June 30, 2019, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 2.75% Salary increases 2.75%, plus service-based increases Investment rate of return 7.25%, net of investment expense and including inflation 105 CITY OF LANSING, MICHIGAN Notes to Financial Statements Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used. 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, 2018 valuation were based on the results of actuarial experience analysis conducted in December 2016. Changes in Actuarial Assumptions. There were no changes in actuarial assumptions during fiscal year 2019. 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, 2019, 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% 5.80% 1.85% International equity - developed 12.00% 6.10% 0.73% International equity - emerging 4.00% 7.25% 0.29% Fixed income 22.00% 2.25% 0.50% Real estate 10.00% 4.80% 0.48% Global opportunistic fixed income 5.00% 3.25% 0.16% Global equity long/short 10.00% 5.00% 0.50% Absolute return 5.00% 4.50% 0.24% 100.00% 4.75% Inflation 2.75% Risk adjustments -0.25% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total pension liability was 7.25%. 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. 106 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2018 $ 444,999,992 $ 291,879,983 $ 153,120,009 Changes for the year: Service cost 6,801,669 - 6,801,669 Interest 31,573,535 31,573,535 Differences between expected and actual experience 10,590,030 - 10,590,030 Employer contributions - 13,554,239 (13,554,239) Employee contributions 3,485,891 (3,485,891) Net investment income 17,943,950 (17,943,950) Benefit payments, including refunds of employee contributions (32,609,254) (32,609,254) - Administrative expense - (53,318) 53,318 Net changes 16,355,980 2,321,508 14,034,472 Balances at June 30, 2019 $ 461,355,972 $ 294,201,491 $ 167,154,481 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 $ 213,013,207 $ 167,154,481 $ 124,427,822 107 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2019, the City recognized pension expense of $30,059,557. At June 30, 2019, 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 $ 12,074,334 $ 4,827,030 $ 7,247,304 Changes in assumptions 7,093,170 - 7,093,170 Net difference between projected and actual earnings on pension plan investments 2,985,001 - 2,985,001 Total $ 22,152,505 $ 4,827,030 $ 17,325,475 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 2020 $ 10,277,161 2021 3,238,585 2022 3,270,565 2023 539,164 Total $ 17,325,475 Payable to the Pension Plan. At June 30, 2019, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2019. 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 $ 138,145,078 $ 167,154,481 $ 305,299,559 Deferred outflows - pension 5,050,290 22,152,505 27,202,795 Deferred inflows - pension 1,706,484 4,827,030 6,533,514 108 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, 2019 were $172,888 for plan members. Employee contributions for the year ended June 30, 2019 were $162,606. 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. 109 CITY OF LANSING, MICHIGAN Notes to Financial Statements Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 5,299,765 $ 1,054,484 $ 3,217,822 $ 428,757 $ $ $ 10,000,828 Equity in pooled cash and investments (215,276) (42,833) 4,112,795 548,008 4,402,694 Investments: U.S. treasuries 7,221,121 1,436,773 9,480,693 1,263,251 19,401,838 U.S. agencies 12,477,237 2,482,573 15,768,919 2,101,123 32,829,852 Collateralized mortgage obligations 156,256 31,090 655,980 87,406 930,732 Mutualfunds 104,086,669 20,709,931 183,127,827 24,400,784 2,952,671 28,939,072 364,216,954 Domestic equities 31,232,828 6,214,338 64,765,263 8,629,619 - - 110,842,048 International equities 566,753 112,766 1,125,618 149,982 - 1,955,119 Emerging market equities 2,986,450 594,209 6,426,688 856,321 829,188 11,692,856 Money market funds 1,756,470 349,482 5,531,597 737,055 767,002 9,141,606 Dividends and interest receivable 163,558 32,543 219,781 29,285 - 528 445,695 Total assets 165,731,831 32,975,356 294,432,983 39,231,591 2,952,671 30,535,790 565,860,222 Liabilities Accounts payable 146,262 29,102 231,492 30,845 - - 437,701 Net position restricted for Pension benefits 165,585,569 - 294,201,491 - 2,952,671 - 462,739,731 Other postemployment benefits - 32,946,254 - 39,200,746 - 30,535,790 102,682,790 Total net position $ 165,585,569 $ 32,946,254 $ 294,201,491 $ 39,200,746 $ 2,952,671 $ 30,535,790 $ 565,422,521 110 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 $ 8,996,245 $ 1,172,732 $ 18,211,768 $ 290,543 $ - $ 1,867,951 $ 30,539,239 Interest income 16,265 - 12,440 - 29,384 - 58,089 Dividend income 190,000 708,000 - 898,000 Investment expenses (764,942) - (988,258) - - (1,753,200) Net investment income 8,437,568 1,172,732 17,943,950 290,543 29,384 1,867,951 29,742,128 Contributions: Employer 10,880,932 11,228,485 13,554,239 13,500,687 172,888 620,000 49,957,231 Plan members 1,220,657 - 3,485,891 - 162,606 - 4,869,154 Total contributions 12,101,589 11,228,485 17,040,130 13,500,687 335,494 620,000 54,826,385 Total additions 20,539,157 12,401,217 34,984,080 13,791,230 364,878 2,487,951 84,568,513 Deductions Participant benefits 23,470,040 10,573,488 32,609,254 12,271,014 - - 78,923,796 Administrative expense 42,364 464,997 53,318 627,673 83,942 1,272,294 Total deductions 23,512,404 11,038,485 32,662,572 12,898,687 - 83,942 80,196,090 Change in net position (2,973,247) 1,362,732 2,321,508 892,543 364,878 2,404,009 4,372,423 Net position restricted for pension and other postemployment benefits: Beginning of year 168,558,816 31,583,522 291,879,983 38,308,203 2,587,793 28,131,781 561,050,098 End of year $165,585,569 $ 32,946,254 $294,201,491 $ 39,200,746 $ 2,952,671 $ 30,535,790 $565,422,521 111 CITY OF LANSING, MICHIGAN Notes to Financial Statements 17. OTHER POSTEMPLOYMENT BENEFITS Primary Government Plan Description. The City of Lansing contributes to the Employees' Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees' Retirement System and the Police and Fire Retirement System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under their respective pension plans, with the exception of Teamster 580 employees hired after May 2014. OPEB plan provisions are established and may be amended by the City Council, subject to the City's various collective bargaining agreements. Separate financial statements are not prepared for the plans. Method Used to Value Investments. Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of each plans' board of trustees, with the assistance of a valuation service. Voluntary Employees Beneficiary Association(VEBA) The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit 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 $620,000 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. 112 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, 2019, the City contributed $11,848,485 (direct benefit payments of$11,038,485 and City contributions of$810,000) to the Plan. Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on investments, net of investment expense, was 4.17%. 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, 2019, were as follows: Total OPEB liability $ 231,415,357 Plan fiduciary net position 63,482,044 City's net OPEB liability $ 167,933,313 Plan fiduciary net position as percentage of total OPEB liability 27.4% 113 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, 2019, 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, 2019 is summarized in the table on the following page. 114 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, 2019 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% 5.80% 1.56% International equity - developed 12.00% 6.10% 0.73% International equity - emerging 4.00% 7.25% 0.29% Fixed income - U.S. 25.00% 2.25% 0.56% Real assets 10.00% 4.80% 0.48% Global opportunistic fixed income 6.00% 3.25% 0.20% Global equity long/short 10.00% 5.00% 0.50% Absolute return 6.00% 4.50% 0.27% 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 5.77% (down from 5.90% in 2018). 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 50%. Based on this information, the City projects that benefits will be paid from the trust from 2034 through 2068. This is done on a closed group basis. Therefore, the expected trust return of 7.25% (between 2034 and 2068) is blended with the 20-year Aa bond rate of 3.13% (before 2034 and after 2068). 115 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, 2018 $ 223,906,447 $ 59,715,303 $ 164,191,144 Changes for the year: Service cost 1,477,747 - 1,477,747 Interest on total OPEB liability 12,990,219 12,990,219 Changes in assumptions 3,614,432 - 3,614,432 Employer contributions - 11,848,485 (11,848,485) Net investment income 3,040,683 (3,040,683) Benefit payments (10,573,488) (10,573,488) - Administrative expense - (548,939) 548,939 Net changes 7,508,910 3,766,741 3,742,169 Balances at June 30, 2019 $ 231,415,357 $ 63,482,044 $ 167,933,313 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 5.77%, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.77%) or 1% higher (6.77%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (4.77%) (5.77%) (6.77%) City's net OPEB liability $ 197,723,334 $ 167,933,313 $ 141,540,793 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%/ 5.0%) City's net OPEB liability $ 142,675,624 $ 167,933,313 $ 198,349,318 116 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, 2019, the City recognized OPEB expense of $6,587,467. At June 30, 2019, 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 Net difference between projected and actual earnings on OPEB plan investments $ 878,960 $ $ 878,960 Changes in assumptions 1,807,216 1,807,216 Total $ 2,686,176 $ $ 2,686,176 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 2020 $ 2,008,695 2021 201,479 2022 201,480 2023 274,522 Total $ 2,686,176 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, 2019, 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. 117 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, 2019, the City contributed $13,500,687 (direct benefit payments of $12,898,687 and City contributions of$602,000) to the Plan. Rate of Return. For the year ended June 30, 2019, the annual money-weighted rate of return on investments, net of investment expense, was -0.88%. 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, 2019, were as follows: Total OPEB liability $ 302,529,360 Plan fiduciary net position 39,200,746 City's net OPEB liability $ 263,328,614 Plan fiduciary net position as percentage of total OPEB liability 13.0% 118 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, 2019, 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, 2019 is summarized in the table on the following page. 119 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, 2019 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% 5.80% 1.86% International equity - developed 12.00% 6.10% 0.73% International equity - emerging 4.00% 7.25% 0.29% Fixed income - U.S. 22.00% 2.25% 0.50% Real assets 10.00% 4.80% 0.48% Global opportunistic fixed income 5.00% 3.25% 0.16% Global equity long/short 10.00% 5.00% 0.50% Absolute return 5.00% 4.50% 0.23% 100.00% 4.75% Inflation 2.75% Risk adjustment -0.25% Investment rate of return 7.25% Discount Rate. The discount rate used to measure the total OPEB liability was 5.19% (down from 5.67% in 2018). 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 50%, and until the fund is depleted. Based on this information, the City projects that benefits will be paid from the trust beginning in 2040. This is done on a closed group basis. Therefore, the expected trust return of 7.25% (after 2040) is blended with the 20-year Aa bond rate of 3.13% (before 2040). 120 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, 2018 $ 277,078,552 $ 38,308,203 $ 238,770,349 Changes for the year: Service cost 3503,096 - 3,503,096 Interest on total OPEB liability 15,565,892 15,565,892 Changes in assumptions 18,652,834 - 18,652,834 Employer contributions - 13,500,687 (13,500,687) Net investment income 290,543 (290,543) Benefit payments (12,271,014) (12,271,014) - Administrative expense - (627,673) 627,673 Net changes 25,450,808 892,543 24,558,265 Balances at June 30, 2019 $ 302,529,360 $ 39,200,746 $ 263,328,614 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 5.19%, as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (4.19%) or 1% higher (6.19%) than the current rate: Current 1% Decrease Discount Rate 1% Increase (4.19%) (5.19%) (6.19%) City's net OPEB liability $ 306,218,707 $ 263,328,614 $ 225,764,105 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%/ 5.0%) City's net OPEB liability $ 229,039,473 $ 263,328,614 $ 305,217,615 121 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, 2019, the City recognized OPEB expense of $15,546,035. At June 30, 2019, 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 $ - $ 8,905,701 $ (8,905,701) Changes in assumptions 13,989,625 3,722,676 10,266,949 Net difference between projected and actual earnings on OPEB plan investments 1,330,459 - 1,330,459 Total $ 15,320,084 $ 12,628,377 $ 2,691,707 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 2020 $ (1,373,281) 2021 (1,373,280) 2022 4,940,906 2023 497,362 Total $ 2,691,707 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, 2019, 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. 122 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 $ 167,933,313 $ 263,328,614 $ 431,261,927 Deferred outflows - OPEB 2,686,176 15,320,084 18,006,260 Deferred inflows - OPEB - 12,628,377 12,628,377 18. 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 2019 amounted to $450,495. 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 2019. 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 2019 amounted to $4,623,383. 123 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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 2019, through direct reimbursement to developers from current tax captures, amounted to $529,215. 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 2019 amounted to $150,221. ■ ■ ■ ■ ■ 124 REQUIRED SUPPLEMENTARY INFORMATION 125 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, 1 2016 2014 Total pension liability Service cost $ 2,719,559 $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest on total pension liability 21,512,099 21,994,837 22,403,009 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience (2,559,726) (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 (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net change in total pension liability (1,798,108) (1,921,279) (17,275,496) 5,023,103 (3,355,060) 2,914,732 Total pension liability,beginning of year 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755 Total pension liability,end of year 303,730,647 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 Plan fiduciary net position Employer contributions 10,880,932 10,843,000 10,246,872 10,181,620 10,547,556 9,361,009 Employee contributions 1,220,657 1,230,857 1,216,519 1,088,943 1,128,120 1,290,678 Pension plan net investment income(loss) 8,437,568 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,635 Benefit payments(including refunds) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) Pension plan administrative expense (42,364) (57,822) (47,217) (126,486) (174,818) (741,037) Net change in plan fiduciary net position (2,973,247) (1,406,624) 5,915,528 (14,506,562) (6,562,186) 4,840,906 Plan fiduciary net position,beginning of year 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754 Plan fiduciary net position,end of year 165,585,569 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 Net pension liability $138,145,078 $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 54.5% 55.2% 55.3% 50.5% 55.9% 57.3% Covered payroll $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 20,874,143 Net pension liability as a percentage of covered payroll 593.8% 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 were changes 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. 126 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% 2019 303,730,647 165,585,569 138,145,078 54.5% 23,265,437 593.8% 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 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 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% 2019 10,880,932 10,880,932 - 23,265,437 46.8% * 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, 2018 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 23 years Asset valuation method Closed; 5-year smooth market Inflation 2.75% Salary increases Increases in salary are assumed to increase with inflation annually, plus an additional amount that varies based on the service of the member as shown below: Years of Service UAW All Others 0-8 2.35% 1.85% 9-10 2.35% 0.60% 11+ 1.35% 0.60% Investment rate of return 7.25%, net of investment expense and including inflation 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. 128 CITY OF LANSING, MICHIGAN Required Supplementary Information Pension Plan Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Returp 2014 13.67% 2015 2.43% 2016 -1.60% 2017 10.91% 2018 5.87% 2019 5.17% 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. 129 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 nommormMmm 2019 2018 2017 2014- Total pension liability Service cost $ 6,801,669 $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest on total pension liability 31,573,535 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 Benefit changes - 779 - - - - Difference between expected and actual experience 10,590,030 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 (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,270,724) Net change in total pension liability 16,355,980 15,329,894 11,321,648 18,230,902 10,700,735 8,240,987 Total pension liability,beginning of year 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 381,175,826 Total pension liability,end of year 461,355,972 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 Plan fiduciary net position Employer contributions 13,554,239 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 Employee contributions 3,485,891 2,650,019 2,840,914 2,608,214 2,950,832 2,911,896 Pension plan net investment income(loss) 17,943,950 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments(including refunds) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,852,038) Pension plan administrative expense (53,318) (77,237) (50,996) (128,903) (173,849) (1,141,506) Net change in plan fiduciary net position 2,321,508 3,438,780 15,325,805 (22,181,251) (5,176,867) 20,183,830 Plan fiduciary net position,beginning of year 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 280,289,686 Plan fiduciary net position,end of year 294,201,491 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 Net pension liability $167,154,481 $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 63.8% 65.6% 67.1% 65.3% 73.8% 77.2% Covered payroll $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974 Net pension liability as a percentage of covered payroll 564.0% 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 were changes 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. 130 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% 2019 461,355,972 294,201,491 167,154,481 63.8% 29,638,532 564.0% 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 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 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 25,611,974 43.9% 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% 2019 13,554,239 13,554,239 - 29,638,532 45.7% * 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, 2018 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 23 years Asset valuation method Closed; 5-year smooth market Inflation 2.75% Salary increases Increases in salary are assumed to be equal to inflation, plus 7.25% for those with less than 5 years of service or 1.00%for all others Investment rate of return 7.25%, net of investment expense and including inflation 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. 132 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% 2019 6.30% 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. 133 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, 2019 2018 2017 Total OPEB liability Service cost $ 1,477,747 $ 1,438,197 $ 1,550,428 Interest on total OPEB liability 12,990,219 13,221,134 12,976,683 Difference between expected and actual experience - (9,321,837) - Changes in assumptions 3,614,432 (2,727,829) Benefit payments (10,573,488) (10,286,249) (10,116,593) Net change in total OPEB liability 7,508,910 (7,676,584) 4,410,518 Total OPEB liability, beginning of year 223,906,447 231,583,031 227,172,513 Total OPEB liability, end of year 231,415,357 223,906,447 231,583,031 Plan fiduciary net position Employer contributions 11,848,485 11,436,222 11,305,756 OPEB plan net investment income 3,040,683 4,329,577 5,209,669 Benefit payments (10,573,488) (10,286,249) (10,116,593) Administrative expense (548,939) (444,973) (389,163) Net change in plan fiduciary net position 3,766,741 5,034,577 6,009,669 Plan fiduciary net position, beginning of year 59,715,303 54,680,726 48,671,057 Plan fiduciary net position, end of year 63,482,044 59,715,303 54,680,726 Net OPEB liability $ 167,933,313 $ 164,191,144 $ 176,902,305 Plan fiduciary net position as a percentage of total OPEB liability 27.4% 26.7% 23.6% Covered payroll $ 23,720,424 $ 21,251,418 $ 20,901,389 Net OPEB liability as a percentage of covered payroll 708.0% 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 2019 and 2018, except the change in discount rate. 134 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% 2019 231,415,357 63,482,044 167,933,313 27.4% 23,720,424 708.0% 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 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 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% 2019 10,198,194 11,848,485 (1,650,291) 23,720,424 50.0% Notes to Schedule of Contributions Valuation Date January 1, 2018 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% Investment rate of return 7.25% 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% 136 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% 2019 4.17% 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. 137 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, 2019 2018 2017 Total OPEB liability Service cost $ 3,503,096 $ 3,409,339 $ 3,749,359 Interest on total OPEB liability 15,565,892 15,994,328 15,584,783 Difference between expected and actual experience - (17,811,401) - Changes in assumptions 18,652,834 (7,445,354) Benefit payments (12,271,014) (11,960,557) (11,065,440) Net change in total OPEB liability 25,450,808 (17,813,645) 8,268,702 Total OPEB liability, beginning of year 277,078,552 294,892,197 286,623,495 Total OPEB liability, end of year 302,529,360 277,078,552 294,892,197 Plan fiduciary net position Employer contributions 13,500,687 13,163,201 12,290,749 OPEB plan net investment income 290,543 3,572,965 3,487,200 Benefit payments (12,271,014) (11,960,557) (11,065,440) Administrative expense (627,673) (600,644) (525,309) Net change in plan fiduciary net position 892,543 4,174,965 4,187,200 Plan fiduciary net position, beginning of year 38,308,203 34,133,238 29,946,038 Plan fiduciary net position, end of year 39,200,746 38,308,203 34,133,238 Net OPEB liability $ 263,328,614 $ 238,770,349 $ 260,758,959 Plan fiduciary net position as a percentage of total OPEB liability 13.0% 13.8% 11.6% Covered payroll $ 28,435,953 $ 20,667,007 $ 27,585,521 Net OPEB liability as a percentage of covered payroll 926.0% 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 2019 and 2018, except the change in discount rate. 138 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% 2019 302,529,360 39,200,746 263,328,614 13.0% 28,435,953 926.0% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 139 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 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 28,435,953 46.3% 2019 15,218,062 13,500,687 1,717,375 28,435,953 47.5% Notes to Schedule of Contributions Valuation Date January 1, 2018 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% Investment rate of return 7.25% 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% 140 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% 2019 -0.88% 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. 141 This page intentionally left blank. 142 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 143 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2019 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 82,029 $ - $ 89,710 $ - $ 171,739 Equity in pooled cash and investments 16,347,557 30,111 8,664,141 1,914,166 26,955,975 Accounts receivable, net 4,859 - 116,032 - 120,891 Special assessments receivable - 191,201 191,201 Loans receivable 1,222,523 - 1,222,523 Accrued interest receivable 2,172,446 2,172,446 Due from other governments, net 7,691,569 7,691,569 Inventories 1,030,305 1,030,305 Prepaids 7,556 - - - 7,556 Total assets $ 28,558,844 $ 30,111 $ 9,061,084 $ 1,914,166 $ 39,564,205 Liabilities Negative equity in pooled cash $ 2,889,204 $ - $ - $ - $ 2,889,204 Accounts payable 1,863,563 200,196 2,063,759 Deposits payable 35,020 - 35,020 Accrued payroll 67,198 67,198 Indemnity bonds 43,867 43,867 Due to other funds 624,145 - 624,145 Advances from other funds - 150,303 150,303 Due to other governments 587,250 - 587,250 Unearned revenue 528,800 - 528,800 Total liabilities 6,639,047 350,499 6,989,546 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable 3,394,969 - 3,394,969 Unavailable revenues - special assessments - 156,444 156,444 Total deferred inflows of resources 3,394,969 156,444 - 3,551,413 Fund balances Nonspendable 1,037,861 - - 1,914,166 2,952,027 Restricted 17,002,298 30,111 6,368 - 17,038,777 Committed 484,669 - 8,663,319 9,147,988 Unassigned (deficit) - - (115,546) - (115,546) Total fund balances 18,524,828 30,111 8,554,141 1,914,166 29,023,246 Total liabilities, deferred inflows of resources and fund balances $ 28,558,844 $ 30,111 $ 9,061,084 $ 1,914,166 $ 39,564,205 144 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Change in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2019 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Property taxes and special assessments $ 552,508 $ 545,744 $ 39,715 $ $ 1,137,967 Intergovernmental 27,183,157 - - 27,183,157 Charges for services 3,541,837 2,669,488 6,211,325 Fines and forfeitures 256,273 - 256,273 Interest and rents 318,202 43,380 43,886 405,468 Contributions 12,500 - - 12,500 Otherrevenues 736,495 - - - 736,495 Total revenues 32,600,972 545,744 2,752,583 43,886 35,943,185 Expenditures Current expenditures: General government 3,313,802 - - - 3,313,802 Public safety 1,883,913 1,883,913 Public works 17,339 17,339 Highways and streets 11,984,896 11,984,896 Community development 10,260,226 - 10,260,226 Debt service: Principal 824,543 500,000 1,324,543 Interest 534,179 17,383 - 551,562 Capital outlay 3,279,045 - 1,519,025 4,798,070 Total expenditures 32,097,943 517,383 1,519,025 - 34,134,351 Revenues over expenditures 503,029 28,361 1,233,558 43,886 1,808,834 Other financing sources (uses) Transfers in 5,184,520 750 3,431,250 32,776 8,649,296 Transfers out (2,900,000) - (711,897) - (3,611,897) Issuance of long-term debt 1,665,000 1,665,000 Issuance of long-term refunding debt 6,938,699 6,938,699 Bond premium 780,670 780,670 Payment to refunding bond escrow agent (7,741,363) - - - (7,741,363) Total other financing sources (uses) 3,927,526 750 2,719,353 32,776 6,680,405 Net change in fund balances 4,430,555 29,111 3,952,911 76,662 8,489,239 Fund balances, beginning of year 14,094,273 1,000 4,601,230 1,837,504 20,534,007 Fund balances, end of year $ 18,524,828 $ 30,111 $ 8,554,141 $ 1,914,166 $ 29,023,246 145 This page intentionally left blank. 146 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 Departments 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 Departments 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. 147 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2019 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Assets Cash and cash equivalents $ - $ - $ - $ 33,000 $ Equity in pooled cash and investments 10,793,690 2,356,585 475,646 730,110 Accounts receivable, net - - - - - Loans receivable 1,185,000 Accrued interest receivable - - 2,172,446 Due from other governments, net 2,194,338 524,644 764,393 Inventories 1,030,305 - - - Prepaids 2,398 - 4,908 - Total assets $ 14,020,731 $ 2,881,229 $ 475,646 $ 768,018 $ 4,121,839 Liabilities Negative equity in pooled cash $ - $ - $ - $ - $ 10,000 Accounts payable 444,324 489,289 11,343 113,370 Deposits payable - - - - Accrued payroll - 16,878 Indemnity bonds 43,867 - Due to other funds - 624,145 Due to other governments - - - Unearned revenue 39,733 11,658 - - Total liabilities 527,924 500y947 11,343 764,393 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable - - 3,357,446 Fund balances Nonspendable 1,032,703 - 41908 - Restricted 12,460,104 2,380,282 475,646 751,767 Committed - - Total fund balances 13,492,807 2,380,282 475,646 756,675 - Total liabilities, deferred inflows of resources and fund balances $ 14,020,731 $ 2,881,229 $ 475,646 $ 768,018 $ 4,121,839 148 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ - $ - $ - $ $ 49,029 $ 82,029 54,400 562,090 484,669 890,367 16,347,557 - 4,859 - - 4,859 - 37,523 1,222,523 - - - 2,172,446 1,000 4,165,779 41,415 7,691,569 - - - 1,030,305 250 - - - - 7,556 $ 55,650 $ 566,949 $ 484,669 $ 4,203,302 $ 980,811 $ 28,558,844 $ - $ - $ - $ 2,879,204 $ - $ 2,889,204 6,179 518 707,190 91,350 1,863,563 - - - 35,020 35,020 1,983 32,483 14,471 1,383 67,198 - - - - 43,867 - - 624,145 - 90,420 496,830 587,250 - 2,915 474,494 - 528,800 8,162 35,916 4,165,779 624,583 6,639,047 - - 37,523 - 3,394,969 250 - - - 1,037,861 47,238 531,033 - 356,228 17,002,298 - - 484,669 - 484,669 47,488 531,033 484,669 - 356,228 18,524,828 $ 55,650 $ 566,949 $ 484,669 $ 4,203,302 $ 980,811 $ 28,558,844 149 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Change in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Revenues Property taxes and special assessments $ 122,854 $ - $ - $ $ - Intergovernmental 12,886,951 3,165,250 269,883 2,236,213 Charges for services 41,667 41,669 - - Fines and forfeitures - - - 114,832 Interest and rents 161,359 106,663 6,964 14,180 Contributions - - - - - Otherrevenues 179,008 - - 173,880 Total revenues 13,391,839 3,313,582 276,847 129,012 2,410,093 Expenditures Current expenditures: General government - - - - - Public safety 98,715 111,626 Public works - - - - Highways and streets 6,305,620 5,679,276 - Community development - - 2,410,093 Debt service: Principal 471,930 352,613 - Interest 175,055 359,124 Capital outlay 11432,267 1,846,778 - - - Total expenditures 81384,872 8,237,791 98,715 111,626 2,410,093 Revenues over (under) expenditures 5,006,967 (4,924,209) 178,132 17,386 - Other financing sources (uses) Transfers in - 4,970,000 - - Transfers out (2,900,000) - Issuance of long-term debt 915,750 749,250 Issuance of long-term refunding debt 1,788,962 5,149,737 Bond premium 219,490 561,180 Payment to refunding bond escrow agent (1,995,908) (5,745,455) Total other financing sources (uses) (1,971,706) 5,684,712 - - Net change in fund balances 3,035,261 760,503 178,132 17,386 Fund balances, beginning of year 10,457,546 1,619,779 297,514 739,289 Fund balances, end of year $ 13,492,807 $ 2,380,282 $ 475,646 $ 756,675 $ 150 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ 429,654 $ $ $ - $ - $ 552,508 - 7,966,087 658,773 27,183,157 4,050 3,010,114 444,337 - 3,541,837 - - - 141,441 256,273 2,971 8,967 17,098 318,202 12,500 - - - 12,500 232,456 - - 151,151 736,495 681,631 3,010,114 8,967 8,561,575 817,312 32,600,972 834,721 2,479,081 - - - 3,313,802 - - 752,323 921,249 1,883,913 17,339 - 17,339 - 11,984,896 7,850,133 10,260,226 - 824,543 534,179 - - - - 3,279,045 834,721 2,479,081 - 8,619,795 921,249 32,097,943 (153,090) 531,033 8,967 (58,220) (103,937) 503,029 156,300 - - 58,220 5,184,520 - - (2,900,000) 1,665,000 6,938,699 780,670 - - (7,741,363) 156,300 - - 58,220 3,927,526 3,210 531,033 8,967 - (103,937) 4,430,555 44,278 - 475,702 460,165 14,094,273 $ 47,488 $ 531,033 $ 484,669 $ $ 356,228 $ 18,524,828 151 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Change in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ - $ 122,854 $ 122,854 Intergovernmental 11,600,385 12,886,951 1,286,566 Charges for services 959,000 41,667 (917,333) Fines and forfeitures - - - Interest and rents 161,359 161,359 Contributions - - - Otherrevenues 45,000 179,008 134,008 Total revenues 12,604,385 13,391,839 787,454 Expenditures Current expenditures: General government - - - Public safety Public works - - Highways and streets 8,389,385 6,305,620 (2,083,765) Community development - - - Debt service: Principal 376,200 471,930 95,730 Interest 150,000 175,055 25,055 Capital outlay 2,700,000 1,432,267 (1,267,733) Total expenditures 11,615,585 8,384,872 (3,230,713) Revenues over (under) expenditures 988,800 5,006,967 4,018,167 Other financing sources (uses) Transfers in 100,000 - (100,000) Transfers out (2,900,000) (2,900,000) - Issuance of long-term debt 2,704,712 2,704,712 Bond premium 219,490 219,490 Payment to refunding bond escrow agent (1,995,908) 1,995,908 Total other financing sources (uses) (2,800,000) (1,971,706) 828,294 Net change in fund balances (1,811,200) 3,035,261 4,846,461 Fund balances, beginning of year 10,457,546 10,457,546 - Fund balances, end of year $ 8,646,346 $ 13,492,807 $ 4,846,461 152 Local Streets Drug Law Enforcement Federal Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 3,196,200 3,165,250 (30,950) 269,883 269,883 200,000 41,669 (158,331) - - 120,000 106,663 (13,337) 6,964 6,964 3,516,200 3,313,582 (202,618) 276,847 276,847 108,000 98,715 (9,285) 5,413,600 5,679,276 265,676 448,400 352,613 (95,787) 279,000 359,124 80,124 2,520,000 1,846,778 (673,222) - 8,661,000 8,237,791 (423,209) 108,000 98,715 (9,285) (5,144,800) (4,924,209) 220,591 (108,000) 178,132 286,132 5,270,000 4,970,000 (300,000) - - 5,898,987 5,898,987 561,180 561,180 - (5,745,455) 5,745,455 5,270,000 5,684,712 414,712 - - 125,200 760,503 635,303 (108,000) 178,132 286,132 1,619,779 1,619,779 - 297,514 297,514 - $ 1,744,979 $ 2,380,282 $ 635,303 $ 189,514 $ 475,646 $ 286,132 continued... 153 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Change in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 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 forfeitures 114,832 114,832 Interest and rents 14,180 14,180 Contributions - - Otherrevenues - - Total revenues 129,012 129,012 Expenditures Current expenditures: General government - - Public safety 523,600 111,626 (411,974) Public works - - Highways and streets Community development Debt service: Principal Interest Capital outlay - - Total expenditures 523,600 111,626 (411,974) Revenues over (under) expenditures (523,600) 17,386 540,986 Other financing sources (uses) Transfers in - - Transfers out Issuance of long-term debt Bond premium Payment to refunding bond escrow agent Total other financing sources (uses) - - Net change in fund balances (523,600) 17,386 540,986 Fund balances, beginning of year 739,289 739,289 - Fund balances, end of year $ 215,689 $ 756,675 $ 540,986 154 Community Development Block Grant Program Downtown Lansing, Inc. Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ $ $ $ 420,400 $ 429,654 $ 9,254 2,850,968 2,236,213 (614,755) - - - - - 5,250 4,050 (1,200) - 2,971 2,971 - - 10,000 12,500 2,500 - 173,880 173,880 285,025 232,456 (52,569) 2,850,968 2,410,093 (440,875) 720,675 681,631 (39,044) - - 891,500 834,721 (56,779) 3,003,498 2,410,093 (593,405) 3,003,498 2,410,093 (593,405) 891,500 834,721 (56,779) (152,530) - 152,530 (170,825) (153,090) 17,735 152,530 (152,530) 156,300 156,300 - 152,530 (152,530) 156,300 156,300 - - (14,525) 3,210 17,735 44,278 44,278 - $ $ $ $ 29,753 $ 47,488 $ 17,735 continued... 155 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Change in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 Building Department Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ $ $ Intergovernmental Charges for services 2,595,000 3,010,114 415,114 Fines and forfeitures - - - Interest and rents Contributions Otherrevenues - - - Total revenues 2,595,000 3,010,114 415,114 Expenditures Current expenditures: General government 2,570,000 2,479,081 (90,919) Public safety - - Public works Highways and streets Community development Debt service: Principal Interest Capital outlay - - Total expenditures 2,570,000 2,479,081 (90,919) Revenues over (under) expenditures 25,000 531,033 506,033 Other financing sources (uses) Transfers in - - - Transfers out Issuance of long-term debt Bond premium Payment to refunding bond escrow agent Total other financing sources (uses) - - - Net change in fund balances 25,000 531,033 506,033 Fund balances, beginning of year - - - Fund balances, end of year $ 25,000 $ 531,033 $ 506,033 156 Parks Department State and Federal Grants Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 11,076,098 7,966,087 (3,110,011) - 444,337 444,337 8,967 8,967 - - 854,613 151,151 (703,462) 8,967 8,967 11,930,711 8,561,575 (3,369,136) 779,849 752,323 (27,526) - 17,339 17,339 10,890,957 7,850,133 (3,040,824) - - 11,670,805 8,619,795 (3,051,010) 8,967 8,967 259,905 (58,220) (318,125) - - 84,940 58,220 (26,720) - - 84,940 58,220 (26,720) - 8,967 8,967 344,845 - (344,845) 475,702 475,702 - - $ 475,702 $ 484,669 $ 8,967 $ 344,845 $ (344,845) continued... 157 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Change in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2019 Tri-County Metro Actual Over Final (Under) Final Budget Actual Budget Revenues Property taxes and special assessments $ - $ - $ Intergovernmental 560,220 658,773 98,553 Charges for services - - - Fines and forfeitures 428,220 141,441 (286,779) Interest and rents - 17,098 17,098 Contributions - - Otherrevenues - - Total revenues 988,440 817,312 (171,128) Expenditures Current expenditures: General government - - Public safety 988,440 921,249 (67,191) Public works - - Highways and streets Community development Debt service: Principal Interest Capital outlay - - Total expenditures 988,440 921,249 (67,191) Revenues over (under) expenditures - (103,937) (103,937) Other financing sources (uses) Transfers in Transfers out Issuance of long-term debt Bond premium Payment to refunding bond escrow agent Total other financing sources (uses) Net change in fund balances - (103,937) (103,937) Fund balances, beginning of year 460,165 460,165 Fund balances, end of year $ 460,165 $ 356,228 $ (103,937) 158 Totals Actual Over Final (Under) Final Budget Actual Budget $ 420,400 $ 552,508 $ 132,108 29,283,871 27,183,157 (2,100,714) 3,759,250 3,541,837 (217,413) 428,220 256,273 (171,947) 120,000 318,202 198,202 10,000 12,500 2,500 1,184,638 736,495 (448,143) 35,206,379 32,600,972 (2,605,407) 3,461,500 3,313,802 (147,698) 2,399,889 1,883,913 (515,976) - 17,339 17,339 13,802,985 11,984,896 (1,818,089) 13,894,455 10,260,226 (3,634,229) 824,600 824,543 (57) 429,000 534,179 105,179 5,220,000 3,279,045 (1,940,955) 40,032,428 32,097,943 (7,934,485) (4,826,050) 503,029 5,329,079 5,763,770 5,184,520 (579,250) (2,900,000) (2,900,000) - 8,603,699 8,603,699 780,670 780,670 (7,741,363) (7,741,363) 2,863,770 3,927,526 1,063,756 (1,962,280) 4,430,555 6,392,835 14,094,273 14,094,273 - $ 12,131,993 $ 18,524,828 $ 6,392,835 concluded 159 This page intentionally left blank. 160 CITY OF LANSING, MICHIGAN Nonmajor Debt Service Funds 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 amount 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 amount of $2,470,000). 161 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2019 1999 2001 Fire Fire Station Station Totals Assets Equity in pooled cash and investments $ 30,111 $ $ 30,111 Fund balances Restricted $ 30,111 $ $ 30,111 162 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Change in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2019 1999 2001 Fire Fire Station Station Totals Revenues Taxes and special assessments $ 232,911 $ 312,833 $ 545,744 Expenditures Debt service: Principal 195,000 305,000 500,000 Interest 7,800 9,583 17,383 Total expenditures 202,800 314,583 517,383 Revenues over (under) expenditures 30,111 (1,750) 28,361 Other financing sources Transfers in - 750 750 Net change in fund balances 30,111 (1,000) 29,111 Fund balances, beginning of year - 1,000 1,000 Fund balances, end of year $ 30,111 $ - $ 30,111 163 This page intentionally left blank. 164 CITY OF LANSING, MICHIGAN Nonmajor Capital Projects Funds 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. 165 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2019 Other Special Capital Assessments Projects Totals Assets Cash and cash equivalents $ $ 89,710 $ 89,710 Equity in pooled cash and investments 8,664,141 8,664,141 Accounts receivable, net 116,032 116,032 Special assessments receivable: Current 34,757 - 34,757 Deferred 156,444 - 156,444 Total assets $ 191,201 $ 8,869,883 $ 9,061,084 Liabilities Accounts payable $ - $ 200,196 $ 200,196 Advance from other funds 150,303 - 150,303 Total liabilities 150,303 200,196 350,499 Deferred inflows of resources Unavailable revenues - special assessments 156,444 - 156,444 Fund balances Restricted - 6,368 6,368 Committed 8,663,319 8,663,319 Unassigned (deficit) (115,546) - (115,546) Total fund balances (115,546) 8,669,687 8,554,141 Total liabilities, deferred inflows of resources and fund balances $ 191,201 $ 8,869,883 $ 9,061,084 166 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Change in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2019 Other Special Capital Assessments Projects Totals Revenues Special assessments $ 39,715 $ - $ 39,715 Charges for services - 2,669,488 2,669,488 Interest and rents - 43,380 43,380 Total revenues 39,715 2,712,868 2,752,583 Expenditures Capital outlay - 1,519,025 1,519,025 Revenues over expenditures 39,715 1,193,843 1,233,558 Other financing sources (uses) Transfers in - 3,431,250 3,431,250 Transfers out (711,897) (711,897) Total other financing sources (uses) - 2,719,353 2,719,353 Net change in fund balances 39,715 3,913,196 3,952,911 Fund balances (deficit), beginning of year (155,261) 4,756,491 4,601,230 Fund balances (deficit), end of year $ (115,546) $ 8,669,687 $ 8,554,141 167 This page intentionally left blank. 168 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. 169 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2019 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash and investments $ 1,912,874 $ 1,292 $ 1,914,166 Fund balances Nonspendable $ 1,912,874 $ 1,292 $ 1,914,166 170 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Change in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2019 Cemetery Perpetual Parks Care Trust Totals Revenues Interest and rents $ 43,862 $ 24 $ 43,886 Other financing sources Transfers in 32,776 - 32,776 Net change in fund balances 76,638 24 76,662 Fund balances, beginning of year 1,836,236 1,268 1,837,504 Fund balances, end of year $ 1,912,874 $ 1,292 $ 1,914,166 171 This page intentionally left blank. 172 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. 173 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2019 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ $ 23,368 $ - $ 23,568 Equity in pooled cash and investments 197,685 531,795 1,165,009 1,894,489 Accounts receivable, net - 163,954 6,374 170,328 Inventories 52,493 - - 52,493 Total current assets 250,378 719,117 1,171,383 2,140,878 Noncurrent assets: Capital assets not being depreciated 57,740 446,501 - - 504,241 Capital assets being depreciated, net 87,224 1,818,276 150,507 2,056,007 Total noncurrent assets 144,964 2,264,777 - 150,507 2,560,248 Total assets 395,342 2,264,777 719,117 1,321,890 4,701,126 Deferred outflows of resources Deferred pension amounts 50,503 - 101,006 151,509 303,018 Deferred other postemployment benefit amounts 18,513 39,003 91,466 148,982 Total deferred outflows of resources 69,016 140,009 242,975 452,000 Liabilities Current liabilities: Accounts payable 22,671 56,289 102,396 181,356 Accrued interest payable - - 2,857 2,857 Accrued payroll 1,845 - - 1,845 Unearned revenues - 160,119 - 160,119 Current portion of: Bonds and notes payable - - 230,023 230,023 Compensated absences 1,657 3,487 8,177 13,321 Total current liabilities 26,173 219,895 343,453 589,521 Noncurrent liabilities: Bonds and notes payable, net of current portion - - 352,897 352,897 Compensated absences, net of current portion 22,066 46,444 108,906 177,416 Net pension liability 1,381,457 2,762,902 4,144,352 8,288,711 Net other postemployment benefit liability 1,157,379 2,438,395 5,718,209 9,313,983 Total noncurrent liabilities 2,560,902 5,247,741 10,324,364 18,133,007 Total liabilities 2,587,075 5,467,636 10,667,817 18,722,528 Deferred inflows of resources Deferred pension amounts 17,065 34,130 51,195 102,390 Net position Net investment in capital assets 144,964 2,264,777 - (432,413) 1,977,328 Unrestricted(deficit) (2,284,746) - (4,642,640) (8,721,734) (15,649,120) Total net position $ (2,139,782) $ 2,264,777 $ (4,642,640) $ (9,154,147) $ (13,671,792) 174 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2019 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 415,757 $ - $ 2,243,627 $ 4,081,700 $ 6,741,084 Operating expenses Personnel services 176,128 8,081 168,869 1,608,187 1,961,265 Purchase of goods and services 284,265 193,229 866,393 1,718,493 3,062,380 Depreciation 9,827 77,191 - 301,012 388,030 Total operating expenses 470,220 278,501 1,035,262 3,627,692 5,411,675 Operating income(loss) (54,463) (278,501) 1,208,365 454,008 1,329,409 Nonoperating revenues(expenses) Interest revenue 13,786 37,180 50,966 Interest expense and fees - (14,586) (14,586) Capital contribution to others - (214,486) (214,486) Total nonoperating revenues(expenses) 13,786 (191,892) (178,106) Income(loss)before transfers (54,463) (278,501) 1,222,151 262,116 1,151,303 Transfers Transfers in 486,850 126,743 - - 613,593 Transfers out (32,776) - (32,776) Total transfers 454,074 126,743 - - 580,817 Change in net position 399,611 (151,758) 1,222,151 262,116 1,732,120 Net position, beginning of year (2,539,393) 2,416,535 (5,864,791) (9,416,263) (15,403,912) Net position,end of year $ (2,139,782) $ 2,264,777 $ (4,642,640) $ (9,154,147) $ (13,671,792) 175 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2019 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 415,757 $ - $ 2,185,037 $ 4,084,189 $ 6,684,983 Cash payments for goods and services (311,653) (193,229) (832,068) (1,662,336) (2,999,286) Cash payments to employees (422,636) (8,081) (969,246) (2,033,995) (3,433,958) Net cash provided by(used in)operating activities (318,532) (201,310) 383,723 387,858 251,739 Cash flows from noncapital financing activities Transfers in 486,850 126,743 - - 613,593 Transfers out (32,776) - (32,776) Net cash provided by noncapital financing activities 454,074 126,743 580,817 Cash flows from capital and related financing activities Capital contributions to others - - (214,486) (214,486) Principal paid on long-term debt (225,580) (225,580) Interest paid on long-term debt (15,691) (15,691) Net cash used in capital and related financing activities - (455,757) (455,757) Cash flows from investing activities Interest and dividends received - 13,786 37,180 50,966 Net change in cash and cash equivalents 135,542 (74,567) 397,509 (30,719) 427,765 Cash and cash equivalents, beginning of year 62,343 74,567 157,654 1,195,728 1,490,292 Cash and cash equivalents,end of year $ 197,885 $ - $ 555,163 $ 1,165,009 $ 1,918,057 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ $ 23,368 $ - $ 23,568 Equity in pooled cash and investments 197,685 531,795 1,165,009 1,894,489 $ 197,885 $ $ 555,163 $ 1,165,009 $ 1,918,057 continued... 176 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2019 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) $ (54,463) $ (278,501) $ 1,208,365 $ 454,008 $ 1,329,409 Adjustments to reconcile operating income(loss)to net cash provided by (used in)operating activities: Depreciation 9,827 77,191 301,012 388,030 Changesin: Accounts receivable - - (47,454) 2,489 (44,965) Deferred outflows-pension 45,912 110,877 111,182 267,971 Deferred outflows-OPEB (18,513) (39,003) (91,466) (148,982) Accounts payable (27,388) 34,325 56,157 63,094 Accrued payroll 22 - - 22 Unearned revenues - (11,136) - (11,136) Compensated absences 952 2,004 4,699 7,655 Net pension liability (212,599) (740,241) (198,828) (1,151,668) Deferred inflows-pension (20,478) (48,376) (51,095) (119,949) Net other postemployment benefit liability 2,623 7,873 18,970 29,466 Deferred inflows-OPEB (44,427) (93,511) (219,270) (357,208) Net cash provided by(used in)operating activities $ (318,532) $ (201,310) $ 383,723 $ 387,858 $ 251,739 concluded 177 This page intentionally left blank. 178 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. 179 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2019 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Assets Current assets: Equity in pooled cash and investments $ 1,614,969 $ 2,971,528 $ 974,132 $ 1,876,618 $ 7,437,247 Accounts receivable, net 3,075 8,265 - - 11,340 Inventories 352,259 - - 352,259 Prepaids 36,675 399,276 - 199,039 634,990 Total current assets 2,006,978 3,379,069 974,132 2,075,657 8,435,836 Noncurrent assets: Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated, net 9,773,085 1,475,229 11,248,314 Total noncurrent assets 9,865,977 - 1,475,229 - 11,341,206 Total assets 11,872,955 3,379,069 2,449,361 2,075,657 19,777,042 Liabilities Current liabilities: Accounts payable 113,088 1,585,286 18,261 837,220 2,553,855 Accrued interest payable 17,147 - - - 17,147 Accrued payroll 56,384 14,673 61,903 26,277 159,237 Claims incurred but not reported - 750,000 - - 750,000 Current portion of: Bonds and notes payable 370,290 - - - 370,290 Compensated absences 27,449 - 15,680 40,675 83,804 Total current liabilities 584,358 2,349,959 95,844 904,172 3,934,333 Noncurrent liabilities: Bonds and notes payable, net of current portion 2,301,746 - - - 2,301,746 Compensated absences, net of current portion 158,903 56,368 434,620 113,371 763,262 Total noncurrent liabilities 2,460,649 56,368 434,620 113,371 3,065,008 Total liabilities 3,045,007 2,406,327 530,464 1,017,543 6,999,341 Net position Net investment in capital assets 7,193,941 - 1,475,229 - 8,669,170 Unrestricted 1,634,007 972,742 443,668 1,058,114 4,108,531 Total net position $ 8,827,948 $ 972,742 $ 1,918,897 $ 1,058,114 $ 12,777,701 180 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2019 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Operating revenues Charges for services $ 9,535,609 $ 65,446,303 $ 4,415,600 $ 6,000,000 $ 85,397,512 Operating expenses Personnel services 3,468,526 301,305 3,107,992 1,766,287 8,644,110 Purchase of goods and services 4,760,140 65,163,137 1,046,270 3,803,591 74,773,138 Depreciation 2,135,087 - 45,650 - 2,180,737 Total operating expenses 10,363,753 65,464,442 4,199,912 5,569,878 85,597,985 Operating income (loss) (828,144) (18,139) 215,688 430,122 (200,473) Nonoperating revenues (expenses) Gain on sale of capital assets 64,820 - - 64,820 Interest expense and fees (174,413) (174,413) Total nonoperating revenues (expenses) (109,593) - - (109,593) Change in net position (937,737) (18,139) 215,688 430,122 (310,066) Net position, beginning of year 9,765,685 990,881 1,703,209 627,992 13,087,767 Net position, end of year $ 8,827,948 $ 972,742 $ 1,918,897 $ 1,058,114 $ 12,777,701 181 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2019 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Cash flows from operating activities Cash received from interfund services $ 9,568,055 $ 65,954,559 $ 4,415,600 $ 6,000,000 $ 85,938,214 Cash payments for goods and services (4,800,282) (64,270,447) (1,028,114) (4,033,293) (74,132,136) Cash payments to employees (3,450,495) (446,769) (3,089,486) (1,790,525) (8,777,275) Net cash provided by operating activities 1,317,278 1,237,343 298,000 176,182 3,028,803 Cash flows from capital and related financing activities Proceeds from sale of capital assets 77,416 - - - 77,416 Acquisition and construction of capital assets (1,318,930) (1,318,930) Principal paid on long-term debt (361,324) (361,324) Interest paid on long-term debt (174,669) (174,669) Net cash used in capital and related financing activities (1,777,507) - - - (1,777,507) Net change in cash and cash equivalents (460,229) 1,237,343 298,000 176,182 1,251,296 Cash and cash equivalents, beginning of year 2,075,198 1,734,185 676,132 1,700,436 6,185,951 Cash and cash equivalents, end of year $ 1,614,969 $ 2,971,528 $ 974,132 $ 1,876,618 $ 7,437,247 continued... 182 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2019 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Reconciliation of operating income (loss) to net cash provided by operating activities Operating income (loss) $ (828,144) $ (18,139) $ 215,688 $ 430,122 $ (200,473) Adjustments to reconcile operating income (loss) to net cash provided by operating activities: Depreciation 2,135,087 - 45,650 2,180,737 Change in: Accounts receivable 32,446 508,256 - 540,702 Inventories (10,114) - (10,114) Prepaids (36,675) (54,319) - (199,039) (290,033) Accounts payable 6,647 947,009 18,156 (30,663) 941,149 Accrued payroll (969) 5,534 7,450 (2,208) 9,807 Claims incurred but not reported reported - (150,000) - (150,000) Compensated absences 19,000 (998) 11,056 (22,030) 7,028 Net cash provided by operating activities $ 1,317,278 $ 1,237,343 $ 298,000 $ 176,182 $ 3,028,803 concluded 183 This page intentionally left blank. 184 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. 185 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2019 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash and investments $ 71,204 $ 5,614 $ 76,818 Liabilities Undistributed receipts $ 71,204 $ 5,614 $ 76,818 186 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2019 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash and investments $ 75,812 $ 596,314 $ 600,922 $ 71,204 Liabilities Undistributed receipts $ 75,812 $ 596,314 $ 600,922 $ 71,204 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash and investments $ 8,796 $ 148,727 $ 151,909 $ 5,614 Liabilities Undistributed receipts $ 8,796 $ 148,727 $ 151,909 $ 5,614 Total - all agency funds Assets Equity in pooled cash and investments $ 84,608 $ 745,041 $ 752,831 $ 76,818 Liabilities Undistributed receipts $ 84,608 $ 745,041 $ 752,831 $ 76,818 187 This page intentionally left blank. 188 STATISTICAL SECTION 189 This page intentionally left blank. 190 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. 193 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. 198 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. 202 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. 207 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. 210 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 191 This page intentionally left blank. 192 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Position by Component Last Ten Fiscal Years -L 20�IL 201M - 20150) E E 201M W 2013 M-IL 201M- Governmental activities Net investment in capital assets $ 146,153,309 $ 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 Restricted 23,505,738 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 Unrestricted(deficit) (629,587,773) (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) Total governmental activities net position $(459,928,726) $(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 Business-type activities Net investment in capital assets $ 233,988,263 $ 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 Restricted 1,953,175 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 Unrestricted(deficit) (7,299,147) (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 Total business-type activities net position $ 228,642,291 $ 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 Primary government Net investment in capital assets $ 380,141,572 $ 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 Restricted 25,458,913 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 Unrestricted(deficit) (636,886,920) (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 Total primary government net position $(231,286,435) $(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 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. 193 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Position Last Ten Fiscal Years -` 2018 i--- 2013 --- Expenses Governmental activities: General government $ 26,679,840 $ 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 Public safety 97,391,612 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 Public works 29,644,398 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 Recreation and culture 7,650,889 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 Community development 21,046,090 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 Interest on long-term debt 1,182,488 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 Total governmental activities expenses 183,595,317 156,424,325 165,584,514 164,347,356 152,947,140 157,771,432 160,684,210 170,817,996 158,754,655 163,402,257 Business-type activities: Sewage disposal system 31,939,976 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 Municipal parking system 7,081,998 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 Cemetery 470,220 1,379,877 886,579 708,545 632,485 722,270 633,050 639,000 755,766 659,584 Golf 278,501 (372,775) 802,564 845,575 852,634 935,671 892,117 810,372 846,817 869,003 Garbage and rubbish collection 1,035,262 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 Recycling 3,856,764 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 Total business-type activities expenses 44,662,721 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 Total primary government expenses 228,258,038 202,833,205 206,918,911 208,218,516 194,880,510 200,950,280 201,824,714 213,194,693 201,023,430 202,422,120 Program revenues Governmental activities: Charges for services: General government 7,567,720 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 Public safety 3,935,250 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 Public works 2,978,549 716,322 1,836,466 3,011,894 1,923,303 2,129,126 1,622,738 2,797,443 2,449,606 2,788,112 Recreation and culture 1,092,232 831,816 617,604 673,840 619,834 800,293 594,349 557,609 685,120 587,906 Community development - - 67,312 67,272 67,264 67,323 67,349 67,344 122,326 69,250 Operating grants and contributions 29,663,253 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 Capital grants and contributions 3,313,872 855,760 63,488 904,298 2,910,660 3,365,682 3,124,288 260,656 189,414 3,109,410 Total governmental activities program revenues 48,550,876 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 Business-type activities: Charges for services: Sewage disposal system 35,752,812 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 Municipal parking system 8,422,161 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 Cemetery 415,757 351,204 403,663 312,929 335,379 289,565 314,913 240,394 225,947 226,973 Golf - 179,464 256,218 313,164 363,559 366,567 373,000 390,134 382,546 438,315 Garbage and rubbish collection 2,243,627 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 Recycling 4,081,700 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 Operating grants and contributions 6,648,917 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 Capital grants and contributions - - 100,000 - - - - 2,683,657 1,439,044 11,928,108 Total business-type activities program revenues 57,564,974 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 Total primary government program revenues 106,115,850 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 Net(expenses)revenues Governmental activities (135,044,441) (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) Business-type activities 12,902,253 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 Total primary government net expense (122,142,188) (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) continued... 194 CITY OF LANSING, MICHIGAN Change in Net Position - Last Ten Fiscal Years 2018 2013 General revenues and other changes in net position Governmental activities: Taxes: Property taxes $ 41,692,930 $ 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 Income taxes 37,021,436 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 Unrestricted grants and contributions 39,530,073 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 Investment earnings 463,685 216,239 125,539 99,058 26,353 36,836 58,588 69,265 89,735 246,495 Miscellaneous 64,820 - 135,270 63,079 280,280 - - 123,066 108,601 75,094 Transfers (580,817) (912,186) (746,209) (629,715) (644,485) (705,637) (583,117) (464,008) (633,814) (464,807) Total governmental activities 118,192,127 116,752,475 113,885,432 109,216,375 107,311,429 104,539,570 99,420,781 87,620,214 92,752,435 92,123,608 Business-type activities: Investment earnings - - - - 17,874 246,616 356,467 271,067 689,883 141,899 Miscellaneous - - - 3,853 - 2,600 - (1,300,561) 21,166 - Transfers 580,817 912,186 746,209 629,715 644,485 705,637 583,117 464,008 633,814 464,807 Total business-type activities 580,817 912,186 746,209 633,568 662,359 954,853 939,584 (565,486) 1,344,863 606,706 Total primary government 118,772,944 117,664,661 114,631,641 109,849,943 107,973,788 105,494,423 100,360,365 87,054,728 94,097,298 92,730,314 Changes in net position Governmental activities (16,852,314) 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) Business-type activities 13,483,070 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 Total primary government $ (3,369,244) $ 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) concluded 195 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances,governmental Funds - Last Ten Fiscal Years --E 2016 - ---L 20�it 2011 (1) 1 General fund Nonspendable $ 38,605 $ 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 9,992,885 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 Unreserved - - - - - - 389,061 Total general fund 10,031,490 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 All other governmental funds Nonspendable 2,952,027 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 17,038,777 9,009,438 4,730,012 6,934,665 6,865,580 4,368,983 4,368,983 5,566,421 7,412,008 Committed 9,147,988 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) (115,546) (155,261) (411,098) (410,252) (528,144) (619,931) (619,931) (543,774) (371,285) - Reserved 1,177,998 Unreserved,reported in: Special revenue funds 12,029,680 Capital projects funds 11,614,644 Debt service funds 126,434 Permanent funds 1,649,550 Total all other governmental funds 29,023,246 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 Total all governmental funds $ 39,054,736 $ 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 (1)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 196 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years 2019 ---- ��----- Revenues Taxes and special assessments $ 41,732,645 $ 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 Income taxes 37,021,436 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 Licenses and permits 1,399,881 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 Intergovernmental 45,586,152 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 Charges for services 15,235,656 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 Fines and forfeits 2,306,990 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 Interest and rents 631,812 284,165 201,367 145,011 87,035 53,179 53,179 63,571 88,516 249,464 Contributions 21,267,532 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 Donations from private sources - - - - - - - 5,000 - 9,000 Otherrevenue 1,123,946 1,403,712 969,317 1,190,624 1,601,497 510,515 510,515 400,074 504,856 473,123 Total revenues 166,306,050 159,466,412 153,167,115 149,647,952 147,950,572 142,976,721 142,976,721 138,895,740 142,322,015 141,480,197 Expenditures General government 27,340,931 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 Public safety 78,659,682 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 Public works 11,632,895 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 11,984,896 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 Recreation and culture 8,138,369 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 Community development 19,435,277 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 Debt service: Principal 3,183,595 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 Interest 1,000,307 949,318 1,120,518 1,275,957 931,079 1,378,856 1,378,856 1,836,218 3,210,220 3,270,068 Issuance costs - - - - - 42,744 42,744 - 48,804 - Capital outlay 4,798,070 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 Total expenditures 166,174,022 153,234,708 149,450,436 144,684,468 160,624,944 146,761,530 146,761,530 142,761,144 149,715,682 156,694,138 Excess of revenues over(under)expenditures 132,028 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) Other financing sources(uses) Proceeds from borrowing 8,603,699 - - 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 Payment to refunding bond escrow agent (7,741,363) - - (2,162,163) - (6,015,112) (6,015,112) - (2,456,207) - Insurance proceeds - - - - - - - - - Transfers in 8,749,296 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 Transfers out (9,330,113) (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) Bond premium 780,670 80,175 40,945 - - - - - Total other financing sources(uses) 1,062,189 (1,433,210) (1,513,054) (839,210) 16,644,578 11,579,250 11,579,250 934,928 590,025 9,681,999 Net change in fund balance $ 1,194,217 $ 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) Debt service as a percentage of noncapital expenditures 2.6% 3.1% 3.9% 3.7% 3.2% 3.2% 3.2% 3.8% 3.7% 3.9% 197 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 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% 2019 1,196,609,516 632,348,896 117,461,087 162,016 - 131,924,900 2,078,506,415 19.70 4,157,012,830 50.0% Source: Lansing City Assessor 198 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 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 2019 2018 19.44 .26 19.70 11.34 22.50 6.00 3.81 11.26 74.61 (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 199 CITY OF LANSING, MICHIGAN Table 7- Unaudited Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2019 2010 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $ 72,564,575 1 3.49% $ 97,245,402 1 4.15% Jackson National Life Insurance Company 36,691,005 2 1.77% 33,598,874 2 1.43% Consumers Energy 36,418,475 3 1.75% 22,660,900 3 0.97% Lansing Properties LLC 24,132,150 4 1.16% Phoenix Development Partners LLC 18,011,594 5 0.87% Emergent Biodefense Operations 12,656,971 6 0.61% Lansing Retail Center LLC 11,943,147 7 0.57% 12,000,900 7 0.51% Phoenix Development Partners II LLC 8,605,391 8 0.41% Eyde Knapp Development LLC 8,401,298 9 0.40% Edward Rose Realty, Inc. 7,317,457 10 0.35% Delta Township Utilities 20,259,900 4 0.86% General Motors LLC 20,222,572 5 0.86% Demmer Corporation 17,254,600 6 0.74% Trappers Cove LTD Partners 11,129,000 8 0.47% River Street Triangle LLC 10,950,800 9 0.47% Blue Cross Blue Shield of Michigan 9,787,000 10 0.42% Data furnished from City of Lansing Assessor 200 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 Taxes Levied Current Percent of Delinquent Total Collections for the Tax Levy Tax Tax as a Percent Tax Year Fiscal Year Fiscal Year Collection Collected Collection Collection of Levy 2009 2010 $ 44,997,919 $ 44,844,495 99.66% $ 33,012 $ 44,877,507 99.73% 2010 2011 41,460,916 41,375,354 99.79% 24,416 41,399,770 99.85% 2011 2012 39,948,762 39,863,393 99.79% 19,647 39,883,040 99.84% 2012 2013 40,450,767 39,716,932 98.19% 55,532 39,772,464 98.32% 2013 2014 39,336,952 39,238,902 99.75% 20,866 39,259,768 99.80% 2014 2015 38,329,032 38,258,272 99.82% 49,590 39,259,768 102.43% 2015 2016 38,538,226 38,461,152 99.80% 52,758 38,307,862 99.40% 2016 2017 38,431,072 38,370,929 99.84% 50,344 38,421,273 99.97% 2017 2018 39,234,692 39,232,925 99.99% 67,348 39,300,273 100.17% 2018 2019 40,231,255 40,203,313 99.93% 42,639 40,245,952 100.04% 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 201 CITY OF LANSING, MICHIGAN Table 9-Unaudited Ratios of Outstanding Debt by Type Last Ten Fiscal Years Governmental Activities Business-Type Activities General e Special Installment General Installment Total Percentage g Fiscal Obligation Assessment Purchase Obligation Revenue Purchase Primary of Personal Per Year Bonds I Debt06,mml Bonds Bonds Agreements Loans Government Income 2010 $ 26,329,157 $ $ 10,925,689 $ 1,038,804 $ 199,063,758 $ 36,122,872 $ $ 4,180,000 $ 277,660,280 13.58%i2i $ 2,426 114,448 2011 27,804,224 9,564,693 779,580 197,000,901 33,209,092 1,574,209 269,932,699 12.86%i2i 2,367 114,017 2012 25,816,914 8,193,615 512,577 189,536,530 30,135,311 1,637,177 255,832,124 12.97%i3i 2,230 114,738 2013 29,994,604 2,807,838 6,246,743 180,359,931 27,528,327 1,702,664 248,640,107 11.96%i3i 2,191 113,488 2014 27,180,294 3,100,563 7,062,234 174,471,861 24,055,438 1,668,081 - 237,538,471 11.00%i3i 2,082 114,113 2015 27,790,281 16,387,327 7,872,600 167,787,460 19,445,482 1,459,431 240,742,581 10.20%i3i 2,118 113,659 2016 21,968,330 15,268,317 7,872,600 154,303,563 20,671,135 1,246,673 221,330,618 9.34%isi 1,940 114,110 2017 18,080,040 13,757,531 7,728,428 143,761,916 18,982,246 1,029,723 203,339,884 7.98%i;i 1,753 117,400 2018 15,325,818 12,289,396 7,476,545 136,938,668 17,258,138 808,500 190,097,065 7.61%i3i 1,625 115,451 2019 14,925,420 11,274,020 7,242,002 117,713,909 14,075,000 582,920 165,813,271 6.31%(3) 1,413 117,388 (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 202 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 2010 114,448 $2,662,792,292 $ 225,392,915 $ 126,434 $ 206,198,758 $ 19,067,723 0.0072 $ 167 2011 114,017 2,446,969,549 224,805,125 46,029 203,225,901 21,533,195 0.0088 189 2012 114,738 2,297,591,331 215,353,444 - 194,911,530 20,441,914 0.0089 178 2013 113,488 2,088,692,281 210,354,535 178 184,849,931 25,504,427 0.0122 225 2014 114,113 2,001,588,500 201,652,155 - 178,031,861 23,620,294 0.0118 207 2015 113,659 2,086,836,822 195,577,741 1,000 170,372,460 25,204,281 0.0121 222 2016 114,110 2,165,392,100 176,271,893 1,000 155,873,563 20,397,330 0.0094 179 2017 117,400 2,236,874,920 161,841,956 1,000 144,271,916 17,569,040 0.0079 150 2018 116,986 2,336,064,001 1521264,486 1,000 136,938,668 15,324,818 0.0066 131 2019 117,388 2,078,506,415 132,639,329 30,111 117,713,909 14,895,309 0.0072 127 Source: 2000 and 2010 Census by the U.S. Census Bureau includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year 203 CITY OF LANSING, MICHIGAN Table 11 - Unaudited Direct and Overlapping Governmental Activities Debt As of June 30, 2019 Net General Obligation Amount Name of Debt % Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 33,441,442 100.00% $ 33,441,442 Share of County-issued bonds Drain Commission 1,013,220 100.00% 1,013,220 Other overlapping debt Eaton Intermediate School District 3,300,000 0.88% 29,040 Ingham Intermediate School District 1,169,000 21.87% 255,660 Waverly School District 20,150,000 0.26% 52,390 Lansing School District 110,660,000 79.34% 87,797,644 East Lansing School District 85,048,377 5.34% 4,541,583 Holt School District 16,570,968 0.98% 162,395 Ingham County 49,154,416 25.35% 12,460,644 Eaton County 21,713,864 1.92% 416,906 Clinton County 437,140 0.28% 1,224 Lansing Community College 64,445,000 17.92% 11,548,544 Okemos School District 34,170,183 4.39% 1,500,071 Mason School District 38,325,000 1.34% 513,555 Grand Ledge School District 88,535,000 1.73% 1,531,656 Total overlapping debt 121,824,532 Total direct and overlapping debt $ 155,265,974 Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 204 CITY OF LANSING, MICHIGAN Table 12-Unaudited Legal Debt Margin Information Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2019 Assessed value,real and personal property $2,078,506,415 Legal debt margin Debt limitation-10 percent of total valuation 207,850,642 Debt applicable to limit Total City Bonded Debt 143,854,842 City Share: Drain Commission-County Issued 1,013,220 TIF Supported Bonds 27,860,758 Lansing Board of Water and Light 615,255,000 787,983,820 Less: Michigan Transportation(MTF)Bonds $ (1,665,000) Lansing Board of Water and Light (615,255,000) Sewage Disposal Revenue Bonds (14,075,000) Pollution Abatement(CSO Project)Bonds (83,305,977) Share of County-issued bonds (1,013,220) (715,314,197) Total net debt applicable to limit 72,669,623 Legal debt margin $ 135,181,019 ----I 201_----- Debt limit $ 207,850,642 $ 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 Total net debt applicable to limit 72,669,623 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 Legal debt margin $ 135,181,019 $ 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 Total net debt applicable to the limit as a percentage of debt limit 34.96% 37.37% 36.39% 39.92% 43.78% 45.37% 43.97% 39.52% 37.52% 33.00% 205 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) 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 2019 36,696,367 18,587,607 18,108,760 1,550,000 690,688 2,240,688 8.08 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 206 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) 2010 114,448 $ 2,044,504,031 $ 17,864 32.92 13,586 15.0% 64,168 2011 114,017 2,099,395,021 18,413 30.40 12,987 13.1% 59,616 2012 114,738 1,973,149,386 17,197 32.40 12,754 11.3% 58,087 2013 113,488 2,078,873,184 18,318 32.20 12,180 11.9% 57,714 2014 114,113 2,159,930,864 18,928 32.00 11,936 9.1% 57,809 2015 113,659 2,359,106,204 20,756 32.10 11,525 7.4% 57,807 2016 114,110 2,368,467,160 20,756 32.10 11,014 6.0% 58,009 2017 117,400 2,548,754,000 21,710 32.00 10,873 6.5% 59,321 2018 116,986 2,666,695,870 22,795 32.30 10,641 5.8% 59,537 2019 117,388 2,629,725,976 22,402 32.70 10,462 5.0% 59,251 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 207 CITY OF LANSING, MICHIGAN Table 15-Unaudited Principal Employers Current Year and Nine Years Ago 2019 2010 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 14,390 1 5.97% 14,355 1 6.55% Michigan State University 10,253 2 4.25% 11,218 2 5.12% Sparrow Health System 7,600 3 3.15% 7,400 3 3.38% General Motors 4,549 4 1.89% 3,688 4 1.68% Lansing Community College 3,144 5 1.30% 3,180 5 1.45% McClaren Greater Lansing 3,000 6 1.24% Auto Owners Insurance 2,578 7 1.07% 1,500 9 0.68% Peckham, Inc. 2,510 8 1.04% 1,400 10 0.64% Jackson National Life 2,500 9 1.04% Dart Container Corp 2,000 10 0.83% Ingham Regional Medical Center 2,500 6 1.14% Lansing School District 2,106 7 0.96% Meijer 2,000 8 0.91% Greater Lansing metropolitan area employment 241,100 (1) Data is representative of the Greater Lansing Region (2)Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 208 This page intentionally left blank. 209 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2019 2018 2017 2016 2015 2014 General government City council 10 10 10 10 10 10 Mayor's office 7 7 (7) 6 6 5 5 City clerk 6 5 5 5 5 5 54-A district court 45 45 45 45 46 43 City attorney's office 12 11 11 11 11 10 City TV 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 Human resources 11 11 12 12 10 10 Information technology 16 16 11 11 11 11 Finance Accounting/budget/purchasing 8 8 8 8 (5) 9 10 Treasury/income tax 13 11 11 10 9 9 Assessing 11 11 11 11 11 11 Property management - - - - - - Fleet management - - - - - - 32 30 30 29 29 30 Planning 8 neighborhood development Administration 2 2 2 2 2 2 Code compliance 15 14 (6) - (4) Building safety 13 13 13 13 13 13 Planning 4 3 (7) 4 4 4 4 Development 9 9 9 10 10 11 Parking if transportation 14 14 14 14 14 15 57 55 42 43 43 45 Neighborhood &Citizen Engagement 5 1 (7) - - - - Police 243 241 240 239 239 234 (4) Fire 182 181 181 181 181 188 Code compliance - - (6) 14 14 14 14 (4) 182 181 195 195 195 202 Public services Administration Is engineering 21 20 20 20 19 19 Operations Et maintenance 118 118 117 117 117 117 (4) Service garage - - - - - - Wastewater 42 42 41 41 41 41 Property Management 16 16 16 18 18 18 Fleet Management 30 30 30 26 27 27 227 226 224 222 222 222 Human relations E. community services 10 9 8 7 7 6 210 Table 16 - Unaudited 2013 2012 2011 2010 10 10 11 11 5 5 5 5 5 5 6 7 43 48 50 53 10 10 11 12 2 2 2 2 1 1 1 1 9 9 11 12 10 10 14 15 10 13 14 16 20 10 11 12 11 11 12 18 20 21 27 29 30 30 79 85 91 2 2 2 2 15 15 16 16 12 13 15 15 4 4 5 5 9 9 9 9 20 20 20 (3) 40 62 63 66 87 229 260 327 344 180 179 207 218 180 179 207 218 19 21 21 17 120 121 135 (3) 110 41 41 41 44 18 (7) - - - 27 - - - 225 183 197 171 5 5 5 5 continued... 211 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2019 2018 2017 2016 2015 2014 Parks Et recreation Administration Et design 6 6 6 6 6 6 Grounds Et forestry - - - - - - Leisure Et special recreation 6 6 6 6 6 6 Cemeteries 1 1 1 1 1 1 Golf/ice arena - 3 3 3 3 3 13 16 16 16 16 16 879 867 858 854 852 852 Source: The City of Lansing, Michigan The following restructuring of departments have occurred: (1) Grounds Maintenance positions were moved from Parks Et Recreation and Planning Et Neighborhood Development and consolidated with Public Service staff. (2) Fleet and Property Management were moved from the Finance Department to the Public Service Department (3) On June 27, 2012, 911 Dispatch employees were transferred from the City to Ingham County. (4) 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. (5) Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. (6) Code Compliance was transferred from Fire to EDEtP. (7) 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. 212 2013 2012 2011 2010 5 5 5 7 - - - 27 8 10 12 15 1 1 1 3 3 3 4 4 17 19 22 56 843 888 1,020 1,090 concluded 213 CITY OF LANSING, MICHIGAN Table 17-Unaudited Operating Indicators by Function/Program Last Ten Fiscal Years �unction/Program 2019M- ` 2016 _W�`2014 .---- Public safety Fire department responses 22,389 22,768 21,902 21,115 20,170 19,427 18,444 17,093 16,974 16,659 EMS related 19,655 19,264 18,827 18,275 17,376 16,235 15,918 14,851 14,628 14,398 Fire related 2,734 3,063 3,075 2,840 2,794 3,012 2,526 2,242 2,346 2,261 Police department responses 84,869 107,379 82,722 71,468 79,331 76,855 73,087 74,058 78,112 87,724 Arrests 4,418 4,507 5,710 3,880 4,510 5,656 7,196 8,043 8,858 11,644 Traffic violations 6,963 6,496 9,385 7,334 10,781 7,756 14,905 8,829 15,585 18,297 Public works Potholes filled 2,589 54,773 53,332 53,488 53,281 55,193 33,155 30,116 32,918 24,945 Streets resurfaced(miles) 4.6 6.0 8.7 8.8 4.0 4.6 6.0 5.0 9.0 20.7 Recreation Recreation participation 93,264 120,245 98,978 101,335 122,639 50,859 55,122 66,836 66,254 70,529 ' Pavilion rentals 222 202 180 242 206 185 199 198 161 288 Sewage disposal Average amount processed daily(gal) 16.60 million 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 Parking system Average number of monthly permit 2,500 3,310 2,581 3,218 3,077 2,891 2,718 2,735 3,122 3,480 Parking tickets issued 37,105 32,857 33,492 32,990 30,888 34,373 38,127 41,829 45,176 63,610 Cemetery Lots sold 103 88 162 115 138 93 113 115 143 142 Garbage and rubbish Yards sent to landfill 20,957 20,492 20,007 20,115 19,667 18,829 17,985 18,705 20,334 21,805 Recycling Recycled goods sold(tons) 5,407 5,593 5,834 5,940 5,691 5,075 3,562 3,149 2,446 2,163 Yards composted 21,198 20,031 24,223 24,413 21,685 25,260 21,832 20,413 15,725 21,819 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 214 This page intentionally left blank. 215 CITY OF LANSING, MICHIGAN Capital Assets Statistics by Function/Program Last Ten Fiscal Years Function/Program 2019 2018 2017 2016 2015 2014 Public safety Police stations 2 2 2 2 2 2 Police patrol units 58 60 60 60 60 61 Fire stations 8 6 6 6 6 6 Emergency Vehicles 55 - - - - - Public works Streets (miles) 413.00 414.00 414.00 414.00 414.00 411.00 Traffic signals 184 200 200 200 200 200 Recreation Park acreage 2,174.13 2,017.56 2,134.26 2,134.26 2,363.45 2,364.85 Playgrounds 76 74 74 74 72 72 Baseball/softball fields 22 25 25 25 47 61 Soccer/football fields 15 15 15 14 6 6 Community centers 4 4 4 4 4 4 Sewage disposal Sanitary sewers (miles) 364 363 361 361 361 359 Storm sewers (miles) 238 237 235 235 235 234 Combined sewers (miles) 185 187 188 188 188 188 Parking system Ramps 3 4 4 4 4 4 Lots 16 16 16 16 17 17 Meters 2,166 2,166 2,166 2,166 2,166 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 8 16 14 14 17 17 Recycling Recycling trucks 8 7 5 5 7 7 Compost trucks 8 - - - - - Source: The City of Lansing, Michigan 216 Table 18 - Unaudited 2013 2012 2011 2010 2 2 3 3 60 60 58 61 6 6 8 9 411.00 407.80 410.80 410.63 204 204 208 203 2,364.85 2,434.88 2,422.63 2,422.63 75 73 71 71 61 61 61 61 6 6 6 6 4 4 4 4 359 359 359 357 234 234 234 233 188 188 188 191 4 4 4 4 18 15 15 16 2,452 2,452 2,452 2,493 3 3 3 3 1 1 1 1 115 115 115 115 17 19 22 18 7 7 9 10 217