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HomeMy WebLinkAbout2021 - Comprehensive Annual Finacial Report CAFR FY 2020 with memo P14SINC FINANCE DEPARTMENT 124 W Michigan Ave., 811 Floor I P$ Lansing, Michigan 48933 x 1 517.483.4500 Andy Schor,Mayor To: City of Lansing Council From: Robert J.F. Widigan, Finance Director Cc: Andy Schor, Mayor Nik Tate, Deputy Mayor Date: January 6, 2021 Subject: Highlights of the Fiscal Year 2020 City of Lansing Comprehensive Annual Financial Report (CAFR) The City of Lansing has submitted its Fiscal Year (FY) 2020 CAFR to the Michigan Department of Treasury (Treasury) ahead of the December 315t statutory deadline. The Fiscal Year (FY) 2020 final amended budget, covering July 1, 2019, through June 30, 2020, was passed with a projected decrease in the General Fund of$3.1M and a reduction of the fund balance to $6,894,240. The City's CAFR reported that it actually ended FY 2020 with a total General Fund balance of $10,121,010, an improvement of$3.2M over the final amended budget. This was due to several departments coming in under their personnel and operating budgets, as well as restrictions on discretionary spending. Two significant revenue sources came from one-time revenues, which were part of the final FY2020 budget amendment: $1,250,000 is attributed to the adjustment of a lawsuit payment to come from the Sewage Disposal System Fund instead of from the general fund. $1,320,895 was added to the general fund due to the sale of the City's Townsend Street parking ramp. The independent audit concluded with the rendering of a "clean" 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). Notable variances are as follows: • Actual audited Property Tax revenues were down $(2,054,201)to $41,305,799 compared to the final amended budgeted amount of$43,360,000. • Actual audited Income Tax revenues were up $938,724 to $37,438,724 compared to the final amended budgeted amount of$36,500,000. • Actual audited Public Safety- Police expenditures were down $1,134,394 to $44,035,657 compared to the final amended budgeted amount of$45,170,051. • Actual audited Public Safety - Fire expenditures were down $1,136,455 to $35,163,854 compared to the final amended budgeted amount of$36,300,309. • Actual audited Recreation and Culture expenditures were down $951,709 to $7,420,052 compared to the final amended budgeted amount of$8,371,761. For more information, please reference the "Letter of Transmittal" (PDF page 7 of the CAFR) and the "Management's Discussion and Analysis" (PDF page 19 of the CAFR). qo&4�� M a n e r Maner Cosierisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,MI 4891 T.517 323 750 T500 C:ertilicil Public AC.COLI[llit[;Lti F.5173236346 Business&-Technology Advisors www.manercpa.com INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS Honorable Mayor and Members of the City Council City of Lansing,Michigan We have audited,in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States,the financial statements of the 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, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 18,2 02 0. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements,we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described below,we identified certain deficiencies in internal control we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. We consider the following deficiencies to be material weaknesses: 2020-001 MATERIAL JOURNAL ENTRIES PROPOSED BY AUDITORS Condition: Material journal entries for the proper recognition of various financial statement amounts within the City's accounting records were proposed by the auditors. In addition,we received several revisions to the City's trial balance(the final version coming in early December 2020),each of which contained material corrections to previous trial balances. Criteria: Management is responsible for establishing,maintaining,and monitoring internal controls,and for the fair presentation in the financial statements of financial position,results of operations, and cash flows, including the recording of all appropriate journal entries to assure the trial balance from which the financial statements are prepared, reflect amounts that are in conformity with U.S. generally accepted accounting principles. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts, has reduced in size due to budget reductions, staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to journal entries not being completed or reviewed timely. Effect: The City's accounting records were initially misstated by amounts material to the financial statements. Necessary adjustments were brought to the attention of management and were subsequently recorded in the City's general ledger. Recommendation: We recommend that the City take steps to assure that material journal entries are not necessary at the time future audit analysis is performed. Corrective Action Response: Management of the City will continue to review auditor recommendations/ corrections and internal procedures related to the identification and correction of potential errors in the financial statements prior to the beginning of future audits. The Finance team will meet to review adjustments made to this year's financial statements and will develop a plan to address the most significant issues in a timelier manner going forward. Within budget constraints, Management will look to increase staffing levels and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various account balances. 2020-002 BANK RECONCILIATIONS Condition: Throughout the year,the City failed to complete bank reconciliations on a timely basis for most of its cash accounts. Several individual bank account reconciliations were not completed for the entire fiscal year until approximately four months after fiscal year end while audit fieldwork was ongoing. It was also noted that while the City has made improvements from prior years in this area, several accounts still had multiple old outstanding reconciling items present that had not yet been investigated and corrected by the City. Criteria: Completion of timely bank account reconciliations and review thereof, represent an important control used to detect and prevent misstatements and errors. Such reconciliations should be completed and reviewed monthly for all accounts and all reconciling items investigated and resolved as quickly as possible. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts,has reduced in size due to staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to reconciliations not being completed or reviewed timely. Effect: As a result of this condition, all activities that have cash transactions have an increased risk that misstatements in the accounting records, whether caused by error or fraud, would not be detected and corrected on a timely basis. 2020-02 BANK RECONCILIATIONS (concluded) Recommendation: We recommend the City take steps to assure all bank reconciliations are completed and tied to the general ledger in a timely fashion and all differences be resolved in a timely manner. Correction Action Response: Management of the City will work on several areas of improvement to alleviate this issue. a. We will continue to review the need for the various bank accounts that have been established over the years with the view toward more consolidation. b. We will assign the responsibility for each of the bank accounts to various Finance staff members, including using City Treasury staff, who will be responsible for reconciling those statements in a timely manner. c. We will review the old outstanding reconciling items with the view toward clearing them up before the end of the next fiscal year. d. We will look to increase staffing levels in Finance and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various bank statements. 2020-003 PENSION AND OPEB ACTIVITY Condition: Actuarial valuations for the pension and other postemployment benefit(OPEB)plans,the GASB 67/68 related information for the defined benefit pension plans,and the GASB 74/75 related information for the other postemployment benefit plans were not completed until December 2020, and the related account balances were not adjusted until the end of audit fieldwork. Also, as of the completion of audit fieldwork,the City had not verified that pension census data and other information provided to the Actuary were properly recorded by the Actuary. Also, it appeared the City may not be in full compliance with P.A. 202 of 2017 in regards to the length of time the Actuary has conducted the calculations without bidding of these services. We also attempted to verify the accuracy of the pension contributions (employer and employee) made to the respective plans during the year and we were unable to reconcile the amounts contributed back to any supporting data at the City and the contributions were only made annually to the plans. In addition, during our census data testing we noted that the census information for the retiree healthcare plans was contained in a manual spreadsheet that does not appear to be updated timely as we noted an instance where an employee was marked as active,but they no longer worked for the City and should have been shown as deferred. This same individual's entire file could not be located for us to perform other census testing on. Census data includes date of birth,date of hire,separation date,retirement date,service credits, final average salary, benefit multiplier, pensionable wages, accumulated employee contributions, and benefits selected. Finally, we noted that there was no documentation of an independent review over pension and OPEB benefit calculations after they are calculated by the Pension Office. Based on the information that we could analyze; these discrepancies did not materially impact the final valuations, or the amounts reported in the audited financial statements,but these systemic issues increase the risk that errors could occur that would materially affect the amounts reported in the financial statements and those errors would go undetected. 2020-003 PENSION AND OPEB ACTIVITY(concluded) Criteria: The City is required to obtain actuarial valuations and other reports for its various pension and other postemployment benefit (OPEB) plans each year. These valuations and other reports should be obtained far enough in advance to be audited and used to calculate amounts to be included in the audited financial statements in a timely fashion. Management is responsible for accurate and timely compilation of data necessary for the contracted actuary to process and complete reporting necessary for the proper reporting of pension and OPEB information in the annual financial statements and should assure all files are maintained as required. The City should also have proper segregation of duties in place regarding the preparation and review of census information and underlying reports that are essential for accurate and complete reporting of pension and OPEB information in the annual financial statements. P.A. 202 of 2017 has specific language that the City shall follow. Cause: Proper internal control procedures and related policies have not been developed and put in place by the City surrounding a multitude of aspects of the pension and OPEB activities under the control of the City. Effect: Without proper internal control procedures and related policies related to the pension and OPEB activity,there is a risk that material misstatements of the financial statements would go undetected. Recommendation: We recommend that the City take steps to assure that all data be submitted timely to the Actuary and the valuation and other reports returned be reconciled to the underlying submitted documentation and that they follow P.A. 202. We also recommend all pension/OPEB plan contributions be made on a monthly basis and the fiduciary plan statement be reconciled with the general ledger. The City should also assure that all employee related files be retained and available for audit purposes. We further recommend that internal control procedures be established to verify employee data so there is proper segregation of duties for calculating and approving benefits. Corrective Action Response: Management of the City will have discussions with the Chairs of the Retirement Boards and will develop an action plan to provide the Actuary with more timely information for preparation of the FY21 Actuarial Reports and we will evaluate the requirements of P.A. 202 of 2017,P.A. 314 of 1965, and other applicable Public Acts to ensure compliance and implement any necessary changes accordingly. Management will develop a procedure for calculating and remitting to the Plans on a quarterly basis rather than annually, the employee contributions net of fees paid. Management will work to develop internal control procedures to establish proper segregation of duties for calculating and approving benefits. Asignifcant deficiency is a deficiency,or a combination of deficiencies,in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. We consider the following deficiencies described below to be significant deficiencies: 2020-004 RECONCILIATION OF CERTAIN REVENUE TRANSACTIONS Condition: During our analysis of water utility revenues that the Lansing BWL processes for the City,it was determined that BWL handles all aspects of water utility billings and collections and provides the City with "equity payments"for a portion of this activity. We were unable to verify the procedures performed by the City to reconcile and verify the accuracy of the amounts remitted to the City by BWL. Criteria: Sufficient internal controls should be in place so that all receipt transactions are adequately supported, reviewed, approved, and reconciled to assure inappropriate activity, whether intentional or unintentional,is mitigated. Cause: Specific internal controls over these revenue sources were not put in place by the City to account for and reconcile these transactions. 2020-004 RECONCILIATION OF CERTAIN REVENUE TRANSACTIONS (concluded) Effect: The City is susceptible to the potential of inappropriate transactions occurring or there being material misstatements to financial data as the internal controls and segregation of duties in these areas appear to not be sufficient. Recommendation: We recommend that the City evaluate all aspects of their accounting functions in this area and consider taking action to correct the above deficiency, such as implementing reconciliation processes for all material revenue streams coming into the City. A comparison and analysis of funds received from BWL with the City's expected collections should be conducted. Corrective Action Response: The City has started a process to verify that we are actually receiving revenue from BWL facilities (primarily the REO Cogeneration facility) and then will develop a process to verify the sewer revenue data. We will always rely on BWL water meter data since there is no direct metering of sanitary sewage volume by customer. We will set up a meeting with BWL to determine how we can get the necessary information to audit this revenue. 2020-005 RECONCILIATIONS OF ASSET AND LIABILITY ACCOUNTS Condition: We noted the City did not reconcile various material liability accounts to supporting documentation on a monthly basis and adjust the general ledger as needed. We also determined that the City had not recorded the assets and liabilities for certain activities under the control of the City in the general ledger. Criteria: The City is required to have a comprehensive accounting system to account for all financial information under its control. All activity under the control of the City must be included in the general ledger and ending asset and liability balances should be reconciled to supporting documentation on a monthly basis. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts, has reduced in size due to budget reductions, staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to account analyses not being completed or reviewed in a timely manner. Effect: The City general ledger was incomplete prior to auditor proposed journal entries. There is a potential for material misstatement when material accounts are excluded from the general ledger or are not reconciled to supporting documentation on a periodic basis. Recommendation: We recommend all accounts be included in the general ledger and material accounts be reconciled monthly to supporting documentation. Corrective Action Response: Management of the City will continue to review auditor recommendations/ corrections and internal procedures related to the identification and correction of potential errors in the financial statements prior to the beginning of future audits. The Finance team will meet to review adjustments made to this year's financial statements and will develop a plan to address the most significant issues in a timelier manner going forward. Within budget constraints, Management will look to increase staffing levels and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various account balances. 2020-006 WRITTEN PROCEDURES AND POLICIES Condition: We noted that the City has not formally adopted certain written procedures and policies for the following areas: business continuation, electronic funds transfer,compensated absences,fund balance,debt management,and receivables/allowances. Criteria: Documenting specific policies and procedures allows employees to have a clearer understanding of management's expectations. Cause: Unknown. Effect: By not having a business continuation plan in place, the City has no formal plan in place if critical business processes were interrupted. Also,by not having an electronic fund transfer policy in place the City is not in compliance with Public Act 738 of 2002 that requires local units of government that utilize electronic transactions to adopt a written resolution. Finally, by not having policies that relate to debt management, compensated absences, receivables/allowances, and fund balance, all key and material financial areas of the City,there are no formal expectations set for employees by City management. Recommendation: We recommend the City develop and adopt the policies as noted above. Corrective Action Plan: We will review the items noted in this Finding and work with the appropriate department, OCA, and City Council to develop a comprehensive electronic fund transfer policy and other noted policies to properly address this Finding. 2020-007 PAYROLL PROCESS Condition: The City currently has procedures in place to ensure that employees are being paid at the correct rate and for the actual number of hours worked, but much of the data entry of this process is manual and payroll can be submitted and paid before applicable department management reviews and approves their departmental staff payroll data. While no inappropriate transactions were noted during our testing of the payroll process,this is a systemic issue. Criteria: Payroll should be reviewed and approved prior to disbursement of funds. Cause: Proper up-front detective internal controls over the payroll process were not put in place to prevent inaccurate amounts being paid to an employee. Effect: Unauthorized amounts could be disbursed either as a result of an error or fraud and those transactions could go undetected by management until"after the fact". Recommendation: We recommend an appropriate level of management,with no other access to the payroll process, be authorized to approve payroll for their respective departments. There also should be an overarching review of the payroll reports prior to each disbursement and that review should be documented. Corrective Action Response: The Human Resources Department, to whom Payroll reports, will work to implement appropriate corrective action over the payroll process noted above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement,we performed tests of its compliance with certain provision of laws,regulations, contracts,and grant agreements,noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed the following instance of noncompliance or other matters that is required to be reported under Government Auditing Standards. 2020-008 UNFAVORABLE BUDGET VARIANCES Condition: We noted that expenditures had exceeded the amounts appropriated for various areas of the General Fund and one Special Revenue Fund. Criteria: The Uniform Budgeting and Accounting Act requires the City to amend the original adopted budget "as soon as it becomes apparent that a deviation from the original general appropriations act is necessary and the amount of the deviation can be determined." The Act also states that"an administrative officer of the local unit shall not incur expenditures against an appropriation account in excess of the amount appropriated by the legislative body." Cause: The City did not adequately monitor expenditures in relation to budgeted amounts in the areas where the overages occurred. Effect: Having unfavorable budget variances as described above, the City is not in compliance with Public Act 621 of 1978,as amended. Recommendation: We recommend the City monitor expenditures against adopted budgets in all applicable funds and make appropriate budget amendments as needed. Corrective Action Response: The City always wants to have a tighter reign over revenue and expenditures. We budget conservatively in order to stay solvent,though we will monitor finances closer in the next year to be certain we are as close to actual as we feel comfortable projecting. For example,following last year's audit the City implemented a mid-year budget amendment rather than strictly waiting until the end of the fiscal year. City of Lansing's Responses to Findings The City's responses to the findings identified in our audit are described above. The City's responses were not subjected to the auditing procedures applied in the audit of the financial statements and,accordingly,we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. December 18,2020 Maner Maner CQsterisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,M1 489 1 T.517 323 750 7500 Certified Public Accountants F.517 323 6346 Business&Technology Advisors www manercpa.com December 18,2020 Honorable Mayor and Members of the City Council City of Lansing,Michigan We have audited the 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),for the year ended June 30,2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards,as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to City Council dated May 5, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Lansing are described in Note 1 to the financial statements. No new accounting policies were adopted,and the application of existing policies was not changed during the year ended June 30, 2020. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the governmental activities, the business-type activities, the aggregate discretely presented component units, the General Fund, the Sewage Disposal System Fund, the Municipal Parking System Fund,and the aggregate remaining fund information was: Management's calculation of the fair market value of pooled investments, which is defined as the amount that the City could reasonably expect to receive for an investment in a current sale between a willing buyer and a willing seller, is generally measured by quoted market prices. The City's investments are carried at fair market value. Management's calculation of the percentages for the allowance for uncollectible receivable balances is based on past experience and future expectation for collection of various account balances. Management's calculation of the income tax receivable balance is based on past experience utilizing the first 45 days collections of income tax withholdings. The most sensitive estimates affecting the governmental activities, the business-type activities, the aggregate discretely presented component units,the Sewage Disposal System Fund,the Municipal Parking System Fund, and the aggregate remaining fund information were: Management's calculation of depreciation expense for the current period is based on an estimate of the useful lives of the capital assets. Management's calculation of the net pension asset and changes therein was based on actuarial assumptions and the use of a specialist(actuary). Management's calculation of the percentages for current and noncurrent compensated absence payments is based on an estimate of the percentage of employees'use of compensated absences. Management's calculation of the net other post-employment benefits liability is calculated using the individual entry age actuarial method of calculation based upon certain actuarial assumptions. The most sensitive estimate affecting the governmental activities and the aggregate remaining fund information was: Management's calculation of the liability for uninsured risks of loss, including incurred but not reported claims based on an estimate of reported claims and calculation provided by the City's third-party administrators. The most sensitive estimate affecting the Sewage Disposal System Fund, the Municipal Parking Fund, and business-type activities was: Management's calculation of the leases receivable balances is based on past experience and future estimates of lease collections. We evaluated the key factors and assumptions used to develop the estimations in determining that they are reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral,consistent,and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures,and the financial statements as a whole and each applicable opinion unit. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The material misstatements detected as a result of audit procedures and corrected by management are described in connection with our report on internal control over financial reporting. 2 Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter,whether or not resolved to our satisfaction,that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 18,2020. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OtherAudit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the management's discussion and analysis, budgetary comparison information,and the historical pension and other post-employment benefits supplementary information,which are required supplementary information(RSI)that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual nonmajor fund financial statements and budgetary comparison schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America,the method of preparing it has not changed from the prior period,and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information,and we do not express an opinion or provide any assurance on it. 3 Restriction on Use This information is intended solely for the use of the City Council of the City of Lansing and management of the City of Lansing and is not intended to be,and should not be,used by anyone other than these specified parties. Very truly yours, 4 CITY OF LANSING, MICHIGAN COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2020 � S j ti G Andy Schor, Mayor Prepared by: Department of Finance Finance Director Robert J.F. Widigan Controller Jeffery D. Scharnowske TABLE OF CONTENTS Page INTRODUCTORY SECTION................................................................................................................................................................1 Electedand Appointed Officers.......................................................................................................................................................2 Letterof Transmittal.........................................................................................................................................................................3-7 Tableof Organization..........................................................................................................................................................................8 FINANCIALSECTION...........................................................................................................................................................................9 INDEPENDENTAUDITOR'S REPORT.......................................................................................................................................11-13 MANAGEMENT'S DISCUSSION AND ANALYSIS..................................................................................................................15-25 BASIC FINANCIAL STATEMENTS.................................................................................................................................................27 Government-wide Financial Statements Statementof Net Position.....................................................................................................................................................30-31 Statementof Activities..............................................................................................................................................................32 Fund Financial Statements Governmental Funds BalanceSheet............................................................................................................................................................................36 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position................37 Statement of Revenues,Expenditures,and Changes in Fund Balances..........................................................38 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances of Governmental Funds to the Statement of Activities..........................................................39 Proprietary Funds Statementof Net Position...................................................................................................................................................42 Statement of Revenues,Expenses,and Changes in Fund Net Position............................................................43 Statementof Cash Flows...................................................................................................................................................44-45 Fiduciary Funds Statement of Fiduciary Net Position...............................................................................................................................48 Statement of Changes in Fiduciary Net Position.......................................................................................................49 Discretely Presented Component Unit Financial Statements Combining Statement of Net Position............................................................................................................................54 Combining Statement of Activities..................................................................................................................................55 Notesto Financial Statements..............................................................................................................................................57-118 REQUIRED SUPPLEMENTARY INFORMATION.....................................................................................................................119 Schedule of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual........................120-121 Employees'Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................122 Scheduleof Contributions......................................................................................................................................................123 Schedule of Investment Returns..........................................................................................................................................124 TABLE OF CONTENTS Pape REQUIRED SUPPLEMENTARY INFORMATION (concluded) Police and Fire Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................125 Scheduleof Contributions......................................................................................................................................................126 Schedule of Investment Returns..........................................................................................................................................127 Employees' Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................128 Scheduleof Contributions......................................................................................................................................................129 Schedule of Investment Returns..........................................................................................................................................130 Police and Fire Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................131 Scheduleof Contributions......................................................................................................................................................132 Schedule of Investment Returns..........................................................................................................................................133 Note to Required Supplementary Information.................................................................................................................134 OTHER SUPPLEMENTARY INFORMATION............................................................................................................................135 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet- Nonmajor Governmental Funds..............................................................................138 Combining Statement of Revenues, Expenditures,and Changes in Fund Balance-Nonmajor Governmental Funds................................................................................................................139 Combining Balance Sheet- Nonmajor Special Revenue Funds.....................................................................142-143 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Special Revenue Funds.....................................................................................................144-145 Schedule of Revenues,Expenditures,and Changes in Fund Balances -Budget and Actual.............146-155 Combining Balance Sheet- Nonmajor Debt Service Funds.................................................................................158 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Debt Service Funds.................................................................................................................159 Combining Balance Sheet- Nonmajor Capital Projects Funds...........................................................................162 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Capital Projects Funds...........................................................................................................163 Combining Balance Sheet- Nonmajor Permanent Funds....................................................................................166 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Permanent Funds....................................................................................................................167 Nonmajor Enterprise Funds Combining Statement of Net Position...........................................................................................................................170 Combining Statement of Revenues,Expenses,and Changes in Fund Net Position...................................171 Combining Statement of Cash Flows.............................................................................................................................172 Internal Service Funds Combining Statement of Net Position...........................................................................................................................174 Combining Statement of Revenues, Expenses,and Changes in Fund Net Position...................................175 Combining Statement of Cash Flows.............................................................................................................................176 Pension and Other Postemployment Benefit Trust Funds Combining Statement of Fiduciary Net Position......................................................................................................178 Combining Statement of Changes in Fiduciary Net Position...............................................................................179 Agency Fund Combining Statement of Changes in Fiduciary Assets and Liabilities............................................................182 TABLE OF CONTENTS Page STATISTICAL SECTION (UNAUDITED)....................................................................................................................................183 Table 1 Net Position by Component...........................................................................................................................................187 2 Changes in Net Position.............................................................................................................................................188-189 3 Fund Balance,Governmental Funds..........................................................................................................................190 4 Changes in Fund Balances of Governmental Funds............................................................................................191 5 Assessed Value and Estimated Actual Value of Taxable Property................................................................192 6 Direct and Overlapping Property Tax Rates..........................................................................................................193 7 Principal Property Taxpayers......................................................................................................................................194 8 Property Tax Levies and Collections.........................................................................................................................195 9 Ratios of Outstanding Debt by Type..........................................................................................................................196 10 Ratios of General Bonded Debt Outstanding.........................................................................................................197 11 Direct and Overlapping Governmental Activities Debt.....................................................................................198 12 Legal Debt Margin Information...................................................................................................................................199 13 Pledged-Revenue Coverage...........................................................................................................................................200 14 Demographic and Economic Statistics.....................................................................................................................201 15 Principal Employers.........................................................................................................................................................202 16 Full-Time Equivalent City Governmental Employees by Function/Program..........................................203 17 Operating Indicators by Function/Program..........................................................................................................204 18 Capital Assets Statistics by Function/Program....................................................................................................205 INTRODUCTORY SECTION 1 CITY OF LANSING,MICHIGAN LANSING CITY GOVERNMENT Fiscal Year Ended June 30,2020 MAYOR Andy Schor CITY COUNCIL Peter Spadafore, Council President, At Large Adam Hussain, Council Vice President, 3rd Ward Carol Wood, At Large Kathie Dunbar, At Large Patricia Spitzley, At Large Brandon Betz, 1 st Ward Jeremy Garza, 2nd Ward Brian T. Jackson, 4th Ward CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson, Chief Judge Stacia Buchanan Cynthia M. Ward Kristen D. Simmons OFFICERS Chief Information Officer........................................................................... Christopher Mumby Chief Strategy Officer................................................................................ Judy Kehler City Assessor............................................................................................ Sharon Frischman City Attorney.............................................................................................. James Smiertka City Treasurer............................................................................................ Desiree Kirkland Court Administrator.................................................................................... Anethia Brewer Deputy Mayor............................................................................................ Samantha Harkins Deputy Mayor of Operations/Chief of Staff................................................ Nicholas Tate Economic Development & Planning Director............................................ Brian McGrain Finance Director........................................................................................ Robert Widigan FireChief................................................................................................... Greg Martin Human Relations & Community Service Director....................................... Kimberly Coleman Human Resources Director....................................................................... Linda Sanchez-Gazella InternalAuditor.......................................................................................... Vacant Neighborhoods & Citizen Engagement...................................................... Andrea Crawford Parks & Recreation Director...................................................................... Brett Kaschinske PoliceChief............................................................................................... Daryl Green Public Service Director.............................................................................. Andrew Kilpatrick 2 y�N Sj�C FINANCE DEPARTMENT 124 W. Michigan Ave., 81h Floor Lansing, Michigan 48933 �I 517.483.4500 CHI Andy Schor,Mayor December 18, 2020 Council President Peter Spadafore and Council Members loth Floor City Hall Lansing, Michigan 48933-1694 Dear President Spadafore and Council Members, We, the Finance Department team, are pleased to submit the comprehensive annual financial report for the City of Lansing, Michigan, for the fiscal year ended June 30, 2020. 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 2019/2020 financial statements have been audited by Maner Costerisan, an independent firm of licensed, certified public accountants located within the Capital Region. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City for the fiscal year-end June 30, 2020, 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 Auditor 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 Michigan's Lower Peninsula within the northwestern corner of Ingham County and the northeastern corner of Eaton County. The City operates under a mayor/council form of government, where the Mayor serves as the chief executive of the City and is elected on an at-large basis to serve a four-year term. Lansing is a mature core city with a population of 118,210 according to the 2019 census estimates and offers a full range of services. During the fiscal year ended June 30, 2020 the City operated a police headquarters and precinct with 208 sworn police officers, eight fire stations with a fire protection force of 159, over 365 miles of sanitary sewers, 239 miles of storm sewers and 185 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 Et Public Facilities Authority, Tax increment Finance Authority, and the Brownfield Redevelopment Authority are reported as discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls. 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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance). The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year ended June 30, 2020 are discussed in the Management Discussion and Analysis (MDEtA), 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. Not later than the third Monday in May of each year, the City Council shall, by resolution, adopt a budget for the ensuing fiscal year. 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 City Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. 4 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, Western Michigan University Thomas M 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 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 Logistics Center and a regional stamping plant, automotive suppliers throughout the region, production of particle accelerators, and vaccine research and production. Within the City major taxpayers and employers include, but are not limited to, the health care sector - Sparrow Health Systems and McLaren Health Care Corporation, manufacturing - General Motors, research sector - Emergent BioSolutions and Niowave, Inc., and financial services and insurance - Jackson National Life and AF Group The Facility for Rare Isotope Beam (FRIB) on the campus of Michigan State University is now open to researchers from around the world. . This will enable scientific discovery of rare isotope properties, employ top nuclear physicists, and is expected to employ approximately 1,000 persons. Even before the FRIB was completed Niowave, Inc. established its operations in Lansing as a commercial spinoff from Michigan State University's nuclear cyclotron facility. Lansing serves as the cultural center for the region. Recent major investments have continued to revitalize Lansing and power the local economy. During the 2019 calendar year, the Lansing Economic Development Corporation (LEDC), working with Mayor Andy Schor's office and the Lansing City Council, gained approvals for 15 development projects. These 15 projects represent $311 million in private investment that will create 421 jobs and retain 25 jobs in Lansing. These new projects range in size from large to small and will continue to make Lansing a great place that offers the benefits of a big city with the affordability and convenience of a small town. Some notable business expansion and real estate projects that are attributed to the success of the City's economic development include: • The newly opened Capital City Market located at 600 East Michigan Avenue provides an urban grocery store to downtown Lansing. In addition to the new grocery store, the project provides a second hotel downtown and additional apartment units. • The Red Cedar Redevelopment project located at 203 S. Clippert is a $255 million development which includes student housing, multi-family apartments, parking, two hotels, an assisted living facility, retail space and restaurants. This project is expected to create 400 full-time jobs and 1,000 additional employment opportunities to the City. • The New McLaren Health Care Hospital located between Collins Road and US 127. This project will be a $600 million investment for the City and will serve as a core component of the area's medical- technology research corridor. The City continues to work with McLaren to repurpose its two existing facilities in South Lansing. • Redevelopment of the Farnum Building at 123 W. Allegan Street. This $20 million project will improve the current infrastructure and building conditions of the office building located adjacent to the state capitol building. The building has begun the leasing process and is expected to create 100 jobs in the City. • A 286-unit market rate multi-family apartment community to be built at 3600 Dunkel Road in Lansing. The $52 million project 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 Dunkel 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. 5 • Capital View Apartments (Formerly Oliver Towers), after years of standing empty, the property deteriorated to the point where it was too hazardous to even enter without wearing the proper hazmat clothing and breathing apparatus. Now with the use of the Lansing's Brownfield program, this challenging property has been transformed to house 92 apartment units and offers additional living options in the City's downtown. • Metro Place Apartments located on the former YMCA site, contains 145 apartment units to the downtown. This development brings new life to an underutilized site in downtown Lansing using the City's Brownfield program. Metro Place contributes significantly to the nearly 450 new downtown housing units coming online by 2022. These new housing developments provide an attractive range of housing options for new residents, which will contribute to improved economic vitality downtown. • The Former Temple Club Building, one of Old Town's most storied buildings, will undergo a $9 million developer-funded transformation into a modern mixed-use apartment building. The building will include retail and office space on the first floor and be fitted for 31 apartment units above. A two-story parking garage will be constructed next to the renovated building. • The $11 million Allen Place Development will see the rehabilitation of a building and a 3-story addition to create a comprehensive development that includes age-friendly and mixed-income housing totaling 21 units, commercial space totaling 24,000 sq. ft. In its commitment to regional partnerships, the City has contracted with the Lansing Economic Area Partnership (LEAP) since 2012. This arrangement allows for a regional based approach to economic development. From 2012-2019, LEAP has facilitated a total of $3.08 billion in project investments which created more than 7,000 jobs in the Greater Lansing area. As a result of the pandemic, LEAP is coordinating business relief resources and small business restart and relief funds, which were allocated to the Lansing region by Michigan Economic Development Corporation. Covid-19 Small Business Assistance In March 2020, the City was faced with adapting, responding, and meeting the challenging budgetary and economic needs of the COVID-19 pandemic. One of their local partners, The Lansing Regional Chamber of Commerce, developed the RELAUNCH Great Lansing Economic Rehabilitation Task Force, to create a strategy for restarting business operations in the Lansing area. The task force consists of business partners, community members, customers, and employees of local businesses. The intent of the task force is to restore and return to a thriving, robust regional economy while taking necessary safety precautions. When the COVID-19 pandemic hit, it became very clear that small businesses in Lansing were being impacted dramatically by the economic shutdown and shelter at home measures. The City of Lansing and the Lansing Economic Development Corporation (LEDC) quickly assessed the situation and used National Development Council guidelines to establish the Lansing Small Business Recovery Program. The LEDC authorized the creation of the COVID-19 Rescue Fund, which allocated $400,000 of LEDC funds to 46 small businesses located within the City of Lansing. Between the regional and local programs, 72 City of Lansing businesses were awarded $820,000 in grants or low interest loans within the first 60 day of the crisis. The LEDC conducted outreach and provided application assistance to help City of Lansing applicants become aware of the LEAP Restart program and submit the strongest applications possible. As a result of the program, $1,685,000 in grant funds was awarded to 140 City of Lansing small businesses and nonprofits. An Economic Recovery Resource Developer (ERRD) program partnership between the City and the LEDC was established to develop a response plan to collaborate with community partners and matching organizations with funding opportunities. The ERRD will also address funding equity and support of organizations representing and assisting disadvantaged businesses throughout the City. 6 In all, $400,000 of LEDC funds and $2,105,000 in funds distributed by LEAP have been awarded to City of Lansing small businesses and nonprofits in 2020, putting over $2.5 million into the hands of the City of Lansing's small business owners. Looking to 2021, through a partnership between the City's Department of Economic Development and Planning and the LEDC, $600,000 of the City's Community Development Block Grant (CDBG) allotment will be allocated the Lansing Small Business Recovery Program. These funds will provide further support to eligible Lansing small businesses continuing to struggle due to the pandemic. Facade Improvement Program In addition to development projects, the LEDC managed the City's Facade Improvement Program, which provides matching dollars to assist Lansing business owners in making improvements to the exterior of their commercial properties. This program assisted over 15 different businesses to make property improvements in highly visible and critical areas of the City in 2019. Commercial Corridor Improvement The LEDC also had a very successful year managing and creating Corridor Improvement Authorities (CIA) in Lansing. These authorities can use special financing tools to revitalize commercial corridors along key major streets in Lansing. Development and Finance Plans were written and approved by both the Saginaw Street and Michigan Avenue Corridor Improvement Authorities. Additionally, CIAs were created for both the South Martin Luther King Jr. Blvd and North Grand River Avenue, paving the way for the funding of public improvements along their respective commercial corridors. Acknowledgements 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 Controller Jeff Scharnowske, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. Cordially, Robert J.F. Widigan, Finance Director 7 Table of Organization Citizens of Lansing City Clerk City Council Mayor 54-A District Court Internal Audit City Attorney's Office of Office FC mmunity Media Review Transactions Legal Advisor/Defender Public Education Grant Identify Efficiencies Prosecutor for City City Television Analyze Programs Economic Neighborhoods Police Fire Development & Citizen Public Parks& Planning Engagement Service Recreation Patrol Suppression Planning/Zoning Neighborhood Resources Roads/Sidewalks Parks Design Crime Investigation Prevention Code Compliance Citizen Engagement Sewers/Treatment Recreation Programs Community Policing Emergency Mgmt. Building Safety Financial Empowerment Trash/Recycling Community Centers Social Work Rescue/Hazards Parking System Grounds Maint. Cemeteries Detention Economic Dev.Corp. Engineering Golf LEPFA Property Mgmt. Downtown Lansing, Inc Fleet Services Information Human Human Relations & Technology Resources Community Services Finance Operations Treasury Assessing IT Helpdesk Recruiting Grant Writing Assistance Accounting/Budget Income Taxes Assessing Cybersecurity Training Human Services Grants Financial Reporting Property Taxes Property Tax Roll Software Mgmt. Payroll/Benefits Police Investigations Strategic Planning Retirement Neighborhood Ombudsman 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 M a n e r Maner Cosierisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,MI 4891 T.517 323 750 T5OO C:ertilicil Public AC.COLI[llit[;Lti F.5173236346 Business&-Technology Advisors www.manercpa.com INDEPENDENT AUDITOR'S REPORT 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 30,2020,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. Auditor's 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 GovernmentAuditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the 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, based on our audit, 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 30,2020,and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis,budgetary comparison schedules,and the pension and OPEB schedules,as identified 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 introductory section, combining and individual nonmajor fund financial statements, nonmajor special revenue fund budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and nonmajor special revenue fund budgetary comparison 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 information is fairly stated,in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 12 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards,we have also issued our report dated December 18, 2020, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. December 18,2020 13 This page intentionally left blank. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF LANSING 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, 2020 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 $ (286,847,440) Change in total net position (55,561,005) Fund balances,governmental funds 42396,832 Change in fund balances,governmental funds 3:342,096 Unassigned fund balance,general fund 9,935,641 Change in fund balance,general fund 89,520 Long-term obligations outstanding 169,427,623 Change in long-term debt (9,520,521) Overview of the Financial Statements This MD&A 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 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). 16 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS The Statement of Net Position and the Statement of Activities report three activities,as follows: ➢ Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch),the District Court(judicial branch),and general operations of the executive branch departments,such as police,fire,parks,public works,and other general staff departments fall within the governmental activities. ➢ Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. ➢ Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has various discretely presented units: the Brownfield Redevelopment Authority, the Tax Increment Finance Authority, and the Lansing Entertainment and Public Facilities Authority. These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements(modified accrual accounting)with governmental activities(full accrual accounting)on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: ➢ Capital assets used in governmental activities are not reported on governmental fund statements. ➢ Certain revenues that are earned,but not available for use within the reporting period,are reported as revenues for governmental activities, but are reported as deferred inflows of resources on the governmental fund statements. ➢ Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements,but not deferred on the government-wide statements. ➢ Internal service funds are reported as governmental activities,but reported as proprietary funds in the fund financial statements. ➢ Bond discounts and premiums in connection with the issuance of long-term obligations 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. 17 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS ➢ Pension and other postemployment benefits liabilities and related deferrals relating to governmental funds are only reported in the government-wide statements. The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Fund Financial Statements. The City's major funds are identified as the General Fund,Sewage Disposal System Fund,and Municipal Parking System Fund. Data for all other funds,termed"nonmajor funds",are combined into a single,aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. ➢ Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital projects, debt service, and permanent funds. ➢ Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. ➢ Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefit plans and for the 54-A District Court. 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 and the 54-A District Court Agency Fund, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. 18 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 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. Government-wide Financial Analysis The City's combined net position decreased $55.6 million over the course of this fiscal year's operations, and came to a total of $(286.8) million. Net position of governmental activities decreased $(50.1) million, and business-type activities decreased$(5.5)million. Explanations for those changes are described below under the governmental activities and business-type activities sections of this Management Discussion and Analysis. Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Current and other assets $ 70,031,080 $ 77,214,265 $ 91,700,607 $ 90,715,087 $ 161,731,687 $ 167,929,352 Capital assets,net 179,267,839 173,018,086 338,450,763 333,064,355 517,718,602 506,082,441 Total assets 249,298,919 250,232,351 430,151,370 423,779,442 679,450,289 674,011,793 Deferred outflows of resources 43,806,456 150,024,374 6,075,602 13,834,495 49,882,058 163,858,869 Current liabilities 26,104,917 27,499,946 18,806,144 19,727,392 44,911,061 47,227,338 Noncurrent liabilities 708,142,720 864,898,715 188,403,110 191,628,749 896,545,830 1,056,527,464 Total liabilities 734,247,637 892,398,661 207,209,254 211,356,141 941,456,891 1,103,754,802 Deferred inflows of resources 18,786,464 17,867,087 375,427 3,096,213 19,161,891 20,963,300 Net position Investment in capital assets 146,153,309 143,583,186 233,988,263 234,126,397 380,141,572 377,709,583 Restricted 23,505,738 20,495,617 1,953,175 2,432,963 25,458,913 22,928,580 Unrestricted (629,587,773) (674,087,826) (7,299,147) (13,397,777) (636,886,920) (687,485,603) Total net position $ (459,928,726) $ (510,009,023) $ 228,642,291 $ 223,161,583 $ (231,286,435) $ (286,847,440) 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$33.2 million and$128.5 million,respectively. 19 CITY OF LANSING 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: Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Revenue Program revenue Charges for services $ 15,573,751 $ 13,962,385 $ 50,916,057 $ 48,240,725 $ 66,489,808 $ 62,203,110 Operating grants and contributions 29,663,253 28,534,469 6,648,917 2,000,000 36,312,170 30,534,469 Capital grants and contributions 3,313,872 285,075 - - 3,313,872 285,075 General revenue Taxes 78,714,366 79,114,435 78,714,366 79,114,435 State shared revenues-unrestricted 15,178,768 14,386,936 15,178,768 14,386,936 Other 24,879,810 28,440,635 4,182,483 24,879,810 32,623,118 Total revenue 167,323,820 164,723,935 S7,S64,974 54,423,208 224,888,794 219,147,143 Expenses General government 26,679,840 30,400,643 - 26,679,840 30,400,643 Public safety 97,391,612 121,102,641 97,391,612 121,102,641 Public works 29,644,398 35,288,254 29,644,398 35,288,254 Recreation and culture 7,650,889 11,238,934 7,650,889 11,238,934 Community development 21,046,090 20,731,730 21,046,090 20,731,730 Interest on long-term debt 1,182,488 733,925 1,182,488 733,925 Sewage disposal system - - 31,939,976 32,605,664 31,939,976 32,605,664 Municipal parking system 7,081,998 12,716,606 7,081,998 12,716,606 Cemetery 470,220 1,652,255 470,220 1,652,255 Golf 278,501 229,467 278,501 229,467 Garbage and rubbish collection 1,035,262 2,431,066 1,035,262 2,431,066 Recycling - - 3,856,764 5,576,963 3,856,764 5,576,963 Total expenses 183,595,317 219,496,127 44,662,721 55,212,021 228,258,038 274,708,148 Change in net position before transfers (16,271,497) (54,772,192) 12,902,253 (788,813) (3,369,244) (55,561,005) Transfers(out)in (580,817) 4,691,895 580,817 (4,691,895) Change in net position (16,852,314) (50,080,297) 13,483,070 (5,480,708) (3,369,244) (55,561,005) Net position-beginning of year (443,076,412) (459,928,726) 215,159,221 228,642,291 (227,917,191) (231,286,435) Net position-end of year $ (459,928,726) $ (S1Q009,023) $ 228,642,291 $ 223,161,583 $ (231,286,435) $ (286,847,440) Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues- Governmental Activities Fiscal Year Ending June 30, 2020 Other Charges for services 18% 9% State shared revenues- Operating grants and unrestricted contributions 9% 18% Capital grants and 4 contributions 0% Property taxes 23% Income taxes 23% 20 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS In total, governmental activity revenues decreased $2.6 million from FY 2019 to FY 2020, with trends of the major revenue categories as follows: Property taxes comprised the largest portion of governmental activity revenue at 25.3%, or$41.7 million, which is consistent with the fiscal year 2019. Income taxes comprised 22.7%,or$37.4 million,of governmental activity revenue,the full amount of which is revenue to the General Fund. This represents a$418,000,or 1.1%,increase from fiscal year 2019. 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$28.8 million,or 17.5%of governmental activity revenue for fiscal year 2020,a$4.2 million,or 12.6%decrease from fiscal year 2019. State Gas and Weight tax revenues restricted for streets, and Community Development, HOME, and Emergency Shelter entitlement grant revenues held constant with mild growth; decrease in this category came largely from non-entitlement restricted grant revenues. Unrestricted grants and contributions(including state shared sales tax revenue)comprised 16.7%,or$27.6 million, of revenues,a$2.5 million, or 6.3% increase from fiscal year 2019. A little more than one-third of this category,$14.4 million,is attributed to State revenue sharing,an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services decreased$1.6 million from FY 2019 to FY 2020. Governmental Activities. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2020 Public works 16% Recreation and culture 5% Public safety 55% Community development 10% Interest on long-term debt 0% General government 14% 21 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS Total expenses for governmental activities increased$35.9 million,19.6%,from FY 2019 to FY 2020,with trends of the major expense categories as follows: The largest component of governmental activities was public safety,accounting for 55.2%,or$121.1 million, a 24.39% ($23.7 million) increase from FY 2019, largely due to the significant increase of other postemployment expense to this activity. Public works comprises the next largest component of governmental activity expenses, at 16.1%, or $35.3 million,a 16.1% ($5.6 million) increase from FY 2019,due to significant increases in net pension and other postemployment benefit(retiree healthcare) expenses. At$30.4 million,general government expenses,representing general and internal City services,comprised 13.9% of governmental activities. This category increased by $3.7 million in operational costs, a 13.9% overall increase from FY 2019,due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. Community development represented 9.4%,or$20.7 million,of total governmental activities expenses. This category decreased$314.4 thousand,or 1.5%from FY 2019. Business-type Activities.Net position of the business-type activities decreased by$5.5 million from FY 2019 to $223.2 million. This decrease was largely attributable to a significant decrease in municipal parking system revenues resulting from the reduced operations of businesses and government downtown during the COVID-19 Pandemic. Financial Analysis of the City's Funds As the City completed the fiscal year,its governmental funds reported combined ending fund balances of$42.4 million, a $3.3 million increase from fiscal year 2019. Of the $42.4 million fiscal year 2020 combined ending fund balance, $3.4 million is unavailable to spend (i.e. amounts tied up in inventories, prepaids and endowments),$18.6 million is legally restricted,and$10.6 million is committed for designated projects,leaving $9.9 million unassigned. The unassigned fund balance for the General Fund was$9.9 million,an increase of$89,520 from FY 2019,which is further described in the General Fund Budgetary Highlights section. Sewage Disposal System Fund Net position increased $3.8 million to $231.3 million in FY 2020. Unrestricted net position increased $6.2 million, from $3.7 million to $9.9 million maintaining stable operations and revenue through the COVID-19 Pandemic. Municipal Parking System Fund Net position decreased$9.3 million to$5.4 million. Unrestricted net position decreased$12.5 million,from$4.7 million to a deficit of$7.8 million. This was due to the conclusion of major capital improvement projects and sharp decrease in parking revenues from the broader economic shutdown and public health restrictions. 22 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS General Fund Budgetary Highlights The FY 2020 General Fund budget was adopted as a balanced budget with a usage of 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$140.8 million to$140.0 million. General Fund reserves combined with the Budget Stabilization Fund (combined for financial statement purposes) decreased $89,520 from FY 2019 to $10.1 million. Unassigned fund balance decreased $58,000, or 0.06% from fiscal year 2019. The City benefited from savings due to reduced activities, participation in Michigan's Workshare program in which employee hours could be reduced and supplemented with unemployment benefits,and a broader freeze on hiring and discretionary expenditures. The City's local economy is comprised of a diversified mix of businesses and industries including government, health care,manufacturing,insurance,banking,and education. The City has responded to both the public health and economic needs of local businesses and residents,partnering with organizations in the Greater Lansing area to provide grant funding and coordinate resources toward restoring the economy during the COVID-19 pandemic. Property tax values continue to increase within the City;however,the growth rate corresponding to the revenue is limited at the rate of inflation per the state constitution. Income tax revenue has been highly susceptible among fluctuations in employment levels,personal income,and the impact of COVID-19. Capital Assets. At the end of the fiscal year 2020, the City had invested $506 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. Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Land $ 25,302,787 $ 25,435,297 $ 12,470,361 $ 12,369,507 $ 37,773,148 $ 37,804,804 Land improvements 14,069,991 13,175,179 14,255,651 13,650,009 28,325,642 26,825,188 Buildings and improvements 45,632,844 41,090,770 69,089,497 65,920,477 114,722,341 107,011,247 Equipment 7,236,992 6,946,593 967,786 2,262,409 8,204,778 9,209,002 Infrastructure 87,025,225 85,580,989 228,122,636 221,498,656 315,147,861 307,079,645 Construction in progress - 789,258 13,544,832 17,363,297 13,544,832 18,152,555 Total $ 179,267,839 $ 173,018,086 $ 338,450,763 $ 333,064,355 $ 517,718,602 $ 506,082,441 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. 23 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 2019 2020 Governmental activities General obligation bonds $ 14,163,699 $ 11,792,231 Deferred amounts For issuance discounts (52,488) (45,655) For issuance premiums 814,209 748,067 Installment purchase contracts 11,274,020 10,230,073 Loans 7,242,002 7,000,422 Compensated absences 9,968,748 9,208,075 Workers compensation 2,310,982 2,557,317 Total governmental activities 45,721,172 41,490,530 Business-type activities General obligation bonds 115,616,143 112,290,745 Deferred amounts For issuance discounts (340,815) (275,524) For issuance premiums 2,438,581 2,165,855 Revenue bonds 14,075,000 12,525,000 Installment purchase agreements 582,920 352,897 Compensated absences 855,143 878,120 Total business-type activities 133,226,972 127,937,093 Total outstanding debt $ 178,948,144 $ 169,427,623 More detailed information regarding these activities and funds can be found in Note 9 of the Notes to the Financial Statements section of the CAFR. Economic Condition and Outlook During the COVID-19 pandemic,unemployment within the City reached an unprecedented 24.8%in April 2020 compared to its previous peak of 17.9%in July 2009. While the City has received initial support from State and Federal stimulus efforts, the outlook for future support is uncertain. Budget constraints within the State of Michigan may have particular impact on future revenue sharing payments. Many of the employers in the City have staff working from home,resulting in reduced business activity downtown posing risks to income tax and parking revenues. The 2019/2020 fiscal year resulted in a$53 thousand decrease to General Fund unassigned reserves,bringing unassigned General Fund reserves down to$9.9 million,or 7.6%of General Fund expenditures,which is below the City's 12%-15%fund balance policy. 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. 24 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 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's financial picture will continuously be evaluated to address any budget constraints for the future fiscal years. 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 STATEMENT OF NET POSITION JUNE 30,2020 Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets Cash and cash equivalents $ 3,085,997 $ 2,810,375 $ 5,896,372 $ 6,632,734 Equity in pooled cash and investments 36,336,628 55,573,392 91,910,020 1,756,650 Cash and cash equivalents,restricted 3,086,975 2,432,963 5,519,938 11,052,725 Current portion of receivables,net 16,630,693 5,912,811 22,543,504 371,341 Due from other governmental units 12,377,688 - 12,377,688 - Inventories 1,643,806 420,638 2,064,444 75,853 Prepaids 665,133 - 665,133 96,369 Total current assets 73,826,920 67,150,179 140,977,099 19,985,672 Noncurrent assets Internal balances (188,126) 188,126 - - Noncurrent portion of receivables,net 3,575,471 23,376,782 26,952,253 160,495 Capital assets not being depreciated 26,224,555 29,732,804 55,957,359 - Capital assets,net of accumulated depreciation 146,793,531 303,331,551 450,125,082 17,846 Total noncurrent assets 176,405,431 356,629,263 533,034,694 178,341 TOTAL ASSETS 250,232,351 423,779,442 674,011,793 20,164,013 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding 290,238 4,077,697 4,367,935 935,439 Deferred outflows of resources related to pensions 35,348,013 3,633,093 38,981,106 - Deferred outflows of resources related to OPEB 114,386,123 6,123,705 120,509,828 TOTAL DEFERRED OUTFLOWS OF RESOURCES 150,024,374 13,834,495 163,858,869 935,439 LIABILITIES Current liabilities Accounts payable 8,105,574 2,086,851 10,192,425 2,789,988 Accrued payroll 2,238,834 126,009 2,364,843 - Deposits payable - 73,828 73,828 Due to other governmental units 3,754,680 - 3,754,680 Claims incurred but not reported 400,000 400,000 Idemnity bonds 43,867 43,867 - Other accrued liabilities 778,071 - 778,071 272,163 Accrued interest payable 270,274 3,482,704 3,752,978 167,602 Unearned revenue 5,690,261 324,913 6,015,174 951,365 Current portion of compensated absences 1,462,227 79,306 1,541,533 - Current portion of long-term debt 4,756,158 13,553,781 18,309,939 - Total current liabilities 27,499,946 19,727,392 47,227,338 4,181,118 The accompanying notes are an integral part of the financial statements. CONTINUED 30 CITY OF LANSING STATEMENT OF NET POSITION (concluded) JUNE 30,2020 Primary Government Governmental Business-type Component Activities Activities Total Units LIABILITIES(concluded) Noncurrent liabilities Noncurrent portion of compensated absences $ 7,745,848 $ 798,814 $ 8,544,662 $ Noncurrent portion of long-term debt 27,526,297 113,505,192 141,031,489 65,349,864 Net pension liability 308,110,357 35,327,661 343,438,018 - Net other post-employment benefits liability 521,516,213 41,997,082 563,513,295 - Total noncurrent liabilities 864,898,715 191,628,749 1,056,527,464 65,349,864 TOTAL LIABILITIES 892,398,661 211,356,141 1,103,754,802 69,530,982 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 1,459,430 190,715 1,650,145 - Deferred inflows of resources related to OPEB 16,407,657 2,905,498 19,313,155 TOTAL DEFERRED INFLOWS OF RESOURCES 17,867,087 3,096,213 20,963,300 - NET POSITION Net investment in capital assets 143,583,186 234,126,397 377,709,583 17,846 Restricted Public safety 1,414,439 - 1,414,439 - Public works 15,347,630 15,347,630 Community development 82,140 82,140 Building department 1,677,085 - 1,677,085 Debt service 29,361 2,432,963 2,462,324 - Revelopment projects - - - 8,465,017 Cooley stadium capital projects - - 80,000 Endowments(nonexpendable) 1,944,962 1,944,962 - Unrestricted(deficit) (674,087,826) (13,397,777) (687,485,603) (56,994,393) TOTAL NET POSITION $ (510,009,023) $ 223,161,583 $ (286,847,440) $ (48,431,530) The accompanying notes are an integral part of the financial statements. 31 CITY OF LANSING STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2020 Net(Expense)Revenue and Changes in Net Position Program Revenues Primary Government Operating Capital Grants Charges for Grants and and Governmental Business-type Component Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Units Primary government Governmental activities General government $ 30,400,643 $ 7,616,658 $ 1,844,175 $ $ (20,939,810) $ $ (20,939,810) $ Public safety 121,102,641 4,770,026 3,020,126 (113,312,489) (113,312,489) Public works 35,288,254 536,961 18,580,693 285,075 (15,885,525) (15,885,525) Recreation and culture 11,238,934 1,038,740 119,710 - (10,080,484) (10,080,484) Community and economic development 20,731,730 - 4,969,765 (15,761,965) (15,761,965) Interest on long-term debt 733,925 (733,925) (733,925) Total governmental activities 219,496,127 13,962,385 28,534,469 285,075 (176,714,198) (176,714,198) Business-type activities Sewage disposal system 32,605,664 34,968,585 2,000,000 4,362,921 4,362,921 Municipal parking system 12,716,606 6,211,685 - (6,504,921) (6,504,921) Cemetery 1,652,255 403,030 (1,249,225) (1,249,225) Golf 229,467 3,091 (226,376) (226,376) Garbage and rubbish collection 2,431,066 2,278,024 (153,042) (153,042) Recycling 5,576,963 4,376,310 (1,200,653) (1,200,653) Total business-type activities 55,212,021 48,240,725 2,000,000 (4,971,296) (4,971,296) Total primary government $ 274,708,148 $ 62,203,110 $ 30,534,469 $ 285,075 (176,714,198) (4,971,296) (181,685,494) Component units Brownfield Redevelopment Authority $ 15,308,883 $ $ 1,174,048 $ - (14,134,835) Tax Increment Finance Authority 4,261,130 (4,261,130) Lansing Entertainment&Public Facilities Authority 9,127,195 6,799,182 1,203,995 (1,124,018) Total component units $ 28,697,208 $ 6,799,182 $ 2,378,043 $ (19,519,983) General revenues Property taxes 41,675,711 41,675,711 7,181,755 Income taxes 37,438,724 37,438,724 Unrestricted state shared revenues 14,386,936 14,386,936 Grants and contributions not restricted to specific programs 27,642,164 27,642,164 Local community stabilization - - Investment earnings 707,383 2,061,667 2,769,050 127,888 Gain on sale of capital assets 2,120,816 2,120,816 Miscellaneous 91,088 - 91,088 364,255 Transfers 4,691,895 (4,691,895) Total general revenues and transfers 126,633,901 (509,412) 126,124,489 7,673,898 Change in net position (50,080,297) (5,480,708) (55,561,005) (11,846,085) Net position(deficit),beginning of the year (459,928,7261 228,642,291 (231,286,435) (36,585,445) Net position(deficit),end of the year $ (510,009,023) $ 223,161,583 $ (286,847,440) $ (48,431,530) 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 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 BALANCESHEET GOVERNMENTAL FUNDS JUNE 30,2020 Nonmajor Governmental General Funds Total ASSETS Cash and cash equivalents $ 2,914,258 $ 171,739 $ 3,085,997 Cash and cash equivalents-restricted 3,086,975 - 3,086,975 Equity in pooled cash and investments - 27,565,473 27,565,473 Receivables Accounts,net 11,138,187 224,735 11,362,922 Taxes receivable,net 1,113,489 - 1,113,489 Special assessments - 153,378 153,378 Loans - 1,220,642 1,220,642 Accrued interest - 2,231,696 2,231,696 Due from other funds - 1,096,006 1,096,006 Due from other governmental units 5,458,760 10,494,399 15,953,159 Inventories 9,241 1,223,600 1,232,841 Prepaids 176,128 1,425 177,553 TOTAL ASSETS $ 23,897,038 $ 44,383,093 $ 68,280,131 LIABILITIES Accounts payable $ 4,450,328 $ 2,130,235 $ 6,580,563 Accrued payroll 2,000,483 68,631 2,069,114 Due to other governmental units 3,450,964 303,716 3,754,680 Indemnity bonds - 43,867 43,867 Other liabilities 737,703 40,368 778,071 Due to other funds 576,200 519,806 1,096,006 Advances from other funds - 188,126 188,126 Unearned revenue 453,210 5,237,051 5,690,261 TOTAL LIABILITIES 11,668,888 8,531,800 20,200,688 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-fees 2,107,140 - 2,107,140 Unavailable revenue-loans and accrued interest receivable - 3,452,338 3,452,338 Unavailable revenue-special assessments - 123,133 123,133 TOTAL DEFERRED INFLOWS OF RESOURCES 2,107,140 3,575,471 5,682,611 FUND BALANCES Nonspendable 185,369 3,169,987 3,355,356 Restricted - 18,550,655 18,550,655 Committed - 10,637,417 10,637,417 Unassigned(deficit) 9,935,641 (82,237) 9,853,404 TOTAL FUND BALANCES 10,121,010 32,275,822 42,396,832 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 23,897,038 $ 44,383,093 $ 68,280,131 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30,2020 Fund balances-total governmental funds $ 42,396,832 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 as assets in the governmental funds. The cost of capital assets is $ 540,848,918 Accumulated depreciation is (367,830,832) Capital assets accounted for in the internal service funds,net (10,671,567) Capital assets,net 162,346,519 Some assets are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. Deferred ambulance fees receivable 1,453,506 Deferred nuisance fees receivable 631,134 Deferred loans receivable 1,220,642 Deferred long-term interest receivable 2,231,696 Deferred long-term special assessments receivable 123,133 Deferred long-term taxes and tax settlement receivables 22,500 Deferred outflows of resources related to pensions 35,348,013 Deferred outflows of resources related to OPEB 114,386,123 Deferred inflows of resources related to pensions (1,459,430) Deferred inflows of resources related to OPEB (16,407,657) 137,549,660 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of certain internal service funds are included in the governmental activities in the government-wide statement of net position. Net position of governmental activities accounted for in governmental activities internal service funds 15,631,025 Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds balance sheet.Long-term liabilities at year-end consist of: Bonds and loans payable (27,421,737) Deferred charges on refunding 290,238 Compensated absences (8,360,652) Workers compensation (2,557,317) Accrued interest payable (257,021) Net pension liability (308,110,357) Net other post-employment benefits liability (521,516,213) (867,933,059) Net position of governmental activities $ (510,009,023) The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2020 Nonmajor Governmental General Funds Total REVENUES Property taxes and special assements $ 41,305,799 $ 403,221 $ 41,709,020 Income taxes 37,438,724 - 37,438,724 Licenses and permits 2,427,866 - 2,427,866 Intergovernmental 18,917,630 25,248,860 44,166,490 Charges for services 8,315,878 4,733,056 13,048,934 Fines and forfeits 1,537,865 51,868 1,589,733 Interest and rents 648,722 262,732 911,454 Other 23,054,531 316,775 23,371,306 TOTAL REVENUES 133,647,015 31,016,512 164,663,527 EXPENDITURES Current General government 19,998,919 3,112,357 23,111,276 Public safety 79,199,511 1,663,648 80,863,159 Public works 12,085,207 283,500 12,368,707 Highways and streets - 10,711,027 10,711,027 Recreation and culture 7,420,052 - 7,420,052 Community and economic development 9,317,141 9,381,917 18,699,058 Debt service Principal 2,018,657 1,268,048 3,286,705 Interest and fiscal charges 400,520 423,387 823,907 Capital outlay - 7,891,788 7,891,788 TOTAL EXPENDITURES 130,440,007 34,735,672 165,175,679 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,207,008 (3,719,160) (512,152) OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets 66,088 26,265 92,353 Transfers in 2,670,895 14,309,616 16,980,511 Transfers out (5,854,471) (7,364,145) (13,218,616) TOTAL OTHER FINANCING SOURCES (USES) (3,117,488) 6,971,736 3,854,248 NET CHANGE IN FUND BALANCES 89,520 3,252,576 3,342,096 Fund balances,beginning of year 10,031,490 29,023,246 39,054,736 Fund balances,end of year $ 10,121,010 $ 32,275,822 $ 42,396,832 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2020 Net change in fund balances-total governmental funds $ 3,342,096 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities,the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period,these amounts are: Capital outlay $ 5,259,427 Depreciation expense (10,839,541) Excess of depreciation expense over capital outlay (5,580,114) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in deferred ambulance fees receivable 633,999 Change in deferred nuisance fees receivable 75,381 Change in deferred loans receivable (1,881) Change in deferred long-term interest receivable 59,250 Change in deferred special assessments receivable (33,311) Change in deferred State of Michigan receivables (765,383) (31,945) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain individual funds are included in the governmental activities. Change in net position of governmental activities internal service funds 2,853,324 Repayment of long-term debt and borrowing of long-term debt is reported as expenditures and other financing sources in governmental funds, but the repayment reduces long-term liabilities and the borrowings increase long-term liabilities in the statement of net position. In the current year, these amounts consist of: Premium on bond issuance 66,142 Deferred charges on refunding (30,306) Discounts on bond issuances (5,178) Debt principal retirement 3,286,705 3,317,363 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purpose of the statement of net position. Change in estimated workers compensation (246,335) Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of: (Increase)in net pension liability (33,202,721) (Increase)in net OPEB liability (128,519,920) Increase in deferred outflows of resources related to pensions 9,256,283 Increase in deferred outflows of resources related to OPEB 96,991,941 Decrease in deferred inflows of resources related to pensions 4,698,657 (Increase)in deferred inflows of resources related to OPEB (3,779,280) Decrease in accrued interest payable 59,324 Decrease in compensated absences 761,030 (53,734,686) Change in net position of governmental activities $ (50,080,297) The accompanying notes are an integral part of the financial statements. 39 This page intentionally left blank. 40 CITY OF LANSING PROPRIETARY FUND FINANCIAL STATEMENTS Major Funds Sewage Disposal System Fund-This fund accounts for the activities 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 Enterprise 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. 41 CITY OF LANSING STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Fund ASSETS Current assets Cash and cash equivalents $ - $ 2,810,175 $ 200 $ 2,810,375 $ Cash and cash equivalents-restricted 2,432,963 - - 2,432,963 - Equity in pooled cash and investments 45,552,675 5,062,011 4,958,706 55,573,392 8,771,155 Receivables,net Customers 4,934,740 2,725 62,867 5,000,332 548,566 Interest 32,144 213,799 - 245,943 - Lease 666,536 - - 666,536 - Inventories 375,150 45,488 420,638 410,965 Prepaids - - - - 487,580 Total current assets 53,994,208 8,088,710 5,067,261 67,150,179 10,218,266 Noncurrent assets Advance to other funds - 188,126 - 188,126 - Lease receivable,net of current portion 5,420,602 17,956,180 - 23,376,782 - Capital assets not being depreciated 17,784,046 11,545,371 403,387 29,732,804 92,892 Capital assets,net of accumulated depreciation 297,764,835 3,721,401 1,845,315 303,331,551 10,578,675 Total noncurrent assets 320,969,483 33,411,078 2,248,702 356,629,263 10,671,567 TOTALASSETS 374,963,691 41,499,788 7,315,963 423,779,442 20,889,833 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refunding 1,069,967 3,007,730 - 4,077,697 - Deferred outflows of resources related to pensions 1,979,257 634,383 1,019,453 3,633,093 Deferred outflows of resources related to OPEB 3,336,108 1,069,275 1,718,322 6,123,705 TOTAL DEFERRED OUTFLOWS OF RESOURCES 6,385,332 4,711,388 2,737,775 13,834,495 - LIABILITIES Current liabilities Accounts payable 1,359,871 513,526 213,454 2,086,851 1,525,011 Accrued payroll 86,626 37,993 1,390 126,009 169,720 Deposit payable - 73,828 - 73,828 - Claims incurred but not reported - - - - 400,000 Accrued interest payable 586,315 2,894,660 1,729 3,482,704 13,253 Unearned revenue - - 324,913 324,913 - Current portion of compensated absences 56,848 11,476 10,982 79,306 115,855 Current portion of bonds and notes payable 11,307,378 2,011,849 234,554 13,553,781 379,333 Total current liabilities 13,397,038 5,543,332 787,022 19,727,392 2,603,172 Noncurrent liabilities Compensated absences,net of current portion 436,962 185,899 175,953 798,814 731,568 Bonds and notes payable,net of current portion 92,372,050 21,014,799 118,343 113,505,192 1,924,068 Net pension liability 19,246,008 6,168,651 9,913,002 35,327,661 - Net other post-employment benefits liability 22,879,414 7,333,215 11,784,453 41,997,082 Total noncurrent liabilities 134,934,434 34,702,564 21,991,751 191,628,749 2,655,636 TOTAL LIABILITIES 148,331,472 40,245,896 22,778,773 211,356,141 5,258,808 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 103,899 33,301 53,515 190,715 - Deferred inflows of resources related to OPEB 1,582,874 507,336 815,288 2,905,498 TOTAL DEFERRED INFLOWS OF RESOURCES 1,686,773 540,637 868,803 3,096,213 - NET POSITION Net investment in capital assets 219,026,558 13,204,034 1,895,805 234,126,397 10,671,567 Restricted for bond reserves 2,432,963 - - 2,432,963 - Unrestricted 9,871,257 (7,779,391) (15,489,643) (13,397,777) 4,959,458 TOTAL NET POSITION $ 231,330,778 $ 5,424,643 $ (13,593,838) $ 223,161,583 $ 15,631,025 The accompanying notes are an integral part of the financial statements. 42 CITY OF LANSING STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds OPERATING REVENUES Charges for services $ 34,968,585 $ 6,211,685 $ 7,060,455 $ 48,240,725 $ 86,491,911 Other - - - - 111,337 TOTAL OPERATING REVENUES 34,968,585 6,211,685 7,060,455 48,240,725 86,603,248 OPERATING EXPENSES Personnel services 7,099,819 2,794,268 6,313,328 16,207,415 8,250,038 Purchase of goods and services 12,468,642 7,908,425 3,324,357 23,701,424 73,897,984 Depreciation 10,561,371 648,754 242,890 11,453,015 2,385,114 TOTAL OPERATING EXPENSES 30,129,832 11,351,447 9,880,575 51,361,854 84,533,136 OPERATING INCOME(LOSS) 4,838,753 (5,139,762) (2,820,120) (3,121,129) 2,070,112 NONOPERATING REVENUE(EXPENSES) Intergovernmental 2,000,000 - - 2,000,000 - Interest revenue 672,888 1,363,345 25,434 2,061,667 Gain(loss)on sale of capital assets - - 2,120,816 2,120,816 (20,258) Other (2,100) - (2,100) Interest expense and fees (2,475,832) (1,363,059) (9,176) (3,848,067) (126,530) TOTAL NONOPERATING REVENUES(EXPENSES) 197,056 (1,814) 2,137,074 2,332,316 (146,788) NET INCOME(LOSS) BEFORE TRANSFERS 5,035,809 (5,141,576) (683,046) (788,813) 1,923,324 TRANSFERS IN - 761,000 761,000 930,000 TRANSFERS OUT (1,250,000) (4,202,895) (5,452,895) - TOTAL TRANSFERS (1,250,000) (4,202,895) 761,000 (4,691,895) 930,000 CHANGE IN NET POSITION 3,785,809 (9,344,471) 77,954 (5,480,708) 2,853,324 Net position(deficit),beginning of year 227,544,969 14,769,114 (13,671,792) 228,642,291 12,777,701 Net position(deficit),end of year $ 231,330,778 $ 5,424,643 $ (13,593,838) $ 223,161,583 $ 15,631,025 The accompanying notes are an integral part of the financial statements. 43 CITY OF LANSING STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 34,862,640 $ 6,275,052 $ 7,332,710 $ 48,470,402 $ Cash received from interfund services provided - - - - 86,066,022 Cash payments for goods and services (13,134,933) (6,496,773) (3,285,254) (22,916,960) (74,838,124) Cash payments to employees (6,850,879) (2,251,579) (3,742,186) (12,844,644) (8,589,198) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 14,876,828 (2,473,300) 305,270 12,708,798 2,638,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental grant 2,000,000 - 2,000,000 - Transfer in - 761,000 761,000 930,000 Transfer out (1,250,000) (4,202,895) - (5,452,895) - NET CASH PROVIDED(USED)BY NONCAPITAL FINANCING ACTIVITIES 750,000 (4,202,895) 761,000 (2,691,895) 930,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of capital assets (4,317,870) (1,817,393) (32,198) (6,167,461) (1,776,031) Proceeds from sale of capital assets 2,221,670 2,221,670 40,298 Principal paid on long-term obligations (12,043,482) (2,274,436) (230,023) (14,547,941) (370,290) Interest paid on long-term obligations (2,608,824) (948,347) (10,304) (3,567,475) (128,769) Proceeds from bond issuance 8,298,084 8,298,084 Payments received on capital lease 657,988 657,988 NET CASH PROVIDED(USED)BY CAPITAL AND RELATED FINANCING ACTIVITIES (10,014,104) (5,040,176) 1,949,145 (13,105,135) (2,234,792) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 676,295 1,443,650 25,434 2,145,379 - NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 6,289,019 (10,272,721) 3,040,849 (942,853) 1,333,908 Cash and cash equivalents,beginning of year 41,696,619 18,144,907 1,918,057 61,759,583 7,437,247 Cash and cash equivalents,end ofyear $ 47,985,638 $ 7,872,186 $ 4,958,906 $ 60,816,730 $ 8,771,155 The accompanying notes are an integral part of the financial statements. 44 CITY OF LANSING STATEMENT OF CASH FLOWS (concluded) PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ 4,838,753 $ (5,139,762) $ (2,820,120) $ (3,121,129) $ 2,070,112 Adjustments to reconcile operating income(loss)to net cash provided(used)by operating activities Depreciation 10,561,371 648,754 242,890 11,453,015 2,385,114 (Increase)decrease in: Accounts receivable (105,945) 63,367 107,461 64,883 (537,226) Due from other funds 2,944 986,515 - 989,459 Advance to other funds - (37,823) - (37,823) Inventories (136,292) - 7,005 (129,287) (58,706) Prepaids 124,355 - 124,355 147,410 Deferred outflows of resources related to pensions (1,373,222) (432,371) (716,435) (2,522,028) - Deferred outflows of resources related to OPEB (2,977,387) (964,900) (1,569,340) (5,511,627) Increase(decrease)in: Accounts payable (170,073) 334,679 32,098 196,704 (1,028,844) Accrued liabilities (3,800) (10,268) (455) (14,523) 10,483 Due to other funds (362,870) (2,942) - (365,812) - Due to component units (145) - (145) Unearned revenue - 164,794 164,794 Deposits payable - 7,013 - 7,013 - Compensated absences (291) 27,070 (3,802) 22,977 357 Claims incurred but not reported - - - - (350,000) Net pension liability 2,668,599 642,848 1,624,291 4,935,738 Net other post-employment benefits liability 453,046 807,932 2,470,470 3,731,448 Deferred inflows of resources related to pensions (100,879) (34,958) (48,875) (184,712) Deferred inflows of resources related to OPEB 1,582,874 507,336 815,288 2,905,498 - NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 14,876,828 $ (2,473,300) $ 305,270 $ 12,708,798 $ 2,638,700 45 This page intentionally left blank. 46 CITY OF LANSING 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. Agency Fund This fund accounts for resources held in a trustee or agent capacity for the 54-A District Court. 47 CITY OF LANSING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30,2020 Pension and Other Post- Employment Benefits Trust 54-A District Funds Court ASSETS Cash and cash equivalents $ 13,649,294 $ - Equity in pooled cash and investments - 183,063 Investments U.S.Treasuries 7,223,877 - U.S.Agencies 42,487,294 - Collateralized mortgage obligations 2,230,626 - Mutual funds 359,993,622 - Domestic equities 95,697,112 - International equities 2,270,930 - Emerging market equities 21,829,799 - Money market funds 7,569,544 - Receivables Interest and dividends 408,460 - TOTAL ASSETS 553,360,558 $ 183,063 LIABILITIES Accounts payable 583,618 $ - Due to other governmental units 4,466,522 - Undistributed receipts - 183,063 TOTAL LIABILITIES 5,050,140 $ 183,063 NET POSITION RESTRICTED FOR: Pension benefits $ 436,573,058 Other postemployment benefits 111,737,360 TOTAL NET POSITION $ 548,310,418 The accompanying notes are an integral part of the financial statements. 48 CITY OF LANSING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30,2020 Pension and Other Post- Employment Benefits Trust Funds ADDITIONS TO NET POSITION Investment income Change in fair value of investments $ 9,719,191 Interest 108,016 Investment expense (1,811,624) Net investment income 8,015,583 Contributions Employer 52,850,500 Plan members 4,986,883 Total contributions 57,837,383 TOTAL ADDITIONS 65,852,966 DEDUCTIONS FROM NET POSITION Participant benefits 81,671,600 Administrative expenses 1,293,469 TOTAL DEDUCTIONS 82,965,069 CHANGE IN NET POSITION (17,112,103) Net position,beginning of year 565,422,521 Net position,end of year $ 548,310,418 The accompanying notes are an integral part of the financial statements. 49 This page intentionally left blank. s0 COMPONENT UNITS 51 This page intentionally left blank. 52 CITY OF LANSING 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. 53 CITY OF LANSING COMBINING STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS JUNE 30,2020 Lansing Entertainment Brownfield Tax Increment and Public Redevelopment Finance Facilities Authority Authority Authority Total ASSETS Current assets Cash and cash equivalents $ 5,347,756 $ - $ 1,284,978 $ 6,632,734 Equity in pooled cash and investments - 1,756,650 - 1,756,650 Cash and cash equivalents-restricted 8,465,017 2,507,708 80,000 11,052,725 Receivables,net - - 371,341 371,341 Inventories 75,853 75,853 Prepaids - - 96,369 96,369 Total current assets 13,812,773 4,264,358 1,908,541 19,985,672 Noncurrent assets Noncurrent portion of receivable,net 160,495 - - 160,495 Capital assets,net of accumulated depreciation - 17,846 17,846 Total noncurrent assets 160,495 17,846 178,341 TOTAL ASSETS 13,973,268 4,264,358 1,926,387 20,164,013 DEFERRED OUTFLOW OF RESOURCES Deferred charge on refunding - 935,439 - 935,439 LIABILITIES Current liabilities Accounts payable 2,223,324 148,114 418,550 2,789,988 Accrued liabilities - - 272,163 272,163 Accrued interest payable 56,979 110,623 - 167,602 Unearned revenue - - 951,365 951,365 Total current liabilities 2,280,303 258,737 1,642,078 4,181,118 Noncurrent liabilities Noncurrent portion of long-term debt 19,760,000 45,589,864 - 65,349,864 TOTAL LIABILITIES 22,040,303 45,848,601 1,642,078 69,530,982 NET POSITION Net investment in capital assets - - 17,846 17,846 Restricted for capital projects - 80,000 80,000 Restricted for redevelopment projects 8,465,017 - 8,465,017 Unrestricted(deficit) (16,532,052) (40,648,804) 186,463 (56,994,393) TOTAL NET POSITION(DEFICIT) $ (8,067,035) $ (40,648,804) $ 284,309 $ (48,431,530) The accompanying notes are an integral part of the financial statements. 54 CITY OF LANSING COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS YEAR ENDED JUNE 30,2020 Lansing Entertainment Brownfield Tax Increment and Public Redevelopment Finance Facilities Authority Authority Authority Total EXPENSES Brownfield redevelopment authority $ 15,308,883 $ - $ $ 15,308,883 Community development - 4,261,130 4,261,130 Recreation and culture - - 9,127,195 9,127,195 TOTAL EXPENSES 15,308,883 4,261,130 9,127,195 28,697,208 PROGRAM REVENUES Charges for services - - 6,799,182 6,799,182 Operating grants and contributions 1,174,048 1,203,995 2,378,043 TOTAL PROGRAM REVENUES 1,174,048 8,003,177 9,177,225 NET PROGRAM(EXPENSE)REVENUE (14,134,835) (4,261,130) (1,124,018) (19,519,983) GENERAL REVENUES Property taxes 3,763,175 3,418,580 7,181,755 Unrestricted investment earnings 31,976 95,912 - 127,888 Other - - 364,255 364,255 TOTAL GENERAL REVENUES 3,795,151 3,514,492 364,255 7,673,898 CHANGE IN NET POSITION (10,339,684) (746,638) (759,763) (11,846,085) Net position(deficit),beginning of year 2,272,649 (39,902,166) 1,044,072 (36,585,445) Net position(deficit),end of year $ (8,067,035) $ (40,648,804) $ 284,309 $ (48,431,530) The accompanying notes are an integral part of the financial statements. 55 This page intentionally left blank. 56 NOTES TO FINANCIAL STATEMENTS 57 This page intentionally left blank. 58 CITY OF LANSING INDEX- NOTES TO FINANCIAL STATEMENTS Page Note 1 - Summary of Significant Accounting Policies..................................................................................................61 Note2 - Budgetary Information...............................................................................................................................................71 Note3 -Deficit Fund Equity........................................................................................................................................................72 Note4-Deposits and Investments.........................................................................................................................................72 Note5 - Receivables........................................................................................................................................................................81 Note6 - Capital Assets....................................................................................................................................................................81 Note 7 -Accounts Payable and Accrued Liabilities.......................................................................................................83 Note 8 -Interfund Receivables,Payables,and Transfers..........................................................................................83 Note9 - Long-term Debt................................................................................................................................................................85 Note 10-Fund Balances- Governmental Funds.............................................................................................................89 Note 11-Net Investment in Capital Assets........................................................................................................................89 Note 12 -Segment Information-Enterprise Funds......................................................................................................90 Note13 -Risk Management........................................................................................................................................................90 Note14-Property Taxes..............................................................................................................................................................91 Note15- Contingent Liabilities................................................................................................................................................91 Note16-Pension Plans.................................................................................................................................................................91 Note 17- Other Postemployment Benefits.......................................................................................................................105 Note18-Tax Abatements...........................................................................................................................................................116 Note 19-Assets Held By Foundation...................................................................................................................................117 Note 20-Upcoming Accounting Pronouncements.......................................................................................................117 Note21-Subsequent Event.......................................................................................................................................................118 59 This page intentionally left blank. 60 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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: The Lansing Brownfield RedevelopmentAuthority("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. 61 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Discretely Presented Component Units (concluded). 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. Because separately issued financial statements are readily available for these component units, detailed notes applicable to each Component Unit are not duplicated here in accordance with GASB 61. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing,Michigan 48933 Brownfield Redevelopment Authority/Tax Increment Finance Authority 1000 S.Washington Avenue,Suite 201 Lansing,Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing,Michigan 48933 62 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 IBA 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 IBA 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. 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. 63 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Measurement Focus.Basis of Accounting.and Financial Statement Presentation (continued) 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 activities of the sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally,the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt Service Funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal,interest and related costs. Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent Funds account for resources that are legally restricted to the extent that only earnings,and not principal,may be used for purposes that support the government's programs. 64 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Measurement Focus.Basis of Accounting.and Financial Statement Presentation (concluded] 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,engineering,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 postemployment benefit distributions. The Agency Fund accounts 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. Also, current internal balances between governmental activities and fiduciary activities have not been eliminated. These balances do not net to zero as fiduciary activities are not reported in the government-wide financial statements. 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 amounts 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. 65 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity Deposits and Investments Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants or other restrictions limiting usage of amounts in certain accounts. 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. 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. Receivables/Payables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. 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. 66 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(continued) Receivables/Payables(concluded) 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. 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. 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. 67 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(continued Capital Assets(concluded) The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the asset constructed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 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 The City permits 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. 68 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity_(continued� 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 when applicable. 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. 69 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(concluded) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(concluded 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 to 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. 70 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 2 -BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: ➢ On or before the fourth Monday in March,the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. ➢ Public hearings are conducted to obtain taxpayer comments. ➢ Not later than the third Monday in May,the Council adopts a budget through passage of a resolution. ➢ The appropriated budget is prepared by fund,department and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds,the legal level of budgetary control is the mandatory expenditure accounts(personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars,but not in excess of 15%of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Michigan Avenue,Lansing,Michigan 48933. ➢ The City formally adopts operating budgets for the General Fund and all special revenue funds. ➢ Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the General Fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the General Fund, capital lease payments/installment payments are budgeted,but capital lease acquisitions are not. There were no capital lease acquisitions during the year ended June 30,2020. ➢ Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. 71 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 3 -DEFICIT FUND EQUITY The Special Assessments Capital Projects Fund reported a deficit fund balance of$82,237. 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 Municipal Parking System, Cemetery, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $7,779,391, $2,929,144, $4,786,782, and $10,012,202, respectively, primarily as a result of the recognition of net pension and net other postemployment benefit liabilities in these funds. The Tax Increment Finance Authority and the Brownfield Redevelopment Authority component units reported deficits in unrestricted net position of$40,648,804 and$16,532,052,respectively at June 30,2020. The deficits are a result of full-accrual accounting for long-term obligations,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). NOTE 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 30,2020: Primary Component Fiduciary Reporting Government Units Funds Entity Cash and cash equivalents $ 5,896,372 $ 6,632,734 $ 13,649,294 $ 26,178,400 Equity in pooled cash and investments 91,910,020 1,756,650 183,063 93,849,733 Cash and cash equivalents-restricted 5,519,938 11,052,725 - 16,572,663 Investments - - 539,302,804 539,302,804 $ 103,326,330 $ 19,442,109 $ 553,135,161 $ 675,903,600 Deposits and investments Bank deposits: Checking/savings accounts-Pension&OPEB related $ 13,649,294 Checking/savings accounts-City-wide accounts-all other 113,823,985 Investment in securities and mutual funds: Pooled investments 6,849,563 Employees"retirement system investments 185,129,170 Police and fire retirement system investments 318,415,903 Employees'money purchase pension plan investments 3,547,785 Retiree health care VEBA investments 32,209,946 Tax increment finance authority investments 2,128,386 Total investment in securities and mutual funds 675,754,032 Cash on hand 149,568 Total $ 675,903,600 72 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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, $97,600,491 of the City's bank balance of $99,760,679 was exposed to custodial credit risk because it was uninsured and uncollateralized. The book balance of all deposits was$113,823,985. 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: S&P AAAm $ 4,795,071 S&P AA+ 1,030,974 Not rated 907,662 Assets not subject to credit risk 115,856 $ 6,849,563 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 $ 4,951,466 1-5 years 1,782,241 No maturity 115,856 $ 6,849,563 73 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year- end are reported above. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the City's investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing,which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark securities, (e) bids or offers, and (f) reference data. The City's level 2 investments as noted in the table below are valued using significant other observable inputs of the underlying securities. INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 1,954,006 $ $ 1,954,006 Money market funds 115,856 - 115,856 $ 115,856 $ 1,954,006 $ 2,069,862 Investments carried at net asset value Michigan CLASS government investment pool 4,779,701 $ 6,849,563 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. It has a rating of AAA from Standard and Poor's with a weighted average maturity of 54 days. At year end,the net asset value of the City's investment in Michigan CLASS was $4,779,701. 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. 74 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments, and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. Deposits The pension and OPEB trust funds maintain demand deposit accounts and equity in pooled cash to handle operational transactions. The book balance of such deposits totaled$13,649,294 at year end. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate,and various other investment instruments,subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds'assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30,2020: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals U.S.treasuries Not on securities loan $ 794,806 $ 1,404,267 $ $ $ 2,199,073 On securities loan 1,907,810 3,116,994 5,024,804 U.S.agencies Not on securities loan 17,945,944 24,541,350 42,487,294 Domestic corporate security mutual funds 23,597,621 36,987,297 60,584,918 Domestic equities Not on securities loan 26,564,299 53,786,393 80,350,692 On securities loan 5,967,989 9,378,431 15,346,420 International equities Not on securities loan 343,905 742,108 1,086,013 On securities loan 520,021 664,896 1,184,917 Emerging markets equities 7,574,273 13,348,239 907,287 21,829,799 Collateralized mortgage obligations 585,940 1,644,686 - 2,230,626 Real estate investment mutual funds 18,676,021 24,651,143 - 43,327,164 International equity mutual funds 60,552,367 90,826,695 177,540 3,549,192 155,105,794 Domestic equity mutual funds 15,781,599 37,607,367 3,123,749 13,335,777 69,848,492 Domestic debt securities mutual funds - - 246,496 14,300,794 14,547,290 International debt securities mutual funds 16,579,964 - - 16,579,964 Money market funds 4,316,575 3,136,073 - 116,896 7,569,544 $ 185,129,170 $ 318,415,903 $ 3,547,785 $ 32,209,946 $ 539,302,804 75 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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 &Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AAA $ 373,111 $ 492,028 $ 44,848 $ - $ 909,987 S&P AAAm - - - 116,896 116,896 AA 139,046 - 139,046 BBB 62,602 9,534,089 9,596,691 BB - - - 4,766,695 4,766,695 Not rated 30,610,600 45,465,045 - 76,075,645 U.S.Government Guaranteed 18,164,985 24,873,594 - - 43,038,579 Assets not subject to credit risk 135,980,474 247,585,236 3,301,289 17,792,266 404,659,265 $ 185,129,170 $ 318,415,903 $ 3,547,785 $ 32,209,946 $ 539,302,804 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, 2020, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employee Police and Fire Investment Retirement Retirement Type Issuer System System Corporate Bonds Western Assets Funds,Inc. 12.7% 11.6% Government Bonds United States of America 10.6% 8.6% Common Stock Northern Trust Bank,N.A. 8.8% 1.0% 76 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Concentration of Credit Risk(concluded) The City's pension and other postemployment benefits investment policies require diversification of fixed income securities;however,they do not specify percentages of dollar amounts by industry or issuer. Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals International equities Canada $ 488,962 $ 760,027 $ $ - $ 1,248,989 Italy 34,373 82,940 - 117,313 Netherlands 16,423 39,686 - 56,109 France 57,283 138,331 - 195,614 Israel 259,637 368,640 - 628,277 Switzerland 7,248 17,380 - 24,628 International mutual funds 60,552,367 107,406,659 177,540 3,549,192 171,685,758 $ 61,416,293 $ 108,813,663 $ 177,540 $ 3,549,192 $ 173,956,688 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 30,2020,maturities of the City's pension and other postemployment benefits trust debt securities, money market funds and collateralized mortgage obligations were as follows: Employee Retirement System Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total U.S.government bonds $ - $ 528,618 $ 1,282,391 $ 891,609 $ 2,702,618 U.S.agencies 417,081 - - - 417,081 U.S.government mortgage backed securities 5 123,664 855,021 13,687,413 14,666,103 U.S.government issued commercial mortgage backed securities - 483,627 960,999 1,418,133 2,862,759 Commercial mortgage backed securities - 26,382 210,102 349,456 585,940 Total $ 417,086 $ 1,162,291 $ 3,308,513 $ 16,346,611 21,234,501 Fixed income investments with no maturity Domestic corporate securities mutual funds 23,597,621 Money market funds 4,316,575 $ 49,148,697 77 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Police and Fire Retirement System Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total U.S.government bonds $ - $ 669,502 $ 1,786,197 $ 2,065,562 $ 4,521,261 U.S.agencies 577,884 - - - 577,884 U.S.government mortgage backed securities 5 186,696 1,723,523 17,690,858 19,601,082 U.S.government issued commercial mortgage backed securities - 633,142 1,537,077 2,192,165 4,362,384 Commercial mortgage backed securities - 33,920 420,204 1,190,562 1,644,686 Total $ 577,889 $ 1,523,260 $ 5,467,001 $ 23,139,147 30,707,297 Fixed income investments with no maturity Domestic corporate securities mutual funds 36,987,297 Money market funds 3,136,073 $ 70,830,667 Employees'Money Purchase Pension Plan Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities $ $ 246,496 $ $ - $ 246,496 Total $ $ 246,496 $ $ - $ 246,496 Retiree Healthcare VEBA Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities $ 116,896 $ $ 14,300,784 $ - $ 14,417,680 Total $ 116,896 $ $ 14,300,784 $ - $ 14,417,680 Securities Lending Under contracts approved by the City,the pension and other postemployment benefits trust funds are permitted to lend their securities to broker-dealers and banks(borrowers)for collateral that will be returned for the same securities in the future. The pension trust and other postemployment benefits funds' custodial banks manage the securities lending programs and receive cash as collateral. Collateral cash is initially pledged at 100%of the fair value of the securities lent,and may not fall below 95%of the market value of the loaned security during the term of the loan. At all times,collateral cannot be more than$100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned. Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end,the pension trust funds have no credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2020,the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $8,395,820 and $13,160,321, respectively, for which the Plans' received cash collateral of$8,544,786 and$13,388,884, 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. 78 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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, 2020: Employee Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 2,702,616 $ - $ 2,702,616 U.S.agencies - 17,945,944 - 17,945,944 Domestic equities 32,532,288 - - 32,532,288 International equities 863,926 - 863,926 Collateralized mortgage obligations 585,940 - 585,940 Emerging market equities 7,574,273 - - 7,574,273 Mutual funds 99,931,587 9,702,365 - 109,633,952 Money market funds 4,316,575 - - 4,316,575 $ 145,804,589 $ 30,350,925 $ - 176,155,514 Investments carried at net asset value Real estate investment trusts 8,973,656 $ 185,129,170 79 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (concluded) Police and Fire Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 4,521,261 $ - $ 4,521,261 U.S.agencies - 24,541,350 - 24,541,350 Domestic equities 63,164,824 - - 63,164,824 International equities 1,407,004 - 1,407,004 Collateralized mortgage obligations 1,644,686 - 1,644,686 Emerging market equities 13,348,239 - - 13,348,239 Mutual funds 164,632,195 13,740,087 - 178,372,282 Money market funds 3,136,073 - - 3,136,073 $ 247,333,021 $ 42,802,698 $ - 290,135,719 Investments carried at net asset value Real estate investment trusts 10,911,056 International equity mutual funds 17,369,128 $ 318,415,903 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, 2020. 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, 2020, the City has $1,963,651 outstanding on initial commitments of$4,300,000 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. Employees'Money Purchase Pension Plan INVESTMENT TYPE Level 1 Level 2 Level 3 Total Mutual funds $ 3,547,785 $ $ $ 3,547,785 Retiree Healthcare VEBA INVESTMENT TYPE Level 1 Level 2 Level 3 Total Emerging market equities $ 907,287 $ - $ - $ 907,287 Mutual funds 31,185,763 - - 31,185,763 Money market funds 116,896 - - 116,896 $ 32,209,946 $ - $ - $ 32,209,946 80 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 5 - RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 12,411,488 $ 5,523,458 $ 396,621 Taxes receivable 1,223,489 - - Special assessments receivable 153,378 Loans receivable 1,220,642 - Accrued interest receivable 2,231,696 245,943 Due from other governments 15,953,159 - Lease receivable - 24,043,318 Allowance for uncollectable accounts (610,000) (523,126) (25,280) $ 32,583,852 $ 29,289,593 $ 371,341 Amount not expected to be collected within one year $ 3,575,471 $ 23,376,782 $ 160,495 NOTE 6- CAPITAL ASSETS Capital asset activity for the year ended June 30,2020,was as follows: Balance Balance July 1,2019 Additions Deletions June 30,2020 Governmental Activities Capital assets not being depreciated Land $ 25,302,787 $ 132,510 $ $ 25,435,297 Construction in process - 789,258 789,258 Subtotal 25,302,787 921,768 26,224,555 Capital assets being depreciated Land improvements 26,588,886 236,096 26,824,982 Equipment and vehicles 41,131,182 2,498,601 (1,223,183) 42,406,600 Buildings 136,275,787 - 136,275,787 Infrastructure 305,738,001 3,378,993 309,116,994 Subtotal 509,733,856 6,113,690 (1,223,183) 514,624,363 Less accumulated depreciation for: Land improvements (12,518,895) (1,130,908) - (13,649,803) Equipment and vehicles (33,894,190) (2,728,444) 1,162,627 (35,460,007) Buildings (90,642,9431 (4,542,0741 - (95,185,0171 Infrastructure (218,712,776) (4,823,229) (223,536,005) Subtotal (355,768,804) (13,224,655) 1,162,627 (367,830,832) Net capital assets being depreciated 153,965,052 (7,110,965) (60,556) 146,793,531 Capital assets,net $ 179,267,839 $ (6,189,197) $ (60,556) $ 173,018,086 81 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6- CAPITAL ASSETS (continued) At June 30, 2020, the City's governmental activities had outstanding commitments through construction contracts of approximately$2,835,000. Depreciation expense was charged to the following governmental activities: Depreciation of governmental activities by function General government $ 498,828 Public safety 665,633 Public works 4,878,803 Recreation and culture 2,983,925 Community development 1,812,352 Internal service fund 2,385,114 Total depreciation expense-governmental activities $ 13,224,655 Balance Balance July 1,2019 Additions Deletions June 30,2020 Business-Type Activities Capital assets not being depreciated Land $ 12,470,361 $ - $ (100,854) $ 12,369,507 Construction in progress 13,544,832 3,818,465 17,363,297 Subtotal 26,015,193 3,818,465 (100,854) 29,732,804 Capital assets being depreciated Land improvements 29,590,223 - 29,590,223 Equipment and vehicles 7,991,082 1,804,144 9,795,226 Buildings 186,766,378 160,498 186,926,876 Sewers 344,149,068 384,354 344,533,422 Subtotal 568,496,751 2,348,996 570,845,747 Less accumulated depreciation for: Land improvements (15,334,572) (605,642) (15,940,214) Equipment and vehicles (7,023,296) (509,521) (7,532,817) Buildings (117,676,881) (3,329,518) (121,006,399) Sewers (116,026,432) (7,008,334) (123,034,766) Subtotal (256,061,181) (11,453,015) (267,514,196) Net capital assets being depreciated 312,435,570 (9,104,019) 303,331,551 Capital assets,net $ 338,450,763 $ (5,285,554) $ (100,854) $ 333,064,355 At June 30, 2020, the City's business-type activities had outstanding commitments through construction contracts of approximately$2,818,000. 82 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6-CAPITAL ASSETS (concluded) Depreciation expense was charged to the following business-type activities: Depreciation of business-type activities by function Sewage disposal system $ 10,561,371 Municipal parking system 648,754 Cemetery 9,827 Golf 77,191 Recycling 155,872 Total depreciation expense-business-type activities $ 11,453,015 NOTE 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 $ 8,105,574 $ 2,086,851 $ 2,789,988 Accrued payroll 2,238,834 126,009 - Deposits payable - 73,828 - Due to other governments 3,754,680 - - Claims incurred but not reported 400,000 - - Other 821,938 - 272,163 $ 15,321,026 $ 2,286,688 $ 3,062,151 NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS The composition of interfund balances of the primary government as of June 30, 2020,was as follows: Due to and from primary government funds Due to nonmajor governmental funds General fund $ 576,200 Nonmajor governmental funds 519,806 Total $ 1,096,006 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. 83 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS (concluded) Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ 188,126 $ - Municipal parking system - 188,126 $ 188,126 $ 188,126 Advances are made to the Special Assessments Fund to prevent a negative equity in pooled cash. For the year ended June 30,2020,interfund transfers consisted of the following: Transfers to General Fund from: Sewage disposal system fund $ 1,250,000 Municipal parking system fund 1,320,895 Nonmajor governmental funds 100,000 $ 2,670,895 Transfers to nonmajor governmental funds from: General fund $ 5,854,471 Municipal parking system fund 1,952,000 Nonmajor governmental funds 6,503,145 $ 14,309,616 Transfers to nonmajor enterprise funds from: Nonmajor governmental funds $ 761,000 Transfer to internal service funds from: Municipal parking system fund $ 930,000 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. 84 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS 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: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rates Amount July 1,2019 (Deletions) June 30,2020 One Year Governmental Activities 2013 Energy Efficiency Refunding Bonds-Limited Tax 1/15/2013 2.40% $ 5,645,000 $ 2,475,000 $ (880,000) $ 1,595,000 $ 940,000 2010 Recovery Zone Economic Development Bonds 12/13/2010 3.40%-7.25% 3,200,000 2,170,000 (165,000) 2,005,000 170,000 2015 Lansing Center Refunding Bonds-Limited Tax 12/17/2015 2.00%-3.00% 1,770,000 915,000 (300,000) 615,000 305,000 2018 Michigan Transportation Fund Bonds 9/12/2018 3.50% 1,665,000 1,665,000 (540,000) 1,125,000 555,000 2019 General Obligation Refunding-Limited Tax* 4/10/2019 3.00%-4.00% 6,938,699 6,938,699 (486,468) 6,452,231 505,452 Total Governmental Activities 19,218,699 14,163,699 (2,371,468) 11,792,231 2,475,452 Business-type Activities 2009 Building Authority Refunding Bonds-Limited Tax 11/9/2009 6.25%-6.85% 8,161,691 2,767,490 - 2,767,490 861,849 2014 Building Authority Refunding Bonds-Limited Tax 3/21/2014 4.75% 7,245,000 7,245,000 - 7,245,000 - 20 15 Building Authority Refunding Bonds-Limited Tax 12/17/2015 2.00%-3.00% 6,765,000 3,465,000 (1,130,000) 2,335,000 1,150,000 2017 Building Authority Refunding Bonds-Limited Tax 12/11/2017 3.305%-4.075% 10,805,000 10,805,000 - 10,805,000 - 1998 Limited Tax Sewer Bond-5005-10 6/25/1998 2.25% 10,539,950 634,950 (634,950) - - 1999 Limited Tax Sewer Bond-5005-11 4/1/1999 2.50% 10,120,000 635,000 (635,000) - - 2000 Limited Tax Sewer Bond-5005-12 3/30/2000 2.50% 9,447,830 1,147,830 (570,000) 577,830 577,830 2001 Limited Tax Sewer Bond-5005-13 3/29/2001 2.50% 10,573,046 1,918,046 (625,000) 1,293,046 645,000 2002 Limited Tax Sewer Bond-5005-14 3/28/2002 2.50% 12,381,131 3,621,131 (690,000) 2,931,131 705,000 2003 Limited Tax Sewer Bond-5005-15 3/27/2003 2.50% 10,145,688 3,560,688 (565,000) 2,995,688 575,000 2004 Limited Tax Sewer Bond-5005-16 3/25/2004 2.125% 3,842,649 1,497,649 (200,000) 1,297,649 205,000 2005 Limited Tax Sewer Bond-5005-17 3/25/2004 2.125% 8,003,778 3,093,778 (420,000) 2,673,778 425,000 2005 Limited Tax Sewer Bond-5005-18 3/34/2005 1.625% 13,389,371 5,429,371 (680,000) 4,749,371 680,000 2006 Limited Tax Sewer Bond-5005-19 3/30/2006 1.625% 18,216,346 8,681,346 (930,000) 7,751,346 940,000 2007 Limited Tax Sewer Bond-5005-20 3/29/2007 1.625% 24,244,726 12,559,726 (1,225,000) 11,334,726 1,225,000 2008 Limited Tax Sewer Bond-5005-21 4/1/2008 2.50% 27,494,933 16,705,453 (1,340,000) 15,365,453 1,370,000 2008 Limited Tax Sewer Bond-5005-22 4/17/2009 2.50% 14,455,604 10,120,604 (670,000) 9,450,604 685,000 2010 Limited Tax Sewer Bond-5411-01 1/22/2010 2.50% 8,548,000 6,333,000 (395,000) 5,938,000 400,000 2015 Limited Tax Sewer Bond-5211-01 4/9/2014 2.50% 3,372,405 2,822,405 (145,000) 2,677,405 150,000 2015 Limited Tax Sewer Bond-5211-02 7/9/2014 2.50% 1,977,487 1,810,065 (95,000) 1,715,065 95,000 2016 Limited Tax Sewer Bond-5581-01 4/11/2016 2.50% 1,309,872 3,081,310 (135,000) 2,946,310 135,000 2019 Limited Tax Sewer Bond-5005-23 4/10/2018 2.00% 8,241,804 - 8,241,804 8,241,804 385,000 2019 Limited Tax Sewer Bond-5672-01 6/7/2019 2.00% 56,280 - 56,280 56,280 - 2019 General Obligation Refunding-Limited Tax* 4/10/2019 3.00%-4.00% 7,681,301 7,681,301 (538,532) 7,142,769 559,548 Total Business-type Activities 237,018,892 115,616,143 (3,325,398) 112,290,745 11,769,227 Total General Obligation Bonds $ 256,237,591 $ 129, 779,842 $ (5,696,866) $ 124,082,976 $ 14,244,679 *These debt issues are split between governmental and business-type activities 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: Amounts Issuance Interest Original Balance Balance Due Within Date Rates Amount July 1,2019 Deletions June 30,2020 One Year Business-type Activities 2013 Sewer Revenue Refunding Bonds 12/27/2012 2.40% $ 21,765,000 $ 14,075,000 $ (1,550,0001 $ 12,525,000 $ 1,550,000 85 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS (continued) 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$2,163,188 and$17,075,224 respectively. Installment Purchase Agreements The government has entered into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rate Amount July 1,2019 (Deletions) June 30,2020 One Year Governmental Activities 2014 Lease Purchase Agreement-Recycling Trucks 9/12/2013 1.96% $ 1,550,855 $ 520,243 $ (205,290) $ 314,953 $ 209,333 2015 Ballpark Improvements Installment Purchase 2/13/2015 3.00% 13,500,000 10,753,777 (838,657) 9,915,120 864,006 $ 15,050,855 $ 11,274,020 $ (1,043,947) $ 10,230,073 $ 1,073,339 Business-type Activities 2014 Lease Purchase Agreement-Recycling Trucks 9/12/2013 1.96% $ 1,737,000 $ 582,920 $ (230,023) $ 352,897 $ 234,554 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: Amounts Issuance Interest Original Balance Balance Due Within Date Rate Amount July 1,2019 Deletions June 30,2020 One Year Governmental Activities HUD Section 108 Loan 5/28/2015 1.52% $ 5,900,000 $ 5,900,000 $ - $ 5,900,000 $ 385,000 2014 SIB Loan 3/27/2014 3.00% 1,828,428 1,342,002 (241,580) 1,100,422 248,736 $ 7, 228,428 $ 7, 442,002 $ (241,580) $ 7,000,422 $ 333,736 Prior Year Defeased Debt As of June 30,2020,defeased bonds related to the prior year refunding of the 2005 Building Authority Refunding Bonds were still outstanding in the amount of$2,555,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2021 through 2022. As of June 30, 2020, 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. As of June 30,2020,defeased bonds related to the prior year refunding of the 2012 and 2018 Building Authority Refunding Bonds were still outstanding in the amount of$9,600,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on May 1 of years 2021 through 2027. 86 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS (continued) The following is a summary of changes in long-term debt (including current portion) of the City for the year ended June 30,2020. Amounts Balance Balance Due Within July 1,2019 Additions Deletions June 30,2020 One Year Governmental Activities General obligation bonds $ 14,163,699 $ $ (2,371,468) $ 11,792,231 $ 2,475,452 Notes from direct borrowings and direct placements Installment purchase agreements 11,274,020 (1,043,947) 10,230,073 1,073,339 Loans payable 7,242,002 (241,580) 7,000,422 633,736 32,679,721 (3,656,995) 29,022,726 4,182,527 Deferred amounts For issuance discounts (52,488) 6,833 (45,655) - For issuance premiums 814,209 (66,142) 748,067 - Compensated absences 9,968,748 701,554 (1,462,227) 9,208,075 1,462,227 Accrued workers compensation 2,310,982 1,190,809 (944,474) 2,557,317 573,631 $ 45,721,172 $ 1,892,363 $ (6,123,0051 $ 41,490,530 $ 6,218,385 Business-type Activities General obligation bonds $ 115,616,143 $ 8,298,084 $ (11,623,482) $ 112,290,745 $ 11,769,227 Revenue bonds 14,075,000 - (1,550,000) 12,525,000 1,550,000 Notes from direct borrowings and direct placements Installment purchase agreements 582,920 - (230,023) 352,897 234,554 130,274,063 8,298,084 (13,403,505) 125,168,642 13,553,781 Deferred amounts For issuance discounts (340,815) 65,291 (275,524) - For issuance premiums 2,438,581 - (272,726) 2,165,855 - Compensated absences 855,143 102,283 (79,306) 878,120 79,306 $ 133,226,972 $ 8,400,367 $ (13,690,2461 $ 127,937,093 $ 13,633,087 Component Units Brownfield Redevelopment Authority Revenue bonds $ - $ 19,260,000 $ $ 19,260,000 $ Direct borrowings and direct placements Loan payable 500,000 - 500,000 500,000 19,260,000 19,760,000 Tax Increment Financing Authority General obligation bonds 27,860,758 - (260,758) 27,600,000 Direct borrowings and direct placements Lease contract 11,029,889 11,029,889 38,890,647 - (260,758) 38,629,889 Add accreted interest on lease contract 5,877,152 1,149,246 - 7,026,398 Less unamortized discount on general obligation bonds (72,462) 6,039 (66,423) 44,695,337 1,149,246 (254,719) 45,589,864 Total component units $ 45,195,337 $ 2 4409,246 $ (254,7191 $ 65,349,864 $ 87 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS(concluded) Details applicable to the Component Units long-term obligations are readily available in their separate issued financial statements and are not duplicated here in accordance with GASB 61. 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 General Obligation Bonds Revenue Bonds Ending Governmental Activities Business-Type Activities Business-Type Activities June 30, Principal Interest Principal Interest Principal Interest 2021 $ 2,475,452 $ 1,405,288 $ 11,769,227 $ 3,709,565 $ 1,550,000 $ 535,688 2022 2,232,063 1,054,132 11,346,171 3,493,651 1,550,000 458,188 2023 716,302 334,898 9,574,778 3,317,815 1,550,000 380,688 2024 747,659 301,656 9,469,125 2,795,368 1,575,000 303,188 2025 776,389 265,956 8,414,299 1,873,619 1,575,000 224,438 2026-2030 3,883,293 740,966 33,654,030 6,855,219 4,725,000 293,344 2031-2035 961,073 97,576 16,495,001 3,764,399 - - 2036-2040 - - 11,568,114 1,111,265 - - $ 11,792,231 $ 4,200,472 $ 112,290,745 $ 26,920,901 $ 12,525,000 $ 2,195,534 Debt service requirements to maturity for the notes from direct borrowings and direct placements of the City are as follows: Year Direct Borrowings and Direct Placements Ending Governmental Activities Business-Type Activities June 30, Principal Interest Principal Interest 2021 $ 1,707,075 $ 505,109 $ 234,554 $ 5,773 2022 1,642,029 459,450 118,343 1,743 2023 1,581,002 413,819 - - 2024 1,626,724 367,543 2025 1,452,731 319,108 2026-2030 7,645,934 921,472 2031-2034 1,575,000 85,844 - $ 17,2301495 $ 3,072,345 $ 352,897 $ 7,516 88 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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 Total Fund Balances Nonspendable Inventory $ 9,241 $ 1,223,600 $ 1,232,841 Prepaids 176,128 1,425 177,553 Corpus of permanent funds - 1,944,962 1,944,962 Restricted Major and local streets 15,347,630 15,347,630 Drug law and narcotics enforcement 1,414,439 1,414,439 Downtown Lansing-community development 79,547 79,547 Debt service 29,361 29,361 Building department 1,677,085 1,677,085 Community development 2,593 2,593 Committed City parks 490,167 490,167 Capital improvements - 10,147,250 10,147,250 Unassigned 9,935,641 (82,237) 9,853,404 TOTAL FUND BALANCES $ 10,121,010 $ 32,275,822 $ 42,396,832 NOTE 11-NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30,2020,was as follows: Govermmntal Business-type Component Activities Activities Units Capital assets Capital assets not being depreciated $ 26,224,555 $ 29,732,804 $ - Capital assets being depreciated,net 146,793,531 303,331,551 17,846 Total capital assets 173,018,086 333,064,355 17,846 Related debt General obligation bonds 11,792,231 112,290,745 - Revenue bonds - 12,525,000 Installment purchase agreements 10,230,073 352,897 Loans payable 7,000,422 - Unamortized bond discounts (45,655) (275,524) Unamortized bond premiums 748,067 2,165,855 Deferred charge on bond refunding (290,238) (4,077,697) Amounts under leases receivable (24,043,318) Total related debt 29,434,900 98,937,958 - Net investment in capital assets $ 143,583,186 $ 234,126,397 $ 17,846 89 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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. NOTE 13 - RISK MANAGEMENT The City of Lansing is exposed to various risks of loss that are covered by the City's policies, including losses related to issues of cyber security, liability, errors and omissions, flood, boiler and machinery, property, employee bonding, auto, crime, ERISA considerations, and employee injuries. The City carries commercial insurance to cover these risks. Settled claims related to the commercial insurance have not exceeded the amount of insurance coverage during the past three years. 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, 2020 2019 Estimated liability,beginning of year $ 750,000 $ 900,000 Estimated claims incurred, including changes in estimates 11,449,390 9,849,331 Claim payments (10,299,390) (9,999,331) Estimated liability,end of year $ 400,000 $ 750,000 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, 2020 2019 Estimated liability,beginning of year $ 2,310,982 $ 2,292,221 Estimated claims incurred, including changes in estimates 1,190,809 978,209 Claim payments (944,474) (959,448) Estimated liability,end of year $ 2,557,317 $ 2,310,982 90 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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 30,2020 was$19.44 per$1,000 of taxable value. NOTE 15 - CONTINGENT LIABILITIES The City and its component units participate in a number of Federal and State assisted programs that are subject to compliance audits. The audit of the Federal programs and the periodic program compliance audits of many of the State programs have not yet been conducted, completed, or resolved. Accordingly, the City's and its component units'compliance with applicable grant requirements will be established at some future date. The amount,if any,of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the City and its component units expect such amounts,if any,to be immaterial. There are various other legal actions pending against the City and its component units. Due to the inconclusive nature of many of the actions, it is not possible for the City's Counsel to determine the probable outcome or a reasonable estimate of the potential liability, if any. These actions, for which a reasonable estimate can be determined of the potential liability,if any,are considered by the City and/or component unit management and legal counsel to not have a material effect on the financial condition of the City. NOTE 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. 91 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Plan Description (concluded) 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. Plan Membership At December 31,2019,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 940 Inactive employees entitled to but not yet receiving benefits 152 Vested and non-vested active participants 413 Total employees covered by the Plan 1,505 92 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 two 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: Multiplier Bargaining Unit/Employee 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% 93 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS(continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 30,2020 was 44.02%of projected valuation payroll. Contribution Bargaining Unit/Employee 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, 2020,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was -0.34%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. Concentrations At June 30,2020,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 Note 4 for the details of these concentrations. 94 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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. The market value change from December 31, 2019 to June 30, 2020 has been included in the Pension accumulation fund amount as it has not been allocated to the other funds as of year-end. A summary of the Plan reserves at June 30,2020 is as follows: Reserve/Group Balance Employee savings fund $ 10,576,130 Retirement reserve fund 136,352,426 Pension accumulation fund (8,735,323) Members benefit fund 14,695,230 Health insurance fund 36,018,599 Net Pension Liability The components of the net pension liability for the employees'retirement system at June 30,2020 were as follows: Total Pension Liability $ 310,941,585 Plan Fiduciary Net Position 152,888,463 Net Pension Liability $ 158,053,122 Plan fiduciary net position as percentage of total Pension Liability 49.17% Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31,2019,rolled forward to June 30,2020,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,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. 95 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) The actuarial assumptions used in the December 31, 2019 valuation were based on the results of actuarial experience analysis conducted in December 2016. There were no changes in actuarial assumptions during fiscal year 2020. 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, 2020,and the final investment return assumption,are summarized in the following table: Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 27.00% 5.75% 1.55% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 25.00% 1.65% 0.41% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.25% 0.26% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 6.00% 5.00% 0.30% 100.00% 4.53% Inflation 2.75% Risk adjustment (0.03%) Investment rate of return 7.25% 96 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 303,730,647 $ 165,585,569 $ 138,145,078 Changes for the Year Service cost 2,738,099 - 2,738,099 Interest on total pension liability 21,360,398 - 21,360,398 Difference between expected and actual experience 7,219,344 - 7,219,344 Employer contributions - 10,698,401 (10,698,401) Employee contributions - 1,286,273 (1,286,273) Net investment income(loss) - (540,861) 540,861 Benefit payments,including employee refunds (24,106,903) (24,106,903) - Administrative expense - (34,016) 34,016 Net changes 7,210,938 (12,697,106) 19,908,044 Balances as of June 30,2020 $ 310,941,585 $ 152,888,463 $ 158,053,122 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: 1%Decrease Current Rate 1%Increase 6.25% 7.25% 8.25% Net pension liability $ 185,452,884 $ 158,053,122 $ 132,787,275 97 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense of$18,549,326. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 4,812,896 $ 853,242 Changes in assumptions - - Changes in proportion and differences between employer contributions and share of contributions - - Net difference between projected and actual earnings on pension plan investments 11,441,271 - Total $ 16,254,167 $ 853,242 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2021 $ 3,970,381 2022 5,944,967 2023 3,083,266 2024 2,402,311 $ 15,400,925 At June 30, 2020,the City did not have any outstanding contributions to the pension plan required for the year ended June 30, 2020. 98 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM Plan Description The City sponsors and administers the Police and Fire Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers all police officers and fire fighters who are full-time employees of the City. The Plan was established and may be amended by the City Council and is administered by an eight member Board of Trustees. The Board is comprised of the Mayor of the City,one member of the City Council appointed by the City Council,the City Treasurer,a resident of the City who shall be appointed by the Mayor,by and with the consent of Council,two members each of the police and fire departments,to be elected by all the members of their respective departments. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. 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. 99 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Plan Membership At December 31, 2019,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 756 Inactive employees entitled to but not yet receiving benefits 52 Vested and non-vested active participants 356 Total employees covered by the Plan 1,164 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 two 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, 2020 was 51.92%of projected valuation payroll. Investment Policy The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was 0.37%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. 100 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Concentrations At June 30,2020,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, 2020 is as follows: Reserve/Group Balance Retirement reserve fund $ 280,136,810 Health insurance fund 43,508,802 Net Pension Liability The components of the net pension liability for the police and fire retirement system at June 30, 2020,were as follows: Total Pension Liability $ 465,521,706 Plan Fiduciary Net Position 280,136,810 Net Pension Liability $ 185,384,896 Plan fiduciary net position as percentage of total Pension Liability 60.18% Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2019,rolled forward to June 30,2020,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,including inflation. 101 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) 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, 2019 valuation were based on the results of actuarial experience analysis conducted in December 2016. There were no changes in actuarial assumptions during fiscal year 2020. 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, 2020,and the final investment return assumption,are summarized in the following table: Long-Term Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 32.00% 5.75% 1.84% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income 22.00% 1.65% 0.36% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 5.00% 4.25% 0.21% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 5.00% 0.25% 100.00% 4.67% Inflation 2.75% Risk adjustment (0.17%) Investment rate of return 7.25% 102 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 461,355,972 $ 294,201,491 $ 167,154,481 Changes for the Year Service cost 6,526,273 - 6,526,273 Interest on total pension liability 32,689,419 - 32,689,419 Difference between expected and actual experience (1,062,537) - (1,062,537) Employer contributions - 15,457,647 (15,457,647) Employee contributions - 3,459,452 (3,459,452) Net investment income(loss) - 1,047,240 (1,047,240) Benefit payments,including employee refunds (33,987,421) (33,987,421) - Administrative expense - (41,599) 41,599 Net changes 4,165,734 (14,064,681) 18,230,415 Balances as of June 30,2020 $ 465,521,706 $ 280,136,810 $ 185,384,896 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: 1%Decrease Current Rate 1%Increase 6.25% 7.25% 8.25% Net pension liability $ 231,735,911 $ 185,384,896 $ 143,089,647 103 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense of$29,083,500. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 7,360,919 $ 796,903 Changes in assumptions 411,761 - Changes in proportion and differences between employer contributions and share of contributions - - Net difference between projected and actual earnings on pension plan investments 14,954,259 - Total $ 22,726,939 $ 796,903 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2021 $ 6,892,607 2022 6,924,587 2023 4,193,184 2024 3,919,658 $ 21,930,036 At June 30,2020,the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30,2020. For governmental activities,pension liabilities are expected to be liquidated by the general fund. 104 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (concluded) 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 and Fire Retirement Retirement System System Total Net pension liability $ 158,053,122 $ 185,384,896 $ 343,438,018 Deferred outflows-pension 16,254,167 22,726,939 38,981,106 Deferred inflows-pension 853,242 796,903 1,650,145 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, 2020 were$261,227 for plan members. Employee contributions for the year ended June 30, 2020 were $241,158. 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. NOTE 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. 105 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) PRIMARY GOVERNMENT(continued) 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. 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. Membership of the Plan consisted of the following at January 1, 2020, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 908 Terminated plan members entitled to but not yet receiving benefits 43 Active plan member 433 Total 1,384 106 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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, 2020,the City contributed $11,461,488 (direct benefit payments of$11,081,488 and City contributions of $380,000)to the Plan. Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on investments,net of investment expense,was 6.63%. 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, 2020,were as follows: Total OPEB Liability $ 256,120,135 Plan Fiduciary Net Position 68,228,558 Net OPEB Liability $ 187,891,577 Plan fiduciary net position as percentage of total OPEB liability 26.64% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2020,rolled forward to June 30,2020,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.75% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. 107 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) Mortality rates are assumed to be in accordance with the Pub2010G tables,with below median and headcount weighted,projected generationally using MP-2018. The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study conducted in 2016. Assumption changes-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.77%to 5.22% ➢ Change in mortality tables from RP-2000 to Pub-2010G 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 30,2020 is summarized in the table on the following page. 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, 2020 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 27.00% 5.75% 1.55% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 25.00% 1.65% 0.41% Real Assets 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.25% 0.26% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 6.00% 5.00% 0.30% 100.00% 4.53% Inflation 2.75% Risk adjustment -0.35% Investment rate of return 6.93% 108 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Discount Rate The discount rate used to measure the total OPEB liability was 4.48% (down from 5.77% in 2019). 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 90%. Based on this information,the City projects that benefits will be paid from the trust from 2034 through 2056. This is done on a closed group basis. Therefore,the expected trust return of 7.00% (between 2034 and 2056)is blended with the 20-year Aa bond rate of 2.45%(before 2034 and after 2056). The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase(Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 231,415,357 $ 63,482,044 $ 167,933,313 Changes for the year Service cost 1,518,385 - 1,518,385 Interest on total OPEB liability 13,143,168 - 13,143,168 Difference between expected and actual experience (19,498,451) - (19,498,451) Changes in assumptions 39,986,554 - 39,986,554 Employer contributions - 11,461,488 (11,461,488) Net investment income - 4,366,514 (4,366,514) Benefit payments (10,444,878) (10,444,878) - Administrative expense - (636,610) 636,610 Net changes 24,704,778 4,746,514 19,958,264 Balances as of June 30,2020 $ 256,120,135 $ 68,228,558 $ 187,891,577 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 4.48%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1%lower(3.48%) or 1%higher(5.48%)than the current rate: 1%Decrease Current 1%Increase 3.48% Discount Rate 5.48% Net OPEB liability $ 220,230,476 $ 187,891,577 $ 159,178,165 109 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 8.25% pre-Medicare/6.5%Medicare,trending to an ultimate rate of 4.5%pre-Medicare/4.50/0 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 (7.25%pre-Medicare/5.5%Medicare,trending to an ultimate rate of 3.5%pre-Medicare/3.5%Medicare)or 1% higher(9.25%pre-Medicare/7.50/0 Medicare,trendingto an ultimate rate of 5.S%pre-Medicare/5.50/0 Medicare) than the current healthcare cost trend rates: Healthcare 1%Decrease Ultimate Cost 1%Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 160,497,367 $ 187,891,577 $ 220,940,828 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2020,the City recognized OPEB expense of$19,707,928. At June 30,2020,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 26,657,703 $ - Differences between expected and actual experience - 12,998,967 Net difference between projected and actual earnings on plan investments 739,264 - Total $ 27,396,967 $ 12,998,967 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2021 $ 7,046,292 2022 7,046,295 2023 289,968 2024 15,445 $ 14,398,000 110 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) 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 presented in the other supplementary information section of this report. At June 30,2020,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. Membership of the Plan consisted of the following at January 1, 2020, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 755 Terminated plan members entitled to but not yet receiving benefits 13 Active plan member 358 Total 1,126 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, 2020,the City contributed $14,971,737 (direct benefit payments of$13,661,737 and City contributions of $1,310,000)to the Plan. 111 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on investments,net of investment expense,was 7.25%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. The components of the net OPEB liability of the City at June 30, 2020,were as follows: Total OPEB Liability $ 419,130,520 Plan Fiduciary Net Position 43,508,802 Net OPEB Liability $ 375,621,718 Plan fiduciary net position as percentage of total OPEB liability 10.38% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2020,rolled forward to June 30,2020,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.75% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. Mortality rates are assumed to be in accordance with the Pub2010S tables, below median and headcount weighted,projected generationally using MP-2018. Adjustments to these rates are as follows: ➢ Pre-retirement: 50%of base rates ➢ Post-disablement: Pub2010S The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study conducted in 2016. Assumption changes-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.19%to 3.62% ➢ Change in mortality tables from RP-2000 to Pub-2010S ➢ Medical trend,expected per-capital costs,and family coverage 112 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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 30,2020 is summarized in the table below. 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, 2020 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 32.00% 5.75% 1.84% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 22.00% 1.65% 0.36% Real Assets 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 5.00% 4.25% 0.21% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 5.00% 0.25% 100.00% 4.67% Inflation 2.75% Risk adjustment -0.42% Investment rate of return 7.00% Discount Rate The discount rate used to measure the total OPEB liability was 3.62% (down from 5.19%in 2019). 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 90%, and until the fund is depleted. Based on this information, the City projects that benefits will be paid from the trust beginning in 2048 until depletion in 2067. This is done on a closed group basis. Therefore,the expected trust return of 7.00% (from 2048 to 2067) is blended with the 20-year Aa bond rate of 2.45% (before 2048 and after 2067). 113 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 302,529,360 $ 39,200,746 $ 263,328,614 Changes for the year Service cost 3,599,431 - 3,599,431 Interest on total OPEB liability 15,551,609 15,551,609 Difference between expected and actual experience 18,584,560 18,584,560 Changes in assumptions 91,997,958 - 91,997,958 Employer contributions - 14,971,737 (14,971,737) Net investment income 2,998,056 (2,998,056) Benefit payments (13,132,398) (13,132,398) - Administrative expense - (529,339) 529,339 Net changes 116,601,160 4,308,056 112,293,104 Balances as of June 30,2020 $ 419,130,520 $ 43,508,802 $ 375,621,718 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 3.62%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (2.62%) or 1%higher(4.62%)than the current rate: 1%Decrease Current 1%Increase 2.62% Discount Rate 4.62% Net OPEB liability $ 436,024,188 $ 375,621,718 $ 322,827,605 114 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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 8.25% pre-Medicare/6.5%Medicare,trending to an ultimate rate of 4.5%pre-Medicare/4.50/0 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 (7.25%pre-Medicare/5.5%Medicare,trending to an ultimate rate of 3.5%pre-Medicare/3.5%Medicare)or 1% higher(9.25%pre-Medicare/7.50/0 Medicare,trending to an ultimate rate of 5.5%pre-Medicare/5.50/0 Medicare) than the current healthcare cost trend rates: Healthcare 1%Decrease Ultimate Cost 1%Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 326,864,641 $ 375,621,718 $ 435,754,893 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2020,the City recognized OPEB expense of$43,157,875. At June 30,2020,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 78,324,884 $ 1,861,337 Differences between expected and actual experience 13,938,420 4,452,851 Net difference between projected and actual earnings on plan investments 849,557 - Contributions subsequent to the measurement date - - Total $ 93,112,861 $ 6,314,188 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2021 $ 26,221,549 2022 32,535,735 2023 28,092,189 2024 (50,800) $ 86,798,673 115 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (concluded) POLICE AND FIRE RETIREMENT SYSTEM (concluded) 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 presented in the other supplementary information section of this report. At June 30,2020,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 general fund. 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 and Fire Retirement Retirement System System Total Net OPEB liability $ 187,891,577 $ 375,621,718 $ 563,513,295 Deferred outflows - OPEB 27,396,967 93,112,861 120,509,828 Deferred inflows- OPEB 12,998,967 6,314,188 19,313,155 NOTE 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 2020 amounted to$197,697. 116 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 18-TAX ABATEMENTS(concluded) ➢ 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 2020. ➢ 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 2020 amounted to$4,086,475. ➢ 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 2020, through direct reimbursement to developers from current tax captures, amounted to$634,298. 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 2020 amounted to$255,106. NOTE 19-ASSETS HELD BY FOUNDATION During 2020 the City contributed $1,296,395 from the sale of Waverly Park to the City of Lansing Parks and Recreation Endowment Fund,which is held by the Capital Region Community Foundation (CRCF) on behalf of the City, from which only a certain component is spendable. The expenditure related to the contribution is recorded within a nonmajor capital project fund. The CRCF has explicit variance power and therefore these amounts are not shown in the financial statements of the City. This variance power allows CRCF to modify any restrictions or considerations on the distributions of the funds. Distributions will be made to the City annually as requested,according to the spending guidelines. The City elected not to receive any distributions this year. At June 30,2020,the fund has a value of$1,233,904. NOTE 20-UPCOMING ACCOUNTING PRONOUNCEMENTS In January 2017,the GASB issued Statement No.84,Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities for all state and local governments, focusing on (1) whether a government is controlling the assets of the fiduciary activity and (2)the beneficiaries for whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2020-2021 fiscal year. In June 2017,the GASB issued Statement No.87,Leases. This Statement increases the usefulness of governments' financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2021-2022 fiscal year. 117 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 20-UPCOMING ACCOUNTING PRONOUNCEMENTS(concluded) In June 2018, the GASB issued Statements No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2020-2021 fiscal year. In May 2019,the GASB issued Statement No.91,Conduit Debt Obligations. This Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders'uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers'roles in conduit debt obligations. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2022-2023 fiscal year. In May 2020,the GASB issued Statement No.96,Subscription-based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset - an intangible asset - and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments,including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases, as amended. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2022-2023 fiscal year. NOTE 21 - SUBSEQUENT EVENT Subsequent to year end, the City has approved borrowing $9,405,000 of capital improvement and refunding bonds to refund a portion of the 2010 General Obligation Limited Tax Bonds as described in Note 4 and to pay for the costs of certain public improvements in the City. 118 REQUIRED SUPPLEMENTARY INFORMATION 119 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes $ 42,875,000 $ 43,360,000 $ 41,305,799 $ (2,054,201) Income taxes 39,400,000 36,500,000 37,438,724 938,724 Licenses and permits 1,877,500 2,029,000 2,427,866 398,866 Intergovernmental 19,657,000 19,147,000 18,917,630 (229,370) Charges for services 10,168,300 8,321,800 8,315,878 (5,922) Fines and forfeits 2,149,200 1,349,200 1,537,865 188,665 Interest and rents 415,000 215,000 648,722 433,722 Other Donations and contributions 23,398,000 23,198,000 23,054,531 (143,469) TOTAL REVENUES 139,940,000 134,120,000 133,647,015 (472,985) EXPENDITURES Current General government Attorney's office 2,183,000 2,060,883 2,056,295 4,588 City clerk 1,404,000 1,482,186 1,475,995 6,191 Council 730,000 711,977 702,555 9,422 Courts 6,516,952 6,216,952 6,068,157 148,795 Internal audit 196,000 161,000 155,282 5,718 Finance 4,987,048 5,303,503 5,350,704 (47,201) Library rental 150,000 145,000 172,900 (27,900) Human resources 2,227,000 2,191,627 2,277,278 (85,651) Mayor 1,287,000 1,286,335 1,326,159 (39,824) Office of community media 478,000 478,000 413,594 64,406 Total general government 20,159,000 20,037,463 19,998,919 38,544 Public safety Police 44,885,000 45,170,051 44,035,657 1,134,394 Fire 36,066,000 36,300,309 35,163,854 1,136,455 Total public safety 80,951,000 81,470,360 79,199,511 2,270,849 Public works 12,173,000 12,162,686 12,085,207 77,479 120 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL (concluded) YEAR ENDED JUNE 30,2020 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) EXPENDITURES(concluded) Current(concluded) Recreation and culture $ 8,818,000 $ 8,371,761 $ 7,420,052 $ 951,709 Community and economic development Economic development&planning 5,762,000 5,284,319 5,132,691 151,628 Neighborhood&community engagement 1,166,000 1,141,000 1,006,145 134,855 Human relations/community services 1,658,000 1,656,911 1,638,492 18,419 Human services/community support 2,044,000 1,987,500 1,539,813 447,687 Total community and economic development 10,630,000 10,069,730 9,317,141 752,589 Debt service Principal 2,018,700 1,180,000 2,018,657 (838,657) Interest 402,300 85,000 400,520 (315,520) Total debt service 2,421,000 1,265,000 2,419,177 (1,154,177) TOTAL EXPENDITURES 135,152,000 133,377,000 130,440,007 2,936,993 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 4,788,000 743,000 3,207,008 2,464,008 OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets 105,000 105,000 66,088 (38,912) Transfers in 797,000 2,670,895 2,670,895 - Transfers out (5,690,000) (6,656,145) (5,854,471) 801,674 TOTAL OTHER FINANCING SOURCES(USES) (4,788,000) (3,880,250) (3,117,488) 762,762 NET CHANGE IN FUND BALANCE - (3,137,250) 89,520 3,226,770 Fund balance,beginning of year 10,031,490 10,031,490 10,031,490 Fund balance,end of year $ 10,031,490 $ 6,894,240 $ 10,121,010 $ 3,226,770 121 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cost $ 2,738,099 $ 2,719,559 $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest 21,360,398 21,512,099 21,994,837 22,403,009 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience 7,219,344 (2,559,726) (6,451,827) (23,183,264) (4,937,823) (6,422,330) - Changes of assumptions - 3,099,448 3,706,512 7,575,775 Benefit payments,including employee refunds (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net Change in Total Pension Liability 7,210,938 (1,798,108) (1,921,279) (17,275,496) 5,023,103 (3,355,060) 2,914,732 Total Pension Liability,beginning 303,730,647 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755 Total Pension Liability,ending $ 310,941,585 $ 303,730,647 $ 305,528,755 $ 307,450,034 $ 324,725,530 $ 319,702,427 $ 323,057,487 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 10,698,401 $ 10,880,932 $ 10,843,000 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 Contributions-employee 1,286,273 1,220,657 1,230,857 1,216,519 1,088,943 1,128,120 1,290,678 Net investment income(loss) (540,861) 8,437,568 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,635 Benefit payments,including employee refunds (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) Administrative expenses (34,016) (42,364) (57,822) (47,217) (126,486) (174,818) (741,037) Net Change in Plan Fiduciary Net Position (12,697,106) (2,973,247) (1,406,624) 5,915,528 (14,506,562) (6,562,186) 4,840,906 Plan Fiduciary Net Position,beginning 165,585,569 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754 Plan Fiduciary Net Position,ending $ 152,888,463 $ 165,585,569 $ 168,558,816 $ 169,965,440 $ 164,049,912 $ 178,556,474 $ 185,118,660 City's Net Pension Liability $ 158,053,122 $ 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 the total pension liability 49.17% 54.52% 55.17% 55.28% 50.52% 55.85% 57.30% Covered payroll $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 City's net pension liability as a percentage of covered payroll 650.3% 593.8% 604.1% 657.8% 696.0% 714.0% 640.9% 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 no changes in actuarial assumptions during fiscal year 2020. 122 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 10,698,401 $ 10,880,932 $ 10,185,060 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 $ 8,586,536 $ 7,596,879 $ 7,297,083 Contributions in relation to the actuarially determined contribution 10,698,401 10,880,932 10,843,000 10,246,872 10,181,620 10,547,556 9,361,009 8,586,536 7,523,534 7,297,083 Contribution deficiency(excess) $ $ $ (657,940) $ - $ $ - $ - $ - $ 73,345 $ Covered payroll $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 $ 20,874,143 $ 22,838,598 $ 26,068,735 Contributions as a percentage of covered payroll 44.02% 46.77% 47.82% 49.02% 44.10% 53.35% 43.50% 41.13% 32.94% 27.99% 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. Actuarial valuation information relative to the determination of contributions: Valuation date: December 31,2019 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percent of payroll over a closed period Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Projected 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 rates 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. 123 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense -0.34% 5.17% 5.87% 10.91% -1.60% 2.43% 13.67% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 124 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS LAST SIX FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cost $ 6,526,273 $ 6,801,669 $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest 32,689,419 31,573,535 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 Changes of benefit terms - - 779 - - - - Difference between expected and actual experience (1,062,537) 10,590,030 8,263,623 (19,308,117) 7,884,167 3,159,996 Changes of assumptions - 1,647,044 25,078,592 3,281,341 - Benefit payments,including employee refunds (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,270,724) Net Change in Total Pension Liability 4,165,734 16,355,980 15,329,894 11,321,648 18,230,902 10,700,735 8,240,987 Total Pension Liability,beginning 461,355,972 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 381,175,826 Total Pension Liability,ending $ 465,521,706 $ 461,355,972 $ 444,999,992 $ 429,670,098 $ 418,348,450 $ 400,117,548 $ 389,416,813 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 15,457,647 $ 13,554,239 $ 12,686,000 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 Contributions-employee 3,459,452 3,485,891 2,650,019 2,840,914 2,608,214 2,950,832 2,911,896 Net investment income(loss) 1,047,240 17,943,950 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments,including employee refunds (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,852,038) Administrative expenses (41,599) (53,318) (77,237) (50,996) (128,903) (173,849) (1,141,506) Net Change in Plan Fiduciary Net Position (14,064,681) 2,321,508 3,438,780 15,325,805 (22,181,251) (5,176,867) 20,183,830 Plan Fiduciary Net Position,beginning 294,201,491 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 280,289,686 Plan Fiduciary Net Position,ending $ 280,136,810 $ 294,201,491 $ 291,879,983 $ 288,441,203 $ 273,115,398 $ 295,296,649 $ 300,473,516 City's Net Pension Liability $ 185,384,896 $ 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 the total pension liability 60.18% 63.77% 65.59% 67.13% 65.28% 73.80% 77.16% Covered payroll $ 29,774,287 $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974 City's net pension asset as a percentage of covered payroll 622.6% 564.0% 538.S% 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 no changes in actuarial assumptions during fiscal year 2020. 125 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 15,457,647 $ 13,554,239 $ 12,562,547 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 $ 10,133,599 $ 9,242,173 $ 8,240,688 Contributions in relation to the actuarially determined contribution 15,457,647 13,554,239 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 10,133,599 9,057,080 8,240,688 Contribution deficiency(excess) $ - $ $ (123,453) $ - $ - $ - $ - $ - $ 185,093 $ - Covered payroll $ 29,774,287 29,638,532 28,435,952 27,585,521 27,078,405 24,407,740 26,405,725 25,636,626 26,121,411 25,128,835 Contributions as a percentage of covered payroll 51.92% 45.73% 44.61% 41.77% 40.20% 45.27% 42.60% 39.53% 34.67% 32.79% 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. Actuarial valuation information relative to the determination of contributions: Valuation date: December 31,2019 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percent of payroll over a closed period Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Projected 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 rates 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. 126 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 0.37% 6.30% 7.10% 12.06% -2.09% 3.04% 17.28% 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 OTHER POSTEMPLOYMENT BENEFITS PLAN- EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 1,518,385 $ 1,477,747 $ 1,438,197 $ 1,550,428 Interest 13,143,168 12,990,219 13,221,134 12,976,683 Difference between expected and actual experience (19,498,451) - (9,321,837) - Changes of assumptions 39,986,554 3,614,432 (2,727,829) Benefit payments,including refunds of member contributions (10,444,878) (10,573,488) (10,286,249) (10,116,593) Net Change in Total OPEB Liability 24,704,778 7,508,910 (7,676,584) 4,410,518 Total OPEB Liability,beginning 231,415,357 223,906,447 231,583,031 227,172,513 Total OPEB Liability,ending $ 256,120,135 $ 231,415,357 $ 223,906,447 $ 231,583,031 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 11,461,488 $ 11,848,485 $ 11,436,222 $ 11,305,756 OPEB plan net investment income 4,366,514 3,040,683 4,329,577 5,209,669 Benefit payments,including refunds of member contributions (10,444,878) (10,573,488) (10,286,249) (10,116,593) Administrative expenses (636,610) (548,939) (444,973) (389,163) Net Change in Plan Fiduciary Net Position 4,746,514 3,766,741 5,034,577 6,009,669 Plan Fiduciary Net Position,beginning 63,482,044 59,715,303 54,680,726 48,671,057 Plan Fiduciary Net Position,ending $ 68,228,558 $ 63,482,044 $ 59,715,303 $ 54,680,726 Plan's Net OPEB Liability $ 187,891,577 $ 167,933,313 $ 164,191,144 $ 176,902,305 Plan fiduciary net position as a percentage of the total OPEB liability 26.64% 27.43% 26.67% 23.61% Covered payroll $ 25,453,989 $ 23,720,424 $ 21,251,418 $ 20,901,289 Plan's net OPEB liability as a percentage of covered payroll 738.16% 707.97% 772.61% 846.37% 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-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.77%to 4.48% ➢ Change in mortality tables from RP-2000 to Pub-2010G ➢ Medical trend,expected per-capita costs,and family coverage 128 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN- EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 10,504,140 $ 10,198,194 $ 10,910,284 $ 10,582,235 $ 11,447,334 $ 13,270,701 $ 14,057,619 $ 12,775,667 $ 14,915,958 $ 8,819,018 Contributions in relation to the actuarially determined contribution 11,461,488 11,848,485 11,436,222 11,305,756 8,814,471 9,212,322 11,048,992 10,147,780 10,363,847 9,773,601 Contribution deficiency(excess) $ (957,348) $ (1,650,291) $ (525,938) $ (723,521) $ 2,632,863 $ 4,058,379 $ 3,008,627 $ 2,627,887 $ 4,552,111 $ (954,583) Covered payroll $ 25,435,989 $ 23,720,424 $ 21,251,418 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 $ 20,874,143 $ 22,838,598 $ 26,068,735 Contributions as a percentage of covered payroll 45.1% 50.0% 53.8% 54.1% 38.2% 46.6% 51.3% 48.6% 45.4% 37.5% Actuarial valuation information relative to the determination of contributions: Valuation date: January 1,2020 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll,closed Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Investment rate of return 7.0%,net of OPEB plan investment expense and including inflation. Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality rates Pub2010G tables,below median and headcount weighted,projected generationally using MP-2018. Health care trend rates Pre-Medicare 8.25%for the first year,gradually decreasing by.25%to 4.50%in year 15 and thereafter. Medicare 6.50%for the first year,gradually decreasing by.25%to 4.50%in year 10 and thereafter. 129 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 6.63% 4.17% 7.10% 9.90% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 130 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN- POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 3,599,431 $ 3,503,096 $ 3,409,339 $ 3,749,359 Interest 15,551,609 15,565,892 15,994,328 15,584,783 Difference between expected and actual experience 18,584,560 - (17,811,401) - Changes of assumptions 91,997,958 18,652,834 (7,445,354) Benefit payments,including refunds of member contributions (13,132,398) (12,271,014) (11,960,557) (11,065,440) Net Change in Total OPEB Liability 116,601,160 25,450,808 (17,813,645) 8,268,702 Total OPEB Liability,beginning 302,529,360 277,078,552 294,892,197 286,623,495 Total OPEB Liability,ending $ 419,130,520 $ 302,529,360 $ 277,078,552 $ 294,892,197 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 14,971,737 $ 13,500,687 $ 13,163,201 $ 12,290,749 OPEB plan net investment income 2,998,056 290,543 3,572,965 3,487,200 Benefit payments,including refunds of member contributions (13,132,398) (12,271,014) (11,960,557) (11,065,440) Administrative expenses (529,339) (627,673) (600,644) (525,309) Net Change in Plan Fiduciary Net Position 4,308,056 892,543 4,174,965 4,187,200 Plan Fiduciary Net Position,beginning 39,200,746 38,308,203 34,133,238 29,946,038 Plan Fiduciary Net Position,ending $ 43,508,802 $ 39,200,746 $ 38,308,203 $ 34,133,238 Plan's Net OPEB Liability $ 375,621,718 $ 263,328,614 $ 238,770,349 $ 260,758,959 Plan fiduciary net position as a percentage of the total OPEB liability 10.38% 12.96% 13.83% 11.57% Covered payroll $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 Plan's net OPEB liability as a percentage of covered payroll 1261.56% 926.04% 1155.32% 945.27% 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-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.19%to 3.62% ➢ Change in mortality tables from RP-2000 to Pub-2010S ➢ Medical trend,expected per-capita costs,and family coverage 131 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SERVICES SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 15,674,604 $ 15,218,062 $ 15,968,029 $ 19,759,521 $ 17,276,901 $ 17,923,366 $ 16,945,536 $ 17,489,692 $ 17,844,155 $ 16,474,153 Contributions in relation to the actuarially determined contribution 14,971,737 13,500,687 13,163,201 12,290,749 12,879,016 11,561,406 11,198,663 11,170,202 9,888,796 9,844,226 Contribution deficiency(excess) $ 702,867 $ 1,717,375 $ 2,804,828 $ 7,468,772 $ 4,397,885 $ 6,361,960 $ 5,746,873 $ 6,319,490 $ 7,955,359 $ 6,629,927 Covered payroll $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 26,405,725 $ 25,636,626 $ 26,121,411 $ 25,128,835 Contributions as a percentage of covered payroll 50.3% 47.5% 63.7% 44.6% 47.6% 47.4% 42.4% 43.6% 37.9% 39.2% Actuarial valuation information relative to the determination of contributions: Valuation date: January 1,2020 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll,closed Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Investment rate of return 7.0%,net of OPEB plan investment expense and including inflation. Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality rates Pub2010G tables,below median and headcount weighted,projected generationally using MP-2018. Health care trend rates Pre-Medicare 8.25%for the first year,gradually decreasing by.25%to 4.50%in year 15 and thereafter. Medicare 6.50%for the first year,gradually decreasing by.25%to 4.50%in year 10 and thereafter. 132 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 7.25% -0.88% 8.71% 9.89% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 133 CITY OF LANSING NOTE TO REQUIRED SUPPLEMENTARY INFORMATION NOTE 1-EXCESS OF EXPENDITURES OVER APPROPRIATIONS State statutes provide that a local government unit not incur expenditures in excess of the amounts appropriated. The City's budgeted expenditures for the General Fund have been shown at the activity level. 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) required 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. During the year ended June 30, 2020, the City incurred expenditures in the General Fund and one Special Revenue Fund in excess of the amounts appropriated as follows: Amounts Amounts Appropriated Expended Variance General Fund Current General government Finance $ 5,303,503 $ 5,350,704 $ (47,201) Library rental 145,000 172,900 (27,900) Mayor 1,286,335 1,326,159 (39,824) Human resources 2,191,627 2,277,278 (85,651) Debt service Principal 1,180,000 2,018,657 (838,657) Interest 85,000 400,520 (315,520) State and Federal Grants Fund Current Public safety - 788,808 (788,808) Public works - 283,500 (283,500) Community development 1,007,888 6,763,349 (5,755,461) 134 OTHER SUPPLEMENTARY INFORMATION 135 This page intentionally left blank. 136 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 137 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total ASSETS Cash and cash equivalents $ 82,029 $ - $ 89,710 $ - $ 171,739 Equity in pooled cash and investments 20,864,389 29,361 4,726,761 1,944,962 27,565,473 Receivables Accounts,net 15,689 - 209,046 - 224,735 Loans 1,220,642 - 1,220,642 Accrued interest 2,231,696 - 2,231,696 Special assessments Current - 30,245 30,245 Deferred 123,133 123,133 Due from other funds - 1,096,006 1,096,006 Due from other governmental units 6,027,877 4,466,522 10,494,399 Inventories 1,223,600 - 1,223,600 Prepaids 1,425 1,425 TOTAL ASSETS $ 31,665,922 $ 29,361 $ 10,742,848 $ 1,944,962 $ 44,383,093 LIABILITIES Accounts payable $ 1,865,084 $ - $ 265,151 $ - $ 2,130,235 Accrued liabilities 68,631 - 68,631 Indemnity bonds 43,867 43,867 Due to other funds 519,806 519,806 Due to other governmental units 303,716 - 303,716 Advances from other funds 188,126 188,126 Undistributed forfeitures 40,368 - 40,368 Unearned revenue 5,137,051 100,000 5,237,051 TOTAL LIABILITIES 7,978,523 553,277 8,531,800 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-loans and accrued interest receivable 3,452,338 - 3,452,338 Unavailable revenue-special assessments - 123,133 123,133 TOTAL DEFERRED INFLOWS OF RESOURCES 3,452,338 123,133 3,575,471 FUND BALANCES Nonspendable 1,223,600 - 1,425 1,944,962 3,169,987 Restricted 18,521,294 29,361 - - 18,550,655 Committed 490,167 - 10,147,250 10,637,417 Unassigned(deficit) - - (82,237) (82,237) TOTAL FUND BALANCES 20,235,061 29,361 10,066,438 1,944,962 32,275,822 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 31,665,922 $ 29,361 $ 10,742,848 $ 1,944,962 $ 44,383,093 138 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total REVENUES Property taxes and special assessments $ 369,912 $ $ 33,309 $ $ 403,221 Intergovernmental 25,248,860 - 25,248,860 Charges for services 4,271,072 461,984 4,733,056 Fines and forfeits 51,868 - 51,868 Interest and rents 191,324 40,612 30,796 262,732 Other Donations and contributions 5,000 - - 5,000 Other 311,775 - - 311,775 TOTAL REVENUES 30,449,811 535,905 30,796 31,016,512 EXPENDITURES Current General government 3,112,357 - - 3,112,357 Public safety 1,663,648 1,663,648 Public works 283,500 283,500 Highways and streets 10,711,027 10,711,027 Community and economic development 9,381,917 9,381,917 Debt service Principal 1,268,048 1,268,048 Interest and fiscal charges 422,637 750 - 423,387 Capital outlay 4,317,180 3,574,608 7,891,788 TOTAL EXPENDITURES 31,160,314 750 3,574,608 - 34,735,672 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (710,503) (750) (3,038,703) 30,796 (3,719,160) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets 1,265 - 25,000 - 26,265 Transfers in 6,790,471 750 7,518,395 14,309,616 Transfers out (4,371,000) (750) (2,992,395) (7,364,145) TOTAL OTHER FINANCING SOURCES(USES) 2,420,736 - 4,551,000 6,971,736 NET CHANGE IN FUND BALANCES 1,710,233 (750) 1,512,297 30,796 3,252,576 Fund balances,beginning of year 18,524,828 30,111 8,554,141 1,914,166 29,023,246 Fund balances,end of year $ 20,235,061 $ 29,361 $ 10,066,438 $ 1,944,962 $ 32,275,822 139 This page intentionally left blank. 140 CITY OF LANSING 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 restricted 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 restricted 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. 141 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local ASSETS Cash and cash equivalents $ - $ - $ - $ 33,000 Equity in pooled cash and investments 9,984,118 3,692,895 445,125 608,769 Receivables Accounts,net - - - - Loans - - Accrued interest - - - Due from other governmental units 1,599,650 439,444 - Inventories 1,223,600 - - TOTAL ASSETS $ 12,807,368 $ 4,132,339 $ 445,125 $ 641,769 LIABILITIES Accounts payable $ 213,009 $ 111,601 $ 11,833 $ 28,722 Accrued payroll and related - - Indemnity bonds 43,867 - - Due to other funds - Due to other governmental units - Undistributed forfeitures Unearned revenue TOTAL LIABILITIES 256,876 111,601 11,833 28,722 DEFERRED INFLOWS OF RESOURCES Unavailable revenue FUND BALANCES Nonspendable 1,223,600 Restricted 11,326,892 4,020,738 433,292 613,047 Committed TOTAL FUND BALANCES 12,550,492 4,020,738 433,292 613,047 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 12,807,368 $ 4,132,339 $ 445,125 $ 641,769 142 Community Development State and Block Grant Downtown Building Parks Federal Tri-County Program Lansing,Inc. Department Department Grants Metro Total $ $ - $ - $ - $ - $ 49,029 $ 82,029 89,179 1,709,653 490,167 3,195,382 649,101 20,864,389 - 15,689 - - - 15,689 1,185,000 - - 35,642 - 1,220,642 2,231,696 - - - - 2,231,696 640,852 3,286,985 60,946 6,027,877 - - - - - - 1,223,600 $ 4,057,548 $ 89,179 $ 1,725,342 $ 490,167 $ 6,518,009 $ 759,076 $ 31,665,922 $ 104,393 $ 3,992 $ 14,516 $ - $ 1,332,030 $ 44,988 $ 1,865,084 14,060 5,640 30,826 16,201 1,904 68,631 - - - - - 43,867 519,806 - - 519,806 - - - 303,716 303,716 - - - 40,368 40,368 - - 2,915 - 5,134,136 - 5,137,051 638,259 9,632 48,257 - 6,482,367 390,976 7,978,523 3,416,696 - - - 35,642 - 3,452,338 - - - - - 1,223,600 2,593 79,547 1,677,085 - 368,100 18,521,294 - - - 490,167 - 490,167 2,593 79,547 1,677,085 490,167 - 368,100 20,235,061 $ 4,057,548 $ 89,179 $ 1,725,342 $ 490,167 $ 6,518,009 $ 759,076 $ 31,665,922 143 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local REVENUES Property taxes and special assessments $ 144,789 $ - $ - $ Intergovernmental 12,011,298 3,160,223 759 Charges for services - - - - Fines and forfeits - - 30,780 Interest and rents 89,443 71,696 5,255 7,502 Contributions - - - Otherrevenues 94,584 - - - TOTAL REVENUES 12,340,114 3,231,919 6,014 38,282 EXPENDITURES Current General government - - - - Public safety - 48,368 183,175 Public works - - - - Highways and streets 5,713,444 4,997,583 Community development - - Debt service Principal 655,332 612,716 Interest 150,174 272,463 Capital outlay 2,692,479 1,624,701 - TOTAL EXPENDITURES 9,211,429 7,507,463 48,368 183,175 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,128,685 (4,275,544) (42,354) (144,893) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets - - 1,265 Transfers in 6,216,000 - Transfers out (4,071,000) (300,000) - TOTAL OTHER FINANCING SOURCES(USES) (4,071,000) 5,916,000 1,265 NET CHANGE IN FUND BALANCES (942,315) 1,640,456 (42,354) (143,628) Fund balances,beginning of year 13,492,807 2,380,282 475,646 756,675 Fund balances,end of year $ 12,550,492 $ 4,020,738 $ 433,292 $ 613,047 144 Community Development State and Block Grant Downtown Building Parks Federal Tri-County Program Lansing,Inc. Department Department Grants Metro Total $ - $ 225,123 $ - $ - $ - $ - $ 369,912 2,460,926 - - 7,000,812 614,842 25,248,860 - 1,092 3,666,013 - 603,967 - 4,271,072 - - - - - 21,088 51,868 2,592 686 5,498 - 8,652 191,324 - 5,000 - - - 5,000 80,641 81,554 - - 44,409 10,587 311,775 2,544,159 313,455 3,666,013 5,498 7,649,188 655,169 30,449,811 - 552,396 2,559,961 - - - 3,112,357 - - - 788,808 643,297 1,663,648 - - - 283,500 - 283,500 - - - - - 10,711,027 2,618,568 - - - 6,763,349 - 9,381,917 - - - - - - 1,268,048 - 422,637 - - - - - - 4,317,180 2,618,568 552,396 2,559,961 - 7,835,657 643,297 31,160,314 (74,409) (238,941) 1,106,052 5,498 (186,469) 11,872 (710,503) - - - - - - 1,265 77,002 271,000 40,000 - 186,469 - 6,790,471 - - - - - - (4,371,000) 77,002 271,000 40,000 - 186,469 - 2,420,736 2,593 32,059 1,146,052 5,498 - 11,872 1,710,233 - 47,488 531,033 484,669 - 356,228 18,524,828 $ 2,593 $ 79,547 $ 1,677,085 $ 490,167 $ $ 368,100 $ 20,235,061 145 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Major Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ $ - $ 144,789 $ 144,789 Intergovernmental 11,002,000 11,518,000 12,011,298 493,298 Interest and rents 60,000 60,000 89,443 29,443 Other revenues - 72,000 94,584 22,584 TOTAL REVENUES 11,062,000 11,650,000 12,340,114 690,114 EXPENDITURES Current Highways and streets 7,342,800 7,342,800 5,713,444 1,629,356 Debt service Principal 686,200 686,200 655,332 30,868 Interest 152,000 152,000 150,174 1,826 Capital outlay 5,348,000 4,848,000 2,692,479 2,155,521 TOTAL EXPENDITURES 13,529,000 13,029,000 9,211,429 3,817,571 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (2,467,000) (1,379,000) 3,128,685 4,507,685 OTHER FINANCING USES Transfers out (3,571,000) (4,071,000) (4,071,000) - NET CHANGE IN FUND BALANCE (6,038,000) (5,450,000) (942,315) 4,507,685 Fund balance,beginning of year 13,492,807 13,492,807 13,492,807 - Fund balance,end of year $ 7,454,807 $ 8,042,807 $ 12,550,492 $ 4,507,685 146 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Local Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ 150,000 $ 150,000 $ - $ (150,000) Intergovernmental 3,480,000 3,480,000 3,160,223 (319,777) Interest and rents 30,000 30,000 71,696 41,696 TOTAL REVENUES 3,660,000 3,660,000 3,231,919 (428,081) EXPENDITURES Current Highways and streets 6,102,600 6,102,600 4,997,583 1,105,017 Debt service Principal 710,400 710,400 612,716 97,684 Interest 275,000 275,000 272,463 2,537 Capital outlay 2,825,000 3,325,000 1,624,701 1,700,299 TOTAL EXPENDITURES 9,913,000 10,413,000 7,507,463 2,905,537 EXCESS OF REVENUES UNDER EXPENDITURES (6,253,000) (6,753,000) (4,275,544) 2,477,456 OTHER FINANCING SOURCES(USES) Transfers in 5,716,000 6,216,000 6,216,000 - Transfers out (300,000) (300,000) (300,000) - TOTAL OTHER FINANCING SOURCES(USES) 5,416,000 5,916,000 5,916,000 -- NET CHANGE IN FUND BALANCE (837,000) (837,000) 1,640,456 2,477,456 Fund balance,beginning of year 2,380,282 2,380,282 2,380,282 - Fund balance,end of year $ 1,543,282 $ 1,543,282 $ 4,020,738 $ 2,477,456 147 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Drug Law Enforcement Federal Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ - $ - $ 759 $ 759 Interest and rents 5,000 5,000 5,255 255 TOTAL REVENUES 5,000 5,000 6,014 1,014 EXPENDITURES Current Public safety 95,000 95,000 48,368 46,632 NET CHANGE IN FUND BALANCE (90,000) (90,000) (42,354) 47,646 Fund balance,beginning of year 475,646 475,646 475,646 - Fund balance,end of year $ 385,646 $ 385,646 $ 433,292 $ 47,646 148 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Drug Law Enforcement State and Local Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Fines and forfeitures $ - $ - $ 30,780 $ 30,780 Interest and rents 10,000 10,000 7,502 (2,498) TOTAL REVENUES 10,000 10,000 38,282 28,282 EXPENDITURES Current Public safety 199,000 229,000 183,175 45,825 EXCESS OF REVENUES UNDER EXPENDITURES (189,000) (219,000) (144,893) 74,107 OTHER FINANCING SOURCES Proceeds from sale of capital assets - 1,265 1,265 NET CHANGE IN FUND BALANCE (189,000) (219,000) (143,628) 75,372 Fund balance,beginning of year 756,675 756,675 756,675 - Fund balance,end of year $ 567,675 $ 537,675 $ 613,047 $ 75,372 149 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 CDBG Program Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 2,006,536 $ 2,786,367 $ 2,460,926 $ (325,441) Interest and rents - - 2,592 2,592 Other revenues 172,464 196,496 80,641 (115,855) TOTAL REVENUES 2,179,000 2,982,863 2,544,159 (438,704) EXPENDITURES Current Community development 2,179,000 3,082,863 2,618,568 464,295 EXCESS OF REVENUES UNDER EXPENDITURES - (100,000) (74,409) 25,591 OTHER FINANCING SOURCES Transfers in 100,000 77,002 (22,998) NET CHANGE IN FUND BALANCE - 2,593 2,593 Fund balance,beginning of year - - - Fund balance,end of year $ $ - $ 2,593 $ 2,593 150 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Downtown Lansing,Inc.Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ 423,700 $ 226,400 $ 225,123 $ (1,277) Charges for services 4,250 4,250 1,092 (3,158) Interest and rents - - 686 686 Contributions 10,000 10,000 5,000 (5,000) Other revenues 87,450 121,321 81,554 (39,767) TOTAL REVENUES 525,400 361,971 313,455 (48,516) EXPENDITURES Current General government 634,000 657,293 552,396 104,897 EXCESS OF REVENUES UNDER EXPENDITURES (108,600) (295,322) (238,941) 56,381 OTHER FINANCING SOURCES Transfers in 93,000 271,000 271,000 NET CHANGE IN FUND BALANCE (15,600) (24,322) 32,059 56,381 Fund balance,beginning of year 47,488 47,488 47,488 - Fund balance,end of year $ 31,888 $ 23,166 $ 79,547 $ 56,381 151 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Building Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Charges for services $ 2,620,000 $ 2,620,000 $ 3,666,013 $ 1,046,013 EXPENDITURES Current General government 2,660,000 2,660,000 2,559,961 100,039 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (40,000) (40,000) 1,106,052 1,146,052 OTHER FINANCING SOURCES Transfers in 40,000 40,000 40,000 NET CHANGE IN FUND BALANCE - - 1,146,052 1,146,052 Fund balance,beginning of year 531,033 531,033 531,033 - Fund balance,end of year $ 531,033 $ 531,033 $ 1,677,085 $ 1,146,052 152 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Parks Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Interest and rents $ $ $ 5,498 $ 5,498 NET CHANGE IN FUND BALANCE 5,498 5,498 Fund balance,beginning of year 484,669 484,669 484,669 - Fund balance,end of year $ 484,669 $ 484,669 $ 490,167 $ 5,498 153 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 State and Federal Grants Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 1,095,600 $ 1,007,888 $ 7,000,812 $ 5,992,924 Charges for services - - 603,967 603,967 Other revenues - - 44,409 44,409 TOTAL REVENUES 1,095,600 1,007,888 7,649,188 6,641,300 EXPENDITURES Current Public safety - - 788,808 (788,808) Public works - - 283,500 (283,500) Community development 1,095,600 1,007,888 6,763,349 (5,755,461) TOTAL EXPENDITURES 1,095,600 1,007,888 7,835,657 (6,827,769) EXCESS OF REVENUES UNDER EXPENDITURES - - (186,469) (186,469) OTHER FINANCING SOURCES Transfers in 186,469 186,469 NET CHANGE IN FUND BALANCE - - Fund balance,beginning of year - Fund balance,end of year $ $ $ $ - 154 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Tri County Metro Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 425,000 $ 493,610 $ 614,842 $ 121,232 Fines and forfeitures 382,000 382,000 21,088 (360,912) Interest and rents - - 8,652 8,652 Other revenues - - 10,587 10,587 TOTAL REVENUES 807,000 875,610 655,169 (220,441) EXPENDITURES Current Public safety 807,000 875,610 643,297 232,313 NET CHANGE IN FUND BALANCE - - 11,872 11,872 Fund balance,beginning of year 356,228 356,228 356,228 - Fund balance,end of year $ 356,228 $ 356,228 $ 368,100 $ 11,872 155 This page intentionally left blank. 156 CITY OF LANSING 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). 157 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30,2020 1999 Fire 2001 Fire Station Station Total ASSETS Equity in pooled cash and investments $ 29,361 $ - $ 29,361 FUND BALANCES Restricted $ 29,361 $ - $ 29,361 158 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 1999 Fire 2001 Fire Station Station Total EXPENDITURES Current Interest and fiscal charges $ - $ 750 $ 750 EXCESS OF REVENUES (UNDER) EXPENDITURES - (750) (750) OTHER FINANCING SOURCES (USES) Transfers in - 750 750 Transfers out (750) - (750) TOTAL OTHER FINANCING SOURCES (USES) (750) 750 - NET CHANGE IN FUND BALANCES (750) - (750) Fund balances,beginning of year 30,111 - 30,111 Fund balances,end of year $ 29,361 $ - $ 29,361 159 This page intentionally left blank. 160 CITY OF LANSING 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. 161 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Special Other Capital Assessments Projects Total ASSETS Cash and cash equivalents $ - $ 89,710 $ 89,710 Equity in pooled cash and investments 75,644 4,651,117 4,726,761 Receivables Accounts receivable - 209,046 209,046 Special assessments Current 30,245 - 30,245 Deferred 123,133 - 123,133 Due from other funds - 1,096,006 1,096,006 Due from other governmental units - 4,466,522 4,466,522 Prepaids - 1,425 1,425 TOTAL ASSETS $ 229,022 $ 10,513,826 $ 10,742,848 LIABILITIES Accounts payable $ - $ 265,151 $ 265,151 Advances from other funds 188,126 - 188,126 Unearned revenue - 100,000 100,000 TOTAL LIABILITIES 188,126 365,151 553,277 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-special assessments 123,133 - 123,133 FUND BALANCES Nonspendable - 1,425 1,425 Committed - 10,147,250 10,147,250 Unassigned(deficit) (82,237) - (82,237) TOTAL FUND BALANCES (DEFICIT) (82,237) 10,148,675 10,066,438 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 229,022 $ 10,513,826 $ 10,742,848 162 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 Special Other Capital Assessments Projects Total REVENUES Special assessments $ 33,309 $ - $ 33,309 Charges for services - 461,984 461,984 Interest and rents - 40,612 40,612 TOTAL REVENUES 33,309 502,596 535,905 EXPENDITURES Capital outlay - 3,574,608 3,574,608 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 33,309 (3,072,012) (3,038,703) OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets - 25,000 25,000 Transfers in - 7,518,395 7,518,395 Transfers out - (2,992,395) (2,992,395) TOTAL OTHER FINANCING SOURCES (USES) - 4,551,000 4,551,000 NET CHANGE IN FUND BALANCES 33,309 1,478,988 1,512,297 Fund balances (deficit),beginning of year (115,546) 8,669,687 8,554,141 Fund balances (deficit),end of year $ (82,237) $ 10,148,675 $ 10,066,438 163 This page intentionally left blank. 164 CITY OF LANSING NONMAJOR PERMANENT FUNDS Cemetery Perpetual Care Fund This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested,and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. 165 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Cemetery Perpetual Care Parks Trust Total ASSETS Equity in pooled cash and investments $ 1,943,656 $ 1,306 $ 1,944,962 FUND BALANCES Nonspendable $ 1,943,656 $ 1,306 $ 1,944,962 166 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 Cemetery Perpetual Care Parks Trust Total REVENUES Interest and rents $ 30,782 $ 14 $ 30,796 NET CHANGE IN FUND BALANCES 30,782 14 30,796 Fund balances,beginning of year 1,912,874 1,292 1,914,166 Fund balances,end of year $ 1,943,656 $ 1,306 $ 1,944,962 167 This page intentionally left blank. 168 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS Cemetery Fund This fund accounts for the operation of City-owned cemeteries. Golf Fund This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund This fund accounts for the provision of recycling services to participating residents of the City. 169 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total ASSETS Current assets Cash and cash equivalents $ 200 $ - $ - $ - $ 200 Equity in pooled cash and investments 505,009 2,245,558 910,338 1,297,801 4,958,706 Accounts receivable,net - - 62,867 - 62,867 Inventories 45,488 - - - 45,488 Total current assets 550,697 2,245,558 973,205 1,297,801 5,067,261 Noncurrent assets Capital assets not being depreciated 57,740 345,647 - - 403,387 Capital assets being depreciated,net 77,397 1,741,085 26,833 1,845,315 Total noncurrent assets 135,137 2,086,732 26,833 2,248,702 TOTAL ASSETS 685,834 4,332,290 973,205 1,324,634 7,315,963 DEFERRED OUTFLOW OF RESOURCES Deferred outflows related to pension 175,564 - 276,855 567,034 1,019,453 Deferred outflows related to OPEB 295,919 466,648 955,755 1,718,322 TOTAL DEFERRED OUTFLOWS OF RESOURCES 471,483 - 743,503 1,522,789 2,737,775 LIABILITIES Current liabilities Accounts payable 39,877 7,073 1,456 165,048 213,454 Accrued payroll 1,390 - - - 1,390 Accrued interest payable - - 1,729 1,729 Unearned revenue - 324,913 - 324,913 Current portion of compensated absences 1,366 2,875 6,741 10,982 Current portion of bonds and notes payable - - - 234,554 234,554 Total current liabilities 42,633 7,073 329,244 408,072 787,022 Noncurrent liabilities Compensated absences,net of current portion 22,468 - 45,886 107,599 175,953 Bonds and notes payable,net of current portion - - 118,343 118,343 Net pension liability 1,707,157 2,692,092 5,513,753 9,913,002 Net other postemployment benefit liability 2,029,446 3,200,326 6,554,681 11,784,453 Total noncurrent liabilities 3,759,071 5,938,304 12,294,376 21,991,751 TOTAL LIABILITIES 3,801,704 7,073 6,267,548 12,702,448 22,778,773 DEFERRED INFLOW OF RESOURCES Deferred inflows of resources related to pension 9,216 - 14,533 29,766 53,515 Deferred inflows of resources related to OPEB 140,404 221,409 453,475 815,288 TOTAL DEFERRED INFLOWS OF RESOURCES 149,620 235,942 483,241 868,803 NET POSITION Net investment in capital assets 135,137 2,086,732 - (326,064) 1,895,805 Unrestricted(deficit) (2,929,144) 2,238,485 (4,786,782) (10,012,202) (15,489,643) TOTAL NET POSITION $ (2,794,007) $ 4,325,217 $ (4,786,782) $ (1Q338,266) $ (13,593,838) 170 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total OPERATING REVENUES Charges for services $ 403,030 $ 3,091 $ 2,278,024 $ 4,376,310 $ 7,060,455 OPERATING EXPENSES Personnel services 1,353,818 3,285 1,430,847 3,525,378 6,313,328 Purchase of goods and services 288,610 148,991 1,000,219 1,886,537 3,324,357 Depreciation 9,827 77,191 155,872 242,890 TOTAL OPERATING EXPENSES 1,652,255 229,467 2,431,066 5,567,787 9,880,575 OPERATING LOSS (1,249,225) (226,376) (153,042) (1,191,477) (2,820,120) NONOPERATING REVENUES(EXPENSES) Interest revenue - 8,900 16,534 25,434 Gain on sale of capital assets 2,120,816 - - 2,120,816 Interest expense and fees - - (9,176) (9,176) TOTAL NONOPERATING REVENUES(EXPENSES) 2,120,816 8,900 7,358 2,137,074 NET INCOME(LOSS)BEFORE TRANSFERS (1,249,225) 1,894,440 (144,142) (1,184,119) (683,046) TRANSFERS Transfers in 595,000 166,000 761,000 CHANGE IN NET POSITION (654,225) 2,060,440 (144,142) (1,184,119) 77,954 Net position(deficit),beginning of year (2,139,782) 2,264,777 (4,642,640) (9,154,147) (13,671,792) Net position(deficit),end of year $(2,794,007) $ 4,325,217 $ (4,786,782) $ (10,338,266) $ (13,593,838) 171 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 403,030 $ 3,091 $ 2,543,905 $ 4,382,684 $ 7,332,710 Cash payments for good and services (264,399) (141,918) (1,055,052) (1,823,885) (3,285,254) Cash payments to employees (426,307) (3,285) (1,142,578) (2,170,016) (3,742,186) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES (287,676) (142,112) 346,275 388,783 305,270 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 595,000 166,000 - - 761,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on long-term debt - - (230,023) (230,023) Proceeds from sales of capital assets 2,221,670 2,221,670 Purchase of capital assets - (32,198) (32,198) Interest paid on long-term debt - (10,304) (10,304) NET CASH PROVIDED(USED)BY CAPITAL AND RELATED FINANCING ACTIVITIES 2,221,670 - (272,525) 1,949,145 CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received - 8,900 16,534 25,434 NET CHANGE IN CASH AND CASH EQUIVALENTS 307,324 2,245,558 355,175 132,792 3,040,849 Cash and cash equivalents,beginning ofyear 197,885 - 555,163 1,165,009 1,918,057 Cash and cash equivalents,end ofyear $ 505,209 $ 2,245,558 $ 910,338 $ 1,297,801 $ 4,958,906 Reconciliation of operating loss to net cash provided(used)by operating activities Operating loss $ (1,249,225) $ (226,376) $ (153,042) $ (1,191,477) $ (2,820,120) Adjustments to reconcile operating loss to net cash provided(used)by operating activities Depreciation 9,827 77,191 - 155,872 242,890 Changes in: Accounts receivable - - 101,087 6,374 107,461 Inventory 7,005 - - 7,005 Deferred outflows-pension (125,061) (175,849) (415,525) (716,435) Deferred outflows-OPEB (277,406) (427,645) (864,289) (1,569,340) Accounts payable 17,206 7,073 (54,833) 62,652 32,098 Accrued payroll (455) - - - (455) Unearned revenue - 164,794 164,794 Compensated absences 111 (1,170) (2,743) (3,802) Net pension liability 325,700 (70,810) 1,369,401 1,624,291 Deferred inflows-pension (7,849) (19,597) (21,429) (48,875) Net other postemployment benefit liability 872,067 761,931 836,472 2,470,470 Deferred inflows-OPEB 140,404 - 221,409 453,475 815,288 NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ (287,676) $ (142,112) $ 346,275 $ 388,783 $ 305,270 172 CITY OF LANSING 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. 173 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30,2020 Fleet Fringe Information Maintenance Benefits Engineering Technology Total ASSETS Current assets Equity in pooled cash and investments $ 2,602,513 $ 3,001,073 $ 1,733,184 $ 1,434,385 $ 8,771,155 Accounts receivable,net 6,000 542,566 - - 548,566 Inventories 410,965 - - 410,965 Prepaids - 374,559 - 113,021 487,580 Total current assets 3,019,478 3,918,198 1,733,184 1,547,406 10,218,266 Noncurrent assets Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated,net 9,148,334 1,430,341 10,578,675 Total noncurrent assets 9,241,226 - 1,430,341 - 10,671,567 TOTAL ASSETS 12,260,704 3,918,198 3,163,525 1,547,406 20,889,833 LIABILITIES Current liabilities Accounts payable 207,298 769,078 7,906 540,729 1,525,011 Accrued payroll 60,204 8,928 63,194 37,394 169,720 Accrued interest payable 13,253 - - - 13,253 Claims incurred but not reported - 400,000 400,000 Current portion of: Bonds and notes payable 379,333 - - 379,333 Compensated absences 42,546 73,309 - 115,855 Total current liabilities 702,634 1,178,006 144,409 578,123 2,603,172 Noncurrent liabilities Bonds and notes payable,net of current portion 1,924,068 - - - 1,924,068 Compensated absences,net of current portion 161,093 53,125 281,417 235,933 731,568 Total noncurrent liabilities 2,085,161 53,125 281,417 235,933 2,655,636 TOTAL LIABILITIES 2,787,795 1,231,131 425,826 814,056 5,258,808 NET POSITION Net investment in capital assets 6,937,825 - 1,430,341 - 10,671,567 Unrestricted 2,535,084 2,687,067 1,307,358 733,350 4,959,458 TOTAL NET POSITION $ 9,472,909 $ 2,687,067 $ 2,737,699 $ 733,350 $ 15,631,025 174 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION YEAR ENDED JUNE 30,2020 Fleet Information Maintenance Fringe Benefits Engineering Technology Total OPERATING REVENUES Charges for services $ 9,589,127 $ 65,907,198 $ 4,695,587 $ 6,299,999 $ 86,491,911 Miscellaneous - 111,337 - - 111,337 TOTAL OPERATING REVENUES 9,589,127 66,018,535 4,695,587 6,299,999 86,603,248 OPERATING EXPENSES Personnel services 3,208,417 316,414 2,778,760 1,946,447 8,250,038 Purchase of goods and services 4,178,735 63,987,796 1,053,137 4,678,316 73,897,984 Depreciation 2,340,226 44,888 2,385,114 TOTAL OPERATING EXPENSES 9,727,378 64,304,210 3,876,785 6,624,763 84,533,136 OPERATING INCOME(LOSS) (138,251) 1,714,325 818,802 (324,764) 2,070,112 NONOPERATING REVENUES(EXPENSES) Loss on sale of capital assets (20,258) - - (20,258) Interest expense and fees (126,530) (126,530) TOTAL NONOPERATING REVENUES(EXPENSES) (146,788) - - (146,788) INCOME(LOSS)BEFORE TRANSFERS (285,039) 1,714,325 818,802 (324,764) 1,923,324 TRANSFERS Transfers in 930,000 - 930,000 CHANGE IN NET POSITION 644,961 1,714,325 818,802 (324,764) 2,853,324 Net position,beginning of year 8,827,948 972,742 1,918,897 1,058,114 12,777,701 Net position,end of year $ 9,472,909 $ 2,687,067 $ 2,737,699 $ 733,350 $ 15,631,025 175 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2020 Fleet Information Maintenance Fringe Benefits Engineering Technology Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from interfund services $ 9,586,202 $ 65,484,234 $ 4,695,587 $ 6,299,999 $ 86,066,022 Cash payments for goods and services (4,106,556) (64,779,287) (1,063,492) (4,888,789) (74,838,124) Cash payments to employees (3,187,310) (675,402) (2,873,043) (1,853,443) (8,589,198) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 2,292,336 29,545 759,052 (442,233) 2,638,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 930,000 - 930,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 40,298 40,298 Purchase of capital assets (1,776,031) (1,776,031) Principal paid on long-term debt (370,290) (370,290) Interest paid on long-term debt (128,769) (128,769) NET CASH(USED)BY RELATED FINANCING ACTIVITIES (2,234,792) (2,234,792) NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 987,544 29,545 759,052 (442,233) 1,333,908 Cash and cash equivalents,beginning of year 1,614,969 2,971,528 974,132 1,876,618 7,437,247 Cash and cash equivalents,end ofyear $ 2,602,513 $ 3,001,073 $ 1,733,184 $ 1,434,385 $ 8,771,155 Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ (138,251) $ 1,714,325 $ 818,802 $ (324,764) $ 2,070,112 Adjustments to reconcile operating income(loss)to net cash provided(used)by operating activities Depreciation 2,340,226 - 44,888 2,385,114 Change in: Accounts receivable (2,925) (534,301) - (537,226) Prepaids 36,675 24,717 86,018 147,410 Inventories (58,706) - - (58,706) Accounts payable 94,210 (816,208) (10,355) (296,491) (1,028,844) Accrued payroll 3,820 (5,745) 1,291 11,117 10,483 Claims incurred but not reported - (350,000) - - (350,000) Compensated absences 17,287 (3,243) (95,574) 81,887 357 NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 2,292,336 $ 29,545 $ 759,052 $ (442,233) $ 2,638,700 176 CITY OF LANSING PENSION AND OTHER POSTEMPLOYMENT BENEFITS TRUST FUNDS Employees'Retirement System Pension This fund accounts for all eligible employees (non-police and fire) activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Employees'Retirement System OPEB This fund accounts for all eligible employees (non-police and fire) activities related to postemployment healthcare coverage for applicable individuals. Police and Fire Retirement System Pension This fund accounts for all eligible employees' activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Police and Fire Retirement System OPEB This fund accounts for all eligible employees' activities related to postemployment healthcare coverage for applicable individuals. Employees'Money Purchase Pension Plan This fund accounts for all newly hired eligible employees who participate in the City's defined contribution plan to account for paying pension benefits to eligible retirees (or beneficiaries). Retiree Healthcare VEBA This fund accounts for all eligible employee's activity related to the defined benefit of postemployment healthcare to provide medical and healthcare benefits for retirees and their beneficiaries. 177 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF FIDUCIARY NET POSITION JUNE 30,2020 Pension and Other Postemployment Benefits Trust Funds Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 4,763,025 $ 1,122,108 $ 6,720,398 $ 1,043,763 $ - $ $ 13,649,294 Investments U.S.Treasuries 2,187,313 515,303 3,913,452 607,809 - 7,223,877 U.S.Agencies 14,524,222 3,421,722 21,242,171 3,299,179 - 42,487,294 Collateralized mortgage obligations 474,220 111,720 1,423,585 221,101 - 2,230,626 Mutual funds 95,992,901 22,614,707 178,871,459 27,781,007 3,547,785 31,185,763 359,993,622 Domestic equities 26,329,413 6,202,875 54,673,358 8,491,466 - - 95,697,112 International equities 699,203 164,723 1,217,856 189,148 - - 2,270,930 Emerging market equities 6,130,100 1,444,173 11,553,789 1,794,450 - 907,287 21,829,799 Money market funds 3,493,541 823,034 2,714,480 421,593 - 116,896 7,569,544 Dividends and interest receivable 130,800 30,838 213,629 33,180 - 13 408,460 Total assets 154,724,738 36,451,203 282,544,177 43,882,696 3,547,785 32,209,959 553,360,558 Liabilities Accounts payable 160,335 37,774 333,684 51,825 - - 583,618 Due to other funds 1,675,940 394,830 2,073,683 322,069 - 4,466,522 Total liabilities 1,836,275 432,604 2,407,367 373,894 5,050,140 Net position restricted for: Pension benefits 152,888,463 - 280,136,810 - 3,547,785 - 436,573,058 Other postemployment benefits - 36,018,599 - 43,508,802 32,209,959 111,737,360 Total net position $ 152,888,463 $ 36,018,599 $ 280,136,810 $ 43,508,802 $ 3,547,785 $ 32,209,959 $ 548,310,418 178 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30,2020 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 $ 182,606 $ 2,600,282 $ 2,172,015 $ 2,998,056 $ - $ 1,766,232 $ 9,719,191 Interest income (34,362) - (2,256) - 144,634 - 108,016 Investment expenses (689,105) - (1,122,519) - - (1,811,624) Net investment income (540,861) 2,600,282 1,047,240 2,998,056 144,634 1,766,232 8,015,583 Contributions Employer 10,698,401 11,461,488 15,457,647 14,971,737 261,227 - 52,850,500 Plan members 1,286,273 - 3,459,452 - 241,158 4,986,883 Total contributions 11,984,674 11,461,488 18,917,099 14,971,737 502,385 57,837,383 Deductions Participant benefits 24,106,903 10,444,878 33,987,420 13,132,399 - - 81,671,600 Administrative expense 34,016 544,547 41,600 529,338 51,905 92,063 1,293,469 Total deductions 24,140,919 10,989,425 34,029,020 13,661,737 51,905 92,063 82,965,069 Change in net position (12,697,106) 3,072,345 (14,064,681) 4,308,056 595,114 1,674,169 (17,112,103) Net position restricted for pension and other postemployment benefits Beginning of year 165,585,569 32,946,254 294,201,491 39,200,746 2,952,671 30,535,790 565,422,521 End of year $ 152,888,463 $ 36,018,599 $ 280,136,810 $ 43,508,802 $ 3,547,785 $ 32,209,959 $ 548,310,418 179 This page intentionally left blank. 180 CITY OF LANSING AGENCY FUND 54-A District Court Fund This fund is used to hold cash received by the District Court for bail bonds, for garnishment payments until claimed,and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. 181 CITY OF LANSING AGENCY FUND COMBINING STATEMENT OF CHANGES FIDUCIARY ASSETS AND LIABILITIES YEAR ENDED JUNE 30,2020 Beginning Ending Balance Additions Deletions Balance 54-A District Court Assets Equity in pooled cash and investments $ 76,818 $ 781,255 $ 675,010 $ 183,063 Liabilities Undistributed receipts $ 76,818 $ 781,255 $ 675,010 $ 183,063 182 STATISTICAL SECTION 183 This page intentionally left blank. 184 STATISTICAL SECTION 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. 187 Revenue Capacity These schedules contain information to help the reader assess the (Tables 5-8) factors affecting the City's ability to generate its property taxes. 192 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. 196 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. 201 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. 203 Sources: Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 185 This page intentionally left blank. 186 CITY OF LANSING Table 1 NET POSITION BY COMPONENT 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Governmental activities Net investment in capital assets $ 180,571,237 $ 163,723,249 $ 154,372,604 $ 150,976,010 $ 151,785,916 $ 149,676,860 $ 149,533,948 $ 148,263,240 $ 146,153,309 $ 143,583,186 Restricted 14,777,571 14,524,584 12,552,011 13,133,137 12,311,541 12,922,525 10,993,950 15,189,723 23,505,738 20,495,617 Unrestricted (18,840,717) (34,371,855) (39,467,672) (46,344,555) (251,453,207) (265,678,371) (276,790,945) (606,529,375) (629,587,773) (674,087,826) Total governmental activities net position $ 176,508,091 $ 143,87S,978 $ 127,456,943 $ 117,764,592 $ (87,355,7S0) $ (103,078,986] $ (116,263,047) $ (443,076,412) $ (459,928,726) $ (510,009,023) Business-type activities Net investment in capital assets $ 204,149,751 $ 209,584,457 $ 212,682,278 $ 214,458,841 $ 218,813,478 $ 220,436,882 $ 224,161,744 $ 227,127,434 $ 233,988,263 $ 234,126,397 Restricted 13,080,302 12,382,060 11,077,134 8,746,096 2,889,096 2,764,963 1,818,671 1,886,620 1,953,175 2,432,963 Unrestricted 34,177,453 32,196,598 31,943,581 37,891,053 17,242,167 19,401,320 25,415,447 (13,854,833) (7,299,147) (13,397,777) Total business-type activities net position $ 251,407,506 $ 254,163,115 $ 255,702,993 $ 261,095,990 $ 238,944,741 $ 242,603,165 $ 251,395,862 $ 215,159,221 $ 228,642,291 $ 223,161,583 Primary government Net investment in capital assets $ 384,720,988 $ 373,307,706 $ 367,054,882 $ 365,434,851 $ 370,599,394 $ 370,113,742 $ 373,695,692 $ 375,390,674 $ 380,141,572 $ 377,709,583 Restricted 27,857,873 26,906,644 23,629,145 21,879,233 15,200,637 15,687,488 12,812,621 17,076,343 25,458,913 22,928,580 Unrestricted 15,336,736 (2,175,257) (7,524,091) (8,453,502) (234,211,040) (246,277,051) (251,375,498) (620,384,208) (636,886,920) (687,485,603) Total primary government net position $ 427,915,597 $ 398,039,093 $ 383,159,936 $ 378,860,582 $ 151,588,991 $ 139,524,179 $ 135,132,815 $ (227,917,191) $ (231,286,435) $ (286,847,440) Note: No discretely presented component units shown - 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. - 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. 187 CITY OF LANSING Table 2 CHANGES IN NET POSITION 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Expenses Governmental activities General government $ 25,665,269 $ 30,841,776 $ 27,438,065 $ 24,771,054 $ 25,225,893 $ 27,993,414 $ 21,778,154 $ 16,995,976 $ 26,679,840 $ 30,400,643 Public safety 83,546,997 82,369,004 77,133,469 78,142,897 81,827,437 85,739,408 91,829,441 87,352,251 97,391,612 121,102,641 Public works 26,355,375 33,144,303 29,984,955 37,243,516 27,815,970 28,212,049 28,983,891 26,485,877 29,644,398 35,288,254 Recreation and culture 8,245,451 8,889,142 7,713,098 8,670,918 6,515,590 10,336,168 9,441,519 8,302,243 7,650,889 11,238,934 Community and economic development 12,825,028 13,623,946 16,939,572 7,602,229 10,270,404 10,642,102 12,349,663 16,150,417 21,046,090 20,731,730 Interest on long-term debt 2,116,535 1,949,825 1,475,051 1,340,818 1,291,846 1,424,215 1,201,846 1,137,561 1,182,488 733,925 Total governmental activities expenses 158,754,655 170,817,996 160,684,210 157,771,432 152,947,140 164,347,356 165,584,514 156,424,325 183,595,317 219,496,127 Business-type activities Sewage disposal system 26,444,741 26,836,597 26,296,964 28,682,809 27,506,843 28,487,957 27,567,228 28,552,143 31,939,976 32,605,664 Municipal parking system 9,896,498 9,491,376 8,106,373 7,851,702 7,605,461 7,651,077 6,866,747 9,888,246 7,081,998 12,716,606 Cemetery 755,766 639,000 633,050 722,270 632,485 708,545 886,579 1,379,877 470,220 1,652,25S Golf 846,817 810,372 892,117 935,671 852,634 845,575 802,564 (372,775) 278,501 229,467 Garbage and rubbish collection 1,515,600 1,558,024 1,557,708 1,722,843 1,712,671 2,085,728 1,543,380 3,101,893 1,035,262 2,431,066 Recycling 2,809,353 3,041,328 3,650,292 3,263,553 3,623,276 4,092,278 3,667,899 3,859,496 3,856,764 5,576,963 Total business-type activities expenses 42,268,775 42,376,697 41,140,504 43,178,848 41,933,370 43,871,160 41,334,397 46,408,880 44,662,721 55,212,021 Total primary government expenses $ 201,023,430 $ 213,194,693 $ 201,824,714 $ 200,950,280 $ 194,880,510 $ 208,218,516 $ 206,918,911 $ 202,833,205 $ 228,258,038 $ 274,708,148 Program Revenues Governmental activities Charges for services General government $ 6,742,306 $ 6,428,110 $ 6,162,713 $ 6,820,261 $ 6,815,975 $ 7,279,427 $ 7,295,556 $ 7,038,702 $ 7,567,720 $ 7,616,658 Public safety 8,975,173 8,525,524 4,083,222 2,122,023 3,344,183 2,909,054 3,476,966 4,140,682 3,935,250 4,770,026 Public works 2,449,606 2,797,443 1,622,738 2,129,126 1,923,303 3,011,894 1,836,466 716,322 2,978,549 536,961 Recreation and culture 685,120 557,609 594,349 800,293 619,834 673,840 617,604 831,816 1,092,232 1,038,740 Community and economic development 122,326 67,344 67,349 67,323 67,264 67,272 67,312 - - - Operating grants and contributions 30,154,681 31,928,983 29,322,435 28,234,803 24,658,955 24,561,960 25,157,629 28,983,936 29,663,253 28,534,469 Capital grants and contributions 169,414 260,656 3,124,288 3,365,682 2,910,660 904,298 63,488 855,760 3,313,672 285,075 Total governmental activities program revenues 49,318,626 50,565,669 44,977,094 43,539,511 40,340,174 39,407,745 38,515,021 42,567,218 48,550,876 42,781,929 Business-type activities Charges for services Sewage disposal system 29,205,945 29,915,799 30,825,174 31,759,698 31,730,416 32,368,491 34,755,896 35,107,570 35,752,812 34,968,585 Municipal parking system 7,539,179 6,858,606 5,267,627 7,453,476 6,988,879 7,090,335 6,906,091 7,436,552 8,422,161 6,211,685 Cemetery 225,947 240,394 314,913 289,565 335,379 312,929 403,663 351,204 415,757 403,030 Golf 382,546 390,134 373,000 366,567 363,559 313,164 256,218 179,464 - 3,091 Garbage and rubbish collection 1,507,577 1,459,101 1,131,659 1,664,201 1,744,999 1,871,665 1,952,897 2,072,454 2,243,627 2,278,024 Recycling 2,609,423 2,818,364 3,434,622 3,508,536 3,624,671 3,627,070 3,614,794 3,779,468 4,081,700 4,376,310 Operating grants and contributions 4,456,708 1,331,737 1,193,571 2,574,949 1,143,085 1,312,362 1,391,326 1,603,942 6,648,917 2,000,000 Capital grants and contributions 1,439,044 2,683,657 100,000 Total business-type activities program revenues 47,366,369 45,697,792 42,540,566 47,616,992 45,930,988 46,896,016 49,380,885 50,530,654 57,564,974 50,240,725 Total primary government program revenues $ 96,684,995 $ 96,263,461 $ 87,517,660 $ 91,156,503 $ 86,271,162 $ 86,303,761 $ 87,895,906 $ 93,097,872 $ 106,115,850 $ 93,022,654 Net(Expense)Revenue Governmental activities $ (109,436,029) $ (120,252,327) $ (115,707,116) $ (114,231,921) $ (112,606,966) $ (124,939,611) $ (127,069,493) $ (113,857,107) $ (135,044,441) $ (176,714,198) Business-type activities S,097,594 3,321,09S 1,400,062 4,438,144 3,997,618 3,024,856 8,046,488 4,121,774 12,902,253 (4,971,296) Total primary government net expense $ (104,338,435) $ (116,931,232) $ (114,307,054) $ (109,793,777) $ (108,609,348) $ (121,914,755) $ (119,023,005) $ (109,735,333) $ (122,142,188) $ (181,685,494) 188 CITY OF LANSING Table 2 CHANGES IN NET POSITION (concluded) 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General Revenues and Other Changes in Net Position Governmental activities General revenues Property taxes $ 37,233,590 $ 33,506,860 $ 38,668,837 $ 38,079,548 $ 39,657,382 $ 38,578,548 $ 40,568,278 $ 39,573,468 $ 41,692,930 $ 41,675,711 Income taxes 28,699,749 27,943,070 29,850,755 31,450,913 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 Unrestricted grants contributions 27,254,574 26,441,961 31,425,718 35,677,910 36,330,976 36,532,275 38,108,544 39,419,658 39,530,073 42,029,100 Unrestricted investment earnings 89,735 69,265 58,588 36,836 26,353 99,058 125,539 216,239 463,685 707,383 Miscellaneous 108,601 123,066 - - 280,280 63,079 135,270 - 64,820 91,088 Transfers-internal activities (633,814) (464,008) (583,117) (705,637) (644,485) (629,715) (746,209) (912,186) (580,817) 4,691,895 Total governmental activities 92,752,435 87,620,214 99,420,781 104,539,570 107,311,429 109,216,375 113,885,432 116,752,475 118,192,127 126,633,901 Business-type activities Unrestricted investment earnings 689,883 271,067 356,467 246,616 17,874 - - - - 2,061,667 Miscellaneous 21,166 (1,300,561) - 2,600 - 3,853 - - - - Transfers-internal activities 633,814 464,008 583,117 705,637 644,485 629,715 746,209 912,186 580,817 (4,691,895) Gain on sale of assets 2,120,816 Total business-type activities 1,344,863 (565,486) 939,584 954,853 662,359 633,568 746,209 912,186 580,817 (509,412) Total primary government $ 94,097,298 $ 87,054,728 $ 100,360,365 $ 105,494,423 $ 107,973,788 $ 109,849,943 $ 114,631,641 $ 117,664,661 $ 118,772,944 $ 126,124,489 Change in Net Position Governmental activities $ (16,683,594) $ (32,632,113) $ (16,286,335) $ (9,692,351) $ (5,295,537) $ (15,723,236) $ (13,184,061) $ 2,895,368 $ (16,852,314) $ (50,080,297) Business-Type activities 6,442,457 2,755,609 2,339,646 5,392,997 4,659,977 3,658,424 8,792,697 5,033,960 13,483,070 (5,480,708) Total primary government $ (10,241,137) $ (29,876,504) $ (13,946,689) $ (4,299,354) $ (635,560) $ (12,064,812) $ (4,391,364) $ 7,929,328 $ (3,369,244) $ (55,561,005) 189 CITY OF LANSING Table 3 FUND BALANCE GOVERNMENTAL FUNDS 2011-2020 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General fund Nonspendable $ 171,586 $ 92,538 $ 75,738 $ 75,738 $ 35,424 $ 492,549 $ 28,342 $ 39,437 $ 38,605 $ 185,369 Restricted 41,129 16,256 9,400 9,400 10,044 - - - - - Committed 178,081 65,373 2,976,408 2,976,408 837,761 428,106 385,067 283,815 - - Unassigned 4,939,691 5,198,032 5,633,528 5,633,528 9,783,911 12,407,748 15,283,857 17,003,260 9,992,885 9,935,641 Total general fund 5,330,487 5,372,199 8,695,074 8,695,074 10,667,140 13,328,403 15,697,266 17,326,512 10,031,490 10,121,010 All other governmental funds Nonspendable 3,006,507 2,852,004 2,671,151 2,671,151 2,619,065 2,578,331 2,618,884 2,842,489 2,952,027 3,169,987 Restricted 7,412,008 5,566,421 4,368,983 4,368,983 6,865,580 6,934,665 4,730,012 9,009,438 17,038,777 18,550,655 Committed 4,908,740 4,109,131 4,035,145 4,035,145 7,110,485 8,427,253 10,426,961 8,837,341 9,147,988 10,637,417 Unassigned(deficit) (371,285) (543,774) (619,931) (619,931) (528,144) (410,252) (411,098) (155,261) (115,546) (82,237) Total all other governmental funds 14,955,970 11,983,782 10,455,348 10,455,348 16,066,986 17,529,997 17,364,759 20,534,007 29,023,246 32,275,822 Total all governmental funds $ 20,286,457 $ 17,355,981 $ 19,150,422 $ 19,150,422 $ 26,734,126 $ 30,858,400 $ 33,062,025 $ 37,860,519 $ 39,054,736 $ 42,396,832 Note: GASB Statement No.54,Fund Balance Reporting and Governmental Fund Type Definitions,was implemented in 2011. Further information on the fund balances are found in the footnotes to the financial statements. 190 CITY OF LANSING Table 4 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 2011-2020 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Revenues Property taxes and special assessments $ 37,371,885 $ 33,583,448 $ 38,717,552 $ 38,717,552 $ 39,470,249 $ 38,782,759 $ 40,691,325 $ 39,629,305 $ 41,732,645 $ 41,709,020 Income taxes 28,699,749 27,943,070 29,850,755 29,850,755 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 Licenses and permits 1,598,804 1,538,325 1,509,402 1,509,402 1,551,125 1,559,638 1,494,298 2,113,824 1,399,881 2,427,866 Intergovernmental revenue 40,304,78S 41,431,793 40,639,183 40,639,183 36,042,377 34,175,112 36,391,761 41,848,072 45,586,152 44,166,490 Charges for services 18,606,304 18,676,398 11,754,381 11,754,381 12,900,490 14,102,447 13,230,822 12,432,770 15,235,656 13,048,934 Fines and forfeits 3,325,728 2,884,328 3,694,351 3,694,351 3,075,427 3,455,541 2,510,945 2,601,063 2,306,990 1,589,733 Interest and rents 88,516 63,571 53,179 53,179 87,035 145,011 201,367 284,165 631,812 911,454 Other 12,326,244 12,774,807 16,757,918 16,757,918 23,162,946 22,854,314 22,952,587 22,101,917 22,391,478 23,371,306 Total revenues 142,322,015 138,895,740 142,976,721 142,976,721 147,950,572 149,647,952 153,167,115 159,466,412 166,306,050 164,663,527 Expenditures Current Expenditures General government 26,396,516 25,038,589 23,595,321 23,595,321 21,720,206 23,386,445 23,948,368 22,281,236 27,340,931 23,111,276 Public safety 70,397,235 66,161,872 63,943,082 63,943,082 75,510,743 72,264,468 73,683,246 75,859,065 78,659,682 80,863,159 Public works 6,002,823 6,225,177 8,908,673 8,908,673 13,273,332 11,715,510 11,201,515 11,087,884 11,632,895 12,368,707 Highway and streets 8,494,233 8,589,298 9,937,423 9,937,423 10,357,488 10,838,473 10,969,516 10,104,034 11,984,896 10,711,027 Recreation and culture 7,464,193 6,996,562 6,629,453 6,629,453 7,583,085 7,719,906 7,749,245 8,236,872 8,138,369 7,420,052 Community and economic development - - - - 3,910,924 3,442,110 4,142,612 15,947,504 19,435,277 18,699,058 Other 15,675,003 17,999,264 23,699,202 23,699,202 2,704,982 2,927,391 2,710,979 - - - Debt service Principal 2,070,552 3,448,080 3,137,159 3,137,159 3,616,297 3,892,862 4,596,159 3,622,053 3,183,595 3,286,705 Interest and fiscal charges 3,259,024 1,836,218 1,421,600 1,421,600 931,079 1,275,957 1,120,518 949,318 1,000,307 823,907 Capital outlay 9,956,103 6,466,084 5,489,617 5,489,617 21,016,808 7,221,346 9,328,278 5,146,742 4,798,070 7,891,788 Total expenditures 149,715,682 142,761,144 146,761,S30 146,761,530 160,624,944 144,684,468 149,450,436 153,234,708 166,174,022 165,17S,679 Excess(deficiency)of revenues over expenditures (7,393,667) (3,865,404) (3,784,809) (3,784,809) (12,674,372) 4,963,484 3,716,679 6,231,704 132,028 (512,152) Other financing sources(uses) Transfers in 9,602,095 7,893,879 7,056,932 7,056,932 9,734,572 9,207,856 9,887,627 7,721,661 8,749,296 16,980,511 Transfers out (10,235,909) (8,357,887) (1,892,449) (1,892,449) (10,002,772) (10,055,346) (11,497,936) (9,283,847) (9,330,113) (13,218,616) Proceeds from borrowing 2,470,000 - 11,932,046 11,932,046 16,761,300 2,090,000 - - 8,603,699 - Proceeds from the sale of capital assets 1,210,046 1,398,936 497,833 497,833 110,533 268 97,255 128,976 - 92,353 Issuance of long-term debt - - - - - - - - - Payments to advance refunding escrow agent (2,456,207) (6,015,112) (6,015,112) - (2,162,163) (7,741,363) Bond premium(discount) 40,945 80,175 780,670 Total other financing sources(uses) 590,025 934,928 11,579,250 11,579,250 16,644,578 (839,210) (1,513,054) (1,433,210) 1,062,189 3,854,248 Net change in fund balances $ (6,803,642) _L(2,930,476) $ 7,794,441 $ 7,794,441 $ 3,970,206 $ 4,124,274 $ 2,203,625 $ 4,798,494 $ 1,194,217 $ 3,342,096 Debt service as a percentage of noncapital expenditures 3.6% 3.7% 3.1% 3.1% 2.8% 3.6% 3.8% 3.0% 2.5% 2.6% 191 CITY OF LANSING Table 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (UNAUDITED) Taxable Assessed Value Ratio of Total Industrial and Assessed Commercial Total Taxable to Total Subject to Assessed Total Direct Estimated Estimated Year Real Personal Act 198 Agricultural Developmental Value Tax Rate Actual Value Actual Value 2011 $ 1,407,920,589 $ 199,543,400 $ 839,505,560 $ $ $ 2,446,969,549 15.70 $ 4,595,182,662 53.3% 2012 1,387,390,250 183,233,681 726,967,400 2,297,591,331 15.70 4,177,384,562 55.0% 2013 1,232,109,181 182,543,900 673,887,300 151,900 2,088,692,281 19.70 4,177,384,562 50.0% 2014 1,152,931,800 182,024,000 666,477,900 151,900 2,900 2,001,588,500 19.70 4,002,817,000 50.0% 2015 1,144,848,592 183,420,400 758,406,830 158,100 2,900 2,086,836,822 19.70 4,173,673,644 50.0% 2016 1,162,708,909 196,143,891 806,360,800 175,600 2,900 2,165,392,100 19.70 4,330,784,200 50.0% 2017 1,285,584,500 144,076,700 837,758,400 172,500 - 2,267,592,100 19.70 4,535,184,200 50.0% 2018 1,325,754,900 131,924,900 892,135,800 180,000 2,349,995,600 19.70 4,699,991,200 50.0% 2019 1,422,412,200 143,567,100 1,000,797,500 185,300 2,566,962,100 19.70 5,133,924,200 50.0% 2020 1,537,030,826 157,132,900 1,143,059,850 211,800 2,837,435,376 19.70 5,674,870,752 50.0% Source: Lansing City Assessor 192 CITY OF LANSING Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) (RATE PER$1,000 OF ASSESSED VALUE) City of Lansing Overlapping Rates Totals Total State Year Ended Operating Service City Schools County Education Other(2) December 31, Tax Year Millage Millage Millage Millage(1) Millage Tax College Millage Millage Total 2011 2010 15.44 .26 15.70 19.95 8.84 6.00 3.81 9.93 64.23 2012 2011 15.44 .26 15.70 21.44 8.85 6.00 3.81 9.96 65.76 2013 2012 19.44 .26 19.70 21.73 9.49 6.00 3.81 9.96 70.69 2014 2013 19.44 .26 19.70 21.91 9.50 6.00 3.81 9.96 70.88 2015 2014 19.44 .26 19.70 21.77 10.20 6.00 3.81 9.96 71.44 2016 2015 19.44 .26 19.70 21.83 9.83 6.00 3.81 9.96 71.13 2017 2016 19.44 .26 19.70 22.57 10.06 6.00 3.81 9.96 72.10 2018 2017 19.44 .26 19.70 22.60 10.07 6.00 3.81 11.25 73.43 2019 2018 19.44 .26 19.70 22.50 11.34 6.00 3.81 11.26 74.61 2020 2019 19.44 .26 19.70 25.38 11.34 6.00 3.81 9.97 76.20 (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 193 CITY OF LANSING Table 7 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) 2020 2011 Taxable Taxable Assessed Percent Assessed Percent Taxpayer Valuation Rank of Total Valuation Rank of Total Consumers Energy $ 46,076,843 1 2.16% $ 23,091,635 3 0.98% General Motors LLC 41,505,761 2 1.94% 81,853,800 1 3.49% Jackson National Life Insurance Company 37,280,474 3 1.75% 33,218,050 2 1.42% Lansing Properties LLC 24,590,660 4 1.15% General Motors Corp. 23,332,027 5 1.09% Phoenix Development Partners LLC 18,353,814 6 0.86% Lansing Retail Center LLC 12,170,056 7 0.57% 11,231,500 6 0.48% McLaren Health Care Corporation 11,878,066 8 0.56% Phoenix Development Partners II LLC 8,768,893 9 0.41% Eyde Knapp Development LLC 8,699,322 10 0.41% Demmer Corporation 15,900,500 4 0.68% Comcast of Michigan LLC 12,210,500 5 0.52% State of Michigan 10,044,300 7 0.43% Blue Cross Blue Shield of Michigan 8,988,200 8 0.38% Heart of the City Assoc 7,921,400 9 0.34% Sprint Spectrum L.P. 7,150,200 10 0.30% $ 232,655,916 10.90% $ 211,610,085 9.02% Source: Lansing City Assessor 194 CITY OF LANSING Table 8 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Collection Percent (B) (A) of Current of Levy Collection Percent Total Year's Taxes Collected Subsequent of Total Tax Fiscal Adjusted During During to the Year of Total Collections Year Year Tax Levy Year Levied Year Levied Tax Levy Collections to Tax 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 38,307,862 99.94% 2015 2016 38,538,226 38,461,152 99.80% 52,758 38,513,910 99.94% 2016 2017 38,431,072 38,370,929 99.84% 50,344 38,421,273 99.97% 2017 2018 39,234,692 39,232,925 100.00% 67,348 39,300,273 100.17% 2018 2019 40,231,255 40,203,313 99.93% 42,639 40,245,952 100.04% 2019 2020 42,128,760 42,123,931 99.99% 17,175 42,141,106 100.03% 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 195 CITY OF LANSING Table 9 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities Business-Type Activities General Installment Special General Percentage Obligation Purchase Assessment Obligation Revenue Lease Total Primary of Personal Per Year Bonds Contracts Bonds Loans Bonds Bonds Purchases Loans Government Income Capita Population(1) 2011 $ 27,804,224 $ 9,564,693 $ $ 779,580 $ 197,000,901 $ 33,209,092 $ $1,574,209 $ 269,932,699 12.86% 2 $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% 3 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% 3 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% 3 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% 3 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% 3 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% 3 1,732 117,400 2018 15,325,818 12,289,396 7,476,545 136,938,668 17,258,138 808,500 190,097,065 7.13% 3 1,625 116,986 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 2020 11,792,231 10,230,073 7,000,422 112,290,745 12,525,000 352,897 154,191,368 6.08% 3 1,304 118,210 (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 196 CITY OF LANSING Table 10 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (UNAUDITED) Ratio of Fiscal Debt Debt Net Bonded Net Year Taxable Service Payable From Debt to Bonded Ended Assessed Gross Bonded Monies Restricted Net Bonded Taxable Debt per June 30, Population(1) Value(3) Debt(2) Available Revenues Debt Value Capita 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 2,336,064,001 152,264,486 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 14,896,059 0.0072 127 2020 118,210 2,837,435,376 124,082,976 29,361 112,290,745 11,792,231 0.0042 103 (1) Source: 2000 and 2010 Census by the U.S.Census Bureau(www.census.gov/quickfacts/lansingcitymichigan) (2) 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 197 CITY OF LANSING Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30,2020 (UNAUDITED) Overlapping Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Net direct- City $ 81,532,491 100.00% $ 81,532,491 Share of County-issued bonds Drain Commission 989,069 100.00% 989,069 Other Overlapping Debt Eaton Intermediate School District 3,175,000 0.88% 27,940 Ingham Intermediate School District 1,002,000 21.87% 219,137 Waverly School District 13,435,000 0.26% 34,931 Lansing School District 104,075,000 79.34% 82,573,105 East Lansing School District 102,413,377 5.34% 5,468,874 Holt School District 36,580,895 0.98% 358,493 Ingham County 40,616,535 25.35% 10,296,292 Eaton County 19,088,071 1.92% 366,491 Clinton County 322,626 0.28% 903 Lansing Community College 98,220,000 17.92% 17,601,024 Okemos School District 32,089,033 4.39% 1,408,709 Mason School District 35,655,000 1.34% 477,777 Grand Ledge School District 84,665,000 1.73% 1,464,705 Total Overlapping $ 121,287,450 Total Direct and Overlapping $ 202,819,941 Sources: Municipal Advisory Council Note: Overlapping debt percentages are apportioned based upon relative assessed values. 198 CITY OF LANSING Table 12 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) Legal Debt Margin Calculation for Fiscal Year 2020 Assessed value,real and personal property $ 2,566,962,100 Legal debt margin Debt limitation-10 percent of total valuation 256,696,210 Debt applicable to limit Total City Bonded Debt 147,452,402 City Share: Drain Commission-County Issued 989,065 TIF Supported Bonds 59,382,491 Lansing Board of Water and Light 627,240,000 835,063,958 Less: Michigan Transportation(MTF)Bonds $ (1,125,000.00) Lansing Board of Water and Light (627,240,000.00) Brownfield Redevelopment Authority Bonds (19,260,000.00) Sewage Disposal Revenue Bonds (12,525,000) Pollution Abatement(CSO Project)Bonds (92,392,402) Share of County-issued bonds (989,065) (753,531,467) Total net debt applicable to limit 81,532,491 Legal debt margin $ 175,163,719 - - - - - - - - - - Debt limit $ 256,696,210 $ 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 Total net debt applicable to limit 81,532,491 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 Legal debt margin $ 175,163,719 $ 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 Total net debt applicable to the limit as a percentage of debt limit 31.76% 34.96% 37.37% 36.39% 39.92% 43.78% 45.37% 43.97% 39.52% 37.52% 199 CITY OF LANSING Table 13 PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(l) Debt Service Principal Interest Total Coverage (2) 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 2020 37,641,473 19,568,461 18,073,012 1,550,000 613,188 2,163,188 8.35 (1) Operating expenses less depreciation (2) Coverage is defined as net revenue available for debt service divided by debt service requirements 200 CITY OF LANSING Table 14 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Lansing Personal Per Capita Median School District Unemployment Labor Year Population (1) Income Income (1) Age 1 Enrollment(2) Rate (3) Force 3 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 2020 118,210 2,536,936,212 22,196 31.90 10,661 16.0% 63,541 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 201 CITY OF LANSING Table 15 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS PRIOR (UNAUDITED) 2020 2011 Percentage Percentage of of Company Employees (1) Rank Employment(2) Employees (1) Rank Employment(2) STATE OF MICHIGAN 14,390 1 5.97% 14,355 1 6.50% MICHIGAN STATE UNIVERSITY 10,253 2 4.25% 11,218 2 5.08% SPARROW HEALTH SYSTEM 7,600 3 3.15% 7,400 3 3.35% GENERAL MOTORS 4,549 4 1.89% 3,688 4 1.67% AUTO-OWNERS INSURANCE GROUP 3,145 5 1.30% 1,500 9 0.68% LANSING COMMUNITY COLLEGE 3,000 6 1.24% 3,180 5 1.44% MCLAREN HEALTH 2,578 7 1.07% PECKHAM 2,510 8 1.04% 1,400 10 0.63% JACKSON NATIONAL LIFE INS CO 2,500 9 1.04% DART CONTAINER CORP 2,000 10 0.83% INGHAM REGIONAL MEDICAL CENTER 2,500 6 1.13% LANSING SCHOOL DISTRICT 2,106 7 0.95% MEIJER 2,000 8 0.91% Greater Lansing metropolitan area employment 241,100 220,759 (1) Data is representative of the Greater Lansing Region (2) Source:www.purelansing.com/Workforce&Data>Top Employers for 2020 data 202 CITY OF LANSING Table 16 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Full-time Equivalent Employees 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Function/Program General government City council 11 10 10 10 10 10 10 10 10 10 Mayor's office 5 5 5 5 5 6 6 7 (G) 7 11 City clerk 6 5 5 5 5 5 5 5 6 6 54-A district court 50 48 43 43 46 45 45 45 45 45 City attorney's office 11 10 10 10 11 11 11 11 12 11 City TV 2 2 2 2 2 2 2 2 2 3 Internal auditor 1 1 1 1 1 1 1 1 1 1 Human resources 11 9 9 10 10 12 12 11 11 11 Information technology 14 10 10 11 11 11 11 16 16 15 Finance Accounting/budget/purchasing 14 13 10 10 9 8 (E) 8 8 8 7 Treasury/income tax 11 10 20 9 9 10 11 11 13 16 Assessing 11 11 11 11 11 11 11 11 11 Property management 20 18 - (B) - - - - - - - Fleet management 29 27 - (B) 196 179 125 127 130 132 133 138 142 147 Planning&neighborhood development Administration 2 2 2 2 2 2 2 2 2 3 Code compliance 16 15 15 - (D) - - - 14 (F) 15 19 Building safety 15 13 12 13 13 13 13 13 13 15 Planning 5 4 4 4 4 4 4 3 (G) 4 4 Development 9 9 9 11 10 10 9 9 9 7 Parking&transportation 20 (C) 20 20 15 14 14 14 14 14 19 66 63 62 45 43 43 42 55 57 67 Neighborhood&Citizen Engagement 1 (G) 5 5 Police 327 260 229 (C) 234 (D) 239 239 240 241 243 239 Fire 207 179 180 188 181 181 181 181 182 186 Code Compliance 14 (D) 14 14 14 - (F) 207 179 180 202 195 195 195 181 182 186 Public services Administration&engineering 21 21 19 19 19 20 20 20 21 22 Operations&maintenance 135 (C) 121 120 117 (D) 117 117 117 118 118 113 Service garage - - - - - - - - - 1 Wastewater 41 41 41 41 41 41 41 42 42 42 Property Management - - 18 (B) 18 18 18 16 16 16 19 Fleet Management 27 (B) 27 27 26 30 30 30 29 197 183 225 222 222 222 224 226 227 226 Human relations&community services 5 5 5 6 7 7 8 9 10 11 Parks&recreation Administration&design 5 5 5 6 6 6 6 6 6 6 Grounds&forestry (A) - - - - - - - - - - Leisure&special recreation 12 10 8 6 6 6 6 6 6 10 Cemeteries 1 1 1 1 1 1 1 1 1 1 Golf/ice arena 4 3 3 3 3 3 3 3 22 19 17 16 16 16 16 16 13 17 Total 1,020 888 843 852 852 854 858 867 879 898 Source:The City of Lansing The following restructuring of departments have occurred: (A)Grounds Maintenance positions were moved from Parks&Recreation and Planning&Neighborhood Development and consolidated with Public Service staff. (B)Fleet and Property Management were moved from the Finance Department to the Public Service Department (C)On June 27,2012,911 Dispatch employees were transferred from the City to Ingham County. (D)Code Compliance(14 positions)were transferred from ED&P to Fire;four(4)positions to Police,and one(1)position to Public Service for FY 2014. (E)Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. (F)Code Compliance was transferred from Fire to ED&P. (G)One(1)position was transferred from Human Resources to Mayor's Office and one(1)position was transferred from ED&P to N&CE in FY 2018. 203 CITY OF LANSING Table 17 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public safety Fire department responses 16,974 17,093 18,444 19,427 20,170 21,115 21,902 22,768 22,389 21,904 EMS related 14,628 14,851 15,918 16,235 17,376 18,275 18,827 19,264 19,655 18,975 Fire related 2,346 2,242 2,526 3,012 2,794 2,840 3,075 3,063 2,734 2,929 Police department responses 78,112 74,058 73,087 76,855 79,331 71,468 82,722 107,379 84,869 80,449 Arrests 8,858 8,043 7,196 5,656 4,510 3,880 5,710 4,507 4,418 3,524 Traffic violations 15,585 8,829 14,905 7,756 10,781 7,334 9,385 6,496 6,963 5,054 Public works Potholes filled 32,918 30,116 33,155 55,193 53,281 53,488 53,332 54,773 2,589 1,042 Streets resurfaced(miles) 9.0 5.0 6.0 4.6 4.0 8.8 8.7 6.0 4.6 11.0 Recreation Recreation participation 66,254 66,836 55,122 50,859 122,639 101,335 98,978 120,245 93,264 29,313 Pavilion rentals 161 198 199 185 206 242 180 202 222 78 Sewage disposal Average amount processed daily(gal) 12.83 million 12.82 million 14.75 million 14.49 million 13.28 million 15.46 million 16.32 million 14.45 million 16.60 million 14.18 million Parking system Average number of monthly permits 3,122 2,735 2,718 2,891 3,077 3,218 2,581 3,310 2,500 869 Parking tickets issued 45,176 41,829 38,127 34,373 30,888 32,990 33,492 32,587 37,105 16,481 Cemetery Lots sold 143 115 113 93 138 115 162 88 103 121 Golf Annual rounds played 26,084 28,560 25,554 22,786 22,998 13,325 14508 20,492 - - Garbage and rubbish Yards sent to landfill 20,334 18,705 17,985 18,829 19,667 20,115 20,007 20,492 20,957 22,825 Recycling Recycled goods sold(tons) 2,446 3,149 3,562 5,075 5,691 5,940 5,834 5,593 5,407 5,322 Yards composted 15,725 20,413 21,832 25,260 21,685 24,413 24,223 20,031 21,198 14,262 Source: The City of Lansing,Michigan (1) The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 204 CITY OF LANSING Table 18 CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public safety Police stations 3 3 2 2 2 2 2 2 2 2 2 Police patrol units 61 58 60 60 61 60 60 60 60 58 58 Fire stations 9 8 6 6 6 6 6 6 6 8 8 Emergency Vehicles 0 0 0 0 0 0 0 0 0 55 27 Public works Streets(miles) 410.63 410.80 407.80 411.00 411.00 414.00 414.00 414.00 414.00 413.00 413.23 Traffic signals 203 208 204 200 200 200 200 200 200 184 206 Recreation Park acreage 2,422.63 2,422.63 2,434.88 2,364.85 2,364.85 2,363.45 2,134.26 2,134.26 2,017.56 2,174 1,659 Playgrounds 71 71 73 75 72 72 74 74 74 76 77 Baseball/softball fields 61 61 61 61 61 47 25 25 25 22 22 Soccer/football fields 6 6 6 6 6 6 14 15 15 15 16 Community centers 4 4 4 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 357.2 359 359 359 359 361 361 361 363 364 365 Storm sewers(miles) 232.6 234 234 234 234 235 235 235 237 238 239 Combined sewers(miles) 190.5 187.6 187.6 188 188 188 188 188 187 185 185 Parking system Ramps 4 4 4 4 4 4 4 4 4 3 3 Lots 16 15 15 18 17 17 16 16 16 16 16 Meters 2,493 2,452 2,452 2,452 2,452 2,166 2,166 2,166 2,166 2166 500 On-street Pay Stations 134 Cemetery Number of cemeteries 3 3 3 3 3 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 1 1 1 1 0 Acreage 115 115 115 115 115 115 115 115 115 115 0 Garbage and rubbish Refuse collection trucks 18 22 19 17 17 17 14 14 16 8 7 Recycling Recycling trucks 10 9 7 7 7 7 5 5 7 8 8 Compost trucks 0 0 0 0 0 0 0 0 0 8 7 Sources:The City of Lansing,Michigan 205 M a n e r Maner Cosierisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,MI 4891 T.517 323 750 T500 C:ertilicil Public AC.COLI[llit[;Lti F.5173236346 Business&-Technology Advisors www.manercpa.com INDEPENDENT AUDITOR'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENTA UDITING STANDARDS Honorable Mayor and Members of the City Council City of Lansing,Michigan We have audited,in accordance with the auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards issued by the Comptroller General of the United States,the financial statements of the 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, 2020, and the related notes to the financial statements, which collectively comprise the City's basic financial statements and have issued our report thereon dated December 18,2 02 0. Internal Control Over Financial Reporting In planning and performing our audit of the financial statements,we considered the City's internal control over financial reporting (internal control) as a basis for designing audit procedures that are appropriate in the circumstances for the purpose of expressing our opinions on the financial statements,but not for the purpose of expressing an opinion on the effectiveness of the City's internal control. Accordingly, we do not express an opinion on the effectiveness of the City's internal control. Our consideration of internal control was for the limited purpose described in the preceding paragraph and was not designed to identify all deficiencies in internal control that might be material weaknesses or significant deficiencies and therefore, material weaknesses or significant deficiencies may exist that were not identified. However, as described below,we identified certain deficiencies in internal control we consider to be material weaknesses and significant deficiencies. A deficiency in internal control exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent, or detect and correct, misstatements on a timely basis. A material weakness is a deficiency,or a combination of deficiencies,in internal control such that there is a reasonable possibility that a material misstatement of the entity's financial statements will not be prevented or detected and corrected on a timely basis. We consider the following deficiencies to be material weaknesses: 2020-001 MATERIAL JOURNAL ENTRIES PROPOSED BY AUDITORS Condition: Material journal entries for the proper recognition of various financial statement amounts within the City's accounting records were proposed by the auditors. In addition,we received several revisions to the City's trial balance(the final version coming in early December 2020),each of which contained material corrections to previous trial balances. Criteria: Management is responsible for establishing,maintaining,and monitoring internal controls,and for the fair presentation in the financial statements of financial position,results of operations, and cash flows, including the recording of all appropriate journal entries to assure the trial balance from which the financial statements are prepared, reflect amounts that are in conformity with U.S. generally accepted accounting principles. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts, has reduced in size due to budget reductions, staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to journal entries not being completed or reviewed timely. Effect: The City's accounting records were initially misstated by amounts material to the financial statements. Necessary adjustments were brought to the attention of management and were subsequently recorded in the City's general ledger. Recommendation: We recommend that the City take steps to assure that material journal entries are not necessary at the time future audit analysis is performed. Corrective Action Response: Management of the City will continue to review auditor recommendations/ corrections and internal procedures related to the identification and correction of potential errors in the financial statements prior to the beginning of future audits. The Finance team will meet to review adjustments made to this year's financial statements and will develop a plan to address the most significant issues in a timelier manner going forward. Within budget constraints, Management will look to increase staffing levels and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various account balances. 2020-002 BANK RECONCILIATIONS Condition: Throughout the year,the City failed to complete bank reconciliations on a timely basis for most of its cash accounts. Several individual bank account reconciliations were not completed for the entire fiscal year until approximately four months after fiscal year end while audit fieldwork was ongoing. It was also noted that while the City has made improvements from prior years in this area, several accounts still had multiple old outstanding reconciling items present that had not yet been investigated and corrected by the City. Criteria: Completion of timely bank account reconciliations and review thereof, represent an important control used to detect and prevent misstatements and errors. Such reconciliations should be completed and reviewed monthly for all accounts and all reconciling items investigated and resolved as quickly as possible. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts,has reduced in size due to staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to reconciliations not being completed or reviewed timely. Effect: As a result of this condition, all activities that have cash transactions have an increased risk that misstatements in the accounting records, whether caused by error or fraud, would not be detected and corrected on a timely basis. 2020-02 BANK RECONCILIATIONS (concluded) Recommendation: We recommend the City take steps to assure all bank reconciliations are completed and tied to the general ledger in a timely fashion and all differences be resolved in a timely manner. Correction Action Response: Management of the City will work on several areas of improvement to alleviate this issue. a. We will continue to review the need for the various bank accounts that have been established over the years with the view toward more consolidation. b. We will assign the responsibility for each of the bank accounts to various Finance staff members, including using City Treasury staff, who will be responsible for reconciling those statements in a timely manner. c. We will review the old outstanding reconciling items with the view toward clearing them up before the end of the next fiscal year. d. We will look to increase staffing levels in Finance and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various bank statements. 2020-003 PENSION AND OPEB ACTIVITY Condition: Actuarial valuations for the pension and other postemployment benefit(OPEB)plans,the GASB 67/68 related information for the defined benefit pension plans,and the GASB 74/75 related information for the other postemployment benefit plans were not completed until December 2020, and the related account balances were not adjusted until the end of audit fieldwork. Also, as of the completion of audit fieldwork,the City had not verified that pension census data and other information provided to the Actuary were properly recorded by the Actuary. Also, it appeared the City may not be in full compliance with P.A. 202 of 2017 in regards to the length of time the Actuary has conducted the calculations without bidding of these services. We also attempted to verify the accuracy of the pension contributions (employer and employee) made to the respective plans during the year and we were unable to reconcile the amounts contributed back to any supporting data at the City and the contributions were only made annually to the plans. In addition, during our census data testing we noted that the census information for the retiree healthcare plans was contained in a manual spreadsheet that does not appear to be updated timely as we noted an instance where an employee was marked as active,but they no longer worked for the City and should have been shown as deferred. This same individual's entire file could not be located for us to perform other census testing on. Census data includes date of birth,date of hire,separation date,retirement date,service credits, final average salary, benefit multiplier, pensionable wages, accumulated employee contributions, and benefits selected. Finally, we noted that there was no documentation of an independent review over pension and OPEB benefit calculations after they are calculated by the Pension Office. Based on the information that we could analyze; these discrepancies did not materially impact the final valuations, or the amounts reported in the audited financial statements,but these systemic issues increase the risk that errors could occur that would materially affect the amounts reported in the financial statements and those errors would go undetected. 2020-003 PENSION AND OPEB ACTIVITY(concluded) Criteria: The City is required to obtain actuarial valuations and other reports for its various pension and other postemployment benefit (OPEB) plans each year. These valuations and other reports should be obtained far enough in advance to be audited and used to calculate amounts to be included in the audited financial statements in a timely fashion. Management is responsible for accurate and timely compilation of data necessary for the contracted actuary to process and complete reporting necessary for the proper reporting of pension and OPEB information in the annual financial statements and should assure all files are maintained as required. The City should also have proper segregation of duties in place regarding the preparation and review of census information and underlying reports that are essential for accurate and complete reporting of pension and OPEB information in the annual financial statements. P.A. 202 of 2017 has specific language that the City shall follow. Cause: Proper internal control procedures and related policies have not been developed and put in place by the City surrounding a multitude of aspects of the pension and OPEB activities under the control of the City. Effect: Without proper internal control procedures and related policies related to the pension and OPEB activity,there is a risk that material misstatements of the financial statements would go undetected. Recommendation: We recommend that the City take steps to assure that all data be submitted timely to the Actuary and the valuation and other reports returned be reconciled to the underlying submitted documentation and that they follow P.A. 202. We also recommend all pension/OPEB plan contributions be made on a monthly basis and the fiduciary plan statement be reconciled with the general ledger. The City should also assure that all employee related files be retained and available for audit purposes. We further recommend that internal control procedures be established to verify employee data so there is proper segregation of duties for calculating and approving benefits. Corrective Action Response: Management of the City will have discussions with the Chairs of the Retirement Boards and will develop an action plan to provide the Actuary with more timely information for preparation of the FY21 Actuarial Reports and we will evaluate the requirements of P.A. 202 of 2017,P.A. 314 of 1965, and other applicable Public Acts to ensure compliance and implement any necessary changes accordingly. Management will develop a procedure for calculating and remitting to the Plans on a quarterly basis rather than annually, the employee contributions net of fees paid. Management will work to develop internal control procedures to establish proper segregation of duties for calculating and approving benefits. Asignifcant deficiency is a deficiency,or a combination of deficiencies,in internal control that is less severe than a material weakness,yet important enough to merit attention by those charged with governance. We consider the following deficiencies described below to be significant deficiencies: 2020-004 RECONCILIATION OF CERTAIN REVENUE TRANSACTIONS Condition: During our analysis of water utility revenues that the Lansing BWL processes for the City,it was determined that BWL handles all aspects of water utility billings and collections and provides the City with "equity payments"for a portion of this activity. We were unable to verify the procedures performed by the City to reconcile and verify the accuracy of the amounts remitted to the City by BWL. Criteria: Sufficient internal controls should be in place so that all receipt transactions are adequately supported, reviewed, approved, and reconciled to assure inappropriate activity, whether intentional or unintentional,is mitigated. Cause: Specific internal controls over these revenue sources were not put in place by the City to account for and reconcile these transactions. 2020-004 RECONCILIATION OF CERTAIN REVENUE TRANSACTIONS (concluded) Effect: The City is susceptible to the potential of inappropriate transactions occurring or there being material misstatements to financial data as the internal controls and segregation of duties in these areas appear to not be sufficient. Recommendation: We recommend that the City evaluate all aspects of their accounting functions in this area and consider taking action to correct the above deficiency, such as implementing reconciliation processes for all material revenue streams coming into the City. A comparison and analysis of funds received from BWL with the City's expected collections should be conducted. Corrective Action Response: The City has started a process to verify that we are actually receiving revenue from BWL facilities (primarily the REO Cogeneration facility) and then will develop a process to verify the sewer revenue data. We will always rely on BWL water meter data since there is no direct metering of sanitary sewage volume by customer. We will set up a meeting with BWL to determine how we can get the necessary information to audit this revenue. 2020-005 RECONCILIATIONS OF ASSET AND LIABILITY ACCOUNTS Condition: We noted the City did not reconcile various material liability accounts to supporting documentation on a monthly basis and adjust the general ledger as needed. We also determined that the City had not recorded the assets and liabilities for certain activities under the control of the City in the general ledger. Criteria: The City is required to have a comprehensive accounting system to account for all financial information under its control. All activity under the control of the City must be included in the general ledger and ending asset and liability balances should be reconciled to supporting documentation on a monthly basis. Cause: Over the past several years,the City's Finance Department,who prepares the reconciliations of all accounts, has reduced in size due to budget reductions, staffing reductions and staffing turnover. These changes have placed a significant burden on the month and year end close processes,and have contributed to account analyses not being completed or reviewed in a timely manner. Effect: The City general ledger was incomplete prior to auditor proposed journal entries. There is a potential for material misstatement when material accounts are excluded from the general ledger or are not reconciled to supporting documentation on a periodic basis. Recommendation: We recommend all accounts be included in the general ledger and material accounts be reconciled monthly to supporting documentation. Corrective Action Response: Management of the City will continue to review auditor recommendations/ corrections and internal procedures related to the identification and correction of potential errors in the financial statements prior to the beginning of future audits. The Finance team will meet to review adjustments made to this year's financial statements and will develop a plan to address the most significant issues in a timelier manner going forward. Within budget constraints, Management will look to increase staffing levels and/or obtain temporary assistance earlier in the fiscal year,in order to perform more timely analyses of the various account balances. 2020-006 WRITTEN PROCEDURES AND POLICIES Condition: We noted that the City has not formally adopted certain written procedures and policies for the following areas: business continuation, electronic funds transfer,compensated absences,fund balance,debt management,and receivables/allowances. Criteria: Documenting specific policies and procedures allows employees to have a clearer understanding of management's expectations. Cause: Unknown. Effect: By not having a business continuation plan in place, the City has no formal plan in place if critical business processes were interrupted. Also,by not having an electronic fund transfer policy in place the City is not in compliance with Public Act 738 of 2002 that requires local units of government that utilize electronic transactions to adopt a written resolution. Finally, by not having policies that relate to debt management, compensated absences, receivables/allowances, and fund balance, all key and material financial areas of the City,there are no formal expectations set for employees by City management. Recommendation: We recommend the City develop and adopt the policies as noted above. Corrective Action Plan: We will review the items noted in this Finding and work with the appropriate department, OCA, and City Council to develop a comprehensive electronic fund transfer policy and other noted policies to properly address this Finding. 2020-007 PAYROLL PROCESS Condition: The City currently has procedures in place to ensure that employees are being paid at the correct rate and for the actual number of hours worked, but much of the data entry of this process is manual and payroll can be submitted and paid before applicable department management reviews and approves their departmental staff payroll data. While no inappropriate transactions were noted during our testing of the payroll process,this is a systemic issue. Criteria: Payroll should be reviewed and approved prior to disbursement of funds. Cause: Proper up-front detective internal controls over the payroll process were not put in place to prevent inaccurate amounts being paid to an employee. Effect: Unauthorized amounts could be disbursed either as a result of an error or fraud and those transactions could go undetected by management until"after the fact". Recommendation: We recommend an appropriate level of management,with no other access to the payroll process, be authorized to approve payroll for their respective departments. There also should be an overarching review of the payroll reports prior to each disbursement and that review should be documented. Corrective Action Response: The Human Resources Department, to whom Payroll reports, will work to implement appropriate corrective action over the payroll process noted above. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City's financial statements are free from material misstatement,we performed tests of its compliance with certain provision of laws,regulations, contracts,and grant agreements,noncompliance with which could have a direct and material effect on the financial statements. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed the following instance of noncompliance or other matters that is required to be reported under Government Auditing Standards. 2020-008 UNFAVORABLE BUDGET VARIANCES Condition: We noted that expenditures had exceeded the amounts appropriated for various areas of the General Fund and one Special Revenue Fund. Criteria: The Uniform Budgeting and Accounting Act requires the City to amend the original adopted budget "as soon as it becomes apparent that a deviation from the original general appropriations act is necessary and the amount of the deviation can be determined." The Act also states that"an administrative officer of the local unit shall not incur expenditures against an appropriation account in excess of the amount appropriated by the legislative body." Cause: The City did not adequately monitor expenditures in relation to budgeted amounts in the areas where the overages occurred. Effect: Having unfavorable budget variances as described above, the City is not in compliance with Public Act 621 of 1978,as amended. Recommendation: We recommend the City monitor expenditures against adopted budgets in all applicable funds and make appropriate budget amendments as needed. Corrective Action Response: The City always wants to have a tighter reign over revenue and expenditures. We budget conservatively in order to stay solvent,though we will monitor finances closer in the next year to be certain we are as close to actual as we feel comfortable projecting. For example,following last year's audit the City implemented a mid-year budget amendment rather than strictly waiting until the end of the fiscal year. City of Lansing's Responses to Findings The City's responses to the findings identified in our audit are described above. The City's responses were not subjected to the auditing procedures applied in the audit of the financial statements and,accordingly,we express no opinion on them. Purpose of this Report The purpose of this report is solely to describe the scope of our testing of internal control and compliance and the results of that testing,and not to provide an opinion on the effectiveness of the City's internal control or on compliance. This report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the entity's internal control and compliance. Accordingly,this communication is not suitable for any other purpose. December 18,2020 Maner Maner CQsterisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,M1 489 1 T.517 323 750 7500 Certified Public Accountants F.517 323 6346 Business&Technology Advisors www manercpa.com December 18,2020 Honorable Mayor and Members of the City Council City of Lansing,Michigan We have audited the 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),for the year ended June 30,2020. Professional standards require that we provide you with information about our responsibilities under generally accepted auditing standards and Government Auditing Standards,as well as certain information related to the planned scope and timing of our audit. We have communicated such information in our letter to City Council dated May 5, 2020. Professional standards also require that we communicate to you the following information related to our audit. Significant Audit Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. The significant accounting policies used by the City of Lansing are described in Note 1 to the financial statements. No new accounting policies were adopted,and the application of existing policies was not changed during the year ended June 30, 2020. We noted no transactions entered into by the City during the year for which there is a lack of authoritative guidance or consensus. All significant transactions have been recognized in the financial statements in the proper period. Accounting estimates are an integral part of the financial statements prepared by management and are based on management's knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimate affecting the governmental activities, the business-type activities, the aggregate discretely presented component units, the General Fund, the Sewage Disposal System Fund, the Municipal Parking System Fund,and the aggregate remaining fund information was: Management's calculation of the fair market value of pooled investments, which is defined as the amount that the City could reasonably expect to receive for an investment in a current sale between a willing buyer and a willing seller, is generally measured by quoted market prices. The City's investments are carried at fair market value. Management's calculation of the percentages for the allowance for uncollectible receivable balances is based on past experience and future expectation for collection of various account balances. Management's calculation of the income tax receivable balance is based on past experience utilizing the first 45 days collections of income tax withholdings. The most sensitive estimates affecting the governmental activities, the business-type activities, the aggregate discretely presented component units,the Sewage Disposal System Fund,the Municipal Parking System Fund, and the aggregate remaining fund information were: Management's calculation of depreciation expense for the current period is based on an estimate of the useful lives of the capital assets. Management's calculation of the net pension asset and changes therein was based on actuarial assumptions and the use of a specialist(actuary). Management's calculation of the percentages for current and noncurrent compensated absence payments is based on an estimate of the percentage of employees'use of compensated absences. Management's calculation of the net other post-employment benefits liability is calculated using the individual entry age actuarial method of calculation based upon certain actuarial assumptions. The most sensitive estimate affecting the governmental activities and the aggregate remaining fund information was: Management's calculation of the liability for uninsured risks of loss, including incurred but not reported claims based on an estimate of reported claims and calculation provided by the City's third-party administrators. The most sensitive estimate affecting the Sewage Disposal System Fund, the Municipal Parking Fund, and business-type activities was: Management's calculation of the leases receivable balances is based on past experience and future estimates of lease collections. We evaluated the key factors and assumptions used to develop the estimations in determining that they are reasonable in relation to the financial statements taken as a whole. The financial statement disclosures are neutral,consistent,and clear. Difficulties Encountered in Performing the Audit We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements For purposes of this communication, professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that we believe are trivial, and communicate them to the appropriate level of management. Further, professional standards require us to also communicate the effect of uncorrected misstatements related to prior periods on the relevant classes of transactions, account balances or disclosures,and the financial statements as a whole and each applicable opinion unit. In addition, professional standards require us to communicate to you all material, corrected misstatements that were brought to the attention of management as a result of our audit procedures. The material misstatements detected as a result of audit procedures and corrected by management are described in connection with our report on internal control over financial reporting. 2 Disagreements with Management For purposes of this letter, a disagreement with management is a financial accounting, reporting, or auditing matter,whether or not resolved to our satisfaction,that could be significant to the financial statements or the auditor's report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the management representation letter dated December 18,2020. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a "second opinion" on certain situations. If a consultation involves application of an accounting principle to the City's financial statements or a determination of the type of auditor's opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. OtherAudit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the City's auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Other Matters We applied certain limited procedures to the management's discussion and analysis, budgetary comparison information,and the historical pension and other post-employment benefits supplementary information,which are required supplementary information(RSI)that supplement the basic financial statements. Our procedures consisted of inquiries of management regarding 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 did not audit the RSI and do not express an opinion or provide any assurance on the RSI. We were engaged to report on the combining and individual nonmajor fund financial statements and budgetary comparison schedules, which accompany the financial statements but are not RSI. With respect to this supplementary information, we made certain inquiries of management and evaluated the form, content, and methods of preparing the information to determine that the information complies with accounting principles generally accepted in the United States of America,the method of preparing it has not changed from the prior period,and the information is appropriate and complete in relation to our audit of the financial statements. We compared and reconciled the supplementary information to the underlying accounting records used to prepare the financial statements or to the financial statements themselves. We were not engaged to report on the introductory and statistical sections, which accompany the financial statements but are not RSI. We did not audit or perform other procedures on this other information,and we do not express an opinion or provide any assurance on it. 3 Restriction on Use This information is intended solely for the use of the City Council of the City of Lansing and management of the City of Lansing and is not intended to be,and should not be,used by anyone other than these specified parties. Very truly yours, 4 CITY OF LANSING, MICHIGAN COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED JUNE 30, 2020 � S j ti G Andy Schor, Mayor Prepared by: Department of Finance Finance Director Robert J.F. Widigan Controller Jeffery D. Scharnowske TABLE OF CONTENTS Page INTRODUCTORY SECTION................................................................................................................................................................1 Electedand Appointed Officers.......................................................................................................................................................2 Letterof Transmittal.........................................................................................................................................................................3-7 Tableof Organization..........................................................................................................................................................................8 FINANCIALSECTION...........................................................................................................................................................................9 INDEPENDENTAUDITOR'S REPORT.......................................................................................................................................11-13 MANAGEMENT'S DISCUSSION AND ANALYSIS..................................................................................................................15-25 BASIC FINANCIAL STATEMENTS.................................................................................................................................................27 Government-wide Financial Statements Statementof Net Position.....................................................................................................................................................30-31 Statementof Activities..............................................................................................................................................................32 Fund Financial Statements Governmental Funds BalanceSheet............................................................................................................................................................................36 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position................37 Statement of Revenues,Expenditures,and Changes in Fund Balances..........................................................38 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances of Governmental Funds to the Statement of Activities..........................................................39 Proprietary Funds Statementof Net Position...................................................................................................................................................42 Statement of Revenues,Expenses,and Changes in Fund Net Position............................................................43 Statementof Cash Flows...................................................................................................................................................44-45 Fiduciary Funds Statement of Fiduciary Net Position...............................................................................................................................48 Statement of Changes in Fiduciary Net Position.......................................................................................................49 Discretely Presented Component Unit Financial Statements Combining Statement of Net Position............................................................................................................................54 Combining Statement of Activities..................................................................................................................................55 Notesto Financial Statements..............................................................................................................................................57-118 REQUIRED SUPPLEMENTARY INFORMATION.....................................................................................................................119 Schedule of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual........................120-121 Employees'Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................122 Scheduleof Contributions......................................................................................................................................................123 Schedule of Investment Returns..........................................................................................................................................124 TABLE OF CONTENTS Pape REQUIRED SUPPLEMENTARY INFORMATION (concluded) Police and Fire Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................125 Scheduleof Contributions......................................................................................................................................................126 Schedule of Investment Returns..........................................................................................................................................127 Employees' Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................128 Scheduleof Contributions......................................................................................................................................................129 Schedule of Investment Returns..........................................................................................................................................130 Police and Fire Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................131 Scheduleof Contributions......................................................................................................................................................132 Schedule of Investment Returns..........................................................................................................................................133 Note to Required Supplementary Information.................................................................................................................134 OTHER SUPPLEMENTARY INFORMATION............................................................................................................................135 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet- Nonmajor Governmental Funds..............................................................................138 Combining Statement of Revenues, Expenditures,and Changes in Fund Balance-Nonmajor Governmental Funds................................................................................................................139 Combining Balance Sheet- Nonmajor Special Revenue Funds.....................................................................142-143 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Special Revenue Funds.....................................................................................................144-145 Schedule of Revenues,Expenditures,and Changes in Fund Balances -Budget and Actual.............146-155 Combining Balance Sheet- Nonmajor Debt Service Funds.................................................................................158 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Debt Service Funds.................................................................................................................159 Combining Balance Sheet- Nonmajor Capital Projects Funds...........................................................................162 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Capital Projects Funds...........................................................................................................163 Combining Balance Sheet- Nonmajor Permanent Funds....................................................................................166 Combining Statement of Revenues, Expenditures,and Changes in Fund Balances-Nonmajor Permanent Funds....................................................................................................................167 Nonmajor Enterprise Funds Combining Statement of Net Position...........................................................................................................................170 Combining Statement of Revenues,Expenses,and Changes in Fund Net Position...................................171 Combining Statement of Cash Flows.............................................................................................................................172 Internal Service Funds Combining Statement of Net Position...........................................................................................................................174 Combining Statement of Revenues, Expenses,and Changes in Fund Net Position...................................175 Combining Statement of Cash Flows.............................................................................................................................176 Pension and Other Postemployment Benefit Trust Funds Combining Statement of Fiduciary Net Position......................................................................................................178 Combining Statement of Changes in Fiduciary Net Position...............................................................................179 Agency Fund Combining Statement of Changes in Fiduciary Assets and Liabilities............................................................182 TABLE OF CONTENTS Page STATISTICAL SECTION (UNAUDITED)....................................................................................................................................183 Table 1 Net Position by Component...........................................................................................................................................187 2 Changes in Net Position.............................................................................................................................................188-189 3 Fund Balance,Governmental Funds..........................................................................................................................190 4 Changes in Fund Balances of Governmental Funds............................................................................................191 5 Assessed Value and Estimated Actual Value of Taxable Property................................................................192 6 Direct and Overlapping Property Tax Rates..........................................................................................................193 7 Principal Property Taxpayers......................................................................................................................................194 8 Property Tax Levies and Collections.........................................................................................................................195 9 Ratios of Outstanding Debt by Type..........................................................................................................................196 10 Ratios of General Bonded Debt Outstanding.........................................................................................................197 11 Direct and Overlapping Governmental Activities Debt.....................................................................................198 12 Legal Debt Margin Information...................................................................................................................................199 13 Pledged-Revenue Coverage...........................................................................................................................................200 14 Demographic and Economic Statistics.....................................................................................................................201 15 Principal Employers.........................................................................................................................................................202 16 Full-Time Equivalent City Governmental Employees by Function/Program..........................................203 17 Operating Indicators by Function/Program..........................................................................................................204 18 Capital Assets Statistics by Function/Program....................................................................................................205 INTRODUCTORY SECTION 1 CITY OF LANSING,MICHIGAN LANSING CITY GOVERNMENT Fiscal Year Ended June 30,2020 MAYOR Andy Schor CITY COUNCIL Peter Spadafore, Council President, At Large Adam Hussain, Council Vice President, 3rd Ward Carol Wood, At Large Kathie Dunbar, At Large Patricia Spitzley, At Large Brandon Betz, 1 st Ward Jeremy Garza, 2nd Ward Brian T. Jackson, 4th Ward CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson, Chief Judge Stacia Buchanan Cynthia M. Ward Kristen D. Simmons OFFICERS Chief Information Officer........................................................................... Christopher Mumby Chief Strategy Officer................................................................................ Judy Kehler City Assessor............................................................................................ Sharon Frischman City Attorney.............................................................................................. James Smiertka City Treasurer............................................................................................ Desiree Kirkland Court Administrator.................................................................................... Anethia Brewer Deputy Mayor............................................................................................ Samantha Harkins Deputy Mayor of Operations/Chief of Staff................................................ Nicholas Tate Economic Development & Planning Director............................................ Brian McGrain Finance Director........................................................................................ Robert Widigan FireChief................................................................................................... Greg Martin Human Relations & Community Service Director....................................... Kimberly Coleman Human Resources Director....................................................................... Linda Sanchez-Gazella InternalAuditor.......................................................................................... Vacant Neighborhoods & Citizen Engagement...................................................... Andrea Crawford Parks & Recreation Director...................................................................... Brett Kaschinske PoliceChief............................................................................................... Daryl Green Public Service Director.............................................................................. Andrew Kilpatrick 2 y�N Sj�C FINANCE DEPARTMENT 124 W. Michigan Ave., 81h Floor Lansing, Michigan 48933 �I 517.483.4500 CHI Andy Schor,Mayor December 18, 2020 Council President Peter Spadafore and Council Members loth Floor City Hall Lansing, Michigan 48933-1694 Dear President Spadafore and Council Members, We, the Finance Department team, are pleased to submit the comprehensive annual financial report for the City of Lansing, Michigan, for the fiscal year ended June 30, 2020. 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 2019/2020 financial statements have been audited by Maner Costerisan, an independent firm of licensed, certified public accountants located within the Capital Region. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City for the fiscal year-end June 30, 2020, 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 Auditor 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 Michigan's Lower Peninsula within the northwestern corner of Ingham County and the northeastern corner of Eaton County. The City operates under a mayor/council form of government, where the Mayor serves as the chief executive of the City and is elected on an at-large basis to serve a four-year term. Lansing is a mature core city with a population of 118,210 according to the 2019 census estimates and offers a full range of services. During the fiscal year ended June 30, 2020 the City operated a police headquarters and precinct with 208 sworn police officers, eight fire stations with a fire protection force of 159, over 365 miles of sanitary sewers, 239 miles of storm sewers and 185 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 Et Public Facilities Authority, Tax increment Finance Authority, and the Brownfield Redevelopment Authority are reported as discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls. 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 Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance). The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year ended June 30, 2020 are discussed in the Management Discussion and Analysis (MDEtA), 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. Not later than the third Monday in May of each year, the City Council shall, by resolution, adopt a budget for the ensuing fiscal year. 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 City Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. 4 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, Western Michigan University Thomas M 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 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 Logistics Center and a regional stamping plant, automotive suppliers throughout the region, production of particle accelerators, and vaccine research and production. Within the City major taxpayers and employers include, but are not limited to, the health care sector - Sparrow Health Systems and McLaren Health Care Corporation, manufacturing - General Motors, research sector - Emergent BioSolutions and Niowave, Inc., and financial services and insurance - Jackson National Life and AF Group The Facility for Rare Isotope Beam (FRIB) on the campus of Michigan State University is now open to researchers from around the world. . This will enable scientific discovery of rare isotope properties, employ top nuclear physicists, and is expected to employ approximately 1,000 persons. Even before the FRIB was completed Niowave, Inc. established its operations in Lansing as a commercial spinoff from Michigan State University's nuclear cyclotron facility. Lansing serves as the cultural center for the region. Recent major investments have continued to revitalize Lansing and power the local economy. During the 2019 calendar year, the Lansing Economic Development Corporation (LEDC), working with Mayor Andy Schor's office and the Lansing City Council, gained approvals for 15 development projects. These 15 projects represent $311 million in private investment that will create 421 jobs and retain 25 jobs in Lansing. These new projects range in size from large to small and will continue to make Lansing a great place that offers the benefits of a big city with the affordability and convenience of a small town. Some notable business expansion and real estate projects that are attributed to the success of the City's economic development include: • The newly opened Capital City Market located at 600 East Michigan Avenue provides an urban grocery store to downtown Lansing. In addition to the new grocery store, the project provides a second hotel downtown and additional apartment units. • The Red Cedar Redevelopment project located at 203 S. Clippert is a $255 million development which includes student housing, multi-family apartments, parking, two hotels, an assisted living facility, retail space and restaurants. This project is expected to create 400 full-time jobs and 1,000 additional employment opportunities to the City. • The New McLaren Health Care Hospital located between Collins Road and US 127. This project will be a $600 million investment for the City and will serve as a core component of the area's medical- technology research corridor. The City continues to work with McLaren to repurpose its two existing facilities in South Lansing. • Redevelopment of the Farnum Building at 123 W. Allegan Street. This $20 million project will improve the current infrastructure and building conditions of the office building located adjacent to the state capitol building. The building has begun the leasing process and is expected to create 100 jobs in the City. • A 286-unit market rate multi-family apartment community to be built at 3600 Dunkel Road in Lansing. The $52 million project 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 Dunkel 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. 5 • Capital View Apartments (Formerly Oliver Towers), after years of standing empty, the property deteriorated to the point where it was too hazardous to even enter without wearing the proper hazmat clothing and breathing apparatus. Now with the use of the Lansing's Brownfield program, this challenging property has been transformed to house 92 apartment units and offers additional living options in the City's downtown. • Metro Place Apartments located on the former YMCA site, contains 145 apartment units to the downtown. This development brings new life to an underutilized site in downtown Lansing using the City's Brownfield program. Metro Place contributes significantly to the nearly 450 new downtown housing units coming online by 2022. These new housing developments provide an attractive range of housing options for new residents, which will contribute to improved economic vitality downtown. • The Former Temple Club Building, one of Old Town's most storied buildings, will undergo a $9 million developer-funded transformation into a modern mixed-use apartment building. The building will include retail and office space on the first floor and be fitted for 31 apartment units above. A two-story parking garage will be constructed next to the renovated building. • The $11 million Allen Place Development will see the rehabilitation of a building and a 3-story addition to create a comprehensive development that includes age-friendly and mixed-income housing totaling 21 units, commercial space totaling 24,000 sq. ft. In its commitment to regional partnerships, the City has contracted with the Lansing Economic Area Partnership (LEAP) since 2012. This arrangement allows for a regional based approach to economic development. From 2012-2019, LEAP has facilitated a total of $3.08 billion in project investments which created more than 7,000 jobs in the Greater Lansing area. As a result of the pandemic, LEAP is coordinating business relief resources and small business restart and relief funds, which were allocated to the Lansing region by Michigan Economic Development Corporation. Covid-19 Small Business Assistance In March 2020, the City was faced with adapting, responding, and meeting the challenging budgetary and economic needs of the COVID-19 pandemic. One of their local partners, The Lansing Regional Chamber of Commerce, developed the RELAUNCH Great Lansing Economic Rehabilitation Task Force, to create a strategy for restarting business operations in the Lansing area. The task force consists of business partners, community members, customers, and employees of local businesses. The intent of the task force is to restore and return to a thriving, robust regional economy while taking necessary safety precautions. When the COVID-19 pandemic hit, it became very clear that small businesses in Lansing were being impacted dramatically by the economic shutdown and shelter at home measures. The City of Lansing and the Lansing Economic Development Corporation (LEDC) quickly assessed the situation and used National Development Council guidelines to establish the Lansing Small Business Recovery Program. The LEDC authorized the creation of the COVID-19 Rescue Fund, which allocated $400,000 of LEDC funds to 46 small businesses located within the City of Lansing. Between the regional and local programs, 72 City of Lansing businesses were awarded $820,000 in grants or low interest loans within the first 60 day of the crisis. The LEDC conducted outreach and provided application assistance to help City of Lansing applicants become aware of the LEAP Restart program and submit the strongest applications possible. As a result of the program, $1,685,000 in grant funds was awarded to 140 City of Lansing small businesses and nonprofits. An Economic Recovery Resource Developer (ERRD) program partnership between the City and the LEDC was established to develop a response plan to collaborate with community partners and matching organizations with funding opportunities. The ERRD will also address funding equity and support of organizations representing and assisting disadvantaged businesses throughout the City. 6 In all, $400,000 of LEDC funds and $2,105,000 in funds distributed by LEAP have been awarded to City of Lansing small businesses and nonprofits in 2020, putting over $2.5 million into the hands of the City of Lansing's small business owners. Looking to 2021, through a partnership between the City's Department of Economic Development and Planning and the LEDC, $600,000 of the City's Community Development Block Grant (CDBG) allotment will be allocated the Lansing Small Business Recovery Program. These funds will provide further support to eligible Lansing small businesses continuing to struggle due to the pandemic. Facade Improvement Program In addition to development projects, the LEDC managed the City's Facade Improvement Program, which provides matching dollars to assist Lansing business owners in making improvements to the exterior of their commercial properties. This program assisted over 15 different businesses to make property improvements in highly visible and critical areas of the City in 2019. Commercial Corridor Improvement The LEDC also had a very successful year managing and creating Corridor Improvement Authorities (CIA) in Lansing. These authorities can use special financing tools to revitalize commercial corridors along key major streets in Lansing. Development and Finance Plans were written and approved by both the Saginaw Street and Michigan Avenue Corridor Improvement Authorities. Additionally, CIAs were created for both the South Martin Luther King Jr. Blvd and North Grand River Avenue, paving the way for the funding of public improvements along their respective commercial corridors. Acknowledgements 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 Controller Jeff Scharnowske, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. Cordially, Robert J.F. Widigan, Finance Director 7 Table of Organization Citizens of Lansing City Clerk City Council Mayor 54-A District Court Internal Audit City Attorney's Office of Office FC mmunity Media Review Transactions Legal Advisor/Defender Public Education Grant Identify Efficiencies Prosecutor for City City Television Analyze Programs Economic Neighborhoods Police Fire Development & Citizen Public Parks& Planning Engagement Service Recreation Patrol Suppression Planning/Zoning Neighborhood Resources Roads/Sidewalks Parks Design Crime Investigation Prevention Code Compliance Citizen Engagement Sewers/Treatment Recreation Programs Community Policing Emergency Mgmt. Building Safety Financial Empowerment Trash/Recycling Community Centers Social Work Rescue/Hazards Parking System Grounds Maint. Cemeteries Detention Economic Dev.Corp. Engineering Golf LEPFA Property Mgmt. Downtown Lansing, Inc Fleet Services Information Human Human Relations & Technology Resources Community Services Finance Operations Treasury Assessing IT Helpdesk Recruiting Grant Writing Assistance Accounting/Budget Income Taxes Assessing Cybersecurity Training Human Services Grants Financial Reporting Property Taxes Property Tax Roll Software Mgmt. Payroll/Benefits Police Investigations Strategic Planning Retirement Neighborhood Ombudsman 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 M a n e r Maner Cosierisan PC 2425 E.Grand River Ave. Suite 1 sterisan Lansing,MI 4891 T.517 323 750 T5OO C:ertilicil Public AC.COLI[llit[;Lti F.5173236346 Business&-Technology Advisors www.manercpa.com INDEPENDENT AUDITOR'S REPORT 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 30,2020,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. Auditor's 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 GovernmentAuditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgment, including the assessment of the risks of material misstatement of the financial statements,whether due to fraud or error. In making those risk assessments,the auditor considers internal control relevant to the 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, based on our audit, 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 30,2020,and the respective changes in financial position and, where applicable, cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Other Matters Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis,budgetary comparison schedules,and the pension and OPEB schedules,as identified 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 introductory section, combining and individual nonmajor fund financial statements, nonmajor special revenue fund budgetary comparison schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual nonmajor fund financial statements and nonmajor special revenue fund budgetary comparison 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 information is fairly stated,in all material respects, in relation to the basic financial statements as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we do not express an opinion or provide any assurance on them. 12 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards,we have also issued our report dated December 18, 2020, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. December 18,2020 13 This page intentionally left blank. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF LANSING 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, 2020 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 $ (286,847,440) Change in total net position (55,561,005) Fund balances,governmental funds 42396,832 Change in fund balances,governmental funds 3:342,096 Unassigned fund balance,general fund 9,935,641 Change in fund balance,general fund 89,520 Long-term obligations outstanding 169,427,623 Change in long-term debt (9,520,521) Overview of the Financial Statements This MD&A 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 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). 16 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS The Statement of Net Position and the Statement of Activities report three activities,as follows: ➢ Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch),the District Court(judicial branch),and general operations of the executive branch departments,such as police,fire,parks,public works,and other general staff departments fall within the governmental activities. ➢ Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. ➢ Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has various discretely presented units: the Brownfield Redevelopment Authority, the Tax Increment Finance Authority, and the Lansing Entertainment and Public Facilities Authority. These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements(modified accrual accounting)with governmental activities(full accrual accounting)on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: ➢ Capital assets used in governmental activities are not reported on governmental fund statements. ➢ Certain revenues that are earned,but not available for use within the reporting period,are reported as revenues for governmental activities, but are reported as deferred inflows of resources on the governmental fund statements. ➢ Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements,but not deferred on the government-wide statements. ➢ Internal service funds are reported as governmental activities,but reported as proprietary funds in the fund financial statements. ➢ Bond discounts and premiums in connection with the issuance of long-term obligations 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. 17 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS ➢ Pension and other postemployment benefits liabilities and related deferrals relating to governmental funds are only reported in the government-wide statements. The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Fund Financial Statements. The City's major funds are identified as the General Fund,Sewage Disposal System Fund,and Municipal Parking System Fund. Data for all other funds,termed"nonmajor funds",are combined into a single,aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. ➢ Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital projects, debt service, and permanent funds. ➢ Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. ➢ Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefit plans and for the 54-A District Court. 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 and the 54-A District Court Agency Fund, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. 18 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 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. Government-wide Financial Analysis The City's combined net position decreased $55.6 million over the course of this fiscal year's operations, and came to a total of $(286.8) million. Net position of governmental activities decreased $(50.1) million, and business-type activities decreased$(5.5)million. Explanations for those changes are described below under the governmental activities and business-type activities sections of this Management Discussion and Analysis. Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Current and other assets $ 70,031,080 $ 77,214,265 $ 91,700,607 $ 90,715,087 $ 161,731,687 $ 167,929,352 Capital assets,net 179,267,839 173,018,086 338,450,763 333,064,355 517,718,602 506,082,441 Total assets 249,298,919 250,232,351 430,151,370 423,779,442 679,450,289 674,011,793 Deferred outflows of resources 43,806,456 150,024,374 6,075,602 13,834,495 49,882,058 163,858,869 Current liabilities 26,104,917 27,499,946 18,806,144 19,727,392 44,911,061 47,227,338 Noncurrent liabilities 708,142,720 864,898,715 188,403,110 191,628,749 896,545,830 1,056,527,464 Total liabilities 734,247,637 892,398,661 207,209,254 211,356,141 941,456,891 1,103,754,802 Deferred inflows of resources 18,786,464 17,867,087 375,427 3,096,213 19,161,891 20,963,300 Net position Investment in capital assets 146,153,309 143,583,186 233,988,263 234,126,397 380,141,572 377,709,583 Restricted 23,505,738 20,495,617 1,953,175 2,432,963 25,458,913 22,928,580 Unrestricted (629,587,773) (674,087,826) (7,299,147) (13,397,777) (636,886,920) (687,485,603) Total net position $ (459,928,726) $ (510,009,023) $ 228,642,291 $ 223,161,583 $ (231,286,435) $ (286,847,440) 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$33.2 million and$128.5 million,respectively. 19 CITY OF LANSING 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: Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Revenue Program revenue Charges for services $ 15,573,751 $ 13,962,385 $ 50,916,057 $ 48,240,725 $ 66,489,808 $ 62,203,110 Operating grants and contributions 29,663,253 28,534,469 6,648,917 2,000,000 36,312,170 30,534,469 Capital grants and contributions 3,313,872 285,075 - - 3,313,872 285,075 General revenue Taxes 78,714,366 79,114,435 78,714,366 79,114,435 State shared revenues-unrestricted 15,178,768 14,386,936 15,178,768 14,386,936 Other 24,879,810 28,440,635 4,182,483 24,879,810 32,623,118 Total revenue 167,323,820 164,723,935 S7,S64,974 54,423,208 224,888,794 219,147,143 Expenses General government 26,679,840 30,400,643 - 26,679,840 30,400,643 Public safety 97,391,612 121,102,641 97,391,612 121,102,641 Public works 29,644,398 35,288,254 29,644,398 35,288,254 Recreation and culture 7,650,889 11,238,934 7,650,889 11,238,934 Community development 21,046,090 20,731,730 21,046,090 20,731,730 Interest on long-term debt 1,182,488 733,925 1,182,488 733,925 Sewage disposal system - - 31,939,976 32,605,664 31,939,976 32,605,664 Municipal parking system 7,081,998 12,716,606 7,081,998 12,716,606 Cemetery 470,220 1,652,255 470,220 1,652,255 Golf 278,501 229,467 278,501 229,467 Garbage and rubbish collection 1,035,262 2,431,066 1,035,262 2,431,066 Recycling - - 3,856,764 5,576,963 3,856,764 5,576,963 Total expenses 183,595,317 219,496,127 44,662,721 55,212,021 228,258,038 274,708,148 Change in net position before transfers (16,271,497) (54,772,192) 12,902,253 (788,813) (3,369,244) (55,561,005) Transfers(out)in (580,817) 4,691,895 580,817 (4,691,895) Change in net position (16,852,314) (50,080,297) 13,483,070 (5,480,708) (3,369,244) (55,561,005) Net position-beginning of year (443,076,412) (459,928,726) 215,159,221 228,642,291 (227,917,191) (231,286,435) Net position-end of year $ (459,928,726) $ (S1Q009,023) $ 228,642,291 $ 223,161,583 $ (231,286,435) $ (286,847,440) Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues- Governmental Activities Fiscal Year Ending June 30, 2020 Other Charges for services 18% 9% State shared revenues- Operating grants and unrestricted contributions 9% 18% Capital grants and 4 contributions 0% Property taxes 23% Income taxes 23% 20 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS In total, governmental activity revenues decreased $2.6 million from FY 2019 to FY 2020, with trends of the major revenue categories as follows: Property taxes comprised the largest portion of governmental activity revenue at 25.3%, or$41.7 million, which is consistent with the fiscal year 2019. Income taxes comprised 22.7%,or$37.4 million,of governmental activity revenue,the full amount of which is revenue to the General Fund. This represents a$418,000,or 1.1%,increase from fiscal year 2019. 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$28.8 million,or 17.5%of governmental activity revenue for fiscal year 2020,a$4.2 million,or 12.6%decrease from fiscal year 2019. State Gas and Weight tax revenues restricted for streets, and Community Development, HOME, and Emergency Shelter entitlement grant revenues held constant with mild growth; decrease in this category came largely from non-entitlement restricted grant revenues. Unrestricted grants and contributions(including state shared sales tax revenue)comprised 16.7%,or$27.6 million, of revenues,a$2.5 million, or 6.3% increase from fiscal year 2019. A little more than one-third of this category,$14.4 million,is attributed to State revenue sharing,an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services decreased$1.6 million from FY 2019 to FY 2020. Governmental Activities. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2020 Public works 16% Recreation and culture 5% Public safety 55% Community development 10% Interest on long-term debt 0% General government 14% 21 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS Total expenses for governmental activities increased$35.9 million,19.6%,from FY 2019 to FY 2020,with trends of the major expense categories as follows: The largest component of governmental activities was public safety,accounting for 55.2%,or$121.1 million, a 24.39% ($23.7 million) increase from FY 2019, largely due to the significant increase of other postemployment expense to this activity. Public works comprises the next largest component of governmental activity expenses, at 16.1%, or $35.3 million,a 16.1% ($5.6 million) increase from FY 2019,due to significant increases in net pension and other postemployment benefit(retiree healthcare) expenses. At$30.4 million,general government expenses,representing general and internal City services,comprised 13.9% of governmental activities. This category increased by $3.7 million in operational costs, a 13.9% overall increase from FY 2019,due to significant increases in net pension and other postemployment benefit (retiree healthcare) expenses. Community development represented 9.4%,or$20.7 million,of total governmental activities expenses. This category decreased$314.4 thousand,or 1.5%from FY 2019. Business-type Activities.Net position of the business-type activities decreased by$5.5 million from FY 2019 to $223.2 million. This decrease was largely attributable to a significant decrease in municipal parking system revenues resulting from the reduced operations of businesses and government downtown during the COVID-19 Pandemic. Financial Analysis of the City's Funds As the City completed the fiscal year,its governmental funds reported combined ending fund balances of$42.4 million, a $3.3 million increase from fiscal year 2019. Of the $42.4 million fiscal year 2020 combined ending fund balance, $3.4 million is unavailable to spend (i.e. amounts tied up in inventories, prepaids and endowments),$18.6 million is legally restricted,and$10.6 million is committed for designated projects,leaving $9.9 million unassigned. The unassigned fund balance for the General Fund was$9.9 million,an increase of$89,520 from FY 2019,which is further described in the General Fund Budgetary Highlights section. Sewage Disposal System Fund Net position increased $3.8 million to $231.3 million in FY 2020. Unrestricted net position increased $6.2 million, from $3.7 million to $9.9 million maintaining stable operations and revenue through the COVID-19 Pandemic. Municipal Parking System Fund Net position decreased$9.3 million to$5.4 million. Unrestricted net position decreased$12.5 million,from$4.7 million to a deficit of$7.8 million. This was due to the conclusion of major capital improvement projects and sharp decrease in parking revenues from the broader economic shutdown and public health restrictions. 22 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS General Fund Budgetary Highlights The FY 2020 General Fund budget was adopted as a balanced budget with a usage of 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$140.8 million to$140.0 million. General Fund reserves combined with the Budget Stabilization Fund (combined for financial statement purposes) decreased $89,520 from FY 2019 to $10.1 million. Unassigned fund balance decreased $58,000, or 0.06% from fiscal year 2019. The City benefited from savings due to reduced activities, participation in Michigan's Workshare program in which employee hours could be reduced and supplemented with unemployment benefits,and a broader freeze on hiring and discretionary expenditures. The City's local economy is comprised of a diversified mix of businesses and industries including government, health care,manufacturing,insurance,banking,and education. The City has responded to both the public health and economic needs of local businesses and residents,partnering with organizations in the Greater Lansing area to provide grant funding and coordinate resources toward restoring the economy during the COVID-19 pandemic. Property tax values continue to increase within the City;however,the growth rate corresponding to the revenue is limited at the rate of inflation per the state constitution. Income tax revenue has been highly susceptible among fluctuations in employment levels,personal income,and the impact of COVID-19. Capital Assets. At the end of the fiscal year 2020, the City had invested $506 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. Governmental Activities Business-type Activities Total 2019 2020 2019 2020 2019 2020 Land $ 25,302,787 $ 25,435,297 $ 12,470,361 $ 12,369,507 $ 37,773,148 $ 37,804,804 Land improvements 14,069,991 13,175,179 14,255,651 13,650,009 28,325,642 26,825,188 Buildings and improvements 45,632,844 41,090,770 69,089,497 65,920,477 114,722,341 107,011,247 Equipment 7,236,992 6,946,593 967,786 2,262,409 8,204,778 9,209,002 Infrastructure 87,025,225 85,580,989 228,122,636 221,498,656 315,147,861 307,079,645 Construction in progress - 789,258 13,544,832 17,363,297 13,544,832 18,152,555 Total $ 179,267,839 $ 173,018,086 $ 338,450,763 $ 333,064,355 $ 517,718,602 $ 506,082,441 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. 23 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 2019 2020 Governmental activities General obligation bonds $ 14,163,699 $ 11,792,231 Deferred amounts For issuance discounts (52,488) (45,655) For issuance premiums 814,209 748,067 Installment purchase contracts 11,274,020 10,230,073 Loans 7,242,002 7,000,422 Compensated absences 9,968,748 9,208,075 Workers compensation 2,310,982 2,557,317 Total governmental activities 45,721,172 41,490,530 Business-type activities General obligation bonds 115,616,143 112,290,745 Deferred amounts For issuance discounts (340,815) (275,524) For issuance premiums 2,438,581 2,165,855 Revenue bonds 14,075,000 12,525,000 Installment purchase agreements 582,920 352,897 Compensated absences 855,143 878,120 Total business-type activities 133,226,972 127,937,093 Total outstanding debt $ 178,948,144 $ 169,427,623 More detailed information regarding these activities and funds can be found in Note 9 of the Notes to the Financial Statements section of the CAFR. Economic Condition and Outlook During the COVID-19 pandemic,unemployment within the City reached an unprecedented 24.8%in April 2020 compared to its previous peak of 17.9%in July 2009. While the City has received initial support from State and Federal stimulus efforts, the outlook for future support is uncertain. Budget constraints within the State of Michigan may have particular impact on future revenue sharing payments. Many of the employers in the City have staff working from home,resulting in reduced business activity downtown posing risks to income tax and parking revenues. The 2019/2020 fiscal year resulted in a$53 thousand decrease to General Fund unassigned reserves,bringing unassigned General Fund reserves down to$9.9 million,or 7.6%of General Fund expenditures,which is below the City's 12%-15%fund balance policy. 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. 24 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 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's financial picture will continuously be evaluated to address any budget constraints for the future fiscal years. 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 STATEMENT OF NET POSITION JUNE 30,2020 Primary Government Governmental Business-type Component Activities Activities Total Units ASSETS Current assets Cash and cash equivalents $ 3,085,997 $ 2,810,375 $ 5,896,372 $ 6,632,734 Equity in pooled cash and investments 36,336,628 55,573,392 91,910,020 1,756,650 Cash and cash equivalents,restricted 3,086,975 2,432,963 5,519,938 11,052,725 Current portion of receivables,net 16,630,693 5,912,811 22,543,504 371,341 Due from other governmental units 12,377,688 - 12,377,688 - Inventories 1,643,806 420,638 2,064,444 75,853 Prepaids 665,133 - 665,133 96,369 Total current assets 73,826,920 67,150,179 140,977,099 19,985,672 Noncurrent assets Internal balances (188,126) 188,126 - - Noncurrent portion of receivables,net 3,575,471 23,376,782 26,952,253 160,495 Capital assets not being depreciated 26,224,555 29,732,804 55,957,359 - Capital assets,net of accumulated depreciation 146,793,531 303,331,551 450,125,082 17,846 Total noncurrent assets 176,405,431 356,629,263 533,034,694 178,341 TOTAL ASSETS 250,232,351 423,779,442 674,011,793 20,164,013 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding 290,238 4,077,697 4,367,935 935,439 Deferred outflows of resources related to pensions 35,348,013 3,633,093 38,981,106 - Deferred outflows of resources related to OPEB 114,386,123 6,123,705 120,509,828 TOTAL DEFERRED OUTFLOWS OF RESOURCES 150,024,374 13,834,495 163,858,869 935,439 LIABILITIES Current liabilities Accounts payable 8,105,574 2,086,851 10,192,425 2,789,988 Accrued payroll 2,238,834 126,009 2,364,843 - Deposits payable - 73,828 73,828 Due to other governmental units 3,754,680 - 3,754,680 Claims incurred but not reported 400,000 400,000 Idemnity bonds 43,867 43,867 - Other accrued liabilities 778,071 - 778,071 272,163 Accrued interest payable 270,274 3,482,704 3,752,978 167,602 Unearned revenue 5,690,261 324,913 6,015,174 951,365 Current portion of compensated absences 1,462,227 79,306 1,541,533 - Current portion of long-term debt 4,756,158 13,553,781 18,309,939 - Total current liabilities 27,499,946 19,727,392 47,227,338 4,181,118 The accompanying notes are an integral part of the financial statements. CONTINUED 30 CITY OF LANSING STATEMENT OF NET POSITION (concluded) JUNE 30,2020 Primary Government Governmental Business-type Component Activities Activities Total Units LIABILITIES(concluded) Noncurrent liabilities Noncurrent portion of compensated absences $ 7,745,848 $ 798,814 $ 8,544,662 $ Noncurrent portion of long-term debt 27,526,297 113,505,192 141,031,489 65,349,864 Net pension liability 308,110,357 35,327,661 343,438,018 - Net other post-employment benefits liability 521,516,213 41,997,082 563,513,295 - Total noncurrent liabilities 864,898,715 191,628,749 1,056,527,464 65,349,864 TOTAL LIABILITIES 892,398,661 211,356,141 1,103,754,802 69,530,982 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 1,459,430 190,715 1,650,145 - Deferred inflows of resources related to OPEB 16,407,657 2,905,498 19,313,155 TOTAL DEFERRED INFLOWS OF RESOURCES 17,867,087 3,096,213 20,963,300 - NET POSITION Net investment in capital assets 143,583,186 234,126,397 377,709,583 17,846 Restricted Public safety 1,414,439 - 1,414,439 - Public works 15,347,630 15,347,630 Community development 82,140 82,140 Building department 1,677,085 - 1,677,085 Debt service 29,361 2,432,963 2,462,324 - Revelopment projects - - - 8,465,017 Cooley stadium capital projects - - 80,000 Endowments(nonexpendable) 1,944,962 1,944,962 - Unrestricted(deficit) (674,087,826) (13,397,777) (687,485,603) (56,994,393) TOTAL NET POSITION $ (510,009,023) $ 223,161,583 $ (286,847,440) $ (48,431,530) The accompanying notes are an integral part of the financial statements. 31 CITY OF LANSING STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2020 Net(Expense)Revenue and Changes in Net Position Program Revenues Primary Government Operating Capital Grants Charges for Grants and and Governmental Business-type Component Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Units Primary government Governmental activities General government $ 30,400,643 $ 7,616,658 $ 1,844,175 $ $ (20,939,810) $ $ (20,939,810) $ Public safety 121,102,641 4,770,026 3,020,126 (113,312,489) (113,312,489) Public works 35,288,254 536,961 18,580,693 285,075 (15,885,525) (15,885,525) Recreation and culture 11,238,934 1,038,740 119,710 - (10,080,484) (10,080,484) Community and economic development 20,731,730 - 4,969,765 (15,761,965) (15,761,965) Interest on long-term debt 733,925 (733,925) (733,925) Total governmental activities 219,496,127 13,962,385 28,534,469 285,075 (176,714,198) (176,714,198) Business-type activities Sewage disposal system 32,605,664 34,968,585 2,000,000 4,362,921 4,362,921 Municipal parking system 12,716,606 6,211,685 - (6,504,921) (6,504,921) Cemetery 1,652,255 403,030 (1,249,225) (1,249,225) Golf 229,467 3,091 (226,376) (226,376) Garbage and rubbish collection 2,431,066 2,278,024 (153,042) (153,042) Recycling 5,576,963 4,376,310 (1,200,653) (1,200,653) Total business-type activities 55,212,021 48,240,725 2,000,000 (4,971,296) (4,971,296) Total primary government $ 274,708,148 $ 62,203,110 $ 30,534,469 $ 285,075 (176,714,198) (4,971,296) (181,685,494) Component units Brownfield Redevelopment Authority $ 15,308,883 $ $ 1,174,048 $ - (14,134,835) Tax Increment Finance Authority 4,261,130 (4,261,130) Lansing Entertainment&Public Facilities Authority 9,127,195 6,799,182 1,203,995 (1,124,018) Total component units $ 28,697,208 $ 6,799,182 $ 2,378,043 $ (19,519,983) General revenues Property taxes 41,675,711 41,675,711 7,181,755 Income taxes 37,438,724 37,438,724 Unrestricted state shared revenues 14,386,936 14,386,936 Grants and contributions not restricted to specific programs 27,642,164 27,642,164 Local community stabilization - - Investment earnings 707,383 2,061,667 2,769,050 127,888 Gain on sale of capital assets 2,120,816 2,120,816 Miscellaneous 91,088 - 91,088 364,255 Transfers 4,691,895 (4,691,895) Total general revenues and transfers 126,633,901 (509,412) 126,124,489 7,673,898 Change in net position (50,080,297) (5,480,708) (55,561,005) (11,846,085) Net position(deficit),beginning of the year (459,928,7261 228,642,291 (231,286,435) (36,585,445) Net position(deficit),end of the year $ (510,009,023) $ 223,161,583 $ (286,847,440) $ (48,431,530) 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 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 BALANCESHEET GOVERNMENTAL FUNDS JUNE 30,2020 Nonmajor Governmental General Funds Total ASSETS Cash and cash equivalents $ 2,914,258 $ 171,739 $ 3,085,997 Cash and cash equivalents-restricted 3,086,975 - 3,086,975 Equity in pooled cash and investments - 27,565,473 27,565,473 Receivables Accounts,net 11,138,187 224,735 11,362,922 Taxes receivable,net 1,113,489 - 1,113,489 Special assessments - 153,378 153,378 Loans - 1,220,642 1,220,642 Accrued interest - 2,231,696 2,231,696 Due from other funds - 1,096,006 1,096,006 Due from other governmental units 5,458,760 10,494,399 15,953,159 Inventories 9,241 1,223,600 1,232,841 Prepaids 176,128 1,425 177,553 TOTAL ASSETS $ 23,897,038 $ 44,383,093 $ 68,280,131 LIABILITIES Accounts payable $ 4,450,328 $ 2,130,235 $ 6,580,563 Accrued payroll 2,000,483 68,631 2,069,114 Due to other governmental units 3,450,964 303,716 3,754,680 Indemnity bonds - 43,867 43,867 Other liabilities 737,703 40,368 778,071 Due to other funds 576,200 519,806 1,096,006 Advances from other funds - 188,126 188,126 Unearned revenue 453,210 5,237,051 5,690,261 TOTAL LIABILITIES 11,668,888 8,531,800 20,200,688 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-fees 2,107,140 - 2,107,140 Unavailable revenue-loans and accrued interest receivable - 3,452,338 3,452,338 Unavailable revenue-special assessments - 123,133 123,133 TOTAL DEFERRED INFLOWS OF RESOURCES 2,107,140 3,575,471 5,682,611 FUND BALANCES Nonspendable 185,369 3,169,987 3,355,356 Restricted - 18,550,655 18,550,655 Committed - 10,637,417 10,637,417 Unassigned(deficit) 9,935,641 (82,237) 9,853,404 TOTAL FUND BALANCES 10,121,010 32,275,822 42,396,832 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 23,897,038 $ 44,383,093 $ 68,280,131 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30,2020 Fund balances-total governmental funds $ 42,396,832 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 as assets in the governmental funds. The cost of capital assets is $ 540,848,918 Accumulated depreciation is (367,830,832) Capital assets accounted for in the internal service funds,net (10,671,567) Capital assets,net 162,346,519 Some assets are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. Deferred ambulance fees receivable 1,453,506 Deferred nuisance fees receivable 631,134 Deferred loans receivable 1,220,642 Deferred long-term interest receivable 2,231,696 Deferred long-term special assessments receivable 123,133 Deferred long-term taxes and tax settlement receivables 22,500 Deferred outflows of resources related to pensions 35,348,013 Deferred outflows of resources related to OPEB 114,386,123 Deferred inflows of resources related to pensions (1,459,430) Deferred inflows of resources related to OPEB (16,407,657) 137,549,660 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of certain internal service funds are included in the governmental activities in the government-wide statement of net position. Net position of governmental activities accounted for in governmental activities internal service funds 15,631,025 Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds balance sheet.Long-term liabilities at year-end consist of: Bonds and loans payable (27,421,737) Deferred charges on refunding 290,238 Compensated absences (8,360,652) Workers compensation (2,557,317) Accrued interest payable (257,021) Net pension liability (308,110,357) Net other post-employment benefits liability (521,516,213) (867,933,059) Net position of governmental activities $ (510,009,023) The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS YEAR ENDED JUNE 30,2020 Nonmajor Governmental General Funds Total REVENUES Property taxes and special assements $ 41,305,799 $ 403,221 $ 41,709,020 Income taxes 37,438,724 - 37,438,724 Licenses and permits 2,427,866 - 2,427,866 Intergovernmental 18,917,630 25,248,860 44,166,490 Charges for services 8,315,878 4,733,056 13,048,934 Fines and forfeits 1,537,865 51,868 1,589,733 Interest and rents 648,722 262,732 911,454 Other 23,054,531 316,775 23,371,306 TOTAL REVENUES 133,647,015 31,016,512 164,663,527 EXPENDITURES Current General government 19,998,919 3,112,357 23,111,276 Public safety 79,199,511 1,663,648 80,863,159 Public works 12,085,207 283,500 12,368,707 Highways and streets - 10,711,027 10,711,027 Recreation and culture 7,420,052 - 7,420,052 Community and economic development 9,317,141 9,381,917 18,699,058 Debt service Principal 2,018,657 1,268,048 3,286,705 Interest and fiscal charges 400,520 423,387 823,907 Capital outlay - 7,891,788 7,891,788 TOTAL EXPENDITURES 130,440,007 34,735,672 165,175,679 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,207,008 (3,719,160) (512,152) OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets 66,088 26,265 92,353 Transfers in 2,670,895 14,309,616 16,980,511 Transfers out (5,854,471) (7,364,145) (13,218,616) TOTAL OTHER FINANCING SOURCES (USES) (3,117,488) 6,971,736 3,854,248 NET CHANGE IN FUND BALANCES 89,520 3,252,576 3,342,096 Fund balances,beginning of year 10,031,490 29,023,246 39,054,736 Fund balances,end of year $ 10,121,010 $ 32,275,822 $ 42,396,832 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2020 Net change in fund balances-total governmental funds $ 3,342,096 Amounts reported for governmental activities in the statement of activities are different because: Capital outlays are reported as expenditures in governmental funds. However, in the statement of activities,the cost of capital assets is allocated over their estimated useful lives as depreciation expense. In the current period,these amounts are: Capital outlay $ 5,259,427 Depreciation expense (10,839,541) Excess of depreciation expense over capital outlay (5,580,114) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in deferred ambulance fees receivable 633,999 Change in deferred nuisance fees receivable 75,381 Change in deferred loans receivable (1,881) Change in deferred long-term interest receivable 59,250 Change in deferred special assessments receivable (33,311) Change in deferred State of Michigan receivables (765,383) (31,945) Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain individual funds are included in the governmental activities. Change in net position of governmental activities internal service funds 2,853,324 Repayment of long-term debt and borrowing of long-term debt is reported as expenditures and other financing sources in governmental funds, but the repayment reduces long-term liabilities and the borrowings increase long-term liabilities in the statement of net position. In the current year, these amounts consist of: Premium on bond issuance 66,142 Deferred charges on refunding (30,306) Discounts on bond issuances (5,178) Debt principal retirement 3,286,705 3,317,363 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purpose of the statement of net position. Change in estimated workers compensation (246,335) Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of: (Increase)in net pension liability (33,202,721) (Increase)in net OPEB liability (128,519,920) Increase in deferred outflows of resources related to pensions 9,256,283 Increase in deferred outflows of resources related to OPEB 96,991,941 Decrease in deferred inflows of resources related to pensions 4,698,657 (Increase)in deferred inflows of resources related to OPEB (3,779,280) Decrease in accrued interest payable 59,324 Decrease in compensated absences 761,030 (53,734,686) Change in net position of governmental activities $ (50,080,297) The accompanying notes are an integral part of the financial statements. 39 This page intentionally left blank. 40 CITY OF LANSING PROPRIETARY FUND FINANCIAL STATEMENTS Major Funds Sewage Disposal System Fund-This fund accounts for the activities 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 Enterprise 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. 41 CITY OF LANSING STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Fund ASSETS Current assets Cash and cash equivalents $ - $ 2,810,175 $ 200 $ 2,810,375 $ Cash and cash equivalents-restricted 2,432,963 - - 2,432,963 - Equity in pooled cash and investments 45,552,675 5,062,011 4,958,706 55,573,392 8,771,155 Receivables,net Customers 4,934,740 2,725 62,867 5,000,332 548,566 Interest 32,144 213,799 - 245,943 - Lease 666,536 - - 666,536 - Inventories 375,150 45,488 420,638 410,965 Prepaids - - - - 487,580 Total current assets 53,994,208 8,088,710 5,067,261 67,150,179 10,218,266 Noncurrent assets Advance to other funds - 188,126 - 188,126 - Lease receivable,net of current portion 5,420,602 17,956,180 - 23,376,782 - Capital assets not being depreciated 17,784,046 11,545,371 403,387 29,732,804 92,892 Capital assets,net of accumulated depreciation 297,764,835 3,721,401 1,845,315 303,331,551 10,578,675 Total noncurrent assets 320,969,483 33,411,078 2,248,702 356,629,263 10,671,567 TOTALASSETS 374,963,691 41,499,788 7,315,963 423,779,442 20,889,833 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refunding 1,069,967 3,007,730 - 4,077,697 - Deferred outflows of resources related to pensions 1,979,257 634,383 1,019,453 3,633,093 Deferred outflows of resources related to OPEB 3,336,108 1,069,275 1,718,322 6,123,705 TOTAL DEFERRED OUTFLOWS OF RESOURCES 6,385,332 4,711,388 2,737,775 13,834,495 - LIABILITIES Current liabilities Accounts payable 1,359,871 513,526 213,454 2,086,851 1,525,011 Accrued payroll 86,626 37,993 1,390 126,009 169,720 Deposit payable - 73,828 - 73,828 - Claims incurred but not reported - - - - 400,000 Accrued interest payable 586,315 2,894,660 1,729 3,482,704 13,253 Unearned revenue - - 324,913 324,913 - Current portion of compensated absences 56,848 11,476 10,982 79,306 115,855 Current portion of bonds and notes payable 11,307,378 2,011,849 234,554 13,553,781 379,333 Total current liabilities 13,397,038 5,543,332 787,022 19,727,392 2,603,172 Noncurrent liabilities Compensated absences,net of current portion 436,962 185,899 175,953 798,814 731,568 Bonds and notes payable,net of current portion 92,372,050 21,014,799 118,343 113,505,192 1,924,068 Net pension liability 19,246,008 6,168,651 9,913,002 35,327,661 - Net other post-employment benefits liability 22,879,414 7,333,215 11,784,453 41,997,082 Total noncurrent liabilities 134,934,434 34,702,564 21,991,751 191,628,749 2,655,636 TOTAL LIABILITIES 148,331,472 40,245,896 22,778,773 211,356,141 5,258,808 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 103,899 33,301 53,515 190,715 - Deferred inflows of resources related to OPEB 1,582,874 507,336 815,288 2,905,498 TOTAL DEFERRED INFLOWS OF RESOURCES 1,686,773 540,637 868,803 3,096,213 - NET POSITION Net investment in capital assets 219,026,558 13,204,034 1,895,805 234,126,397 10,671,567 Restricted for bond reserves 2,432,963 - - 2,432,963 - Unrestricted 9,871,257 (7,779,391) (15,489,643) (13,397,777) 4,959,458 TOTAL NET POSITION $ 231,330,778 $ 5,424,643 $ (13,593,838) $ 223,161,583 $ 15,631,025 The accompanying notes are an integral part of the financial statements. 42 CITY OF LANSING STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds OPERATING REVENUES Charges for services $ 34,968,585 $ 6,211,685 $ 7,060,455 $ 48,240,725 $ 86,491,911 Other - - - - 111,337 TOTAL OPERATING REVENUES 34,968,585 6,211,685 7,060,455 48,240,725 86,603,248 OPERATING EXPENSES Personnel services 7,099,819 2,794,268 6,313,328 16,207,415 8,250,038 Purchase of goods and services 12,468,642 7,908,425 3,324,357 23,701,424 73,897,984 Depreciation 10,561,371 648,754 242,890 11,453,015 2,385,114 TOTAL OPERATING EXPENSES 30,129,832 11,351,447 9,880,575 51,361,854 84,533,136 OPERATING INCOME(LOSS) 4,838,753 (5,139,762) (2,820,120) (3,121,129) 2,070,112 NONOPERATING REVENUE(EXPENSES) Intergovernmental 2,000,000 - - 2,000,000 - Interest revenue 672,888 1,363,345 25,434 2,061,667 Gain(loss)on sale of capital assets - - 2,120,816 2,120,816 (20,258) Other (2,100) - (2,100) Interest expense and fees (2,475,832) (1,363,059) (9,176) (3,848,067) (126,530) TOTAL NONOPERATING REVENUES(EXPENSES) 197,056 (1,814) 2,137,074 2,332,316 (146,788) NET INCOME(LOSS) BEFORE TRANSFERS 5,035,809 (5,141,576) (683,046) (788,813) 1,923,324 TRANSFERS IN - 761,000 761,000 930,000 TRANSFERS OUT (1,250,000) (4,202,895) (5,452,895) - TOTAL TRANSFERS (1,250,000) (4,202,895) 761,000 (4,691,895) 930,000 CHANGE IN NET POSITION 3,785,809 (9,344,471) 77,954 (5,480,708) 2,853,324 Net position(deficit),beginning of year 227,544,969 14,769,114 (13,671,792) 228,642,291 12,777,701 Net position(deficit),end of year $ 231,330,778 $ 5,424,643 $ (13,593,838) $ 223,161,583 $ 15,631,025 The accompanying notes are an integral part of the financial statements. 43 CITY OF LANSING STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 34,862,640 $ 6,275,052 $ 7,332,710 $ 48,470,402 $ Cash received from interfund services provided - - - - 86,066,022 Cash payments for goods and services (13,134,933) (6,496,773) (3,285,254) (22,916,960) (74,838,124) Cash payments to employees (6,850,879) (2,251,579) (3,742,186) (12,844,644) (8,589,198) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 14,876,828 (2,473,300) 305,270 12,708,798 2,638,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental grant 2,000,000 - 2,000,000 - Transfer in - 761,000 761,000 930,000 Transfer out (1,250,000) (4,202,895) - (5,452,895) - NET CASH PROVIDED(USED)BY NONCAPITAL FINANCING ACTIVITIES 750,000 (4,202,895) 761,000 (2,691,895) 930,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of capital assets (4,317,870) (1,817,393) (32,198) (6,167,461) (1,776,031) Proceeds from sale of capital assets 2,221,670 2,221,670 40,298 Principal paid on long-term obligations (12,043,482) (2,274,436) (230,023) (14,547,941) (370,290) Interest paid on long-term obligations (2,608,824) (948,347) (10,304) (3,567,475) (128,769) Proceeds from bond issuance 8,298,084 8,298,084 Payments received on capital lease 657,988 657,988 NET CASH PROVIDED(USED)BY CAPITAL AND RELATED FINANCING ACTIVITIES (10,014,104) (5,040,176) 1,949,145 (13,105,135) (2,234,792) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 676,295 1,443,650 25,434 2,145,379 - NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 6,289,019 (10,272,721) 3,040,849 (942,853) 1,333,908 Cash and cash equivalents,beginning of year 41,696,619 18,144,907 1,918,057 61,759,583 7,437,247 Cash and cash equivalents,end ofyear $ 47,985,638 $ 7,872,186 $ 4,958,906 $ 60,816,730 $ 8,771,155 The accompanying notes are an integral part of the financial statements. 44 CITY OF LANSING STATEMENT OF CASH FLOWS (concluded) PROPRIETARY FUNDS YEAR ENDED JUNE 30,2020 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ 4,838,753 $ (5,139,762) $ (2,820,120) $ (3,121,129) $ 2,070,112 Adjustments to reconcile operating income(loss)to net cash provided(used)by operating activities Depreciation 10,561,371 648,754 242,890 11,453,015 2,385,114 (Increase)decrease in: Accounts receivable (105,945) 63,367 107,461 64,883 (537,226) Due from other funds 2,944 986,515 - 989,459 Advance to other funds - (37,823) - (37,823) Inventories (136,292) - 7,005 (129,287) (58,706) Prepaids 124,355 - 124,355 147,410 Deferred outflows of resources related to pensions (1,373,222) (432,371) (716,435) (2,522,028) - Deferred outflows of resources related to OPEB (2,977,387) (964,900) (1,569,340) (5,511,627) Increase(decrease)in: Accounts payable (170,073) 334,679 32,098 196,704 (1,028,844) Accrued liabilities (3,800) (10,268) (455) (14,523) 10,483 Due to other funds (362,870) (2,942) - (365,812) - Due to component units (145) - (145) Unearned revenue - 164,794 164,794 Deposits payable - 7,013 - 7,013 - Compensated absences (291) 27,070 (3,802) 22,977 357 Claims incurred but not reported - - - - (350,000) Net pension liability 2,668,599 642,848 1,624,291 4,935,738 Net other post-employment benefits liability 453,046 807,932 2,470,470 3,731,448 Deferred inflows of resources related to pensions (100,879) (34,958) (48,875) (184,712) Deferred inflows of resources related to OPEB 1,582,874 507,336 815,288 2,905,498 - NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 14,876,828 $ (2,473,300) $ 305,270 $ 12,708,798 $ 2,638,700 45 This page intentionally left blank. 46 CITY OF LANSING 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. Agency Fund This fund accounts for resources held in a trustee or agent capacity for the 54-A District Court. 47 CITY OF LANSING STATEMENT OF FIDUCIARY NET POSITION FIDUCIARY FUNDS JUNE 30,2020 Pension and Other Post- Employment Benefits Trust 54-A District Funds Court ASSETS Cash and cash equivalents $ 13,649,294 $ - Equity in pooled cash and investments - 183,063 Investments U.S.Treasuries 7,223,877 - U.S.Agencies 42,487,294 - Collateralized mortgage obligations 2,230,626 - Mutual funds 359,993,622 - Domestic equities 95,697,112 - International equities 2,270,930 - Emerging market equities 21,829,799 - Money market funds 7,569,544 - Receivables Interest and dividends 408,460 - TOTAL ASSETS 553,360,558 $ 183,063 LIABILITIES Accounts payable 583,618 $ - Due to other governmental units 4,466,522 - Undistributed receipts - 183,063 TOTAL LIABILITIES 5,050,140 $ 183,063 NET POSITION RESTRICTED FOR: Pension benefits $ 436,573,058 Other postemployment benefits 111,737,360 TOTAL NET POSITION $ 548,310,418 The accompanying notes are an integral part of the financial statements. 48 CITY OF LANSING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FIDUCIARY FUNDS YEAR ENDED JUNE 30,2020 Pension and Other Post- Employment Benefits Trust Funds ADDITIONS TO NET POSITION Investment income Change in fair value of investments $ 9,719,191 Interest 108,016 Investment expense (1,811,624) Net investment income 8,015,583 Contributions Employer 52,850,500 Plan members 4,986,883 Total contributions 57,837,383 TOTAL ADDITIONS 65,852,966 DEDUCTIONS FROM NET POSITION Participant benefits 81,671,600 Administrative expenses 1,293,469 TOTAL DEDUCTIONS 82,965,069 CHANGE IN NET POSITION (17,112,103) Net position,beginning of year 565,422,521 Net position,end of year $ 548,310,418 The accompanying notes are an integral part of the financial statements. 49 This page intentionally left blank. s0 COMPONENT UNITS 51 This page intentionally left blank. 52 CITY OF LANSING 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. 53 CITY OF LANSING COMBINING STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS JUNE 30,2020 Lansing Entertainment Brownfield Tax Increment and Public Redevelopment Finance Facilities Authority Authority Authority Total ASSETS Current assets Cash and cash equivalents $ 5,347,756 $ - $ 1,284,978 $ 6,632,734 Equity in pooled cash and investments - 1,756,650 - 1,756,650 Cash and cash equivalents-restricted 8,465,017 2,507,708 80,000 11,052,725 Receivables,net - - 371,341 371,341 Inventories 75,853 75,853 Prepaids - - 96,369 96,369 Total current assets 13,812,773 4,264,358 1,908,541 19,985,672 Noncurrent assets Noncurrent portion of receivable,net 160,495 - - 160,495 Capital assets,net of accumulated depreciation - 17,846 17,846 Total noncurrent assets 160,495 17,846 178,341 TOTAL ASSETS 13,973,268 4,264,358 1,926,387 20,164,013 DEFERRED OUTFLOW OF RESOURCES Deferred charge on refunding - 935,439 - 935,439 LIABILITIES Current liabilities Accounts payable 2,223,324 148,114 418,550 2,789,988 Accrued liabilities - - 272,163 272,163 Accrued interest payable 56,979 110,623 - 167,602 Unearned revenue - - 951,365 951,365 Total current liabilities 2,280,303 258,737 1,642,078 4,181,118 Noncurrent liabilities Noncurrent portion of long-term debt 19,760,000 45,589,864 - 65,349,864 TOTAL LIABILITIES 22,040,303 45,848,601 1,642,078 69,530,982 NET POSITION Net investment in capital assets - - 17,846 17,846 Restricted for capital projects - 80,000 80,000 Restricted for redevelopment projects 8,465,017 - 8,465,017 Unrestricted(deficit) (16,532,052) (40,648,804) 186,463 (56,994,393) TOTAL NET POSITION(DEFICIT) $ (8,067,035) $ (40,648,804) $ 284,309 $ (48,431,530) The accompanying notes are an integral part of the financial statements. 54 CITY OF LANSING COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS YEAR ENDED JUNE 30,2020 Lansing Entertainment Brownfield Tax Increment and Public Redevelopment Finance Facilities Authority Authority Authority Total EXPENSES Brownfield redevelopment authority $ 15,308,883 $ - $ $ 15,308,883 Community development - 4,261,130 4,261,130 Recreation and culture - - 9,127,195 9,127,195 TOTAL EXPENSES 15,308,883 4,261,130 9,127,195 28,697,208 PROGRAM REVENUES Charges for services - - 6,799,182 6,799,182 Operating grants and contributions 1,174,048 1,203,995 2,378,043 TOTAL PROGRAM REVENUES 1,174,048 8,003,177 9,177,225 NET PROGRAM(EXPENSE)REVENUE (14,134,835) (4,261,130) (1,124,018) (19,519,983) GENERAL REVENUES Property taxes 3,763,175 3,418,580 7,181,755 Unrestricted investment earnings 31,976 95,912 - 127,888 Other - - 364,255 364,255 TOTAL GENERAL REVENUES 3,795,151 3,514,492 364,255 7,673,898 CHANGE IN NET POSITION (10,339,684) (746,638) (759,763) (11,846,085) Net position(deficit),beginning of year 2,272,649 (39,902,166) 1,044,072 (36,585,445) Net position(deficit),end of year $ (8,067,035) $ (40,648,804) $ 284,309 $ (48,431,530) The accompanying notes are an integral part of the financial statements. 55 This page intentionally left blank. 56 NOTES TO FINANCIAL STATEMENTS 57 This page intentionally left blank. 58 CITY OF LANSING INDEX- NOTES TO FINANCIAL STATEMENTS Page Note 1 - Summary of Significant Accounting Policies..................................................................................................61 Note2 - Budgetary Information...............................................................................................................................................71 Note3 -Deficit Fund Equity........................................................................................................................................................72 Note4-Deposits and Investments.........................................................................................................................................72 Note5 - Receivables........................................................................................................................................................................81 Note6 - Capital Assets....................................................................................................................................................................81 Note 7 -Accounts Payable and Accrued Liabilities.......................................................................................................83 Note 8 -Interfund Receivables,Payables,and Transfers..........................................................................................83 Note9 - Long-term Debt................................................................................................................................................................85 Note 10-Fund Balances- Governmental Funds.............................................................................................................89 Note 11-Net Investment in Capital Assets........................................................................................................................89 Note 12 -Segment Information-Enterprise Funds......................................................................................................90 Note13 -Risk Management........................................................................................................................................................90 Note14-Property Taxes..............................................................................................................................................................91 Note15- Contingent Liabilities................................................................................................................................................91 Note16-Pension Plans.................................................................................................................................................................91 Note 17- Other Postemployment Benefits.......................................................................................................................105 Note18-Tax Abatements...........................................................................................................................................................116 Note 19-Assets Held By Foundation...................................................................................................................................117 Note 20-Upcoming Accounting Pronouncements.......................................................................................................117 Note21-Subsequent Event.......................................................................................................................................................118 59 This page intentionally left blank. 60 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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: The Lansing Brownfield RedevelopmentAuthority("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. 61 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Discretely Presented Component Units (concluded). 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. Because separately issued financial statements are readily available for these component units, detailed notes applicable to each Component Unit are not duplicated here in accordance with GASB 61. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing,Michigan 48933 Brownfield Redevelopment Authority/Tax Increment Finance Authority 1000 S.Washington Avenue,Suite 201 Lansing,Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing,Michigan 48933 62 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) 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 IBA 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 IBA 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. 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. 63 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Measurement Focus.Basis of Accounting.and Financial Statement Presentation (continued) 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 activities of the sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally,the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt Service Funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal,interest and related costs. Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent Funds account for resources that are legally restricted to the extent that only earnings,and not principal,may be used for purposes that support the government's programs. 64 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Measurement Focus.Basis of Accounting.and Financial Statement Presentation (concluded] 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,engineering,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 postemployment benefit distributions. The Agency Fund accounts 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. Also, current internal balances between governmental activities and fiduciary activities have not been eliminated. These balances do not net to zero as fiduciary activities are not reported in the government-wide financial statements. 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 amounts 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. 65 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity Deposits and Investments Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants or other restrictions limiting usage of amounts in certain accounts. 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. 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. Receivables/Payables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. 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. 66 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(continued) Receivables/Payables(concluded) 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. 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. 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. 67 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(continued Capital Assets(concluded) The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the asset constructed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 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 The City permits 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. 68 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity_(continued� 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 when applicable. 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. 69 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(concluded) Assets.Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(concluded 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 to 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. 70 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 2 -BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: ➢ On or before the fourth Monday in March,the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. ➢ Public hearings are conducted to obtain taxpayer comments. ➢ Not later than the third Monday in May,the Council adopts a budget through passage of a resolution. ➢ The appropriated budget is prepared by fund,department and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds,the legal level of budgetary control is the mandatory expenditure accounts(personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars,but not in excess of 15%of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Michigan Avenue,Lansing,Michigan 48933. ➢ The City formally adopts operating budgets for the General Fund and all special revenue funds. ➢ Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the General Fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the General Fund, capital lease payments/installment payments are budgeted,but capital lease acquisitions are not. There were no capital lease acquisitions during the year ended June 30,2020. ➢ Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. 71 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 3 -DEFICIT FUND EQUITY The Special Assessments Capital Projects Fund reported a deficit fund balance of$82,237. 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 Municipal Parking System, Cemetery, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $7,779,391, $2,929,144, $4,786,782, and $10,012,202, respectively, primarily as a result of the recognition of net pension and net other postemployment benefit liabilities in these funds. The Tax Increment Finance Authority and the Brownfield Redevelopment Authority component units reported deficits in unrestricted net position of$40,648,804 and$16,532,052,respectively at June 30,2020. The deficits are a result of full-accrual accounting for long-term obligations,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). NOTE 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 30,2020: Primary Component Fiduciary Reporting Government Units Funds Entity Cash and cash equivalents $ 5,896,372 $ 6,632,734 $ 13,649,294 $ 26,178,400 Equity in pooled cash and investments 91,910,020 1,756,650 183,063 93,849,733 Cash and cash equivalents-restricted 5,519,938 11,052,725 - 16,572,663 Investments - - 539,302,804 539,302,804 $ 103,326,330 $ 19,442,109 $ 553,135,161 $ 675,903,600 Deposits and investments Bank deposits: Checking/savings accounts-Pension&OPEB related $ 13,649,294 Checking/savings accounts-City-wide accounts-all other 113,823,985 Investment in securities and mutual funds: Pooled investments 6,849,563 Employees"retirement system investments 185,129,170 Police and fire retirement system investments 318,415,903 Employees'money purchase pension plan investments 3,547,785 Retiree health care VEBA investments 32,209,946 Tax increment finance authority investments 2,128,386 Total investment in securities and mutual funds 675,754,032 Cash on hand 149,568 Total $ 675,903,600 72 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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, $97,600,491 of the City's bank balance of $99,760,679 was exposed to custodial credit risk because it was uninsured and uncollateralized. The book balance of all deposits was$113,823,985. 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: S&P AAAm $ 4,795,071 S&P AA+ 1,030,974 Not rated 907,662 Assets not subject to credit risk 115,856 $ 6,849,563 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 $ 4,951,466 1-5 years 1,782,241 No maturity 115,856 $ 6,849,563 73 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Concentration of Credit Risk Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year- end are reported above. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the City's investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing,which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark securities, (e) bids or offers, and (f) reference data. The City's level 2 investments as noted in the table below are valued using significant other observable inputs of the underlying securities. INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 1,954,006 $ $ 1,954,006 Money market funds 115,856 - 115,856 $ 115,856 $ 1,954,006 $ 2,069,862 Investments carried at net asset value Michigan CLASS government investment pool 4,779,701 $ 6,849,563 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. It has a rating of AAA from Standard and Poor's with a weighted average maturity of 54 days. At year end,the net asset value of the City's investment in Michigan CLASS was $4,779,701. 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. 74 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments, and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. Deposits The pension and OPEB trust funds maintain demand deposit accounts and equity in pooled cash to handle operational transactions. The book balance of such deposits totaled$13,649,294 at year end. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate,and various other investment instruments,subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds'assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30,2020: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals U.S.treasuries Not on securities loan $ 794,806 $ 1,404,267 $ $ $ 2,199,073 On securities loan 1,907,810 3,116,994 5,024,804 U.S.agencies Not on securities loan 17,945,944 24,541,350 42,487,294 Domestic corporate security mutual funds 23,597,621 36,987,297 60,584,918 Domestic equities Not on securities loan 26,564,299 53,786,393 80,350,692 On securities loan 5,967,989 9,378,431 15,346,420 International equities Not on securities loan 343,905 742,108 1,086,013 On securities loan 520,021 664,896 1,184,917 Emerging markets equities 7,574,273 13,348,239 907,287 21,829,799 Collateralized mortgage obligations 585,940 1,644,686 - 2,230,626 Real estate investment mutual funds 18,676,021 24,651,143 - 43,327,164 International equity mutual funds 60,552,367 90,826,695 177,540 3,549,192 155,105,794 Domestic equity mutual funds 15,781,599 37,607,367 3,123,749 13,335,777 69,848,492 Domestic debt securities mutual funds - - 246,496 14,300,794 14,547,290 International debt securities mutual funds 16,579,964 - - 16,579,964 Money market funds 4,316,575 3,136,073 - 116,896 7,569,544 $ 185,129,170 $ 318,415,903 $ 3,547,785 $ 32,209,946 $ 539,302,804 75 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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 &Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AAA $ 373,111 $ 492,028 $ 44,848 $ - $ 909,987 S&P AAAm - - - 116,896 116,896 AA 139,046 - 139,046 BBB 62,602 9,534,089 9,596,691 BB - - - 4,766,695 4,766,695 Not rated 30,610,600 45,465,045 - 76,075,645 U.S.Government Guaranteed 18,164,985 24,873,594 - - 43,038,579 Assets not subject to credit risk 135,980,474 247,585,236 3,301,289 17,792,266 404,659,265 $ 185,129,170 $ 318,415,903 $ 3,547,785 $ 32,209,946 $ 539,302,804 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, 2020, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employee Police and Fire Investment Retirement Retirement Type Issuer System System Corporate Bonds Western Assets Funds,Inc. 12.7% 11.6% Government Bonds United States of America 10.6% 8.6% Common Stock Northern Trust Bank,N.A. 8.8% 1.0% 76 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) Concentration of Credit Risk(concluded) The City's pension and other postemployment benefits investment policies require diversification of fixed income securities;however,they do not specify percentages of dollar amounts by industry or issuer. Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals International equities Canada $ 488,962 $ 760,027 $ $ - $ 1,248,989 Italy 34,373 82,940 - 117,313 Netherlands 16,423 39,686 - 56,109 France 57,283 138,331 - 195,614 Israel 259,637 368,640 - 628,277 Switzerland 7,248 17,380 - 24,628 International mutual funds 60,552,367 107,406,659 177,540 3,549,192 171,685,758 $ 61,416,293 $ 108,813,663 $ 177,540 $ 3,549,192 $ 173,956,688 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 30,2020,maturities of the City's pension and other postemployment benefits trust debt securities, money market funds and collateralized mortgage obligations were as follows: Employee Retirement System Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total U.S.government bonds $ - $ 528,618 $ 1,282,391 $ 891,609 $ 2,702,618 U.S.agencies 417,081 - - - 417,081 U.S.government mortgage backed securities 5 123,664 855,021 13,687,413 14,666,103 U.S.government issued commercial mortgage backed securities - 483,627 960,999 1,418,133 2,862,759 Commercial mortgage backed securities - 26,382 210,102 349,456 585,940 Total $ 417,086 $ 1,162,291 $ 3,308,513 $ 16,346,611 21,234,501 Fixed income investments with no maturity Domestic corporate securities mutual funds 23,597,621 Money market funds 4,316,575 $ 49,148,697 77 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Police and Fire Retirement System Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total U.S.government bonds $ - $ 669,502 $ 1,786,197 $ 2,065,562 $ 4,521,261 U.S.agencies 577,884 - - - 577,884 U.S.government mortgage backed securities 5 186,696 1,723,523 17,690,858 19,601,082 U.S.government issued commercial mortgage backed securities - 633,142 1,537,077 2,192,165 4,362,384 Commercial mortgage backed securities - 33,920 420,204 1,190,562 1,644,686 Total $ 577,889 $ 1,523,260 $ 5,467,001 $ 23,139,147 30,707,297 Fixed income investments with no maturity Domestic corporate securities mutual funds 36,987,297 Money market funds 3,136,073 $ 70,830,667 Employees'Money Purchase Pension Plan Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities $ $ 246,496 $ $ - $ 246,496 Total $ $ 246,496 $ $ - $ 246,496 Retiree Healthcare VEBA Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities $ 116,896 $ $ 14,300,784 $ - $ 14,417,680 Total $ 116,896 $ $ 14,300,784 $ - $ 14,417,680 Securities Lending Under contracts approved by the City,the pension and other postemployment benefits trust funds are permitted to lend their securities to broker-dealers and banks(borrowers)for collateral that will be returned for the same securities in the future. The pension trust and other postemployment benefits funds' custodial banks manage the securities lending programs and receive cash as collateral. Collateral cash is initially pledged at 100%of the fair value of the securities lent,and may not fall below 95%of the market value of the loaned security during the term of the loan. At all times,collateral cannot be more than$100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned. Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end,the pension trust funds have no credit risk exposure to borrowers because the collateral held by the custodians exceeds the market value of the related securities lent. At June 30, 2020,the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $8,395,820 and $13,160,321, respectively, for which the Plans' received cash collateral of$8,544,786 and$13,388,884, 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. 78 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (continued) 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, 2020: Employee Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 2,702,616 $ - $ 2,702,616 U.S.agencies - 17,945,944 - 17,945,944 Domestic equities 32,532,288 - - 32,532,288 International equities 863,926 - 863,926 Collateralized mortgage obligations 585,940 - 585,940 Emerging market equities 7,574,273 - - 7,574,273 Mutual funds 99,931,587 9,702,365 - 109,633,952 Money market funds 4,316,575 - - 4,316,575 $ 145,804,589 $ 30,350,925 $ - 176,155,514 Investments carried at net asset value Real estate investment trusts 8,973,656 $ 185,129,170 79 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4- DEPOSITS AND INVESTMENTS (concluded) Police and Fire Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ - $ 4,521,261 $ - $ 4,521,261 U.S.agencies - 24,541,350 - 24,541,350 Domestic equities 63,164,824 - - 63,164,824 International equities 1,407,004 - 1,407,004 Collateralized mortgage obligations 1,644,686 - 1,644,686 Emerging market equities 13,348,239 - - 13,348,239 Mutual funds 164,632,195 13,740,087 - 178,372,282 Money market funds 3,136,073 - - 3,136,073 $ 247,333,021 $ 42,802,698 $ - 290,135,719 Investments carried at net asset value Real estate investment trusts 10,911,056 International equity mutual funds 17,369,128 $ 318,415,903 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, 2020. 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, 2020, the City has $1,963,651 outstanding on initial commitments of$4,300,000 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. Employees'Money Purchase Pension Plan INVESTMENT TYPE Level 1 Level 2 Level 3 Total Mutual funds $ 3,547,785 $ $ $ 3,547,785 Retiree Healthcare VEBA INVESTMENT TYPE Level 1 Level 2 Level 3 Total Emerging market equities $ 907,287 $ - $ - $ 907,287 Mutual funds 31,185,763 - - 31,185,763 Money market funds 116,896 - - 116,896 $ 32,209,946 $ - $ - $ 32,209,946 80 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 5 - RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 12,411,488 $ 5,523,458 $ 396,621 Taxes receivable 1,223,489 - - Special assessments receivable 153,378 Loans receivable 1,220,642 - Accrued interest receivable 2,231,696 245,943 Due from other governments 15,953,159 - Lease receivable - 24,043,318 Allowance for uncollectable accounts (610,000) (523,126) (25,280) $ 32,583,852 $ 29,289,593 $ 371,341 Amount not expected to be collected within one year $ 3,575,471 $ 23,376,782 $ 160,495 NOTE 6- CAPITAL ASSETS Capital asset activity for the year ended June 30,2020,was as follows: Balance Balance July 1,2019 Additions Deletions June 30,2020 Governmental Activities Capital assets not being depreciated Land $ 25,302,787 $ 132,510 $ $ 25,435,297 Construction in process - 789,258 789,258 Subtotal 25,302,787 921,768 26,224,555 Capital assets being depreciated Land improvements 26,588,886 236,096 26,824,982 Equipment and vehicles 41,131,182 2,498,601 (1,223,183) 42,406,600 Buildings 136,275,787 - 136,275,787 Infrastructure 305,738,001 3,378,993 309,116,994 Subtotal 509,733,856 6,113,690 (1,223,183) 514,624,363 Less accumulated depreciation for: Land improvements (12,518,895) (1,130,908) - (13,649,803) Equipment and vehicles (33,894,190) (2,728,444) 1,162,627 (35,460,007) Buildings (90,642,9431 (4,542,0741 - (95,185,0171 Infrastructure (218,712,776) (4,823,229) (223,536,005) Subtotal (355,768,804) (13,224,655) 1,162,627 (367,830,832) Net capital assets being depreciated 153,965,052 (7,110,965) (60,556) 146,793,531 Capital assets,net $ 179,267,839 $ (6,189,197) $ (60,556) $ 173,018,086 81 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6- CAPITAL ASSETS (continued) At June 30, 2020, the City's governmental activities had outstanding commitments through construction contracts of approximately$2,835,000. Depreciation expense was charged to the following governmental activities: Depreciation of governmental activities by function General government $ 498,828 Public safety 665,633 Public works 4,878,803 Recreation and culture 2,983,925 Community development 1,812,352 Internal service fund 2,385,114 Total depreciation expense-governmental activities $ 13,224,655 Balance Balance July 1,2019 Additions Deletions June 30,2020 Business-Type Activities Capital assets not being depreciated Land $ 12,470,361 $ - $ (100,854) $ 12,369,507 Construction in progress 13,544,832 3,818,465 17,363,297 Subtotal 26,015,193 3,818,465 (100,854) 29,732,804 Capital assets being depreciated Land improvements 29,590,223 - 29,590,223 Equipment and vehicles 7,991,082 1,804,144 9,795,226 Buildings 186,766,378 160,498 186,926,876 Sewers 344,149,068 384,354 344,533,422 Subtotal 568,496,751 2,348,996 570,845,747 Less accumulated depreciation for: Land improvements (15,334,572) (605,642) (15,940,214) Equipment and vehicles (7,023,296) (509,521) (7,532,817) Buildings (117,676,881) (3,329,518) (121,006,399) Sewers (116,026,432) (7,008,334) (123,034,766) Subtotal (256,061,181) (11,453,015) (267,514,196) Net capital assets being depreciated 312,435,570 (9,104,019) 303,331,551 Capital assets,net $ 338,450,763 $ (5,285,554) $ (100,854) $ 333,064,355 At June 30, 2020, the City's business-type activities had outstanding commitments through construction contracts of approximately$2,818,000. 82 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6-CAPITAL ASSETS (concluded) Depreciation expense was charged to the following business-type activities: Depreciation of business-type activities by function Sewage disposal system $ 10,561,371 Municipal parking system 648,754 Cemetery 9,827 Golf 77,191 Recycling 155,872 Total depreciation expense-business-type activities $ 11,453,015 NOTE 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 $ 8,105,574 $ 2,086,851 $ 2,789,988 Accrued payroll 2,238,834 126,009 - Deposits payable - 73,828 - Due to other governments 3,754,680 - - Claims incurred but not reported 400,000 - - Other 821,938 - 272,163 $ 15,321,026 $ 2,286,688 $ 3,062,151 NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS The composition of interfund balances of the primary government as of June 30, 2020,was as follows: Due to and from primary government funds Due to nonmajor governmental funds General fund $ 576,200 Nonmajor governmental funds 519,806 Total $ 1,096,006 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. 83 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS (concluded) Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ 188,126 $ - Municipal parking system - 188,126 $ 188,126 $ 188,126 Advances are made to the Special Assessments Fund to prevent a negative equity in pooled cash. For the year ended June 30,2020,interfund transfers consisted of the following: Transfers to General Fund from: Sewage disposal system fund $ 1,250,000 Municipal parking system fund 1,320,895 Nonmajor governmental funds 100,000 $ 2,670,895 Transfers to nonmajor governmental funds from: General fund $ 5,854,471 Municipal parking system fund 1,952,000 Nonmajor governmental funds 6,503,145 $ 14,309,616 Transfers to nonmajor enterprise funds from: Nonmajor governmental funds $ 761,000 Transfer to internal service funds from: Municipal parking system fund $ 930,000 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. 84 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS 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: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rates Amount July 1,2019 (Deletions) June 30,2020 One Year Governmental Activities 2013 Energy Efficiency Refunding Bonds-Limited Tax 1/15/2013 2.40% $ 5,645,000 $ 2,475,000 $ (880,000) $ 1,595,000 $ 940,000 2010 Recovery Zone Economic Development Bonds 12/13/2010 3.40%-7.25% 3,200,000 2,170,000 (165,000) 2,005,000 170,000 2015 Lansing Center Refunding Bonds-Limited Tax 12/17/2015 2.00%-3.00% 1,770,000 915,000 (300,000) 615,000 305,000 2018 Michigan Transportation Fund Bonds 9/12/2018 3.50% 1,665,000 1,665,000 (540,000) 1,125,000 555,000 2019 General Obligation Refunding-Limited Tax* 4/10/2019 3.00%-4.00% 6,938,699 6,938,699 (486,468) 6,452,231 505,452 Total Governmental Activities 19,218,699 14,163,699 (2,371,468) 11,792,231 2,475,452 Business-type Activities 2009 Building Authority Refunding Bonds-Limited Tax 11/9/2009 6.25%-6.85% 8,161,691 2,767,490 - 2,767,490 861,849 2014 Building Authority Refunding Bonds-Limited Tax 3/21/2014 4.75% 7,245,000 7,245,000 - 7,245,000 - 20 15 Building Authority Refunding Bonds-Limited Tax 12/17/2015 2.00%-3.00% 6,765,000 3,465,000 (1,130,000) 2,335,000 1,150,000 2017 Building Authority Refunding Bonds-Limited Tax 12/11/2017 3.305%-4.075% 10,805,000 10,805,000 - 10,805,000 - 1998 Limited Tax Sewer Bond-5005-10 6/25/1998 2.25% 10,539,950 634,950 (634,950) - - 1999 Limited Tax Sewer Bond-5005-11 4/1/1999 2.50% 10,120,000 635,000 (635,000) - - 2000 Limited Tax Sewer Bond-5005-12 3/30/2000 2.50% 9,447,830 1,147,830 (570,000) 577,830 577,830 2001 Limited Tax Sewer Bond-5005-13 3/29/2001 2.50% 10,573,046 1,918,046 (625,000) 1,293,046 645,000 2002 Limited Tax Sewer Bond-5005-14 3/28/2002 2.50% 12,381,131 3,621,131 (690,000) 2,931,131 705,000 2003 Limited Tax Sewer Bond-5005-15 3/27/2003 2.50% 10,145,688 3,560,688 (565,000) 2,995,688 575,000 2004 Limited Tax Sewer Bond-5005-16 3/25/2004 2.125% 3,842,649 1,497,649 (200,000) 1,297,649 205,000 2005 Limited Tax Sewer Bond-5005-17 3/25/2004 2.125% 8,003,778 3,093,778 (420,000) 2,673,778 425,000 2005 Limited Tax Sewer Bond-5005-18 3/34/2005 1.625% 13,389,371 5,429,371 (680,000) 4,749,371 680,000 2006 Limited Tax Sewer Bond-5005-19 3/30/2006 1.625% 18,216,346 8,681,346 (930,000) 7,751,346 940,000 2007 Limited Tax Sewer Bond-5005-20 3/29/2007 1.625% 24,244,726 12,559,726 (1,225,000) 11,334,726 1,225,000 2008 Limited Tax Sewer Bond-5005-21 4/1/2008 2.50% 27,494,933 16,705,453 (1,340,000) 15,365,453 1,370,000 2008 Limited Tax Sewer Bond-5005-22 4/17/2009 2.50% 14,455,604 10,120,604 (670,000) 9,450,604 685,000 2010 Limited Tax Sewer Bond-5411-01 1/22/2010 2.50% 8,548,000 6,333,000 (395,000) 5,938,000 400,000 2015 Limited Tax Sewer Bond-5211-01 4/9/2014 2.50% 3,372,405 2,822,405 (145,000) 2,677,405 150,000 2015 Limited Tax Sewer Bond-5211-02 7/9/2014 2.50% 1,977,487 1,810,065 (95,000) 1,715,065 95,000 2016 Limited Tax Sewer Bond-5581-01 4/11/2016 2.50% 1,309,872 3,081,310 (135,000) 2,946,310 135,000 2019 Limited Tax Sewer Bond-5005-23 4/10/2018 2.00% 8,241,804 - 8,241,804 8,241,804 385,000 2019 Limited Tax Sewer Bond-5672-01 6/7/2019 2.00% 56,280 - 56,280 56,280 - 2019 General Obligation Refunding-Limited Tax* 4/10/2019 3.00%-4.00% 7,681,301 7,681,301 (538,532) 7,142,769 559,548 Total Business-type Activities 237,018,892 115,616,143 (3,325,398) 112,290,745 11,769,227 Total General Obligation Bonds $ 256,237,591 $ 129, 779,842 $ (5,696,866) $ 124,082,976 $ 14,244,679 *These debt issues are split between governmental and business-type activities 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: Amounts Issuance Interest Original Balance Balance Due Within Date Rates Amount July 1,2019 Deletions June 30,2020 One Year Business-type Activities 2013 Sewer Revenue Refunding Bonds 12/27/2012 2.40% $ 21,765,000 $ 14,075,000 $ (1,550,0001 $ 12,525,000 $ 1,550,000 85 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS (continued) 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$2,163,188 and$17,075,224 respectively. Installment Purchase Agreements The government has entered into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rate Amount July 1,2019 (Deletions) June 30,2020 One Year Governmental Activities 2014 Lease Purchase Agreement-Recycling Trucks 9/12/2013 1.96% $ 1,550,855 $ 520,243 $ (205,290) $ 314,953 $ 209,333 2015 Ballpark Improvements Installment Purchase 2/13/2015 3.00% 13,500,000 10,753,777 (838,657) 9,915,120 864,006 $ 15,050,855 $ 11,274,020 $ (1,043,947) $ 10,230,073 $ 1,073,339 Business-type Activities 2014 Lease Purchase Agreement-Recycling Trucks 9/12/2013 1.96% $ 1,737,000 $ 582,920 $ (230,023) $ 352,897 $ 234,554 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: Amounts Issuance Interest Original Balance Balance Due Within Date Rate Amount July 1,2019 Deletions June 30,2020 One Year Governmental Activities HUD Section 108 Loan 5/28/2015 1.52% $ 5,900,000 $ 5,900,000 $ - $ 5,900,000 $ 385,000 2014 SIB Loan 3/27/2014 3.00% 1,828,428 1,342,002 (241,580) 1,100,422 248,736 $ 7, 228,428 $ 7, 442,002 $ (241,580) $ 7,000,422 $ 333,736 Prior Year Defeased Debt As of June 30,2020,defeased bonds related to the prior year refunding of the 2005 Building Authority Refunding Bonds were still outstanding in the amount of$2,555,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1 of years 2021 through 2022. As of June 30, 2020, 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. As of June 30,2020,defeased bonds related to the prior year refunding of the 2012 and 2018 Building Authority Refunding Bonds were still outstanding in the amount of$9,600,000. The defeased bonds are scheduled to be paid by the escrow agent in installments on May 1 of years 2021 through 2027. 86 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS (continued) The following is a summary of changes in long-term debt (including current portion) of the City for the year ended June 30,2020. Amounts Balance Balance Due Within July 1,2019 Additions Deletions June 30,2020 One Year Governmental Activities General obligation bonds $ 14,163,699 $ $ (2,371,468) $ 11,792,231 $ 2,475,452 Notes from direct borrowings and direct placements Installment purchase agreements 11,274,020 (1,043,947) 10,230,073 1,073,339 Loans payable 7,242,002 (241,580) 7,000,422 633,736 32,679,721 (3,656,995) 29,022,726 4,182,527 Deferred amounts For issuance discounts (52,488) 6,833 (45,655) - For issuance premiums 814,209 (66,142) 748,067 - Compensated absences 9,968,748 701,554 (1,462,227) 9,208,075 1,462,227 Accrued workers compensation 2,310,982 1,190,809 (944,474) 2,557,317 573,631 $ 45,721,172 $ 1,892,363 $ (6,123,0051 $ 41,490,530 $ 6,218,385 Business-type Activities General obligation bonds $ 115,616,143 $ 8,298,084 $ (11,623,482) $ 112,290,745 $ 11,769,227 Revenue bonds 14,075,000 - (1,550,000) 12,525,000 1,550,000 Notes from direct borrowings and direct placements Installment purchase agreements 582,920 - (230,023) 352,897 234,554 130,274,063 8,298,084 (13,403,505) 125,168,642 13,553,781 Deferred amounts For issuance discounts (340,815) 65,291 (275,524) - For issuance premiums 2,438,581 - (272,726) 2,165,855 - Compensated absences 855,143 102,283 (79,306) 878,120 79,306 $ 133,226,972 $ 8,400,367 $ (13,690,2461 $ 127,937,093 $ 13,633,087 Component Units Brownfield Redevelopment Authority Revenue bonds $ - $ 19,260,000 $ $ 19,260,000 $ Direct borrowings and direct placements Loan payable 500,000 - 500,000 500,000 19,260,000 19,760,000 Tax Increment Financing Authority General obligation bonds 27,860,758 - (260,758) 27,600,000 Direct borrowings and direct placements Lease contract 11,029,889 11,029,889 38,890,647 - (260,758) 38,629,889 Add accreted interest on lease contract 5,877,152 1,149,246 - 7,026,398 Less unamortized discount on general obligation bonds (72,462) 6,039 (66,423) 44,695,337 1,149,246 (254,719) 45,589,864 Total component units $ 45,195,337 $ 2 4409,246 $ (254,7191 $ 65,349,864 $ 87 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS(concluded) Details applicable to the Component Units long-term obligations are readily available in their separate issued financial statements and are not duplicated here in accordance with GASB 61. 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 General Obligation Bonds Revenue Bonds Ending Governmental Activities Business-Type Activities Business-Type Activities June 30, Principal Interest Principal Interest Principal Interest 2021 $ 2,475,452 $ 1,405,288 $ 11,769,227 $ 3,709,565 $ 1,550,000 $ 535,688 2022 2,232,063 1,054,132 11,346,171 3,493,651 1,550,000 458,188 2023 716,302 334,898 9,574,778 3,317,815 1,550,000 380,688 2024 747,659 301,656 9,469,125 2,795,368 1,575,000 303,188 2025 776,389 265,956 8,414,299 1,873,619 1,575,000 224,438 2026-2030 3,883,293 740,966 33,654,030 6,855,219 4,725,000 293,344 2031-2035 961,073 97,576 16,495,001 3,764,399 - - 2036-2040 - - 11,568,114 1,111,265 - - $ 11,792,231 $ 4,200,472 $ 112,290,745 $ 26,920,901 $ 12,525,000 $ 2,195,534 Debt service requirements to maturity for the notes from direct borrowings and direct placements of the City are as follows: Year Direct Borrowings and Direct Placements Ending Governmental Activities Business-Type Activities June 30, Principal Interest Principal Interest 2021 $ 1,707,075 $ 505,109 $ 234,554 $ 5,773 2022 1,642,029 459,450 118,343 1,743 2023 1,581,002 413,819 - - 2024 1,626,724 367,543 2025 1,452,731 319,108 2026-2030 7,645,934 921,472 2031-2034 1,575,000 85,844 - $ 17,2301495 $ 3,072,345 $ 352,897 $ 7,516 88 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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 Total Fund Balances Nonspendable Inventory $ 9,241 $ 1,223,600 $ 1,232,841 Prepaids 176,128 1,425 177,553 Corpus of permanent funds - 1,944,962 1,944,962 Restricted Major and local streets 15,347,630 15,347,630 Drug law and narcotics enforcement 1,414,439 1,414,439 Downtown Lansing-community development 79,547 79,547 Debt service 29,361 29,361 Building department 1,677,085 1,677,085 Community development 2,593 2,593 Committed City parks 490,167 490,167 Capital improvements - 10,147,250 10,147,250 Unassigned 9,935,641 (82,237) 9,853,404 TOTAL FUND BALANCES $ 10,121,010 $ 32,275,822 $ 42,396,832 NOTE 11-NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30,2020,was as follows: Govermmntal Business-type Component Activities Activities Units Capital assets Capital assets not being depreciated $ 26,224,555 $ 29,732,804 $ - Capital assets being depreciated,net 146,793,531 303,331,551 17,846 Total capital assets 173,018,086 333,064,355 17,846 Related debt General obligation bonds 11,792,231 112,290,745 - Revenue bonds - 12,525,000 Installment purchase agreements 10,230,073 352,897 Loans payable 7,000,422 - Unamortized bond discounts (45,655) (275,524) Unamortized bond premiums 748,067 2,165,855 Deferred charge on bond refunding (290,238) (4,077,697) Amounts under leases receivable (24,043,318) Total related debt 29,434,900 98,937,958 - Net investment in capital assets $ 143,583,186 $ 234,126,397 $ 17,846 89 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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. NOTE 13 - RISK MANAGEMENT The City of Lansing is exposed to various risks of loss that are covered by the City's policies, including losses related to issues of cyber security, liability, errors and omissions, flood, boiler and machinery, property, employee bonding, auto, crime, ERISA considerations, and employee injuries. The City carries commercial insurance to cover these risks. Settled claims related to the commercial insurance have not exceeded the amount of insurance coverage during the past three years. 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, 2020 2019 Estimated liability,beginning of year $ 750,000 $ 900,000 Estimated claims incurred, including changes in estimates 11,449,390 9,849,331 Claim payments (10,299,390) (9,999,331) Estimated liability,end of year $ 400,000 $ 750,000 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, 2020 2019 Estimated liability,beginning of year $ 2,310,982 $ 2,292,221 Estimated claims incurred, including changes in estimates 1,190,809 978,209 Claim payments (944,474) (959,448) Estimated liability,end of year $ 2,557,317 $ 2,310,982 90 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 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 30,2020 was$19.44 per$1,000 of taxable value. NOTE 15 - CONTINGENT LIABILITIES The City and its component units participate in a number of Federal and State assisted programs that are subject to compliance audits. The audit of the Federal programs and the periodic program compliance audits of many of the State programs have not yet been conducted, completed, or resolved. Accordingly, the City's and its component units'compliance with applicable grant requirements will be established at some future date. The amount,if any,of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the City and its component units expect such amounts,if any,to be immaterial. There are various other legal actions pending against the City and its component units. Due to the inconclusive nature of many of the actions, it is not possible for the City's Counsel to determine the probable outcome or a reasonable estimate of the potential liability, if any. These actions, for which a reasonable estimate can be determined of the potential liability,if any,are considered by the City and/or component unit management and legal counsel to not have a material effect on the financial condition of the City. NOTE 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. 91 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Plan Description (concluded) 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. Plan Membership At December 31,2019,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 940 Inactive employees entitled to but not yet receiving benefits 152 Vested and non-vested active participants 413 Total employees covered by the Plan 1,505 92 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 two 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: Multiplier Bargaining Unit/Employee 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% 93 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS(continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 30,2020 was 44.02%of projected valuation payroll. Contribution Bargaining Unit/Employee 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, 2020,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was -0.34%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. Concentrations At June 30,2020,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 Note 4 for the details of these concentrations. 94 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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. The market value change from December 31, 2019 to June 30, 2020 has been included in the Pension accumulation fund amount as it has not been allocated to the other funds as of year-end. A summary of the Plan reserves at June 30,2020 is as follows: Reserve/Group Balance Employee savings fund $ 10,576,130 Retirement reserve fund 136,352,426 Pension accumulation fund (8,735,323) Members benefit fund 14,695,230 Health insurance fund 36,018,599 Net Pension Liability The components of the net pension liability for the employees'retirement system at June 30,2020 were as follows: Total Pension Liability $ 310,941,585 Plan Fiduciary Net Position 152,888,463 Net Pension Liability $ 158,053,122 Plan fiduciary net position as percentage of total Pension Liability 49.17% Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31,2019,rolled forward to June 30,2020,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,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. 95 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) The actuarial assumptions used in the December 31, 2019 valuation were based on the results of actuarial experience analysis conducted in December 2016. There were no changes in actuarial assumptions during fiscal year 2020. 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, 2020,and the final investment return assumption,are summarized in the following table: Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 27.00% 5.75% 1.55% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 25.00% 1.65% 0.41% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.25% 0.26% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 6.00% 5.00% 0.30% 100.00% 4.53% Inflation 2.75% Risk adjustment (0.03%) Investment rate of return 7.25% 96 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 303,730,647 $ 165,585,569 $ 138,145,078 Changes for the Year Service cost 2,738,099 - 2,738,099 Interest on total pension liability 21,360,398 - 21,360,398 Difference between expected and actual experience 7,219,344 - 7,219,344 Employer contributions - 10,698,401 (10,698,401) Employee contributions - 1,286,273 (1,286,273) Net investment income(loss) - (540,861) 540,861 Benefit payments,including employee refunds (24,106,903) (24,106,903) - Administrative expense - (34,016) 34,016 Net changes 7,210,938 (12,697,106) 19,908,044 Balances as of June 30,2020 $ 310,941,585 $ 152,888,463 $ 158,053,122 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: 1%Decrease Current Rate 1%Increase 6.25% 7.25% 8.25% Net pension liability $ 185,452,884 $ 158,053,122 $ 132,787,275 97 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense of$18,549,326. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 4,812,896 $ 853,242 Changes in assumptions - - Changes in proportion and differences between employer contributions and share of contributions - - Net difference between projected and actual earnings on pension plan investments 11,441,271 - Total $ 16,254,167 $ 853,242 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2021 $ 3,970,381 2022 5,944,967 2023 3,083,266 2024 2,402,311 $ 15,400,925 At June 30, 2020,the City did not have any outstanding contributions to the pension plan required for the year ended June 30, 2020. 98 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM Plan Description The City sponsors and administers the Police and Fire Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers all police officers and fire fighters who are full-time employees of the City. The Plan was established and may be amended by the City Council and is administered by an eight member Board of Trustees. The Board is comprised of the Mayor of the City,one member of the City Council appointed by the City Council,the City Treasurer,a resident of the City who shall be appointed by the Mayor,by and with the consent of Council,two members each of the police and fire departments,to be elected by all the members of their respective departments. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. 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. 99 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Plan Membership At December 31, 2019,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 756 Inactive employees entitled to but not yet receiving benefits 52 Vested and non-vested active participants 356 Total employees covered by the Plan 1,164 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 two 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, 2020 was 51.92%of projected valuation payroll. Investment Policy The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was 0.37%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. 100 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Concentrations At June 30,2020,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, 2020 is as follows: Reserve/Group Balance Retirement reserve fund $ 280,136,810 Health insurance fund 43,508,802 Net Pension Liability The components of the net pension liability for the police and fire retirement system at June 30, 2020,were as follows: Total Pension Liability $ 465,521,706 Plan Fiduciary Net Position 280,136,810 Net Pension Liability $ 185,384,896 Plan fiduciary net position as percentage of total Pension Liability 60.18% Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2019,rolled forward to June 30,2020,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,including inflation. 101 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) 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, 2019 valuation were based on the results of actuarial experience analysis conducted in December 2016. There were no changes in actuarial assumptions during fiscal year 2020. 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, 2020,and the final investment return assumption,are summarized in the following table: Long-Term Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 32.00% 5.75% 1.84% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income 22.00% 1.65% 0.36% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 5.00% 4.25% 0.21% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 5.00% 0.25% 100.00% 4.67% Inflation 2.75% Risk adjustment (0.17%) Investment rate of return 7.25% 102 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 461,355,972 $ 294,201,491 $ 167,154,481 Changes for the Year Service cost 6,526,273 - 6,526,273 Interest on total pension liability 32,689,419 - 32,689,419 Difference between expected and actual experience (1,062,537) - (1,062,537) Employer contributions - 15,457,647 (15,457,647) Employee contributions - 3,459,452 (3,459,452) Net investment income(loss) - 1,047,240 (1,047,240) Benefit payments,including employee refunds (33,987,421) (33,987,421) - Administrative expense - (41,599) 41,599 Net changes 4,165,734 (14,064,681) 18,230,415 Balances as of June 30,2020 $ 465,521,706 $ 280,136,810 $ 185,384,896 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: 1%Decrease Current Rate 1%Increase 6.25% 7.25% 8.25% Net pension liability $ 231,735,911 $ 185,384,896 $ 143,089,647 103 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2020, the City recognized pension expense of$29,083,500. At June 30, 2020, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 7,360,919 $ 796,903 Changes in assumptions 411,761 - Changes in proportion and differences between employer contributions and share of contributions - - Net difference between projected and actual earnings on pension plan investments 14,954,259 - Total $ 22,726,939 $ 796,903 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2021 $ 6,892,607 2022 6,924,587 2023 4,193,184 2024 3,919,658 $ 21,930,036 At June 30,2020,the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30,2020. For governmental activities,pension liabilities are expected to be liquidated by the general fund. 104 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16- PENSION PLANS (concluded) 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 and Fire Retirement Retirement System System Total Net pension liability $ 158,053,122 $ 185,384,896 $ 343,438,018 Deferred outflows-pension 16,254,167 22,726,939 38,981,106 Deferred inflows-pension 853,242 796,903 1,650,145 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, 2020 were$261,227 for plan members. Employee contributions for the year ended June 30, 2020 were $241,158. 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. NOTE 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. 105 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) PRIMARY GOVERNMENT(continued) 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. 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. Membership of the Plan consisted of the following at January 1, 2020, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 908 Terminated plan members entitled to but not yet receiving benefits 43 Active plan member 433 Total 1,384 106 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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, 2020,the City contributed $11,461,488 (direct benefit payments of$11,081,488 and City contributions of $380,000)to the Plan. Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on investments,net of investment expense,was 6.63%. 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, 2020,were as follows: Total OPEB Liability $ 256,120,135 Plan Fiduciary Net Position 68,228,558 Net OPEB Liability $ 187,891,577 Plan fiduciary net position as percentage of total OPEB liability 26.64% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2020,rolled forward to June 30,2020,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.75% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. 107 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) Mortality rates are assumed to be in accordance with the Pub2010G tables,with below median and headcount weighted,projected generationally using MP-2018. The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study conducted in 2016. Assumption changes-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.77%to 5.22% ➢ Change in mortality tables from RP-2000 to Pub-2010G 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 30,2020 is summarized in the table on the following page. 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, 2020 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 27.00% 5.75% 1.55% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 25.00% 1.65% 0.41% Real Assets 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.25% 0.26% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 6.00% 5.00% 0.30% 100.00% 4.53% Inflation 2.75% Risk adjustment -0.35% Investment rate of return 6.93% 108 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Discount Rate The discount rate used to measure the total OPEB liability was 4.48% (down from 5.77% in 2019). 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 90%. Based on this information,the City projects that benefits will be paid from the trust from 2034 through 2056. This is done on a closed group basis. Therefore,the expected trust return of 7.00% (between 2034 and 2056)is blended with the 20-year Aa bond rate of 2.45%(before 2034 and after 2056). The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase(Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 231,415,357 $ 63,482,044 $ 167,933,313 Changes for the year Service cost 1,518,385 - 1,518,385 Interest on total OPEB liability 13,143,168 - 13,143,168 Difference between expected and actual experience (19,498,451) - (19,498,451) Changes in assumptions 39,986,554 - 39,986,554 Employer contributions - 11,461,488 (11,461,488) Net investment income - 4,366,514 (4,366,514) Benefit payments (10,444,878) (10,444,878) - Administrative expense - (636,610) 636,610 Net changes 24,704,778 4,746,514 19,958,264 Balances as of June 30,2020 $ 256,120,135 $ 68,228,558 $ 187,891,577 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 4.48%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1%lower(3.48%) or 1%higher(5.48%)than the current rate: 1%Decrease Current 1%Increase 3.48% Discount Rate 5.48% Net OPEB liability $ 220,230,476 $ 187,891,577 $ 159,178,165 109 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) 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 8.25% pre-Medicare/6.5%Medicare,trending to an ultimate rate of 4.5%pre-Medicare/4.50/0 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 (7.25%pre-Medicare/5.5%Medicare,trending to an ultimate rate of 3.5%pre-Medicare/3.5%Medicare)or 1% higher(9.25%pre-Medicare/7.50/0 Medicare,trendingto an ultimate rate of 5.S%pre-Medicare/5.50/0 Medicare) than the current healthcare cost trend rates: Healthcare 1%Decrease Ultimate Cost 1%Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 160,497,367 $ 187,891,577 $ 220,940,828 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2020,the City recognized OPEB expense of$19,707,928. At June 30,2020,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 26,657,703 $ - Differences between expected and actual experience - 12,998,967 Net difference between projected and actual earnings on plan investments 739,264 - Total $ 27,396,967 $ 12,998,967 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2021 $ 7,046,292 2022 7,046,295 2023 289,968 2024 15,445 $ 14,398,000 110 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) 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 presented in the other supplementary information section of this report. At June 30,2020,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. Membership of the Plan consisted of the following at January 1, 2020, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 755 Terminated plan members entitled to but not yet receiving benefits 13 Active plan member 358 Total 1,126 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, 2020,the City contributed $14,971,737 (direct benefit payments of$13,661,737 and City contributions of $1,310,000)to the Plan. 111 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Rate of Return For the year ended June 30, 2020,the annual money-weighted rate of return on investments,net of investment expense,was 7.25%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. The components of the net OPEB liability of the City at June 30, 2020,were as follows: Total OPEB Liability $ 419,130,520 Plan Fiduciary Net Position 43,508,802 Net OPEB Liability $ 375,621,718 Plan fiduciary net position as percentage of total OPEB liability 10.38% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2020,rolled forward to June 30,2020,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.75% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. Mortality rates are assumed to be in accordance with the Pub2010S tables, below median and headcount weighted,projected generationally using MP-2018. Adjustments to these rates are as follows: ➢ Pre-retirement: 50%of base rates ➢ Post-disablement: Pub2010S The actuarial assumptions used in the January 1, 2020 valuation were based on the results of an actuarial experience study conducted in 2016. Assumption changes-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.19%to 3.62% ➢ Change in mortality tables from RP-2000 to Pub-2010S ➢ Medical trend,expected per-capital costs,and family coverage 112 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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 30,2020 is summarized in the table below. 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, 2020 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 32.00% 5.75% 1.84% International Equity-Developed 12.00% 5.90% 0.71% International Equity-Emerging 4.00% 7.25% 0.29% Fixed Income-U.S. 22.00% 1.65% 0.36% Real Assets 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 5.00% 4.25% 0.21% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 5.00% 0.25% 100.00% 4.67% Inflation 2.75% Risk adjustment -0.42% Investment rate of return 7.00% Discount Rate The discount rate used to measure the total OPEB liability was 3.62% (down from 5.19%in 2019). 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 90%, and until the fund is depleted. Based on this information, the City projects that benefits will be paid from the trust beginning in 2048 until depletion in 2067. This is done on a closed group basis. Therefore,the expected trust return of 7.00% (from 2048 to 2067) is blended with the 20-year Aa bond rate of 2.45% (before 2048 and after 2067). 113 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2019 $ 302,529,360 $ 39,200,746 $ 263,328,614 Changes for the year Service cost 3,599,431 - 3,599,431 Interest on total OPEB liability 15,551,609 15,551,609 Difference between expected and actual experience 18,584,560 18,584,560 Changes in assumptions 91,997,958 - 91,997,958 Employer contributions - 14,971,737 (14,971,737) Net investment income 2,998,056 (2,998,056) Benefit payments (13,132,398) (13,132,398) - Administrative expense - (529,339) 529,339 Net changes 116,601,160 4,308,056 112,293,104 Balances as of June 30,2020 $ 419,130,520 $ 43,508,802 $ 375,621,718 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 3.62%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1% lower (2.62%) or 1%higher(4.62%)than the current rate: 1%Decrease Current 1%Increase 2.62% Discount Rate 4.62% Net OPEB liability $ 436,024,188 $ 375,621,718 $ 322,827,605 114 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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 8.25% pre-Medicare/6.5%Medicare,trending to an ultimate rate of 4.5%pre-Medicare/4.50/0 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 (7.25%pre-Medicare/5.5%Medicare,trending to an ultimate rate of 3.5%pre-Medicare/3.5%Medicare)or 1% higher(9.25%pre-Medicare/7.50/0 Medicare,trending to an ultimate rate of 5.5%pre-Medicare/5.50/0 Medicare) than the current healthcare cost trend rates: Healthcare 1%Decrease Ultimate Cost 1%Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 326,864,641 $ 375,621,718 $ 435,754,893 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2020,the City recognized OPEB expense of$43,157,875. At June 30,2020,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ 78,324,884 $ 1,861,337 Differences between expected and actual experience 13,938,420 4,452,851 Net difference between projected and actual earnings on plan investments 849,557 - Contributions subsequent to the measurement date - - Total $ 93,112,861 $ 6,314,188 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2021 $ 26,221,549 2022 32,535,735 2023 28,092,189 2024 (50,800) $ 86,798,673 115 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (concluded) POLICE AND FIRE RETIREMENT SYSTEM (concluded) 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 presented in the other supplementary information section of this report. At June 30,2020,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 general fund. 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 and Fire Retirement Retirement System System Total Net OPEB liability $ 187,891,577 $ 375,621,718 $ 563,513,295 Deferred outflows - OPEB 27,396,967 93,112,861 120,509,828 Deferred inflows- OPEB 12,998,967 6,314,188 19,313,155 NOTE 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 2020 amounted to$197,697. 116 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 18-TAX ABATEMENTS(concluded) ➢ 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 2020. ➢ 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 2020 amounted to$4,086,475. ➢ 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 2020, through direct reimbursement to developers from current tax captures, amounted to$634,298. 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 2020 amounted to$255,106. NOTE 19-ASSETS HELD BY FOUNDATION During 2020 the City contributed $1,296,395 from the sale of Waverly Park to the City of Lansing Parks and Recreation Endowment Fund,which is held by the Capital Region Community Foundation (CRCF) on behalf of the City, from which only a certain component is spendable. The expenditure related to the contribution is recorded within a nonmajor capital project fund. The CRCF has explicit variance power and therefore these amounts are not shown in the financial statements of the City. This variance power allows CRCF to modify any restrictions or considerations on the distributions of the funds. Distributions will be made to the City annually as requested,according to the spending guidelines. The City elected not to receive any distributions this year. At June 30,2020,the fund has a value of$1,233,904. NOTE 20-UPCOMING ACCOUNTING PRONOUNCEMENTS In January 2017,the GASB issued Statement No.84,Fiduciary Activities. This Statement establishes criteria for identifying fiduciary activities for all state and local governments, focusing on (1) whether a government is controlling the assets of the fiduciary activity and (2)the beneficiaries for whom a fiduciary relationship exists. Separate criteria are included to identify fiduciary component units and postemployment benefit arrangements that are fiduciary activities. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2020-2021 fiscal year. In June 2017,the GASB issued Statement No.87,Leases. This Statement increases the usefulness of governments' financial statements by requiring recognition of certain lease assets and liabilities for leases that previously were classified as operating leases and recognized as inflows of resources or outflows of resources based on the payment provisions of the contract. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2021-2022 fiscal year. 117 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 20-UPCOMING ACCOUNTING PRONOUNCEMENTS(concluded) In June 2018, the GASB issued Statements No. 89, Accounting for Interest Cost Incurred Before the End of a Construction Period. This Statement establishes accounting requirements for interest cost incurred before the end of a construction period. This Statement also reiterates that in financial statements prepared using the current financial resources measurement focus, interest cost incurred before the end of a construction period should be recognized as an expenditure on a basis consistent with governmental fund accounting principles. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2020-2021 fiscal year. In May 2019,the GASB issued Statement No.91,Conduit Debt Obligations. This Statement will improve financial reporting by eliminating the existing option for issuers to report conduit debt obligations as their own liabilities, thereby ending significant diversity in practice. The clarified definition will resolve stakeholders'uncertainty as to whether a given financing is, in fact, a conduit debt obligation. Requiring issuers to recognize liabilities associated with additional commitments extended by issuers and to recognize assets and deferred inflows of resources related to certain arrangements associated with conduit debt obligations also will eliminate diversity, thereby improving comparability in reporting by issuers. Revised disclosure requirements will provide financial statement users with better information regarding the commitments issuers extend and the likelihood that they will fulfill those commitments. That information will inform users of the potential impact of such commitments on the financial resources of issuers and help users assess issuers'roles in conduit debt obligations. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2022-2023 fiscal year. In May 2020,the GASB issued Statement No.96,Subscription-based Information Technology Arrangements. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset - an intangible asset - and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments,including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases, as amended. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2022-2023 fiscal year. NOTE 21 - SUBSEQUENT EVENT Subsequent to year end, the City has approved borrowing $9,405,000 of capital improvement and refunding bonds to refund a portion of the 2010 General Obligation Limited Tax Bonds as described in Note 4 and to pay for the costs of certain public improvements in the City. 118 REQUIRED SUPPLEMENTARY INFORMATION 119 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes $ 42,875,000 $ 43,360,000 $ 41,305,799 $ (2,054,201) Income taxes 39,400,000 36,500,000 37,438,724 938,724 Licenses and permits 1,877,500 2,029,000 2,427,866 398,866 Intergovernmental 19,657,000 19,147,000 18,917,630 (229,370) Charges for services 10,168,300 8,321,800 8,315,878 (5,922) Fines and forfeits 2,149,200 1,349,200 1,537,865 188,665 Interest and rents 415,000 215,000 648,722 433,722 Other Donations and contributions 23,398,000 23,198,000 23,054,531 (143,469) TOTAL REVENUES 139,940,000 134,120,000 133,647,015 (472,985) EXPENDITURES Current General government Attorney's office 2,183,000 2,060,883 2,056,295 4,588 City clerk 1,404,000 1,482,186 1,475,995 6,191 Council 730,000 711,977 702,555 9,422 Courts 6,516,952 6,216,952 6,068,157 148,795 Internal audit 196,000 161,000 155,282 5,718 Finance 4,987,048 5,303,503 5,350,704 (47,201) Library rental 150,000 145,000 172,900 (27,900) Human resources 2,227,000 2,191,627 2,277,278 (85,651) Mayor 1,287,000 1,286,335 1,326,159 (39,824) Office of community media 478,000 478,000 413,594 64,406 Total general government 20,159,000 20,037,463 19,998,919 38,544 Public safety Police 44,885,000 45,170,051 44,035,657 1,134,394 Fire 36,066,000 36,300,309 35,163,854 1,136,455 Total public safety 80,951,000 81,470,360 79,199,511 2,270,849 Public works 12,173,000 12,162,686 12,085,207 77,479 120 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL (concluded) YEAR ENDED JUNE 30,2020 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) EXPENDITURES(concluded) Current(concluded) Recreation and culture $ 8,818,000 $ 8,371,761 $ 7,420,052 $ 951,709 Community and economic development Economic development&planning 5,762,000 5,284,319 5,132,691 151,628 Neighborhood&community engagement 1,166,000 1,141,000 1,006,145 134,855 Human relations/community services 1,658,000 1,656,911 1,638,492 18,419 Human services/community support 2,044,000 1,987,500 1,539,813 447,687 Total community and economic development 10,630,000 10,069,730 9,317,141 752,589 Debt service Principal 2,018,700 1,180,000 2,018,657 (838,657) Interest 402,300 85,000 400,520 (315,520) Total debt service 2,421,000 1,265,000 2,419,177 (1,154,177) TOTAL EXPENDITURES 135,152,000 133,377,000 130,440,007 2,936,993 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 4,788,000 743,000 3,207,008 2,464,008 OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets 105,000 105,000 66,088 (38,912) Transfers in 797,000 2,670,895 2,670,895 - Transfers out (5,690,000) (6,656,145) (5,854,471) 801,674 TOTAL OTHER FINANCING SOURCES(USES) (4,788,000) (3,880,250) (3,117,488) 762,762 NET CHANGE IN FUND BALANCE - (3,137,250) 89,520 3,226,770 Fund balance,beginning of year 10,031,490 10,031,490 10,031,490 Fund balance,end of year $ 10,031,490 $ 6,894,240 $ 10,121,010 $ 3,226,770 121 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cost $ 2,738,099 $ 2,719,559 $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest 21,360,398 21,512,099 21,994,837 22,403,009 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience 7,219,344 (2,559,726) (6,451,827) (23,183,264) (4,937,823) (6,422,330) - Changes of assumptions - 3,099,448 3,706,512 7,575,775 Benefit payments,including employee refunds (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net Change in Total Pension Liability 7,210,938 (1,798,108) (1,921,279) (17,275,496) 5,023,103 (3,355,060) 2,914,732 Total Pension Liability,beginning 303,730,647 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755 Total Pension Liability,ending $ 310,941,585 $ 303,730,647 $ 305,528,755 $ 307,450,034 $ 324,725,530 $ 319,702,427 $ 323,057,487 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 10,698,401 $ 10,880,932 $ 10,843,000 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 Contributions-employee 1,286,273 1,220,657 1,230,857 1,216,519 1,088,943 1,128,120 1,290,678 Net investment income(loss) (540,861) 8,437,568 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,635 Benefit payments,including employee refunds (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) Administrative expenses (34,016) (42,364) (57,822) (47,217) (126,486) (174,818) (741,037) Net Change in Plan Fiduciary Net Position (12,697,106) (2,973,247) (1,406,624) 5,915,528 (14,506,562) (6,562,186) 4,840,906 Plan Fiduciary Net Position,beginning 165,585,569 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754 Plan Fiduciary Net Position,ending $ 152,888,463 $ 165,585,569 $ 168,558,816 $ 169,965,440 $ 164,049,912 $ 178,556,474 $ 185,118,660 City's Net Pension Liability $ 158,053,122 $ 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 the total pension liability 49.17% 54.52% 55.17% 55.28% 50.52% 55.85% 57.30% Covered payroll $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 City's net pension liability as a percentage of covered payroll 650.3% 593.8% 604.1% 657.8% 696.0% 714.0% 640.9% 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 no changes in actuarial assumptions during fiscal year 2020. 122 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 10,698,401 $ 10,880,932 $ 10,185,060 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 $ 8,586,536 $ 7,596,879 $ 7,297,083 Contributions in relation to the actuarially determined contribution 10,698,401 10,880,932 10,843,000 10,246,872 10,181,620 10,547,556 9,361,009 8,586,536 7,523,534 7,297,083 Contribution deficiency(excess) $ $ $ (657,940) $ - $ $ - $ - $ - $ 73,345 $ Covered payroll $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 $ 20,874,143 $ 22,838,598 $ 26,068,735 Contributions as a percentage of covered payroll 44.02% 46.77% 47.82% 49.02% 44.10% 53.35% 43.50% 41.13% 32.94% 27.99% 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. Actuarial valuation information relative to the determination of contributions: Valuation date: December 31,2019 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percent of payroll over a closed period Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Projected 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 rates 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. 123 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense -0.34% 5.17% 5.87% 10.91% -1.60% 2.43% 13.67% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 124 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS LAST SIX FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cost $ 6,526,273 $ 6,801,669 $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest 32,689,419 31,573,535 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 Changes of benefit terms - - 779 - - - - Difference between expected and actual experience (1,062,537) 10,590,030 8,263,623 (19,308,117) 7,884,167 3,159,996 Changes of assumptions - 1,647,044 25,078,592 3,281,341 - Benefit payments,including employee refunds (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,270,724) Net Change in Total Pension Liability 4,165,734 16,355,980 15,329,894 11,321,648 18,230,902 10,700,735 8,240,987 Total Pension Liability,beginning 461,355,972 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 381,175,826 Total Pension Liability,ending $ 465,521,706 $ 461,355,972 $ 444,999,992 $ 429,670,098 $ 418,348,450 $ 400,117,548 $ 389,416,813 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 15,457,647 $ 13,554,239 $ 12,686,000 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 Contributions-employee 3,459,452 3,485,891 2,650,019 2,840,914 2,608,214 2,950,832 2,911,896 Net investment income(loss) 1,047,240 17,943,950 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments,including employee refunds (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,852,038) Administrative expenses (41,599) (53,318) (77,237) (50,996) (128,903) (173,849) (1,141,506) Net Change in Plan Fiduciary Net Position (14,064,681) 2,321,508 3,438,780 15,325,805 (22,181,251) (5,176,867) 20,183,830 Plan Fiduciary Net Position,beginning 294,201,491 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 280,289,686 Plan Fiduciary Net Position,ending $ 280,136,810 $ 294,201,491 $ 291,879,983 $ 288,441,203 $ 273,115,398 $ 295,296,649 $ 300,473,516 City's Net Pension Liability $ 185,384,896 $ 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 the total pension liability 60.18% 63.77% 65.59% 67.13% 65.28% 73.80% 77.16% Covered payroll $ 29,774,287 $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974 City's net pension asset as a percentage of covered payroll 622.6% 564.0% 538.S% 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 no changes in actuarial assumptions during fiscal year 2020. 125 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 15,457,647 $ 13,554,239 $ 12,562,547 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 $ 10,133,599 $ 9,242,173 $ 8,240,688 Contributions in relation to the actuarially determined contribution 15,457,647 13,554,239 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 10,133,599 9,057,080 8,240,688 Contribution deficiency(excess) $ - $ $ (123,453) $ - $ - $ - $ - $ - $ 185,093 $ - Covered payroll $ 29,774,287 29,638,532 28,435,952 27,585,521 27,078,405 24,407,740 26,405,725 25,636,626 26,121,411 25,128,835 Contributions as a percentage of covered payroll 51.92% 45.73% 44.61% 41.77% 40.20% 45.27% 42.60% 39.53% 34.67% 32.79% 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. Actuarial valuation information relative to the determination of contributions: Valuation date: December 31,2019 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percent of payroll over a closed period Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Projected 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 rates 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. 126 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN FISCAL YEARS (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 0.37% 6.30% 7.10% 12.06% -2.09% 3.04% 17.28% 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 OTHER POSTEMPLOYMENT BENEFITS PLAN- EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 1,518,385 $ 1,477,747 $ 1,438,197 $ 1,550,428 Interest 13,143,168 12,990,219 13,221,134 12,976,683 Difference between expected and actual experience (19,498,451) - (9,321,837) - Changes of assumptions 39,986,554 3,614,432 (2,727,829) Benefit payments,including refunds of member contributions (10,444,878) (10,573,488) (10,286,249) (10,116,593) Net Change in Total OPEB Liability 24,704,778 7,508,910 (7,676,584) 4,410,518 Total OPEB Liability,beginning 231,415,357 223,906,447 231,583,031 227,172,513 Total OPEB Liability,ending $ 256,120,135 $ 231,415,357 $ 223,906,447 $ 231,583,031 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 11,461,488 $ 11,848,485 $ 11,436,222 $ 11,305,756 OPEB plan net investment income 4,366,514 3,040,683 4,329,577 5,209,669 Benefit payments,including refunds of member contributions (10,444,878) (10,573,488) (10,286,249) (10,116,593) Administrative expenses (636,610) (548,939) (444,973) (389,163) Net Change in Plan Fiduciary Net Position 4,746,514 3,766,741 5,034,577 6,009,669 Plan Fiduciary Net Position,beginning 63,482,044 59,715,303 54,680,726 48,671,057 Plan Fiduciary Net Position,ending $ 68,228,558 $ 63,482,044 $ 59,715,303 $ 54,680,726 Plan's Net OPEB Liability $ 187,891,577 $ 167,933,313 $ 164,191,144 $ 176,902,305 Plan fiduciary net position as a percentage of the total OPEB liability 26.64% 27.43% 26.67% 23.61% Covered payroll $ 25,453,989 $ 23,720,424 $ 21,251,418 $ 20,901,289 Plan's net OPEB liability as a percentage of covered payroll 738.16% 707.97% 772.61% 846.37% 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-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.77%to 4.48% ➢ Change in mortality tables from RP-2000 to Pub-2010G ➢ Medical trend,expected per-capita costs,and family coverage 128 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN- EMPLOYEES' RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 10,504,140 $ 10,198,194 $ 10,910,284 $ 10,582,235 $ 11,447,334 $ 13,270,701 $ 14,057,619 $ 12,775,667 $ 14,915,958 $ 8,819,018 Contributions in relation to the actuarially determined contribution 11,461,488 11,848,485 11,436,222 11,305,756 8,814,471 9,212,322 11,048,992 10,147,780 10,363,847 9,773,601 Contribution deficiency(excess) $ (957,348) $ (1,650,291) $ (525,938) $ (723,521) $ 2,632,863 $ 4,058,379 $ 3,008,627 $ 2,627,887 $ 4,552,111 $ (954,583) Covered payroll $ 25,435,989 $ 23,720,424 $ 21,251,418 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 $ 20,874,143 $ 22,838,598 $ 26,068,735 Contributions as a percentage of covered payroll 45.1% 50.0% 53.8% 54.1% 38.2% 46.6% 51.3% 48.6% 45.4% 37.5% Actuarial valuation information relative to the determination of contributions: Valuation date: January 1,2020 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll,closed Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Investment rate of return 7.0%,net of OPEB plan investment expense and including inflation. Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality rates Pub2010G tables,below median and headcount weighted,projected generationally using MP-2018. Health care trend rates Pre-Medicare 8.25%for the first year,gradually decreasing by.25%to 4.50%in year 15 and thereafter. Medicare 6.50%for the first year,gradually decreasing by.25%to 4.50%in year 10 and thereafter. 129 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 6.63% 4.17% 7.10% 9.90% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 130 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN- POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 3,599,431 $ 3,503,096 $ 3,409,339 $ 3,749,359 Interest 15,551,609 15,565,892 15,994,328 15,584,783 Difference between expected and actual experience 18,584,560 - (17,811,401) - Changes of assumptions 91,997,958 18,652,834 (7,445,354) Benefit payments,including refunds of member contributions (13,132,398) (12,271,014) (11,960,557) (11,065,440) Net Change in Total OPEB Liability 116,601,160 25,450,808 (17,813,645) 8,268,702 Total OPEB Liability,beginning 302,529,360 277,078,552 294,892,197 286,623,495 Total OPEB Liability,ending $ 419,130,520 $ 302,529,360 $ 277,078,552 $ 294,892,197 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 14,971,737 $ 13,500,687 $ 13,163,201 $ 12,290,749 OPEB plan net investment income 2,998,056 290,543 3,572,965 3,487,200 Benefit payments,including refunds of member contributions (13,132,398) (12,271,014) (11,960,557) (11,065,440) Administrative expenses (529,339) (627,673) (600,644) (525,309) Net Change in Plan Fiduciary Net Position 4,308,056 892,543 4,174,965 4,187,200 Plan Fiduciary Net Position,beginning 39,200,746 38,308,203 34,133,238 29,946,038 Plan Fiduciary Net Position,ending $ 43,508,802 $ 39,200,746 $ 38,308,203 $ 34,133,238 Plan's Net OPEB Liability $ 375,621,718 $ 263,328,614 $ 238,770,349 $ 260,758,959 Plan fiduciary net position as a percentage of the total OPEB liability 10.38% 12.96% 13.83% 11.57% Covered payroll $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 Plan's net OPEB liability as a percentage of covered payroll 1261.56% 926.04% 1155.32% 945.27% 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-the actuarial assumptions were changed during the year as follows: ➢ Reduction in the investment rate of return assumptions from 7.25%to 7.00% ➢ Reduction in blended discount rate from 5.19%to 3.62% ➢ Change in mortality tables from RP-2000 to Pub-2010S ➢ Medical trend,expected per-capita costs,and family coverage 131 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SERVICES SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 Actuarially determined contributions $ 15,674,604 $ 15,218,062 $ 15,968,029 $ 19,759,521 $ 17,276,901 $ 17,923,366 $ 16,945,536 $ 17,489,692 $ 17,844,155 $ 16,474,153 Contributions in relation to the actuarially determined contribution 14,971,737 13,500,687 13,163,201 12,290,749 12,879,016 11,561,406 11,198,663 11,170,202 9,888,796 9,844,226 Contribution deficiency(excess) $ 702,867 $ 1,717,375 $ 2,804,828 $ 7,468,772 $ 4,397,885 $ 6,361,960 $ 5,746,873 $ 6,319,490 $ 7,955,359 $ 6,629,927 Covered payroll $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 26,405,725 $ 25,636,626 $ 26,121,411 $ 25,128,835 Contributions as a percentage of covered payroll 50.3% 47.5% 63.7% 44.6% 47.6% 47.4% 42.4% 43.6% 37.9% 39.2% Actuarial valuation information relative to the determination of contributions: Valuation date: January 1,2020 Notes: Actuarially determined contribution amounts are calculated as of January 1 every year. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry age normal Amortization method Level percentage of payroll,closed Remaining amortization period 22 years Asset valuation method 5 years smoothed market Inflation 2.75% Investment rate of return 7.0%,net of OPEB plan investment expense and including inflation. Retirement age Age-based table of rates that are specific to the type of eligibility condition. Mortality rates Pub2010G tables,below median and headcount weighted,projected generationally using MP-2018. Health care trend rates Pre-Medicare 8.25%for the first year,gradually decreasing by.25%to 4.50%in year 15 and thereafter. Medicare 6.50%for the first year,gradually decreasing by.25%to 4.50%in year 10 and thereafter. 132 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST FOUR MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 7.25% -0.88% 8.71% 9.89% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 133 CITY OF LANSING NOTE TO REQUIRED SUPPLEMENTARY INFORMATION NOTE 1-EXCESS OF EXPENDITURES OVER APPROPRIATIONS State statutes provide that a local government unit not incur expenditures in excess of the amounts appropriated. The City's budgeted expenditures for the General Fund have been shown at the activity level. 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) required 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. During the year ended June 30, 2020, the City incurred expenditures in the General Fund and one Special Revenue Fund in excess of the amounts appropriated as follows: Amounts Amounts Appropriated Expended Variance General Fund Current General government Finance $ 5,303,503 $ 5,350,704 $ (47,201) Library rental 145,000 172,900 (27,900) Mayor 1,286,335 1,326,159 (39,824) Human resources 2,191,627 2,277,278 (85,651) Debt service Principal 1,180,000 2,018,657 (838,657) Interest 85,000 400,520 (315,520) State and Federal Grants Fund Current Public safety - 788,808 (788,808) Public works - 283,500 (283,500) Community development 1,007,888 6,763,349 (5,755,461) 134 OTHER SUPPLEMENTARY INFORMATION 135 This page intentionally left blank. 136 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 137 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total ASSETS Cash and cash equivalents $ 82,029 $ - $ 89,710 $ - $ 171,739 Equity in pooled cash and investments 20,864,389 29,361 4,726,761 1,944,962 27,565,473 Receivables Accounts,net 15,689 - 209,046 - 224,735 Loans 1,220,642 - 1,220,642 Accrued interest 2,231,696 - 2,231,696 Special assessments Current - 30,245 30,245 Deferred 123,133 123,133 Due from other funds - 1,096,006 1,096,006 Due from other governmental units 6,027,877 4,466,522 10,494,399 Inventories 1,223,600 - 1,223,600 Prepaids 1,425 1,425 TOTAL ASSETS $ 31,665,922 $ 29,361 $ 10,742,848 $ 1,944,962 $ 44,383,093 LIABILITIES Accounts payable $ 1,865,084 $ - $ 265,151 $ - $ 2,130,235 Accrued liabilities 68,631 - 68,631 Indemnity bonds 43,867 43,867 Due to other funds 519,806 519,806 Due to other governmental units 303,716 - 303,716 Advances from other funds 188,126 188,126 Undistributed forfeitures 40,368 - 40,368 Unearned revenue 5,137,051 100,000 5,237,051 TOTAL LIABILITIES 7,978,523 553,277 8,531,800 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-loans and accrued interest receivable 3,452,338 - 3,452,338 Unavailable revenue-special assessments - 123,133 123,133 TOTAL DEFERRED INFLOWS OF RESOURCES 3,452,338 123,133 3,575,471 FUND BALANCES Nonspendable 1,223,600 - 1,425 1,944,962 3,169,987 Restricted 18,521,294 29,361 - - 18,550,655 Committed 490,167 - 10,147,250 10,637,417 Unassigned(deficit) - - (82,237) (82,237) TOTAL FUND BALANCES 20,235,061 29,361 10,066,438 1,944,962 32,275,822 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 31,665,922 $ 29,361 $ 10,742,848 $ 1,944,962 $ 44,383,093 138 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total REVENUES Property taxes and special assessments $ 369,912 $ $ 33,309 $ $ 403,221 Intergovernmental 25,248,860 - 25,248,860 Charges for services 4,271,072 461,984 4,733,056 Fines and forfeits 51,868 - 51,868 Interest and rents 191,324 40,612 30,796 262,732 Other Donations and contributions 5,000 - - 5,000 Other 311,775 - - 311,775 TOTAL REVENUES 30,449,811 535,905 30,796 31,016,512 EXPENDITURES Current General government 3,112,357 - - 3,112,357 Public safety 1,663,648 1,663,648 Public works 283,500 283,500 Highways and streets 10,711,027 10,711,027 Community and economic development 9,381,917 9,381,917 Debt service Principal 1,268,048 1,268,048 Interest and fiscal charges 422,637 750 - 423,387 Capital outlay 4,317,180 3,574,608 7,891,788 TOTAL EXPENDITURES 31,160,314 750 3,574,608 - 34,735,672 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (710,503) (750) (3,038,703) 30,796 (3,719,160) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets 1,265 - 25,000 - 26,265 Transfers in 6,790,471 750 7,518,395 14,309,616 Transfers out (4,371,000) (750) (2,992,395) (7,364,145) TOTAL OTHER FINANCING SOURCES(USES) 2,420,736 - 4,551,000 6,971,736 NET CHANGE IN FUND BALANCES 1,710,233 (750) 1,512,297 30,796 3,252,576 Fund balances,beginning of year 18,524,828 30,111 8,554,141 1,914,166 29,023,246 Fund balances,end of year $ 20,235,061 $ 29,361 $ 10,066,438 $ 1,944,962 $ 32,275,822 139 This page intentionally left blank. 140 CITY OF LANSING 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 restricted 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 restricted 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. 141 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local ASSETS Cash and cash equivalents $ - $ - $ - $ 33,000 Equity in pooled cash and investments 9,984,118 3,692,895 445,125 608,769 Receivables Accounts,net - - - - Loans - - Accrued interest - - - Due from other governmental units 1,599,650 439,444 - Inventories 1,223,600 - - TOTAL ASSETS $ 12,807,368 $ 4,132,339 $ 445,125 $ 641,769 LIABILITIES Accounts payable $ 213,009 $ 111,601 $ 11,833 $ 28,722 Accrued payroll and related - - Indemnity bonds 43,867 - - Due to other funds - Due to other governmental units - Undistributed forfeitures Unearned revenue TOTAL LIABILITIES 256,876 111,601 11,833 28,722 DEFERRED INFLOWS OF RESOURCES Unavailable revenue FUND BALANCES Nonspendable 1,223,600 Restricted 11,326,892 4,020,738 433,292 613,047 Committed TOTAL FUND BALANCES 12,550,492 4,020,738 433,292 613,047 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 12,807,368 $ 4,132,339 $ 445,125 $ 641,769 142 Community Development State and Block Grant Downtown Building Parks Federal Tri-County Program Lansing,Inc. Department Department Grants Metro Total $ $ - $ - $ - $ - $ 49,029 $ 82,029 89,179 1,709,653 490,167 3,195,382 649,101 20,864,389 - 15,689 - - - 15,689 1,185,000 - - 35,642 - 1,220,642 2,231,696 - - - - 2,231,696 640,852 3,286,985 60,946 6,027,877 - - - - - - 1,223,600 $ 4,057,548 $ 89,179 $ 1,725,342 $ 490,167 $ 6,518,009 $ 759,076 $ 31,665,922 $ 104,393 $ 3,992 $ 14,516 $ - $ 1,332,030 $ 44,988 $ 1,865,084 14,060 5,640 30,826 16,201 1,904 68,631 - - - - - 43,867 519,806 - - 519,806 - - - 303,716 303,716 - - - 40,368 40,368 - - 2,915 - 5,134,136 - 5,137,051 638,259 9,632 48,257 - 6,482,367 390,976 7,978,523 3,416,696 - - - 35,642 - 3,452,338 - - - - - 1,223,600 2,593 79,547 1,677,085 - 368,100 18,521,294 - - - 490,167 - 490,167 2,593 79,547 1,677,085 490,167 - 368,100 20,235,061 $ 4,057,548 $ 89,179 $ 1,725,342 $ 490,167 $ 6,518,009 $ 759,076 $ 31,665,922 143 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2020 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local REVENUES Property taxes and special assessments $ 144,789 $ - $ - $ Intergovernmental 12,011,298 3,160,223 759 Charges for services - - - - Fines and forfeits - - 30,780 Interest and rents 89,443 71,696 5,255 7,502 Contributions - - - Otherrevenues 94,584 - - - TOTAL REVENUES 12,340,114 3,231,919 6,014 38,282 EXPENDITURES Current General government - - - - Public safety - 48,368 183,175 Public works - - - - Highways and streets 5,713,444 4,997,583 Community development - - Debt service Principal 655,332 612,716 Interest 150,174 272,463 Capital outlay 2,692,479 1,624,701 - TOTAL EXPENDITURES 9,211,429 7,507,463 48,368 183,175 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 3,128,685 (4,275,544) (42,354) (144,893) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets - - 1,265 Transfers in 6,216,000 - Transfers out (4,071,000) (300,000) - TOTAL OTHER FINANCING SOURCES(USES) (4,071,000) 5,916,000 1,265 NET CHANGE IN FUND BALANCES (942,315) 1,640,456 (42,354) (143,628) Fund balances,beginning of year 13,492,807 2,380,282 475,646 756,675 Fund balances,end of year $ 12,550,492 $ 4,020,738 $ 433,292 $ 613,047 144 Community Development State and Block Grant Downtown Building Parks Federal Tri-County Program Lansing,Inc. Department Department Grants Metro Total $ - $ 225,123 $ - $ - $ - $ - $ 369,912 2,460,926 - - 7,000,812 614,842 25,248,860 - 1,092 3,666,013 - 603,967 - 4,271,072 - - - - - 21,088 51,868 2,592 686 5,498 - 8,652 191,324 - 5,000 - - - 5,000 80,641 81,554 - - 44,409 10,587 311,775 2,544,159 313,455 3,666,013 5,498 7,649,188 655,169 30,449,811 - 552,396 2,559,961 - - - 3,112,357 - - - 788,808 643,297 1,663,648 - - - 283,500 - 283,500 - - - - - 10,711,027 2,618,568 - - - 6,763,349 - 9,381,917 - - - - - - 1,268,048 - 422,637 - - - - - - 4,317,180 2,618,568 552,396 2,559,961 - 7,835,657 643,297 31,160,314 (74,409) (238,941) 1,106,052 5,498 (186,469) 11,872 (710,503) - - - - - - 1,265 77,002 271,000 40,000 - 186,469 - 6,790,471 - - - - - - (4,371,000) 77,002 271,000 40,000 - 186,469 - 2,420,736 2,593 32,059 1,146,052 5,498 - 11,872 1,710,233 - 47,488 531,033 484,669 - 356,228 18,524,828 $ 2,593 $ 79,547 $ 1,677,085 $ 490,167 $ $ 368,100 $ 20,235,061 145 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Major Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ $ - $ 144,789 $ 144,789 Intergovernmental 11,002,000 11,518,000 12,011,298 493,298 Interest and rents 60,000 60,000 89,443 29,443 Other revenues - 72,000 94,584 22,584 TOTAL REVENUES 11,062,000 11,650,000 12,340,114 690,114 EXPENDITURES Current Highways and streets 7,342,800 7,342,800 5,713,444 1,629,356 Debt service Principal 686,200 686,200 655,332 30,868 Interest 152,000 152,000 150,174 1,826 Capital outlay 5,348,000 4,848,000 2,692,479 2,155,521 TOTAL EXPENDITURES 13,529,000 13,029,000 9,211,429 3,817,571 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (2,467,000) (1,379,000) 3,128,685 4,507,685 OTHER FINANCING USES Transfers out (3,571,000) (4,071,000) (4,071,000) - NET CHANGE IN FUND BALANCE (6,038,000) (5,450,000) (942,315) 4,507,685 Fund balance,beginning of year 13,492,807 13,492,807 13,492,807 - Fund balance,end of year $ 7,454,807 $ 8,042,807 $ 12,550,492 $ 4,507,685 146 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Local Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ 150,000 $ 150,000 $ - $ (150,000) Intergovernmental 3,480,000 3,480,000 3,160,223 (319,777) Interest and rents 30,000 30,000 71,696 41,696 TOTAL REVENUES 3,660,000 3,660,000 3,231,919 (428,081) EXPENDITURES Current Highways and streets 6,102,600 6,102,600 4,997,583 1,105,017 Debt service Principal 710,400 710,400 612,716 97,684 Interest 275,000 275,000 272,463 2,537 Capital outlay 2,825,000 3,325,000 1,624,701 1,700,299 TOTAL EXPENDITURES 9,913,000 10,413,000 7,507,463 2,905,537 EXCESS OF REVENUES UNDER EXPENDITURES (6,253,000) (6,753,000) (4,275,544) 2,477,456 OTHER FINANCING SOURCES(USES) Transfers in 5,716,000 6,216,000 6,216,000 - Transfers out (300,000) (300,000) (300,000) - TOTAL OTHER FINANCING SOURCES(USES) 5,416,000 5,916,000 5,916,000 -- NET CHANGE IN FUND BALANCE (837,000) (837,000) 1,640,456 2,477,456 Fund balance,beginning of year 2,380,282 2,380,282 2,380,282 - Fund balance,end of year $ 1,543,282 $ 1,543,282 $ 4,020,738 $ 2,477,456 147 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Drug Law Enforcement Federal Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ - $ - $ 759 $ 759 Interest and rents 5,000 5,000 5,255 255 TOTAL REVENUES 5,000 5,000 6,014 1,014 EXPENDITURES Current Public safety 95,000 95,000 48,368 46,632 NET CHANGE IN FUND BALANCE (90,000) (90,000) (42,354) 47,646 Fund balance,beginning of year 475,646 475,646 475,646 - Fund balance,end of year $ 385,646 $ 385,646 $ 433,292 $ 47,646 148 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Drug Law Enforcement State and Local Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Fines and forfeitures $ - $ - $ 30,780 $ 30,780 Interest and rents 10,000 10,000 7,502 (2,498) TOTAL REVENUES 10,000 10,000 38,282 28,282 EXPENDITURES Current Public safety 199,000 229,000 183,175 45,825 EXCESS OF REVENUES UNDER EXPENDITURES (189,000) (219,000) (144,893) 74,107 OTHER FINANCING SOURCES Proceeds from sale of capital assets - 1,265 1,265 NET CHANGE IN FUND BALANCE (189,000) (219,000) (143,628) 75,372 Fund balance,beginning of year 756,675 756,675 756,675 - Fund balance,end of year $ 567,675 $ 537,675 $ 613,047 $ 75,372 149 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 CDBG Program Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 2,006,536 $ 2,786,367 $ 2,460,926 $ (325,441) Interest and rents - - 2,592 2,592 Other revenues 172,464 196,496 80,641 (115,855) TOTAL REVENUES 2,179,000 2,982,863 2,544,159 (438,704) EXPENDITURES Current Community development 2,179,000 3,082,863 2,618,568 464,295 EXCESS OF REVENUES UNDER EXPENDITURES - (100,000) (74,409) 25,591 OTHER FINANCING SOURCES Transfers in 100,000 77,002 (22,998) NET CHANGE IN FUND BALANCE - 2,593 2,593 Fund balance,beginning of year - - - Fund balance,end of year $ $ - $ 2,593 $ 2,593 150 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Downtown Lansing,Inc.Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ 423,700 $ 226,400 $ 225,123 $ (1,277) Charges for services 4,250 4,250 1,092 (3,158) Interest and rents - - 686 686 Contributions 10,000 10,000 5,000 (5,000) Other revenues 87,450 121,321 81,554 (39,767) TOTAL REVENUES 525,400 361,971 313,455 (48,516) EXPENDITURES Current General government 634,000 657,293 552,396 104,897 EXCESS OF REVENUES UNDER EXPENDITURES (108,600) (295,322) (238,941) 56,381 OTHER FINANCING SOURCES Transfers in 93,000 271,000 271,000 NET CHANGE IN FUND BALANCE (15,600) (24,322) 32,059 56,381 Fund balance,beginning of year 47,488 47,488 47,488 - Fund balance,end of year $ 31,888 $ 23,166 $ 79,547 $ 56,381 151 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Building Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Charges for services $ 2,620,000 $ 2,620,000 $ 3,666,013 $ 1,046,013 EXPENDITURES Current General government 2,660,000 2,660,000 2,559,961 100,039 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (40,000) (40,000) 1,106,052 1,146,052 OTHER FINANCING SOURCES Transfers in 40,000 40,000 40,000 NET CHANGE IN FUND BALANCE - - 1,146,052 1,146,052 Fund balance,beginning of year 531,033 531,033 531,033 - Fund balance,end of year $ 531,033 $ 531,033 $ 1,677,085 $ 1,146,052 152 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Parks Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Interest and rents $ $ $ 5,498 $ 5,498 NET CHANGE IN FUND BALANCE 5,498 5,498 Fund balance,beginning of year 484,669 484,669 484,669 - Fund balance,end of year $ 484,669 $ 484,669 $ 490,167 $ 5,498 153 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 State and Federal Grants Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 1,095,600 $ 1,007,888 $ 7,000,812 $ 5,992,924 Charges for services - - 603,967 603,967 Other revenues - - 44,409 44,409 TOTAL REVENUES 1,095,600 1,007,888 7,649,188 6,641,300 EXPENDITURES Current Public safety - - 788,808 (788,808) Public works - - 283,500 (283,500) Community development 1,095,600 1,007,888 6,763,349 (5,755,461) TOTAL EXPENDITURES 1,095,600 1,007,888 7,835,657 (6,827,769) EXCESS OF REVENUES UNDER EXPENDITURES - - (186,469) (186,469) OTHER FINANCING SOURCES Transfers in 186,469 186,469 NET CHANGE IN FUND BALANCE - - Fund balance,beginning of year - Fund balance,end of year $ $ $ $ - 154 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2020 Tri County Metro Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 425,000 $ 493,610 $ 614,842 $ 121,232 Fines and forfeitures 382,000 382,000 21,088 (360,912) Interest and rents - - 8,652 8,652 Other revenues - - 10,587 10,587 TOTAL REVENUES 807,000 875,610 655,169 (220,441) EXPENDITURES Current Public safety 807,000 875,610 643,297 232,313 NET CHANGE IN FUND BALANCE - - 11,872 11,872 Fund balance,beginning of year 356,228 356,228 356,228 - Fund balance,end of year $ 356,228 $ 356,228 $ 368,100 $ 11,872 155 This page intentionally left blank. 156 CITY OF LANSING 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). 157 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS COMBINING BALANCE SHEET JUNE 30,2020 1999 Fire 2001 Fire Station Station Total ASSETS Equity in pooled cash and investments $ 29,361 $ - $ 29,361 FUND BALANCES Restricted $ 29,361 $ - $ 29,361 158 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 1999 Fire 2001 Fire Station Station Total EXPENDITURES Current Interest and fiscal charges $ - $ 750 $ 750 EXCESS OF REVENUES (UNDER) EXPENDITURES - (750) (750) OTHER FINANCING SOURCES (USES) Transfers in - 750 750 Transfers out (750) - (750) TOTAL OTHER FINANCING SOURCES (USES) (750) 750 - NET CHANGE IN FUND BALANCES (750) - (750) Fund balances,beginning of year 30,111 - 30,111 Fund balances,end of year $ 29,361 $ - $ 29,361 159 This page intentionally left blank. 160 CITY OF LANSING 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. 161 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Special Other Capital Assessments Projects Total ASSETS Cash and cash equivalents $ - $ 89,710 $ 89,710 Equity in pooled cash and investments 75,644 4,651,117 4,726,761 Receivables Accounts receivable - 209,046 209,046 Special assessments Current 30,245 - 30,245 Deferred 123,133 - 123,133 Due from other funds - 1,096,006 1,096,006 Due from other governmental units - 4,466,522 4,466,522 Prepaids - 1,425 1,425 TOTAL ASSETS $ 229,022 $ 10,513,826 $ 10,742,848 LIABILITIES Accounts payable $ - $ 265,151 $ 265,151 Advances from other funds 188,126 - 188,126 Unearned revenue - 100,000 100,000 TOTAL LIABILITIES 188,126 365,151 553,277 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-special assessments 123,133 - 123,133 FUND BALANCES Nonspendable - 1,425 1,425 Committed - 10,147,250 10,147,250 Unassigned(deficit) (82,237) - (82,237) TOTAL FUND BALANCES (DEFICIT) (82,237) 10,148,675 10,066,438 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 229,022 $ 10,513,826 $ 10,742,848 162 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 Special Other Capital Assessments Projects Total REVENUES Special assessments $ 33,309 $ - $ 33,309 Charges for services - 461,984 461,984 Interest and rents - 40,612 40,612 TOTAL REVENUES 33,309 502,596 535,905 EXPENDITURES Capital outlay - 3,574,608 3,574,608 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 33,309 (3,072,012) (3,038,703) OTHER FINANCING SOURCES (USES) Proceeds from sale of capital assets - 25,000 25,000 Transfers in - 7,518,395 7,518,395 Transfers out - (2,992,395) (2,992,395) TOTAL OTHER FINANCING SOURCES (USES) - 4,551,000 4,551,000 NET CHANGE IN FUND BALANCES 33,309 1,478,988 1,512,297 Fund balances (deficit),beginning of year (115,546) 8,669,687 8,554,141 Fund balances (deficit),end of year $ (82,237) $ 10,148,675 $ 10,066,438 163 This page intentionally left blank. 164 CITY OF LANSING NONMAJOR PERMANENT FUNDS Cemetery Perpetual Care Fund This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested,and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. 165 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING BALANCE SHEET JUNE 30,2020 Cemetery Perpetual Care Parks Trust Total ASSETS Equity in pooled cash and investments $ 1,943,656 $ 1,306 $ 1,944,962 FUND BALANCES Nonspendable $ 1,943,656 $ 1,306 $ 1,944,962 166 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES FOR THE YEAR ENDED JUNE 30,2020 Cemetery Perpetual Care Parks Trust Total REVENUES Interest and rents $ 30,782 $ 14 $ 30,796 NET CHANGE IN FUND BALANCES 30,782 14 30,796 Fund balances,beginning of year 1,912,874 1,292 1,914,166 Fund balances,end of year $ 1,943,656 $ 1,306 $ 1,944,962 167 This page intentionally left blank. 168 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS Cemetery Fund This fund accounts for the operation of City-owned cemeteries. Golf Fund This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund This fund accounts for the provision of recycling services to participating residents of the City. 169 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total ASSETS Current assets Cash and cash equivalents $ 200 $ - $ - $ - $ 200 Equity in pooled cash and investments 505,009 2,245,558 910,338 1,297,801 4,958,706 Accounts receivable,net - - 62,867 - 62,867 Inventories 45,488 - - - 45,488 Total current assets 550,697 2,245,558 973,205 1,297,801 5,067,261 Noncurrent assets Capital assets not being depreciated 57,740 345,647 - - 403,387 Capital assets being depreciated,net 77,397 1,741,085 26,833 1,845,315 Total noncurrent assets 135,137 2,086,732 26,833 2,248,702 TOTAL ASSETS 685,834 4,332,290 973,205 1,324,634 7,315,963 DEFERRED OUTFLOW OF RESOURCES Deferred outflows related to pension 175,564 - 276,855 567,034 1,019,453 Deferred outflows related to OPEB 295,919 466,648 955,755 1,718,322 TOTAL DEFERRED OUTFLOWS OF RESOURCES 471,483 - 743,503 1,522,789 2,737,775 LIABILITIES Current liabilities Accounts payable 39,877 7,073 1,456 165,048 213,454 Accrued payroll 1,390 - - - 1,390 Accrued interest payable - - 1,729 1,729 Unearned revenue - 324,913 - 324,913 Current portion of compensated absences 1,366 2,875 6,741 10,982 Current portion of bonds and notes payable - - - 234,554 234,554 Total current liabilities 42,633 7,073 329,244 408,072 787,022 Noncurrent liabilities Compensated absences,net of current portion 22,468 - 45,886 107,599 175,953 Bonds and notes payable,net of current portion - - 118,343 118,343 Net pension liability 1,707,157 2,692,092 5,513,753 9,913,002 Net other postemployment benefit liability 2,029,446 3,200,326 6,554,681 11,784,453 Total noncurrent liabilities 3,759,071 5,938,304 12,294,376 21,991,751 TOTAL LIABILITIES 3,801,704 7,073 6,267,548 12,702,448 22,778,773 DEFERRED INFLOW OF RESOURCES Deferred inflows of resources related to pension 9,216 - 14,533 29,766 53,515 Deferred inflows of resources related to OPEB 140,404 221,409 453,475 815,288 TOTAL DEFERRED INFLOWS OF RESOURCES 149,620 235,942 483,241 868,803 NET POSITION Net investment in capital assets 135,137 2,086,732 - (326,064) 1,895,805 Unrestricted(deficit) (2,929,144) 2,238,485 (4,786,782) (10,012,202) (15,489,643) TOTAL NET POSITION $ (2,794,007) $ 4,325,217 $ (4,786,782) $ (1Q338,266) $ (13,593,838) 170 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION FOR THE YEAR ENDED JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total OPERATING REVENUES Charges for services $ 403,030 $ 3,091 $ 2,278,024 $ 4,376,310 $ 7,060,455 OPERATING EXPENSES Personnel services 1,353,818 3,285 1,430,847 3,525,378 6,313,328 Purchase of goods and services 288,610 148,991 1,000,219 1,886,537 3,324,357 Depreciation 9,827 77,191 155,872 242,890 TOTAL OPERATING EXPENSES 1,652,255 229,467 2,431,066 5,567,787 9,880,575 OPERATING LOSS (1,249,225) (226,376) (153,042) (1,191,477) (2,820,120) NONOPERATING REVENUES(EXPENSES) Interest revenue - 8,900 16,534 25,434 Gain on sale of capital assets 2,120,816 - - 2,120,816 Interest expense and fees - - (9,176) (9,176) TOTAL NONOPERATING REVENUES(EXPENSES) 2,120,816 8,900 7,358 2,137,074 NET INCOME(LOSS)BEFORE TRANSFERS (1,249,225) 1,894,440 (144,142) (1,184,119) (683,046) TRANSFERS Transfers in 595,000 166,000 761,000 CHANGE IN NET POSITION (654,225) 2,060,440 (144,142) (1,184,119) 77,954 Net position(deficit),beginning of year (2,139,782) 2,264,777 (4,642,640) (9,154,147) (13,671,792) Net position(deficit),end of year $(2,794,007) $ 4,325,217 $ (4,786,782) $ (10,338,266) $ (13,593,838) 171 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2020 Garbage and Rubbish Cemetery Golf Collection Recycling Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 403,030 $ 3,091 $ 2,543,905 $ 4,382,684 $ 7,332,710 Cash payments for good and services (264,399) (141,918) (1,055,052) (1,823,885) (3,285,254) Cash payments to employees (426,307) (3,285) (1,142,578) (2,170,016) (3,742,186) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES (287,676) (142,112) 346,275 388,783 305,270 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 595,000 166,000 - - 761,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Principal paid on long-term debt - - (230,023) (230,023) Proceeds from sales of capital assets 2,221,670 2,221,670 Purchase of capital assets - (32,198) (32,198) Interest paid on long-term debt - (10,304) (10,304) NET CASH PROVIDED(USED)BY CAPITAL AND RELATED FINANCING ACTIVITIES 2,221,670 - (272,525) 1,949,145 CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received - 8,900 16,534 25,434 NET CHANGE IN CASH AND CASH EQUIVALENTS 307,324 2,245,558 355,175 132,792 3,040,849 Cash and cash equivalents,beginning ofyear 197,885 - 555,163 1,165,009 1,918,057 Cash and cash equivalents,end ofyear $ 505,209 $ 2,245,558 $ 910,338 $ 1,297,801 $ 4,958,906 Reconciliation of operating loss to net cash provided(used)by operating activities Operating loss $ (1,249,225) $ (226,376) $ (153,042) $ (1,191,477) $ (2,820,120) Adjustments to reconcile operating loss to net cash provided(used)by operating activities Depreciation 9,827 77,191 - 155,872 242,890 Changes in: Accounts receivable - - 101,087 6,374 107,461 Inventory 7,005 - - 7,005 Deferred outflows-pension (125,061) (175,849) (415,525) (716,435) Deferred outflows-OPEB (277,406) (427,645) (864,289) (1,569,340) Accounts payable 17,206 7,073 (54,833) 62,652 32,098 Accrued payroll (455) - - - (455) Unearned revenue - 164,794 164,794 Compensated absences 111 (1,170) (2,743) (3,802) Net pension liability 325,700 (70,810) 1,369,401 1,624,291 Deferred inflows-pension (7,849) (19,597) (21,429) (48,875) Net other postemployment benefit liability 872,067 761,931 836,472 2,470,470 Deferred inflows-OPEB 140,404 - 221,409 453,475 815,288 NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ (287,676) $ (142,112) $ 346,275 $ 388,783 $ 305,270 172 CITY OF LANSING 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. 173 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30,2020 Fleet Fringe Information Maintenance Benefits Engineering Technology Total ASSETS Current assets Equity in pooled cash and investments $ 2,602,513 $ 3,001,073 $ 1,733,184 $ 1,434,385 $ 8,771,155 Accounts receivable,net 6,000 542,566 - - 548,566 Inventories 410,965 - - 410,965 Prepaids - 374,559 - 113,021 487,580 Total current assets 3,019,478 3,918,198 1,733,184 1,547,406 10,218,266 Noncurrent assets Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated,net 9,148,334 1,430,341 10,578,675 Total noncurrent assets 9,241,226 - 1,430,341 - 10,671,567 TOTAL ASSETS 12,260,704 3,918,198 3,163,525 1,547,406 20,889,833 LIABILITIES Current liabilities Accounts payable 207,298 769,078 7,906 540,729 1,525,011 Accrued payroll 60,204 8,928 63,194 37,394 169,720 Accrued interest payable 13,253 - - - 13,253 Claims incurred but not reported - 400,000 400,000 Current portion of: Bonds and notes payable 379,333 - - 379,333 Compensated absences 42,546 73,309 - 115,855 Total current liabilities 702,634 1,178,006 144,409 578,123 2,603,172 Noncurrent liabilities Bonds and notes payable,net of current portion 1,924,068 - - - 1,924,068 Compensated absences,net of current portion 161,093 53,125 281,417 235,933 731,568 Total noncurrent liabilities 2,085,161 53,125 281,417 235,933 2,655,636 TOTAL LIABILITIES 2,787,795 1,231,131 425,826 814,056 5,258,808 NET POSITION Net investment in capital assets 6,937,825 - 1,430,341 - 10,671,567 Unrestricted 2,535,084 2,687,067 1,307,358 733,350 4,959,458 TOTAL NET POSITION $ 9,472,909 $ 2,687,067 $ 2,737,699 $ 733,350 $ 15,631,025 174 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION YEAR ENDED JUNE 30,2020 Fleet Information Maintenance Fringe Benefits Engineering Technology Total OPERATING REVENUES Charges for services $ 9,589,127 $ 65,907,198 $ 4,695,587 $ 6,299,999 $ 86,491,911 Miscellaneous - 111,337 - - 111,337 TOTAL OPERATING REVENUES 9,589,127 66,018,535 4,695,587 6,299,999 86,603,248 OPERATING EXPENSES Personnel services 3,208,417 316,414 2,778,760 1,946,447 8,250,038 Purchase of goods and services 4,178,735 63,987,796 1,053,137 4,678,316 73,897,984 Depreciation 2,340,226 44,888 2,385,114 TOTAL OPERATING EXPENSES 9,727,378 64,304,210 3,876,785 6,624,763 84,533,136 OPERATING INCOME(LOSS) (138,251) 1,714,325 818,802 (324,764) 2,070,112 NONOPERATING REVENUES(EXPENSES) Loss on sale of capital assets (20,258) - - (20,258) Interest expense and fees (126,530) (126,530) TOTAL NONOPERATING REVENUES(EXPENSES) (146,788) - - (146,788) INCOME(LOSS)BEFORE TRANSFERS (285,039) 1,714,325 818,802 (324,764) 1,923,324 TRANSFERS Transfers in 930,000 - 930,000 CHANGE IN NET POSITION 644,961 1,714,325 818,802 (324,764) 2,853,324 Net position,beginning of year 8,827,948 972,742 1,918,897 1,058,114 12,777,701 Net position,end of year $ 9,472,909 $ 2,687,067 $ 2,737,699 $ 733,350 $ 15,631,025 175 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2020 Fleet Information Maintenance Fringe Benefits Engineering Technology Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from interfund services $ 9,586,202 $ 65,484,234 $ 4,695,587 $ 6,299,999 $ 86,066,022 Cash payments for goods and services (4,106,556) (64,779,287) (1,063,492) (4,888,789) (74,838,124) Cash payments to employees (3,187,310) (675,402) (2,873,043) (1,853,443) (8,589,198) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 2,292,336 29,545 759,052 (442,233) 2,638,700 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 930,000 - 930,000 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 40,298 40,298 Purchase of capital assets (1,776,031) (1,776,031) Principal paid on long-term debt (370,290) (370,290) Interest paid on long-term debt (128,769) (128,769) NET CASH(USED)BY RELATED FINANCING ACTIVITIES (2,234,792) (2,234,792) NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 987,544 29,545 759,052 (442,233) 1,333,908 Cash and cash equivalents,beginning of year 1,614,969 2,971,528 974,132 1,876,618 7,437,247 Cash and cash equivalents,end ofyear $ 2,602,513 $ 3,001,073 $ 1,733,184 $ 1,434,385 $ 8,771,155 Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ (138,251) $ 1,714,325 $ 818,802 $ (324,764) $ 2,070,112 Adjustments to reconcile operating income(loss)to net cash provided(used)by operating activities Depreciation 2,340,226 - 44,888 2,385,114 Change in: Accounts receivable (2,925) (534,301) - (537,226) Prepaids 36,675 24,717 86,018 147,410 Inventories (58,706) - - (58,706) Accounts payable 94,210 (816,208) (10,355) (296,491) (1,028,844) Accrued payroll 3,820 (5,745) 1,291 11,117 10,483 Claims incurred but not reported - (350,000) - - (350,000) Compensated absences 17,287 (3,243) (95,574) 81,887 357 NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 2,292,336 $ 29,545 $ 759,052 $ (442,233) $ 2,638,700 176 CITY OF LANSING PENSION AND OTHER POSTEMPLOYMENT BENEFITS TRUST FUNDS Employees'Retirement System Pension This fund accounts for all eligible employees (non-police and fire) activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Employees'Retirement System OPEB This fund accounts for all eligible employees (non-police and fire) activities related to postemployment healthcare coverage for applicable individuals. Police and Fire Retirement System Pension This fund accounts for all eligible employees' activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Police and Fire Retirement System OPEB This fund accounts for all eligible employees' activities related to postemployment healthcare coverage for applicable individuals. Employees'Money Purchase Pension Plan This fund accounts for all newly hired eligible employees who participate in the City's defined contribution plan to account for paying pension benefits to eligible retirees (or beneficiaries). Retiree Healthcare VEBA This fund accounts for all eligible employee's activity related to the defined benefit of postemployment healthcare to provide medical and healthcare benefits for retirees and their beneficiaries. 177 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF FIDUCIARY NET POSITION JUNE 30,2020 Pension and Other Postemployment Benefits Trust Funds Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 4,763,025 $ 1,122,108 $ 6,720,398 $ 1,043,763 $ - $ $ 13,649,294 Investments U.S.Treasuries 2,187,313 515,303 3,913,452 607,809 - 7,223,877 U.S.Agencies 14,524,222 3,421,722 21,242,171 3,299,179 - 42,487,294 Collateralized mortgage obligations 474,220 111,720 1,423,585 221,101 - 2,230,626 Mutual funds 95,992,901 22,614,707 178,871,459 27,781,007 3,547,785 31,185,763 359,993,622 Domestic equities 26,329,413 6,202,875 54,673,358 8,491,466 - - 95,697,112 International equities 699,203 164,723 1,217,856 189,148 - - 2,270,930 Emerging market equities 6,130,100 1,444,173 11,553,789 1,794,450 - 907,287 21,829,799 Money market funds 3,493,541 823,034 2,714,480 421,593 - 116,896 7,569,544 Dividends and interest receivable 130,800 30,838 213,629 33,180 - 13 408,460 Total assets 154,724,738 36,451,203 282,544,177 43,882,696 3,547,785 32,209,959 553,360,558 Liabilities Accounts payable 160,335 37,774 333,684 51,825 - - 583,618 Due to other funds 1,675,940 394,830 2,073,683 322,069 - 4,466,522 Total liabilities 1,836,275 432,604 2,407,367 373,894 5,050,140 Net position restricted for: Pension benefits 152,888,463 - 280,136,810 - 3,547,785 - 436,573,058 Other postemployment benefits - 36,018,599 - 43,508,802 32,209,959 111,737,360 Total net position $ 152,888,463 $ 36,018,599 $ 280,136,810 $ 43,508,802 $ 3,547,785 $ 32,209,959 $ 548,310,418 178 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30,2020 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 $ 182,606 $ 2,600,282 $ 2,172,015 $ 2,998,056 $ - $ 1,766,232 $ 9,719,191 Interest income (34,362) - (2,256) - 144,634 - 108,016 Investment expenses (689,105) - (1,122,519) - - (1,811,624) Net investment income (540,861) 2,600,282 1,047,240 2,998,056 144,634 1,766,232 8,015,583 Contributions Employer 10,698,401 11,461,488 15,457,647 14,971,737 261,227 - 52,850,500 Plan members 1,286,273 - 3,459,452 - 241,158 4,986,883 Total contributions 11,984,674 11,461,488 18,917,099 14,971,737 502,385 57,837,383 Deductions Participant benefits 24,106,903 10,444,878 33,987,420 13,132,399 - - 81,671,600 Administrative expense 34,016 544,547 41,600 529,338 51,905 92,063 1,293,469 Total deductions 24,140,919 10,989,425 34,029,020 13,661,737 51,905 92,063 82,965,069 Change in net position (12,697,106) 3,072,345 (14,064,681) 4,308,056 595,114 1,674,169 (17,112,103) Net position restricted for pension and other postemployment benefits Beginning of year 165,585,569 32,946,254 294,201,491 39,200,746 2,952,671 30,535,790 565,422,521 End of year $ 152,888,463 $ 36,018,599 $ 280,136,810 $ 43,508,802 $ 3,547,785 $ 32,209,959 $ 548,310,418 179 This page intentionally left blank. 180 CITY OF LANSING AGENCY FUND 54-A District Court Fund This fund is used to hold cash received by the District Court for bail bonds, for garnishment payments until claimed,and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. 181 CITY OF LANSING AGENCY FUND COMBINING STATEMENT OF CHANGES FIDUCIARY ASSETS AND LIABILITIES YEAR ENDED JUNE 30,2020 Beginning Ending Balance Additions Deletions Balance 54-A District Court Assets Equity in pooled cash and investments $ 76,818 $ 781,255 $ 675,010 $ 183,063 Liabilities Undistributed receipts $ 76,818 $ 781,255 $ 675,010 $ 183,063 182 STATISTICAL SECTION 183 This page intentionally left blank. 184 STATISTICAL SECTION 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. 187 Revenue Capacity These schedules contain information to help the reader assess the (Tables 5-8) factors affecting the City's ability to generate its property taxes. 192 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. 196 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. 201 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. 203 Sources: Unless otherwise noted,the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 185 This page intentionally left blank. 186 CITY OF LANSING Table 1 NET POSITION BY COMPONENT 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Governmental activities Net investment in capital assets $ 180,571,237 $ 163,723,249 $ 154,372,604 $ 150,976,010 $ 151,785,916 $ 149,676,860 $ 149,533,948 $ 148,263,240 $ 146,153,309 $ 143,583,186 Restricted 14,777,571 14,524,584 12,552,011 13,133,137 12,311,541 12,922,525 10,993,950 15,189,723 23,505,738 20,495,617 Unrestricted (18,840,717) (34,371,855) (39,467,672) (46,344,555) (251,453,207) (265,678,371) (276,790,945) (606,529,375) (629,587,773) (674,087,826) Total governmental activities net position $ 176,508,091 $ 143,87S,978 $ 127,456,943 $ 117,764,592 $ (87,355,7S0) $ (103,078,986] $ (116,263,047) $ (443,076,412) $ (459,928,726) $ (510,009,023) Business-type activities Net investment in capital assets $ 204,149,751 $ 209,584,457 $ 212,682,278 $ 214,458,841 $ 218,813,478 $ 220,436,882 $ 224,161,744 $ 227,127,434 $ 233,988,263 $ 234,126,397 Restricted 13,080,302 12,382,060 11,077,134 8,746,096 2,889,096 2,764,963 1,818,671 1,886,620 1,953,175 2,432,963 Unrestricted 34,177,453 32,196,598 31,943,581 37,891,053 17,242,167 19,401,320 25,415,447 (13,854,833) (7,299,147) (13,397,777) Total business-type activities net position $ 251,407,506 $ 254,163,115 $ 255,702,993 $ 261,095,990 $ 238,944,741 $ 242,603,165 $ 251,395,862 $ 215,159,221 $ 228,642,291 $ 223,161,583 Primary government Net investment in capital assets $ 384,720,988 $ 373,307,706 $ 367,054,882 $ 365,434,851 $ 370,599,394 $ 370,113,742 $ 373,695,692 $ 375,390,674 $ 380,141,572 $ 377,709,583 Restricted 27,857,873 26,906,644 23,629,145 21,879,233 15,200,637 15,687,488 12,812,621 17,076,343 25,458,913 22,928,580 Unrestricted 15,336,736 (2,175,257) (7,524,091) (8,453,502) (234,211,040) (246,277,051) (251,375,498) (620,384,208) (636,886,920) (687,485,603) Total primary government net position $ 427,915,597 $ 398,039,093 $ 383,159,936 $ 378,860,582 $ 151,588,991 $ 139,524,179 $ 135,132,815 $ (227,917,191) $ (231,286,435) $ (286,847,440) Note: No discretely presented component units shown - 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. - 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. 187 CITY OF LANSING Table 2 CHANGES IN NET POSITION 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Expenses Governmental activities General government $ 25,665,269 $ 30,841,776 $ 27,438,065 $ 24,771,054 $ 25,225,893 $ 27,993,414 $ 21,778,154 $ 16,995,976 $ 26,679,840 $ 30,400,643 Public safety 83,546,997 82,369,004 77,133,469 78,142,897 81,827,437 85,739,408 91,829,441 87,352,251 97,391,612 121,102,641 Public works 26,355,375 33,144,303 29,984,955 37,243,516 27,815,970 28,212,049 28,983,891 26,485,877 29,644,398 35,288,254 Recreation and culture 8,245,451 8,889,142 7,713,098 8,670,918 6,515,590 10,336,168 9,441,519 8,302,243 7,650,889 11,238,934 Community and economic development 12,825,028 13,623,946 16,939,572 7,602,229 10,270,404 10,642,102 12,349,663 16,150,417 21,046,090 20,731,730 Interest on long-term debt 2,116,535 1,949,825 1,475,051 1,340,818 1,291,846 1,424,215 1,201,846 1,137,561 1,182,488 733,925 Total governmental activities expenses 158,754,655 170,817,996 160,684,210 157,771,432 152,947,140 164,347,356 165,584,514 156,424,325 183,595,317 219,496,127 Business-type activities Sewage disposal system 26,444,741 26,836,597 26,296,964 28,682,809 27,506,843 28,487,957 27,567,228 28,552,143 31,939,976 32,605,664 Municipal parking system 9,896,498 9,491,376 8,106,373 7,851,702 7,605,461 7,651,077 6,866,747 9,888,246 7,081,998 12,716,606 Cemetery 755,766 639,000 633,050 722,270 632,485 708,545 886,579 1,379,877 470,220 1,652,25S Golf 846,817 810,372 892,117 935,671 852,634 845,575 802,564 (372,775) 278,501 229,467 Garbage and rubbish collection 1,515,600 1,558,024 1,557,708 1,722,843 1,712,671 2,085,728 1,543,380 3,101,893 1,035,262 2,431,066 Recycling 2,809,353 3,041,328 3,650,292 3,263,553 3,623,276 4,092,278 3,667,899 3,859,496 3,856,764 5,576,963 Total business-type activities expenses 42,268,775 42,376,697 41,140,504 43,178,848 41,933,370 43,871,160 41,334,397 46,408,880 44,662,721 55,212,021 Total primary government expenses $ 201,023,430 $ 213,194,693 $ 201,824,714 $ 200,950,280 $ 194,880,510 $ 208,218,516 $ 206,918,911 $ 202,833,205 $ 228,258,038 $ 274,708,148 Program Revenues Governmental activities Charges for services General government $ 6,742,306 $ 6,428,110 $ 6,162,713 $ 6,820,261 $ 6,815,975 $ 7,279,427 $ 7,295,556 $ 7,038,702 $ 7,567,720 $ 7,616,658 Public safety 8,975,173 8,525,524 4,083,222 2,122,023 3,344,183 2,909,054 3,476,966 4,140,682 3,935,250 4,770,026 Public works 2,449,606 2,797,443 1,622,738 2,129,126 1,923,303 3,011,894 1,836,466 716,322 2,978,549 536,961 Recreation and culture 685,120 557,609 594,349 800,293 619,834 673,840 617,604 831,816 1,092,232 1,038,740 Community and economic development 122,326 67,344 67,349 67,323 67,264 67,272 67,312 - - - Operating grants and contributions 30,154,681 31,928,983 29,322,435 28,234,803 24,658,955 24,561,960 25,157,629 28,983,936 29,663,253 28,534,469 Capital grants and contributions 169,414 260,656 3,124,288 3,365,682 2,910,660 904,298 63,488 855,760 3,313,672 285,075 Total governmental activities program revenues 49,318,626 50,565,669 44,977,094 43,539,511 40,340,174 39,407,745 38,515,021 42,567,218 48,550,876 42,781,929 Business-type activities Charges for services Sewage disposal system 29,205,945 29,915,799 30,825,174 31,759,698 31,730,416 32,368,491 34,755,896 35,107,570 35,752,812 34,968,585 Municipal parking system 7,539,179 6,858,606 5,267,627 7,453,476 6,988,879 7,090,335 6,906,091 7,436,552 8,422,161 6,211,685 Cemetery 225,947 240,394 314,913 289,565 335,379 312,929 403,663 351,204 415,757 403,030 Golf 382,546 390,134 373,000 366,567 363,559 313,164 256,218 179,464 - 3,091 Garbage and rubbish collection 1,507,577 1,459,101 1,131,659 1,664,201 1,744,999 1,871,665 1,952,897 2,072,454 2,243,627 2,278,024 Recycling 2,609,423 2,818,364 3,434,622 3,508,536 3,624,671 3,627,070 3,614,794 3,779,468 4,081,700 4,376,310 Operating grants and contributions 4,456,708 1,331,737 1,193,571 2,574,949 1,143,085 1,312,362 1,391,326 1,603,942 6,648,917 2,000,000 Capital grants and contributions 1,439,044 2,683,657 100,000 Total business-type activities program revenues 47,366,369 45,697,792 42,540,566 47,616,992 45,930,988 46,896,016 49,380,885 50,530,654 57,564,974 50,240,725 Total primary government program revenues $ 96,684,995 $ 96,263,461 $ 87,517,660 $ 91,156,503 $ 86,271,162 $ 86,303,761 $ 87,895,906 $ 93,097,872 $ 106,115,850 $ 93,022,654 Net(Expense)Revenue Governmental activities $ (109,436,029) $ (120,252,327) $ (115,707,116) $ (114,231,921) $ (112,606,966) $ (124,939,611) $ (127,069,493) $ (113,857,107) $ (135,044,441) $ (176,714,198) Business-type activities S,097,594 3,321,09S 1,400,062 4,438,144 3,997,618 3,024,856 8,046,488 4,121,774 12,902,253 (4,971,296) Total primary government net expense $ (104,338,435) $ (116,931,232) $ (114,307,054) $ (109,793,777) $ (108,609,348) $ (121,914,755) $ (119,023,005) $ (109,735,333) $ (122,142,188) $ (181,685,494) 188 CITY OF LANSING Table 2 CHANGES IN NET POSITION (concluded) 2011-2020 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General Revenues and Other Changes in Net Position Governmental activities General revenues Property taxes $ 37,233,590 $ 33,506,860 $ 38,668,837 $ 38,079,548 $ 39,657,382 $ 38,578,548 $ 40,568,278 $ 39,573,468 $ 41,692,930 $ 41,675,711 Income taxes 28,699,749 27,943,070 29,850,755 31,450,913 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 Unrestricted grants contributions 27,254,574 26,441,961 31,425,718 35,677,910 36,330,976 36,532,275 38,108,544 39,419,658 39,530,073 42,029,100 Unrestricted investment earnings 89,735 69,265 58,588 36,836 26,353 99,058 125,539 216,239 463,685 707,383 Miscellaneous 108,601 123,066 - - 280,280 63,079 135,270 - 64,820 91,088 Transfers-internal activities (633,814) (464,008) (583,117) (705,637) (644,485) (629,715) (746,209) (912,186) (580,817) 4,691,895 Total governmental activities 92,752,435 87,620,214 99,420,781 104,539,570 107,311,429 109,216,375 113,885,432 116,752,475 118,192,127 126,633,901 Business-type activities Unrestricted investment earnings 689,883 271,067 356,467 246,616 17,874 - - - - 2,061,667 Miscellaneous 21,166 (1,300,561) - 2,600 - 3,853 - - - - Transfers-internal activities 633,814 464,008 583,117 705,637 644,485 629,715 746,209 912,186 580,817 (4,691,895) Gain on sale of assets 2,120,816 Total business-type activities 1,344,863 (565,486) 939,584 954,853 662,359 633,568 746,209 912,186 580,817 (509,412) Total primary government $ 94,097,298 $ 87,054,728 $ 100,360,365 $ 105,494,423 $ 107,973,788 $ 109,849,943 $ 114,631,641 $ 117,664,661 $ 118,772,944 $ 126,124,489 Change in Net Position Governmental activities $ (16,683,594) $ (32,632,113) $ (16,286,335) $ (9,692,351) $ (5,295,537) $ (15,723,236) $ (13,184,061) $ 2,895,368 $ (16,852,314) $ (50,080,297) Business-Type activities 6,442,457 2,755,609 2,339,646 5,392,997 4,659,977 3,658,424 8,792,697 5,033,960 13,483,070 (5,480,708) Total primary government $ (10,241,137) $ (29,876,504) $ (13,946,689) $ (4,299,354) $ (635,560) $ (12,064,812) $ (4,391,364) $ 7,929,328 $ (3,369,244) $ (55,561,005) 189 CITY OF LANSING Table 3 FUND BALANCE GOVERNMENTAL FUNDS 2011-2020 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 General fund Nonspendable $ 171,586 $ 92,538 $ 75,738 $ 75,738 $ 35,424 $ 492,549 $ 28,342 $ 39,437 $ 38,605 $ 185,369 Restricted 41,129 16,256 9,400 9,400 10,044 - - - - - Committed 178,081 65,373 2,976,408 2,976,408 837,761 428,106 385,067 283,815 - - Unassigned 4,939,691 5,198,032 5,633,528 5,633,528 9,783,911 12,407,748 15,283,857 17,003,260 9,992,885 9,935,641 Total general fund 5,330,487 5,372,199 8,695,074 8,695,074 10,667,140 13,328,403 15,697,266 17,326,512 10,031,490 10,121,010 All other governmental funds Nonspendable 3,006,507 2,852,004 2,671,151 2,671,151 2,619,065 2,578,331 2,618,884 2,842,489 2,952,027 3,169,987 Restricted 7,412,008 5,566,421 4,368,983 4,368,983 6,865,580 6,934,665 4,730,012 9,009,438 17,038,777 18,550,655 Committed 4,908,740 4,109,131 4,035,145 4,035,145 7,110,485 8,427,253 10,426,961 8,837,341 9,147,988 10,637,417 Unassigned(deficit) (371,285) (543,774) (619,931) (619,931) (528,144) (410,252) (411,098) (155,261) (115,546) (82,237) Total all other governmental funds 14,955,970 11,983,782 10,455,348 10,455,348 16,066,986 17,529,997 17,364,759 20,534,007 29,023,246 32,275,822 Total all governmental funds $ 20,286,457 $ 17,355,981 $ 19,150,422 $ 19,150,422 $ 26,734,126 $ 30,858,400 $ 33,062,025 $ 37,860,519 $ 39,054,736 $ 42,396,832 Note: GASB Statement No.54,Fund Balance Reporting and Governmental Fund Type Definitions,was implemented in 2011. Further information on the fund balances are found in the footnotes to the financial statements. 190 CITY OF LANSING Table 4 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 2011-2020 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Revenues Property taxes and special assessments $ 37,371,885 $ 33,583,448 $ 38,717,552 $ 38,717,552 $ 39,470,249 $ 38,782,759 $ 40,691,325 $ 39,629,305 $ 41,732,645 $ 41,709,020 Income taxes 28,699,749 27,943,070 29,850,755 29,850,755 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 Licenses and permits 1,598,804 1,538,325 1,509,402 1,509,402 1,551,125 1,559,638 1,494,298 2,113,824 1,399,881 2,427,866 Intergovernmental revenue 40,304,78S 41,431,793 40,639,183 40,639,183 36,042,377 34,175,112 36,391,761 41,848,072 45,586,152 44,166,490 Charges for services 18,606,304 18,676,398 11,754,381 11,754,381 12,900,490 14,102,447 13,230,822 12,432,770 15,235,656 13,048,934 Fines and forfeits 3,325,728 2,884,328 3,694,351 3,694,351 3,075,427 3,455,541 2,510,945 2,601,063 2,306,990 1,589,733 Interest and rents 88,516 63,571 53,179 53,179 87,035 145,011 201,367 284,165 631,812 911,454 Other 12,326,244 12,774,807 16,757,918 16,757,918 23,162,946 22,854,314 22,952,587 22,101,917 22,391,478 23,371,306 Total revenues 142,322,015 138,895,740 142,976,721 142,976,721 147,950,572 149,647,952 153,167,115 159,466,412 166,306,050 164,663,527 Expenditures Current Expenditures General government 26,396,516 25,038,589 23,595,321 23,595,321 21,720,206 23,386,445 23,948,368 22,281,236 27,340,931 23,111,276 Public safety 70,397,235 66,161,872 63,943,082 63,943,082 75,510,743 72,264,468 73,683,246 75,859,065 78,659,682 80,863,159 Public works 6,002,823 6,225,177 8,908,673 8,908,673 13,273,332 11,715,510 11,201,515 11,087,884 11,632,895 12,368,707 Highway and streets 8,494,233 8,589,298 9,937,423 9,937,423 10,357,488 10,838,473 10,969,516 10,104,034 11,984,896 10,711,027 Recreation and culture 7,464,193 6,996,562 6,629,453 6,629,453 7,583,085 7,719,906 7,749,245 8,236,872 8,138,369 7,420,052 Community and economic development - - - - 3,910,924 3,442,110 4,142,612 15,947,504 19,435,277 18,699,058 Other 15,675,003 17,999,264 23,699,202 23,699,202 2,704,982 2,927,391 2,710,979 - - - Debt service Principal 2,070,552 3,448,080 3,137,159 3,137,159 3,616,297 3,892,862 4,596,159 3,622,053 3,183,595 3,286,705 Interest and fiscal charges 3,259,024 1,836,218 1,421,600 1,421,600 931,079 1,275,957 1,120,518 949,318 1,000,307 823,907 Capital outlay 9,956,103 6,466,084 5,489,617 5,489,617 21,016,808 7,221,346 9,328,278 5,146,742 4,798,070 7,891,788 Total expenditures 149,715,682 142,761,144 146,761,S30 146,761,530 160,624,944 144,684,468 149,450,436 153,234,708 166,174,022 165,17S,679 Excess(deficiency)of revenues over expenditures (7,393,667) (3,865,404) (3,784,809) (3,784,809) (12,674,372) 4,963,484 3,716,679 6,231,704 132,028 (512,152) Other financing sources(uses) Transfers in 9,602,095 7,893,879 7,056,932 7,056,932 9,734,572 9,207,856 9,887,627 7,721,661 8,749,296 16,980,511 Transfers out (10,235,909) (8,357,887) (1,892,449) (1,892,449) (10,002,772) (10,055,346) (11,497,936) (9,283,847) (9,330,113) (13,218,616) Proceeds from borrowing 2,470,000 - 11,932,046 11,932,046 16,761,300 2,090,000 - - 8,603,699 - Proceeds from the sale of capital assets 1,210,046 1,398,936 497,833 497,833 110,533 268 97,255 128,976 - 92,353 Issuance of long-term debt - - - - - - - - - Payments to advance refunding escrow agent (2,456,207) (6,015,112) (6,015,112) - (2,162,163) (7,741,363) Bond premium(discount) 40,945 80,175 780,670 Total other financing sources(uses) 590,025 934,928 11,579,250 11,579,250 16,644,578 (839,210) (1,513,054) (1,433,210) 1,062,189 3,854,248 Net change in fund balances $ (6,803,642) _L(2,930,476) $ 7,794,441 $ 7,794,441 $ 3,970,206 $ 4,124,274 $ 2,203,625 $ 4,798,494 $ 1,194,217 $ 3,342,096 Debt service as a percentage of noncapital expenditures 3.6% 3.7% 3.1% 3.1% 2.8% 3.6% 3.8% 3.0% 2.5% 2.6% 191 CITY OF LANSING Table 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (UNAUDITED) Taxable Assessed Value Ratio of Total Industrial and Assessed Commercial Total Taxable to Total Subject to Assessed Total Direct Estimated Estimated Year Real Personal Act 198 Agricultural Developmental Value Tax Rate Actual Value Actual Value 2011 $ 1,407,920,589 $ 199,543,400 $ 839,505,560 $ $ $ 2,446,969,549 15.70 $ 4,595,182,662 53.3% 2012 1,387,390,250 183,233,681 726,967,400 2,297,591,331 15.70 4,177,384,562 55.0% 2013 1,232,109,181 182,543,900 673,887,300 151,900 2,088,692,281 19.70 4,177,384,562 50.0% 2014 1,152,931,800 182,024,000 666,477,900 151,900 2,900 2,001,588,500 19.70 4,002,817,000 50.0% 2015 1,144,848,592 183,420,400 758,406,830 158,100 2,900 2,086,836,822 19.70 4,173,673,644 50.0% 2016 1,162,708,909 196,143,891 806,360,800 175,600 2,900 2,165,392,100 19.70 4,330,784,200 50.0% 2017 1,285,584,500 144,076,700 837,758,400 172,500 - 2,267,592,100 19.70 4,535,184,200 50.0% 2018 1,325,754,900 131,924,900 892,135,800 180,000 2,349,995,600 19.70 4,699,991,200 50.0% 2019 1,422,412,200 143,567,100 1,000,797,500 185,300 2,566,962,100 19.70 5,133,924,200 50.0% 2020 1,537,030,826 157,132,900 1,143,059,850 211,800 2,837,435,376 19.70 5,674,870,752 50.0% Source: Lansing City Assessor 192 CITY OF LANSING Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) (RATE PER$1,000 OF ASSESSED VALUE) City of Lansing Overlapping Rates Totals Total State Year Ended Operating Service City Schools County Education Other(2) December 31, Tax Year Millage Millage Millage Millage(1) Millage Tax College Millage Millage Total 2011 2010 15.44 .26 15.70 19.95 8.84 6.00 3.81 9.93 64.23 2012 2011 15.44 .26 15.70 21.44 8.85 6.00 3.81 9.96 65.76 2013 2012 19.44 .26 19.70 21.73 9.49 6.00 3.81 9.96 70.69 2014 2013 19.44 .26 19.70 21.91 9.50 6.00 3.81 9.96 70.88 2015 2014 19.44 .26 19.70 21.77 10.20 6.00 3.81 9.96 71.44 2016 2015 19.44 .26 19.70 21.83 9.83 6.00 3.81 9.96 71.13 2017 2016 19.44 .26 19.70 22.57 10.06 6.00 3.81 9.96 72.10 2018 2017 19.44 .26 19.70 22.60 10.07 6.00 3.81 11.25 73.43 2019 2018 19.44 .26 19.70 22.50 11.34 6.00 3.81 11.26 74.61 2020 2019 19.44 .26 19.70 25.38 11.34 6.00 3.81 9.97 76.20 (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 193 CITY OF LANSING Table 7 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) 2020 2011 Taxable Taxable Assessed Percent Assessed Percent Taxpayer Valuation Rank of Total Valuation Rank of Total Consumers Energy $ 46,076,843 1 2.16% $ 23,091,635 3 0.98% General Motors LLC 41,505,761 2 1.94% 81,853,800 1 3.49% Jackson National Life Insurance Company 37,280,474 3 1.75% 33,218,050 2 1.42% Lansing Properties LLC 24,590,660 4 1.15% General Motors Corp. 23,332,027 5 1.09% Phoenix Development Partners LLC 18,353,814 6 0.86% Lansing Retail Center LLC 12,170,056 7 0.57% 11,231,500 6 0.48% McLaren Health Care Corporation 11,878,066 8 0.56% Phoenix Development Partners II LLC 8,768,893 9 0.41% Eyde Knapp Development LLC 8,699,322 10 0.41% Demmer Corporation 15,900,500 4 0.68% Comcast of Michigan LLC 12,210,500 5 0.52% State of Michigan 10,044,300 7 0.43% Blue Cross Blue Shield of Michigan 8,988,200 8 0.38% Heart of the City Assoc 7,921,400 9 0.34% Sprint Spectrum L.P. 7,150,200 10 0.30% $ 232,655,916 10.90% $ 211,610,085 9.02% Source: Lansing City Assessor 194 CITY OF LANSING Table 8 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Collection Percent (B) (A) of Current of Levy Collection Percent Total Year's Taxes Collected Subsequent of Total Tax Fiscal Adjusted During During to the Year of Total Collections Year Year Tax Levy Year Levied Year Levied Tax Levy Collections to Tax 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 38,307,862 99.94% 2015 2016 38,538,226 38,461,152 99.80% 52,758 38,513,910 99.94% 2016 2017 38,431,072 38,370,929 99.84% 50,344 38,421,273 99.97% 2017 2018 39,234,692 39,232,925 100.00% 67,348 39,300,273 100.17% 2018 2019 40,231,255 40,203,313 99.93% 42,639 40,245,952 100.04% 2019 2020 42,128,760 42,123,931 99.99% 17,175 42,141,106 100.03% 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 195 CITY OF LANSING Table 9 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities Business-Type Activities General Installment Special General Percentage Obligation Purchase Assessment Obligation Revenue Lease Total Primary of Personal Per Year Bonds Contracts Bonds Loans Bonds Bonds Purchases Loans Government Income Capita Population(1) 2011 $ 27,804,224 $ 9,564,693 $ $ 779,580 $ 197,000,901 $ 33,209,092 $ $1,574,209 $ 269,932,699 12.86% 2 $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% 3 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% 3 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% 3 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% 3 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% 3 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% 3 1,732 117,400 2018 15,325,818 12,289,396 7,476,545 136,938,668 17,258,138 808,500 190,097,065 7.13% 3 1,625 116,986 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 2020 11,792,231 10,230,073 7,000,422 112,290,745 12,525,000 352,897 154,191,368 6.08% 3 1,304 118,210 (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 196 CITY OF LANSING Table 10 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (UNAUDITED) Ratio of Fiscal Debt Debt Net Bonded Net Year Taxable Service Payable From Debt to Bonded Ended Assessed Gross Bonded Monies Restricted Net Bonded Taxable Debt per June 30, Population(1) Value(3) Debt(2) Available Revenues Debt Value Capita 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 2,336,064,001 152,264,486 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 14,896,059 0.0072 127 2020 118,210 2,837,435,376 124,082,976 29,361 112,290,745 11,792,231 0.0042 103 (1) Source: 2000 and 2010 Census by the U.S.Census Bureau(www.census.gov/quickfacts/lansingcitymichigan) (2) 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 197 CITY OF LANSING Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30,2020 (UNAUDITED) Overlapping Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Net direct- City $ 81,532,491 100.00% $ 81,532,491 Share of County-issued bonds Drain Commission 989,069 100.00% 989,069 Other Overlapping Debt Eaton Intermediate School District 3,175,000 0.88% 27,940 Ingham Intermediate School District 1,002,000 21.87% 219,137 Waverly School District 13,435,000 0.26% 34,931 Lansing School District 104,075,000 79.34% 82,573,105 East Lansing School District 102,413,377 5.34% 5,468,874 Holt School District 36,580,895 0.98% 358,493 Ingham County 40,616,535 25.35% 10,296,292 Eaton County 19,088,071 1.92% 366,491 Clinton County 322,626 0.28% 903 Lansing Community College 98,220,000 17.92% 17,601,024 Okemos School District 32,089,033 4.39% 1,408,709 Mason School District 35,655,000 1.34% 477,777 Grand Ledge School District 84,665,000 1.73% 1,464,705 Total Overlapping $ 121,287,450 Total Direct and Overlapping $ 202,819,941 Sources: Municipal Advisory Council Note: Overlapping debt percentages are apportioned based upon relative assessed values. 198 CITY OF LANSING Table 12 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) Legal Debt Margin Calculation for Fiscal Year 2020 Assessed value,real and personal property $ 2,566,962,100 Legal debt margin Debt limitation-10 percent of total valuation 256,696,210 Debt applicable to limit Total City Bonded Debt 147,452,402 City Share: Drain Commission-County Issued 989,065 TIF Supported Bonds 59,382,491 Lansing Board of Water and Light 627,240,000 835,063,958 Less: Michigan Transportation(MTF)Bonds $ (1,125,000.00) Lansing Board of Water and Light (627,240,000.00) Brownfield Redevelopment Authority Bonds (19,260,000.00) Sewage Disposal Revenue Bonds (12,525,000) Pollution Abatement(CSO Project)Bonds (92,392,402) Share of County-issued bonds (989,065) (753,531,467) Total net debt applicable to limit 81,532,491 Legal debt margin $ 175,163,719 - - - - - - - - - - Debt limit $ 256,696,210 $ 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 Total net debt applicable to limit 81,532,491 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 Legal debt margin $ 175,163,719 $ 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 Total net debt applicable to the limit as a percentage of debt limit 31.76% 34.96% 37.37% 36.39% 39.92% 43.78% 45.37% 43.97% 39.52% 37.52% 199 CITY OF LANSING Table 13 PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(l) Debt Service Principal Interest Total Coverage (2) 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 2020 37,641,473 19,568,461 18,073,012 1,550,000 613,188 2,163,188 8.35 (1) Operating expenses less depreciation (2) Coverage is defined as net revenue available for debt service divided by debt service requirements 200 CITY OF LANSING Table 14 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Lansing Personal Per Capita Median School District Unemployment Labor Year Population (1) Income Income (1) Age 1 Enrollment(2) Rate (3) Force 3 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 2020 118,210 2,536,936,212 22,196 31.90 10,661 16.0% 63,541 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 201 CITY OF LANSING Table 15 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS PRIOR (UNAUDITED) 2020 2011 Percentage Percentage of of Company Employees (1) Rank Employment(2) Employees (1) Rank Employment(2) STATE OF MICHIGAN 14,390 1 5.97% 14,355 1 6.50% MICHIGAN STATE UNIVERSITY 10,253 2 4.25% 11,218 2 5.08% SPARROW HEALTH SYSTEM 7,600 3 3.15% 7,400 3 3.35% GENERAL MOTORS 4,549 4 1.89% 3,688 4 1.67% AUTO-OWNERS INSURANCE GROUP 3,145 5 1.30% 1,500 9 0.68% LANSING COMMUNITY COLLEGE 3,000 6 1.24% 3,180 5 1.44% MCLAREN HEALTH 2,578 7 1.07% PECKHAM 2,510 8 1.04% 1,400 10 0.63% JACKSON NATIONAL LIFE INS CO 2,500 9 1.04% DART CONTAINER CORP 2,000 10 0.83% INGHAM REGIONAL MEDICAL CENTER 2,500 6 1.13% LANSING SCHOOL DISTRICT 2,106 7 0.95% MEIJER 2,000 8 0.91% Greater Lansing metropolitan area employment 241,100 220,759 (1) Data is representative of the Greater Lansing Region (2) Source:www.purelansing.com/Workforce&Data>Top Employers for 2020 data 202 CITY OF LANSING Table 16 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Full-time Equivalent Employees 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Function/Program General government City council 11 10 10 10 10 10 10 10 10 10 Mayor's office 5 5 5 5 5 6 6 7 (G) 7 11 City clerk 6 5 5 5 5 5 5 5 6 6 54-A district court 50 48 43 43 46 45 45 45 45 45 City attorney's office 11 10 10 10 11 11 11 11 12 11 City TV 2 2 2 2 2 2 2 2 2 3 Internal auditor 1 1 1 1 1 1 1 1 1 1 Human resources 11 9 9 10 10 12 12 11 11 11 Information technology 14 10 10 11 11 11 11 16 16 15 Finance Accounting/budget/purchasing 14 13 10 10 9 8 (E) 8 8 8 7 Treasury/income tax 11 10 20 9 9 10 11 11 13 16 Assessing 11 11 11 11 11 11 11 11 11 Property management 20 18 - (B) - - - - - - - Fleet management 29 27 - (B) 196 179 125 127 130 132 133 138 142 147 Planning&neighborhood development Administration 2 2 2 2 2 2 2 2 2 3 Code compliance 16 15 15 - (D) - - - 14 (F) 15 19 Building safety 15 13 12 13 13 13 13 13 13 15 Planning 5 4 4 4 4 4 4 3 (G) 4 4 Development 9 9 9 11 10 10 9 9 9 7 Parking&transportation 20 (C) 20 20 15 14 14 14 14 14 19 66 63 62 45 43 43 42 55 57 67 Neighborhood&Citizen Engagement 1 (G) 5 5 Police 327 260 229 (C) 234 (D) 239 239 240 241 243 239 Fire 207 179 180 188 181 181 181 181 182 186 Code Compliance 14 (D) 14 14 14 - (F) 207 179 180 202 195 195 195 181 182 186 Public services Administration&engineering 21 21 19 19 19 20 20 20 21 22 Operations&maintenance 135 (C) 121 120 117 (D) 117 117 117 118 118 113 Service garage - - - - - - - - - 1 Wastewater 41 41 41 41 41 41 41 42 42 42 Property Management - - 18 (B) 18 18 18 16 16 16 19 Fleet Management 27 (B) 27 27 26 30 30 30 29 197 183 225 222 222 222 224 226 227 226 Human relations&community services 5 5 5 6 7 7 8 9 10 11 Parks&recreation Administration&design 5 5 5 6 6 6 6 6 6 6 Grounds&forestry (A) - - - - - - - - - - Leisure&special recreation 12 10 8 6 6 6 6 6 6 10 Cemeteries 1 1 1 1 1 1 1 1 1 1 Golf/ice arena 4 3 3 3 3 3 3 3 22 19 17 16 16 16 16 16 13 17 Total 1,020 888 843 852 852 854 858 867 879 898 Source:The City of Lansing The following restructuring of departments have occurred: (A)Grounds Maintenance positions were moved from Parks&Recreation and Planning&Neighborhood Development and consolidated with Public Service staff. (B)Fleet and Property Management were moved from the Finance Department to the Public Service Department (C)On June 27,2012,911 Dispatch employees were transferred from the City to Ingham County. (D)Code Compliance(14 positions)were transferred from ED&P to Fire;four(4)positions to Police,and one(1)position to Public Service for FY 2014. (E)Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. (F)Code Compliance was transferred from Fire to ED&P. (G)One(1)position was transferred from Human Resources to Mayor's Office and one(1)position was transferred from ED&P to N&CE in FY 2018. 203 CITY OF LANSING Table 17 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public safety Fire department responses 16,974 17,093 18,444 19,427 20,170 21,115 21,902 22,768 22,389 21,904 EMS related 14,628 14,851 15,918 16,235 17,376 18,275 18,827 19,264 19,655 18,975 Fire related 2,346 2,242 2,526 3,012 2,794 2,840 3,075 3,063 2,734 2,929 Police department responses 78,112 74,058 73,087 76,855 79,331 71,468 82,722 107,379 84,869 80,449 Arrests 8,858 8,043 7,196 5,656 4,510 3,880 5,710 4,507 4,418 3,524 Traffic violations 15,585 8,829 14,905 7,756 10,781 7,334 9,385 6,496 6,963 5,054 Public works Potholes filled 32,918 30,116 33,155 55,193 53,281 53,488 53,332 54,773 2,589 1,042 Streets resurfaced(miles) 9.0 5.0 6.0 4.6 4.0 8.8 8.7 6.0 4.6 11.0 Recreation Recreation participation 66,254 66,836 55,122 50,859 122,639 101,335 98,978 120,245 93,264 29,313 Pavilion rentals 161 198 199 185 206 242 180 202 222 78 Sewage disposal Average amount processed daily(gal) 12.83 million 12.82 million 14.75 million 14.49 million 13.28 million 15.46 million 16.32 million 14.45 million 16.60 million 14.18 million Parking system Average number of monthly permits 3,122 2,735 2,718 2,891 3,077 3,218 2,581 3,310 2,500 869 Parking tickets issued 45,176 41,829 38,127 34,373 30,888 32,990 33,492 32,587 37,105 16,481 Cemetery Lots sold 143 115 113 93 138 115 162 88 103 121 Golf Annual rounds played 26,084 28,560 25,554 22,786 22,998 13,325 14508 20,492 - - Garbage and rubbish Yards sent to landfill 20,334 18,705 17,985 18,829 19,667 20,115 20,007 20,492 20,957 22,825 Recycling Recycled goods sold(tons) 2,446 3,149 3,562 5,075 5,691 5,940 5,834 5,593 5,407 5,322 Yards composted 15,725 20,413 21,832 25,260 21,685 24,413 24,223 20,031 21,198 14,262 Source: The City of Lansing,Michigan (1) The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 204 CITY OF LANSING Table 18 CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Public safety Police stations 3 3 2 2 2 2 2 2 2 2 2 Police patrol units 61 58 60 60 61 60 60 60 60 58 58 Fire stations 9 8 6 6 6 6 6 6 6 8 8 Emergency Vehicles 0 0 0 0 0 0 0 0 0 55 27 Public works Streets(miles) 410.63 410.80 407.80 411.00 411.00 414.00 414.00 414.00 414.00 413.00 413.23 Traffic signals 203 208 204 200 200 200 200 200 200 184 206 Recreation Park acreage 2,422.63 2,422.63 2,434.88 2,364.85 2,364.85 2,363.45 2,134.26 2,134.26 2,017.56 2,174 1,659 Playgrounds 71 71 73 75 72 72 74 74 74 76 77 Baseball/softball fields 61 61 61 61 61 47 25 25 25 22 22 Soccer/football fields 6 6 6 6 6 6 14 15 15 15 16 Community centers 4 4 4 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 357.2 359 359 359 359 361 361 361 363 364 365 Storm sewers(miles) 232.6 234 234 234 234 235 235 235 237 238 239 Combined sewers(miles) 190.5 187.6 187.6 188 188 188 188 188 187 185 185 Parking system Ramps 4 4 4 4 4 4 4 4 4 3 3 Lots 16 15 15 18 17 17 16 16 16 16 16 Meters 2,493 2,452 2,452 2,452 2,452 2,166 2,166 2,166 2,166 2166 500 On-street Pay Stations 134 Cemetery Number of cemeteries 3 3 3 3 3 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 1 1 1 1 0 Acreage 115 115 115 115 115 115 115 115 115 115 0 Garbage and rubbish Refuse collection trucks 18 22 19 17 17 17 14 14 16 8 7 Recycling Recycling trucks 10 9 7 7 7 7 5 5 7 8 8 Compost trucks 0 0 0 0 0 0 0 0 0 8 7 Sources:The City of Lansing,Michigan 205