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HomeMy WebLinkAboutCAFR_ 2016 City of Lansing-FS Final City of INS I Michigan � HI � Year Ended Comprehensive June 30, 2016 V Annual Financial Report . • Prepared by: Department of Finance Finance Director Angela Bennett Accounting Manager Randy Endsley CITY OF LANSING, MICHIGAN Table of Contents Page INTRODUCTORY SECTION 1 Elected and Appointed Officers 2 Letter of Transmittal 3 Table of Organization 7 GFOA Certificate of Achievement 8 FINANCIAL SECTION 9 Independent Auditors' Report 11 Management's Discussion and Analysis 15 Basic Financial Statements Government-wide Financial Statements: Statement of Net Position 30 Statement of Activities 31 Fund Financial Statements: Balance Sheet - Governmental Funds 36 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 37 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 38 Reconciliation of Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities 39 Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual: General Fund 40 Statement of Net Position - Proprietary Funds 44 Statement of Revenues, Expenses and Changes in Fund Net Position - Proprietary Funds 45 Statement of Cash Flows - Proprietary Funds 46 Statement of Fiduciary Net Position - Fiduciary Funds 50 Statement of Changes in Fiduciary Net Position - Pension and Other Postemployment Benefits Trust Funds 51 Combining Statement of Net Position - Discretely Presented Component Units 56 Combining Statement of Activities - Discretely Presented Component Units 57 Notes to Financial Statements 59 CITY OF LANSING, MICHIGAN Table of Contents Page Required Supplementary Information 113 Schedule of Changes in Net Pension Liability and Related Ratios - Employees' Retirement System 114 Schedule of the Net Pension Liability - Employees' Retirement System 115 Schedule of Contributions - Employees' Retirement System 116 Schedule of Investment Returns - Employees' Retirement System 117 Schedule of Changes in Net Pension Liability and Related Ratios - Police and Fire Retirement System 118 Schedule of the Net Pension Liability - Police and Fire Retirement System 119 Schedule of Contributions - Police and Fire Retirement System 120 Schedule of Investment Returns - Police and Fire Retirement System 121 Schedule of Funding Progress - Other Postemployment Benefit Plans 122 Schedule of Employer Contributions - Other Postemployment Benefit Plans 122 Combining and Individual Fund Financial Statements and Schedules 123 Nonmajor Governmental Funds: Combining Balance Sheet - Nonmajor Governmental Funds 124 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 125 Combining Balance Sheet - Nonmajor Special Revenue Funds 128 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds 130 Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds 132 Combining Balance Sheet - Nonmajor Debt Service Funds 140 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds 141 Combining Balance Sheet - Nonmajor Capital Projects Funds 144 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 145 Combining Balance Sheet - Nonmajor Permanent Funds 148 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds 149 Nonmajor Enterprise Funds: Combining Statement of Net Position - Nonmajor Enterprise Funds 152 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Enterprise Funds 153 Combining Statement of Cash Flows - Nonmajor Enterprise Funds 154 Internal Service Funds: Combining Statement of Net Position - Internal Service Funds 158 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Internal Service Funds 159 Combining Statement of Cash Flows - Internal Service Funds 160 CITY OF LANSING, MICHIGAN Table of Contents Page Agency Funds: Combining Statement of Fiduciary Assets and Liabilities - Agency Funds 164 Combining Statement of Changes in Fiduciary Assets and Liabilities - Agency Funds 165 STATISTICAL SECTION (UNAUDITED) 167 TABLE 1 Net Position by Component 171 2 Change in Net Position 172 3 Fund Balances, Governmental Funds 174 4 Changes in Fund Balances of Governmental Funds 175 5 Assessed and Estimated Actual Value of Taxable Property 176 6 Direct and Overlapping Property Tax Rates 177 7 Profile of Ten Largest Ad Valorem Taxpayers 178 8 Property Tax Levies and Collections 179 9 Ratios of Outstanding Debt by Type 180 10 Ratios of General Bonded Debt Outstanding 181 11 Direct and Overlapping Governmental Activities Debt 182 12 Legal Debt Margin Information 183 13 Pledged-Revenue Coverage 184 14 Demographic and Economic Statistics 185 15 Principal Employers 186 16 Full-Time Equivalent City Governmental Employees by Function/Program 188 17 Operating Indicators by Function/Program 192 18 Capital Asset Statistics by Function/Program 194 INTRODUCTORY SECTION 1 CITY OF LANSING, MICHIGAN ELECTED AND APPOINTED OFFICERS For the Year Ended June 30, 2016 MAYOR Virg Bernero CLERK Chris Swope DISTRICT COURT JUDGES Louise Alderson, Chief Judge Patrick F. Cherry Hugh B. Clarke, Jr. Frank J. Deluca CITY COUNCIL AT LARGE BY WARDS Judi Brown Clarke Jody Washington - 1st Ward Patricia Spitzley Tina Houghton - 2nd Ward Kathie Dunbar Adam Hussain - 3rd Ward Carol Wood Jessica Yorko - 4th Ward OFFICERS Randy Hannan Executive Assistant/Chief of Staff Chad Gamble Chief Operating Officer/Public Service Director Vacant City Attorney Angela Bennett Finance Director Mary Riley Human Resources Director Sharon Frischman City Assessor Tammy Good City Treasurer Randy Talifarro Fire Chief Michael Yankowski Police Chief Joan Jackson Johnson Human Relations Et Community Services Director Brett Kaschinske Parks Et Recreation Director Robert Johnson Planning Et Neighborhood Development Director Vacant Internal Auditor 2 G �' S1 FINANCE DEPARTMENT 124 W. Michigan Ave., 8"Floor Lansing: Michigan 48933 (517'a 4834500 December 22, 2016 Council President Judi Brown Clarke and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Houghton and Council Members: We are pleased to submit the comprehensive annual financial report of the City of Lansing, Michigan for the fiscal year ended June 30, 2016. The City assumes full responsibility for both the accuracy of the data and the completeness and fairness of the presentation, including all disclosures. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations government wide and of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The City's fiscal year 2015/2016 financial statements have been audited by Rehmann Robson, an independent firm of licensed, certified public accountants. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City of Lansing for the fiscal year-ended June 30, 2016, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures contained in the financial statements; assessing the accounting principles used; and evaluating the overall financial statement presentation. The independent audit concluded with the rendering of an unmodified opinion on the statements, meaning the financial statements present, fairly and accurately in all material respects, the financial position of the City in conformity with Generally Accepted Accounting Principles ("GAAP"). The independent auditors repot is presented as the first component of the financial section of this report. This letter of transmittal is designed to complement the Management Discussion and Analysis (MDEtA) and should be read in conjunction with it. The Management Discussion and Analysis can be found immediately following the Independent Auditor Report. Profile of the City of Lansing Serving as Michigan's capital since 1848, the City of Lansing was incorporated in 1859 and operates under provisions of Public Act 279 of 1909, as amended (the "Home Rule City Act"). The City incorporates 34.7 square miles and is located in the lower middle of Michigan's Lower Peninsula and operates under a strong mayor form of government established by 1978 Charter revision. 3 Lansing is a mature core city with a population of 115,056, according to 2015 census estimates, and offers a full range of services. During the fiscal year ended June 30, 2016, the City operated police headquarters and a precinct with over 190 sworn police officers; six fire stations with a fire protection force of over 170; over 350 miles of sanitary sewers, 230 miles of storm sewers, and 180 miles of combined sewers; over 400 miles of roads; 113 parks; a District Court; and support for human services and cultural events. The City's main sources of revenue are property taxes, income taxes, State revenue sharing, Federal entitlement grants, and charges for services, including utility billings. Reporting Entity The financial reporting entity (the City) includes all of the funds and of the primary government (i.e., the City as legally defined), as well as its blended component units. Blended component units, although legally separate entities, are, in substance, part of the primary government's operations and are included as part of the primary government. The Lansing Building Authority is a blended component unit. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position, results of operations and cash flows from those of the primary government. The Lansing Entertainment It Public Facilities Authority, Tax Increment Finance Authority, Brownfield Redevelopment Authority, and Smart Zone are reported as a discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls designed to ensure that the assets of the government are protected from loss, theft, or misuse and to assure that adequate accounting data is compiled to allow for the accurate presentation of financial statements in conformity with generally accepted accounting principles. To provide a reasonable basis for making these presentations, management has established a comprehensive system of internal controls designed to reasonably ensure that assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of these financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment, and monitoring and review processes which are communicated throughout City operations. Because the cost of internal controls generally should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that these objectives are met. Because the City is a recipient of federal grant dollars, the independent audit of the financial statements of the City of Lansing was part of a broader, federally-mandated "single audit" in conformity with the provisions of the Single Audit Act of 1996 and the U.S. Office of Management and Budget Circular A-133, Audits of States. Local Governments, and Non-profit Organizations. The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately-issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year-ended June 30, 2015 are discussed in the Management Discussion and Analysis (MDBA), located immediately following the Independent Auditor Report. 4 Budgeting Controls The annual budget serves as the foundation for the City's financial planning, policy-making, and control. The City Charter requires that the Mayor submit to the City Council a proposed budget by the fourth Monday in March. Budgetary controls and limitations are noted in the Note Disclosure Section of the financial statements. The City also maintains an encumbrance accounting system, whereby purchase orders amounts are deducted from the available budget, as one technique of accomplishing budgetary control. Encumbered amounts lapse at year end and require Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. Local Economy The City of Lansing is the seat of Michigan state government and the local economy is comprised of a diversified mix of business and industries. With Michigan State University, Davenport University, Cooley Law School and Lansing Community College, the region has a strong higher education presence. The metro Lansing region is also home to several insurance company headquarters, including Jackson National Life, Auto Owners, AF Group, and Delta Dental; healthcare services with two major hospitals in the city, Sparrow and McLaren; 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, automotive suppliers throughout the region, Niowave's production of particle accelerators, and Emergent Biosolution's research and vaccine production. While its presence in the metro Lansing region has decreased over the past two decades, General Motors has continued to invest in its two state-of-the-art Lansing plants, even during the recent Great Recession. The plants produce the Buick Enclave, GMC Acadia, Chevrolet Traverse, Cadillac ATS (2013 North American Car of the Year) and Cadillac CTS (2008 and 2014 Motor Trend Car of the Year). Production of the Chevrolet Camaro was moved to Lansing from Ontario, Canada in July, 2015 and was subsequently named 2016 Motor Trend Car of the Year. Over the past three years, General Motors has invested over $277 million in plant expansions and retooling, $40 million in a new Logistics Center, and $174 million in a new regional stamping plant. Currently under construction and scheduled for completion in 2022, Michigan State University will be home to the $174 million Facility for Rare Isotope Beams (FRIB), which will enable scientific discovery of rare isotope properties, will employ top nuclear physicists, and is expected to create approximately 1,000 jobs. Even before the plant is completed, Niowave, Inc. established its operations in Lansing as commercial spinoff from Michigan State University's nuclear cyclotron facility. MSU has been named #1 in Nuclear Physics, ahead of MIT, by U.S. News l* World Report for four consecutive years. Lansing serves as the cultural and commercial center for the region, and recent major investments have revitalized downtown Lansing into an entertainment and residential destination, with renovations to historic buildings and brand new developments. The former Lansing Board of Water Light downtown plant was transformed in 2011 into the corporate headquarters for Accident Fund Insurance Company of America (now AF Group), followed by Blue Cross Blue Shield of Michigan moving into Accident Fund's former downtown location. Recent renovations of the former downtown Knapp's department store into apartments and commercial space have attracted Dewpoint, CGI Group, Inc., and TEKsystems technology firms. Highly successful, recently-completed new developments, including Marketplace, Midtown, and The Outfield residential developments, and the SkyView on Michigan development currently under construction, have added significant additional residential units near and within downtown. The Outfield Ballpark Lofts development was the first in the nation to feature apartments located right in the outfield of a Class-A minor league baseball stadium and has received national and international awards. 5 In its commitment to regional partnerships, the City of Lansing has contracted with the Lansing Economic Area Partnership (LEAP) since 2012. This arrangement allows for a cost-effective, regional-based approach to economic development. As testament to its success, this past year, LEAP received the prestigious Excellence in Economic Development Award by the International Economic Development Council (IEDC). Over the past decade, LEAP and the Lansing Economic Development Corporation have attracted more than $2.3 billion in new private investment to the City. The metro Lansing region is one of growth and opportunities; it was one of only two communities in the State of Michigan to show population growth in the 2010 Census. The region was ranked the best in the U.S. for job growth in Goods Produced, Manufacturing and Transportation Et Utilities job sectors by Urban Institute's Metro Trends, and Lansing was recently named by Kiplinger's Nation's Top 10 Best Cities for Young Adults, ranking with cities like Austin, Texas, and Boston, Massachusetts. Awards and Acknowledgements The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2015. This was the 38th consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Preparation of this comprehensive annual financial report was made possible by the dedicated service of the entire staff of the Finance Department, as well as support by other departments. All those who contributed to this document, especially Accounting Manager Randy Endsley, have our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 38th consecutive GFOA award, recognizing their efforts, is well deserved indeed. Sincerely, t� Virg Bernero Mayor Angela Bennett Finance Director 6 CITY OF LANSING, MICHIGAN Table of Organization Citizens of Lansing City Clerk City Council Mayor -54-A District Court Intcmal City Attorney's Office of Office of Audit Office Community financial Media Empowerment Police F' c Planning& Economic Public Parks& Human Relations Neighborhood Development Service Recreation and Community Development Services Patrol Suppression Planning Economic Dev.Corp. Roads/Sidewalks Parks Design;?rograrrts Grant Writing Assist. Crime Investigation Prevention Zoning LE11 'A Scwersffreatment Recreation Programs Human Scrv.Crrants Community Policing; Code Compliance Housing/Neighborhoods Downtown Lansing,Inc. Trash/Recycling Community Centers Police Internal Inv. Detention Emergency Mgmt Building Safety TIFA Grounds Maintenance Cemeteries Parking hnforccment Parking System bngineering Golf Properly Management Fleet Services F rmation'technology Finance Human Rcsourccs Treasury/Income Tax Recruitment Assessing Training Accountin&udget Labor Relations Retirement Services PayrolllBenefits 7 CITY OF LANSING, MICHIGAN GFOA Certificate of Achievement Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City of Lansing Michigan For its Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2015 Executive';Director/CEO 8 FINANCIAL SECTION 9 This page intentionally left blank. 10 Rebmann Robson Rehmann 2330 East Paris Ave.SE Grand Rapids,MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 rehmann.com INDEPENDENT AUDITORS' REPORT December 22, 2016 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, 2016, and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. Management's Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Independent Auditors'Responsibility Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. 11 We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Opinions In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan, as of June 30, 2016, and the respective changes in financial position and, where applicable, cash flows thereof and the budgetary comparison for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. Restatement of Beginning Net Position of the Brownfield Redevelopment Authority Component As described in Note 19, the beginning net position of the Brownfield Redevelopment Authority component unit was reduced to reflect the fact that certain outstanding loans receivable are only collectible from outside parties if future tax captures are insufficient to cover the required payments (contingent receivables). Our opinion is not modified with respect to this matter. Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis and the schedules for the pension and other postemployment benefits plans, as listed in the table of contents, be presented to supplement the basic financial statements. Such information, although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America, which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Other Information Our audit was conducted for the purpose of forming opinions on the financial statements that collectively comprise the City's basic financial statements. The combining and individual fund financial statements and schedules, and the introductory section and statistical tables are presented for purposes of additional analysis and are not a required part of the basic financial statements. 12 The combining and individual fund financial statements and schedules are the responsibility of management and were derived from and relate directly to the underlying accounting and other records used to prepare the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and certain additional procedures, including comparing and reconciling such information directly to the underlying accounting and other records used to prepare the basic financial statements or to the basic financial statements themselves, and other additional procedures in accordance with auditing standards generally accepted in the United States of America. In our opinion, the combining and individual fund financial statements and schedules are fairly stated, in all material respects, in relation to the basic financial statements as a whole. The introductory section and statistical tables have not been subjected to the auditing procedures applied in the audit of the basic financial statements, and accordingly, we do not express an opinion or provide any assurance on them. Other Reporting Required by Government Auditing&andards In accordance with Government Auditing Standards, we have also issued, under separate cover, our report dated December 22, 2016, on our consideration of the City of Lansing, Michigan's internal control over financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. 44MA4V14-4L4-)'t- «c 13 This page intentionally left blank. 14 MANAGEMENT'S DISCUSSION AND ANALYSIS 15 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The management of the City of Lansing, Michigan ("the City") provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2016 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MDBA") is intended to assist the reader in focusing on significant financial issues and provide an overview of the City's financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section. Financial Highlights Total government-wide assets and deferred outflows of resources of the City exceeded its liabilities and deferred inflows of resources at the close of the fiscal year by $139.5 million (reported as net position), a decrease of $12.1 million from fiscal year 2014/2015. As of the close of the 2015/2016 fiscal year, the City's governmental funds reported combined ending fund balances of $30.9 million on a modified accrual basis, a $4.1 million increase from fiscal year 2014/2015. Of the $30.9 million fiscal year 2015/2016 combined ending fund balance, $10.0 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $8.9 million is committed for designated projects, leaving $12.0 million unassigned. At the end of the fiscal year, unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund), was $12.4 million, an increase of $2.6 million from FY 2014/2015. Please see the "General Fund and Budgetary Highlights" section of this Management Discussion and Analysis for further detail. The business-type activities reported net position at year-end of $242.6 million, an increase of $3.7 million during the year. The City's total bonded and loaned debt was $219.5 million at June 30, 2016, a decrease of $17.6 million (or 7.4%), which represents the net difference between new issuances and payments. More detailed information regarding these activities and funds can be found in Footnote 9, Long-Term Debt of the Notes to the Financial Statements section of the CAFR. Overview of the Financial Statements This MDEtA is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. These statements include all non-fiduciary assets and liabilities, excluding assets and liabilities related to pension and OPEB plans. The Statement of Net Position and the Statement of Activities are two financial statements that report information about the City, as a whole, and about its activities, which provide measurements of long-term trends that should help answer this question: Is the City, as a whole, better off or worse off as a result of this year's activities? Unlike the governmental funds, the current year's revenues and expenses are taken into account regardless of when cash is received or paid, known as "full accrual accounting". The Statement of Net Position presents all of the City's assets, deferred outflows of resources, liabilities and deferred inflows of resources with the difference between the these categories reported as "net position". Over time, increases and decreases in net position are an indicator of whether the City's long-term financial position is improving or deteriorating, but can also change as a result of governmental accounting standards. 16 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). The Statement of Net Position and the Statement of Activities report three activities, as follows: Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch), the District Court (judicial branch), and general operations of the executive branch departments, such as police, fire, parks, public works, and other general staff departments fall within the governmental activities. Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has various discretely presented units: the Lansing Entertainment and Public Facilities Authority, the Tax Increment Finance Authority, the Brownfield Redevelopment Authority, and the SmartZone (which was dissolved as of June 30, 2016). These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements (modified accrual accounting) with governmental activities (full accrual accounting) on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: Capital assets used in governmental activities are not reported on governmental fund statements. Certain revenues that are earned, but not available for use within the reporting period, are reported as revenues for governmental activities, but are reported as deferred inflows of resources on the governmental fund statements. Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements, but not deferred on the government-wide statements. Internal service funds are reported as governmental activities, but reported as proprietary funds in the fund financial statements. Bond discounts and premiums in the issuance of long-term debt, are reported as expenditures in governmental fund statements, but are capitalized and amortized in the government-wide statements. Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, and others only appear as liabilities in the government-wide statements. 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. 17 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Certain other outflows, such as debt service principal payments, represent decreases in liabilities on the government-wide statements, but are reported as expenditures on the governmental fund statements. Pension and other postemployment benefits liabilities and related deferrals relating to governmental funds are only reported in the government-wide statements. The Notes to the Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. Fund Financial Statements. The City's major funds are identified as the General Fund, Sewage Disposal System Fund, and Municipal Parking System Fund. Data for all other funds, termed "nonmajor funds", are combined into a single, aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital projects, debt service, and permanent funds. Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefit plans. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. These funds, which include pension and other postemployment benefit funds, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. Other Supplementary Information Other supplementary information includes combining financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental fund financial statements. 18 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Government-Wide Financial Analysis The City's combined net position decreased $12.1 million over the course of this fiscal year's operations, and came to a total of $139.5 million. Net position of governmental activities decreased $15.7 million or 18.0%, and business-type activities increased $3.7 million or 1.5%. Explanations for those changes are described below under the governmental activities and business-type activities sections of this Management Discussion and Analysis. Net Position Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Current and other assets $ 59,967,923 $ 55,267,321 $ 75,273,478 $ 72,710,863 $135,241,401 $127,978,184 Capital assets, net 194,187,285 200,588,271 371,535,963 382,581,922 565,723,248 583,170,193 Total assets 254,155,208 255,855,592 446,809,441 455,292,785 700,964,649 711,148,377 Deferred outflows of resources 59,465,643 19,319,368 7,190,842 4,220,635 66,656,485 23,540,003 Long-term liabilities 56,959,949 63,089,729 176,980,629 189,410,522 233,940,578 252,500,251 Other liabilities 355,363,179 295,991,635 33,360,540 30,325,950 388,723,719 326,317,585 Total liabilities 412,323,128 359,081,364 210,341,169 219,736,472 622,664,297 578,817,836 Deferred inflows of resources 4,376,709 3,449,346 1,055,949 832,207 5,432,658 4,281,553 Net position Net investment in capital assets 149,676,860 151,785,916 220,436,882 218,813,478 370,113,742 370,599,394 Restricted 12,922,525 12,311,541 2,764,963 2,889,096 15,687,488 15,200,637 Unrestricted (265,678,371) (251,453,207) 19,401,320 17,242,167 (246,277,051) (234,211,040) Total net position $(103,078,986) $ (87,355,750) $242,603,165 $238,944,741 $139,524,179 $151,588,991 The largest component of the City's net position reflects its net investment in capital assets (e.g. land, buildings, equipment, infrastructure, and others). Restricted net position is the next largest component, which represents amounts subject to external restrictions such as bond covenants, City Charter, State legislation or Constitutional provision. The remaining portion, unrestricted net position are resources that may be used at the City's discretion, but often have limitations based on policy action. 19 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City's net position changed during the fiscal year: Change in Net Position Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Program revenues Charges for services $ 13,941,487 $ 12,770,559 $ 45,583,654 $ 44,787,903 $ 59,525,141 $ 57,558,462 Operating grants 24,561,960 24,658,955 1,312,362 1,143,085 25,874,322 25,802,040 Capital grants 904,298 2,910,660 - - 904,298 2,910,660 General revenues Taxes 73,151,678 71,318,305 73,151,678 71,318,305 State shared revenues 13,911,200 13,919,567 13,911,200 13,919,567 Unrestricted grants and contributions 22,621,075 22,411,409 22,621,075 22,411,409 Unrestricted investment earnings 99,058 26,353 - 17,874 99,058 44,227 Gain on sale of capital assets 63,079 280,280 3,853 - 66,932 280,280 Total revenues 149,253,835 148,296,088 46,899,869 45,948,862 196,153,704 194,244,950 Expenses General government 27,993,414 25,225,893 - - 27,993,414 25,225,893 Public safety 85,739,408 81,827,437 85,739,408 81,827,437 Public works 28,212,049 27,815,970 28,212,049 27,815,970 Recreation and culture 10,336,168 6,515,590 10,336,168 6,515,590 Community development 10,642,102 10,270,404 10,642,102 10,270,404 Interest on long-term debt 1,424,215 1,291,846 1,424,215 1,291,846 Sewage disposal system - - 28,487,957 27,506,843 28,487,957 27,506,843 Municipal parking system 7,651,077 7,605,461 7,651,077 7,605,461 Cemetery 708,545 632,485 708,545 632,485 Golf 845,575 852,634 845,575 852,634 Garbage and rubbish collection 2,085,728 1,712,671 2,085,728 1,712,671 Recycling 4,092,278 3,623,276 4,092,278 3,623,276 Total expenses 164,347,356 152,947,140 43,871,160 41,933,370 208,218,516 194,880,510 Change in net position, before transfers (15,093,521) (4,651,052) 3,028,709 4,015,492 (12,064,812) (635,560) Transfers (629,715) (644,485) 629,715 644,485 Change in net position (15,723,236) (5,295,537) 3,658,424 4,659,977 (12,064,812) (635,560) Net position: Beginning of year, (87,355,750) 117,764,592 238,944,741 261,095,990 151,588,991 378,860,582 Restatement for implementation of GASB 68 - (199,824,805) - (26,811,226) - (226,636,031) End of year $(103,078,986) $ (87,355,750) $242,603,165 $238,944,741 $139,524,179 $151,588,991 20 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues - Governmental Activities Fiscal Year Ending June 30, 2016 Property tax and special assessments 25.8% Income tax 23.2% Otherrevenues 0.1% Charges for services 9.3% Unrestricted grants and contributions 15.2% Operating grants Capital grants 16.5% State shared revenues 0.6% 9.3% In total, governmental activity revenues increased $957,747 from FY 2014/2015 to FY 2015/2016, with trends of the major revenue categories as follows: Property taxes and special assessments comprised the largest portion of governmental activity revenue at 25.8%, or $38.6 million, a $1.1 million, or 2.7% decrease from fiscal year 2014/2015. $789,400 of the decrease resulted from a one-time change in accrual of certain tax-sharing agreement receipts, with remaining decrease resulting from changes in deferred revenue. Income taxes comprised 23.2%, or $34.6 million, of governmental activity revenue, the full amount of which is revenue to the General Fund. This represents a $2.9 million, or 9.2%, increase from fiscal year 2014/2015. Local income tax rates are prescribed by State law, and limited in Lansing's case to 1% of resident income and 0.5% of the income of persons working in the City, but living outside of its corporate boundaries. Restricted operating and capital grants and contributions made up $25.5 million, or 17.1% of governmental activity revenue for fiscal year 2015/2016, a $2.1 million, or 7.6% decrease from fiscal year 2014/2015. In this category, $16.4 are primarily from recurring sources such as State Gas Ft Weight tax revenues restricted for streets; Community Development, HOME, and Emergency Shelter entitlement grants; and drug forfeiture funds restricted for drug enforcement efforts. The remaining $9.1 million is attributable to non-entitlement grants. The decrease from FY 2014/2015 is the result of a reduction in non-entitlement grants with the conclusion of federal ARRA grants. Unrestricted grants and contributions (including state shared sales tax revenue) comprised 24.5%, or $36.5 million, of revenues, a $201,299 or 0.6% increase from fiscal year 2014/2015. A little more than one-third of this category, $13.9 million, is attributed to State revenue sharing, an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Equity payments from the independently-managed-and-operated Board of Water and Light account for $21.0 million of the category, with the remaining revenue coming from payments from the State of Michigan for a payment in lieu of tax for its fire protection for its properties, bad driver revenues, and reimbursement of liquor license enforcement costs. The $201,299 increase from the prior year was attributable to a reimbursement of State election costs and an increase in the equity payment from the Board of Water and Light. 21 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services increased $1.2 million from FY 2014/2015 to FY 2015/2016. The majority of the increase is attributable to reimbursement of street cutting costs for accessing underground utilities and an increase in building safety inspections due to increased development activity in the City. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2016 Community Interest on long-term development debt 6.5% 0.9% General government Recreation and culture 17.0% 6.3% Public works 17.2% Public safety 52.1% Total expenses for governmental activities increased $11.4 million, 7.5%, from FY 2014/2015 to FY 2015/2016 due to an increase in legacy cost (retiree healthcare and net pension expense) on a government-wide basis. Excluding the increase in net pension expense, governmental activity expenses increased by $2.6 million, which was mainly attributable to infrastructure spending. Business-type Activities. Net position of the business-type activities increased by $3.7 million, or 1.6%, from FY 2014/2015 to $242.6 million. The increase was mainly attributable to the increase in sewer fund net position for the fiscal year, which is necessary to fund future debt needs associated with U.S. Environmental Projection Agency and Michigan Department of Environmental Quality-mandated sewer separation projects. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $30.9 million on a modified accrual basis, a $4.1 million increase from fiscal year 2014/2015. Of the $30.9 million fiscal year 2015/2016 combined ending fund balance, $10.0 million is legally restricted and/or unavailable to spend (i.e. amounts tied up in inventories), and $8.9 million is committed for designated projects, leaving $12.0 million unassigned. The unassigned fund balance for the General Fund, (including the amount internally identified as a Budget Stabilization Fund), was $12.4 million, an increase of $2.6 million from FY 2014/2015, which is further described in the next section, General Fund Budgetary Highlights. 22 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis General Fund Budgetary Highlights The FY 2015/2016 General Fund budget was adopted as a balanced budget, based on projected revenues, with a $500,000 addition to reserves (fund balance). The City budgeted a vacancy factor in its General Fund to account for anticipated positions that would become vacant during the course of the year. Because vacancies that will occur within each department cannot be projected, the vacancy factor is budgeted as a single line item of the General Fund and allocated to various departments through a budget amendment during the year. During the course of the fiscal year, the budget was amended to allocate the vacancy factor and to adjust expenditures in response to higher-than- expected special election, street lighting, and facility maintenance and improvement needs, as well as information technology upgrades. General Fund reserves, combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $2.7 million from FY 2015/2016 from $10.7 million to $13.3 million. Unassigned fund balance increased $2.6 million (slightly less than the total fund balance increase due to changes in fund balance restrictions), or 26.8% from fiscal year 2014/2015. This $2.6 million increase was attributable to revenues exceeding budgeted amounts by close to $350,000 as well as expenditures coming in under budget by $2.2 million, largely due to position vacancies during the year. The FY 2016/2017 budget, adopted at service levels commensurate with FY 2015/2016 and anticipated revenue, is budgeted to increase unassigned reserves by $500,000. The City's FY 2016/2017 adopted budget is available on the City's website at www.tansingmi.gov. Sewage Disposal Fund Net position increased $3.9 million to $232.4 million in FY 2015/2016. Unrestricted net position increased $2.8 million, from $18.8 million to $21.6 million. The increase in total net position was the result of sewer operations for the year and is necessary to fund future debt needs associated with the U.S. Environmental Projection Agency and Michigan Department of Environmental Quality-mandated sewer separation projects. Municipal Parking Fund The Municipal Parking Fund net position increased $429,446, from $14.9 million to $15.3 million. Unrestricted net position remained consistent at $5.3 million. Capital Assets. At the end of the fiscal year 2016, the City had invested $565.7 million, net of accumulated depreciation, in a broad range of capital assets (see the table below). Additional information regarding the City's capital assets can be found in Footnote 6 of the of the Notes to the Financial Statements section of the CAFR. Capital Assets (Net of Depreciation) Governmental Activities Business-type Activities Total 2016 2015 2016 2015 2016 2015 Land $ 25,838,193 $ 25,838,193 $ 13,483,910 $ 13,483,910 $ 39,322,103 $ 39,322,103 Land improvements 10,285,057 11,074,077 11,561,180 11,457,282 21,846,237 22,531,359 Buildings and improvements 58,888,516 49,325,202 92,246,302 96,312,347 151,134,818 145,637,549 Equipment 6,776,694 7,000,277 1,384,910 1,790,500 8,161,604 8,790,777 Infrastructure 91,733,706 92,983,289 240,872,516 247,182,984 332,606,222 340,166,273 Construction in progress 665,119 14,367,233 11,987,145 12,354,899 12,652,264 26,722,132 Total capital assets, net $ 194,187,285 $200,588,271 $371,535,963 $382,581,922 $565,723,248 $583,170,193 23 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Debt Administration. The City, along with the Lansing Building Authority (LBA), a blended component unit of the City, is empowered by law to authorize, issue, and sell debt obligations. Limited tax and unlimited tax general obligation bonds are backed by the full faith and credit of the City. The City also issues revenue-dedicated bonded debt, whose payment for principal and interest comes solely out of funds that receive legally-restricted revenues. The Sewage Disposal fund has the City's only dedicated revenue bonds currently outstanding. LBA's bonds financed the construction of parking structures, golf courses, and other related improvements. Revenues derived from user fees from persons using parking and golf facilities fund the debt service requirements for related improvements, but they are also backed by a limited tax pledge. Outstanding Debt 2016 2015 Governmental activities General obligation bonds $ 21,900,000 $ 25,755,000 Installment purchase contracts 15,268,317 16,387,327 Loans 7,872,600 7,872,600 Compensated absences 9,552,788 9,568,555 Workers compensation 2,297,914 3,418,805 Tax settlement - 52,161 Deferred amounts: For issuance discounts (72,988) (79,821) For issuance premiums 141,318 115,102 Total governmental activities 56,959,949 63,089,729 Business-type activities General obligation bonds 154,534,187 165,352,984 Revenue bonds 18,725,000 20,275,000 Installment purchase agreements 1,246,673 1,459,431 Compensated absences 759,258 718,149 Deferred amounts: For issuance discounts (636,356) (709,367) For issuance premiums 2,351,867 2,314,325 Total business-type activities 176,980,629 189,410,522 Total outstanding debt $233,940,578 $252,500,251 The City, along with the LBA, issued $7,085,000 of general obligation limited tax refunding bonds to advance refund its 2005 Building Authority refunding bonds and $1,770,000 in Lansing Center refunding bonds for interest savings of $809,000 and 167,000 over the next six years, respectively. The City also issued $1,977,487 in Limited Tax Sewer Bonds for Combined Sewer Overflow projects. Reductions in the categories listed above are due debt payments made during the course of the fiscal year. More detailed information regarding these activities and funds can be found in Footnote 9 of the of the Notes to the Financial Statements section of the CAFR. 24 CITY OF LANSING, MICHIGAN Management's Discussion and Analysis Economic Condition and Outlook Unemployment levels in the City continued to decline in FY 2015/2016, resulting in increased income tax revenue. Property values increased; however growth in corresponding property tax revenue is limited by State of Michigan Statute to the rate of inflation for property that does not change hands. Lansing's financial picture as a whole has stabilized and continues to improve. The 2015/2016 fiscal year resulted in a $2.6 million addition to General Fund unassigned reserves and a surplus is again expecting in FY 2016/2017, bringing unassigned General Fund reserves up to $12.4 million, or 10.3% of General Fund expenditures and transfers out -- closer to the City's 12%-15% fund balance policy. However, significant challenges remain in the longer-term. Going forward, State-imposed limitations on municipal revenues, most notably those on property tax growth, will continue to constrain resources, which in context of projected increases in pension, healthcare, and infrastructure needs, will present significant budgetary challenges. Strengthening the City's economic base, building back up General Fund reserves to pre-Recession levels, and addressing long-term pension and retiree healthcare obligations are top priorities. The City continues to work diligently with its employees and unions to address the ongoing structural imbalance between projected revenues and long-term pension and retiree health care costs and has been successful in achieving significant agreements over the past several years on a wide range of cost-saving measures. The City, in conjunction with the Mayor-appointed Financial Health Team made up of volunteer community leaders, issued a request for proposal and awarded a contract for recommendations earlier this year for addressing long-term pension and retiree healthcare funding obligations in context of revenue growth limitations. Recommendations are expected from the study in FY 2016/2017. The City continues to experience significant economic development and national recognition of its economic development efforts and accomplishments. For more information, please see the "Local Economy" section of the Transmittal Letter. Requests for Information This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City's finances and to demonstrate the City's accountability for the money it receives. Copies of this financial report, as well as other financial reports, are available on the City's website, www.lansingmi.gov. If you have any questions about this report or need additional financial information, please feel free to contact the Finance Department at (517)483-4500. 25 This page intentionally left blank. 26 BASIC FINANCIAL STATEMENTS 27 This page intentionally left blank. 28 GOVERNMENT-WIDE FINANCIAL STATEMENTS 29 CITY OF LANSING, MICHIGAN Statement of Net Position June 30, 2016 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments $ 34,384,710 $ 42,380,927 $ 76,765,637 $ 4,600,110 Receivables, net 2379027340 28,589,430 5274917770 1,229,203 Internal balances (359,156) 359,156 - - Due from primary government - - - 2,119,598 Inventories, prepaids and other assets 2,040,029 375,147 27415,176 161,064 Restricted assets: Cash and investments - 3,568,818 375687818 1,201,198 Capital assets not being depreciated 26,503,312 25,471,055 5179747367 - Capitalassets being depreciated, net 167,683,973 346,064,908 51377487881 4,471 Total assets 254,155,208 446,809,441 70079647649 9,315,644 Deferred outflows of resources Deferred charge on refunding 1497549 2,627,629 277777178 4,048,435 Deferred pension amounts 5973167094 4,563,213 6378797307 - Total deferred outflows of resources 5974657643 7,190,842 6676567485 4,048,435 Liabilities Accounts payable and accrued liabilities 157818,252 1,082,098 1679007350 2,091,597 Accrued interest payable 335,708 941,571 1,277,279 17,021,031 Unearned revenue 396,652 106,286 5027938 291,419 Due to component units 2,119,598 - 271197598 - Long-term liabilities: Due within one year 6,725,586 14,161,686 2078877272 784,570 Due in more than one year 50,234,363 162,818,943 21370537306 29,633,748 Net pension liability 2747678,085 31,230,585 30579087670 - Net other postemployment benefit obligation 62,014,884 - 6270147884 Total liabilities 412,3237128 210,341,169 62276647297 49,822,365 Deferred inflows of resources Deferred pension amounts 473767709 1,055,949 574327658 - Net position Net investment in capital assets 1497676,860 220,436,882 370,113,742 4,471 Restricted for: Public safety 17466,679 - 174667679 - Public works 578867114 578867114 Community development 37514,745 375147745 Building department 2867633 - 286,633 Debt service - 2,424,820 274247820 Capital projects - 340,143 3407143 Endowments(nonexpendable) 17768,354 - 177687354 Unrestricted (deficit) (265,678,371) 19,401,320 (246,277,051) (36,462,757) Total net position $(1037078,986) $ 242,603,165 $ 13975247179 $ (36,458,286) The accompanying notes are an integral part of the financial statements. 30 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2016 Program Revenues Operating Capital Net Charges Grants and Grants and (Expense) Functions/Programs Expenses for Services Contributions Contributions Revenues Primary government Governmental activities: General government $ 27,993,414 $ 7,279,427 $ 2,191,684 $ $ (18,522,303) Public safety 85,739,408 2,909,054 5,213,007 (77,617,347) Public works 28,212,049 3,011,894 11,355,455 904,298 (12,940,402) Recreation and culture 10,336,168 673,840 241,388 - (9,420,940) Community development 10,642,102 67,272 5,560,426 (5,014,404) Interest on long-term debt 1,424,215 - - - (1,424,215) Total governmental activities 164,347,356 13,941,487 24,561,960 904,298 (124,939,611) Business-type activities: Sewage disposal system 28,487,957 32,368,491 306,085 - 4,186,619 Municipal parking system 7,651,077 7,090,335 987,941 427,199 Cemetery 708,545 312,929 - (395,616) Golf 845,575 313,164 18,336 (514,075) Garbage and rubbish collection 2,085,728 1,871,665 - (214,063) Recycling 4,092,278 3,627,070 - (465,208) Total business-type activities 43,871,160 45,583,654 1,312,362 - 3,024,856 Total primary government $ 208,218,516 $ 59,525,141 $ 25,874,322 $ 904,298 $ (121,914,755) Component units Brownfield redevelopment authority $ 1,855,832 $ - $ 333,702 $ - $ (1,522,130) Tax increment finance authority 3,899,919 - - (3,899,919) Lansing entertainment Et public facilities authority 7,429,956 6,075,913 1,206,931 (147,112) SmartZone 2,612 - - (2,612) Total component units $ 13,188,319 $ 6,075,913 $ 1,540,633 $ $ (5,571,773) continued... 31 CITY OF LANSING, MICHIGAN Statement of Activities For the Year Ended June 30, 2016 Primary Government Governmental Business-type Component Activities Activities Totals Units Changes in net position Net (expense) revenues $(124,939,611) $ 3,024,856 $(121,914,755) $ (5,571,773) General revenues: Property taxes 38,578,548 - 38,578,548 4,894,303 Income taxes 34,573,130 34,573,130 - Grants and contributions not restricted to specific programs 36,532,275 36,532,275 - Unrestricted investment earnings 99,058 99,058 8,459 Gain on sale of capital assets 63,079 3,853 66,932 - Transfers -internal activities (629,715) 629,715 - - Total general revenues and transfers 109,216,375 633,568 109,849,943 4,902,762 Change in net position (15,723,236) 3,658,424 (12,064,812) (669,011) Net position, beginning of year, as restated (87,355,750) 238,944,741 151,588,991 (35,789,275) Net position, end of year $ (103,078,986) $ 242,603,165 $ 139,524,179 $ (36,458,286) concluded The accompanying notes are an integral part of the financial statements. 32 FUND FINANCIAL STATEMENTS 33 This page intentionally left blank. 34 CITY OF LANSING, MICHIGAN Governmental Fund Financial Statements Major Fund General Fund - This is the general operating fund of the City. It is used to account for and report all financial resources not accounted for and reported in another fund. Nonmajor Funds Nonmajor governmental funds are presented, by fund type, are within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 35 CITY OF LANSING, MICHIGAN Balance Sheet Governmental Funds June 30, 2016 Nonmajor Governmental General Funds Totals Assets Cash and cash equivalents $ 2,450,450 $ 157,846 $ 2,608,296 Equity in pooled cash and investments 7,162,425 16,870,847 24,033,272 Investments - 1,700,000 1,700,000 Accounts receivable, net 8,762,983 1,209,159 9,972,142 Taxes receivable 735,014 - 735,014 Special assessments receivable - 393,563 393,563 Loans receivable 1,428,378 1,428,378 Accrued interest receivable 2,293,588 2,293,588 Due from other funds - 1,404,970 1,404,970 Due from other governments 4,888,700 3,610,700 8,499,400 Inventories 29,770 809,977 839,747 Prepaids 462,779 - 462,779 Total assets $ 24,492,121 $ 29,879,028 $ 54,371,149 Liabilities Accounts payable $ 4,198,065 $ 3,409,311 $ 7,607,376 Deposits payable - 17,662 17,662 Accrued payroll 2,617,707 73,024 2,690,731 Retainage payable 255,174 - 255,174 Indemnity bonds - 16,131 16,131 Due to other funds 2,497 1,520,320 1,522,817 Due to component units - 2,119,598 2,119,598 Advances from other funds - 241,309 241,309 Due to other governments 2,165,648 828,989 2,994,637 Unearned revenue 134,031 262,621 396,652 Other 669,417 - 669,417 Total liabilities 10,042,539 8,488,965 18,531,504 Deferred inflows of resources Unavailable revenues-fees 1,121,179 - 1,121,179 Unavailable revenues- loans and accrued interest receivable - 3,514,745 3,514,745 Unavailable revenues- special assessments - 345,321 345,321 Total deferred inflows of resources 1,121,179 3,860,066 4,981,245 Fund balances Nonspendable 492,549 2,578,331 3,070,880 Restricted - 6,934,665 6,934,665 Committed 428,106 8,427,253 8,855,359 Unassigned (deficit) 12,407,748 (410,252) 11,997,496 Total fund balances 13,328,403 17,529,997 30,858,400 Total liabilities, deferred inflows of resources and fund balances $ 24,492,121 $ 29,879,028 $ 54,371,149 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING, MICHIGAN Reconciliation Fund Balances of Governmental Funds to Net Position of Governmental Activities June 30, 2016 Fund balances-total governmental funds $ 30,858,400 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Capital assets not being depreciated 26,503,312 Capital assets being depreciated, net 167,683,973 Capital assets accounted for in internal service funds, net (12,293,786) Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current expenditures. Those assets (i.e., receivables) are offset by deferred inflows of resources in the governmental funds and, therefore, are not included in fund balance. Deferred ambulance fees receivable 605,208 Deferred nuisance fees receivable 453,317 Deferred loans receivable 1,228,378 Deferred long-term interest receivable 2,286,367 Deferred long-term special assessments receivable 345,321 Deferred long-term taxes and tax settlement receivables 62,654 Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net position. 12,510,762 Long-term liabilities and related deferred outflows are not due and payable in the current period and therefore are not reported in the funds. Bonds, loans and leases payable (40,354,089) Deferred charge on refunding 149,549 Accrued interest on bonds, loans and leases payable (302,220) Net other postemployment benefit obligation (62,014,884) Compensated absences and other long-term liabilities (11,062,548) Certain pension-related amounts, such as the net pension liability and deferred amounts, are not due and payable in the current period or do not represent current financial resources and therefore are not reported in the funds. Net pension liability (274,678,085) Deferred outflows related to the net pension liability 59,316,094 Deferred inflows related to the net pension liability (4,376,709) Net position of governmental activities $ (103,078,986) The accompanying notes are an integral part of the financial statements. 37 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2016 Nonmajor Governmental General Funds Totals Revenues Taxes and special assessments $ 37,712,911 $ 1,069,848 $ 38,782,759 Income taxes 34,573,130 - 34,573,130 Licenses and permits 1,559,638 - 1,559,638 Intergovernmental 15,431,325 18,743,787 34,175,112 Charges for services 8,523,221 5,579,226 14,102,447 Fines and forfeits 2,835,155 620,386 3,455,541 Interest and rents 69,939 75,072 145,011 Contributions 21,653,690 10,000 21,663,690 Otherrevenues 198,729 991,895 1,190,624 Total revenues 122,557,738 27,090,214 149,647,952 Expenditures Current expenditures: General government 20,033,578 3,352,867 23,386,445 Public safety 70,443,729 1,820,739 72,264,468 Public works 10,823,830 891,680 11,715,510 Highways and streets - 10,838,473 10,838,473 Recreation and culture 7,719,906 - 7,719,906 Community development - 3,442,110 3,442,110 Other functions 2,927,391 - 2,927,391 Debt service: Principal 1,182,862 2,710,000 3,892,862 Interest 579,344 696,613 1,275,957 Capital outlay 186,146 7,035,200 7,221,346 Total expenditures 113,896,786 30,787,682 144,684,468 Revenues over(under)expenditures 8,660,952 (3,697,468) 4,963,484 Other financing sources (uses) Transfers in 387,290 8,820,566 9,207,856 Transfers out (6,395,290) (3,660,056) (10,055,346) Proceeds on sale of capital assets 268 - 268 Issuance of long-term debt 1,770,000 320,000 2,090,000 Bond premium 68,153 12,022 80,175 Payment to refunded bond escrow agent (1,830,110) (332,053) (2,162,163) Total other financing sources (uses) (5,999,689) 5,160,479 (839,210) Net change in fund balances 2,661,263 1,463,011 4,124,274 Fund balances, beginning of year 10,667,140 16,066,986 26,734,126 Fund balances, end of year $ 13,328,403 $ 17,529,997 $ 30,858,400 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING, MICHIGAN Reconciliation Net Changes in Fund Balances of Governmental Funds to Change in Net Position of Governmental Activities For the Year Ended June 30, 2016 Net changes in fund balances-total governmental funds $ 4,124,274 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Capital assets purchased/constructed 3,758,133 Depreciation expense (9,452,903) Loss on sale of capital assets (125,649) Proceeds on sale of capital assets (268) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred to subsequent fiscal years. Changein deferred ambulance fees receivable (362,705) Changein deferred nuisance fees receivable 88,520 Changein deferred loans receivable (1,978) Changein deferred long-term interest receivable 69,250 Changein deferred special assessments receivable (105,262) Changein deferred taxes and tax settlement receivables (197,182) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase (decrease)in the net position of the internal service funds is reported with governmental activities. Net operating income from governmental activities in internal service funds 3,235,007 Gain on sale of capital assets from governmental internal service funds 63,079 Interest expense from governmental internal service funds (175,521) Transfers in from governmental internal service funds 1,000,000 Transfers out of governmental internal service funds (782,225) Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt increases long-term Liabilities in the statement of net position. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net position. Issuance of long-term debt (2,090,000) Principal payments on long-term liabilities 3,892,862 Premium on bond issuances (80,175) Payments to refunded bond escrow agent 2,162,163 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purposes of the statement of net position. Change in estimated liability for workers'compensation 1,120,891 Some expenses reported in the statement of activates do not require the use of current financial resources and therefore are not reported as expenditures in the funds. Change in accrued interest payable on long-term liabilities 10,306 Amortization of issuance premiums and discounts, and deferred charge on refunding 16,957 Change in net other postemployment benefit obligation (5,030,748) Change in net pension liability and related deferral amounts (16,908,817) Change in the accrual for compensated absences (3,406) Change in the accrual for tax settlement agreement 52,161 Change in net position of governmental activities $ (15,723,236) The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2016 Actual Over Original Final (Under) Final Budget Budget Actual Budget Revenues Property taxes $ 38,100,000 $ 38,100,000 $ 37,712,911 $ (387,089) Income taxes 32,150,000 32,880,000 34,573,130 1,693,130 Licenses and permits 1,574,500 1,562,500 1,559,638 (2,862) Intergovernmental 15,738,000 15,998,000 15,431,325 (566,675) Charges for services 8,690,400 9,149,400 8,523,221 (626,179) Fines and forfeits 2,542,100 2,542,100 2,835,155 293,055 Interest and rents 36,500 36,500 69,939 33,439 Contributions - 21,819,619 21,653,690 (165,929) Otherrevenues 21,683,500 121,000 198,729 77,729 Total revenues 120,515,000 122,209,119 122,557,738 348,619 Expenditures General government: Attorney'soffice 1,915,800 1,765,800 1,657,029 (108,771) City clerk 1,060,000 1,245,000 1,165,243 (79,757) Council 706,400 701,400 676,750 (24,650) Courts 6,313,200 6,213,200 6,029,906 (183,294) Internal audit 209,200 189,200 173,011 (16,189) Finance 5,092,600 4,969,474 4,652,352 (317,122) Library rental 165,000 165,000 144,155 (20,845) LEPFA support 331,400 1,206,930 1,206,930 Human resources 2,052,900 2,052,900 1,973,076 (79,824) Mayor 1,230,100 1,130,100 1,007,050 (123,050) Office of community media 394,200 394,200 377,189 (17,011) Office of financial empowerment 60,000 60,000 63,835 3,835 Planning / neighborhood development 910,600 910,600 907,052 (3,548) Budgetary savings from attrition (800,000) - - Total general government 19,641,400 21,003,804 20,033,578 (970,226) Public safety: Police 37,801,800 37,644,600 37,298,382 (346,218) Fire 33,840,200 33,725,200 33,145,347 (579,853) Total public safety 71,642,000 71,369,800 70,443,729 (926,071) Public works 10,373,700 10,803,700 10,823,830 20,130 Recreation and culture 7,891,400 7,841,400 7,719,906 (121,494) continued... 40 CITY OF LANSING, MICHIGAN Statement of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - General Fund For the Year Ended June 30, 2016 Actual Over Original Final (Under) Final Budget Budget Actual Budget Expenditures (concluded) Other functions: Human relations / community services $ 1,128,200 $ 1,098,200 $ 1,021,279 $ (76,921) Human services / community support 1,520,000 2,084,414 1,906,112 (178,302) Total other functions 2,648,200 3,182,614 2,927,391 (255,223) Debt service: Principal 800,000 1,175,100 1,182,862 7,762 Interest 207,100 583,768 579,344 (4,424) Total debt service 1,007,100 1,758,868 1,762,206 3,338 Capital outlay - 423,871 186,146 (237,725) Total expenditures 113,203,800 116,384,057 113,896,786 (2,487,271) Revenues over expenditures 7,311,200 5,825,062 8,660,952 2,835,890 Other financing sources (uses) Transfers in 85,000 385,000 387,290 2,290 Transfers out (7,396,200) (6,485,956) (6,395,290) (90,666) Proceeds on sale of capital assets 10,000 268 (9,732) Issuance of long-term debt 1,770,000 1,770,000 Bond premium 68,153 68,153 Payment to refunded bond escrow agent (1,830,110) (1,830,110) - Total other financing sources (uses) (7,311,200) (6,082,913) (5,999,689) 83,224 Net change in fund balance - (257,851) 2,661,263 2,919,114 Fund balance, beginning of year 10,667,140 10,667,140 10,667,140 - Fund balance, end of year $ 10,667,140 $ 10,409,289 $ 13,328,403 $ 2,919,114 concluded The accompanying notes are an integral part of the financial statements. 41 This page intentionally left blank. 42 CITY OF LANSING, MICHIGAN Proprietary Fund Financial Statements Major Funds Sewage Disposal System Fund This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund This fund accounts for the operation of City-owned parking facilities. Nonmajor Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, are within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 43 CITY OF LANSING, MICHIGAN Statement of Net Position Proprietary Funds June 30, 2016 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Assets Current assets: Cash and cash equivalents $ 5,433,665 $ 576,965 $ 947 $ 6,011,577 $ 57,842 Equity in pooled cash and investments 25,392,757 9,164,910 1,811,683 36,369,350 5,985,300 Accounts receivable,net 5,460,023 354,134 84,677 5,898,834 580,255 Accrued interest receivable 46,237 85,850 - 132,087 - Lease receivable,current 631,084 - 631,084 Loans receivable,current - 63,848 - 63,848 - Inventories 311,083 - 63,464 374,547 374,891 Prepaids - 600 - 600 362,612 Due from other funds 2,695,492 15,790 - 2,711,282 - Total current assets 39,970,341 10,262,097 1,960,771 52,193,209 7,360,900 Noncurrent assets: Restricted cash and cash equivalents 3,228,675 340,143 - 3,568,818 Advances to other funds - 241,309 241,309 Lease receivable,net of current portion 8,155,351 13,708,226 - 21,863,577 - Capital assets not being depreciated 12,407,894 12,558,920 504,241 25,471,055 92,892 Capital assets being depreciated,net 325,615,803 17,306,891 3,142,214 346,064,908 12,200,894 Total noncurrent assets 349,407,723 44,155,489 3,646,455 397,209,667 12,293,786 Total assets 389,378,064 54,417,586 5,607,226 449,402,876 19,654,686 Deferred outflows of resources Deferred charge on refunding 1,188,986 1,436,346 2,297 2,627,629 - Deferred pension amounts 2,304,129 803,066 1,456,018 4,563,213 Total deferred outflows of resources 3,493,115 2,239,412 1,458,315 7,190,842 - Liabilities Current liabilities: Accounts payable 708,588 32,465 155,130 896,183 775,848 Deposits payable - 58,375 - 58,375 - Accrued interest payable 803,855 131,397 6,319 941,571 33,488 Accrued payroll 69,641 33,476 24,423 127,540 135,212 Claims incurred but not reported - - - - 656,064 Due to other funds 2,591,138 2,297 2,593,435 - Unearned revenues - - 106,286 106,286 - Bonds and notes payable,current portion 11,805,073 1,920,000 321,950 14,047,023 893,799 Compensated absences,current portion 94,008 20,655 - 114,663 37,591 Total current liabilities 16,072,303 2,196,368 616,405 18,885,076 2,532,002 Noncurrent liabilities: Bonds and notes payable,net of current portion 127,793,558 33,351,067 1,029,723 162,174,348 3,861,359 Compensated absences,net of current portion 298,139 94,309 252,147 644,595 750,563 Net pension liability 15,769,435 5,496,177 9,964,973 31,230,585 - Total noncurrent liabilities 143,861,132 38,941,553 11,246,843 194,049,528 4,611,922 Total liabilities 159,933,435 41,137,921 11,863,248 212,934,604 7,143,924 Deferred inflows of resources Deferred pension amounts 533,186 185,833 336,930 1,055,949 - Net position Net investment in capital assets 208,400,487 9,739,316 2,297,079 220,436,882 7,538,628 Restricted for debt retirement 2,424,820 - - 2,424,820 - Restricted for capital projects - 340,143 340,143 - Unrestricted(deficit) 21,579,251 5,253,785 (7,431,716) 19,401,320 4,972,134 Total net position $ 232,404,558 $ 15,333,244 $ (5,134,637) $ 242,603,165 $ 12,510,762 The accompanying notes are an integral part of the financial statements. 44 CITY OF LANSING, MICHIGAN Statement of Reve es Expenses and Changes in Fund Net Position Proprietary Funds For the Year Ended June 30,2016 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Service Funds Operating revenues Charges for services $ 32,368,491 $ 7,090,335 $ 6,124,828 $ 45,583,654 $ 79,047,421 Operating expenses Personal services 7,109,786 2,809,797 4,248,079 14,167,662 7,819,105 Purchase of goods and services 7,416,804 1,269,689 2,856,314 11,542,807 65,949,522 Depreciation 10,288,817 2,206,999 379,505 12,875,321 2,043,787 Total operating expenses 24,815,407 6,286,485 7,483,898 38,585,79C 75,812,414 Operating income(loss) 7,553,084 803,850 (1,359,070) 6,997,864 3,235,007 Nonoperating revenues(expenses) Interest revenue 306,085 - 18,336 324,421 - Gain on sale of capital assets 1,606 2,247 - 3,853 63,079 Interest expense and fees (3,672,550) (1,364,592) (33,742) (5,070,884) (175,521) Capital contribution to others - (214,486) (214,486) (181,638) Otherrevenues 987,941 987,941 Total nonoperating revenue(expenses) (3,364,859) (374,404) (229,892) (3,969,155) (294,080) Income(loss)before transfers 4,188,225 429,446 (1,588,962) 3,028,709 2,940,927 Transfers Transfers in - - 951,497 951,497 1,000,000 Transfers out (300,000) (21,782) (321,782) (782,225) Total transfers (300,000) - 929,715 629,715 217,775 Change in net position 3,888,225 429,446 (659,247) 3,658,424 3,158,702 Net position,beginning of year 228,516,333 14,903,798 (4,475,390) 238,944,741 9,352,060 Net position,end of year $ 232,404,558 $ 15,333,244 $ (5,134,637) $ 242,603,165 $ 12,510,762 The accompanying notes are an integral part of the financial statements. 45 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2016 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Cash flows from operating activities Cash received from customers $ 34,280,583 $ 7,071,512 $ 6,022,525 $ 47,374,620 $ - Cash received from interfund services - - - - 79,329,036 Cash payments for goods and services (8,092,838) (1,298,557) (2,861,967) (12,253,362) (66,569,019) Cash payments to employees (6,630,068) (2,638,162) (3,933,138) (13,201,368) (7,857,442) Net cash provided by(used in)operating activities 19,557,677 3,134,793 (772,580) 21,919,890 4,902,575 Cash flows from noncapital financing activities Transfers in - - 951,497 951,497 1,000,000 Transfers out (300,000) - (21,782) (321,782) (782,225) Cash received on interfund advances 100,781 - 100,781 - Net cash provided by(used in) noncapital financing activities (300,000) 100,781 929,715 730,496 217,775 Cash flows from capital and related financing activities Proceeds from sale of capital assets 1,606 2,247 - 3,853 63,079 Acquisition and construction of capital assets (1,647,945) (181,417) - (1,829,362) (1,463,488) Capital contributions to others - - (214,486) (214,486) Proceeds from issuance of long-term debt 1,977,487 6,765,000 - 8,742,487 Principal paid on long-term debt (12,236,284) (1,795,000) (312,758) (14,344,042) (1,026,148) Interest paid on long-term debt (3,802,710) (1,281,996) (32,487) (5,117,193) (177,632) Amount paid to refunding bond escrow agent (7,019,806) (7,019,806) Premium on issuance of long-term debt 254,156 254,156 Payments received on capital lease 621,442 - 621,442 Net cash used in capital and related financing activities (15,086,404) (3,256,816) (559,731) (18,902,951) (2,604,189) Cash flows from investing activities Interest and dividends received 309,288 23,746 18,336 351,370 Payments received on loans made to others - 331,911 - 331,911 Net cash provided by investing activities 309,288 355,657 18,336 683,281 - Net change in cash and cash equivalents 4,480,561 334,415 (384,260) 4,430,716 2,516,161 Cash and cash equivalents,beginning of year 29,574,536 9,747,603 2,196,890 41,519,029 3,526,981 Cash and cash equivalents,end of year $ 34,055,097 $ 10,082,018 $ 1,812,630 $ 45,949,745 $ 6,043,142 Reconciliation to statement of net position Cash and cash equivalents $ 5,433,665 $ 576,965 $ 947 $ 6,011,577 $ 57,842 Equity in pooled cash and investments 25,392,757 9,164,910 1,811,683 36,369,350 5,985,300 Restricted cash and cash equivalents 3,228,675 340,143 - 3,568,818 - $ 34,055,097 $ 10,082,018 $ 1,812,630 $ 45,949,745 $ 6,043,142 continued... 46 CITY OF LANSING, MICHIGAN Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2016 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income(loss)to net cash provided by(used in)operating activities Operating income(loss) $ 7,553,084 $ 803,850 $ (1,359,070) $ 6,997,864 $ 3,235,007 Adjustments to reconcile operating income(loss)to net cash provided by(used in)operating activities: Depreciation expense 10,288,817 2,206,999 379,505 12,875,321 2,043,787 Changein: Accounts receivable 29,544 (28,213) (18,720) (17,389) 281,615 Inventories (23,609) - 36,583 12,974 52,993 Prepaids - (200) - (200) 43,632 Due from other funds 1,882,548 9,390 - 1,891,938 - Accounts payable (652,425) (19,278) 60,738 (610,965) (16,122) Deposits payable - - (4,140) (4,140) - Accrued payroll 4,599 3,684 5,770 14,053 29,677 Claims incurred but not reported - - - - (48,841) Due to other funds (9,390) (102,974) (112,364) (700,000) Unearned revenues - - (79,443) (79,443) Compensated absences 15,056 7,604 18,449 41,109 (19,173) Net pension liability and related deferred amounts 460,063 160,347 290,722 911,132 - Net cash provided by(used in)operating activities $ 19,557,677 $ 3,134,793 $ (772,580) $ 21,919,890 $ 4,902,575 concluded The accompanying notes are an integral part of the financial statements. 47 This page intentionally left blank. 48 CITY OF LANSING, MICHIGAN Fiduciary Fund Financial Statements Pension and Other Postemployment Benefit Trust Funds - Employee pension and other postemployment benefit trust funds accept payments made by the City, invest fund resources, calculate and pay pensions to retirees (or beneficiaries), and account for postemployment healthcare coverage. Combining schedules for fiduciary funds are presented in the notes to the financial statements. Agency Funds - These funds account for resources held in a trustee or agent capacity for the 54-A District Court. Combining statements for agency funds are presented, by fund type are within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 49 CITY OF LANSING, MICHIGAN Statement of Fiduciary Net Position Fiduciary Funds June 30, 2016 Pension and Other Postemployment Benefits Trust Agency Funds Funds Assets Cash and cash equivalents $ 2,000 $ Equity in pooled cash and investments - 67,738 Investments: Money market funds 7,099,485 Government obligations 53,946,205 - Corporate bonds 56,776,959 Common stocks 121,639,469 Private equity partnerships 17,253,511 Mutualfunds 260,793,968 Contribution receivable 1,312,208 Dividends and interest receivable 428,766 - Total assets 519,252,571 $ 67,738 Liabilities Accounts payable 1,440,697 $ - Undistributed receipts - 67,738 Total liabilities 1,440,697 $ 67,738 Net position restricted for Pension benefits 439,194,779 Other postemployment benefits 78,617,095 Total net position $ 517,811,874 The accompanying notes are an integral part of the financial statements. 50 CITY OF LANSING, MICHIGAN Statement of Changes in Fiduciary Net Position Pension and Other Postemployment Benefits Trust Funds For the Year Ended June 30, 2016 Additions Investment income (loss): Net depreciation in fair value of investments $ (5,678,747) Interest income 2,070,006 Dividend income 1,933,620 Investment expenses (6,464) Net investment income (loss) (1,681,585) Contributions: Employer 44,284,624 Plan members 3,746,974 Total contributions 48,031,598 Total additions 46,350,013 Deductions Participant benefits 72,261,499 Administrative expense 1,942,776 Total deductions 74,204,275 Change in net position (27,854,262) Net position restricted for pension and other postemployment benefits Beginning of year 545,666,136 End of year $ 517,811,874 The accompanying notes are an integral part of the financial statements. 51 This page intentionally left blank. 52 COMPONENT UNITS 53 This page intentionally left blank. 54 CITY OF LANSING, MICHIGAN Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has four discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Lansing Entertainment and Public Facilities Authority SmartZone Complete financial statements for each of the individual component units, excluding SmartZone, may be obtained from the entity's administrative offices. Separately-issued financial statements are not prepared for the SmartZone. 55 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Discretely Presented Component Units June 30, 2016 Lansing Tax Entertainment Brownfield Increment 8 Public Redevelopment Finance Facilities Authority Authority Authority SmartZone Totals Assets Cash and cash equivalents $ 970,759 $ 3,404,813 $ 224,538 $ $ 4,600,110 Receivables, net 410,032 - 819,171 1,229,203 Due from primary government 1,150,064 969,534 - 2,119,598 Inventories, prepaids and other assets - - 161,064 161,064 Restricted cash and cash equivalents 364,246 836,952 1,201,198 Capital assets being depreciated, net - - 4,471 4,471 Total assets 2,530,855 4,738,593 2,046,196 9,315,644 Deferred outflows of resources Deferred charge on refunding - 4,048,435 - 4,048,435 Liabilities Accounts payable and accrued liabilities 1,445,997 19,082 626,518 2,091,597 Accrued interest payable - 17,021,031 - 17,021,031 Unearned revenues - - 291,419 291,419 Long-term debt: Due within one year 63,849 720,721 - 784,570 Due in more than one year - 29,633,748 - 29,633,748 Total liabilities 1,509,846 47,394,582 917,937 49,822,365 Net position Investment in capital assets - - 4,471 4,471 Unrestricted (deficit) 1,021,009 (38,607,554) 1,123,788 (36,462,757) Total net position $ 1,021,009 $ (38,607,554) $ 1,128,259 $ $ (36,458,286) The accompanying notes are an integral part of the financial statements. 56 CITY OF LANSING, MICHIGAN Combining Statement of Activities Discretely Presented Component Units For the Year Ended June 30, 2016 Lansing Tax Entertainment Brownfield Increment 8 Public Redevelopment Finance Facilities Authority Authority Authority SmartZone Totals Expenses Brownfield redevelopment $ 1,855,832 $ - $ $ - $ 1,855,832 Community development - 3,899,919 2,612 3,902,531 Recreation and culture - - 7,429,956 - 7,429,956 Total expenses 1,855,832 3,899,919 7,429,956 2,612 13,188,319 Program revenues Charges for services - - 6,075,913 - 6,075,913 Operating grants and contributions 333,702 1,206,931 1,540,633 Total program revenues 333,702 7,282,844 7,616,546 Net program expense (1,522,130) (3,899,919) (147,112) (2,612) (5,571,773) General revenues Property taxes 1,600,095 2,955,764 338,444 4,894,303 Unrestricted investment earnings 1,626 6,646 187 8,459 Total general revenues 1,601,721 2,962,410 338,631 4,902,762 Changes in net position 79,591 (937,509) 191,519 (2,612) (669,011) Net position, beginning of year, as restated 941,418 (37,670,045) 936,740 2,612 (35,789,275) Net position, end of year $ 1,021,009 $ (38,607,554) $ 1,128,259 $ - $ (36,458,286) The accompanying notes are an integral part of the financial statements. 57 This page intentionally left blank. 58 NOTES TO FINANCIAL STATEMENTS 59 This page intentionally left blank. 60 CITY OF LANSING, MICHIGAN Index - Notes to Financial Statements Page 1. Summary of Significant Accounting Policies 62 Reporting Entity Government-wide and Fund Financial Statements Measurement Focus, Basis of Accounting, and Financial Statement Presentation Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity 2. Budgetary Information 72 3. Deficit Fund Equity 73 4. Deposits and Investments 74 5. Receivables 80 6. Capital Assets 82 7. Accounts Payable and Accrued Liabilities 84 8. Interfund Receivables, Payables and Transfers 84 9. Long-Term Debt 86 10.Fund Balances - Governmental Funds 90 11.Net Investment in Capital Assets 91 12.Segment Information - Enterprise Funds 91 13.Risk Management 92 14.Property Taxes 93 15.Contingent Liabilities 93 16.Pension Plans 93 17.Other Postemployment Benefits 107 18.Operating Leases 111 19.Restatement 112 61 CITY OF LANSING, MICHIGAN Notes to Financial Statements 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lansing (the "City") was incorporated in 1859. In 1909, the City came under the provisions of Act 279, P.A. 1909, as amended ("Home Rule City Act"). The City operates under a strong Mayor form of government in which the Mayor is responsible for implementation and administration of City policy as established by City Council. The accounting and reporting policies of the City conform in all material respects to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: Reporting Entity As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Unit A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and its financial data is combined with data of the appropriate funds. The City has one blended component unit, the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended unit is described as follows: The Building Authority (the "Authority") was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's governing body and designates management. The Authority uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities and equity of the Authority are incorporated within the City's Municipal Parking System and Golf enterprise funds, and the 2015 Refunding Debt Service Fund. Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The discretely presented component units are as follows: 62 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Lansing Brownfield Redevelopment Authority ("LBRA") was established by the City on August 17, 1997, under the authority contained in Act 381, Michigan Public Acts of 1996 (the "Act"). The Act authorizes the City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Brownfield Redevelopment Authority is appointed by City Council to preside over such a zone, and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows the LBRA to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property value deterioration. Tax increment financing plans must be approved by the City. Tax increment financing permits the LBRA to capture tax revenues which are attributable to increases in the value of real and personal property located within an approved project area. Current activities of the LBRA include collections of property tax revenues on project areas for the Rite Aid Pharmacy and the former Motor Wheel Site Plant. The Tax Increment Finance Authority ("TIFA") was established by the City under the authority contained in Act 450, Michigan Public Acts of 1981 ("Act 450"). Act 450 authorizes the City to designate specific districts within its corporate limits as TIFA districts. The TIFA presides over such districts, formulating plans for public improvements, economic development, neighborhood revitalization, and historic preservation within the districts. Act 450 allows the TIFA to participate in a broad range of improvement activities intended to contribute to economic growth and prevent property value deterioration. The TIFA's governing body is appointed by the Mayor with the advice and consent of the City Council. Bond issuances, to fund the above activities, are approved by the City Council and the legal liability for the debt remains with the City. The Lansing Entertainment and Public Facilities Authority ("LEPFA") was established under the charter of the City of Lansing, Michigan in February 1996, replacing the former Greater Lansing Convention/Exhibition Authority, which had been responsible for operating and managing the Lansing Center and the Lansing Civic Arena (the latter through the fiscal year ended June 30, 1995). LEPFA was established to oversee the management and operations of the Lansing Center, the City Market and the Cooley Law School stadium. LEPFA is chartered as a building authority under the provisions of Act 31, Public Acts of Michigan, 1948. In the event of dissolution or termination of LEPFA, all assets and rights of the Authority shall revert to the City. LEPFA's Board of Commissioners consists of thirteen members appointed by the Mayor of the City of Lansing and approved by the City Council. The Lansing Regional SmartZone ("SmartZone") was established by the City of Lansing and the City of East Lansing under the authority contained in Act 281, Public Act of Michigan of 1986 ("Act 281"). Act 281 authorizes the cities to create a multi-jurisdictional local development finance authority. The SmartZone shall be known and exercise its powers under title of the Local Development Finance Authority of the Cities of Lansing and East Lansing. The SmartZone is fiscally dependent on the City of Lansing; the City approves the annual budget and is responsible for managing the SmartZone. The SmartZone was created in order to eliminate the conditions of unemployment, underemployment and joblessness, and to promote economic growth in the City. The SmartZone's Board of Commissioners consists of seven members, three of which are appointed by the City of Lansing, three are appointed by the City of East Lansing, and one is appointed by the Ingham County Board of Commissioners. The SmartZone was dissolved as of June 30, 2016. 63 CITY OF LANSING, MICHIGAN Notes to Financial Statements Component Unit Financial Statements Complete financial statements for the individual component units may be obtained from each entity's administrative offices. Separate financial statements are not prepared for the SmartZone. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing, Michigan 48933 Brownfield Redevelopment Authority / Tax Increment Finance Authority 1000 S Washington Avenue, Suite 201 Lansing, Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing, Michigan 48933 Joint Venture In 1998, the City entered into an agreement with Ingham County (the "County") to form the City of Lansing and County of Ingham Joint Building Authority (JBA) for the purpose of constructing and managing a building in downtown Lansing that houses the courts, prosecuting attorney and other related departments. The JBA is governed by a three-member board composed of one member each appointed by the City and the County and one appointed jointly by the two units. Both the County and the City contribute cash and/or property to the JBA. Bonds were issued in 1999 by the JBA to provide the funding necessary to construct the building. Because the joint venture agreement does not provide an explicit contractual formula outlining the City's claim to the JBA's assets, it is considered to be a "joint venture with no equity interest" and accordingly, no amounts are reported in the accompanying financial statements for an equity interest. Financial information for the JBA may be obtained by writing the Ingham County Financial Services Division, P.O. Box 319, Mason, Michigan 48854. Government-wide and Fund Financial Statements The government-wide financial statements (i.e., the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. 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. 64 CITY OF LANSING, MICHIGAN Notes to Financial Statements Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. Measurement Focus, Basis of Accounting, and Financial Statement Presentation The government-wide financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements. Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless of the timing of related cash flows. Property taxes are recognized as revenues in the year for which they are levied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposed by the provider have been met. Agency funds, a type of fiduciary fund, are unlike all other types of funds, reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus. They do, however, use the accrual basis of accounting to recognize receivables and payables. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues reported in the governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60-day collection period, and reimbursement-based grants that use one year. Expenditures generally are recorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, as well as expenditures related to compensated absences and claims and judgments, are recorded only when payment is due. Property taxes, intergovernmental revenue, licenses, and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major governmental fund: General fund. This fund is the City's primary operating fund. It accounts for all the financial resources of the primary government, except those accounted for and reported in another fund. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. 65 CITY OF LANSING, MICHIGAN Notes to Financial Statements Additionally, the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise, or are expected to comprise a substantial portion of the fund's total reported inflows. Debt Service Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for principal, interest and related costs. Capital Projects Funds are used to account for and report financial resources that are restricted, committed, or assigned to expenditure for capital outlays, including the acquisition or construction of capital facilities and other capital assets. Permanent Funds account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the government's programs. Enterprise Funds account for those operations that are financed and operated in a manner similar to private business or where the City has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Internal Service Funds account for operations that provide services to other departments or agencies of the City, or to other governments, on a cost-reimbursement basis. This includes operating a maintenance facility for trucks and equipment used by the Public Service Department, health care and self-insurance services, and information technology. Pension and Other Postemployment Benefit Trust Funds account for the accumulation of resources to be used for retirement annuity payments to eligible full-time employees of the City, certain healthcare costs, and other retirement distributions. The Agency Fund account for resources held in a fiduciary capacity for the 54-A District Court. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. 66 CITY OF LANSING, MICHIGAN Notes to Financial Statements Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Restricted net position are assets that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. Assets, Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources, and Equity Deposits and Investments The City maintains an investment pool for all City funds. Each fund's portion of the investment pool is displayed on the statement of net position/balance sheet as "equity in pooled cash." The City's cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants. State statutes authorize the City to invest in: Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or instrumentality of the United States. Certificates of deposit, savings accounts, deposit accounts or depository receipts of a qualified financial institution. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of purchase. Bankers' acceptances of United States banks. Obligations of the State of Michigan and its political subdivisions, that, at the time of purchase are rated as investment grade by at least one standard rating service. Mutual funds registered under the Investment Company Act of 1940 with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. External investment pools as authorized by Public Act 20 as amended through December 31, 1997. 67 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have established market values are reported at estimated fair value. Cash deposits are reported at carrying amounts, which reasonably approximates fair value. Unrealized appreciation or depreciation on pension and other postemployment benefit trust fund investments due to changes in fair value are recognized each year. Receivables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Amounts due from other governments include amounts due from grantors for specific programs and capital projects. Program grants and capital grants for capital assets are recorded as receivables and revenues at the time reimbursable project costs are incurred. Amounts received in advance of project costs being incurred are reported as unearned revenue. Certain receivables in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Leases receivable consist of amounts collectible from local municipalities for which the City has irrevocably pledged its full faith and credit as collateral for certain construction and improvement bonds. In accordance with contractual agreements, these entities will provide all future amounts due for bond principal and accrued interest payable. The receivable has been reported as current based on the amounts to be collected next year to satisfy obligations. Inventories and Prepaids All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. 68 CITY OF LANSING, MICHIGAN Notes to Financial Statements Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets having a useful life in excess of three years and whose costs exceed $5,000 ($100,000 for buildings). Capital assets are stated at historical cost or estimated historical cost where actual cost information is not available. Donated capital assets are recorded at their estimated acquisition cost as of the donation date. The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. Interest incurred during the construction phase of capital assets of business-type activities, if any, is included as part of the capitalized value of the asset constructed. Capital assets are depreciated using the straight-line method over the following estimated useful lives: Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 In addition to land and construction in progress, the amount presented as capital assets not being depreciated includes intangible assets consisting of land development rights acquired for the purpose of farmland and ranch preservation. Land development rights are deemed to have an indefinite useful life, and therefore are not being amortized. The City reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its fair value. If it is determined that an impairment loss has occurred the asset is written down to its net realizable value and a current charge to income is recognized. Deferred Outflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net position that applies to one or more future periods and so will not be recognized as an outflow of resources (expense/expenditure) until then. The City reports deferred outflows of resources for change in expected and actual investment returns, assumptions, and benefits provided in its pension plans as well as for the deferred charge on refunding. A deferred refunding charge results from the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. 69 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pa yabl es Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as internal balances. Compensated Absences It is the City's policy to permit employees to accumulate earned but unused vacation and compensatory time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to accumulate earned but unused sick leave. All vacation and compensatory time pay and 50% of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Unearned Revenue Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure on allowable costs. 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. In addition, the City reports deferred inflows of resources for changes in expected and actual investment returns, assumptions, and benefits provided in its pension plans. 70 CITY OF LANSING, MICHIGAN Notes to Financial Statements Fund Balances Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors, or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority, the City Council. A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes, but are neither restricted nor committed. The City Council has not delegated the authority to assign fund balance. Unassigned fund balance is the residual classification for the General Fund. When the City incurs an expenditure for purposes for which various fund balance classifications can be used, it is the City's policy to use restricted fund balance first, then committed, assigned, and finally unassigned. Interfund Transactions During the course of normal operations, the City has numerous transactions between funds, including expenditures and transfers of resources to provide services, construct assets, and service debt. The accompanying financial statements generally reflect such transactions as transfers. Operating subsidies are also recorded as transfers. The amounts recorded as subsidies or advances are determined by the City. Balances outstanding at year-end are reported as due to/from other funds. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Internal service funds are used to record charges for services to all City departments and funds as transfers or operating revenue. All City funds record these payments to the internal service funds as transfers or operating expenditures/expenses. Pensions For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows of resources related to pensions, and pension expense, information about the fiduciary net position of the plan and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plan. For this purpose, benefit payments (including refunds of employee contributions) are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly, actual results could differ from those estimates. The City utilizes various investment instruments which are exposed to various risks, such as interest rate, credit and overall market volatility. Due to the level of risk associated with certain investment securities, it is reasonably possible that changes in the values of investment securities will occur in the near-term and that such changes could materially affect the amounts reported in the financial statements. 71 CITY OF LANSING, MICHIGAN Notes to Financial Statements 2. BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: On or before the fourth Monday in March, the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. Public hearings are conducted to obtain taxpayer comments. Not later than the third Monday in May, the Council adopts a budget through passage of a resolution. The appropriated budget is prepared by fund, department and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars, but not in excess of 15% of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Michigan Avenue, Lansing, Michigan 48933. The City formally adopts operating budgets for the General Fund and all special revenue funds. Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the General Fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the General Fund, capital lease payments / installment payments are budgeted, but capital lease acquisitions are not. There were no capital lease acquisitions during the year ended June 30, 2016. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. P.A. 621 of 1978, as amended, provides that a local unit shall not incur expenditures in excess of the amount appropriated. During the year ended June 30, 2016, the City incurred expenditures in certain budgetary funds which were in excess of the amounts appropriated, as follows: Total Amount of Budget Appropriations Expenditures Variance General fund: General government: Office of financial empowerment $ 60,000 $ 63,835 $ 3,835 Public works 10,803,700 10,823,830 20,130 Debt service: Principal 1,175,100 1,182,862 7,762 72 CITY OF LANSING, MICHIGAN Notes to Financial Statements Total Amount of Budget Appropriations Expenditures Variance Nonmajor governmental funds: Downtown Lansing, Inc.: General government 760,200 760,399 199 State and federal grants fund: Public works 15,451 891,680 876,229 Transfers out - 2,290 2,290 Tri-County Metro: Public safety 837,500 840,095 2,595 The above budgeted amounts are presented at the activity level, which is the required minimum level of control per the Michigan Uniform Budget Manual. The public works budget variance in the State and Federal Grants fund was caused by recording donated infrastructure (constructed by the State of Michigan Department of Transportation) in the fund. This transaction included both intergovernmental revenue and expenditures (and so had no effect on ending fund balance), but was not reflected in the amended budget, as it was attributable to amounts recorded for in-kind roadwork performed by the State, and therefore not subject to appropriation. 3. DEFICIT FUND EQUITY Governmental activities reported a deficit in unrestricted net position in the amount of $265,678,371 at June 30, 2016. Total net position amounted to a deficit of $103,078,986, inclusive of $274,678,085 net pension liability. The Community Development Block Grant Program Special Revenue Fund reported a deficit unassigned fund balance of $200,000. Total fund balance (which included $200,000 classified as committed related to a long- term advance), was $0. The Special Assessments Capital Projects Fund reported a deficit fund balance of $210,252. The fund received a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. The deficit is the result of deferred special assessments receivable. As special assessments are collected, this deficit will be eliminated, and the advance repaid. The Cemetery, Golf, Garbage and Rubbish Collection, and Recycling Enterprise Funds reported deficits in unrestricted fund net position of $754,476, $1,071,989, $2,630,456, and $2,974,795, respectively, as a result of the net pension liability. Excluding the net pension liability, unrestricted net positions were $425,588, $173,274, $235,788, and $1,698,607, respectively. Total fund net position amounted to deficits of $579,163, $2,630,456, and $3,167,925 for the Cemetery, Garbage and Rubbish Collection, and Recycling funds, respectively. Excluding the net pension liability, total net positions were $600,901 for the Cemetery fund, $235,788 for the Garbage and Rubbish Collection fund, and $1,505,477 for the Recycling fund. Total fund net position for the Golf fund was positive at $1,242,907, inclusive of the net pension liability and the net investment in capital assets. 73 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Tax Increment Finance Authority component unit reported a deficit in unrestricted net position of $38,607,554 at June 30, 2016. The deficit is a result of full-accrual accounting for long-term debt, without reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). 4. DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances for the primary government (including both pooled cash and investments as well as pension and other postemployment benefit (OPEB) trust fund balances) as of June 30, 2016: Primary Component Government Units Totals Statement of net position Cash and investments $ 76,765,637 $ 4,600,110 $ 81,365,747 Restricted cash and investments 3,568,818 1,201,198 4,770,016 Statement of fiduciary net position Pension and OPEB trust funds: Cash and cash equivalents 2,000 - 2,000 Investments 517,509,597 517,509,597 Agency funds: Equity in pooled cash and investments 67,738 67,738 Total $ 597,913,790 $ 5,801,308 $ 603,715,098 Deposits and investments Bank deposits: Checking/savings accounts $ 83,520,021 Investment in securities and mutual funds: Pooled investments 2,407,468 Pension and OPEB investments 517,509,597 Total investment in securities and mutual fund 519,917,065 Cash on hand 278,012 Total $ 603,715,098 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, $82,988,204 of the City's bank balance of $85,675,798 was exposed to custodial credit risk because it was uninsured and uncollateralized. The City's investment policy does not specifically address this risk, although the City believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank deposits. As a result, the City evaluates each financial institution with which it deposits City funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. 74 CITY OF LANSING, MICHIGAN Notes to Financial Statements Custodial Credit Risk - Investments. As of June 30, 2016, the City's pooled investments consisted entirely of mutual funds totaling $2,407,468. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require and the City does not have a policy for investment custodial credit risk. On the investments listed above, there is no custodial credit risk, as these investments are uncategorized as to credit risk. Credit Risk. State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment credit risk. Credit risk ratings, where applicable, are summarized as follows: SEtP AAAm $ 158,524 SEW A3 993,830 SEW Al 999,940 Unrated 255,174 Total $ 2,407,468 Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable investments as identified in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Maturity dates for investments held at year-end are summarized as follows: Due within 1 year $ 1,993,770 No maturity 413,698 Total $ 2,407,468 Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude of the City's investment in a single issuer. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year-end are reported above. Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments, and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. 75 CITY OF LANSING, MICHIGAN Notes to Financial Statements Deposits The pension and OPEB trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net position are composed entirely of short-term investments in money market accounts. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds' assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. 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, 2016: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Investments at fair value, as determined by quoted market price U.S. treasuries: Not on securities loan $ 6,332,795 $ 9,323,600 $ 14,571 $ $ 15,670,966 On securities loan 611,789 658,640 - 1,270,429 U.S. agencies: Not on securities loan 16,325,853 20,458,957 36,784,810 On securities loan 212,787 7,213 220,000 Domestic corporate securities: Not on securities loan 24,207,773 31,794,917 56,002,690 Domestic equities: Not on securities loan 16,946,493 44,841,387 61,787,880 On securities loan 18,323,498 22,206,197 40,529,695 International equities: Not on securities loan 769,376 1,448,649 2,218,025 Emerging markets equities 6,709,430 10,394,439 585,795 17,689,664 Collateralized mortgage obligations 358,046 416,223 - 774,269 Real estate investment funds 19,178,655 21,434,902 40,613,557 Equity mutual funds - 28,143,587 - - 28,143,587 International equity mutual funds 44,163,946 42,615,767 99,233 2,236,046 89,114,992 Domestic equity mutual funds 16,598,398 37,920,820 1,314,170 8,794,625 64,628,013 Domestic debt securities mutual funds - - 596,867 9,631,551 10,228,418 International debt securities mutual funds - 27,479,643 - - 27,479,643 Private equity partnerships 17,253,511 - - 17,253,511 Money market funds 2,928,230 2,595,437 1,575,781 7,099,448 Total investments $ 190,920,580 $ 301,740,378 $ 2,024,841 $ 22,823,798 $ 517,509,597 76 CITY OF LANSING, MICHIGAN Notes to Financial Statements Credit Risk. The City's pension investment policies provide that at least 90% of its investments in fixed income securities be rated BBB- or better by a nationally recognized statistical rating organization and the remaining 10% be rated at least B- or better. The City's pension and other postemployment benefits investments were rated by Standard Et Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AAA $ - $ - $ 113,173 $ $ 113,173 AA 1,629,887 1,326,733 156,723 3,113,343 BBB 19,235,750 27,479,643 - 9,631,551 56,346,944 BB - - 50,419 - 50,419 US government guaranteed 22,000,486 29,292,864 - 51,293,350 Not rated 28,214,355 35,177,554 - - 63,391,909 Assets not subject to credit risk 119,840,102 208,463,584 1,704,526 13,192,247 343,200,459 $ 190,920,580 $ 301,740,378 $ 2,024,841 $ 22,823,798 $ 517,509,597 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, 2016, the pension and other postemployment benefits investment portfolio was concentrated as follows: Employees' Police and Fire Retirement Retirement Investment Type Issuer System System Common stock Northern Trust Bank, N.A. 8.7% 12.6% Corporate bonds Legg Mason Fund Advisor, Inc. 12.7% 10.5% International equity mutual funds Franklin Templeton 10.1% 9.1 Domestic equity mutual funds Private Advisors 9.0% 9.3% International equity mutual funds SEI Trust Company 6.5% 0.0% International equity mutual funds Lazard Asset Management 6.5% 0.0% International equity mutual funds Mondrian 0.0% 7.1% International equity mutual funds Artisan 0.0% 7.0% The City's pension and other postemployment benefits investment policies require diversification of fixed income securities; however, they do not specify percentages of dollar amounts by industry or issuer. 77 CITY OF LANSING, MICHIGAN Notes to Financial Statements Foreign Currency Risk. Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Investment Retirement Retirement Money Purchase Health Care (currency in U.S. dollar) System System Pension Plan VEBA Totals International equities: Canada $ 337,948 $ 590,880 $ $ $ 928,828 India 96,363 150,363 246,726 The Netherlands 95,180 216,360 311,540 United Kingdom 187,216 371,373 558,589 France 52,669 119,673 172,342 International equity mutual funds 44,163,946 70,095,410 99,233 2,236,046 116,594,635 Total $ 44,933,322 $ 71,544,059 $ 99,233 $ 2,236,046 $ 118,812,660 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, 2016, maturities of the City's pension and other postemployment benefits trust debt securities and collateralized mortgage obligations were as follows: Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Employees' Retirement System U.S. agencies $ 1,629,887 $ 689,617 $ - $ - $ 2,319,504 U.S. government bonds 2,570,027 1,384,531 2,666,283 323,743 6,944,584 U.S. government mortgage backed securities 2,321 657,817 1,790,460 9,641,556 12,092,154 U.S. government issued commercial mortgage backed securities - 200,985 810,862 485,987 1,497,834 Commercial mortgage backed securities - - 87,494 270,552 358,046 Total $ 4,202,235 $ 2,932,950 $ 5,355,099 $ 10,721,838 $ 23,212,122 78 CITY OF LANSING, MICHIGAN Notes to Financial Statements Investment Maturities (Fair Value) Less than More than 1 year 1-5 years 6-10 years 10 years Total Police and Fire Retirement System U.S. agencies $ 1,326,733 $ 953,940 $ - $ - $ 2,280,673 U.S. government bonds 4,025,502 1,637,270 3,939,422 380,046 9,982,240 U.S. government mortgage backed securities 2,989 993,891 1,558,786 13,279,939 15,835,605 U.S. government issued commercial mortgage backed securities - 299,690 901,819 655,342 1,856,851 Commercial mortgage backed securities - - 112,492 303,731 416,223 Total $ 5,355,224 $ 3,884,791 $ 6,512,519 $ 14,619,058 $ 30,371,592 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, 2016, the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $19,148,074 and $22,872,049, respectively, for which the Plans' received cash collateral of $19,444,659 and $23,219,203, respectively. The contract with the pension and other postemployment benefits trust fund custodians require them to indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the City for income distributions by the securities' issuers while the securities are on loan. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; Level 2 inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs. 79 CITY OF LANSING, MICHIGAN Notes to Financial Statements The City has the following recurring fair value measurements as of June 30, 2016: Level Level Level Total U.S. agencies $ $ 37,004,810 $ $ 37,004,810 U.S. government bonds 16,941,395 16,941,395 Collateralized mortgage obligations 774,269 - 774,269 Mutualfunds 254,097,059 36,355,433 290,452,492 Domestic equities 102,317,575 - 102,317,575 International equities 2,218,025 2,218,025 Emerging equities 17,689,664 17,689,664 Commercial paper 1,993,770 - 1,993,770 Money market funds 7,354,622 158,524 7,513,146 $ 386,444,984 $ 90,460,162 $ 476,905,146 Investments carried at net asset value: Equity funds 25,758,408 Private equity partnerships 17,253,511 Total investments $ 519,917,065 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, 2016. 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, 2016, the City had $1,382,103 outstanding on initial commitments of $8,600,000 with the Invesco Mortgage Recovery Fund (the "Fund"). The Fund has a seven year life, and the intent is to sell all of the investments prior to the Fund's maturity. The other investments at net asset value do not contain required redemption periods. 5. RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 10,943,563 $ 6,218,353 $ 831,399 Taxes receivable 888,017 - - Special assessments receivable 393,563 - - Loansreceivable 1,428,378 63,848 279,495 Accrued interest receivable 2,293,588 132,087 - Due from other governments 8,683,766 - 119,292 Lease receivable - 22,494,661 - Allowance for uncollectible accounts (728,535) (319,519) (983) $ 23,902,340 $ 28,589,430 $ 1,229,203 Amount not expected to be collected within one year $ 3,858,185 $ 21,863,577 $ 279,495 80 CITY OF LANSING, MICHIGAN Notes to Financial Statements The Brownfield Redevelopment Authority component is also party to loan agreements in which the associated loans are expected to be repaid by future collections of tax increment revenues related to the properties being cleaned up. The liability of the local corporations is limited to any shortfalls in future collection of tax increment revenues. Because these balances are not expected to be collected from outside parties, no balance is reported in the Brownfield Redevelopment Authority statements. The outstanding balance of such loans at June 30, 2016 consisted of the following: Brownfield Revolving Loan Fund loan to Michigan Avenue Investors, LLC for cleanup related to a former gas station. Interest is accreted at 2.0% per annum. $ 79,554 Brownfield Revolving Loan Fund loan to Brownfield Development Specialists, LLC for cleanup related to the "bard Building" in the City. Interest is stated at 0%. 250,000 Brownfield Revolving Loan Fund loan to Y Site, LLC for cleanup related to the former YMCA building. Interest is accreted at 3.0% per annum. 115,157 Brownfield Revolving Loan Fund loan to the High Grade Material Company for demolition and cleanup related to a single parcel of property in the City. Interest is accreted at 5.0% per annum. 82,111 Brownfield Cleanup Revolving Loan Fund loan to the City of Lansing Economic Development Corporation related to property formerly owned by the City of Lansing Board of Water and Light. Interest is stated at 0%. 409,096 Brownfield Revolving Loan Fund loan receivable to the City for cleanup related to a single parcel to be converted into a City parking lot. Interest is stated at 0%. 400,000 $ 1,335,918 81 CITY OF LANSING, MICHIGAN Notes to Financial Statements 6. CAPITAL ASSETS Capital asset activity for the year ended June 30, 2016 was as follows: Beginning Ending Balance Additions Disposals Transfers Balance Governmental activities Capital assets, not being depreciated: Land $ 25,838,193 $ - $ $ - $ 25,838,193 Construction in progress 14,367,233 346,563 (14,048,677) 665,119 40,205,426 346,563 (14,048,677) 26,503,312 Capital assets, being depreciated: Land improvements 19,945,351 - 19,945,351 Equipment and vehicles 36,065,775 1,653,432 (506,158) 383,818 37,596,867 Buildings 123,353,011 - (742,083) 13,664,859 136,275,787 Infrastructure 303,307,990 3,221,626 (4,533,169) - 301,996,447 482,672,127 4,875,058 (5,781,410) 14,048,677 495,814,452 Less accumulated depreciation for: Land improvements (8,871,274) (789,020) - - (9,660,294) Equipment and vehicles (29,065,498) (2,260,833) 506,158 (30,820,173) Buildings (74,027,809) (4,057,877) 698,415 (77,387,271) Infrastructure (210,324,701) (4,388,960) 4,450,920 (210,262,741) (322,289,282) (11,496,690) 5,655,493 - (328,130,479) Total capital assets being depreciated, net 160,382,845 (6,621,632) (125,917) 14,048,677 167,683,973 Governmental activities capital assets, net $ 200,588,271 $ (6,275,069) $ (125,917) $ - $ 194,187,285 At June 30, 2016, the City's governmental activities had outstanding commitments through construction contracts of approximately $2,150,000. 82 CITY OF LANSING, MICHIGAN Notes to Financial Statements Beginning Ending Balance Additions Disposals Transfers Balance Business-type activities Capital assets, not being depreciated: Land $ 13,483,910 $ - $ $ - $ 13,483,910 Construction in progress 12,354,899 1,098,618 (1,466,372) 11,987,145 25,838,809 1,098,618 (1,466,372) 25,471,055 Capital assets, being depreciated: Land improvements 24,585,130 - (94,248) 845,344 25,336,226 Equipment and vehicles 7,144,619 - (20,552) - 7,124,067 Buildings 216,145,477 181,417 621,028 216,947,922 Sewers 335,569,192 549,327 336,118,519 583,444,418 730,744 (114,800) 1,466,372 585,526,734 Less accumulated depreciation for: Land improvements (13,127,848) (741,446) 94,248 - (13,775,046) Equipment and vehicles (5,354,119) (405,590) 20,552 (5,739,157) Buildings (119,833,130) (4,868,490) - (124,701,620) Sewers (88,386,208) (6,859,795) (95,246,003) (226,701,305) (12,875,321) 114,800 (239,461,826) Total capital assets being depreciated, net 356,743,113 (12,144,577) - 1,466,372 346,064,908 Business-type activities capital assets, net $ 382,581,922 $ (11,045,959) $ - $ - $ 371,535,963 At June 30, 2016, the City's business-type activities had outstanding commitments through construction contracts of approximately $2,730,000. Depreciation expense was charged to functions/programs of the primary government as follows: Depreciation of governmental activities by function General government $ 455,334 Public safety 505,720 Public works 4,388,961 Recreation and culture 2,290,536 Community development 1,812,352 Internal service funds 2,043,787 Total depreciation expense - governmental activities $ 11,496,690 Depreciation of business-type activities by function Sewage disposal system $ 10,288,817 Municipal parking system 2,206,999 Cemetery 12,408 Golf 66,085 Recycling 301,012 Total depreciation expense - business-type activities $ 12,875,321 83 CITY OF LANSING, MICHIGAN Notes to Financial Statements 7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 8,383,224 $ 896,183 $ 1,957,711 Deposits payable 17,662 58,375 - Accrued payroll 2,825,943 127,540 133,886 Contract retainage payable 255,174 - - Due to other governments 2,994,637 Other 1,341,612 - - $ 15,818,252 $ 1,082,098 $ 2,091,597 8. INTERFUND RECEIVABLES, PAYABLES AND TRANSFERS The composition of interfund balances as of June 30, 2016, was as follows: Due to and from primary government funds Due from Due to Other Other Funds Funds General fund $ - $ 2,497 Nonmajor governmental funds 1,404,970 1,520,320 Sewage disposal system 2,695,492 2,591,138 Municipal parking system 15,790 - Nonmajor enterprise funds - 2,297 Total $ 4,116,252 $ 4,116,252 The above balances generally resulted from a time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. Advances to and from primary government funds Advances to Advances from Other Funds Other Funds Nonmajor governmental funds $ - $ 241,309 Municipal parking system 241,309 - Total $ 241,309 $ 241,309 84 CITY OF LANSING, MICHIGAN Notes to Financial Statements Due to and from component units Due from Due to primary component government unit Nonmajor governmental funds $ - $ 2,119,598 Brownfield Redevelopment Authority 1,150,064 - Tax Increment Finance Authority 969,534 - Total $ 2,119,598 $ 2,119,598 For the year ended June 30, 2016, interfund transfers consisted of the following: Transfers In Nonmajor Nonmajor Internal governmental enterprise service Transfers Out General fund funds funds funds Total General fund $ - $ 5,395,290 $ - $ 1,000,000 $ 6,395,290 Nonmajor governmental funds 87,290 2,621,269 951,497 - 3,660,056 Sewage disposal system 300,000 - - 300,000 Nonmajor enterprise funds - 21,782 21,782 Internal service funds - 782,225 - - 782,225 Total $ 387,290 $ 8,820,566 $ 951,497 $ 1,000,000 $ 11,159,353 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. 85 CITY OF LANSING, MICHIGAN Notes to Financial Statements 9. LONG-TERM DEBT General obligation bonds. The government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Interest Original Rate Amount Amount General obligation bonds Governmental activities: 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% $ 1,137,600 $ 138,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625-5.00% 3,602,400 437,000 2007 Fire Station Refunding Bonds 3.625-5.00% 1,780,000 595,000 2008 Michigan Transportation Fund Limited Tax Bonds 3.00-4.00% 3,500,000 995,000 2009 Capital Improvement Bonds - Limited Tax General 3.15-6.85% 10,197,000 8,825,000 2010 Refunding Bonds - Limited Tax General Obligation 2.60-2.65% 2,470,000 920,000 2013 Refunding Bonds - Limited Tax General Obligation Energy Efficiency Refunding Bonds 2.40% 5,645,000 4,435,000 2013 Refunding Bonds - Limited Tax General Obligation Phone System Refunding Bonds 2.40% 240,000 60,000 2010 Recovery Zone Economic Development Bonds 2014 Capital Improvement Bonds - Limited Tax General Obligation 1.25-2.00% 2,275,000 770,000 2010 Recovery Zone Economic Development Bonds 3.40-7.25% 3,200,000 2,635,000 2015 Building Authority Refunding 2.00% 320,000 320,000 2015 Lansing Center Refunding 2.00-3.00% 1,770,000 1,770,000 $ 36,137,000 $ 21,900,000 Business-type activities: 2009 Building Authority Refunding Bonds 6.014-6.584% $ 8,161,691 $ 8,161,691 2012 Building Authority Refunding Bonds 0.55-3.70% 7,200,000 6,005,000 2007 Building Authority Refunding Bonds 3.625-5.00% 7,965,000 7,325,000 2013 Building Authority Golf Course Refunding Bonds 2.40% 405,000 105,000 2014 Building Authority Refunding Bonds 4.75% 7,965,000 7,245,000 1996 Limited Tax Sewer Bond - 5005-07 2.25% 3,365,073 200,073 1996 Limited Tax Sewer Bond - 5005-08 2.25% 3,995,000 485,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 836,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 2,454,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 2,450,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 2,777,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 3,703,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 5,586,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,259,826 5,165,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,070,277 2,082,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 8,003,778 4,293,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 13,389,371 7,469,371 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,216,346 11,411,346 86 CITY OF LANSING, MICHIGAN Notes to Financial Statements Interest Original Rate Amount Amount Business-type activities (concluded): 2007 Limited Tax Sewer Bond - 5005-20 1.63% $ 24,244,726 $ 16,144,726 2008 Limited Tax Sewer Bond - 5005-21 2.50% 27,494,933 20,525,453 2008 Limited Tax Sewer Bond - 5005-22 2.50% 15,615,000 12,025,604 2009 Capital Improvement Bonds 4.10-7.05% 9,803,000 9,165,000 2010 Limited Tax Sewer Bond - 5411-01 2.50% 8,548,000 7,478,000 2015 Limited Tax Sewer Bond - 5211-01 2.50% 2,914,584 2,784,584 2015 Limited Tax Sewer Bond - 5211-02 2.40% 1,977,487 1,887,487 2015 Building Authority Refunding 2.00-3.00% 6,765,000 6,765,000 $ 247,167,829 $ 154,534,187 On April 11, 2016, the City issued $3,335,000 of Limited Tax General Obligation bonds under the wet weather control program. Payments of amounts drawn are to be made semi-annually over a 20-year period, beginning on October 1, 2018. Interest is charged on the outstanding balance at 2.50%. As of June 30, 2016, no amounts had been drawn on this loan. Advance Refunding. In December 2015, the City issued $7,085,000 of General Obligation Limited Tax Refunding Bonds to partially advance refund the City's 2005 Building Authority Refunding Bonds of $325,000 and $6,980,000 reported in its governmental activities and business-type activities, respectively. The proceeds of the bonds were used to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on the refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The bonds are to be called on June 1, 2017 through 2022. Accordingly, $7,305,000 of defeased debt remains outstanding at year-end. The refunding resulted in a cash savings of $808,750 and an economic gain of $763,178. In December 2015, the City issued $1,770,000 of General Obligation Limited Tax Refunding Bonds to partially advance refund the City's 2006 Lansing Center Limited Tax Bonds of $1,820,000. The proceeds of the bonds were used to purchase U.S. government securities that were placed in an escrow fund for the purpose of generating resources for all future debt service payments on the refunded debt. As a result, the bonds are considered defeased and the liability has been removed from the statement of net position. The bonds are to be called on June 1, 2017 through 2022. Accordingly, $1,820,000 of defeased debt remains outstanding at year-end. The refunding resulted in a cash savings of $166,645 and an economic gain of $157,462. As of June 30, 2016, the Tax Increment Financing Authority component unit had defeased bonds outstanding consisting of $8,420,000 related to the 1990 Tax Increment Finance Authority Bonds. This amount is scheduled to be paid by the escrow agent in installments on May 1 of years 2017 through 2020. 87 CITY OF LANSING, MICHIGAN Notes to Financial Statements Revenue bonds. The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Interest Original Rate Amount Amount Revenue bonds - business type activities 2013 Sewer Revenue and Refunding Bond 2.40% $ 21,765,000 $ 18,725,000 Pledged revenues. The City has pledged future sewer customer revenues, net of specified operating expenses, to repay $21,765,000 in sewer revenue and refunding bonds issued in 2013. Proceeds from the bonds provided financing for the construction for various sewer infrastructure projects. The bonds are payable solely from sewer customer net revenues and are payable through 2028. Annual principal and interest payments on the bonds are expected to require less than 14% of net revenues. The total principal and interest paid for the current year and total customer net revenues were $2,411,188 and $17,841,901 respectively. Installment purchase agreements. The government enters into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Interest Original Rate Amount Amount Installment purchase agreements Governmental activities: 2013 Lease Purchase Agreement - Garage 2.40% $ 1,892,332 $ 782,442 2014 Lease Purchase Agreement - Recycling Trucks 1.96% 1,550,855 1,112,625 2015 Ballpark Improvements Installment Purchase 3.00% 13,500,000 13,124,986 2014 Installment Purchase Agreement - Police Cars 1.44% 491,241 248,264 $ 17,434,428 $ 15,268,317 Business-type activities: 2014 Lease Purchase Agreement - Recycling Carts 1.96% $ 1,737,000 $ 1,246,673 Loans payable. The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Interest Original Rate Amount Amount Loans payable Governmental activities: HUD Section 108 Loan 1.52% $ 5,900,000 $ 5,900,000 2014 SIB Loan 3.00% 1,972,600 1,972,600 $ 7,872,600 $ 7,872,600 88 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in long-term debt. Long-term liability activity for the year ended June 30, 2016, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds $ 25,755,000 $ 2,090,000 $ 5,945,000 $ 21,900,000 $ 3,835,000 Installment purchase agreements 16,387,327 - 1,119,010 15,268,317 1,510,786 Loans payable 7,872,600 - - 7,872,600 - Total installment debt 50,014,927 2,090,000 7,064,010 45,040,917 5,345,786 Deferred amounts: For issuance discounts (79,821) - (6,833) (72,988) - For issuance premiums 115,102 80,175 53,959 141,318 - Compensated absences 9,568,555 9,552,788 9,568,555 9,552,788 885,338 Accrued workers compensation 3,418,805 184,364 1,305,255 2,297,914 494,462 Accrued tax settlement 52,161 - 52,161 - - $ 63,089,729 $ 11,907,327 $ 18,037,107 $ 56,959,949 $ 6,725,586 Business-type activities General obligation bonds $ 165,352,984 $ 8,742,487 $ 19,561,284 $ 154,534,187 $ 12,280,073 Revenue bonds 20,275,000 - 1,550,000 18,725,000 1,550,000 Installment purchase agreements 1,459,431 - 212,758 1,246,673 216,950 Total installment debt 187,087,415 8,742,487 21,324,042 174,505,860 14,047,023 Deferred amounts: For issuance discounts (709,367) - (73,011) (636,356) - For issuance premiums 2,314,325 254,156 216,614 2,351,867 - Compensated absences 718,149 759,258 718,149 759,258 114,663 $ 189,410,522 $ 9,755,901 $ 22,185,794 $ 176,980,629 $ 14,161,686 For the governmental activities, compensated absences and other long-term debt are generally liquidated by the General Fund. 89 CITY OF LANSING, MICHIGAN Notes to Financial Statements Debt service requirements to maturity for all installment debt of the City are as follows: Year Governmental Activities Business-type Activities Ending June 30 Principal Interest Total Principal Interest Total 2017 $ 5,345,786 $ 1,503,403 $ 6,849,189 $ 14,047,023 $ 7,534,838 $ 21,581,861 2018 4,425,796 1,340,744 5,766,540 14,016,223 7,160,579 21,176,802 2019 3,539,718 1,210,063 4,749,781 14,007,360 6,814,301 20,821,661 2020 3,240,169 1,102,649 4,342,818 14,004,973 6,424,295 20,429,268 2021 3,756,647 1,001,025 4,757,672 15,065,326 6,035,709 21,101,035 2022-2026 13,474,579 3,460,283 16,934,862 60,418,384 23,074,663 83,493,047 2027-2031 10,188,221 1,090,497 11,278,718 31,005,896 10,116,419 41,122,315 2032-2036 1,070,001 38,749 1,108,750 8,905,675 6,462,599 15,368,274 2037-2040 - - - 3,035,000 3,474,257 6,509,257 $ 45,040,917 $ 10,747,413 $ 55,788,330 $ 174,505,860 $ 77,097,660 $ 251,603,520 10. FUND BALANCES - GOVERNMENTAL FUNDS In accordance with GASB Statement No. 54, Fund Balance Reporting and Governmental Fund Type Definitions, the City classifies fund balances based primarily on the extent to which it is bound to observe constraints imposed upon the use of the resources reported in governmental funds. Detailed information on fund balances of governmental funds is as follows: Nonmajor General Governmental Fund Funds Totals Nonspendable Inventories $ 29,770 $ 809,977 $ 839,747 Prepaids 462,779 - 462,779 Corpus of permanent fund - 1,768,354 1,768,354 492,549 2,578,331 3,070,880 Restricted Major and local streets - 4,730,816 4,730,816 Drug law and narcotics enforcement 1,466,679 1,466,679 Building permit activity 286,633 286,633 Capital improvements (unexpended bond proceeds) 449,273 449,273 6,934,665 6,934,665 90 CITY OF LANSING, MICHIGAN Notes to Financial Statements Nonmajor General Governmental Fund Funds Totals Committed Police and fire services $ 328,111 $ - $ 328,111 By ordinance (budget carryforwards) - 3,011,081 3,011,081 Stadium events 99,995 - 99,995 Community development - 200,000 200,000 Shopping district events and maintenance 17,712 17,712 City parks 469,114 469,114 Capital improvements - 4,729,346 4,729,346 428,106 8,427,253 8,855,359 Unassigned (deficit) 12,407,748 (410,252) 11,997,496 Total fund balances - governmental funds $ 13,328,403 $ 17,529,997 $ 30,858,400 11. NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30, 2016, was as follows: Governmental Business-type Component Activities Activities Units Capital assets: Capital assets not being depreciated $ 26,503,312 $ 25,471,055 $ - Capital assets being depreciated, net 167,683,973 346,064,908 4,471 Total capital assets 194,187,285 371,535,963 4,471 Related debt: General obligation bonds 21,900,000 154,534,187 - Revenue bonds - 18,725,000 Installment purchase agreements 15,268,317 1,246,673 Loans payable 7,872,600 - Unamortized bond discounts (72,988) (636,356) Unamortized bond premiums 141,318 2,351,867 Deferred loss on bond refunding (149,549) (2,627,629) Amounts under leases receivable - (22,494,661) Unexpended bond proceeds (449,273) - Totalrelated debt 44,510,425 151,099,081 Net investment in capital assets $ 149,676,860 $ 220,436,882 $ 4,471 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. 91 CITY OF LANSING, MICHIGAN Notes to Financial Statements 13. RISK MANAGEMENT The City of Lansing, Michigan is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries. The City carries commercial insurance for claims relating to general liability, property, electronic data processing, boiler and machinery, police professional and errors and omissions. The City has not experienced settlements in excess of insurance coverage during the past three years. The City is uninsured for acts of nature and environmental clean-up costs. 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, 2016 2015 Estimated liability, beginning of year $ 704,905 $ 831,808 Estimated claims incurred, including changes in estimates 9,812,124 10,048,116 Claim payments (9,860,965) (10,175,019) Estimated liability, end of year $ 656,064 $ 704,905 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, 2016 2015 Estimated liability, beginning of year $ 3,418,805 $ 5,967,593 Estimated claims incurred, including changes in estimates 184,364 1,328,263 Claim payments (1,305,255) (3,877,051) Estimated liability, end of year $ 2,297,914 $ 3,418,805 92 CITY OF LANSING, MICHIGAN Notes to Financial Statements 14. PROPERTY TAXES Property taxes attach as an enforceable lien on property as of the date they are levied. City, community college, and 50% of school taxes are levied and due July 1 and become delinquent after August 31. County taxes and the balance of school taxes are levied and due December 1 and become delinquent after February 14. In March, taxes on real property still delinquent are purchased by the County's tax revolving funds. Collections of community college, school, and county taxes and remittances are accounted for in the general fund. City property tax revenues are recognized in the fiscal year for which the taxes are levied to the extent that they result in current receivables (i.e., are collected within 60 days after fiscal year-end). The City is permitted by charter and state law to levy taxes up to $20.00 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, 2016 was $19.44 per $1,000 of taxable value. 15. CONTINGENT LIABILITIES Federal Grant Programs. Amounts received or receivable from grantor agencies are subject to audit and potential adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. Risk Management. The government is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the government's counsel that resolution of these matters will not have a material adverse effect on the financial condition of the government. 16. PENSION PLANS Employees'Retirement System Plan Description. The City sponsors and administers the Employees' Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers general full-time employees of the City of Lansing, 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. 93 CITY OF LANSING, MICHIGAN Notes to Financial Statements 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, 2015, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 909 Terminated employees entitled to but not yet receiving benefits 72 Vested and non-vested active participants 371 Total membership 1,352 Benefits Provided. Employees who retire with minimum age and years of service requirements are entitled to annual retirement benefits, payable in monthly installments for life, in an amount equal to a percentage of their final average compensation times years of credited service. Final average compensation is defined as the average of the highest annual compensation paid over 2 consecutive years of credited service within the last 10 years of credited service immediately preceding a member's termination of employment. The benefit payments are calculated using the following rates for the various groups of general employees: Bargaining Unit/Employee Multiplier Group Percentage United Auto Workers (UAW): Hired after October 18, 2013 1.70% All others 2.75% Teamsters Local 214: Hired after September 2012 1.25% All others 1.80% Teamsters Local 580: Hired after May 19, 2014 1.25% All others 1.80% Non-bargaining and all others Hired after April 1, 2014 1.25% All others 1.60% 94 CITY OF LANSING, MICHIGAN Notes to Financial Statements Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Employees are required to make contributions to the Plan in rates from 3.00 to 6.50% 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, 2016 was 44.1% of projected valuation payroll. Bargaining Unit/Employee Contribution Group Percentage United Auto Workers (UAW) 3.00% Teamsters Local 214: Hired after September 2012 5.00% All others 6.50% Teamsters Local 580: Hired after May 9, 2014 5.00% All others 6.35% District court Teamsters: Hired after April 2014 5.00% All others 5.50% District court exempt 5.50% All others 6.50% Investment Policy. The plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return. For the year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (1.60%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2016, 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. 95 CITY OF LANSING, MICHIGAN Notes to Financial Statements Reserves. In accordance with the Plan policy, the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. A summary of the Plan reserves at June 30, 2016 is as follows: Reserve/Group Balance Employee savings fund $ 16,067,427 Retirement reserve fund 134,629,178 Pension accumulation fund (2,814,285) Members benefit fund 16,167,592 Health insurance fund 25,843,649 Net Pension Liability. The components of the net pension liability for the employees' retirement system at June 30, 2016 were as follows: Total pension liability $ 324,725,530 Plan fiduciary net position 164,049,912 Net pension liability $ 160,675,618 Plan fiduciary net position as percentage of total pension liability 50.52% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2015, rolled forward to June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50% of Scale BB. The actuarial assumptions used in the December 31, 2015 valuation were based on the results of actuarial experience analysis conducted in 2012. An assumption review was conducted 2016, the pending results of which will be applicable in fiscal year 2017. 96 CITY OF LANSING, MICHIGAN Notes to Financial Statements The long-term expected rate of return on pension plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns, net of pension plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte- Carlo simulation process, by which a (downward) risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the pension plan's target asset allocation as of June 30, 2016, and the final investment return assumption, are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 29.30% 5.74% 1.69% International equity - developed 13.80% 5.71% 0.79% International equity - emerging 4.00% 6.80% 0.27% Fixed income 21.90% 3.01% 0.66% Real estate 10.00% 4.81% 0.48% Global opportunistic fixed income 10.00% 4.12% 0.41% Global equity long/short 10.00% 4.51% 0.45% Opportunistic strategy 1.00% 4.41% 0.04% 100.00% 4.79% Inflation 3.10% Risk adjustments -0.29% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.09%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2056. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2056, and discounting with the 20-year AA municipal bond index rate of 2.59% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. 97 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2015 $ 319,702,427 $ 178,556,474 $ 141,145,953 Changes for the year: Service cost 2,977,084 - 2,977,084 Interest 22,268,516 22,268,516 Differences between expected and actual experience (4,937,823) (4,937,823) Changes in assumptions 7,575,775 7,575,775 Employer contributions - 10,181,620 (10,181,620) Employee contributions 1,088,943 (1,088,943) Net investment income (loss) (2,790,190) 2,790,190 Benefit payments, including refunds of employee contributions (22,860,449) (22,860,449) - Administrative expense - (126,486) 126,486 Net changes 5,023,103 (14,506,562) 19,529,665 Balances at June 30, 2016 $ 324,725,530 $ 164,049,912 $ 160,675,618 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 7.09%, 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 (6.09%) or 1-percentage-point higher (8.09%) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.09%) (7.09%) (8.09%) Net pension liability $ 191,228,508 $ 160,675,618 $ 134,454,989 98 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2016, the City recognized pension expense of $14,869,224. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Changes in benefit terms $ $ - $ Difference between expected and actual experience 5,432,658 (5,432,658) Changes in assumptions 5,050,517 - 5,050,517 Net difference between projected and actual earnings on pension plan investments 18,426,381 - 18,426,381 237476,898 5,432,658 18,044,240 Contributions subsequent to measurement date - - - Total $ 23,476,898 $ 5,432,658 $ 18,044,240 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended June 30, Amount 2017 $ 3,812,870 2018 5,953,647 2019 5,074,329 2020 3,203,394 Total $ 18,044,240 Payable to the Pension Plan. At June 30, 2016, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2016. 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. 99 CITY OF LANSING, MICHIGAN Notes to Financial Statements Members may retire at age 55, or at any age with 25 or more years of credited service. Members are vested after completing 10 years of credited service. Members are required to retire at age 60 (Police) or 70 (Fire). When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. The plan provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Summary of Significant Accounting Policies. The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments. Plan investments are reported at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees, with the assistance of a valuation service. Plan Membership. At December 31, 2015, plan membership consisted of the following: Retirees and beneficiaries currently receiving benefits 723 Terminated employees entitled to but not yet receiving benefits 38 Vested and non-vested active participants 349 Total membership 1,110 Benefits Provided. Annual retirement allowances are determined by multiplying final average compensation by 3.2% for the first 25 years of credited service. The maximum allowance is 80% of final average compensation. Final average compensation is the member's highest wages for 2 consecutive years. Contributions. The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Fire members are required to contribute 10.0% of their annual wages to the plan. Police supervisors are required to contribute 9.52% and police non-supervisors, 9.0%. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City's actuary) not financed by member contributions shall be financed by annual appropriations. The City's contribution rate for the plan for the year ended June 30, 2016 was 40.2%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. 100 CITY OF LANSING, MICHIGAN Notes to Financial Statements Rate of Return. For the year ended June 30, 2016, the annual money-weighted rate of return on pension plan investments, net of pension plan investment expense, was (2.09%). The money-weighted rate of return expresses investment performance, net of investment expense, adjusted for the changing amounts actually invested. Concentrations. At June 30, 2016, 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, 2016 is as follows: Reserve/Group Balance Retirement reserve fund $ 273,115,398 Health insurance fund 29,946,038 Net Pension Liability. The components of the net pension liability for the police and fire retirement system at June 30, 2016, were as follows: Total pension liability $ 418,348,450 Plan fiduciary net position 273,115,398 Net pension liability $ 145,233,052 Plan fiduciary net position as percentage of total pension liability 65.28% Actuarial Assumptions. The total pension liability was determined by an actuarial valuation as of December 31, 2015, rolled forward to June 30, 2016, using the following actuarial assumptions, applied to all periods included in the measurement: Inflation 3.10% Salary increases 3.10%, plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Mortality is based on the RP-2000 tables (with Blue Collar adjustments for Police and Fire) for males and females. For Disabled members, the disabled versions of these tables are used with a 5 year age setback for males. Each of these tables is projected to 2008 using Scale BB. Future improvements in mortality for non- disabled members are anticipated by projecting these tables an additional 15 years using 50% of Scale BB. 101 CITY OF LANSING, MICHIGAN Notes to Financial Statements The actuarial assumptions used in the December 31, 2015 valuation were based on the results of actuarial experience analysis conducted in 2012. An assumption review was conducted 2016, the pending results of which will be applicable in fiscal year 2017. 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, 2016, and the final investment return assumption, are summarized in the following table: Long-term Money- Target Expected Real Weighted Rate Asset Class Allocation Rate of Return of Return Domestic equity 29.30% 5.74% 1.69% International equity - developed 13.80% 5.71% 0.79% International equity - emerging 4.00% 6.80% 0.27% Fixed income 21.90% 3.01% 0.66% Real estate 10.00% 4.81% 0.48% Global opportunistic fixed income 10.00% 4.12% 0.41% Global equity long/short 10.00% 4.51% 0.45% Opportunistic strategy 1.00% 4.41% 0.04% 100.00% 4.79% Inflation 3.10% Risk adjustments -0.29% Investment rate of return 7.60% Discount Rate. The discount rate used to measure the total pension liability was 7.49%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, the pension plan's fiduciary net position was projected to be exhausted in the year 2070. Therefore, the discount rate represents the single equivalent rate resulting from discounting at the long-term expected rate of return until 2070, and discounting with the 20-year AA municipal bond index rate of 2.59% thereafter. This projection is done on a closed group basis, per GASB requirements. On an ongoing, open- group basis, it is unlikely that the funds will be depleted because funding progress is frequently reviewed and adjustments are made to contribution levels. 102 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in the Net Pension Liability. The components of the change in the net pension liability are summarized as follows: Total Pension Plan Fiduciary Net Pension Liability Net Position Liability (a) (b) (a) - (b) Balances at June 30, 2015 $ 400,117,548 $ 295,296,649 $ 104,820,899 Changes for the year: Service cost 6,371,845 - 6,371,845 Interest 30,197,513 30,197,513 Differences between expected and actual experience 7,884,167 7,884,167 Changes in assumptions 3,281,341 - 3,281,341 Employer contributions - 10,884,312 (10,884,312) Employee contributions 2,608,214 (2,608,214) Net investment loss (6,040,910) 6,040,910 Benefit payments, including refunds of employee contributions (29,503,964) (29,503,964) - Administrative expense - (128,903) 128,903 Net changes 18,230,902 (22,181,251) 40,412,153 Balances at June 30, 2016 $ 418,348,450 $ 273,115,398 $ 145,233,052 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 7.49%, 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 (6.49%) or 1-percentage-point higher (8.49%) than the current rate: One Percent Current One Percent Decrease Discount Rate Increase (6.49%) (7.49%) (8.49%) Net pension liability $ 188,703,501 $ 145,233,052 $ 108,359,537 103 CITY OF LANSING, MICHIGAN Notes to Financial Statements Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions. For the year ended June 30, 2016, the City recognized pension expense of $24,016,657. At June 30, 2016, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Net Deferred Deferred Deferred Outflows Outflows of Inflows of (Inflows) of Resources Resources Resources Changes in benefit terms $ - $ $ - Difference between expected and actual experience 7,493,123 7,493,123 Changes in assumptions 2,461,006 2,461,006 Net difference between projected and actual earnings on pension plan investments 30,448,280 30,448,280 407402,409 40,402,409 Contributions subsequent to measurement date - - Total $ 40,402,409 $ $ 40,402,409 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ended June 30, Amount 2017 $ 11,865,484 2018 11,865,484 2019 11,075,485 2020 5,595,956 Total $ 40,402,409 Payable to the Pension Plan. At June 30, 2016, the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30, 2016. 104 CITY OF LANSING, MICHIGAN Notes to Financial Statements Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care .,=ion OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 1,000 $ - $ 1,000 $ - $ $ - $ 2,000 Investments: Money market funds 2,531,855 396,375 2,337,854 257,583 1,575,818 7,099,485 Government obligations 20,304,455 3,178,768 27,426,577 3,021,834 14,571 - 53,946,205 Corporate bonds 21,240,507 3,325,312 29,014,365 3,196,775 - 56,776,959 Common stocks 36,962,177 5,786,620 71,061,216 7,829,456 121,639,469 Private equity partnerships 14,918,018 2,335,493 - - - 17,253,511 Mutualfunds 69,119,918 10,821,081 141,954,329 15,640,390 2,010,270 21,247,980 260,793,968 Contribution receivable 1,855 - 1,302,152 - 4,628 3,573 1,312,208 Dividends and interest receivable 174,277 - 254,452 - 37 428,766 Total assets 165,254,062 25,843,649 273,351,945 29,946,038 2,029,469 22,827,408 519,252,571 Liabilities Accounts payable 1,204,150 - 236,547 - - - 1,440,697 Net position restricted for Pension benefits 164,049,912 - 273,115,398 - 2,029,469 - 439,194,779 Other postern ployment benefits - 25,843,649 - 29,946,038 - 22,827,408 78,617,095 Total net position $ 164,049,912 $ 25,843,649 $ 273,115,398 $ 29,946,038 $ 2,029,469 $ 22,827,408 $ 517,811,874 105 CITY OF LANSING, MICHIGAN Notes to Financial Statements Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income (loss): Net appreciation (depreciation) in fair value of investments $ (6,698,095) $ 5,214,104 $ (8,968,428) $ 4,907,324 $ - $ (133,652) $ (5,678,747) Interest income 855,670 - 1,194,152 - 19,731 453 2,070,006 Dividend income 523,380 1,008,773 - 401,467 1,933,620 Investment expenses - - - (6,464) - (6,464) Net investment income(loss) (5,319,045) 5,214,104 (6,765,503) 4,907,324 13,267 268,268 (1,681,585) Contributions: Employer 10,181,620 8,814,471 10,884,312 12,879,016 66,905 1,458,300 44,284,624 Plan members 1,088,943 - 2,608,214 - 49,817 - 3,746,974 Total contributions 11,270,563 8,814,471 13,492,526 12,879,016 116,722 1,458,300 48,031,598 Total additions 5,951,518 14,028,575 6,727,023 17,786,340 129,989 1,726,568 46,350,013 Deductions Participant benefits 22,860,449 8,599,473 29,503,964 11,277,516 20,097 - 72,261,499 Administrative expense 768,033 - 1,118,632 - - 56,111 1,942,776 Total deductions 23,628,482 8,599,473 30,622,596 11,277,516 20,097 56,111 74,204,275 Change in net position (17,676,964) 5,429,102 (23,895,573) 6,508,824 109,892 1,670,457 (27,854,262) Net position restricted for pension and other postemployment benefits: Beginning of year 181,726,876 20,414,547 297,010,971 23,437,214 1,919,577 21,156,951 545,666,136 End of year $164,049,912 $ 25,843,649 $273,115,398 $ 29,946,038 $ 2,029,469 $ 22,827,408 $517,811,874 106 CITY OF LANSING, MICHIGAN Notes to Financial Statements 17. OTHER POSTEMPLOYMENT BENEFITS Primary Government Plan Description. The City of Lansing contributes to the Employees' Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees' Retirement System and the Police and Fire Retirement System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under their respective pension plans, with the exception of Teamster 580 employees hired after May 2014. OPEB plan provisions are established and may be amended by the City Council, subject to the City's various collective bargaining agreements. Separate financial statements are not prepared for the plans. Method Used to Value Investments. Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of each plans' board of trustees, with the assistance of a valuation service. Voluntary Employees Beneficiary Association(VEBA) The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit postemployment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City's pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During the year, the City contributed $1,458,300 to the Plan. Employees'Retirement System The City provides postemployment health care benefits, in accordance with labor agreements, to full-time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees' Retirement System are also eligible to receive health care benefits, with the exception of Teamster 580 employees hired after May, 2014. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $121.80 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. 107 CITY OF LANSING, MICHIGAN Notes to Financial Statements Membership of the Plan consisted of the following at December 31, 2015, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 865 Terminated plan members entitled to but not yet receiving benefits 52 Active plan members 374 Total 1,291 During the year, the City contributed $8,814,471 (direct benefit payments of $8,599,471 and City contributions of$215,000) to the Plan. Annual required contribution $ 11,342,560 Interest on net OPEB obligation 838,452 Adjustment to annual required contribution (733,678) Net OPEB cost (expense) 11,447,334 Contributions made (8,814,471) Increase in net OPEB obligation 2,632,863 Net OPEB obligation, beginning of year 11,032,264 Net OPEB obligation, end of year $ 13,665,127 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Annual OPEB OPEB Cost Net OPEB Year Ended Cost Contributed Obligation 2014 $ 14,057,619 78.6% $ 6,973,885 2015 13,270,701 69.4% 11,032,264 2016 11,447,334 77.0% 13,665,127 The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. 108 CITY OF LANSING, MICHIGAN Notes to Financial Statements Funded Status and Funding Progress. As of December 31, 2015, the most recent actuarial valuation date, the Plan was 26.0% funded. The actuarial accrued liability for benefits was $175,482,584, and the actuarial value of assets was $45,570,448, resulting in an unfunded actuarial accrued liability (UAAL) of $129,912,136. The covered payroll (annual payroll of active employees covered by the Plan) was $20,583,058, and the ratio of the UAAL to the covered payroll was 630.8%. The Employees' Retirement System and VEBA were combined in the actuarial valuation. Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2015 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 7.6 percent investment rate of return (net of administrative expenses), which includes a 3.1 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2015, was 26 years. Police and Fire Retirement System The City also provides postemployment health care benefits, in accordance with labor agreements, to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $121.80 per month for each covered retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Membership of the Plan consisted of the following at December 31, 2015, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 663 Terminated plan members entitled to but not yet receiving benefits 23 Active plan members 346 Total 1,032 109 CITY OF LANSING, MICHIGAN Notes to Financial Statements During the year, the City contributed $12,879,016 (direct benefit payments of $11,277,516 and City contributions of $1,601,500) to the Plan. Annual required contribution $ 14,840,496 Interest on net OPEB obligation 3,492,342 Adjustment to annual required contribution (3,055,937) Net OPEB cost (expense) 15,276,901 Contributions made (12,879,016) Increase in net OPEB obligation 2,397,885 Net OPEB obligation, beginning of year 45,951,872 Net OPEB obligation, end of year $ 48,349,757 The City's annual OPEB cost, the percentage of annual OPEB cost contributed to the Plan, and the net OPEB obligation for the current year and the two preceding years were as follows: Three-Year Trend Information Percentage of Annual Annual OPEB OPEB Cost Net OPEB Year Ended Cost Contributed Obligation 2014 $ 17,489,692 63.9% $ 39,589,912 2015 17,923,366 64.5% 45,951,872 2016 15,276,901 84.3% 48,349,757 The schedule of employer contributions, presented as required supplementary information (RSI) following the notes to the financial statements, presents trend information about the amounts contributed to the plan by employers in comparison to the ARC, an amount that is actuarially determined in accordance with the parameters of GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost for each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed thirty years. Funded Status and Funding Progress. As of December 31, 2015, the most recent actuarial valuation date, the Plan was 8.8% funded. The actuarial accrued liability for benefits was $327,413,936, and the actuarial value of assets was $28,895,679, resulting in an unfunded actuarial accrued liability (UAAL) of $298,518,257. The covered payroll (annual payroll of active employees covered by the Plan) was $25,533,302, and the ratio of the UAAL to the covered payroll was 1,169.1%. 110 CITY OF LANSING, MICHIGAN Notes to Financial Statements Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptions about the probability of occurrence of events far into the future. Examples include assumptions about future employment, mortality, and the healthcare cost trend. Amounts determined regarding the funded status of the plan and the annual required contributions of the employer are subject to continual revision as actual results are compared with past expectations and new estimates are made about the future. The schedule of funding progress, presented as required supplementary information following the notes to the financial statements, presents multiyear trend information about whether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarial accrued liabilities for benefits. Actuarial Methods and Assumptions. Projections of benefits for financial reporting purposes are based on the substantive plan (the plan as understood by the employer and the plan members) and include the types of benefits provided at the time of each valuation and the historical pattern of sharing of benefit costs between the employer and plan members to that point. The actuarial methods and assumptions used include techniques that are designed to reduce the effects of short-term volatility in actuarial accrued liabilities and the actuarial value of assets, consistent with the long-term perspective of the calculations. In the December 31, 2015 actuarial valuation, the entry age actuarial cost method was used. The actuarial assumptions included a 7.6 percent investment rate of return (net of administrative expenses), which includes a 3.1 percent inflation assumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized as a level percentage of projected payroll on an open basis. The remaining amortization period at December 31, 2015, was 26 years. 18. OPERATING LEASES During fiscal year 2014, the City entered into an operating lease with the Lansing School District (the "District"), for approximately 86,900 square feet of the Hill Center for Academics and Technology for the purpose of operating a police precinct. The term of the lease runs through June 30, 2018. The City is required to make approximately $800,000 worth of improvements to the leased space, the cost of which will be capitalized by the District. In addition, beginning July 1, 2016, rent payments will be made to the District by the City in monthly installments of $2,083 ($25,000 annually) and $10,417 ($125,000 annually) for the year ended June 30, 2018, respectively. The Tax Increment Finance Authority (TIFA) component unit has entered into an operating lease with the City of Lansing and County of Ingham Joint Building Authority (the "Joint Authority") related to the City's use of a building constructed by the Joint Authority. The payments related to this lease are paid by the TIFA, pursuant to a payment agreement between the City and the TIFA. The total of such payments amounted to $573,237 for the year ended June 30 2016. Future minimum lease payments for this lease are as follows: Year Ending June 30 Amount 2017 $ 572,644 2018 570,913 2019 573,367 2020 571,900 111 CITY OF LANSING, MICHIGAN Notes to Financial Statements 19. RESTATEMENT Net position of the Brownfield Redevelopment Authority component unit was decreased on July 1, 2015 by $457,816 to reflect the fact that certain outstanding loans receivable reported in prior years are only collectible from outside parties if future tax captures are insufficient to cover the required payments (contingent receivables). Accordingly, these receivables have been removed from the face of the financial statements, and disclosed in Note 5, instead. ■ ■ ■ ■ ■ 112 REQUIRED SUPPLEMENTARY INFORMATION 113 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2016 2015 2014 Total pension liability Service cost $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest on total pension liability 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience (4,937,823) (6,422,330) - Assumption changes 7,575,775 Benefit payments, including refunds (22,860,449) (22,462,587) (22,790,522) Net change in total pension liability 5,023,103 (3,355,060) 2,914,732 Total pension liability, beginning of year 319,702,427 323,057,487 320,142,755 Total pension liability, end of year 324,725,530 319,702,427 323,057,487 Plan fiduciary net position Employer contributions 10,181,620 10,547,556 9,361,009 Employee contributions 1,088,943 1,128,120 1,290,678 Pension plan net investment income (loss) (2,790,190) 4,399,543 17,887,635 Benefit payments (including refunds) (22,860,449) (22,462,587) (22,957,379) Pension plan administrative expense (126,486) (174,818) (741,037) Net change in plan fiduciary net position (14,506,562) (6,562,186) 4,840,906 Plan fiduciary net position, beginning of year 178,556,474 185,118,660 180,277,754 Plan fiduciary net position, end of year 164,049,912 178,556,474 185,118,660 Net pension liability $ 160,675,618 $ 141,145,953 $ 137,938,827 Plan fiduciary net position as a percentage of total pension liability 50.5% 55.9% 57.3% Covered payroll $ 23,085,894 $ 19,769,460 $ 20,874,143 Net pension liability as a percentage of covered payroll 696.0% 714.0% 660.8% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 114 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedule of the Net Pension Liability Plan Net Net Pension Position as Liability as Fiscal Year Percentage of Percentage of Ending Total Pension Plan Net Net Pension Total Pension Covered Covered June 30, Liability Position Liability Liability Payroll Payroll 2014 $323,057,487 $185,118,660 $137,938,827 57.3% $ 20,874,143 660.8% 2015 319,702,427 178,556,474 141,145,953 55.9% 19,769,460 714.0% 2016 324,725,530 164,049,912 160,675,618 50.5% 23,085,894 696.0% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 115 CITY OF LANSING, MICHIGAN Required Supplementary Information Employees' Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2007 $ 5,231,000 $ 5,231,000 $ $ 31,797,000 16.5% 2008 6,022,000 6,022,000 29,688,000 20.3% 2009 6,048,000 6,477,000 429,000 30,602,000 21.2% 2010 6,472,349 6,043,861 (428,488) 27,766,628 21.8% 2011 7,297,083 7,297,083 - 26,068,735 28.0% 2012 7,596,879 7,523,534 (73,345) 22,838,598 32.9% 2013 8,586,536 8,586,536 20,874,143 41.1% 2014 9,361,009 9,361,009 21,521,242 43.5% 2015 10,547,556 10,547,556 19,769,460 53.4% 2016 10,181,620 10,181,620 23,085,894 44.1% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $73,345 in recognition of additional contributions by United Auto Workers (UAW) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2015 (rolled forward to June 30, 2016) Notes Actuarially determined contribution rates are calculated as of the June 30 that is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 26 years Asset valuation method Closed; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2015 valuation. This was based on an actuarial experience analysis conducted in 2012. An assumption review was conducted 2016, the pending results of which will be applicable in fiscal year 2017. Mortality RP-2000 Combined Healthy Tables for males and females. For disabled members, the disabled version of these tables are used with a 5 year age setback for males. 116 CITY OF LANSING, MICHIGAN Required Suppleme*ry Information Employees' Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return(l) 2014 13.67% 2015 2.43% 2016 -1.60% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 117 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedules of Changes in Net Pension Liability and Related Ratios Fiscal Year Ending June 30, 2016 2015 2014 Total pension liability Service cost $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest on total pension liability 30,197,513 29,159,382 27,896,927 Difference between expected and actual experience 7,884,167 3,159,996 - Assumption changes 3,281,341 - Benefit payments, including refunds (29,503,964) (27,969,021) (26,270,724) Net change in total pension liability 18,230,902 10,700,735 8,240,987 Total pension liability, beginning of year 400,117,548 389,416,813 381,175,826 Total pension liability, end of year 418,348,450 400,117,548 389,416,813 Plan fiduciary net position Employer contributions 10,884,312 11,050,091 11,248,857 Employee contributions 2,608,214 2,950,832 2,911,896 Pension plan net investment income (loss) (6,040,910) 8,965,080 34,016,621 Benefit payments (including refunds) (29,503,964) (27,969,021) (26,852,038) Pension plan administrative expense (128,903) (173,849) (1,141,506) Net change in plan fiduciary net position (22,181,251) (5,176,867) 20,183,830 Plan fiduciary net position, beginning of year 295,296,649 300,473,516 280,289,686 Plan fiduciary net position, end of year 273,115,398 295,296,649 300,473,516 Net pension liability $ 145,233,052 $ 104,820,899 $ 88,943,297 Plan fiduciary net position as a percentage of total pension liability 65.3% 73.8% 77.2% Covered payroll $ 27,078,405 $ 24,407,740 $ 25,611,974 Net pension liability as a percentage of covered payroll 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. 118 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedule of the Net Pension Liability Plan Net Position as Net Pension Fiscal Year Percentage of Liability as Ending Total Pension Plan Net Net Pension Total Pension Covered Percentage of June 30, Liability Position Liability Liability Payroll Covered Payroll 2014 $389,416,813 $300,473,516 $ 88,943,297 77.2% $ 25,611,974 347.3% 2015 400,117,548 295,296,649 104,820,899 73.8% 24,407,740 429.5% 2016 418,348,450 273,115,398 145,233,052 65.3% 27,078,405 536.3% Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 119 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedule of Contributions Actual Contribution Fiscal Year Actuarially Contribution as Percentage Ending Determined Actual Deficiency Covered of Covered June 30, Contribution* Contribution (Excess)* Payroll Payroll 2007 $ 5,385,960 $ 5,385,960 $ $ 29,600,000 18.2% 2008 6,520,974 6,520,974 30,161,000 21.6% 2009 6,094,397 6,483,000 388,603 30,443,000 21.3% 2010 7,179,360 6,790,757 (388,603) 28,536,056 23.8% 2011 8,240,688 8,240,688 - 25,128,835 32.8% 2012 9,242,173 9,057,080 (185,093) 26,121,411 34.7% 2013 10,133,599 10,133,599 25,636,626 39.5% 2014 11,248,857 11,248,857 26,405,725 42.6% 2015 11,050,091 11,050,091 24,407,740 45.3% 2016 10,884,312 10,884,312 27,078,405 40.2% * The City contributed in excess of its FY 2009 Actuarially Determined Employer Contribution (ADEC). The City's FY 2010 contribution was reduced by the dollar amount of the FY 2009 overpayment. The FY 2012 City contribution was reduced by $185,093 in recognition of additional contributions by International Association of Firefighters (IAFF) employees, which were negotiated and contributed after the establishment of the June 30, 2012 ADEC from the December 31, 2010 valuation. The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly, the actuarially-determined contribution has been expressed above as a percentage of actual payroll. Notes to Schedule of Contributions Valuation Date December 31, 2015 (rolled forward to June 30, 2016) Notes Actuarially determined contribution rates are calculated as of the June 30 that is 12 months prior to the beginning of the fiscal year in which contributions are reported. Methods and assumptions used to determine contribution rates: Actuarial cost method Entry-age normal Amortization method Level percent of payroll, closed Remaining amortization period 26 years Asset valuation method Closed; 5-year smooth market Inflation 3.10% Salary increases 3.10% plus service based increases Investment rate of return 7.60%, net of investment expense and including inflation Retirement age Age-based table of rates that are specific to the type of eligibility condition. Last updated for the December 31, 2015 valuation. This was based on an actuarial experience analysis conducted in 2012. An assumption review was conducted 2016, the pending results of which will be applicable in fiscal year 2017. Mortality RP-2000 Combined Healthy Tables for males and females. For disabled members, the disabled version of these tables are used with a 5 year age setback for males. 120 CITY OF LANSING, MICHIGAN Required Supplementary Information Police and Fire Retirement System Schedule of Investment Returns Fiscal Year Ending Annual June 30, Return(1) 2014 17.28% 2015 3.04% 2016 -2.09% Annual money-weighted rate of return, net of investment expenses Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, 10 years of data will be presented. 121 CITY OF LANSING, MICHIGAN Required Supplementary Information Other Postemployment Benefit Plans (amounts in thousands) Employees' Retirement System and VEBA-Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2011 $ 28,690 $ 349,080 $ 320,390 8.2% $ 24,813 1291.2% 12/31/2013 37,629 248,376 210,747 15.2% 20,874 1009.6% 12/31/2015 45,570 175,482 129,912 26.0% 20,583 631.2% Police and Fire Retirement System -Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered %of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2011 $ 18,679 $ 421,353 $ 402,674 4.4% $ 25,129 1602.4% 12/31/2013 23,197 364,905 341,708 6.4% 25,637 1332.9% 12/31/2015 28,896 327,414 298,518 8.8% 25,533 1169.1% Employees' Retirement System and VEBA-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2014 $ 14,040 78.7% 2015 13,195 69.8% 2016 11,343 77.7% Police and Fire Retirement System-Schedule of Employer Contributions Annual Required Percentage Year Ended Contribution of ARC June 30, (ARC) Contributed 2014 $ 16,852 66.5% 2015 17,491 66.1% 2016 14,840 86.8% 122 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 123 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Governmental Funds June 30, 2016 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents $ 157,846 $ - $ - $ - $ 157,846 Equity in pooled cash and investments 10,360,313 1,264 6,448,137 61,133 16,870,847 Investments - - - 1,700,000 1,700,000 Accounts receivable, net 6,125 176 1,202,858 - 1,209,159 Special assessments receivable - - 393,563 393,563 Loans receivable 1,428,378 - - 1,428,378 Accrued interest receivable 2,286,367 - 7,221 2,293,588 Due from other funds - 1,404,970 - 1,404,970 Due from other governments 3,610,700 - 3,610,700 Inventories 809,977 - - - 809,977 Total assets $ 18,659,706 $ 1,440 $ 9,449,528 $ 1,768,354 $ 29,879,028 Liabilities Accounts payable $ 1,754,522 $ - $ 1,654,789 $ - $ 3,409,311 Deposits payable 17,662 - 17,662 Accrued payroll 73,024 73,024 Indemnity bonds 16,131 - - 16,131 Due to other funds 1,400,000 176 120,144 1,520,320 Due to component units - - 2,119,598 2,119,598 Advances from other funds - 241,309 241,309 Due to other governments 828,989 - 828,989 Unearned revenue 262,621 - - 262,621 Total liabilities 4,352,949 176 4,135,840 8,488,965 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable 3,514,745 - 3,514,745 Unavailable revenues - special assessments - 345,321 345,321 Total deferred inflows of resources 3,514,745 345,321 - 3,860,066 Fund balances Nonspendable 809,977 - - 1,768,354 2,578,331 Restricted 6,484,128 1,264 449,273 - 6,934,665 Committed 3,697,907 - 4,729,346 8,427,253 Unassigned (deficit) (200,000) - (210,252) - (410,252) Total fund balances 10,792,012 1,264 4,968,367 1,768,354 17,529,997 Total liabilities, deferred inflows of resources and fund balances $ 18,659,706 $ 1,440 $ 9,449,528 $ 1,768,354 $ 29,879,028 124 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Governmental Funds For the Year Ended June 30, 2016 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Taxes and special assessments $ 507,581 $ 503,077 $ 59,190 $ $ 1,069,848 Intergovernmental 18,743,787 - - 18,743,787 Charges for services 4,598,231 980,995 5,579,226 Fines and forfeits 620,386 - - 620,386 Interest and rents 59,849 264 7,522 7,437 75,072 Contributions 10,000 - - - 10,000 Otherrevenues 991,895 - - - 991,895 Total revenues 25,531,729 503,341 1,047,707 7,437 27,090,214 Expenditures Current expenditures: General government 3,352,867 - - - 3,352,867 Public safety 1,820,739 1,820,739 Public works 891,680 891,680 Highways and streets 10,838,473 10,838,473 Community development 3,442,110 - 3,442,110 Debt service: Principal 1,295,000 1,415,000 2,710,000 Interest 575,750 120,863 - 696,613 Capital outlay 4,577,038 - 2,458,162 7,035,200 Total expenditures 26,793,657 1,535,863 2,458,162 - 30,787,682 Revenues over (under) expenditures (1,261,928) (1,032,522) (1,410,455) 7,437 (3,697,468) Other financing sources (uses) Transfers in 4,983,670 1,032,817 2,782,297 21,782 8,820,566 Transfers out (2,549,240) - (1,103,469) (7,347) (3,660,056) Issuance of long-term debt 320,000 320,000 Bond premium 12,022 12,022 Payment to refunded bond escrow agent - (332,053) - - (332,053) Total other financing sources (uses) 2,434,430 1,032,786 1,678,828 14,435 5,160,479 Net change in fund balances 1,172,502 264 268,373 21,872 1,463,011 Fund balances, beginning of year 9,619,510 1,000 4,699,994 1,746,482 16,066,986 Fund balances, end of year $ 10,792,012 $ 1,264 $ 4,968,367 $ 1,768,354 $ 17,529,997 125 This page intentionally left blank. 126 CITY OF LANSING, MICHIGAN Nonmajor Special Revenue Funds Major Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of major streets. Local Streets Fund - This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of local streets. Drug Law Enforcement Federal Fund - This fund accounts for federal revenues, from the Departmens of Justice and Treasury, set aside for drug law enforcement under the provisions of Federal Grant Agreements. Drug Law Enforcement State and Local Fund - This fund accounts for state and local revenues, from the Departmens of Justice and Treasury, set aside for drug law enforcement under the provisions of State of Michigan Public Act 135 of 1985, as amended. Community Development Block Grant Program Fund - This fund accounts for revenues received from the Department of Housing and Urban Development. These revenues are restricted to accomplishing the various objectives of Community Development Block Grant Programs, within specific target areas. Downtown Lansing, Inc. Fund - This fund accounts for assessments received from businesses located in the district. The revenues are used for special events and maintenance of the district. Building Department Fund - This fund accounts for revenues and expenditures resulting from the enforcement of the State Construction Code Act of 1999 (PA 245 of 1999). Parks Department Fund - This fund accounts for contributions and transfers which are restricted for park expenditures. State and Federal Grants Fund - This fund accounts for all revenues received from miscellaneous grants and contributions. These revenues are used for projects as detailed in individual grant applications. Tri-County Metro Fund - This fund accounts for the operations of the Tri-County Metro Narcotics Squad. 127 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Special Revenue Funds June 30, 2016 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Assets Cash and cash equivalents $ - $ - $ - $ 23,000 $ - Equity in pooled cash and investments 4,538,575 2,289,868 355,887 492,469 152,154 Accounts receivable, net - - - - - Loans receivable 1,385,000 Accrued interest receivable - - 2,286,367 Due from other governments 1,620,097 337,135 133,042 Inventories 809,977 - - - - Total assets $ 6,968,649 $ 2,627,003 $ 355,887 $ 515,469 $ 3,956,563 Liabilities Accounts payable $ 611,387 $ 416,260 $ - $ 51,383 $ 59,196 Deposits payable - - - - Accrued payroll - 26,000 Indemnity bonds 16,131 - Due to other funds - 400,000 Due to other governments - Unearned revenue - - - Total liabilities 627,518 416,260 51,383 485,196 Deferred inflows of resources Unavailable revenues - loans and accrued interest receivable - - - 3,471,367 Fund balances Nonspendable 809,977 - - - - Restricted 3,725,000 1,005,816 355,887 464,086 - Committed 11806,154 1,204,927 - - 200,000 Unassigned (deficit) - - - - (200,000) Total fund balances 6,341,131 2,210,743 355,887 464,086 - Total liabilities, deferred inflows of resources and fund balances $ 6,968,649 $ 2,627,003 $ 355,887 $ 515,469 $ 3,956,563 128 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ - $ - $ - $ - $ 134,846 $ 157,846 40,376 311,188 469,114 683,737 1,026,945 10,360,313 - 6,125 - - - 6,125 - 43,378 1,428,378 - - 2,286,367 1,504,218 16,208 3,610,700 - - - - - 809,977 $ 40,376 $ 317,313 $ 469,114 $ 2,231,333 $ 1,177,999 $ 18,659,706 $ 17,490 $ 651 $ - $ 509,396 $ 88,759 $ 1,754,522 - - - 17,662 17,662 5,174 27,114 12,160 2,576 73,024 - - - - 16,131 1,000,000 - 1,400,000 - 406,693 422,296 828,989 - 2,915 259,706 - 262,621 22,664 30,680 2,187,955 531,293 4,352,949 - - 43,378 - 3,514,745 - - - 809,977 - 286,633 - 646,706 6,484,128 17,712 - 469,114 - 3,697,907 - - - - (200,000) 17,712 286,633 469,114 646,706 10,792,012 $ 40,376 $ 317,313 $ 469,114 $ 2,231,333 $ 1,177,999 $ 18,659,706 129 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds For the Year Ended June 30, 2016 Drug Law Community Drug Law Enforcement Development Major Local Enforcement State and Block Grant Streets Streets Federal Local Program Revenues Taxes and special assessments $ 111,283 $ - $ - $ $ - Intergovernmental 9,482,007 2,050,012 47,419 1,573,946 Charges for services 947,738 1,008,645 - - Fines and forfeits - - - 377,904 Interest and rents 26,710 21,343 1,657 2,409 Contributions - - - - - Otherrevenues 175,892 - - 383,894 Total revenues 10,743,630 3,080,000 49,076 380,313 1,957,840 Expenditures Current expenditures: General government - - - - - Public safety 139,216 Public works - - - Highways and streets 5,917,314 4,921,159 Community development - - Debt service: Principal 310,800 984,200 Interest 194,455 381,295 - - Capital outlay 1,193,940 1,065,796 178,159 2,028,374 Total expenditures 7,616,509 7,352,450 - 317,375 2,028,374 Revenues over (under) expenditures 3,127,121 (4,272,450) 49,076 62,938 (70,534) Other financing sources (uses) Transfers in 72,940 4,456,950 - - 70,534 Transfers out (2,546,950) - - Total other financing sources (uses) (2,474,010) 4,456,950 - - 70,534 Net change in fund balances 653,111 184,500 49,076 62,938 - Fund balances, beginning of year 5,688,020 2,026,243 306,811 401,148 Fund balances, end of year $ 6,341,131 $ 2,210,743 $ 355,887 $ 464,086 $ 130 State and Downtown Building Parks Federal Tri-County Lansing, Inc. Department Department Grants Metro Totals $ 396,298 $ $ $ - $ - $ 507,581 - 5,045,846 544,557 18,743,787 5,250 2,636,598 - - 4,598,231 - - 242,482 620,386 405 2,226 5,099 59,849 10,000 - - - 10,000 275,395 - - 156,714 - 991,895 687,348 2,636,598 2,226 5,202,560 792,138 25,531,729 760,399 2,359,966 - 232,502 - 3,352,867 - - 841,428 840,095 1,820,739 891,680 - 891,680 - 10,838,473 3,442,110 3,442,110 - 1,295,000 - 575,750 - - 110,769 - 4,577,038 760,399 2,359,966 - 5,518,489 840,095 26,793,657 (73,051) 276,632 2,226 (315,929) (47,957) (1,261,928) 69,380 - - 313,866 4,983,670 - (2,290) (2,549,240) 69,380 - - 311,576 2,434,430 (3,671) 276,632 2,226 (4,353) (47,957) 1,172,502 21,383 10,001 466,888 4,353 694,663 9,619,510 $ 17,712 $ 286,633 $ 469,114 $ - $ 646,706 $ 10,792,012 131 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2016 Major Streets Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ 27,000 $ 111,283 $ 84,283 Intergovernmental 7,472,035 9,482,007 2,009,972 Charges for services 850,000 947,738 97,738 Fines and forfeits - - - Interest and rents 26,710 26,710 Contributions - - - Otherrevenues 92,925 175,892 82,967 Total revenues 8,441,960 10,743,630 2,301,670 Expenditures Current expenditures: General government - - - Public safety Public works - - Highways and streets 6,302,850 5,917,314 (385,536) Community development - - Debt service: Principal 310,800 310,800 - Interest 195,000 194,455 (545) Capital outlay 3,294,560 1,193,940 (2,100,620) Total expenditures 10,103,210 7,616,509 (2,486,701) Revenues over (under) expenditures (1,661,250) 3,127,121 4,788,371 Other financing sources (uses) Transfers in 187,977 72,940 (115,037) Transfers out (2,546,950) (2,546,950) Total other financing sources (uses) (2,358,973) (2,474,010) (115,037) Net change in fund balances (4,020,223) 653,111 4,673,334 Fund balances, beginning of year 5,688,020 5,688,020 - Fund balances, end of year $ 1,667,797 $ 6,341,131 $ 4,673,334 132 Local Streets Drug Law Enforcement Federal Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 1,800,000 2,050,012 250,012 47,419 47,419 750,000 1,008,645 258,645 - - 21,343 21,343 1,657 1,657 2,550,000 3,080,000 530,000 49,076 49,076 5,020,000 4,921,159 (98,841) 984,200 984,200 - 382,100 381,295 (805) 2,294,898 1,065,796 (1,229,102) 8,681,198 7,352,450 (1,328,748) - - (6,131,198) (4,272,450) 1,858,748 49,076 49,076 4,456,950 4,456,950 - - 4,456,950 4,456,950 - - - (1,674,248) 184,500 1,858,748 - 49,076 49,076 2,026,243 2,026,243 - 306,811 306,811 - $ 351,995 $ 2,210,743 $ 1,858,748 $ 306,811 $ 355,887 $ 49,076 continued... 133 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2016 Drug Law Enforcement State and Local Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services - Fines and forfeits 377,904 377,904 Interest and rents 2,409 2,409 Contributions - - Otherrevenues - - Total revenues 380,313 380,313 Expenditures Current expenditures: General government - - Public safety 172,650 139,216 (33,434) Public works - - Highways and streets Community development Debt service: Principal Interest - - Capital outlay 218,000 178,159 (39,841) Total expenditures 390,650 317,375 (73,275) Revenues over (under) expenditures (390,650) 62,938 453,588 Other financing sources (uses) Transfers in - - Transfers out Total other financing sources (uses) - - Net change in fund balances (390,650) 62,938 453,588 Fund balances, beginning of year 401,148 401,148 - Fund balances, end of year $ 10,498 $ 464,086 $ 453,588 134 Community Development Block Grant Program Downtown Lansing, Inc. Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget $ $ $ $ 409,000 $ 396,298 $ (12,702) 1,864,490 1,573,946 (290,544) - - - - - 4,800 5,250 450 - 405 405 - - 10,000 10,000 - 550,000 383,894 (166,106) 271,610 275,395 3,785 2,414,490 1,957,840 (456,650) 695,410 687,348 (8,062) - - 760,200 760,399 199 2,414,490 2,028,374 (386,116) - - 2,414,490 2,028,374 (386,116) 760,200 760,399 199 - (70,534) (70,534) (64,790) (73,051) (8,261) 70,534 70,534 69,380 69,380 70,534 70,534 69,380 69,380 - - 4,590 (3,671) (8,261) 21,383 21,383 $ $ $ $ 25,973 $ 17,712 $ (8,261) continued... 135 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2016 Building Department Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ $ $ Intergovernmental Charges for services 2,252,860 2,636,598 383,738 Fines and forfeits - - - Interest and rents Contributions Otherrevenues - - - Total revenues 2,252,860 2,636,598 383,738 Expenditures Current expenditures: General government 2,444,000 2,359,966 (84,034) Public safety - - Public works Highways and streets Community development Debt service: Principal Interest Capital outlay - - Total expenditures 2,444,000 2,359,966 (84,034) Revenues over (under) expenditures (191,140) 276,632 467,772 Other financing sources (uses) Transfers in 191,140 - (191,140) Transfers out - Total other financing sources (uses) 191,140 - (191,140) Net change in fund balances - 276,632 276,632 Fund balances, beginning of year 10,001 10,001 - Fund balances, end of year $ 10,001 $ 286,633 $ 276,632 136 Parks Department State and Federal Grants Actual Over Actual Over Final (Under) Final Final (Under) Final Budget Actual Budget Budget Actual Budget 6,790,567 5,045,846 (1,744,721) 2,226 2,226 - - - 156,714 156,714 2,226 2,226 6,790,567 5,202,560 (1,588,007) - - 261,815 232,502 (29,313) 961,567 841,428 (120,139) 15,451 891,680 876,229 4,954,478 3,442,110 (1,512,368) - 220,814 110,769 (110,045) 41,175 - (41,175) 6,471,118 5,518,489 (952,629) (41,175) 2,226 43,401 319,448 (315,929) (635,377) - - 173,793 313,866 140,073 - (2,290) (2,290) - - 173,793 311,576 137,783 (41,175) 2,226 43,401 493,242 (4,353) (497,595) 466,888 466,888 - 4,353 4,353 $ 425,713 $ 469,114 $ 43,401 $ 497,595 $ - (497,595) continued... 137 CITY OF LANSING, MICHIGAN Schedule of Revenues, Expenditures and Changes in Fund Balances Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2016 Tri-County Metro Actual Over Final (Under) Final Budget Actual Budget Revenues Taxes and special assessments $ - $ - $ - Intergovernmental 424,780 544,557 119,777 Charges for services - - - Fines and forfeits 424,720 242,482 (182,238) Interest and rents - 5,099 5,099 Contributions - - Otherrevenues - - Total revenues 849,500 792,138 (57,362) Expenditures Current expenditures: General government - - - Public safety 837,500 840,095 2,595 Public works - - - Highways and streets Community development Debt service: Principal Interest Capital outlay - - - Total expenditures 837,500 840,095 2,595 Revenues over (under) expenditures 12,000 (47,957) (59,957) Other financing sources (uses) Transfers in - - Transfers out (12,000) 12,000 Total other financing sources (uses) (12,000) 12,000 Net change in fund balances - (47,957) (47,957) Fund balances, beginning of year 694,663 694,663 Fund balances, end of year $ 694,663 $ 646,706 $ (47,957) concluded 138 CITY OF LANSING, MICHIGAN Nonmajor Debt Service Funds 2015 Refunding Debt Service Fund - This fund accounts for the accumulation of resources for payment of the 2015 $320,000 Refunding Building Authority Bonds. 1999 Fire Station Fund - This fund accounts for the accumulation of resources for payment of the 1999 $3,000,000 Unlimited Tax General Obligation Bonds (which was refunding in 2007 in the amont of $1,780,000). 2001 Fire Station Fund - This fund accounts for the accumulation of resources for the payment of the 2001 $4,000,000 Unlimited Tax General Obligation Bonds (which was refunding in 2010 in the amont of $2,470,000). 2014 Technology Bond Fund - This fund accounts for the accumulation of resources for payment of the 2014 $2,275,000 Limited Tax Capital Improvement Bonds issued for technology improvements. 139 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Debt Service Funds June 30, 2016 2015 Refunding 1999 2001 2014 Debt Fire Fire Technology Service Station Station Bond Totals Assets Equity in pooled cash and investments $ - $ 103 $ 1,161 $ $ 1,264 Accounts receivable, net 176 - - 176 Special assessments receivable - - Due from other funds - - - - Total assets $ 176 $ 103 $ 1,161 $ $ 1,440 Liabilities Due to other funds $ 176 $ - $ - $ $ 176 Fund balances Restricted - 103 1,161 1,264 Total liabilities and fund balances $ 176 $ 103 $ 1,161 $ $ 1,440 140 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Debt Service Funds For the Year Ended June 30, 2016 2015 Refunding 1999 2001 2014 Debt Fire Fire Technology Service Station Station Bond Totals Revenues Taxes and special assessments $ $ 235,800 $ 267,277 $ $ 503,077 Interest and rents 103 161 264 Total revenues 235,903 267,438 503,341 Expenditures Debt service: Principal 150,000 200,000 310,000 755,000 1,415,000 Interest 23,543 35,800 34,295 27,225 120,863 Total expenditures 173,543 235,800 344,295 782,225 1,535,863 Revenues over (under) expenditures (173,543) 103 (76,857) (782,225) (1,032,522) Other financing sources (uses) Transfers in 173,574 - 77,018 782,225 1,032,817 Issuance of long-term debt 320,000 - - 320,000 Bond premium 12,022 12,022 Payment to refunded bond escrow agent (332,053) - - (332,053) Total other financing sources (uses) 173,543 - 77,018 782,225 1,032,786 Net change in fund balances - 103 161 - 264 Fund balances, beginning of year - 1,000 1,000 Fund balances, end of year $ $ 103 $ 1,161 $ $ 1,264 141 This page intentionally left blank. 142 CITY OF LANSING, MICHIGAN Nonmajor Capital Projects Funds 1990 Environmental 11 Fund - This fund accounts for the proceeds of the 1990 $6,300,000 environmental bonds. Special Assessments Fund - This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Lansing Center Improvements Fund - This fund accounts for the proceeds of the 2006 $4,000,000 Lansing Center limited tax bonds. Other Capital Projects Fund - This fund accounts for accounts for miscellaneous capital projects. 143 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Capital Projects Funds June 30, 2016 1990 Lansing Other Environ- Special Center Capital mental11 Assessments Improvements Projects Totals Assets Equity in pooled cash and investments $ 26,137 $ $ 6 $ 6,421,994 $ 6,448,137 Accounts receivable, net - - 1,202,858 1,202,858 Special assessments receivable: Current 48,242 - 48,242 Deferred 345,321 - 345,321 Due from other funds - - - 1,404,970 1,404,970 Total assets $ 26,137 $ 393,563 $ 6 $ 9,029,822 $ 9,449,528 Liabilities Accounts payable $ - $ 17,185 $ 6 $ 1,637,598 $ 1,654,789 Due to other funds - - 120,144 120,144 Due to component units - 2,119,598 2,119,598 Advance from other funds 241,309 - - 241,309 Total liabilities 258,494 6 3,877,340 4,135,840 Deferred inflows of resources Unavailable revenues - specialassessments - 345,321 - - 345,321 Fund balances Restricted 26,137 - 423,136 449,273 Committed - 4,729,346 4,729,346 Unassigned (deficit) - (210,252) - (210,252) Total fund balances (deficit) 26,137 (210,252) - 5,152,482 4,968,367 Total liabilities, deferred inflows of resources and fund balances $ 26,137 $ 393,563 $ 6 $ 9,029,822 $ 9,449,528 144 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Capital Projects Funds For the Year Ended June 30, 2016 1990 Lansing Other Environ- Special Center Capital mental11 Assessments Improvements Projects Totals Revenues Special assessments $ $ 59,190 $ $ - $ 59,190 Charges for services - 980,995 980,995 Interest and rents 132 - 13 7,377 7,522 Total revenues 132 59,190 13 988,372 1,047,707 Expenditures Capital outlay 25,312 27,945 3,230 2,401,675 2,458,162 Revenues over (under) expenditures (25,180) 31,245 (3,217) (1,413,303) (1,410,455) Other financing sources (uses) Transfers in 86,647 2,695,650 2,782,297 Transfers out - (1,103,469) (1,103,469) Total other financing sources (uses) 86,647 1,592,181 1,678,828 Net change in fund balances (25,180) 117,892 (3,217) 178,878 268,373 Fund balances (deficit), beginning of year 51,317 (328,144) 3,217 4,973,604 4,699,994 Fund balances (deficit), end of year $ 26,137 $ (210,252) $ - $ 5,152,482 $ 4,968,367 145 This page intentionally left blank. 146 CITY OF LANSING, MICHIGAN Nonmajor Permanent Funds Cemetery Perpetual Care Fund - This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested, and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund - This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. 147 CITY OF LANSING, MICHIGAN Combining Balance Sheet Nonmajor Permanent Funds June 30, 2016 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash and investments $ 59,880 $ 1,253 $ 61,133 Investments 1,700,000 - 1,700,000 Accrued interest receivable 7,221 7,221 Total assets $ 1,767,101 $ 1,253 $ 1,768,354 Fund balances Nonspendable $ 1,767,101 $ 1,253 $ 1,768,354 148 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Permanent Funds For the Year Ended June 30, 2016 Cemetery Perpetual Parks Care Trust Totals Revenues Interest and rents $ 7,435 $ 2 $ 7,437 Other financing sources (uses) Transfers in 21,782 - 21,782 Transfers out (7,347) (7,347) Total other financing sources (uses) 14,435 14,435 Net change in fund balances 21,870 2 21,872 Fund balances, beginning of year 1,745,231 1,251 1,746,482 Fund balances, end of year $ 1,767,101 $ 1,253 $ 1,768,354 149 This page intentionally left blank. 150 CITY OF LANSING, MICHIGAN Nonmajor Enterprise Funds Cemetery Fund - This fund accounts for the operation of City-owned cemeteries. Golf Fund - This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund - This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund - This fund accounts for the provision of recycling services to participating residents of the City. 151 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Nonmajor Enterprise Funds June 30, 2016 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Assets Current assets: Cash and cash equivalents $ 200 $ 747 $ - $ - $ 947 Equity in pooled cash and investments 316,300 116,782 36,112 1,342,489 1,811,683 Accounts receivable, net - 912 74,675 9,090 84,677 Inventories 48,862 4,023 10,579 - 63,464 Total current assets 365,362 122,464 121,366 1,351,579 1,960,771 Noncurrent assets: Capital assets not being depreciated 57,740 446,501 - - 504,241 Capital assets being depreciated, net 117,573 1,971,098 1,053,543 3,142,214 Total noncurrent assets 175,313 2,417,599 - 1,053,543 3,646,455 Total assets 540,675 2,540,063 121,366 2,405,122 5,607,226 Deferred outflows of resources Deferred charge on refunding - 2,297 - - 2,297 Deferred pension amounts 172,423 181,950 418,797 682,848 1,456,018 Total deferred outflows of resources 172,423 184,247 418,797 682,848 1,458,315 Liabilities Current liabilities: Accounts payable 48,515 12,914 46,254 47,447 155,130 Accrued interest payable - 210 - 6,109 6,319 Accrued payroll 3,099 21,324 - 24,423 Due to other funds - 2,297 - 2,297 Unearned revenues 21,554 84,732 - 106,286 Current portion of: Bonds and notes payable - 105,000 - 216,950 321,950 Total current liabilities 51,614 163,299 130,986 270,506 616,405 Noncurrent liabilities: Bonds and notes payable, net of current portion - - - 1,029,723 1,029,723 Compensated absences, net of current portion 20,683 30,737 76,477 124,250 252,147 Net pension liability 1,180,064 1,245,263 2,866,244 4,673,402 9,964,973 Total noncurrent liabilities 1,200,747 1,276,000 2,942,721 5,827,375 11,246,843 Total liabilities 1,252,361 1,439,299 3,073,707 6,097,881 11,863,248 Deferred inflows of resources Deferred pension amounts 39,900 42,104 96,912 158,014 336,930 Net position Net investment in capital assets 175,313 2,314,896 - (193,130) 2,297,079 Unrestricted (deficit) (754,476) (1,071,989) (2,630,456) (2,974,795) (7,431,716) Total net position $ (579,163) $ 1,242,907 $ (2,630,456) $ (3,167,925) $ (5,134,637) 152 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Nonmajor Enterprise Funds For the Year Ended June 30, 2016 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Operating revenues Charges for services $ 312,929 $ 313,164 $ 1,871,665 $ 3,627,070 $ 6,124,828 Operating expenses Personal services 407,255 516,021 1,098,242 2,226,561 4,248,079 Purchase of goods and services 288,882 256,252 987,486 1,323,694 2,856,314 Depreciation 12,408 66,085 - 301,012 379,505 Total operating expenses 708,545 838,358 2,085,728 3,851,267 7,483,898 Operating loss (395,616) (525,194) (214,063) (224,197) (1,359,070) Nonoperating revenues (expenses) Interest revenue 4,016 14,320 18,336 Interest expense and fees (7,217) - (26,525) (33,742) Capital contribution to others - (214,486) (214,486) Total nonoperating revenues (expenses) (7,217) 4,016 (226,691) (229,892) Loss before transfers (395,616) (532,411) (210,047) (450,888) (1,588,962) Transfers in 433,147 518,350 951,497 Transfers out (21,782) - (21,782) Change in net position 15,749 (14,061) (210,047) (450,888) (659,247) Net position, beginning of year (594,912) 1,256,968 (2,420,409) (2,717,037) (4,475,390) Net position, end of year $ (579,163) $ 1,242,907 $ (2,630,456) $ (3,167,925) $ (5,134,637) 153 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2016 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Cash flows from operating activities Cash received from customers $ 312,929 $ 300,303 $ 1,789,848 $ 3,619,445 $ 6,022,525 Cash payments for goods and services (259,153) (255,863) (1,015,449) (1,331,502) (2,861,967) Cash payments to employees (369,394) (473,746) (1,008,967) (2,081,031) (3,933,138) Net cash provided by (used in)operating activities (315,618) (429,306) (234,568) 206,912 (772,580) Cash flows from noncapital financing activities Transfers in 433,147 518,350 - 951,497 Transfers out (21,782) - (21,782) Net cash provided by noncapital financing activities 411,365 518,350 929,715 Cash flows from capital and related financing activities Capital contributions to others - - (214,486) (214,486) Principal paid on long-term debt (100,000) (212,758) (312,758) Interest paid on long-term debt (4,920) (27,567) (32,487) Net cash used in capital and related financing activities (104,920) - (454,811) (559,731) Cash flows from investing activities Interest and dividends received - 4,016 14,320 18,336 Net change in cash and cash equivalents 95,747 (15,876) (230,552) (233,579) (384,260) Cash and cash equivalents, beginning of year 220,753 133,405 266,664 1,576,068 2,196,890 Cash and cash equivalents, end of year $ 316,500 $ 117,529 $ 36,112 $ 1,342,489 $ 1,812,630 Reconciliation to statement of net position Cash and cash equivalents $ 200 $ 747 $ - $ - $ 947 Equity in pooled cash and investments 316,300 116,782 36,112 1,342,489 1,811,683 $ 316,500 $ 117,529 $ 36,112 $ 1,342,489 $ 1,812,630 continued... 154 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2016 Garbage and Rubbish Cemetery Golf Collection Recycling Totals Reconciliation of operating loss to net cash provided by(used in) operating activities Operating loss $ (395,616) $ (525,194) $ (214,063) $ (224,197) $ (1,359,070) Adjustments to reconcile operating Loss to net cash provided by (used in) operating activities: Depreciation expense 12,408 66,085 301,012 379,505 Changes in: Accounts receivable - 1,415 (12,510) (7,625) (18,720) Inventories 6,411 179 29,993 36,583 Accounts payable 23,318 3,184 42,044 (7,808) 60,738 Deposits payable - - (4,140) (4,140) Accrued payroll 1,903 3,867 5,770 Due to other funds - (2,974) (100,000) (102,974) Unearned revenues - (14,276) (65,167) - (79,443) Compensated absences 1,529 2,079 5,654 9,187 18,449 Net pension liability and related deferred amounts 34,429 36,329 83,621 136,343 290,722 Net cash provided by (used in)operating activities $ (315,618) $ (429,306) $ (234,568) $ 206,912 $ (772,580) concluded 155 This page intentionally left blank. 156 CITY OF LANSING, MICHIGAN Internal Service Funds Fleet Maintenance Fund - This fund accounts for the costs of maintaining the City's fleet of vehicles and heavy equipment. Fringe Benefits Fund - This fund accounts for the costs of the City's fringe benefits. Engineering Fund - This fund accounts for the operations of the City's engineering department. Information Technology Fund - This fund accounts for the operations of the City's information technology department. 157 CITY OF LANSING, MICHIGAN Combining Statement of Net Position Internal Service Funds June 30, 2016 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Assets Current assets: Cash and cash equivalents $ 57,842 $ - $ - $ - $ 57,842 Equity in pooled cash and investments 2,463,949 1,871,604 594,560 1,055,187 5,985,300 Accounts receivable, net - 580,255 - - 580,255 Inventories 374,891 - - 374,891 Prepaids - 356,370 - 6,242 362,612 Total current assets 2,896,682 2,808,229 594,560 1,061,429 7,360,900 Noncurrent assets: Capital assets not being depreciated 92,892 - - - 92,892 Capital assets being depreciated, net 10,594,558 1,606,336 12,200,894 Total noncurrent assets 10,687,450 - 1,606,336 - 12,293,786 Total assets 13,584,132 2,808,229 2,200,896 1,061,429 19,654,686 Liabilities Current liabilities: Accounts payable 301,983 402,535 36,113 35,217 775,848 Accrued interest payable 33,488 - - - 33,488 Accrued payroll 60,233 7,232 47,539 20,208 135,212 Claims incurred but not reported - 656,064 - - 656,064 Current portion of: Bonds and notes payable 893,799 - 893,799 Compensated absences 37,591 - - - 37,591 Total current liabilities 1,327,094 1,065,831 83,652 55,425 2,532,002 Noncurrent liabilities: Bonds and notes payable, net of current portion 3,861,359 - - - 3,861,359 Compensated absences, net of current portion 169,822 46,693 421,593 112,455 750,563 Total noncurrent liabilities 4,031,181 46,693 421,593 112,455 4,611,922 Total liabilities 5,358,275 1,112,524 505,245 167,880 7,143,924 Net position Net investment in capital assets 5,932,292 - 1,606,336 - 7,538,628 Unrestricted 2,293,565 1,695,705 89,315 893,549 4,972,134 Total net position $ 8,225,857 $ 1,695,705 $ 1,695,651 $ 893,549 $ 12,510,762 158 CITY OF LANSING, MICHIGAN Combining Statement of Revenues, Expenses and Changes in Fund Net Position Internal Service Funds For the Year Ended June 30, 2016 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Operating revenues Charges for services $ 9,746,085 $ 60,804,769 $ 4,136,645 $ 4,359,922 $ 79,047,421 Operating expenses Personal services 3,314,682 270,451 3,019,391 1,214,581 7,819,105 Purchase of goods and services 3,520,367 59,673,534 903,022 1,852,599 65,949,522 Depreciation 1,998,357 - 45,430 - 2,043,787 Total operating expenses 8,833,406 59,943,985 3,967,843 3,067,180 75,812,414 Operating income 912,679 860,784 168,802 1,292,742 3,235,007 Nonoperating revenues (expenses) Gain on sale of capital assets 63,079 - - - 63,079 Interest expense and fees (168,672) (6,849) (175,521) Capital contribution to others (181,638) (181,638) Total nonoperating revenues (expenses) (105,593) - (188,487) - (294,080) Income (loss) before transfers 807,086 860,784 (19,685) 1,292,742 2,940,927 Transfers Transfers in 1,000,000 - - 1,000,000 Transfers out - (782,225) (782,225) Total transfers 1,000,000 - (782,225) 217,775 Change in net position 1,807,086 860,784 (19,685) 510,517 3,158,702 Net position, beginning of year 6,418,771 834,921 1,715,336 383,032 9,352,060 Net position, end of year $ 8,225,857 $ 1,695,705 $ 1,695,651 $ 893,549 $ 12,510,762 159 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2016 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Cash flows from operating activities Cash received from interfund services $ 9,746,085 $ 61,086,384 $ 4,136,645 $ 4,359,922 $ 79,329,036 Cash payments for goods and services (3,773,980) (59,550,269) (869,766) (2,375,004) (66,569,019) Cash payments to employees (3,284,713) (315,812) (3,015,516) (1,241,401) (7,857,442) Net cash provided by operating activities 2,687,392 1,220,303 251,363 743,517 4,902,575 Cash flows from noncapital financing activities Transfers in 1,000,000 - - - 1,000,000 Transfers out - (782,225) (782,225) Net cash provided by (used in) noncapital financing activities 1,000,000 (782,225) 217,775 Cash flows from capital and related financing activities Proceeds on sale of capital assets 63,079 63,079 Acquisition and construction of capital assets (1,281,850) (181,638) (1,463,488) Principal paid on long-term debt (871,148) (155,000) (1,026,148) Interest paid on long-term debt (173,912) (3,720) (177,632) Net cash used in capital and related financing activities (2,263,831) - (340,358) (2,604,189) Net change in cash and cash equivalents 1,423,561 1,220,303 (88,995) (38,708) 2,516,161 Cash and cash equivalents, beginning of year 1,098,230 651,301 683,555 1,093,895 3,526,981 Cash and cash equivalents, end of year $ 2,521,791 $ 1,871,604 $ 594,560 $ 1,055,187 $ 6,043,142 Reconciliation to statement of net position Cash and cash equivalents $ 57,842 $ - $ - $ - $ 57,842 Equity in pooled cash and investments 2,463,949 1,871,604 594,560 1,055,187 5,985,300 $ 2,521,791 $ 1,871,604 $ 594,560 $ 1,055,187 $ 6,043,142 continued... 160 CITY OF LANSING, MICHIGAN Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2016 Fleet Fringe Information Maintenance Benefits Engineering Technology Totals Reconciliation of operating income to net cash provided by operating activities Operating income $ 912,679 $ 860,784 $ 168,802 $ 1,292,742 $ 3,235,007 Adjustments to reconcile operating income to net cash provided by operating activities: Depreciation expense 1,998,357 - 45,430 2,043,787 Change in: Accounts receivable - 281,615 - 281,615 Inventories 52,993 - 52,993 Prepaids - 49,874 - (6,242) 43,632 Accounts payable 193,394 73,391 33,256 (316,163) (16,122) Accrued payroll 11,051 1,526 11,260 5,840 29,677 Claims incurred but not reported reported - (48,841) - - (48,841) Due to other funds (500,000) - (200,000) (700,000) Compensated absences 18,918 1,954 (7,385) (32,660) (19,173) Net cash provided by operating activities $ 2,687,392 $ 1,220,303 $ 251,363 $ 743,517 $ 4,902,575 concluded 161 This page intentionally left blank. 162 CITY OF LANSING, MICHIGAN Agency Funds Bail Bonds Fund - This fund is used to hold cash received by the District Court for bail bonds. Garnishment, Indemnity Bond and Restitution Fund - This fund is used to hold cash received by the District Court for garnishment payments until claimed, and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. 163 CITY OF LANSING, MICHIGAN Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2016 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash and investments $ 63,498 $ 4,240 $ 67,738 Liabilities Undistributed receipts $ 63,498 $ 4,240 $ 67,738 164 CITY OF LANSING, MICHIGAN Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2016 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash and investments $ 58,364 $ 498,111 $ 492,977 $ 63,498 Liabilities Undistributed receipts $ 58,364 $ 498,111 $ 492,977 $ 63,498 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash and investments $ 10,943 $ 206,457 $ 213,160 $ 4,240 Liabilities Undistributed receipts $ 10,943 $ 206,457 $ 213,160 $ 4,240 Total - all agency funds Assets Equity in pooled cash and investments $ 69,307 $ 704,568 $ 706,137 $ 67,738 Liabilities Undistributed receipts $ 69,307 $ 704,568 $ 706,137 $ 67,738 165 This page intentionally left blank. 166 STATISTICAL SECTION 167 This page intentionally left blank. 168 CITY OF LANSING, MICHIGAN Statistical Section Table of Contents This part of the City of Lansing, Michigan's (the "City") comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the City's overall financial health. Page Financial Trends These schedules contain trend information to help the reader (Tables 1-4) understand how the City's financial performance and well-being have changed over time. 171 Revenue Capacity These schedules contain information to help the reader assess (Tables 5-8) the factors affecting the City's ability to generate its property taxes. 176 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. 180 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. 185 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. 188 Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. 169 This page intentionally left blank. 170 CITY OF LANSING, MICHIGAN Table 1 -Unaudited Net Position by Component Last Ten Fiscal Years 2016 20150 -- 2013 IL 20' ` 2011'--ML2008M. Governmental activities Net investment in capital assets $ 149,676,860 $ 151,785,916 $ 150,976,010 $ 154,372,604 $ 163,723,249 $ 180,571,237 $ 186,536,428 $ 191,516,475 $ 187,054,852 $ 184,150,439 Restricted 12,922,525 12,311,541 13,133,137 12,552,011 14,524,584 14,777,571 14,304,689 17,139,090 34,554,539 37,642,784 Unrestricted(deficit) (265,678,371) (251,453,207) (46,344,555) (39,467,672) (34,371,855) (18,840,717) (7,649,432) 6,589,790 (3,124,027) 2,776,006 Total governmental activities net position $(103,078,986) $ (87,355,750) $ 117,764,592 $ 127,456,943 $ 143,875,978 $ 176,508,091 $ 193,191,685 $ 215,245,355 $ 218,485,364 $ 224,569,229 Business-type activities Net investment in capital assets $ 220,436,882 $ 218,813,478 $ 214,458,841 $ 212,682,278 $ 209,584,457 $ 204,149,751 $ 194,854,140 $ 185,430,669 $ 178,526,049 $ 166,320,408 Restricted 2,764,963 2,889,096 8,746,096 11,077,134 12,382,060 13,080,302 19,917,341 19,454,812 30,892,739 35,777,715 Unrestricted 19,401,320 17,242,167 37,891,053 31,943,581 32,196,598 34,177,453 30,193,568 23,730,694 16,330,517 28,929,677 Total business-type activities net position $ 242,603,165 $ 238,944,741 $ 261,095,990 $ 255,702,993 $ 254,163,115 $ 251,407,506 $ 244,965,049 $ 228,616,175 $ 225,749,305 $ 231,027,800 Primary government Net investment in capital assets $ 370,113,742 $ 370,599,394 $ 365,434,851 $ 367,054,882 $ 373,307,706 $ 384,720,988 $ 381,390,568 $ 376,947,144 $ 365,580,901 $ 350,470,847 Restricted 15,687,488 15,200,637 21,879,233 23,629,145 26,906,644 27,857,873 34,222,030 36,593,902 65,447,278 73,420,499 Unrestricted(deficit) (246,277,051) (234,211,040) (8,453,502) (7,524,091) (2,175,257) 15,336,736 22,544,136 30,320,484 13,206,490 31,705,683 Total primary government net position $ 139,524,179 $ 151,588,991 $ 378,860,582 $ 383,159,936 $ 398,039,093 $ 427,915,597 $ 438,156,734 $ 443,861,530 $ 444,234,669 $ 455,597,029 Note:No discretely presented component units shown (1)GASB Statement No.68 was implemented for the fiscal year ended June 30,2015.This resulted in presentation of the City's net pension liability on the statement of net position.Prior years were not restated. 171 CITY OF LANSING, MICHIGAN Table 2-Unaudited Change in Net Position - Last Ten Fiscal Years ---------- Expenses Governmental activities: General government $ 27,993,414 $ 25,225,893 $ 24,771,054 $ 27,438,065 $ 30,841,776 $ 25,665,269 $ 30,326,671 $ 26,426,242 $ 28,901,548 $ 22,043,283 Public safety 85,739,408 81,827,437 78,142,897 77,133,469 82,369,004 83,546,997 84,566,215 71,236,947 76,211,756 62,570,888 Public works 28,212,049 27,815,970 37,243,516 29,984,955 33,144,303 26,355,375 29,252,516 37,588,680 40,032,746 40,517,063 Recreation and culture 10,336,168 6,515,590 8,670,918 7,713,098 8,889,142 8,245,451 7,312,480 7,298,385 7,677,083 6,198,462 Community development 10,642,102 10,270,404 7,602,229 16,939,572 13,623,946 12,825,028 9,715,087 6,378,286 6,382,336 6,232,406 Interest on long-term debt 1,424,215 1,291,846 1,340,818 1,475,051 1,949,825 2,116,535 2,229,288 1,803,125 1,481,658 1,658,708 Total governmental activities expenses 164,347,356 152,947,140 157,771,432 160,684,210 170,817,996 158,754,655 163,402,257 150,731,665 160,687,127 139,220,810 Business-type activities: Sewage disposal system 28,487,957 27,506,843 28,682,809 26,298,964 26,836,597 26,444,741 24,931,075 26,247,188 27,382,736 24,725,229 Municipal parking system 7,651,077 7,605,461 7,851,702 8,108,373 9,491,376 9,896,498 8,305,095 8,353,063 10,188,065 10,275,379 Cemetery 708,545 632,485 722,270 633,050 639,000 755,766 659,584 689,979 675,672 692,510 Golf 845,575 852,634 935,671 892,117 810,372 846,817 869,003 927,200 1,072,505 1,358,008 Garbage and rubbish collection 2,085,728 1,712,671 1,722,843 1,557,708 1,558,024 1,515,600 1,451,059 1,547,372 1,436,642 1,372,266 Recycling 4,092,278 3,623,276 3,263,553 3,650,292 3,041,328 2,809,353 2,804,047 3,008,750 2,940,366 2,777,068 Potter Park Zoo - - - (156,270) 2,968,236 Total business-type activities expenses 43,871,160 41,933,370 43,178,848 41,140,504 42,376,697 42,268,775 39,019,863 40,773,552 43,539,716 44,168,696 Total primary government expenses 208,218,516 194,880,510 200,950,280 201,824,714 213,194,693 201,023,430 202,422,120 191,505,217 204,226,843 183,389,506 Program revenues Governmental activities: Charges for services: General government 7,279,427 6,815,975 6,820,261 6,162,713 6,428,110 6,742,306 6,565,263 5,188,510 5,938,911 6,251,032 Public safety 2,909,054 3,344,183 2,122,023 4,083,222 8,525,524 8,975,173 8,589,146 9,817,421 12,705,181 13,014,934 Public works 3,011,894 1,923,303 2,129,126 1,622,738 2,797,443 2,449,606 2,788,112 4,565,013 4,364,525 3,805,739 Recreation and culture 673,840 619,834 800,293 594,349 557,609 685,120 587,906 1,217,445 1,556,260 1,259,373 Community development 67,272 67,264 67,323 67,349 67,344 122,326 69,250 50,132 66,308 66,161 Operating grants and contributions 24,561,960 24,658,955 28,234,803 29,322,435 31,928,983 30,154,681 27,515,892 26,462,211 20,356,292 16,524,178 Capital grants and contributions 904,298 2,910,660 3,365,682 3,124,288 260,656 189,414 3,109,410 2,571,741 2,531,974 2,179,870 Total governmental activities program revenues 39,407,745 40,340,174 43,539,511 44,977,094 50,565,669 49,318,626 49,224,979 49,872,473 47,519,451 43,101,287 Business-type activities: Charges for services: Sewage disposal system 32,368,491 31,730,416 31,759,698 30,825,174 29,915,799 29,205,945 28,907,772 27,446,304 28,023,322 26,926,202 Municipal parking system 7,090,335 6,988,879 7,453,476 5,267,627 6,858,606 7,539,179 7,396,219 7,539,611 10,090,566 10,838,270 Cemetery 312,929 335,379 289,565 314,913 240,394 225,947 226,973 248,314 218,688 264,255 Golf 313,164 363,559 366,567 373,000 390,134 382,546 438,315 448,067 607,922 754,995 Garbage and rubbish collection 1,871,665 1,744,999 1,664,201 1,131,659 1,459,101 1,507,577 1,677,428 1,486,531 1,617,717 1,378,562 Recycling 3,627,070 3,624,671 3,508,536 3,434,622 2,818,364 2,609,423 2,651,309 2,945,061 3,039,089 2,903,092 Potter Park Zoo - - - (115) 553,999 Operating grants and contributions 1,312,362 1,143,085 2,574,949 1,193,571 1,331,737 4,456,708 1,535,907 1,541,913 Capital grants and contributions - - - 2,683,657 1,439,044 11,928,108 60,318 196,317 183,012 Total business-type activities program revenues 46,896,016 45,930,988 47,616,992 42,540,566 45,697,792 47,366,369 54,762,031 41,716,119 43,793,506 43,802,387 Total primary government program revenues 86,303,761 86,271,162 91,156,503 87,517,660 96,263,461 96,684,995 103,987,010 91,588,592 91,312,957 86,903,674 Net(expenses)revenues Governmental activities (124,939,611) (112,606,966) (114,231,921) (115,707,116) (120,252,327) (109,436,029) (114,177,278) (100,859,192) (113,167,676) (96,119,523) Business-type activities 3,024,856 3,997,618 4,438,144 1,400,062 3,321,095 5,097,594 15,742,168 942,567 253,790 (366,309) Total primary government net expense (121,914,755) (108,609,348) (109,793,777) (114,307,054) (116,931,232) (104,338,435) (98,435,110) (99,916,625) (112,913,886) (96,485,832) 172 CITY OF LANSING, MICHIGAN Change in Net Position Last Ten Fiscal Years ---------- General revenues and other changes in net position Governmental activities: Taxes: Property taxes $ 38,578,548 $ 39,657,382 $ 38,079,548 $ 38,668,837 $ 33,506,860 $ 37,233,590 $ 39,010,960 $ 39,141,928 $ 38,607,761 $ 38,371,105 Income taxes 34,573,130 31,660,923 31,450,913 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 Unrestricted grants and contributions 36,532,275 36,330,976 35,677,910 31,425,718 26,441,961 27,254,574 25,847,423 27,318,313 28,180,799 27,258,536 Investment earnings 99,058 26,353 36,836 58,588 69,265 89,735 246,495 978,034 1,706,572 2,483,162 Miscellaneous 63,079 280,280 - 123,066 108,601 75,094 32,310 Transfers (629,715) (644,485) (705,637) (583,117) (464,008) (633,814) (464,807) (509,728) 7,420,667 (3,098,357) Total governmental activities 109,216,375 107,311,429 104,539,570 99,420,781 87,620,214 92,752,435 92,123,608 96,273,619 107,083,811 93,224,359 Business-type activities: Investment earnings - 17,874 246,616 356,467 271,067 689,883 141,899 413,850 1,883,034 2,815,480 Miscellaneous 3,853 - 2,600 - (1,300,561) 21,166 725 5,348 2,160 Transfers 629,715 644,485 705,637 583,117 464,008 633,814 464,807 509,728 (7,420,667) 3,098,357 Total business-type activities 633,568 662,359 954,853 939,584 (565,486) 1,344,863 606,706 924,303 (5,532,285) 5,915,997 Total primary government 109,849,943 107,973,788 105,494,423 100,360,365 87,054,728 94,097,298 92,730,314 97,197,922 101,551,526 99,140,356 Changes in net position Governmental activities $ (15,723,236) $ (5,295,537) $ (9,692,351) $ (16,286,335) $ (32,632,113) $ (16,683,594) $ (22,053,670) $ (4,585,573) $ (6,083,865) $ (2,895,164) Business-type activities 3,658,424 4,659,977 5,392,997 2,339,646 2,755,609 6,442,457 16,348,874 1,866,870 (5,278,495) 5,549,688 Total primary government $ (12,064,812) $ (635,560) $ (4,299,354) $ (13,946,689) $ (29,876,504) $ (10,241,137) $ (5,704,796) $ (2,718,703) $ (11,362,360) $ 2,654,524 Note:No discretely presented component units shown 173 CITY OF LANSING, MICHIGAN Table 3-Unaudited Fund Balances,governmental Funds - Last Ten Fiscal Years 2016 'L 2015 201AM' 2013 2012 ---EL 2008 2- General fund Nonspendable $ 492,549 $ 35,424 $ 75,738 $ 75,738 $ 92,538 $ 171,586 $ $ $ $ - Restricted - 10,044 9,400 9,400 16,256 41,129 Committed 428,106 837,761 2,976,408 2,976,408 65,373 178,081 Unassigned 12,407,748 9,783,911 5,633,528 5,633,528 5,198,032 4,939,691 - Reserved - - - - - - 102,732 1,320,375 1,765,288 1,848,021 Unreserved - - - - - - 389,061 3,755,862 5,465,164 5,036,129 Total general fund 13,328,403 10,667,140 8,695,074 8,695,074 5,372,199 5,330,487 491,793 5,076,237 7,230,452 6,884,150 All other governmental funds Nonspendable 2,578,331 2,619,065 2,671,151 2,671,151 2,852,004 3,006,507 - - - - Restricted 6,934,665 6,865,580 4,368,983 4,368,983 5,566,421 7,412,008 Committed 8,427,253 7,110,485 4,035,145 4,035,145 4,109,131 4,908,740 Unassigned(deficit) (410,252) (528,144) (619,931) (619,931) (543,774) (371,285) - - - - Reserved 1,177,998 324,366 365,351 2,544,339 Unreserved,reported in: Special revenue funds 12,029,680 13,394,485 14,716,755 14,523,146 Capital projects funds 11,614,644 12,010,219 17,862,441 18,978,360 Debt service funds 126,434 186,636 256,144 144,518 Permanent funds 1,649,550 1,630,098 1,609,992 1,596,939 Total all other governmental funds 17,529,997 16,066,986 10,455,348 10,455,348 11,983,782 14,955,970 26,598,306 27,545,804 34,810,683 37,787,302 Total all governmental funds $ 30,858,400 $ 26,734,126 $ 19,150,422 $ 19,150,422 $ 17,355,981 $ 20,286,457 $ 27,090,099 $ 32,622,041 $ 42,041,135 $ 44,671,452 (1)The City implemented GASB 54 for the Fiscal Year Ended June 30,2011. Prior years were not restated retroactively. 174 CITY OF LANSING, MICHIGAN Table 4-Unaudited Changes in Fund Balances of Governmental Funds Last Ten Fiscal Years 2016M�15 , -------- Revenues Taxes and special assessments $ 38,782,759 $ 39,470,249 $ 38,717,552 $ 38,717,552 $ 33,583,448 $ 37,371,885 $ 39,279,343 $ 39,258,893 $ 38,775,722 $ 38,681,928 Income taxes 34,573,130 31,660,923 29,850,755 29,850,755 27,943,070 28,699,749 27,408,443 29,312,762 31,168,012 28,209,913 Licenses and permits 1,559,638 1,551,125 1,509,402 1,509,402 1,538,325 1,598,804 1,414,906 1,325,119 1,429,075 1,101,550 Intergovernmental 34,175,112 36,042,377 40,639,183 40,639,183 41,431,793 40,304,785 39,137,217 38,998,039 38,556,616 34,699,908 Charges for services 14,102,447 12,900,490 11,754,381 11,754,381 18,676,398 18,606,304 18,323,158 20,355,642 19,116,593 18,415,612 Fines and forfeits 3,455,541 3,075,427 3,694,351 3,694,351 2,884,328 3,325,728 4,579,175 4,143,000 4,090,397 4,349,642 Interest and rents 145,011 87,035 53,179 53,179 63,571 88,516 249,464 1,196,559 1,836,485 2,607,388 Contributions 21,663,690 21,561,449 16,247,403 16,247,403 12,369,733 11,821,388 10,606,368 10,372,056 10,894,573 9,980,854 Donations from private sources - - - - 5,000 - 9,000 44,000 326,768 114,954 Otherrevenue 1,190,624 1,601,497 510,515 510,515 400,074 504,856 473,123 1,054,209 331,248 1,019,476 Total revenues 149,647,952 147,950,572 142,976,721 142,976,721 138,895,740 142,322,015 141,480,197 146,060,279 146,525,489 139,181,225 Expenditures General government 23,386,445 21,720,206 23,595,321 23,595,321 25,038,589 26,396,516 27,839,564 28,951,805 29,209,458 28,905,058 Public safety 72,264,468 75,510,743 63,943,082 63,943,082 66,161,872 70,397,235 70,820,184 70,082,462 67,715,160 65,218,515 Public works 11,715,510 13,273,332 8,908,673 8,908,673 6,225,177 6,002,823 Highways and streets 10,838,473 10,357,488 9,937,423 9,937,423 8,589,298 8,494,233 14,506,982 14,723,311 14,860,390 13,501,747 Recreation and culture 7,719,906 7,583,085 6,629,453 6,629,453 6,996,562 7,464,193 8,127,700 8,452,768 8,038,290 7,676,600 Community development 3,442,110 3,910,924 - - - - - - - - Other functions 2,927,391 2,704,982 23,699,202 23,699,202 17,999,264 15,675,003 15,182,675 12,599,072 11,805,843 9,847,925 Capital outlay 7,221,346 21,016,808 5,489,617 5,489,617 6,466,084 9,956,103 14,781,728 14,855,863 16,228,127 20,001,659 Debt service: Interest 1,275,957 931,079 1,378,856 1,378,856 1,836,218 3,210,220 3,270,068 1,801,394 1,607,703 1,285,436 Principal 3,892,862 3,616,297 3,137,159 3,137,159 3,448,080 2,070,552 2,165,237 4,743,146 4,721,581 3,875,909 Issuance costs - - 42,744 42,744 - 48,804 - - - - Total expenditures 144,684,468 160,624,944 146,761,530 146,761,530 142,761,144 149,715,682 156,694,138 156,209,821 154,186,552 150,312,849 Excess of revenues over(under)expenditures 4,963,484 (12,674,372) (3,784,809) (3,784,809) (3,865,404) (7,393,667) (15,213,941) (10,149,542) (7,661,063) (11,131,624) Other financing sources(uses) Proceeds from borrowing 2,090,000 16,761,300 11,932,046 11,932,046 - 2,470,000 10,146,117 - 4,052,979 15,190,077 Proceeds from sale of capital assets 268 110,533 497,833 497,833 1,398,936 1,210,046 689 1,587,216 - - Payment to escrow agent (2,162,163) - (6,015,112) (6,015,112) - (2,456,207) - - Insurance proceeds - - - - - - - 120,960 - - Transfers in 9,207,856 9,734,572 7,056,932 7,056,932 7,893,879 9,602,095 16,181,590 11,601,871 13,507,521 6,908,259 Transfers out (10,055,346) (10,002,772) (1,892,449) (1,892,449) (8,357,887) (10,235,909) (16,646,397) (12,579,599) (12,529,754) (10,168,616) Bond premium 80,175 40,945 - - - - - - - - Total other financing sources(uses) (839,210) 16,644,578 11,579,250 11,579,250 934,928 590,025 9,681,999 730,448 5,030,746 11,929,720 Net change in fund balance $ 4,124,274 $ 3,970,206 $ 7,794,441 $ 7,794,441 $ (2,930,476) $ (6,803,642) $ (5,531,942) $ (9,419,094) $ (2,630,317) $ 798,096 Debt service as a percentage of noncapital expenditures 3.7% 3.2% 3.2% 3.2% 3.8% 3.7% 3.9% 4.5% 4.6% 4.0% 175 CITY OF LANSING, MICHIGAN Table 5 - Unaudited Assessed and Estimated Actual Value of Taxable Property Last Ten Fiscal Years (rate per$1,000 of assessed value) Fiscal Total Assessed Year Personal Total Taxable Direct Estimated Value as a Ended Residential Commercial Industrial Agricultural Developmental Property Assessed Tax Actual Percentage of June 30, Property Property Property Property Property Valuation Valuation Rate Value Actual Value 2007 $ 1,354,989,247 $728,343,561 $ 195,703,073 $ $ $ 221,858,408 $ 2,500,894,289 15.88 $5,001,788,578 50.0% 2008 1,437,051,392 765,233,437 192,915,386 223,995,750 2,619,195,965 15.83 5,238,391,930 50.0% 2009 1,479,089,611 719,463,319 254,539,254 205,034,000 2,658,126,184 15.83 5,316,252,368 50.0% 2010 1,480,467,389 713,807,797 248,288,931 220,228,175 2,662,792,292 15.70 5,325,584,584 50.0% 2011 1,407,920,589 624,406,132 215,099,428 199,543,400 2,446,969,549 15.70 4,893,939,098 50.0% 2012 1,387,390,250 639,535,400 87,432,000 183,233,681 2,297,591,331 15.70 4,595,182,662 50.0% 2013 1,232,109,181 587,002,900 86,884,400 151,900 - 182,543,900 2,088,692,281 19.70 4,177,384,562 50.0% 2014 1,152,931,800 580,539,700 85,938,200 151,900 2,900 182,024,000 2,001,588,500 19.70 4,002,817,000 50.0% 2015 1,144,848,592 602,472,030 155,934,800 158,100 2,900 183,420,400 2,086,836,822 19.70 4,173,673,644 50.0% 2016 1,162,708,909 643,816,600 162,544,200 175,600 2,900 196,143,891 2,165,392,100 19.70 4,330,784,200 50.0% Source: Lansing City Assessor 176 CITY OF LANSING, MICHIGAN Table 6 - Unaudited Direct and Overlapping Property Tax Rates Last Ten Fiscal Years (rate per$1,000 of assessed value) Fiscal City Direct Rates Overlapping Rates Year Ended Tax Operating Service City County School State College Other June 30, Year Millage Millage Millage Millage Millage(l) Education Millage Millage(2) Total 2007 2006 14.95 .93 15.88 8.72 20.32 6.00 3.81 9.15 63.87 2008 2007 14.95 .88 15.83 8.73 20.18 6.00 3.81 8.15 62.70 2009 2008 15.01 .82 15.83 8.87 20.15 6.00 3.81 9.04 63.70 2010 2009 15.44 .26 15.70 8.85 19.95 6.00 3.81 9.93 64.24 2011 2010 15.44 .26 15.70 8.84 19.95 6.00 3.81 9.93 64.23 2012 2011 15.44 .26 15.70 8.85 21.44 6.00 3.81 9.96 65.76 2013 2012 19.44 .26 19.70 9.49 21.73 6.00 3.81 9.96 70.68 2014 2013 19.44 .26 19.70 9.50 21.91 6.00 3.81 9.96 70.88 2015 2014 19.44 .26 19.70 10.20 21.77 6.00 3.81 9.96 71.44 2016 2015 19.44 .26 19.70 9.83 21.83 6.00 3.81 9.96 71.12 (1) rates for Lansing School District only (2) includes Intermediate School, Airport Authority, Capital Area Transit Authority and Capital Area District Library. Source: Lansing City Treasurer 177 CITY OF LANSING, MICHIGAN Table 7-Unaudited Profile of Ten Largest Ad Valorem Taxpayers Current Year and Nine Years Ago 2016 2007 Percentage Percentage Taxable of Total Total of Total Assessed Assessed Assessed Assessed Taxpayer Valuation Rank Valuation Valuation Rank Valuation General Motors Corp. $ 59,302,202 1 2.74% $ 133,897,648 1 5.11% Consumers Energy 29,103,567 2 1.34% 21,628,281 4 0.83% Jackson National Life Insurance Company 27,829,926 3 1.29% 33,130,261 2 1.26% Sprint Spectrum L.P. 19,326,303 4 0.89% 14,526,841 6 0.55% Phoenix Development Part I LLC 17,022,933 5 0.79% Emergent Biodefense Operations 13,360,674 6 0.62% Demmer Corporation 12,287,800 7 0.57% Lansing Retail Center LLC 11,863,110 8 0.55% 13,139,375 8 0.50% Phoenix Development Part 11 LLC 8,133,041 9 0.38% Eyde Knapp Development LLC 7,940,150 10 0.37% Delta Township Utilities 25,381,733 3 0.97% Capitol Outlook LLC 18,764,936 5 0.72% Accident Fund Company 13,202,404 7 0.50% Trappers Cove LTD Partners 12,565,459 9 0.48% Heart of the City Association 10,290,786 10 0.39% Data furnished from City of Lansing Assessor 178 CITY OF LANSING, MICHIGAN Table 8 - Unaudited Property Tax Levies and Collections Last Ten Fiscal Years Collected within the Fiscal Year of the Levy Total Collections to Date Fiscal Year Taxes Levied Current Percent of Delinquent Total Collections Ended for the Tax Levy Tax Tax as Percent June 30, Fiscal Year Collection Collected Collection Collection of Levy 2007 $ 42,627,042 $ 42,516,696 99.74% $ 107,322 $ 42,624,018 99.99% 2008 44,286,657 44,125,517 99.64% 144,587 44,270,104 99.96% 2009 45,567,556 45,468,639 99.78% 72,779 45,541,418 99.94% 2010 44,997,919 44,844,495 99.66% 33,012 44,877,507 99.73% 2011 41,460,916 41,375,354 99.79% 24,416 41,399,770 99.85% 2012 39,948,762 39,863,393 99.79% 19,647 39,883,040 99.84% 2013 40,450,767 39,716,932 98.19% 55,532 39,772,464 98.32% 2014 39,336,952 39,238,902 99.75% 20,866 39,259,768 99.80% 2015 38,329,032 38,258,272 99.82% 49,590 38,307,862 99.94% 2016 38,538,226 38,461,152 99.80% 52,758 38,513,910 99.94% Note: Amounts are net of chargebacks from the County Tax Revolving Funds for taxes still delinquent after three years. Note: Delinquent Tax Collection represents amounts received in the indicated fiscal year. Source: City of Lansing Treasurer 179 CITY OF LANSING, MICHIGAN Table 9-Unaudited Ratios of Outstanding Debt by Type _ Last Ten Fiscal Years Governmental Activities Business-Type Activitie General e Special Installment General Total Percentage g Fiscal Obligation Assessment Purchase Obligation Revenue Lease Primary of Personal Per Year Bonds Debt Loans Bonds Government Income 2007 $ 20,128,052 $ 10,000 $ 15,721,844 $ 1,772,049 $ 156,536,857 $ 44,787,045 $ $ 4,180,000 $ 243,135,847 11.42%(2) $ 2,041 119,100 2008 20,914,466 - 14,037,885 1,534,822 175,578,524 41,921,307 4,180,000 258,167,004 12.13%(2) 2,168 119,100 2009 17,899,203 12,394,082 1,290,479 189,210,199 39,045,570 4,180,000 264,019,533 12.41%(2) 2,217 119,100 2010 26,329,157 10,925,689 1,038,804 199,063,758 36,122,872 4,180,000 277,660,280 13.05%(2) 2,331 119,100 2011 27,804,224 9,564,693 779,580 197,000,901 33,209,092 1,574,209 269,932,699 12.17%(3) 2,362 114,297 2012 25,816,914 8,193,615 512,577 189,536,530 30,135,311 1,637,177 255,832,124 11.32%(3) 2,238 114,297 2013 29,994,604 2,807,838 6,246,743 180,359,931 27,528,327 1,702,664 248,640,107 11.01%(3) 2,175 114,298 2014 27,180,294 3,100,563 7,062,234 174,471,861 24,055,438 1,668,081 - 237,538,471 10.69%(3) 2,078 114,298 2015 25,790,281 16,387,327 7,872,600 167,787,460 19,445,482 1,459,431 238,742,581 10.74%(3) 2,089 114,297 2016 21,968,330 15,268,317 7,872,600 154,303,563 20,671,135 1,246,673 221,330,618 9.88%(;) 1,924 115,056 (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 180 CITY OF LANSING, MICHIGAN Table 10 - Unaudited Ratios of General Bonded Debt Outstanding Last Ten Fiscal Years Ratio of Fiscal Debt Net Bonded Net Year Service Debt Payable Debt to Bonded Ended Taxable Gross Bonded Monies From Restricted Net Bonded Taxable Debt per June 30, Population(') Value(3) Debt"' Available Revenues Debt Value Capita 2007 119,100 $2,500,894,289 $ 176,674,909 $ 309,363 $ 162,596,857 $ 13,768,689 0.0055 116 2008 119,100 2,619,195,965 196,492,990 256,144 184,442,624 11,794,222 0.0045 99 2009 119,100 2,658,126,184 207,109,402 186,636 197,225,199 9,697,567 0.0036 81 2010 119,100 2,662,792,292 225,392,915 126,434 206,198,758 19,067,723 0.0072 160 2011 114,297 2,446,969,549 224,805,125 46,029 203,225,901 21,533,195 0.0088 188 2012 114,297 2,297,591,331 215,353,444 - 194,911,530 20,441,914 0.0089 179 2013 114,298 2,088,692,281 210,354,535 178 184,849,931 25,504,427 0.0122 223 2014 114,298 2,001,588,500 201,652,155 - 178,031,861 23,620,294 0.0118 207 2015 114,297 2,086,836,822 193,577,741 1,000 170,372,460 23,204,281 0.0111 203 2016 115,056 2,165,392,100 176,271,893 1,000 155,873,563 20,397,330 0.0094 177 Source:2000 and 2010 Census by the U.S. Census Bureau includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year 181 CITY OF LANSING, MICHIGAN Table 11 - Unaudited Direct and Overlapping Governmental Activities Debt As of June 30, 2016 Net General Obligation Amount Name of Debt % Applicable Applicable Governmental Unit Outstanding to City to City Net direct - City $ 45,109,247 100.00% $ 45,109,247 Share of County-issued bonds Joint Building Authority 1,612,808 100.00% 1,612,808 Drain Commission 1,283,146 100.00% 1,283,146 $ 2,895,954 Overlapping debt Eaton Intermediate School District $ 740,000 0.58% $ 4,292 Ingham Intermediate School District 1,836,000 22.81% 418,792 Waverly School District 29,760,000 0.22% 65,472 Lansing School District 39,930,000 81.04% 32,359,272 East Lansing School District 41,068,377 3.74% 1,535,957 Holt School District 70,412,946 2.38% 1,675,828 Ingham County 307064,178 26.07% 7,837,731 Eaton County 30,395,466 1.60% 486,327 Clinton County 2,053,375 0.28% 5,749 Lansing Community College 72,720,000 18.82% 13,685,904 Okemos School District 17,629,329 2.76% 486,569 Mason School District 13,365,000 0.35% 46,778 Grand Ledge School District 51,650,000 1.22% 630,130 Total overlapping debt 59,238,801 Total direct and overlapping debt $ 107,244,002 Note: Overlapping debt percentages are apportioned based upon relative assessed values. Source: Municipal Advisory Council of Michigan 182 CITY OF LANSING, MICHIGAN Table 12-Unaudited Legal Debt Margin Information - Last Ten Fiscal Years Legal Debt Margin Calculation for Fiscal Year 2016 Assessed value,real and personal property $2,165,392,100 Legal debt margin Debt limitation-10 percent of total valuation 216,539,210 Debt applicable to limit Total City Bonded Debt 196,943,028 City Share: Drain Commission-County Issued 1,283,146 Joint Building Authority-County Issued 1,612,808 TIF Supported Bonds 16,650,973 216,489,955 Less: Michigan Transportation(MTF)Bonds (1,570,000) Sewage Disposal Revenue Bonds (18,725,000) Pollution Abatement(CSO Project)Bonds (109,762,496) (130,057,496) Total net debt applicable to limit 86,432,459 Legal debt margin $ 130,106,751 ----i 2UIIIIIIIIIIIIIIIl 2011­1 Debt limit $ 216,539,210 $ 208,683,682 $ 205,138,999 $ 208,869,228 $ 233,669,637 $ 268,975,768 $ 298,052,683 $ 298,581,799 $ 318,810,868 $ 324,987,531 Total net debt applicable to limit 86,432,459 91,352,614 93,062,835 91,833,157 92,357,575 100,923,863 98,368,804 79,513,756 87,966,365 84,276,312 Legal debt margin $ 130,106,751 $ 117,331,068 $ 112,076,164 $ 117,036,071 $ 141,312,062 $ 168,051,905 $ 199,683,880 $ 219,068,043 $ 230,844,503 $ 240,711,219 Total net debt applicable to the limit as a percentage of debt limit 39.92% 43.78% 45.37% 43.97% 39.52% 37.52% 33.00% 26.63% 27.59% 25.93% 183 CITY OF LANSING, MICHIGAN Table 13 - Unaudited Pledged-Revenue Coverage Last Ten Fiscal Years Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(') Debt Service Principal Interest Total Coverage(2) 2007 $ 29,292,698 $ 13,494,658 $ 15,798,040 $ 3,950,000 $ 2,152,990 $ 6,102,990 2.59 2008 29,356,299 15,997,449 13,358,850 2,830,000 2,002,400 4,832,400 2.76 2009 27,759,684 14,206,961 13,552,723 2,840,000 1,900,000 4,740,000 2.86 2010 28,613,004 12,358,472 16,254,532 2,840,000 1,803,425 4,643,425 3.50 2011 29,865,648 12,616,100 17,249,548 2,925,000 1,621,221 4,546,221 3.79 2012 30,178,511 12,562,663 17,615,848 3,040,000 1,448,856 4,488,856 3.92 2013 31,169,428 12,112,994 19,056,434 3,160,000 1,111,390 4,271,390 4.46 2014 31,996,794 13,424,901 18,571,893 3,265,000 1,054,878 4,319,878 4.30 2015 31,945,082 13,295,574 18,649,508 1,490,000 920,788 2,410,788 7.74 2016 32,368,491 14,526,590 17,841,901 1,550,000 861,188 2,411,188 7.40 Operating expenses less depreciation Coverage is defined as net revenue available for debt service divided by debt service requirements 184 CITY OF LANSING, MICHIGAN Table 14- Unaudited Demographic and Economic Statistics Last Ten Fiscal Years Per capita Lansing School Personal Personal Median District Unemployment Labor Year Population(') Income Income(') Age(') Enrollment(z) %Rate(3) Force(3) 2007 119,100 $ 2,129,750,646 $ 17,882 32.52 15,178 8.9% 66,224 2008 119,100 2,129,040,730 17,876 32.68 14,475 10.2% 65,833 2009 119,100 2,128,331,049 17,870 32.84 14,482 16.2% 66,822 2010 119,100 2,127,621,606 17,864 32.92 14,098 15.0% 64,074 2011 114,297 2,218,237,360 19,408 30.40 13,465 13.1% 63,130 2012 114,297 2,259,194,502 19,766 32.40 13,236 11.3% 63,374 2013 114,298 2,259,194,502 19,766 32.20 12,544 11.9% 63,181 2014 114,298 2,221,933,680 19,440 32.00 12,088 9.1% 63,102 2015 114,297 2,221,933,600 19,440 32.10 11,587 7.4% 57,432 2016 115,056 2,240,255,376 19,471 32.10 11,112 6.0% 57,633 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 185 CITY OF LANSING, MICHIGAN Table 15-Unaudited Principal Employers Current Year and Nine Years Ago 2016 2007 Percentage Percentage of Total City of Total City Employer Employees(') Rank Employment(2) Employees(') Rank Employment State of Michigan 13,700 1 5.97% 13,000 1 5.65% Michigan State University 10,725 2 4.67% 10,500 2 4.56% Sparrow Health System 5,735 3 2.50% 6,000 4 2.61% General Motors 5,222 4 2.28% 6,000 3 2.61% Lansing Community College 2,990 5 1.30% 3,800 5 1.65% McClaren Greater Lansing 2,400 6 1.05% 2,500 7 1.09% Lansing School District 1,613 7 0.70% 3,000 6 1.30% Meijer 1,500 8 0.65% 2,000 8 0.87% Auto Owners Insurance 1,400 9 0.61% 1,500 9 0.65% Jackson National Life Insurance 1,400 10 0.61% U.S. Post Office 1,200 10 0.52% Greater Lansing metropolitan area employment 229,466 230,075 (1) Data is representative of the Greater Lansing Region (2)Source: Michigan Department of Career Development: Employment Service Agency- Labor Market Information 186 This page intentionally left blank. 187 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2016 2015 2014 2013 2012 2011 General government City council 10 10 10 10 10 11 Mayor's office 6 5 5 5 5 5 City clerk 5 5 5 5 5 6 54-A district court 45 46 43 43 48 50 City attorney's office 11 11 10 10 10 11 City TV 2 2 2 2 2 2 Internal auditor 1 1 1 1 1 1 Human resources 12 10 10 9 9 11 Information technology 11 11 11 10 10 14 Finance Accounting/budget/purchasing 8 (9) 9 10 10 13 14 Treasury/income tax 10 9 9 20 10 11 Assessing 11 11 11 11 11 Property management - - (6) 18 20 Fleet management - - (6) 27 29 29 29 30 30 79 85 Planning Et neighborhood development Administration 2 2 2 2 2 2 Code compliance - - 15 15 16 Building safety 13 13 13 12 13 15 Planning 4 4 4 4 4 5 Development 10 10 11 9 9 9 Parking Et transportation 14 14 15 20 20 20 (5) 43 43 45 62 63 66 Police 234 234 234 229 (7) 260 327 Fire 181 181 188 180 179 207 Code compliance 14 14 14 195 195 202 180 179 207 Public services - Administration Et engineering 20 19 19 19 21 21 Operations Et maintenance 117 117 117 120 121 135 (5) Service garage - - - - - - Wastewater 41 41 41 41 41 41 Property Management 18 18 18 18 (6) Fleet Management 26 27 27 27 (6) 222 222 222 225 183 197 Human relations Et community services 7 7 6 5 5 5 188 Table 16 - Unaudited 2010 2009 2008 2007 11 11 11 11 5 5 5 5 7 7 7 7 53 53 53 55 12 12 12 12 2 2 2 2 1 1 1 1 12 13 14 14 15 17 18 18 16 17 16 18 12 13 13 15 12 12 13 14 21 23 24 26 (3) 30 31 33 37 �Z) 91 96 99 110 2 2 2 2 16 16 17 19 15 15 15 16 5 4 5 7 9 10 10 10 40 41 41 43 87 88 90 97 344 342 341 338 218 219 219 219 218 219 219 219 17 18 18 18 110 113 113 119 (7) 44 50 50 51 171 181 181 188 5 6 8 9 continued... 189 CITY OF LANSING, MICHIGAN Full-time Equivalent City Governmental Employees by Function/Program Last Ten Fiscal Years Function/Program 2016 2015 2014 2013 2012 2011 Parks Et recreation Administration Et design 6 6 6 5 5 5 Grounds &t forestry - - - - - - (5) Leisure Et special recreation 6 6 6 8 10 12 Cemeteries 1 1 1 1 1 1 Golf/ice arena 3 3 3 3 3 4 Zoo - - - - - - 16 16 16 17 19 22 849 847 852 843 888 1,020 Source: The City of Lansing, Michigan In FY 2007, the following restructuring of departments occurred: (1) A payroll position was transferred from Finance to Human Resources (2) Operations of the City's three fleet garages was consolidated in Finance (3) Four custodial positions were transferred from Parks Et Recreation to Finance (4) On July 1, 2007, Potter Park Zoo employees were transferred to Ingham County In FY 2011, the following restructuring of departments occurred: (5) Grounds Maintenance positions were moved from Parks Et Recreation and Planning Et Neighborhood Development and consolidated with Public Service staff In FY 2013, the following restructuring of departments occurred: (6) Fleet and Property Management were moved from the Finance Department to the Public Service Department (7) On June 27, 2012, 911 Dispatch employees were transferred from the City to Ingham County In FY 2014, the following restructuring of a department occurred: (8) Fourteen positions are transferred from PND to Fire; four to Police, and one to Public Service. In FY 2016, the following restructuring of a department occurred: (9) Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. 190 2010 2009 2008 2007 7 7 8 8 27 31 32 32 15 19 17 19 (3) 3 4 4 5 4 4 4 4 - - - 18 (4) 56 65 65 86 1,090 1,118 1,126 1,172 concluded 191 CITY OF LANSING, MICHIGAN Table 17-Unaudited Operating Indicators by Function/Program - Last Ten Fiscal Years Function/Program 2016 2015 ` 2011 -`2008 i- Public safety Fire department responses 21,115 20,170 19,427 18,444 17,093 16,974 16,659 15,852 15,780 15,267 EMS related 18,275 17,376 16,235 15,918 14,851 14,628 14,398 13,447 13,151 12,779 Fire related 2,840 2,794 3,012 2,526 2,242 2,346 2,261 2,405 2,629 2,488 Police department responses 71,468 79,331 76,855 73,087 74,058 78,112 87,724 89,958 87,634 97,466 Arrests 3,880 4,510 5,656 7,196 8,043 8,858 11,644 11,559 12,810 13,260 Traffic violations 7,334 10,781 7,756 14,905 8,829 15,585 18,297 20,122 25,398 29,047 Public works Potholes filled 53,488 53,281 55,193 33,155 30,116 32,918 24,945 43,601 40,790 28,122 Streets resurfaced(miles) 9 4 4.60 6.00 5.01 8.99 20.70 16.20 20.92 22.11 Recreation Recreation participation 101,335 122,639 50,859 55,122 66,836 66,254 70,529 39,060 37,783 ' 41,069 Pavilion rentals 242 206 185 199 198 161 288 315 341 254 Sewage disposal Average amount processed daily(gal) 15.46 million 13.28 million 14.49 million 14.75 million 12.82 million 12.83 million 15.01 million 18.15 million 16.73 million 16.00 million Parking system Average number of monthly permits 3,218 3,077 2,891 2,718 2,735 3,122 3,480 3,783 4,059 3,905 Parking tickets issued 32,990 30,888 34,373 38,127 41,829 45,176 63,610 66,183 57,153 75,637 Cemetery Lots sold 115 138 93 113 115 143 142 119 98 114 Golf Annual rounds played 13,325 (31 22,998 22,786 25,554 28,560 26,084 30,936 41,588 43,605 Z 59,244 Garbage and rubbish Yards sent to landfill 20,115 19,667 18,829 17,985 18,705 20,334 21,805 29,322 29,869 30,402 Recycling Recycled goods sold(tons) 5,940 5,691 5,075 3,562 3,149 2,446 2,163 2,591 2,818 2,269 Yards composted 24,413 21,685 25,260 21,832 20,413 15,725 21,819 21,871 21,928 17,189 Source: The City of Lansing,Michigan " The addition of the Southside Community Center,with a pool,resulted in a large increase in recreation participation in FY 2010 ` Two golf course were closed in FY 2008 with one of those being converted to a driving range " Groesbeck golf course was closed due to during the months of May-June,2016 for stormwater management course alterations, 192 This page intentionally left blank. 193 CITY OF LANSING, MICHIGAN Capital Assets Statistics by Function/Program Last Ten Fiscal Years Function/Program 2016 2015 2014 2013 2012 2011 Public safety Police stations 2 2 2 2 2 3 Police patrol units 60 60 61 60 60 58 Fire stations 6 6 6 6 6 8 Public works Streets (miles) 414.00 414.00 411.00 411.00 407.80 410.80 Traffic signals 200 200 200 204 204 208 Recreation Park acreage 2,134.26 2,363.45 2,364.85 2,364.85 2,434.88 2,422.63 Playgrounds 74 72 72 75 73 71 Baseball/softball fields 25 47 61 61 61 61 Soccer/football fields 14 6 6 6 6 6 Community centers 4 4 4 4 4 4 Sewage disposal Sanitary sewers (miles) 361 361 359 359 359 359 Storm sewers (miles) 235 235 234 234 234 234 Combined sewers (miles) 188 188 188 188 188 188 Parking system Ramps 4 4 4 4 4 4 Lots 16 17 17 18 15 15 Meters 2,166 2,166 2,452 2,452 2,452 2,452 Cemetery Number of cemeteries 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 Acreage 115 115 115 115 115 115 Garbage and rubbish Refuse collection trucks 14 17 17 17 19 22 Recycling Recycling trucks 5 7 7 7 7 9 Potter park zoo Number of animals N/A N/A N/A N/A N/A N/A Source: The City of Lansing, Michigan (1) Zoo operations were transferred to Ingham County in 2008 (2)Two municipal golf courses were non-operational beginning in 2008 194 Table 18 - Unaudited 2010 2009 2008 2007 3 3 3 3 61 61 58 55 9 9 9 9 410.63 410.15 410.15 410 203 196 203 188 2,422.63 2,422.63 2,422.63 2,219.63 71 82 82 80 61 61 61 61 6 6 6 6 4 4 4 4 357 354 347.4 341.0 233 230 225.1 220.0 191 192 197.4 203.0 4 4 6 6 16 16 15 15 2,493 2,493 2,489 2,489 3 3 3 3 1 1 1 (2) 3 115 115 115 (2) 318 18 16 21 21 10 10 10 10 N/A N/A N/A 398 195