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Home My WebLink About2023 - City of Lansing Audit Annual Comprehensive Financial Report CAFR ACFR FY23 CITY OF LANSING, MICHIGAN ANNUAL COMPREHENSIVE FINANCIAL REPORT YEAR ENDED JUNE 30, 2023 ti G ONE HIS Andy Schor, Mayor Prepared by: Department of Finance Chief Financial Officer/Finance Director Desiree A. Kirkland Controller Cynthia Gill TABLE OF CONTENTS Paee INTRODUCTORY SECTION................................................................................................................................................................1 Electedand Appointed Officers.......................................................................................................................................................2 Letterof Transmittal.........................................................................................................................................................................3-7 Certificate of Achievement for Excellence in Financial Reporting...................................................................................8 Tableof Organization..........................................................................................................................................................................9 FINANCIALSECTION.........................................................................................................................................................................10 INDEPENDENT AUDITOR'S REPORT.......................................................................................................................................11-14 MANAGEMENT'S DISCUSSION AND ANALYSIS..................................................................................................................15-25 BASIC FINANCIAL STATEMENTS.................................................................................................................................................26 Government-wide Financial Statements Statementof Net Position.....................................................................................................................................................28-29 Statementof Activities..............................................................................................................................................................30 Fund Financial Statements Governmental Funds BalanceSheet............................................................................................................................................................................33 Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position................34 Statement of Revenues,Expenditures,and Changes in Fund Balances..........................................................35 Reconciliation of the Statement of Revenues,Expenditures,and Changes in Fund Balances of Governmental Funds to the Statement of Activities.........................................................36 Proprietary Funds Statementof Net Position...................................................................................................................................................38 Statement of Revenues,Expenses,and Changes in Fund Net Position............................................................39 Statementof Cash Flows...................................................................................................................................................40-41 Fiduciary Funds Statement of Fiduciary Net Position...............................................................................................................................43 Statement of Changes in Fiduciary Net Position.......................................................................................................44 Discretely Presented Component Units Financial Statements Combining Statement of Net Position............................................................................................................................47 Combining Statement of Activities..................................................................................................................................48 Notesto Financial Statements..............................................................................................................................................49-112 REQUIRED SUPPLEMENTARY INFORMATION.....................................................................................................................113 General Fund Schedule of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual....................114-116 State and Federal Grants Fund Schedule of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual.........................117 CERA-MSHDA Fund Schedule of Revenues,Expenditures,and Changes in Fund Balance-Budget and Actual.........................118 TABLE OF CONTENTS Page REQUIRED SUPPLEMENTARY INFORMATION (concluded) Employees'Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................119 Scheduleof Contributions......................................................................................................................................................120 Schedule of Investment Returns..........................................................................................................................................121 Police and Fire Retirement System Defined Benefit Pension Plan Schedule of Changes in Net Pension Liability and Related Ratios........................................................................122 Scheduleof Contributions......................................................................................................................................................123 Schedule of Investment Returns..........................................................................................................................................124 Employees'Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................125 Scheduleof Contributions......................................................................................................................................................126 Schedule of Investment Returns..........................................................................................................................................127 Police and Fire Retirement System OPEB Plan Schedule of Changes in Net OPEB Liability and Related Ratios.............................................................................128 Scheduleof Contributions......................................................................................................................................................129 Scheduleof Investment Returns..........................................................................................................................................130 Note to Required Supplementary Information............................................................................................................131-132 OTHER SUPPLEMENTARY INFORMATION............................................................................................................................133 Combining and Individual Fund Financial Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet-Nonmajor Governmental Funds..............................................................................135 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances-Nonmajor Governmental Funds..............................................................................................................136 Combining Balance Sheet-Nonmajor Special Revenue Funds.....................................................................138-139 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances-Nonmajor Special Revenue Funds.....................................................................................................140-141 Schedules of Revenues,Expenditures,and Changes in Fund Balance- Budgetand Actual-by Fund......................................................................................................................................142-151 Balance Sheet-Nonmajor Debt Service Fund...........................................................................................................153 Statement of Revenues,Expenditures,and Changes in Fund Balance-Nonmajor Debt Service Fund.....................................................................................................................154 Combining Balance Sheet-Nonmajor Capital Projects Funds...........................................................................156 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances-Nonmajor Capital Projects Funds...........................................................................................................157 Combining Balance Sheet-Nonmajor Permanent Funds....................................................................................159 Combining Statement of Revenues,Expenditures,and Changes in Fund Balances-Nonmajor Permanent Funds....................................................................................................................160 Nonmajor Enterprise Fund Combining Statement of Net Position...........................................................................................................................162 Combining Statement of Revenues,Expenses,and Changes in Fund Net Position...................................163 Combining Statement of Cash Flows.............................................................................................................................164 TABLE OF CONTENTS Paee OTHER SUPPLEMENTARY INFORMATION (concluded) Combining and Individual Fund Financial Statements and Schedules (concluded) Internal Service Funds Combining Statement of Net Position...........................................................................................................................166 Combining Statement of Revenues,Expenses,and Changes in Fund Net Position...................................167 Combining Statement of Cash Flows.............................................................................................................................168 Fiduciary Funds Pension and Other Postemployment Benefit Trust Funds Combining Statement of Fiduciary Net Position..................................................................................................170 Combining Statement of Changes in Fiduciary Net Position..........................................................................171 Custodial Funds Combining Statement of Fiduciary Net Position..................................................................................................172 Combining Statement of Changes in Fiduciary Net Position..........................................................................173 STATISTICAL SECTION (UNAUDITED)....................................................................................................................................174 Table 1 Net Position by Component...........................................................................................................................................176 2 Changes in Net Position.............................................................................................................................................177-178 3 Fund Balance,Governmental Funds..........................................................................................................................179 4 Changes in Fund Balances of Governmental Funds............................................................................................180 5 Assessed Value and Estimated Actual Value of Taxable Property................................................................181 6 Direct and Overlapping Property Tax Rates..........................................................................................................182 7 Principal Property Taxpayers......................................................................................................................................183 8 Property Tax Levies and Collections.........................................................................................................................184 9 Ratios of Outstanding Debt by Type..........................................................................................................................185 10 Ratios of General Bonded Debt Outstanding.........................................................................................................186 11 Direct and Overlapping Governmental Activities Debt.....................................................................................187 12 Legal Debt Margin Information...................................................................................................................................188 13 Pledged-Revenue Coverage...........................................................................................................................................189 14 Demographic and Economic Statistics.....................................................................................................................190 15 Principal Employers.........................................................................................................................................................191 16 Full-Time Equivalent City Governmental Employees by Function/Program..........................................192 17 Operating Indicators by Function/Program..........................................................................................................193 18 Capital Assets Statistics by Function/Program....................................................................................................194 INTRODUCTORY SECTION 1 CITY OF LANSING,MICHIGAN LANSING CITY GOVERNMENT Fiscal Year Ended June 30, 2023 MAYOR Andy Schor CITY COUNCIL Carol Wood,Council President,At Large Jeremy A.Garza,Council Vice President,2nd Ward Peter Spadafore,At Large Jeffrey Brown,At Large Patricia Spitzley,At Large Ryan Kost, 1st Ward Adam Hussain,3rd Ward Brian T.Jackson,4th Ward CLERK Chris Swope DISTRICT COURT JUDGES Stacia Buchanan,Chief Judge Kristen D.Simmons Cynthia M.Ward Tony Flores OFFICERS Chief Information Officer....................................................................................................... Christopher Mumby Chief Strategy Officer............................................................................................................... Jake Brower Chief Labor Negotiatior/Human Resources Director............................................... Elizabeth O'Leary City Assessor............................................................................................................................... Sharon Frischman CityAttorney............................................................................................................................... Jim Smiertka Communications Director..................................................................................................... Scott Bean Chief Finanical Officer/City Treasurer............................................................................. Desiree A.Kirkland Court Administrator................................................................................................................. Anethia Brewer DeputyMayor............................................................................................................................. Shelbi Frayer Deputy Chief of Staff................................................................................................................ Mark Lawrence Economic Development &Planning Director.............................................................. Jorda Hankwitz FireChief....................................................................................................................................... Brian Sturdivant Human Relations&Community Service Director....................................................... Kimberly Coleman InternalAuditor......................................................................................................................... Emily Linden Neighborhoods&Citizen Engagement............................................................................ DeLisa Fountain Parks&Recreation Director................................................................................................. Brett Kaschinske PoliceChief................................................................................................................................... Ellery Sosebee Public Service Director........................................................................................................... Andy Kilpatrick 2 41H N FINANCE DEPARTMENT 124 W. Michigan Ave., 8t" Floor Lansing, Michigan 48933 517.483.4500 Andy Schor,Mayor December 18, 2023 Council President Carol Wood and Council Members 10th Floor City Hall Lansing,Michigan 48933-1694 Dear President Wood and Council Members, The Finance Department is pleased to submit the comprehensive annual financial report for the City of Lansing, Michigan,for the fiscal year ended June 30,2023. The City of Lansing 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 is accurate in all material respects and is reported in a manner designed to present fairly the financial position and results of the government operations and of the various funds of the City. All disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. The City's fiscal year 2022/2023 financial statements have been audited by Maner Costerisan, an independent firm of licensed, certified public accountants located within the Capital Region. The goal of the independent audit is to provide reasonable assurance that the financial statements for the City for the fiscal year-end June 30, 2023, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures contained in the financial statements, assessing the accounting principles used,and evaluating the overall financial statement presentation. The independent audit concluded with the rendering of an unmodified opinion on the statements,meaning the financial statements present fairly and accurately in all material respects in conformity with the Generally Accepted Accounting Principles(GAAP). The Independent Auditor Report is presented as the first component of the financial section of this report. This letter of transmittal is designed to complement the Management Discussion and Analysis (MD&A) and should be read in conjunction with it. The Management Discussion and Analysis can be found immediately following the Independent Auditor Report. Profile of the City of Lansing Serving as Michigan's capital since 1848, the City of Lansing was incorporated in 1859 and operates under provisions of Public Act 279 of 1909,as amended(Home Rule City Act). The City incorporates 34.7 square miles and is in Michigan's Lower Peninsula within the northwestern corner of Ingham County and the northeastern corner of Eaton County. The City operates under a mayor/council form of government,where the Mayor serves as the chief executive of the City and is elected on an at-large basis to serve a four-year term. Lansing is a mature core city with a population of 112,644 according to the 2020 census and offers a full range of services. During the fiscal year ended June 30,2023,the City operated a police headquarters and precinct with 211 sworn police officers,six fire stations with a fire protection force of 170,over 365 miles of sanitary sewers,239 miles of storm sewers and 184 miles of combined sewers,over 413 miles of roads, 113 parks,a District Court and support for human services and cultural events. The City's main sources of revenue are property taxes,income taxes,State revenue sharing,Federal entitlement grants and charges for services including utility billings. 3 Reporting Entity The financial reporting entity (the City) includes all of the funds of the primary government (i.e., the City as legally defined)as well as its blended component unit the Lansing Building Authority. Blended component units, although legally separate entities,are in substance part of the primary government's operations and are included as part of the primary government. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position, results of operations and cash flows from those of the primary government. The Lansing Entertainment&Public Facilities Authority,Tax increment Finance Authority,and the Brownfield Redevelopment Authority are reported as discretely presented component units. Financial Management and Control Management of the City of Lansing is responsible for establishing and maintaining internal controls. These controls are designed to ensure that the assets of the government are protected from loss,theft, or misuse and to assure that adequate accounting data is compiled. This allows for the accurate presentation of financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment and monitoring and review processes which are communicated throughout City operations. Because the cost of internal controls generally should not outweigh their benefits, the City's framework of internal controls has been designed to provide reasonable rather than absolute assurance that these objectives are met. Because the City is a recipient of federal grant dollars the independent audit of the financial statements of the City of Lansing was part of a broader federally mandated"single audit"in conformity with the provisions of Title 2 U.S. Code of Federal Regulations Part 200, Uniform Administrative Requirements, Cost Principals, and Audit Requirements for Federal Awards (Uniform Guidance). The standards governing the single audits require the independent auditor to report not only on the fair presentation of the financial statements but also on the audited government's internal controls and compliance with legal requirements involving the administration of the federal awards. These reports are available in the City's separately issued Single Audit Report. Financial results and applicable policies affecting year-end results for the fiscal year ended June 30, 2023, are discussed in the Management Discussion and Analysis (MD&A),located immediately following the Independent Auditor Reports. Budgeting Controls The annual budget serves as the foundation for the City's financial planning,policymaking and control. The City Charter requires that the Mayor submit to the City Council a proposed budget by the fourth Monday in March. Not later than the third Monday in May of each year,the City Council shall,by resolution,adopt a budget for the ensuing fiscal year. Budgetary controls and limitations are noted in the Note Disclosure Section of the financial statements. The City also maintains an encumbrance accounting system, whereby purchase order amounts are deducted from the available budget as one technique of accomplishing budgetary control. Encumbered amounts lapse at year-end and require City Council approval to be carried forward to the ensuing fiscal year for amounts greater than$5,000 or greater than eight months old. 4 Local Economy The City of Lansing is the seat of the Michigan state government. The local economy is comprised of a diversified mix of business,health care, education, and industries. With Michigan State University, Davenport University, Western Michigan University, and Lansing Community College, the region has a strong higher education presence. The metro Lansing region is also home to several national insurance company headquarters and healthcare services with two major hospitals in the City and a wide variety of technology firms. Manufacturing also has a strong presence, especially in the automotive and biotech engineering sectors, with two General Motors assembly plants and related facilities located in the City, including a Logistics Center and a regional stamping plant, automotive suppliers throughout the region, production of particle accelerators, and vaccine research and production. Within the City, major taxpayers and employers include, but are not limited to, the health care sector - Sparrow Health Systems and McLaren Health Care Corporation, manufacturing - General Motors,research sector- Emergent BioSolutions,Neogen Corporation,and Niowave, Inc.,and financial services and insurance-Jackson National Life and AF Group. Lansing serves as the cultural center for the region. Recent major investments have continued to revitalize Lansing and power the local economy. These new projects range in size from large to small and will continue to make Lansing a great place that offers the benefits of a big city with the affordability and convenience of a small town. Some notable business expansion and real estate projects that are attributed to the success of the City's economic development include: • The City's Arts grant program continues to support local arts and culture organizations including the Lansing Art Gallery, Impression 5 and the Lansing Symphony Orchestra. In addition, the City will be providing$167,500 of arts impact grants through the Fiscal Year 2022/2023 City of Lansing budget. • City View, Building#2: The second phase of the City View project,which includes a new building with 117 residential units, was completed in mid-2023 and units are available to lease. The total project investment is estimated at$32,000,000. • Lansing Shuffleboard and Social Club: The Lansing Shuffle project includes a full renovation of the former Lansing City Market building and upgrades to the patio. Lansing Shuffle opened in January 2023 and offers a variety of food and drink options from local food entrepreneurs as well as community event space. Full-sized shuffleboard courts and an additional two restaurants are expected to open in early 2024. Voted as Best New Business of 2023 in the local"Top of the Town"awards,this project serves as a hub for delicious food and unique entertainment and continues the momentum of riverfront activation, adding to the flourishing lifestyle amenities in downtown Lansing. The total project investment is estimated at over$3,000,000. • Grewal Hall/Hall 224:The transformation of 224 S.Washington Sq.into a live music and event venue is nearing completion. The estimated$1.4 million development opened in 2023 and has a capacity of about 600 for general admission and 250 people for tabled events. • Grand River Pedway Improvements: The complete refurbishment of the city owned pedway that provides pedestrian access across the Grand River reopened to the public in 2023. The Lansing Brownfield Redevelopment Authority was able to leverage private development investment from its Brownfield Revolving Fund to help finance this important public improvement. The update pedway will promote stronger connections across downtown and improve access to several assets such as the river trail,the Lansing Center,and numerous local businesses. • Holmes Street School Redevelopment: Lofts in the recently converted former Holmes Street School became available to new tenants in 2023. The project includes 47 new residential units that incorporate many of the original details of the building in the redevelopment such as high ceilings,large windows, and original terrazzo as well as using reclaimed wood floors. 5 • Moneyball Sportswear:The new Moneyball Sportswear Headquarters opened in spring 2023. Moneyball Sportswear is well known local business and premier retailer for athletic wear. When Moneyball owner and founder Desmond Ferguson looked for a new headquarters and main retail store location for his expanding business,he wanted to invest back in the community and the 927 W.Saginaw St.property was the perfect opportunity. The complete renovation and reactivation of this dilapidated and long vacant commercial building in a key commercial focus area along West Saginaw further catalyzes investment in the area by building on recent improvements and new businesses in the 900 block,several of which were supported in part by the City of Lansing Facade Improvement Program. Furthermore, this project is located in a Neighborhood of Focus within the Saginaw Street Corridor Improvement Authority Development Area (SSCIA) and aligns with the Authority's mission to enhance the corridor by attracting investment in commercial properties and reinvigorating commercial/retail activities. Future development projects currently underway include: • $175 million Lansing public safety bond will pay for newly constructed public safety and courts campus. This new facility will house the headquarters of the Lansing Fire Department, the Lansing Police Department, a new fire station, temporary detention facility, and the 54-A District Court. The new, central location for public safety services will be on S. Washington Ave, next to the City's South Washington Office Complex. • The Ovation Music and Arts Center, which will be located downtown next to the former Lake Trust location will be a new,state of the art live performance venue. The City of Lansing brought our economic development team back in-house, re-establishing the Lansing Economic Development Corporation. With six full-time staff, the Lansing EDC accomplishes this by attracting and growing businesses, redeveloping properties, and using public/private partnerships. We continue our regional partnership with the Lansing Economic Area Partnership (LEAP). For the year 2023, the City and our EDC was able to get 3 projects from the Prospect to the Approved stage. These projects represent nearly $30 million in new investment in Lansing and are now ready to start construction or are already underway. • Notable Real Estate and Placemaking Projects 0 230 W.Holmes Redevelopment Project: Multi-Family Residential and Commercial 0 505/507 E.Shiawassee St.: Commercial Redevelopment • Notable Business Development Projects o New Consumers Energy Service Center Commercial Corridor Improvement The City and Lansing EDC has also targeted four commercial corridors throughout the city to focus special redevelopment efforts. These Corridor Improvement Authorities are the Michigan Avenue Corridor Improvement Authority (MACIA), Saginaw Street Corridor Improvement Authority (SSCIA), South Martin Luther King Jr. Blvd. Corridor Improvement Authority(SMLKCIA)and the Lansing Gateway Corridor Improvement Authority. The S.Martin Luther King Corridor Improvement Authority(SMLKCIA)with the assistance of Lansing EDC staff has been in contact with vendors,supporting businesses and local organizations to begin implementing a traffic safety programs as well as transit improvements. These measures strive to cut down on the number of deaths on the corridor as well as encourage more pedestrian activity. In conjunction with CATA and with the assistance of the Thriving Communities Grant the corridor is looking at improving or establishing 4 bus shelters with murals along Martin Luther King. The corridor is also working with local business owners on applying for the facade improvement grant to improve the front facing look of businesses on MLK. The MLK CIA has also been very influential in assisting with the redevelopment plan for the Logan Square shopping center. Finally, The SMLKCIA is working with the city to demolish abandoned buildings along the corridor. 6 The Saginaw Street Corridor Improvement Authority (SSCIA) has been working on a marketing and communications outreach program. So far this year they have attracted the interest of numerous businesses along the corridor. These local businesses have been attending the monthly meetings and have shown interest in joining the board. The SSCIA has also established a communications and marketing subcommittee made-up of individuals from the community as well as the board and they have also established a beautification project which started in the fall of 2023 and will be completed early spring of 2024. This beautification project will enhance and beautify the entrance to the West side neighborhood as well as West Saginaw corridor at a place marking landmark called the point. The Michigan Avenue Corridor Improvement Authority(MACIA)this past year has worked on measures to assist local businesses on the corridor as a transition through a lengthy street redesign. MACIA has developed its own website full of exciting content,up-to-date news,and information from the corridor,as well as discount coupons and hidden gems. The MACIA has also assisted with the Red Cedar's development project in the form of providing promotional products for the Red Cedar Social District. Finally, the corridor has a renewed focus on branding Michigan Ave.as"The Avenue",making the Michigan Ave.corridor safe and welcoming for pedestrians and visitors. The North Grand River Avenue Corridor Improvement Authority known as the Lansing Gateway CIA has begun the initial steps on the creation of their Development and Tax Increment Finance Plan, including community engagement and prioritization of efforts. Lansing Equitable Economic Development(LEED) Initiative In 2021, the Jobs and Economic Development Workgroup of Lansing Mayor Andy Schor's Racial Justice and Equity Alliance (MRJEA) identified the critical need to ensure Lansing's BIPOC (Black, Indigenous, People of Color)populations have the tools,opportunities,and access to expertise,resources,and training needed to start and sustain successful businesses,and to participate in the economic development process. To address these findings, the Lansing EDC developed the Lansing Equitable Economic Development (LEED) Initiative. In 2022, the Lansing City Council approved the allocation of$2 million of ARPA funds to the LEED Initiative. The LEED Initiative was designed to equip BIPOC entrepreneurs with financial resources and technical assistance to build strong successful businesses and increase the number of BIPOC-led real estate development projects. In 2023,the Lansing EDC launched the inaugural cohort of the Empower Program. The Empower Program is a 6-month program that provides a cohort of 10 business owners with a team of dedicated project managers, consultants, and business specialists to create and implement an individualized business development plan. Business owners also participate in bi-weekly in-person training sessions around business strategy,marketing, establishing systems and automation to scale their operations, and other topics. Participants have received photography services to develop marketing and promotional materials,human resource consulting to develop staffing strategies and systems,financial management consulting,and a host of other technical assistance free of charge. The Lansing EDC provided over 40 grants in the amount of$2,500 to the graduates of the LEAP One & All Program that are operating in the city of Lansing. This much needed funding is helping to sustain and expand small businesses in the city of Lansing. The Lansing EDC is in the process of developing additional programs to launch in early 2024 that will provide funds for BIPOC-owned business sustainability and expansion as well as programs to provide training, mentorship, and networking opportunities for emerging BIPOC real estate developers and spur investment in focus areas in the city of Lansing. Cordially, 9e ulh A X&Vez rL456 Desiree A. Kirkland, Finance Director 7 e Government Finance Officers Association Certificate of Achievement for Excellence in Financial Reporting Presented to City- of Lansing Michigan For its Annual Comprehensive Financial Report For the Fiscal Year Ended June 30, 2022 P. Executive Director.-CEO 8 Table of Organization Citizens of Lansing City aerk City Council Mayor 54-A District Court Internal Audit CityAttorneys Office of Review Transactions Legal Advisor/Defender Public Education Gant Identify Efficiencies Prosecutor for Oty City Television Analyze Programs Police Fire Economic Neighborhoods Public Parks& Patrol Suppression Planning/Zoning Neighborhood Resources Roads/Sidewalks Parks Design Crime Investigation Prevention Code Compliance Citizen Engagement Sewers/Treatment Recreation Programs Community Policing Emergency Mgmt. Building Safety Financial Empowerment Trash/Recycling Community Centers Social Work Rescue/Hazards Parking System Grounds Maint. Cemeteries Detention Economic Dev.Corp. Engineering Golf LEPFA Property Mgmt. Downtown Lansing,Inc Fleet Services Information Human Human Relations& Finance Operations Treasury Assessing IT Helpdesk Recruiting Gant Writing Assistance Accounting/Budget Income Taxes Assessing Gybersecurity Training Human Services Grants Financial Reporting Property Taxes Property Tax Roll Software Mgmt. Payroll/Benefits Police Investigations Strategic Planning Retirement Neighborhood Ombudsman 9 FINANCIAL SECTION 10 2425 E.Grand River Ave., Ma n e r Suite 1,Lansing,MI 48912 'a517.323.7500 (0.pw osterisan517.323.6346 INDEPENDENT AUDITOR'S REPORT To the Honorable Mayor and Members of the City Council City of Lansing,Michigan Report on the Audit of the Financial Statements Opinions 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 30,2023,and the related notes to the financial statements, which collectively comprise the City's basic financial statements as listed in the table of contents. 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, as of June 30,2023,and the respective changes in financial position,and,when applicable,cash flows thereof for the year then ended in accordance with accounting principles generally accepted in the United States of America. Basis for Opinions We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in GovernmentAuditing Standards,issued by the Comptroller General of the United States. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the Audit of the Financial Statements section of our report. We are required to be independent of the City of Lansing and to meet our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audit. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinions. Change in Accounting Principle As discussed in Note 21 to the financial statements, in 2023 the City adopted new accounting guidance, GASB Statement No. 96, Subscription-based IT Arrangements. Our opinions are not modified with respect to this matter. 11 Responsibilities of Management of the Financial Statements Management is responsible for the preparation and fair presentation of the financial statements in accordance with accounting principles generally accepted in the United States of America, and for 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. In preparing the financial statements, management is required to evaluate whether there are conditions or events, considered in the aggregate,that raise substantial doubt about the City of Lansing's ability to continue as a going concern for twelve months beyond the financial statement date, including any currently known information that may raise substantial doubt shortly thereafter. Auditor's Responsibilities for the Audit of the Financial Statements Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement,whether due to fraud or error, and to issue an auditor's report that includes our opinions. Reasonable assurance is a high level of assurance but is not absolute assurance and therefore is not a guarantee that an audit conducted in accordance with generally accepted auditing standards and Government Auditing Standards will always detect a material misstatement when it exists. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Misstatements are considered material if there is a substantial likelihood that,individually or in the aggregate,they would influence the judgment made by a reasonable user based on the financial statements. In performing an audit in accordance with generally accepted auditing standards and Government Auditing Standards,we: ➢ Exercise professional judgment and maintain professional skepticism throughout the audit. ➢ Identify and assess the risks of material misstatement of the financial statements,whether due to fraud or error,and design and perform audit procedures responsive to those risks. Such procedures include examining,on a test basis,evidence regarding the amounts and disclosures in the financial statements. ➢ Obtain an understanding of internal control relevant to the audit 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 City of Lansing's internal control. Accordingly,no such opinion is expressed. ➢ Evaluate the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management,as well as evaluate the overall presentation of the financial statements. ➢ Conclude whether, in our judgment, there are conditions or events, considered in the aggregate, that raise substantial doubt about the City of Lansing's ability to continue as a going concern for a reasonable period of time. We are required to communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit, significant audit findings, and certain internal control-related matters that we identified during the audit. 12 Required Supplementary Information Accounting principles generally accepted in the United States of America require that the management's discussion and analysis,budgetary comparison schedules,and the pension and OPEB schedules,as identified in the table of contents,be presented to supplement the basic financial statements. Such information,although not a part of the basic financial statements, is required by the Governmental Accounting Standards Board, who considers it to be an essential part of financial reporting for placing the basic financial statements in an appropriate operational, economic, or historical context. We have applied certain limited procedures to the required supplementary information in accordance with auditing standards generally accepted in the United States of America,which consisted of inquiries of management about the methods of preparing the information and comparing the information for consistency with management's responses to our inquiries, the basic financial statements, and other knowledge we obtained during our audit of the basic financial statements. We do not express an opinion or provide any assurance on the information because the limited procedures do not provide us with sufficient evidence to express an opinion or provide any assurance. Supplementary 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 accompanying other supplementary information, as identified in the table of contents,is presented for purpose of additional analysis and is not a require part of the basic financial statements. Such information is the responsibility of management and was derived from and relates directly to the underlying accounting and other records used to prepare the basic financial statements. The 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 State of America. In our opinion,other supplementary information,as identified in the table contents, is fairly stated, in all material respects, in relation to the basic financial statements as a whole. Other Information Management is responsible for the other information included in the annual report. The other information comprises the introductory and statistical sections but does not include the basic financial statements and our auditor's report thereon. Our opinions on the basic financial statements do not cover the other information,and we do not express an opinion or any form of assurance thereon. In connection with our audit of the basic financial statements,our responsibility is to read the other information and consider whether a material inconsistency exists between the other information and the basic financial statements, or the other information otherwise appears to be materially misstated. If, based on the work perform, we conclude that an uncorrected material misstatement of the other information exists, we are required to describe it in our report. 13 Other Reporting Required by Government Auditing Standards In accordance with Government Auditing Standards,we have also issued our report dated December 18, 2023, on our consideration of the City's internal control over financial reporting and on our tests of its compliance with certain provisions of laws,regulations,contracts,and grant agreements and other matters. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards in considering the City's internal control over financial reporting and compliance. December 18, 2023 14 MANAGEMENT'S DISCUSSION AND ANALYSIS is CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS The management of the City of Lansing, Michigan ("the City") provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2023 for the benefit of the readers of these financial statements. This management's discussion and analysis ("MD&A") is intended to assist the reader in focusing on significant financial issues and provide an overview of the City's financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole,which follow this section. Financial Highlights Total net position $ (65,743,898) Change in total net position 69,624,086 Fund balances,governmental funds 249,530,755 Change in fund balances,governmental funds 181,855,391 Unassigned fund balance,general fund 20,917,243 Change in fund balance,general fund 6,209,695 Long-term obligations outstanding 397,571,831 Change in long-term obligations 208,165,751 Overview of the Financial Statements This MD&A is an introduction to the City's basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-Wide Financial Statements. The government-wide financial statements are designed to provide readers with a broad overview of the City's finances, in a manner similar to a private-sector business. The Statement of Net Position and the Statement of Activities are two financial statements that report information about the City,as a whole,and about its activities,which provide measurements of long-term trends that should help answer this question:Is the City,as a whole,better off or worse off as a result of this year's activities? Unlike the governmental funds, the current year's revenues and expenses are taken into account regardless of when cash is received or paid,known as"full accrual accounting'. The Statement of Net Position presents all of the City's assets, deferred outflows of resources, liabilities, and deferred inflows of resources with the difference between these categories reported as"net position". Over time, increases and decreases in net position are an indicator of whether the City's long-term financial position is improving or deteriorating,but can also change as a result of governmental accounting standards. The Statement of Activities presents information showing how the City's net position changed during the most recent fiscal year. All changes in net position are reported as soon as the underlying events giving rise to the change occur,regardless of the timing of related cash flows. Therefore,revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g.,uncollected taxes and earned but unused vacation leave). 16 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS The Statement of Net Position and the Statement of Activities report three activities,as follows: ➢ Governmental Activities. Most of the City's basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch),the District Court(judicial branch),and general operations of the executive branch departments,such as police,fire,parks,public works,and other general staff departments fall within the governmental activities. ➢ Business-type Activities. The City charges fees to customers to help cover all or most of the costs of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. ➢ Discretely Presented Component Units. Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has various discretely presented units: the Brownfield Redevelopment Authority, the Tax Increment Finance Authority, Saginaw Street Corridor Improvement Authority, Michigan Avenue Corridor Improvement Authority, and the Lansing Entertainment and Public Facilities Authority. These financial statements include two schedules that reconcile the amounts reported on the governmental fund financial statements(modified accrual accounting)with governmental activities(full accrual accounting)on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: ➢ Capital assets used in governmental activities are not reported on governmental fund statements. ➢ Certain revenues that are earned,but not available for use within the reporting period,are reported as revenues for governmental activities, but are reported as deferred inflows of resources on the governmental fund statements. ➢ Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements,but not deferred on the government-wide statements. ➢ Internal service funds are reported as governmental activities but reported as proprietary funds in the fund financial statements. ➢ Bond discounts and premiums in connection with the issuance of long-term obligations are reported as other financing sources/uses in governmental fund statements but are capitalized and amortized in the government-wide statements. ➢ Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, and others only appear as liabilities in the government-wide statements. ➢ Capital outlay spending in excess of capitalization thresholds are recorded as capital assets on the government-wide statements but are reported as expenditures on the governmental fund statements. ➢ Bond and note proceeds result in liabilities on the government-wide statements but are recorded as other financing sources on the governmental fund statements. 17 CITY OF LANSING 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,State and Federal Grants Fund, CERA-MSHDA Grant Fund, Public Safety Capital Projects Fund, Sewage Disposal System Fund, and Municipal Parking System Fund. Data for all other funds,termed"nonmajor funds",are combined into a single, aggregated presentation. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. ➢ Governmental funds. Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital projects, debt service, and permanent funds. ➢ Proprietary funds. When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Municipal Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. ➢ Fiduciary Funds. The City acts as a trustee or fiduciary, for its employee pension and other postemployment benefit plans and for the 54-A District Court. It is also responsible for other assets that, because of a trust arrangement,can be used only for the trust beneficiaries. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Position and Changes in Fiduciary Net Position. These funds,which include pension and other postemployment benefit funds, 54-A District Court, and Current Tax Collections Fund are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. 18 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS Other Supplementary Information Other supplementary information includes combining and individual fund financial statements for nonmajor governmental,proprietary,and fiduciary funds. These funds are added together,by fund type,and presented in single columns in the basic financial statements,but are not reported individually, as with major funds, on the governmental fund financial statements. Government-wide Financial Analysis The City's combined net position increased$69,624,086 over the course of this fiscal year's operations and came to a total of$(65,743,898). Net position of governmental activities increased $55,404,216, and business-type activities increased$14,219,870. Explanations for those changes are described below under the governmental activities and business-type activities sections of this Management Discussion and Analysis. Governmental Activities Business-type Activities Total 2022* 2023 2022* 2023 2022* 2023 Current and other assets $ 172,294,944 $ 360,802,878 $ 78,404,972 $ 93,844,460 $ 250,699,916 $ 454,647,338 Capital assets,net 207,842,733 238,293,979 343,402,376 349,092,019 551,245,109 587,385,998 Total assets 380,137,677 599,096,857 421,807,348 442,936,479 801,945,025 1,042,033,336 Deferred outflows of resources 96,309,562 56,279,711 8,155,009 6,547,737 104,464,571 62,827,448 Current liabilities 70,574,273 75,311,106 21,217,472 20,003,397 91,791,745 95,314,503 Noncurrent liabilities 646,310,560 853,493,720 145,906,653 158,634,947 792,217,213 1,012,128,667 Total liabilities 716,884,833 928,804,826 167,124,125 178,638,344 884,008,958 1,107,443,170 Deferred inflows of resources 151,013,876 62,618,996 6,754,746 542,516 157,768,622 63,161,512 Net position Investment in capital assets 159,442,216 152,933,894 232,446,124 227,979,176 391,888,340 380,913,070 Restricted 28,101,348 217,209,665 2,441,780 2,486,846 30,543,128 219,696,511 Unrestricted (578,995,034) (706,190,813) 21,195,582 39,837,334 (557,799,452) (666,353,479) Total net position $ (391,451,470) $ (336,047,254) $ 256,083,486 $ 270,303,356 $ (135,367,984) $ (65,743,898) *The 2022 figures have not been updated for the adoption of GASB 96. The largest component of the City's net position reflects its net investment in capital assets (e.g.,land,buildings, equipment,infrastructure,and others). Restricted net position is the next largest component,which represents amounts subject to external restrictions such as bond covenants, State legislation or Constitutional provision. The remaining portion, unrestricted net position are resources that may be used at the City's discretion, but often have limitations based on policy action. The large increase in unrestricted net position of governmental activities was primarily due to the recognition of ARPA funds and lost revenue. 19 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City's net position changed during the fiscal year: Governmental Activities Business-type Activities Total 2022* 2023 2022* 2023 2022* 2023 Revenue Program revenue Charges for services $ 16,188,665 $ 16,993,355 $ 49,273,285 $ 52,102,949 $ 65,461,950 $ 69,096,304 Operating grants and contributions 90,177,926 70,476,683 - - 90,177,926 70,476,683 Capital grants and contributions 5,283,332 1,490,181 5,000,000 5,283,332 6,490,181 General revenue Taxes 84,708,200 88,404,216 - 84,708,200 88,404,216 State shared revenues-unrestricted 17,704,794 17,994,492 - - 17,704,794 17,994,492 Other 29,982,652 32,452,603 698,662 1,355,841 30,681,314 33,808,444 Total revenue 244,045,569 227,811,530 49,971,947 58,458,790 294,017,516 286,270,320 Expenses General government 19,628,516 20,719,165 - - 19,628,516 20,719,165 Judicial - 4,437,374 - 4,437,374 Health and welfare - 6,658,603 - 6,658,603 Public safety 78,113,026 88,377,091 78,113,026 88,377,091 Public works 27,316,002 16,436,242 27,316,002 16,436,242 Recreation and culture 6,707,099 13,784,687 6,707,099 13,784,687 Community and economic development 75,618,986 18,257,010 75,618,986 18,257,010 Interest on long-term debt 1,845,964 2,993,891 1,845,964 2,993,891 Sewage disposal system - - 22,239,978 30,964,460 22,239,978 30,964,460 Municipal parking system 10,110,065 6,717,635 10,110,065 6,717,635 Cemetery 98,394 703,931 98,394 703,931 Golf 164,878 165,530 164,878 165,530 Garbage and rubbish collection 1,509,140 2,425,495 1,509,140 2,425,495 Recycling 1,656,519 4,005,120 1,656,519 4,005,120 Total expenses 209,229,593 171,664,063 35,778,974 44,982,171 245,008,567 216,646,234 Change in net position before transfers 34,815,976 56,147,467 14,192,973 13,476,619 49,008,949 69,624,086 Transfers(out)in (597,000) (743,251) 597,000 743,251 Change in net position 34,218,976 55,404,216 14,789,973 14,219,870 49,008,949 69,624,086 Net position-beginning of year (425,670,446) (391,451,470) 241,293,513 256,083,486 (184,376,933) (135,367,984) Net position-end of year $ (391,451,470) $ (336,047,254) $ 256,083,486 $ 270,303,356 $ (135,367,984) $ (65,743,898) *The 2022 figures have not been updated for the adoption of GASB 96. Governmental Activities. The following chart depicts revenues of the governmental activities for the fiscal year: Revenues- Governmental Activities Fiscal Year Ending June 30, 2023 Other _ Charges for services 14% 7% State shared revenues- ' unrestricted _ 8% Operating grants and contributions 31% Property taxes 21% Capital grants and contributions 1% Income taxes 18% 20 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS In total, governmental activity revenues decreased $16,234,039 from FY 2022 to FY 2023, with trends of the major revenue categories as follows: General revenue taxes comprised the largest portion of governmental revenues of$88,404,216,or 38.8%of governmental activity revenue for fiscal year 2023,a$3,696,016,or 4.4%increase from fiscal year 2022. Property taxes revenue was 20.8%of governmental revenues,or$47,447,205,which is consistent with the previous year. Income taxes comprised 18.0%,or$40,957,011,of governmental activity revenue,the full amount of which is revenue to the General Fund. This represents a $3,869,418, or 10.4%, increase from fiscal year 2022. Local income tax rates are prescribed by State law and limited in Lansing's case to 1% of resident income and 0.5%of the income of persons working in the City but living outside of its corporate boundaries. Local income tax rates are also limited to 0.5%for Lansing residents working subject to East Lansing's income tax. Unrestricted grants and contributions (including state shared sales tax revenue) comprised 22%, or $50,447,095,of revenues,a$2,759,648,or 5.8%increase from fiscal year 2022. Approximately 36%of this category,$17,994,492,is attributed to State revenue sharing,an amount distributed to municipalities by the State of Michigan by formula allocation of portions of the State sales tax. Charges for services are program-specific revenues generated for services provided. Governmental activity charges for services increased$804,690 from FY 2022 to FY 2023. Governmental Activities. The following chart depicts expenses of the governmental activities for the fiscal year: Expenses - Governmental Activities Fiscal Year Ending June 30, 2023 Judicial 3% Public safety 51% Health and welfare 4% Public works 9% Recreation and culture 8% General government 12% Community and economic development Interest on long-term debt 11% 2% 21 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS Total expenses for governmental activities decreased$37,565,529,18.0%,from FY 2022 to FY 2023,with trends of the major expense categories as follows: The largest component of governmental activities was public safety,accounting for 51.5%,or$88,377,091, a 13.1% ($10,264,065) increase from FY 2022, largely resulting from a decrease in postemployment and pension liabilities and the resulting impact to long-term liabilities. General government comprises the second largest component of governmental activity expenses,at 12.1%, or$20,719,165,an 5.6% ($1,090,649) increase from FY 2022,due to normal increases in expenses. Community and economic development represented 10.6%,or$18,257,000,of total governmental activities expenses. This category decreased$57,361,976,or 76%from FY 2022 due to a decrease in grant programs as part of federal recovery efforts,such as the CERA grant projects. Business-type Activities. Net position of the business-type activities increased by$14,219,870 from FY 2022 to$270,303,356. This increase was largely attributable to ARPA funding and charges for service increases. Financial Analysis of the City's Funds As the City completed the fiscal year, its governmental funds reported combined ending fund balances of $249,530,755,a$181,855,391 increase from fiscal year 2022. Of the $249,530,755 fiscal year 2023 combined ending fund balance, $4,082,050 is unavailable to spend (i.e., amounts tied up in inventories, prepaids, and endowments), $216,263,156 is legally restricted,and$8,268,306 is committed for designated projects,leaving $20,917,243 unassigned. The unassigned fund balance for the General Fund was$20,917,243,a decrease of$989,970 from FY 2022,which is further described in the General Fund Budgetary Highlights section. Sewage Disposal System Fund Net position increased $8,678,021 to $272,161,921 in FY 2023. Unrestricted net position increased $13,433,762,from$23,969,593 to$37,403,355. Municipal Parking System Fund Net position increased $4,236,192 to $3,692,950. Unrestricted net position increased $3,824,189, from $6,152,097 to$9,976,286. The system saw consistent revenues in the current year as well as ARPA lost revenue allocated to the fund in the current year. 22 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS General Fund Budgetary Highlights The FY 2023 General Fund budget was adopted as a balanced budget with a usage of fund balance. During the course of the fiscal year,the General Fund revenue budget was amended from$155,674,501 to$156,042,746. General Fund reserves combined with the Budget Stabilization Fund (combined for financial statement purposes) increased $6,209,695 from FY 2022 to $29,661,497. Unassigned fund balance decreased $989,970, or 4% from fiscal year 2022. The City also benefited from state and federal grants received in previous years and recognized in the current year. The City's local economy is comprised of a diversified mix of businesses and industries including government, health care,manufacturing,insurance,banking,and education. Capital Assets. At the end of the fiscal year 2023, the City had invested $587,385,998, net of accumulated depreciation/amortization, 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 ACFR. Governmental Activities Business-type Activities Total 2022* 2023 2022* 2023 2022* 2023 Land $ 25,435,297 $ 27,743,613 $ 12,369,507 $ 12,369,507 $ 37,804,804 $ 40,113,120 Land improvements 12,926,012 13,174,333 2,345,583 1,791,282 15,271,595 14,965,615 Buildings and improvements 34,191,717 30,812,099 69,837,354 65,957,958 104,029,071 96,770,057 Equipment 7,110,279 8,566,556 2,910,621 2,923,717 10,020,900 11,490,273 Flowage rights 19,365,117 30,322,259 - - 19,365,117 30,322,259 Right to use-SBITA - 4,509,347 - - - 4,509,347 Infrastructure 85,285,683 108,258,080 234,781,043 230,024,679 320,066,726 338,282,759 Construction in progress 23,528,628 14,907,692 21,158,268 36,024,876 44,686,896 50,932,568 Total $ 207,842,733 $ 238,293,979 $ 343,402,376 $ 349,092,019 $ 551,245,109 $ 587,385,998 *The 2022 figures have not been updated for the adoption of GASB 96. Debt Administration. The City,along with the Lansing Building Authority(LBA),a blended component unit of the City,is empowered by law to authorize,issue,and sell debt obligations. Limited tax and unlimited tax general obligation bonds are backed by the full faith and credit of the City. The City also issues revenue-dedicated bonded debt,whose payment for principal and interest comes solely out of funds that receive legally-restricted revenues. The Sewage Disposal fund has the City's only dedicated revenue bonds currently outstanding. LBA's bonds financed the construction of parking structures,golf courses,and other related improvements. Revenues derived from user fees from persons using parking and golf facilities fund the debt service requirements for related improvements,but they are also backed by a limited tax pledge. 23 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 2022* 2023 Governmental activities General obligation bonds $ 29,629,300 $ 214,543,986 Deferred amounts For issuance premiums 586,222 11,526,235 Installment purchase contracts 22,457,000 21,048,000 Loans 6,886,326 6,092,706 SBITA - 4,524,170 Compensated absences 10,962,758 11,188,764 Workers compensation 3,082,191 2,989,432 Total governmental activities 73,603,797 271,913,293 Business-type activities General obligation bonds 103,495,891 115,004,650 Deferred amounts For issuance discounts (144,942) (79,651) For issuance premiums 2,143,101 1,972,584 Revenue bonds 9,425,000 7,875,000 Compensated absences 883,233 885,955 Total business-type activities 115,802,283 125,658,538 Total outstanding obligations $ 189,406,080 $ 397,571,831 *The 2022 figures have not been updated for the adoption of GASB 96. More detailed information regarding these activities and funds can be found in Note 9 of the Notes to the Financial Statements section of the ACFR. Economic Condition and Outlook The City has received substantial support from the federal stimulus American Rescue Plan Act (ARPA) and is reviewing potential support on infrastructure. These have empowered ARPA funds have allowed the City to maintain government services, increase community support-without sacrificing financial health. Many of the employers in the City continue to have staff work remotely or remote hybrid, resulting in reduced business activity downtown impacting income tax and parking revenues. Strengthening the City's economic base,maintaining General Fund reserves,and addressing long-term pension and retiree healthcare obligations are top priorities. The City continues to work diligently with its employees and unions to address the ongoing structural imbalance between projected revenues and long-term pension and retiree health care costs. The City's financial picture will continuously be evaluated to address any budget constraints for future fiscal years. The City continues to experience significant economic development and national recognition of its economic development efforts and accomplishments. For more information,please see the"Local Economy"section of the Transmittal Letter. 24 CITY OF LANSING MANAGEMENT'S DISCUSSION AND ANALYSIS 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-8t"Floor, 124 W.Michigan Avenue,Lansing,Michigan. 25 BASIC FINANCIAL STATEMENTS 26 GOVERNMENT-WIDE FINANCIAL STATEMENTS 27 CITY OF LANSING STATEMENT OF NET POSITION JUNE 30, 2023 Primary Government Governmental Business-type Activities Activities Total Component Units ASSETS Current assets Cash and cash equivalents $ 36,488,808 $ 2,046,080 $ 38,534,888 $ 10,969,750 Equity in pooled cash and investments 57,706,440 50,584,325 108,290,765 10,277,406 Cash and cash equivalents,restricted 187,511,836 2,486,846 189,998,682 2,694,744 Current portion of receivables,net 23,934,120 9,268,584 33,202,704 2,116,130 Due from other governmental units 31,235,270 14,051,105 45,286,375 10 Inventories 1,749,443 699,539 2,448,982 83,282 Prepaids 2,458,800 - 2,458,800 36,956 Total current assets 341,084,717 79,136,479 420,221,196 26,178,278 Noncurrent assets Noncurrent portion of receivables,net 19,718,161 14,707,981 34,426,142 68,812 Capital assets not being depreciated/amortized 42,651,305 48,394,383 91,045,688 - Capital assets,net of accumulated depreciation/amortization 195,642,674 300,697,636 496,340,310 62,509 Total noncurrent assets 258,012,140 363,800,000 621,812,140 131,321 TOTAL ASSETS 599,096,857 442,936,479 1,042,033,336 26,309,599 DEFERRED OUTFLOWS OF RESOURCES Deferred charges on refunding 209,679 3,659,740 3,869,419 Deferred outflows of resources related to pensions 54,838,040 2,602,238 57,440,278 Deferred outflows of resources related to OPEB 1,231,992 285,759 1,517,751 TOTAL DEFERRED OUTFLOWS OF RESOURCES 56,279,711 6,547,737 62,827,448 LIABILITIES Current liabilities Accounts payable 16,429,719 6,342,968 22,772,687 5,303,315 Accrued payroll 2,646,555 104,110 2,750,665 Deposits payable - 85,377 85,377 Due to other governmental units 5,342,622 - 5,342,622 Claims incurred but not reported 1,380,000 1,380,000 Indemnity bonds 43,867 43,867 - Other accrued liabilities 2,621,119 - 2,621,119 468,500 Accrued interest payable 1,175,969 1,295,759 2,471,728 343,542 Unearned revenue 37,559,557 - 37,559,557 540,381 Current portion of compensated absences 1,124,854 52,649 1,177,503 - Current portion of long-term obligations 6,986,844 12,122,534 19,109,378 2,399,762 Total current liabilities 75,311,106 20,003,397 95,314,503 9,055,500 The accompanying notes are an integral part of the financial statements. CONTINUED 28 CITY OF LANSING STATEMENT OF NET POSITION (concluded) JUNE 30, 2023 Primary Government Governmental Business-type Activities Activities Total Component Units LIABILITIES(concluded) Noncurrent liabilities Noncurrent portion of compensated absences $ 10,063,910 $ 833,306 $ 10,897,216 $ - Noncurrent portion of long-term obligations 253,737,685 112,650,049 366,387,734 77,531,120 Accrued interest payable,net of current portion - - - 131,646 Net pension liability 371,601,052 30,896,550 402,497,602 - Net other post-employment benefits liability 218,091,073 14,255,042 232,346,115 - Total noncurrent liabilities 853,493,720 158,634,947 1,012,128,667 77,662,766 TOTAL LIABILITIES 928,804,826 178,638,344 1,107,443,170 86,718,266 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to leases 428,928 - 428,928 - Deferred gain on refunding - - - 1,019,672 Deferred inflows of resources related to pensions 3,075,054 542,516 3,617,570 - Deferred inflows of resources related to OPEB 59,115,014 - 59,115,014 TOTAL DEFERRED INFLOWS OF RESOURCES 62,618,996 542,516 63,161,512 1,019,672 NET POSITION(DEFICIT) Net investment in capital assets 152,933,894 227,979,176 380,913,070 41,944 Restricted Public safety 172,256,020 - 172,256,020 - Public works 20,487,481 20,487,481 Community development 335,291 335,291 Building department 4,583,754 - 4,583,754 Debt service 9,842,945 2,486,846 12,329,791 - Redevelopment projects - - - 2,588,142 Cooley stadium capital projects - - 80,000 Stabilization arrangements 7,792,610 7,792,610 - Endowments(nonexpendable) 1,911,564 - 1,911,564 Unrestricted (706,190,813) 39,837,334 (666,353,479) (64,138,425) TOTAL NET POSITION(DEFICIT) $ (336,047,254) $ 270,303,356 $ (65,743,898) $ (61,428,339) The accompanying notes are an integral part of the financial statements. 29 CITY OF LANSING STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2023 Net(Expense)Revenue and Changes in Net Position Program Revenues Primary Government Operating Grants Capital Grants Charges for and and Governmental Business-type Functions/Programs Expenses Services Contributions Contributions Activities Activities Total Component Units Primary government Governmental activities General government $ 20,719,165 $ 13,093,046 $ 36,389,882 $ $ 28,763,763 $ $ 28,763,763 $ Judicial 4,437,374 - 278,831 - (4,158,543) - (4,158,543) - Health and welfare 6,658,603 - 904,118 - (5,754,485) - (5,754,485) - Public safety 88,377,091 237,161 4,840,032 (83,299,898) (83,299,898) Public works 16,436,242 732,020 21,020,197 1,490,181 6,806,156 6,806,156 Recreation and culture 13,784,687 - 1,879,644 - (11,905,043) - (11,905,043) - Community and economic development 18,257,010 2,931,128 5,163,979 - (10,161,903) - (10,161,903) - Interest on long-term obligations 2,993,891 (2,993,891) (2,993,891) Total governmental activities 171,664,063 16,993,355 70,476,683 1,490,181 (82,703,844) (82,703,844) Business-type activities Sewage disposal system 30,964,460 38,710,464 - - 7,746,004 7,746,004 Municipal parking system 6,717,635 5,018,385 - 5,000,000 - 3,300,750 3,300,750 - Cemetery 703,931 487,209 - - - (216,722) (216,722) - Golf 165,530 - (165,530) (165,530) Garbage and rubbish collection 2,425,495 3,333,884 908,389 908,389 Recycling 4,005,120 4,553,007 547,887 547,887 Total business-type activities 44,982,171 52,102,949 5,000,000 12,120,778 12,120,778 Total primary government $ 216,646,234 $ 69,096,304 $ 70,476,683 $ 6,490,181 (82,703,844) 12,120,778 (70,583,066) Component units Brownfield Redevelopment Authority $ 11,459,272 $ - $ - $ - - (11,459,272) Tax Increment Finance Authority 1,622,914 - - - - - - (1,622,914) Saginaw Street Corridor Improvement Authority - - - - - - - - Michigan Avenue Corridor Improvement Authority 50,000 - - (50,000) Lansing Entertainment&Public Facilities Authority 8,774,515 6,503,225 2,671,000 399,710 Total component units $ 21,906,701 $ 6,503,225 $ 2,671,000 $ (12,732,476) General revenues Property taxes 47,447,205 - 47,447,205 13,991,570 Income taxes 40,957,011 - 40,957,011 - Unrestricted state shared revenues 17,994,492 17,994,492 Grants and contributions not restricted to specific programs 29,222,158 - 29,222,158 - Investment earnings(loss) 3,211,843 1,216,752 4,428,595 251,013 Gain on sale of capital assets - 123,591 123,591 - Miscellaneous 18,602 15,498 34,100 879,338 Transfers (743,251) 743,251 Total general revenues and transfers 138,108,060 2,099,092 140,207,152 15,121,921 Change in net position 55,404,216 14,219,870 69,624,086 2,389,445 Net position(deficit),beginning of the year (391,451,470) 256,083,486 (135,367,984) (63,817,784) Net position(deficit),end of the year $ (336,047,254) $ 270,303,356 $ (65,743,898) $ (61,428,339) The accompanying notes are an integral part of the financial statements. 30 FUND FINANCIAL STATEMENTS 31 CITY OF LANSING GOVERNMENTAL FUND FINANCIAL STATEMENTS Major Fund General Fund - This is the general operating fund of the City. It is used to account for and report all financial resources not accounted for and reported in another fund. State and Federal Grants Fund - This Special Revenue fund accounts for all revenues received from intergovernmental grants and various contributions. These revenues are used for projects as detailed in individual grant applications. CERA-MSHDA Grant Fund - This fund accounts for all revenues received from the CERA grant through the Michigan State Housing Development Authority. These revenues are used for projects as detailed in individual grant applications. Public Safety Capital Projects Fund-This fund accounts for capital project and debt service activity for the Public Safety. Nonmajor Funds Nonmajor governmental funds are presented,by fund type,within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 32 CITY OF LANSING BALANCESHEET GOVERNMENTALFUNDS JUNE 30, 2023 State and Federal Nonmajor Grants-Special Public Safety Governmental General Revenue CERA-MSHDA Capital Projects Funds Total ASSETS Cash and cash equivalents $ 14,737,887 $ 20,693,472 $ 612,358 $ - $ 445,091 $ 36,488,808 Cash and cash equivalents-restricted 3,047,997 - - 171,770,528 12,693,311 187,511,836 Equity in pooled cash and investments 2,410,206 - - - 32,196,171 34,606,377 Receivables Accounts,net 24,076,922 4,904,918 28,981,840 Taxes receivable,net 346,127 - - - - 346,127 Special assessments - - - - 10,278,221 10,278,221 Loans - 29,999 1,185,000 1,214,999 Leases 416,469 - - - - 416,469 Accrued interest - - - - 2,409,446 2,409,446 Due from other funds - - 344,008 344,008 Due from other governmental units 6,933,974 17,220,146 1,837,838 - 5,243,312 31,235,270 Inventories - - - - 1,218,842 1,218,842 Prepaids 951,644 951,644 TOTAL ASSETS $ 52,921,226 $ 37,943,617 $ 2,450,196 $ 171,770,528 $ 70,918,320 $ 336,003,887 LIABILITIES Accounts payable $ 8,683,368 $ 2,914,996 $ 52,723 $ 613,123 $ 1,999,764 $ 14,263,974 Accrued payroll 2,342,679 20,898 - - 35,754 2,399,331 Due to other governmental units 4,932,769 40,972 - - 368,881 5,342,622 Indemnity bonds - - - - 43,867 43,867 Other liabilities 2,590,451 30,668 2,621,119 Due to other funds - - - - 344,008 344,008 Unearned revenue 170,143 34,929,026 2,397,473 62,915 37,559,557 TOTAL LIABILITIES 18,719,410 37,905,892 2,450,196 613,123 2,885,857 62,574,478 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-fees 2,711,024 - - - - 2,711,024 Unavailable revenue-leases 428,928 - - - - 428,928 Unavailable revenue-contracts 1,400,367 - - - - 1,400,367 Unavailable revenue-loans and accrued interest receivable - 37,725 9,457,673 9,495,398 Unavailable revenue-special assessments 9,862,937 9,862,937 TOTAL DEFERRED INFLOWS OF RESOURCES 4,540,319 37,725 19,320,610 23,898,654 FUND BALANCES Nonspendable 951,644 - 3,130,406 4,082,050 Restricted 7,792,610 - - 171,157,405 37,313,141 216,263,156 Committed - - - - 8,268,306 8,268,306 Unassigned 20,917,243 20,917,243 TOTAL FUND BALANCES 29,661,497 171,157,405 48,711,853 249,530,755 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 52,921,226 $ 37,943,617 $ 2,450,196 $ 171,770,528 $ 70,918,320 $ 336,003,887 The accompanying notes are an integral part of the financial statements. 33 CITY OF LANSING RECONCILIATION OF THE GOVERNMENTAL FUNDS BALANCE SHEET TO THE STATEMENT OF NET POSITION JUNE 30, 2023 Fund balances-total governmental funds $ 249,530,755 Amounts reported for governmental activities in the statement of net position are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported as assets in the governmental funds. The cost of capital assets is $ 644,505,052 Accumulated depreciation/amortization is (406,211,073) Capital assets accounted for in the internal service funds,net (14,602,972) Capital assets,net 223,691,007 Some assets are not current financial resources and therefore are not reported in the Governmental Funds Balance Sheet. Deferred ambulance fees receivable 1,669,181 Deferred nuisance fees receivable 1,041,843 Deferred loans receivable 5,855,009 Deferred long-term interest receivable 2,409,446 Deferred long-term special assessments receivable 9,862,937 Deferred contract receivable 1400,367 Deferred opioid settlement 1:230,943 Deferred outflows of resources related to pensions 54,838,040 Deferred outflows of resources related to OPEB 1,231,992 Deferred inflows of resources related to pensions (3,075,054) Deferred inflows of resources related to OPEB (59,115,014) 17,349,690 Internal service funds are used by management to charge the costs of certain activities to individual funds. The assets and liabilities of certain internal service funds are included in the governmental activities in the government-wide statement of net position. Net position of governmental activities accounted for in governmental activities internal service funds 29,392,360 Long-term liabilities are not due and payable in the current period and therefore are not reported in the governmental funds balance sheet.Long-term liabilities at year-end consist of: Bonds and loans payable (252,174,640) Deferred charges on refunding 209,679 Compensated absences (10,192,206) Workers compensation (2,989,432) Accrued interest payable (1,172,342) Net pension liability (371,601,052) Net other post-employment benefits liability (218,091,073) (856,011,066) Net position of governmental activities $ (336,047,254) The accompanying notes are an integral part of the financial statements. 34 CITY OF LANSING STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES GOVERNMENTALFUNDS YEAR ENDED JUNE 30,2023 State and Federal Nonmajor Grants-Special Public Safety Governmental General Revenue CERA-MSHDA Capital Projects Funds Total REVENUES Property taxes and special assessments $ 45,752,274 $ $ $ $ 1,694,931 $ 47,447,205 Income taxes 40,957,011 - 40,957,011 Licenses and permits 2,000,219 - 2,000,219 Intergovernmental 33,244,473 19,575,851 7,586,644 24,982,147 85,389,115 Charges for services 11,817,041 - - 4,070,479 15,887,520 Fines and forfeits 1,427,593 - 227,255 1,654,848 Interest and rents 823,618 1,307,228 1,297,217 3,428,063 Other 26,880,847 115,330 - 2,365,211 29,361,388 TOTAL REVENUES 162,903,076 20,998,409 7,586,644 34,637,240 226,125,369 EXPENDITURES Current General government 14,722,054 3,571,661 - 3,956,563 22,250,278 Public safety 91,044,037 3,849,063 756,261 95,649,361 Public works 13,697,797 2,653,109 - 16,350,906 Judicial 8,237,201 278,831 8,516,032 Health and welfare - 893,963 - 893,963 Highways and streets - - 13,687,366 13,687,366 Recreation and culture 9,992,527 3,988,301 - - 13,980,828 Community and economic development 10,817,891 5,941,173 7,586,644 4,034,145 28,379,853 Debt service Principal 1,409,000 - - 2,400,000 2,471,885 6,280,885 Interest and fiscal charges 434,071 1,648,428 1,858,735 3,941,234 Capital outlay - - - 2,194,167 20,036,190 22,230,357 TOTAL EXPENDITURES 150,354,578 21,176,101 7,586,644 6,242,595 46,801,145 232,161,063 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 12,548,498 (177,692) (6,242,595) (12,163,905) (6,035,694) OTHER FINANCING SOURCES(USES) Proceeds from debt issuances 177,400,000 177,400,000 Bond premium - 10,989,553 10,989,553 Proceeds from sale of capital assets 23,532 23,532 Transfers in 100,000 177,692 9,650,113 9,927,805 Transfers out (6,438,803) (4,011,002) (10,449,805) TOTAL OTHER FINANCING SOURCES(USES) (6,338,803) 177,692 177,400,000 16,652,196 187,891,085 NET CHANGE IN FUND BALANCES 6,209,695 - 171,157,405 4,488,291 181,855,391 Fund balances,beginning of year 23,451,802 44,223,562 67,675,364 Fund balances,end of year $ 29,661,497 $ $ $ 171,157,405 $ 48,711,853 $ 249,530,755 The accompanying notes are an integral part of the financial statements. 35 CITY OF LANSING RECONCILIATION OF THE STATEMENT OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCES OF GOVERNMENTAL FUNDS TO THE STATEMENT OF ACTIVITIES YEAR ENDED JUNE 30,2023 Net change in fund balances-total governmental funds $ 181,855,391 Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlays as expenditures.However,in the statement of activities,the cost of these assets is allocated over their estimated useful lives and reported as depreciation/amortization expense.This is the amount by which capital outlays exceeded depreciation/amortization expense in the current period. Capital outlay $ 36,148,372 Depreciation/amortization expense (10,976,887) Excess of capital outlay over depreciation/amortization expense 25,171,485 Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds. Change in deferred ambulance fees receivable 899,708 Change in deferred nuisance fees receivable 338,026 Change in deferred loans receivable (401,881) Change in deferred opioid settlement 1,230,943 Change in deferred contract receivable 78,307 Change in deferred long-term interest receivable 59,250 Change in deferred special assessments receivable (431,224) 1,773,129 Internal service funds are used by management to charge the costs of certain activities to individual funds. The net revenue of certain individual funds are included in the governmental activities. Change in net position of governmental activities internal service funds 4,038,112 Repayment of long-term debt and borrowing of long-term debt is reported as expenditures and other financing sources in governmental funds, but the repayment reduces long-term liabilities and the borrowings increase long-term liabilities in the statement of net position. In the current year, these amounts consist of: Premium on bond issuance (10,940,013) Deferred charges on refunding (19,202) Issuance of debt (189,122,593) Debt principal retirement 6,280,885 (193,800,923) Certain expenditures are reported in governmental funds that reduce long-term liabilities for purpose of the statement of net position. Change in estimated workers compensation 92,759 Some items reported in the statement of activities do not require the use of current financial resources and therefore are not reported as expenditures in governmental funds. These activities consist of: (Increase)in net pension liability (26,934,966) Decrease in net OPEB liability 15,152,080 Increase in deferred outflows of resources related to pensions 3,744,039 (Decrease)in deferred outflows of resources related to OPEB (43,754,688) Decrease in deferred inflows of resources related to pensions 1,822,626 Decrease in deferred inflows of resources related to OPEB 87,001,182 (Increase)in accrued interest payable (573,378) (Increase)in compensated absences (182,632) 36,274,263 Change in net position of governmental activities $ 55,404,216 The accompanying notes are an integral part of the financial statements. 36 CITY OF LANSING PROPRIETARY FUND FINANCIAL STATEMENTS Major Funds Sewage Disposal System Fund-This fund accounts for the activities of sewage disposal services to the residents of the City. Municipal Parking System Fund-This fund accounts for the operation of City-owned parking facilities. Nonmajor Enterprise Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, within the Combining and Individual Fund Financial Statements and Schedules section of this report as noted in the table of contents. 37 CITY OF LANSING STATEMENT OF NET POSITION PROPRIETARY FUNDS JUNE 30, 2023 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Fund ASSETS Current assets Cash and cash equivalents $ - $ 2,045,880 $ 200 $ 2,046,080 $ Cash and cash equivalents-restricted 2,486,846 - - 2,486,846 - Equity in pooled cash and investments 40,326,881 4,348,475 5,908,969 50,584,325 23,100,063 Receivables,net Customers 6,824,825 89,662 103 6,914,590 5,179 Interest 28,686 134,939 - 163,625 - Contracts 682,232 1,508,137 2,190,369 Due from other governmental units 14,051,105 - - 14,051,105 - Inventories 649,259 50,280 699,539 530,601 Prepaids 1,507,156 Total current assets 65,049,834 8,127,093 5,959,552 79,136,479 25,142,999 Noncurrent assets Contract receivable,net of current portion 3,379,862 11,328,119 - 14,707,981 - Capital assets not being depreciated/amortized 36,445,625 11,545,371 403,387 48,394,383 92,892 Capital assets,net of accumulated depreciation/amortization 292,094,315 7,015,916 1,587,405 300,697,636 14,510,080 Total noncurrent assets 331,919,802 29,889,406 1,990,792 363,800,000 14,602,972 TOTAL ASSETS 396,969,636 38,016,499 7,950,344 442,936,479 39,745,971 DEFERRED OUTFLOWS OF RESOURCES Deferred amounts on refunding 708,710 2,951,030 - 3,659,740 - Deferred outflows of resources related to pensions 1,409,870 424,034 768,334 2,602,238 Deferred outflows of resources related to OPEB 154,822 46,564 84,373 285,759 TOTAL DEFERRED OUTFLOWS OF RESOURCES 2,273,402 3,421,628 852,707 6,547,737 - LIABILITIES Current liabilities Accounts payable 5,649,161 55,704 638,103 6,342,968 2,165,745 Accrued payroll 72,469 26,564 5,077 104,110 247,224 Deposit payable - 85,377 - 85,377 - Claims incurred but not reported - - - 1,380,000 Accrued interest payable 406,768 888,991 - 1,295,759 3,627 Current portion of compensated absences 28,188 2,276 22,185 52,649 42,640 Current portion of long-term obligations 10,991,881 1,130,653 - 12,122,534 1,207,096 Total current liabilities 17,148,467 2,189,565 665,365 20,003,397 5,046,332 Noncurrent liabilities Compensated absences,net of current portion 511,275 124,441 197,590 833,306 953,918 Bonds and notes payable,net of current portion 84,664,713 27,985,336 - 112,650,049 4,353,361 Net pension liability 16,739,477 5,034,579 9,122,494 30,896,550 - Net other post-employment benefits liability 7,723,255 2,322,853 4,208,934 14,255,042 Total noncurrent liabilities 109,638,720 35,467,209 13,529,018 158,634,947 5,307,279 TOTAL LIABILITIES 126,787,187 37,656,774 14,194,383 178,638,344 10,353,611 DEFERRED INFLOWS OF RESOURCES Deferred inflows of resources related to pensions 293,930 88,403 160,183 542,516 NET POSITION(DEFICIT) Net investment in capital assets 232,271,720 (6,283,336) 1,990,792 227,979,176 9,042,515 Restricted for bond reserves 2,486,846 - - 2,486,846 - Unrestricted 37,403,355 9,976,286 (7,542,307) 39,837,334 20,349,845 TOTAL NET POSITION(DEFICIT) $ 272,161,921 $ 3,692,950 $ (5,551,515) $ 270,303,356 $ 29,392,360 The accompanying notes are an integral part of the financial statements. 38 CITY OF LANSING STATEMENT OF REVENUES,EXPENSES,AND CHANGES IN FUND NET POSITION PROPRIETARY FUNDS YEAR ENDED JUNE 30,2023 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds OPERATING REVENUES Charges for services $ 38,710,464 $ 5,018,385 $ 8,374,100 $ 52,102,949 $ 95,282,079 Other - 15,498 - 15,498 141,514 TOTAL OPERATING REVENUES 38,710,464 5,033,883 8,374,100 52,118,447 95,423,593 OPERATING EXPENSES Personnel services 6,398,685 1,535,039 3,267,860 11,201,584 9,180,637 Purchase of goods and services 10,821,826 1,682,151 3,954,072 16,458,049 78,934,055 Other services and charges 555,392 46,348 - 601,740 - Depreciation/amortization 11,113,627 2,154,115 78,144 13,345,886 3,126,414 TOTAL OPERATING EXPENSES 28,889,530 5,417,653 7,300,076 41,607,259 91,241,106 OPERATING INCOME(LOSS) 9,820,934 (383,770) 1,074,024 10,511,188 4,182,487 NONOPERATING REVENUES(EXPENSES) Intergovernmental - 5,000,000 - 5,000,000 - Interest income 932,017 575,102 (290,367) 1,216,752 59,016 Gain on sale of capital assets - 123,591 123,591 50,081 Interest expense and fees (2,074,930) (1,299,982) (3,374,912) (32,221) TOTAL NONOPERATING REVENUES(EXPENSES) (1,142,913) 4,398,711 (290,367) 2,965,431 76,876 NET INCOME(LOSS) BEFORE TRANSFERS 8,678,021 4,014,941 783,657 13,476,619 4,259,363 TRANSFERS IN - 221,251 550,000 771,251 - TRANSFERS OUT - (28,000) (28,000) (221,251) TOTAL TRANSFERS 221,251 522,000 743,251 (221,251) CHANGE IN NET POSITION 8,678,021 4,236,192 1,305,657 14,219,870 4,038,112 Net position(deficit),beginning of year 263,483,900 (543,242) (6,857,172) 256,083,486 25,354,248 Net position(deficit),end of year $ 272,161,921 $ 3,692,950 $ (5,551,515) $ 270,303,356 $ 29,392,360 The accompanying notes are an integral part of the financial statements. 39 CITY OF LANSING STATEMENT OF CASH FLOWS PROPRIETARY FUNDS YEAR ENDED JUNE 30,2023 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 39,196,229 $ 5,014,638 $ 8,420,691 $ 52,631,558 $ - Cash received from interfund services provided 6,135,551 - - 6,135,551 97,223,473 Cash received(paid)for intergovernmental services 12,049,941 (1,867,157) - 10,182,784 - Cash payments for goods and services (12,116,172) (1,770,848) (3,570,283) (17,457,303) (78,240,662) Cash payments to employees (6,778,110) (1,954,398) (4,643,881) (13,376,389) (10,326,053) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 38,487,439 (577,765) 206,527 38,116,201 8,656,758 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Intergovernmental - 5,000,000 - 5,000,000 - Transfers in 221,251 550,000 771,251 Transfers out - (28,000) (28,000) NET CASH PROVIDED(USED)BY NONCAPITAL FINANCING ACTIVITIES 5,221,251 522,000 5,743,251 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Purchases of capital assets (19,035,529) - - (19,035,529) (2,840,418) Proceeds from sale of capital assets 123,591 123,591 50,081 Principal paid on long-term obligations (10,831,585) (1,428,421) (12,260,006) (1,171,229) Interest and costs paid on long-term obligations (2,015,391) (1,962,832) (3,978,223) (32,675) Transfer out - - (221,251) Proceeds from debt issuance 22,113,539 - 22,113,539 Payments received on contract receivable 682,232 1,249,907 1,932,139 NET CASH(PROVIDED)BY CAPITAL AND RELATED FINANCING ACTIVITIES (9,086,734) (2,017,755) (11,104,489) (4,215,492) CASH FLOWS FROM INVESTING ACTIVITIES Interest received(loss) 932,017 580,367 (290,367) 1,222,017 59,016 NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 30,332,722 3,206,098 438,160 33,976,980 4,500,282 Cash and cash equivalents,beginning of year 12,481,005 3,188,257 5,471,009 21,140,271 18,599,781 Cash and cash equivalents,end of year $ 42,813,727 $ 6,394,355 $ 5,909,169 $ 55,117,251 $ 23,100,063 The accompanying notes are an integral part of the financial statements. CONTINUED 40 CITY OF LANSING STATEMENT OF CASH FLOWS (concluded) PROPRIETARY FUNDS YEAR ENDED JUNE 30,2023 Governmental Business-type Activities-Enterprise Funds Activities Sewage Municipal Nonmajor Internal Disposal Parking Enterprise Service System System Funds Total Funds Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ 9,820,934 $ (383,770) $ 1,074,024 $ 10,511,188 $ 4,182,487 Adjustments to reconcile operating income to net cash provided(used)by operating activities Depreciation/amortization 11,113,627 2,154,115 78,144 13,345,886 3,126,414 (Increase)decrease in: Accounts receivable 485,765 (19,245) 46,591 513,111 863,799 Due from other funds 6,135,551 - 6,135,551 - Due from other governmental units 12,049,941 - 12,049,941 - Inventories (234,379) 2,241 (232,138) 184 Prepaids 406 Deferred outflows of resources related to pensions (121,441) (21,034) (3,976) (146,451) - Deferred outflows of resources related to OPEB 756,193 238,386 456,086 1,450,665 - Increase(decrease)in: Accounts payable (504,575) (45,944) 381,548 (168,971) 692,891 Accrued liabilities (57,426) (26,497) (4,471) (88,394) (132,797) Due to other funds (1,867,157) (1,867,157) Deposits payable 3,595 3,595 - Compensated absences 40,325 (700) (36,903) 2,722 43,374 Claims incurred but not reported - - - - (120,000) Net pension liability 2,419,777 555,611 627,353 3,602,741 Net other post-employment benefits liability (166,906) (145,060) (471,892) (783,858) Deferred inflows of resources related to pensions (50,952) (19,472) (44,418) (114,842) Deferred inflows of resources related to OPEB (3,198,995) (1,000,593) (1,897,800) (6,097,388) - NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 38,487,439 $ (577,765) $ 206,527 $ 38,116,201 $ 8,656,758 NONCASH FINANCING ACTIVITIES Subscription-based IT arrangement inflows $ - $ $ - $ - $ 4,839,491 Subscription-based IT arrangement outflows (4,839,491) TOTAL NONCASH FINANCING ACTIVITIES $ $ $ $ - $ The accompanying notes are an integral part of the financial statements. 41 CITY OF LANSING FIDUCIARY FUND FINANCIAL STATEMENTS Pension and Other Postemplovment 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. Custodial Funds 54-A District Court accounts for resources held in a trustee or agent capacity. Current tax collections fund accounts for collections of property taxes and remittances of them to the appropriate authorities. The accompanying notes are an integral part of the financial statements. 42 CITY OF LANSING FIDUCIARY FUNDS STATEMENT OF FIDUCIARY NET POSITION JUNE 30,2023 Pension and Other Post-Employment Benefits Trust Funds Custodial Funds ASSETS Cash and cash equivalents $ 3,982,630 $ - Equity in pooled cash and investments 742 462,237 Investments Mutual funds 422,266,384 - Domestic equities 114,963,318 - International equities 1,974,210 - Emerging market equities 25,339,867 - Money market funds 8,500,591 - Receivables Interest and dividends 222,949 - Due from other governmental units 4,653 - Prepaids 370 - TOTAL ASSETS 577,255,714 462,237 LIABILITIES Accounts payable 286,258 - Due to other governmental units 4,653 - Due to individuals and agencies - 462,237 TOTAL LIABILITIES 290,911 462,237 NET POSITION RESTRICTED FOR: Pension benefits 438,349,561 - Other postemployment benefits 138,615,242 - TOTAL NET POSITION $ 576,964,803 $ - The accompanying notes are an integral part of the financial statements. 43 CITY OF LANSING FIDUCIARY FUNDS STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30,2023 Pension and Other Post-Employment Benefits Trust Funds Custodial Funds ADDITIONS TO NET POSITION Collections from or on behalf of individuals $ - $ 366,985 Collections of taxes for other governments - 131,650,983 Investment income Change in fair value of investments 42,226,957 - Interest income 1,122,032 - Investment expense (805,413) - Net investment income 42,543,576 132,017,968 Contributions Employer 53,723,438 - Plan members 4,719,562 - Total contributions 58,443,000 - TOTAL ADDITIONS 100,986,576 132,017,968 DEDUCTIONS FROM NET POSITION Payments to or on behalf of individuals - 366,985 Payment of taxes collected for other governments - 131,650,983 Participant benefits 81,528,453 - Administrative expenses 1,921,670 - TOTAL DEDUCTIONS 83,450,123 132,017,968 CHANGE IN NET POSITION 17,536,453 - Net position,beginning of year 559,428,350 - Net position,end of year $ 576,964,803 $ - The accompanying notes are an integral part of the financial statements. 44 COMPONENT UNITS 45 CITY OF LANSING DISCRETELY PRESENTED COMPONENT UNITS Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The City has five discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Saginaw Street Corridor Improvement Authority Michigan Avenue Corridor Improvement Authority Lansing Entertainment and Public Facilities Authority 46 CITY OF LANSING COMBINING STATEMENT OF NET POSITION DISCRETELY PRESENTED COMPONENT UNITS JUNE 30, 2023 Lansing Saginaw Street Michigan Avenue Entertainment Brownfield Tax Increment Corridor Corridor and Public Redevelopment Finance Improvement Improvement Facilities Authority Authority Authority Authority Authority Total ASSETS Current assets Cash and cash equivalents $ 8,382,756 $ - $ 13,930 $ 77,610 $ 2,495,454 $ 10,969,750 Equity in pooled cash and investments - 10,075,304 56,609 145,493 - 10,277,406 Cash and cash equivalents-restricted 2,197,893 416,851 - - 80,000 2,694,744 Receivables,net 45,410 - 2,070,720 2,116,130 Due from other governmental units 10 - 10 Inventories - 83,282 83,282 Prepaids 36,956 36,956 Total current assets 10,626,069 10,492,155 70,539 223,103 4,766,412 26,178,278 Noncurrent assets Noncurrent portion of receivable,net 68,812 - - - - 68,812 Capital assets,net of accumulated depreciation 62,509 62,509 Total noncurrent assets 68,812 62,509 131,321 TOTAL ASSETS 10,694,881 10,492,155 70,539 223,103 4,828,921 26,309,599 LIABILITIES Current liabilities Accounts payable 4,490,439 - - - 812,876 5,303,315 Accrued liabilities - - 468,500 468,500 Current portion of accrued interest payable 334,364 9,178 - - - 343,542 Unearned revenue - - 540,381 540,381 Current portion of long-term obligations 821,060 1,558,137 20,565 2,399,762 Total current liabilities 5,645,863 1,567,315 1,842,322 9,055,500 Noncurrent liabilities Noncurrent portion of long-term obligations 38,038,001 39,493,119 - 77,531,120 Accrued interest payable,net of current portion 131,646 131,646 Total noncurrent liabilities 38,038,001 39,624,765 77,662,766 TOTAL LIABILITIES 43,683,864 41,192,080 1,842,322 86,718,266 DEFERRED INFLOW OF RESOURCES Deferred gain on refunding 1,019,672 1,019,672 NET POSITION(DEFICIT) Net investment in capital assets - - - - 41,944 41,944 Restricted for capital projects - - - - 80,000 80,000 Restricted for redevelopment projects 2,312,115 276,027 - - - 2,588,142 Unrestricted (35,301,098) (31,995,624) 70,539 223,103 2,864,655 (64,138,425) TOTAL NET POSITION(DEFICIT) $ (32,988,983) $ (31,719,597) $ 70,539 $ 223,103 $ 2,986,599 $ (61,428,339] The accompanying notes are an integral part of the financial statements. 47 CITY OF LANSING COMBINING STATEMENT OF ACTIVITIES DISCRETELY PRESENTED COMPONENT UNITS YEAR ENDED JUNE 30,2023 Lansing Saginaw Street Michigan Avenue Entertainment Brownfield Tax Increment Corridor Corridor and Public Redevelopment Finance Improvement Improvement Facilities Authority Authority Authority Authority Authority Total EXPENSES Brownfield redevelopment authority $ 11,459,272 $ - $ $ - $ $ 11,459,272 Community development - 1,622,914 50,000 1,672,914 Recreation and culture - - - 8,774,515 8,774,515 TOTAL EXPENSES 11,459,272 1,622,914 50,000 8,774,515 21,906,701 PROGRAM REVENUES Charges for services - - - 6,503,225 6,503,225 Operating grants and contributions 2,671,000 2,671,000 TOTAL PROGRAM REVENUES - 9,174,225 9,174,225 NET PROGRAM(EXPENSE) REVENUE (11,459,272) (1,622,914) (50,000) 399,710 (12,732,476) GENERAL REVENUES Property taxes 8,793,323 5,036,311 40,023 121,913 - 13,991,570 Unrestricted investment earnings(loss) 233,331 17,682 - - - 251,013 Other - 3,062 - - 876,276 879,338 TOTAL GENERAL REVENUES 9,026,654 5,057,055 40,023 121,913 876,276 15,121,921 CHANGE IN NET POSITION (2,432,618) 3,434,141 40,023 71,913 1,275,986 2,389,445 Net position(deficit),beginning of year (30,556,365) (35,153,738) 30,516 151,190 1,710,613 (63,817,784) Net position(deficit),end of year $ (32,988,983) $ (31,719,597) $ 70,539 $ 223,103 $ 2,986,599 $ (61,428,339) The accompanying notes are an integral part of the financial statements. 48 NOTES TO FINANCIAL STATEMENTS 49 CITY OF LANSING INDEX- NOTES TO FINANCIAL STATEMENTS Pape Note 1 -Summary of Significant Accounting Policies..................................................................................................51 Note2 -Budgetary Information...............................................................................................................................................64 Note3 -Deficit Fund Equity........................................................................................................................................................64 Note 4-Deposits and Investments.........................................................................................................................................65 Note5 -Receivables........................................................................................................................................................................73 Note6-Capital Assets....................................................................................................................................................................74 Note 7-Accounts Payable and Accrued Liabilities.......................................................................................................76 Note 8-Interfund Receivables,Payables,and Transfers..........................................................................................76 Note9-Long-term Obligations.................................................................................................................................................77 Note 10-Fund Balances-Governmental Funds.............................................................................................................82 Note 11 -Net Investment in Capital Assets........................................................................................................................82 Note 12 -Segment Information-Enterprise Funds......................................................................................................83 Note13 -Risk Management........................................................................................................................................................83 Note14-Property Taxes..............................................................................................................................................................84 Note15 -Contingent Liabilities................................................................................................................................................84 Note16-Pension Plans.................................................................................................................................................................84 Note 17-Other Postemployment Benefits........................................................................................................................97 Note18-Tax Abatements...........................................................................................................................................................109 Note 19 -Assets Held by Foundation....................................................................................................................................110 Note20 -Lease Receivable.........................................................................................................................................................110 Note 21 -Change in Accounting Principles.........................................................................................................111 Note 22 -Upcoming Accounting Pronouncements.......................................................................................................111 Note23 -Subsequent Events.....................................................................................................................................................112 50 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The City of Lansing(the"City")was incorporated in 1859. In 1909,the City came under the provisions of Act 279, P.A. 1909, as amended ("Home Rule City Act"). The City operates under a strong Mayor form of government in which the Mayor is responsible for implementation and administration of City policy as established by City Council. The accounting and reporting policies of the City conform in all material respects to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB)is the standard setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB's Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: Reporting Entity As required by generally accepted accounting principles,these financial statements present the City and its component units,entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City's reporting entity because of the significance of their operational or financial relationships with the City. Blended Component Unit A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is,in substance,the same as the City. It is reported as part of the City and its financial data is combined with data of the appropriate funds. The City has one blended component unit,the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended unit is described as follows: The City of Lansing Building Authority (the "Authority") was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's governing body and designates management. The Authority uses the proceeds of its tax- exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities, and equity of the Authority are incorporated within the City's Municipal Parking System enterprise fund. Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City's financial statements to be misleading or incomplete. The discretely presented component units are as follows: The Lansing Brownfield RedevelopmentAuthority("LBRA")was established by the City on August 17,1997, under the authority contained in Act 381,Michigan Public Acts of 1996(the"Act"). The Act authorizes the City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Brownfield Redevelopment Authority is appointed by City Council to preside over such a zone,and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows the LBRA to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property value deterioration. Tax increment financing plans must be approved by the City. 51 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1-SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Discretely Presented Component Units (continuedl 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 Saginaw Street Corridor Improvement Authority ("SSCIA") was created in 2009 with the goals to correct and prevent deterioration in the business district,redevelop the city's commercial corridors and promote economic growth. The Authority followed several key principles that were used in the creation of the plan and are supported by the city's master plan to transform the visually unappealing character of the corridor,to encourage pedestrians and to market the quality of the adjacent neighborhoods. In 2019, the development and tax increment financing plans were approved and allow the Authority to begin its first steps in executing the vision set forth by the corridor's residents, businesses, and other stakeholders. The Authority's governing body is appointed by the Mayor with the advice and consent of the City Council. The Authority relies on tax increment revenues as available, along with grants and other revenues. If there are bond issuances to fund the above activities,they are approved by the City Council and the legal liability for the debt remains with the City. The Michigan Avenue Corridor Improvement Authority("MACIA") was created in 2009 with the goals to correct and prevent deterioration in the business district,redevelop the city's commercial corridors and promote economic growth. The Development and Tax Increment Financing plans arrange projects into three categories: public infrastructure, current and prevent deterioration, and promote neighborhood aligned economic growth. In 2019, the development and tax increment finance plans were approved and allow the Authority to begin its first steps in executing the vision set forth by the corridor's residents, businesses,and other stakeholders. The Authority's governing body is appointed by the Mayor with the advice and consent of the City Council. The Authority relies on tax increment revenues as available, along with grants and other revenues. If there are bond issuances to fund the above activities,they 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,Center Park Productions, Grosbeck Golf Course,and the Jackson Field. 52 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Discretely Presented Component Units (concluded) LEPFA is chartered as a building authority under the provisions of Act 31,Public Acts of Michigan, 1948. In the event of dissolution or termination of LEPFA,all assets and rights of the Authority shall revert to the City. LEPFA's Board of Commissioners consists of thirteen members appointed by the Mayor of the City of Lansing and approved by the City Council. Component Unit Financial Statements Complete financial statements for the following individual component units may be obtained from each entity's administrative offices. Because separately issued financial statements are readily available for these component units, detailed notes applicable to each Component Unit are not duplicated here in accordance with GASB 61. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing,Michigan 48933 Brownfield Redevelopment Authority/Tax Increment Finance Authority 1000 S.Washington Avenue,Suite 201 Lansing,Michigan 48910 Lansing Entertainment and Public Facilities Authority 333 East Michigan Avenue Lansing,Michigan 48933 For the SSCIA and the MACIA,these discretely presented component units financial statements are included in the City's audited financial statements and are not audited separately. Fiduciary Component Unit The Pension and Other Postemployment Benefits Trust Funds were established to account for the assets set aside to fund the City's pension and OPEB plans. The primary purpose of the Trusts are to provide the necessary funding for pension payments and retiree healthcare coverage provided to eligible City employees during retirement. The Trusts were established with a Board of Trustees made from individuals from the City, Council, retirement plans, and the public for each of the Employees' Retirement System and Police Officers'and Fire Fighters' Retirement System. The assets of the Trusts are for the exclusive benefit of the participants and their beneficiaries, and the assets shall not be diverted to any other activity prior to the satisfaction of all liabilities. The assets are protected from any of the City's creditors. The respective Boards of Trustees have the ability to exercise responsibility,specifically in the area of designation of management. 53 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Joint Venture In 1998,the City entered into an agreement with Ingham County(the"County")to form the City of Lansing and County of Ingham Joint Building Authority(JBA)for the purpose of constructing and managing a building in downtown Lansing that houses the courts,prosecuting attorney,and other related departments. The JBA is governed by a three-member board composed of one member each appointed by the City and the County and one appointed jointly by the two units. Both the County and the City contribute cash and/or property to the JBA. Bonds were issued in 1999 by the JBA to provide the funding necessary to construct the building. Because the joint venture agreement does not provide an explicit contractual formula outlining the City's claim to the JBA's assets,it is considered to be a"joint venture with no equity interest"and accordingly,no amounts are reported in the accompanying financial statements for an equity interest. Financial information for the JBA may be obtained by writing the Ingham County Financial Services Division,P.O.Box 319,Mason, Michigan 48854. Government-wide and Fund Financial Statements The government-wide financial statements(i.e.,the statement of net position and the statement of activities) report information on all of the nonfiduciary activities of the primary government and its component units. Governmental activities, which normally are supported by taxes and intergovernmental revenues, are reported separately from business-type activities,which rely to a significant extent on fees and charges for support. Likewise,the primary government is reported separately from certain component units for which the primary government is financially accountable. The statement of activities demonstrates the degree to which the direct expenses of a given function or segment are offset by program revenues. Direct expenses are those that are clearly identifiable with a specific function or segment. Program revenues include (1) charges to customers or applicants who purchase,use,or directly benefit from goods,services,or privileges provided by a given function or segment and (2)grants and contributions that are restricted to meeting the operational or capital requirements of a particular function or segment. Taxes and other items not properly included among program revenues are reported instead as general revenues. Separate financial statements are provided for governmental funds,proprietary funds,and fiduciary funds, even though the latter are excluded from the government-wide financial statements. Major individual governmental funds and major individual enterprise funds are reported as separate columns in the fund financial statements. 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. 54 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Measurement Focus, Basis of Accounting,and Financial Statement Presentation (continued) Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. Revenues are considered to be available when they are collectible within the current period or soon enough thereafter to pay liabilities of the current period. The City considers all revenues reported in the governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60-day collection period, and reimbursement-based grants that use one year. Expenditures generally are recorded when a liability is incurred,as under accrual accounting. However,debt service expenditures,as well as expenditures related to compensated absences and claims and judgments,are recorded only when payment is due. Property taxes,intergovernmental revenue,licenses,and interest associated with the current fiscal period are all considered to be susceptible to accrual and as such have been recognized as revenues of the current fiscal period. Only the portion of special assessments receivable due within the current fiscal period is considered to be susceptible to accrual as revenue of the current period. All other revenue items are considered to be measurable and available only when cash is received by the City. The City reports the following major govern mental funds: General Fund. This fund is the City's primary operating fund. It accounts for all the financial resources of the primary government,except those accounted for and reported in another fund. State and Federal Grant Fund. This Special Revenue fund accounts for all revenues from intergovernmental grants and various contributions. These revenues are used for projects as detailed in individual grant applications. CERA-MSHDA Grant Fund. This fund accounts for all revenues received from the CERA grant through the Michigan State Housing Development Authority. These revenues are used for projects as detailed in individual grant applications. Public Safety Capital Projects Fund. This fund accounts for capital project and debt service activity for the Public Safety. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the activities of the sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operation of City-owned parking facilities. Additionally,the City reports the following fund types: Special Revenue Funds are used to account for and report the proceeds of specific revenue sources that are restricted or committed to expenditure for specified purposes other than debt service or capital projects that comprise or are expected to comprise a substantial portion of the fund's total reported inflows. Debt Service Funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal,interest,and related costs. 55 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Measurement Focus, Basis of Accounting,and Financial Statement Presentation(concluded) 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,engineering,311 program,and information technology. Pension and Other Postemployment Benefit Trust Funds account for the accumulation of resources to be used for retirement annuity payments to eligible full-time employees of the City, certain healthcare costs,and other postemployment benefit distributions. The Custodial Funds accounts for resources held in a fiduciary capacity for the 54-A District Court,and property taxes collected and distributed to other governments. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. Also, current internal balances between governmental activities and fiduciary activities have not been eliminated. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund's principal ongoing operations. The principal operating revenues of the City's enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Nonexchange transactions,in which the City gives (or receives)value without directly receiving(or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants,entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Restricted net position are amounts that are subject to restrictions beyond the government's control. The restrictions may be externally imposed or imposed by law. When both restricted and unrestricted resources are available for use, it is the government's policy to use restricted resources first, then unrestricted resources as they are needed. 56 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Assets,Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources,and Equity Deposits and Investments Restricted cash consists of amounts required to be maintained separately in accordance with bond covenants or other restrictions limiting usage of amounts in certain accounts. The City maintains an investment pool for all City funds. Each fund's portion of the investment pool is displayed on the statement of net position/balance sheet as"equity in pooled cash." The City's cash and cash equivalents are considered to be cash on hand,demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize the City to invest in: Bonds, securities, other obligations and repurchase agreements of the United States, or an agency or instrumentality of the United States. Certificates of deposit,savings accounts,deposit accounts or depository receipts of a qualified financial institution. Commercial paper rated at the time of purchase within the two highest classifications established by not less than two standard rating services and that matures not more than 270 days after the date of purchase. Bankers'acceptances of United States banks. Obligations of the State of Michigan and its political subdivisions,that,at the time of purchase are rated as investment grade by at least one standard rating service. Mutual funds registered under the Investment Company Act of 1940 with the authority to purchase only investment vehicles that are legal for direct investment by a public corporation. External investment pools as authorized by Public Act 20 as amended through December 31, 1997. Investments are stated at fair value. Short-term investments are reported at cost,which approximates fair value. Unrealized appreciation or depreciation on pension and other postemployment benefit trust fund investments due to changes in fair value are recognized each year. Receivables/Payables All receivables are reported at their gross value and, where appropriate, are reduced by the estimated portion that is expected to be uncollectible. Amounts due from other governments include amounts due from grantors for specific programs and capital projects and for capture property tax revenues not received by applicable component units as of year-end. 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. 57 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets,Deferred Outflows of Resources, Liabilities,Deferred Inflows of Resources.and Equity(continued) Receivables/Payables(concluded) Transactions between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either due to/from other funds (i.e.,the current portion of interfund loans)or advances to/from other funds(i.e.,the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental activities and business-type activities are reported in the government-wide financial statements as internal balances. Certain receivables in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. Contract receivable consist of amounts collectible from local municipalities for which the City has irrevocably pledged its full faith and credit as collateral for certain construction and improvement bonds. In accordance with contractual agreements, these entities will provide all future amounts due for bond principal and accrued interest payable. The receivable has been reported as current based on the amounts to be collected next year to satisfy obligations. Inventories and Prepaids All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. In governmental funds, prepaid items are charged to expenditures using the consumption method. Capital Assets Capital assets, which include property, plant, equipment, flowage rights, right to use, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets are defined by the City as assets having a useful life in excess of three years and whose costs exceed$5,000 ($100,000 for buildings). Capital assets are stated at historical cost or estimated historical cost where actual cost information is not available. Donated capital assets are recorded at their estimated acquisition cost as of the donation date. In addition to land and construction in progress, the amount presented as capital assets not being depreciated includes intangible assets consisting of land development rights acquired for the purpose of farmland and ranch preservation. Land development rights are deemed to have an indefinite useful life,and therefore are not being amortized. Right to use assets of the City are amortized using the straight-line method over the shorter of the subscription period or the estimated useful lives. 58 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets,Deferred Outflows of Resources, Liabilities,Deferred Inflows of Resources.and Equity(continued) Capital Assets(concluded) The costs of normal maintenance and repairs that do not add to the value of the asset or materially extend asset lives are not capitalized. Major outlays for capital assets and improvements are capitalized as projects are constructed. The other 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 Flowage rights 30 Right to use-SBITA 7 Infrastructure 10-75 The City reviews long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset exceeds its fair value. If it is determined that an impairment loss has occurred,the asset is written down to its net realizable value and a current charge to income is recognized. Deferred Outflows of Resources In addition to assets, the statement of financial position will sometimes report a separate section for deferred outflows of resources. This separate financial statement element, deferred outflows of resources, represents a consumption of net assets that applies to a future period(s)and so will not be recognized as an outflow of resources(expense/expenditure)until then. The City reports a deferred charge on advance bond refunding for the difference in the carrying value of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorter of the life of the refunded or refunding debt. The City also reports deferred outflows of resources for changes in expected and actual investments returns, assumptions, and benefits provided,related to the net pension and other postemployment benefit liabilities. Compensated Absences The City permits employees to accumulate earned but unused vacation and compensatory time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to accumulate earned but unused sick leave. All vacation and compensatory time pay and 50% of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured,for example,as a result of employee resignations or retirements. Unearned Revenue Unearned revenue consists of amounts received prior to the delivery of goods/service or expenditure on allowable costs. 59 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(continued) Assets,Deferred Outflows of Resources.Liabilities,Deferred Inflows of Resources.and Equity(continued Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund statement of net position. Bond premiums and discounts are deferred and amortized over the life of the bonds using the straight-line basis. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as expenses when incurred. In the fund financial statements,governmental fund types recognize bond premiums and discounts,as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs,whether or not withheld from the actual debt proceeds received,are reported as debt service expenditures. Deferred Inflows of Resources In addition to liabilities, the statement of financial position will sometimes report a separate section for deferred inflows of resources. This separate financial statement element, deferred inflows of resources, represents an acquisition of net assets that applies to one or more future periods and so will not be recognized as an inflow of resources (revenue) until that time. The governmental funds report unavailable revenues, which arise only under a modified accrual basis of accounting that are reported as deferred inflows of resources. These amounts are deferred and recognized as an inflow of resources in the period that the amounts become available. The City also reports deferred inflows of resources for changes in expected and actual investments returns,assumptions,and benefits provided,related to the net pension and other postemployment benefit liabilities when applicable. Fund Balances Governmental funds report nonspendable fund balance for amounts that cannot be spent because they are either(a) not in spendable form or(b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources by grantors, contributors,or laws or regulations of other governments. Committed fund balance is reported for amounts that can only be used for specific purposes pursuant to constraints imposed by formal action of the government's highest level of decision-making authority, the City Council. A formal resolution of the City Council is required to establish, modify, or rescind a fund balance commitment. The City reports assigned fund balance for amounts that are constrained by the government's intent to be used for specific purposes but are neither restricted nor committed. The City Council has not delegated the authority to assign fund balance. Unassigned fund balance is the residual classification for the General Fund. In other funds, the unassigned classification is used to report a deficit balance resulting from overspending for specific purposes for which amounts had been restricted,committed,or assigned,when applicable. 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. 60 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Assets,Deferred Outflows of Resources, Liabilities, Deferred Inflows of Resources.and Equity(continued) Stabilization Arrangement On May 23, 1994,the Council adopted a resolution to establish and maintain a revenue stabilization reserve in the general fund. For any year in which actual general fund revenues exceed actual general fund expenditures (including encumbrances and reappropriation into the succeeding fiscal year) according to the annual City audit and reappropriations by Council, Council shall appropriate at least 25% of such excess of revenues over expenditures to the fund until the fund balance reaches a sum equal to 10% of the net current fiscal year general fund appropriations. Council, upon recommendation of the Mayor, may make additional appropriations to the fund from one time or intermittent revenue sources or as provided by policy, except that such appropriations shall not cause the fund balance to exceed a sum equal to 10%of net current fiscal year general fund appropriations. Appropriations to the fund shall require approval by vote of two-thirds of the members elected and serving on Council. Money in the fund may be appropriated by an ordinance or resolution adopted by a two-thirds vote of the members elected and serving on Council for the following purposes: a. To cover a general fund deficit,should the Cit/s annual audit reveal such a deficit; b. To prevent a reduction in the level of public services or in the number of employees at any time in the fiscal year when the City's budgeted revenue is not being collected in an amount sufficient to cover budgeted expenses; c. To prevent a reduction in the level of public services or in the number of employees when, in preparing the budget for the next fiscal year,the City's estimated revenue does not appear sufficient to cover estimated expenses;and d. To cover expenses arising because of a natural disaster, including flood, fire or tornado, with the proviso that if Federal or State funds are received to offset the appropriations from the fund, that such money shall be returned to the fund. Subscription-based ITArrangements(SBITA) Subscriber: The City is a lessee for a noncancelable subscription of an IT arrangement. The City recognizes a SBITA liability and an intangible right-to-use SBITA asset in the government-wide financial statements. At the commencement of a subscription,the City initially measures the SBITA liability at the present value of payments expected to be made during the SBITA term. Subsequently, the SBITA liability is reduced by the principal portion of SBITA payments made. The SBITA asset is initially measured as the initial amount of the SBITA liability,adjusted for SBITA payments made at or before the SBITA commencement date,plus certain initial direct costs. Subsequently,the SBITA asset is amortized on a straight-line basis over its useful life. 61 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Assets,Deferred Outflows of Resources, Liabilities,Deferred Inflows of Resources,and Equity_(continuedl Subscription-based ITArrangements(SBITA) (concluded) Key estimates and judgements related to SBITA's included how the City determines (1) the discount rate it uses to discount the expected SBITA payments to present value, (2) SBITA term,and (3) SBITA payments. ➢ The City uses the interest rate charged by the lessor as the discount rate. When the interest rate charged by the lessor is not provided,the City generally uses its estimated incremental borrowing rate as the discount rate for SBITA. ➢ The SBITA term includes the noncancelable period of the subscription. SBITA payments included in the measurement of the SBITA liability are composed of fixed payments and purchase option price that the City is reasonably certain to exercise. The City monitors changes in circumstances that would require a remeasurement of its SBITA and will remeasure the SBITA asset and liability if certain changes occur that are expected to significantly affect the amount of the SBITA liability. SBITA assets are reported with other capital assets and SBITA liabilities are reported with long-term obligations on the statement of net position. Leases Lessor: The City is a lessor for a noncancelable lease of a building. The City recognizes a lease receivable and a deferred inflow of resources in the government-wide and governmental fund financial statements. At the commencement of a lease, the City initially measures the lease receivable at the present value of payments expected to be received during the lease term. Subsequently, the lease receivable is reduced by the principal portion of lease payments received. The deferred inflow of resources is initially measured as the initial amount of the lease receivable, adjusted for lease payment received at or before the lease commencement date. Subsequently,the deferred inflow of resources is recognized as revenue over the life of the lease term. Key estimates and judgements include how the City determines (1) the discount rate is uses to discount the expected lease receipts to present value, (2) lease term,and (3) lease receipts. ➢ The City uses its estimated incremental borrowing rate as the discount rate for leases. ➢ The lease term includes the noncancelable period of the lease. Lease receipts included in the measurement of the lease receivable is composed of fixed payments from the lessee. The City monitors changes in circumstances that would require a remeasurement of this lease and will remeasure the lease receivable and deferred inflows of resources if certain changes occur that are expected to significantly affect the amount of the lease receivable. 62 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 1 -SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES(concluded) Assets,Deferred Outflows of Resources, Liabilities,Deferred Inflows of Resources.and Equity(concluded) Interfund Transactions During the course of normal operations, the City has numerous transactions between funds, including expenditures and transfers of resources to provide services, construct assets, and service debt. The accompanying financial statements generally reflect such transactions as transfers. Operating subsidies are also recorded as transfers. The amounts recorded as subsidies or advances are determined by the City. Balances outstanding at year-end are reported as due to/from other funds. Transfers between governmental or proprietary funds are netted as part of the reconciliation to the government-wide financial statements. Internal service funds are used to record charges for services to all City departments and funds as transfers or operating revenue. All City funds record these payments to the internal service funds as transfers or operating expenditures/expenses. Pension and Other Postemployment Benefit Plans For purposes of measuring the net pension and other postemployment benefit liabilities,deferred outflows of resources and deferred inflows of resources related to pensions and other postemployment benefits,and pension and other postemployment benefit expense, information about the fiduciary net position of the plans and additions to/deductions from the plan fiduciary net position have been determined on the same basis as they are reported by the plans. For this purpose,benefit payments (including refunds of employee contributions)are recognized when due and payable in accordance with the benefit terms. Investments are reported at fair value. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Accordingly,actual results could differ from those estimates. The City utilizes various investment instruments which are exposed to various risks, such as interest rate, credit,and overall market volatility. Due to the level of risk associated with certain investment securities,it is reasonably possible that changes in the values of investment securities will occur in the near-term and that such changes could materially affect the amounts reported in the financial statements. 63 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 2-BUDGETARY INFORMATION The City follows these procedures in establishing the budgetary data reflected in the financial statements: ➢ On or before the fourth Monday in March,the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. ➢ Public hearings are conducted to obtain taxpayer comments. ➢ Not later than the third Monday in May,the Council adopts a budget through passage of a resolution. ➢ The appropriated budget is prepared by fund,department,and the mandatory expenditure accounts as established by the State of Michigan's Uniform Chart of Accounts. Within the General Fund, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within each department. Within other funds,the legal level of budgetary control is the mandatory expenditure accounts(personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) require City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars,but not in excess of 15%of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. Copies of the City's separately issued budget report may be obtained from the Finance Department, 124 West Michigan Avenue,Lansing,Michigan 48933 or on the City's website at www.lansingmi.gov. ➢ 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"). ➢ Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. NOTE 3 -DEFICIT FUND EQUITY The Cemetery,Garbage and Rubbish Collection,and Recycling Enterprise Funds reported deficits in unrestricted net position of$1,165,744, $1,098,132, and$5,394,947,respectively,primarily as a result of the recognition of net pension and net other postemployment benefit liabilities in these funds. The Tax Increment Finance Authority and the Brownfield Redevelopment Authority component units reported deficits in unrestricted net position of$31,995,624 and$35,301,098,respectively at June 30,2023. The deficits are a result of full-accrual accounting for long-term obligations, without reflecting a corresponding receivable for tax captures to be received in future periods(which cannot be accrued in accordance with generally accepted accounting principles). 64 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS Following is a reconciliation of deposit and investment balances for the primary government and component units(including both pooled cash and investments as well as pension and other postemployment benefit(OPEB) trust fund balances) as of June 30,2023: Primary Component Fiduciary Reporting Government Units Funds Entity Cash and cash equivalents $ 38,534,888 $ 10,969,750 $ 3,982,630 $ 53,487,268 Equity in pooled cash and investments 108,290,765 10,277,406 462,979 119,031,150 Cash and cash equivalents-restricted 189,998,682 2,694,744 - 192,693,426 Investments - - 573,044,370 573,044,370 $ 336,824,335 $ 23,941,900 $ 577,489,979 $ 938,256,214 Deposits and investments Bank deposits Checking/savings accounts-Pension&OPEB related-nonpooled $ 28,097,711 Checking/savings accounts-City-wide accounts-all other 288,672,734 Investment in securities and mutual funds Pooled investments 48,236,760 Employees'retirement system investments 188,496,007 Police and fire retirement system investments 339,605,576 Employees'money purchase pension plan investments 5,846,748 Retiree health care VEBA investments 39,096,039 Tax increment finance authority investments-pooled investments 33,890 Total investment in securities and mutual funds 938,085,465 Cash on hand 170,749 Total $ 938,256,214 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, $304,723,192 of the City's bank balance of$307,517,892 was exposed to custodial credit risk because it was uninsured and uncollateralized. The book balance of all deposits (other than pension & OPEB related) was $288,672,734. 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. 65 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Custodial Credit Risk-Investments For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty,the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require, and the City does not have a policy for investment custodial credit risk. On the investments listed above,there is no custodial credit risk,as these investments are uncategorized as to credit risk. Disclosure related to the TIFA pooled investment are described in their separately issued, readily available financial statements so they are not presented here in accordance with GASB 61. Credit Risk State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in the list of authorized investments in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment credit risk. Credit risk ratings,where applicable,are summarized as follows: S&P AAAm $ 16,857,341 AA 2,510,779 Not rated 28,846,762 Assets not subject to credit risk 21,878 $ 48,236,760 Interest Rate Risk State law limits the allowable investments and the maturities of some of the allowable investments as identified in the summary of significant accounting policies. The City's investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. For investments held at year end maturities are as follows: Due within 1 year $ 48,215,641 No maturity 21,119 $ 48,236,760 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. 66 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset, as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the City's investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing,which consider: (a) benchmark yields, (b) reported trades, (c) broker/dealer quotes, (d) benchmark securities, (e) bids or offers, and (f) reference data. The City's level 2 investments as noted in the table below are valued using significant other observable inputs of the underlying securities. INVESTMENT TYPE Level 1 Level 2 Level 3 Total U.S.treasuries $ $ 28,846,762 $ $ 28,846,762 Commercial paper 2,510,779 2,510,779 Money market funds 21,878 - 21,878 $ 21,878 $ 31,357,541 $ 31,379,419 Investments carried at net asset value Michigan CLASS government investment pool 16,857,341 $ 48,236,760 Investments in Entities that Calculate Net Asset Value per Share The City holds shares in Michigan CLASS whereby the fair value of the investment is measured on a recurring basis using net asset value per share (or its equivalent) of the investment pool as a practical expedient. It has a rating of AAAm from Standard and Poor's with a weighted average maturity of 45 days. At year end, the net asset value of the City's investment in Michigan CLASS was $16,857,341. The investment pool had no unfunded commitments,specific redemption frequency or redemption notice period required. The Michigan CLASS investment pool invests in U.S. treasury obligations, federal agency obligations of the U.S. government, high-grade commercial paper (rated 'A-1' or better) collateralized bank deposits, repurchase agreements (collateralized at 102% by Treasuries and agencies), and approved money-market funds. The program seeks to provide safety,liquidity,convenience,and competitive rates of return,and is designed to meet the needs of Michigan public sector investors. It purchases securities that are legally permissible under state statutes and are available for investment by Michigan counties, cities,townships, school districts, authorities, and other public agencies. 67 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Pension and Other Postemployment Benefit Trust Funds The deposits and investments of the City's pension and other postemployment benefit trust funds are maintained separately from the City's pooled cash and investments and are subject to separate investment policies and State statutes. Accordingly, the required disclosures for the pension and OPEB deposits and investments are presented separately. Deposits The pension and OPEB trust funds maintain demand deposit accounts and equity in pooled cash to handle operational transactions. The book balance of such deposits totaled$28,097,711 at year end. Investments The Michigan Public Employees Retirement Systems' Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate,and various other investment instruments,subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds'assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension and other postemployment benefits investments as of June 30,2023: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals Domestic corporate security mutual funds $ 13,439,468 $ 28,326,284 $ $ $ 41,765,752 Domestic equities Not on securities loan 28,297,591 60,624,938 88,922,529 On securities loan 9,921,665 16,119,124 26,040,789 International equities Not on securities loan 279,003 576,138 855,141 On securities loan 363,261 755,808 1,119,069 Emerging markets equities 8,780,117 15,473,313 1,086,437 25,339,867 Real estate investment mutual funds 19,778,416 27,014,029 - 46,792,445 International equity mutual funds 78,874,787 143,310,968 265,245 4,283,602 226,734,602 Domestic equity mutual funds 24,403,777 43,313,096 4,873,291 16,403,657 88,993,821 Domestic debt securities mutual funds - - 708,212 17,271,552 17,979,764 Money market funds 4,357,922 4,091,878 - 50,791 8,500,591 $ 188,496,007 $ 339,605,576 $ 5,846,748 $ 39,096,039 $ 573,044,370 68 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Credit Risk The City's pension investment policies provide that at least 90%of its investments in fixed income securities be rated BBB- or better by a nationally recognized statistical rating organization and the remaining 10%be rated at least B-or better. The City's pension and other postemployment benefits investments were rated by Standard &Poor's as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals AAA $ $ $ 21,328 $ 599,867 $ 621,195 S&P AAAm - 71,578 71,578 AA 119,087 7,375,993 7,495,080 A 511,047 1,700,219 2,211,266 BBB 56,520 3,001,773 3,058,293 BB - 621,395 621,395 B 380,027 380,027 Not rated 17,802,617 32,440,480 - 3,592,278 53,835,375 Assets not subject to credit risk 170,693,390 307,165,096 5,138,766 21,752,909 504,750,161 $ 188,496,007 $ 339,605,576 $ 5,846,748 $ 39,096,039 $ 573,044,370 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 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. 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. 69 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Foreign Currency Risk Foreign currency risk is the risk that changes in exchange rates will adversely affect the fair value of an investment or deposit. The pension and other postemployment benefits trusts' exposure to foreign currency risk is as follows: Employees' Police and Fire Employees' Retiree Retirement Retirement Money Purchase Health Care System System Pension Plan VEBA Totals International equities Canada $ 415,865 $ 867,783 $ $ $ 1,283,648 Netherlands 31,889 63,778 95,667 United Kingdom 31,706 64,055 95,761 Israel 113,575 237,062 350,637 Denmark 39,972 80,753 120,725 Ireland 9,257 18,515 27,772 International mutual funds 78,874,787 143,310,968 265,245 4,283,602 226,734,602 $ 79,517,051 $ 144,642,914 $ 265,245 $ 4,283,602 $ 228,708,812 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 30,2023,maturities of the City's pension and other postemployment benefits trust debt securities, money market funds, and collateralized mortgage obligations were as follows: Employee Retirement System Fixed income investments with no maturity Domestic corporate securities mutual funds $ 13,439,468 Money market funds 4,357,922 $ 17,797,390 Police and Fire Retirement System Fixed income investments with no maturity Domestic corporate securities mutual funds $ 28,326,284 Money market funds 4,091,878 $ 32,418,162 70 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Interest Rate Risk(concluded) Employees'Money Purchase Pension Plan Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities mutual funds $ - $ 651,463 $ 56,749 $ - $ 708,212 Retiree Healthcare VEBA Investment Maturities(fair value by years) Less than 1 1-5 6-10 More than 10 Total Domestic debt securities mutual funds $ 17,271,552 $ $ - $ - $ 17,271,552 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, 2023,the fair value of securities on loan by the Employees' Retirement System and the Police and Fire Retirement System were $10,284,926 and $16,874,932, respectively, for which the Plans' received cash collateral of$10,468,911 and$17,151,028,respectively. The contract with the pension and other postemployment benefits trust fund custodians require them to indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the City for income distributions by the securities'issuers while the securities are on loan. Fair Value Measurement The City categorizes its fair value measurements within the fair value hierarchy established by generally accepted accounting principles. The hierarchy is based on the valuation inputs used to measure the fair value of the asset,as determined by the City's investment advisors. Level 1 inputs are quoted prices in active markets for identical assets; level 2 inputs are significant other observable inputs; level 3 inputs are significant unobservable inputs. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Debt securities are valued by the Plans' investment custodian using independent pricing services based on the type of asset. The pricing services may use valuation models or matrix pricing, which consider: (a)benchmark yields,(b)reported trades,(c)broker/dealer quotes,(d)benchmark securities,(e)bids or offers, and (f) reference data. Asset-backed and mortgage-backed securities funds are valued based on the future cash flows of the principal and interest payments of the underlying collateral of mortgages on various assets. The Plans'level 2 investments as noted in the tables below are valued using significant other observable inputs of the underlying securities. 71 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (continued) Fair Value Measurement(continued) The City has the following recurring fair value measurements as of June 30,2023: Employee Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total Domestic equities $ 38,219,256 $ - $ $ 38,219,256 International equities 642,264 - 642,264 Emerging market equities 8,780,117 - 8,780,117 Mutual funds 116,718,031 9,297,266 126,015,297 Money market funds 4,357,922 - 4,357,922 $ 168,717,590 $ 9,297,266 $ 178,014,856 Investments carried at net asset value Real estate investment trusts 10,481,151 $ 188,496,007 Police and Fire Retirement System INVESTMENT TYPE Level 1 Level 2 Level 3 Total Domestic equities $ 76,744,062 $ $ $ 76,744,062 International equities 1,331,946 1,331,946 Emerging market equities 15,473,313 15,473,313 Mutual funds 191,328,528 13,430,668 204,759,196 Money market funds 4,091,878 - 4,091,878 $ 288,969,727 $ 13,430,668 $ 302,400,395 Investments carried at net asset value Real estate investment trusts 13,583,361 International equity mutual funds 23,621,820 $ 339,605,576 72 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 4-DEPOSITS AND INVESTMENTS (concluded) Fair Value Measurement(concluded) 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, 2023. 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, 2023, the City has $1,038,686 outstanding on initial commitments of$4,300,000 with the Invesco Mortgage Recovery Fund(the"Fund"). The Fund has a seven-year life,and the intent is to sell all of the investments prior to the Fund's maturity. The other investments at net asset value do not contain required redemption periods. Employees'Money Purchase Pension Plan INVESTMENT TYPE Level 1 Level 2 Level 3 Total Mutual funds $ 5,846,748 $ $ $ 5,846,748 Retiree Healthcare VEBA INVESTMENT TYPE Level 1 Level 2 Level 3 Total Emerging market equities $ 1,086,437 $ - $ $ 1,086,437 Mutual funds 37,958,811 - 37,958,811 Money market funds 50,791 - 50,791 $ 39,096,039 $ - $ $ 39,096,039 NOTE 5 -RECEIVABLES Receivables are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts receivable $ 29,397,019 $ 6,924,590 $ 2,096,000 Taxes receivable 446,127 - - Special assessments receivable 10,278,221 - - Loans receivable 1,214,999 - 114,222 Lease receivable 416,469 - - Accrued interest receivable 2,409,446 163,625 - Due from other governments 31,235,270 14,051,105 10 Contract receivable - 16,898,350 - Allowance for uncollectable accounts (510,000) (10,000) (25,280) $ 74,887,551 $ 38,027,670 $ 2,184,952 Amount not expected to be collected within one year $ 19,718,161 $ 14,707,981 $ 68,812 73 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6-CAPITAL ASSETS Capital asset activity for the year ended June 30,2023,was as follows: Restated Balance Additions/ Deletions/ Balance July 1,2022 Reclassifications Reclassifications June 30,2023 Governmental Activities Capital assets not being depreciated/amortized Land $ 25,435,297 $ 2,308,316 $ - $ 27,743,613 Construction in process 23,528,628 13,176,920 (21,797,856) 14,907,692 Subtotal 48,963,925 15,485,236 (21,797,856) 42,651,305 Capital assets being depreciated/amortized Land improvements 28,953,894 1,405,022 30,358,916 Equipment and vehicles 44,416,857 3,869,032 (65,327) 48,220,562 Buildings 138,336,441 - 138,336,441 Flowage rights 20,032,880 11,722,593 31,755,473 Right of use-SBITA 726,265 4,839,492 5,565,757 Infrastructure 319,311,835 28,304,763 347,616,598 Subtotal 551,778,172 50,140,902 (65,327) 601,853,747 Less accumulated depreciation/amortization for: Land improvements (16,027,882) (1,156,701) - (17,184,583) Equipment and vehicles (37,306,578) (2,412,755) 65,327 (39,654,006) Buildings (104,144,7241 (3,379,618) - (107,524,342) Flowage rights (667,7631 (765,451) (1,433,214) Right of use-SBITA - (1,056,4101 (1,056,410) Infrastructure (234,026,152) (5,332,366) (239,358,518) Subtotal (392,173,099) (14,103,301) 65,327 (406,211,073) Net capital assets being depreciated/amortized 159,605,073 36,037,601 - 195,642,674 Capital assets,net $ 208,568,998 $ 51,522,837 $ (21,797,856) $ 238,293,979 At June 30, 2023, the City's governmental activities had outstanding commitments through construction contracts of approximately$57,840,000. Depreciation/amortization expense was charged to the following governmental activities: Depreciation/amortization of governmental activities by function General government $ 213,733 Public safety 846,929 Public works 6,191,568 Recreation and culture 3,172,768 Community and economic development 551,889 Internal service fund 3,126,414 Total depreciation/amortization expense-governmental activities $ 14,103,301 74 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 6-CAPITAL ASSETS (concluded) Balance Additions/ Deletions/ Balance July 1,2022 Reclassifications Reclassifications June 30,2023 Business-Type Activities Capital assets not being depreciated Land $ 12,369,507 $ - $ - $ 12,369,507 Construction in progress 21,158,268 17,876,110 (3,009,502) 36,024,876 Subtotal 33,527,775 17,876,110 (3,009,502) 48,394,383 Capital assets being depreciated Land improvements 30,077,106 - 30,077,106 Equipment and vehicles 10,876,578 505,342 11,381,920 Buildings 194,889,124 955,659 195,844,783 Sewers 364,817,219 2,707,920 367,525,139 Subtotal 600,660,027 4,168,921 604,828,948 Less accumulated depreciation for: Land improvements (27,731,523) (554,301) (28,285,824) Equipment and vehicles (7,965,957) (492,246) (8,458,203) Buildings (125,051,770) (4,835,055) (129,886,825) Sewers (130,036,176) (7,464,284) (137,500,460) Subtotal (290,785,426) (13,345,886) (304,131,312) Net capital assets being depreciated 309,874,601 (9,176,965) 300,697,636 Capital assets,net $ 343,402,376 $ 8,699,145 $ (3,009,502) $ 349,092,019 At June 30, 2023, the City's business-type activities had outstanding commitments through construction contracts of approximately$16,619,000. Depreciation expense was charged to the following business-type activities: Depreciation of business-type activities by function Sewage disposal system $ 11,113,627 Municipal parking system 2,154,115 Cemetery 9,827 Golf 62,951 Recycling 5,366 Total depreciation expense-business-type activities $ 13,345,886 Details applicable to the Component Units capital assets are readily available in their separate issued financial statements and are not duplicated here in accordance with GASB 61. 75 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 7-ACCOUNTS PAYABLE AND ACCRUED LIABILITIES Accounts payable and accrued liabilities are comprised of the following: Governmental Business-type Component Activities Activities Units Accounts payable $ 16,429,719 $ 6,342,968 $ 5,303,315 Accrued payroll 2,646,555 104,110 - Deposits payable - 85,377 - Due to other governments 5,342,622 - - Claims incurred but not reported 1,380,000 - - Other 2,664,986 - 468,500 $ 28,463,882 $ 6,532,455 $ 5,771,815 NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS The composition of interfund balances of the primary government as of June 30,2023,was as follows: Due to and from primary government funds Due to Nonmajor Governmental Funds Nonmajor Governmental Funds $ 344,008 The above balance generally resulted from a time lag between the dates that interfund goods and services were provided or reimbursable expenditures occur, transactions were recorded in the accounting system, and payments between funds were made. For the year ended June 30,2023,interfund transfers consisted of the following: Transfers to General Fund from: Nonmajor governmental funds (1) $ 100,000 Transfers to State and Federal Grants Fund from: General Fund (3) $ 177,692 Transfers to nonmajor governmental funds from: General Fund (3) $ 6,261,111 Nonmajor enterprise funds (2) 28,000 Nonmajor governmental funds (1)(2) 3,361,002 $ 9,650,113 Transfers to nonmajor enterprise funds from: Nonmajor governmental funds (2) $ 550,000 76 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 8-INTERFUND RECEIVABLES,PAYABLES,AND TRANSFERS(concluded) Transfer to Municipal Parking System: Internal service funds (1) $ 221,251 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 to assist in covering specific outlays or general operational costs as applicable; (2) move receipts restricted to or allowed for debt service or capital projects from the funds collecting the receipts to the respective fund as debt service payments become due or capital outlay is constructed; and (3) use unrestricted revenues collected in the General Fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. NOTE 9 -LONG-TERM OBLIGATIONS General Obligation Bonds The government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rates Amount July 1,2022 (Deletions) June 30,2023 One Year Governmental Activities 2019 General Obligation Refunding-Limited Tax(i) 4/10/2019 4.00% $ 7,456,200 $ 5,829,300 $ (576,300) $ 5,253,000 $ 599,250 2021 Capital Improvement Bonds,Series 2021(LTGO) 12/21/2021 2.15% 10,569,000 4,185,000 (260,000) 3,925,000 270,000 2023A Capital Improvement Bonds(LTGO) 3/30/2023 4.18% 2,400,000 - - - - 2023B Capital Improvement Bonds(LTGO) 6/29/2023 4.00%-5.00% 175,000,000 - 175,000,000 175,000,000 2,210,000 Montgomery Drain District-Series 2021 G.O.Bonds(3) 8/1/2022 2.00%-2.45% 3,961,607 - 3,745,000 3,745,000 - Montgomery Drain District-Series 2023 G.O.Bonds I3J 3/1/2023 1.125%-4.125% 7,760,986 - 7,760,986 7,760,986 - Montgomery Drain District-Series 2020A G.O.Bonds I3J 9/8/2020 3.00% 20,032,880 19,615,000 (755,000) 18,860,000 Total Governmental Activities 227,180,673 29,629,300 184,914,686 214,543,986 3,079,250 Business-type Activities 2009 Building Authority Refunding Bonds-Limited Tax 11/9/2009 6.85% 2,767,491 1,141,733 (711,080) 430,653 430,653 2017 Building Authority Refunding Bonds-Limited Tax 12/11/2017 3.305%-4.075% 10,80s,000 10,805,000 - 10,805,000 - 2020 Building Authority Refunding Bonds-Limited Tax 8/13/2020 1.045%-2.793% 8,735,000 8,535,000 (100,000) 8,435,000 100,000 2002 Limited Tax Sewer Bond-5005-14 3/28/2002 2.50% 12,381,131 1,501,131 (740,000) 761,131 761,131 2003 Limited Tax Sewer Bond-5005-15 3/27/2003 2.50% 10,145,688 1,835,688 (605,000) 1,230,688 620,000 2004 Limited Tax Sewer Bond-5005-16 3/25/2004 2.125% 3,842,649 882,649 (215,000) 667,649 220,000 2005 Limited Tax Sewer Bond-5005-17 3/25/2004 2.125% 8,003,778 1,813,778 (445,000) 1,368,778 455,000 2005 Limited Tax Sewer Bond-5005-18 3/34/2005 1.62S% 13,389,371 3,389,371 (680,000) 2,709,371 680,000 2006 Limited Tax Sewer Bond-5005-19 3/30/2006 1.625% 18,216,346 5,861,346 (960,000) 4,901,346 970,000 2007 Limited Tax Sewer Bond-5005-20 3/29/2007 1.625% 24,244,726 8,884,726 (1,250,000) 7,634,726 1,250,000 2008 Limited Tax Sewer Bond-5005-21 4/1/2008 2.50% 27,494,933 12,590,453 (1,440,000) 11,150,453 1,480,000 2008 Limited Tax Sewer Bond-5005-22 4/17/2009 2.50% 14,455,604 8,065,604 (720,000) 7,345,604 740,000 2010 Limited Tax Sewer Bond-5411-01 1/22/2010 2.50% 8,548,000 5,123,000 (420,000) 4,703,000 430,000 2015 Limited Tax Sewer Bond-5211-01 4/9/2014 2.50% 3,372,405 2,372,405 (155,000) 2,217,405 160,000 2015 Limited Tax Sewer Bond-5211-02 7/9/2014 2.50% 2,185,065 1,520,065 (100,000) 1,420,065 105,000 2016 Limited Tax Sewer Bond-SS81-01 4/11/2016 2.50% 3,206,310 2,676,310 (140,000) 2,536,310 140,000 2019 Limited Tax Sewer Bond-5005-23 4/10/2018 2.00% 8,877,827 8,097,827 (400,000) 7,697,827 410,000 2019 Limited Tax Sewer Bond-5672-01(2) 6/7/2019 2.00% 9,214,990 4,109,105 4,295,885 8,404,990 420,000 2019 General Obligation Refunding-Limited Tax-Sewer(1) 4/10/2019 4.00% 7,163,800 5,600,700 (553,700) 5,047,000 575,750 2022 Limited Tax Sewer Bond-5005-24(4) 3/25/2022 2.125% 23,570,000 - 17,303,437 17,303,437 - 2023 Limited Tax Sewer Bond-5005-2515J 3/24/2023 1.875% 19,881,280 - 109,217 109,217 - 2020 CIB&Refunding Bonds-Municipal Parking 8/13/2020 3.00%-5.00% 9,405,000 8,690,000 (565,000) 8,125,000 600,000 Total Business-type Activities 249,906,394 103,49S,891 11,508,7S9 11S,004,650 10,547,534 Total General Obligation Bonds $ 477,087,067 $ 133,125,191 $ 196,423,445 $ 329,548,636 $ 13,626,784 (1)These debt issues are split between governmental and business-type activities. (2)This debt issue was originally issued in 2019 but proceeds are drawn as the project progresses. (3)This debt is funded by general assessments and drain code tax. (4)The annual requirements to pay the long-term debt principal and interest outstanding are not shown because the loan has not been fully drawn down and as a result the maturity schedule is not in place at year end, the first payment is anticipated to be made during fiscal year 2025. (5)The annual requirements to pay the long-term debt principal and interest outstanding are not shown because the loan has not been fully drawn down and as a result the maturity schedule is not in place at year end, the first payment is anticipated to be made during fiscal year 2027. 77 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS (continued) General Obligation Bonds (concluded) The purpose of each of the General Obligation bonds issued in the Governmental activities was for an energy conservation project,economic development projects,facility improvements,various street improvements,and drainage projects. The purpose of each of the General Obligation(G.O.)bonds issued in the Business-type activities for the Building Authority were for municipal parking system projects. The G.O. sewer bonds issued were for various sewer capital improvement projects throughout the City. Revenue Bonds The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Amounts Issuance Interest Original Balance Balance Due Within Date Rates Amount July 1,2022 Deletions June 30,2023 One Year Business-type Activities 2013 Sewer Revenue Refunding Bonds 12/27/2012 2.40% $ 21,765,000 $ 9,425,000 $ (1,550,000) $ 7,87S,000 $ 1,575,000 The purpose of these noted bonds were for sewer capital improvement projects. Pledged Revenues The City has pledged future sewer customer revenues,net of specified operating expenses,to repay$7,875,000 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$1,930,688 and$21,870,558,respectively. Installment Purchase Agreements The government has entered into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rate Amount July 1,2022 (Deletions) June 30,2023 One Year Governmental Activities 2021 Installment Purchase Agreement(LTGO) 8/18/2021 2.14% $ 10,569,000 $ 10,300,000 $ (639,000) $ 9,661,000 $ 652,000 2021 Installment Purchase Agreement(LTGO) 9/1/2021 1.81% 12,500,000 12,157,000 (770,000) 11,387,000 784,000 $ 23,069,000 $ 22,457,000 $ (1,409,000) $ 21,048,000 $ 1,436,000 The purpose of the lease purchase agreements were for vehicle acquisitions as noted and the installment purchase agreements were for various facility improvements. 78 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9 -LONG-TERM OBLIGATIONS (continued) Loans Payable The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rate Amount July 1,2022 (Deletions) June 30,2023 One Year Governmental Activities HUD Section 108 Loan 5/28/2015 1.52% $ 5,900,000 $ 5,125,000 $ (400,000) $ 4,725,000 $ 410,000 2020 IPA Fire Truck 10/28/2020 1.40% 1,390,000 1,165,929 (129,642) 1,036,287 131,463 2014 SIB Loan 3/27/2014 3.00% 1,828,428 595,397 (263,978) 331,419 271,983 $ 9,118,428 $ 6,886,326 $ (793,620) $ 6,092,706 $ 813,446 The purpose of the HUD loan was for applicable capital improvements within the City. The IPA was for the acquisition of a new fire truck for public safety purposes. The purpose of the SIB loan was for various street improvements. Restated Amounts Issuance Interest Original Balance Additions/ Balance Due Within Date Rate Amount July 1,2022 (Deletions) June 30,2023 One Year Governmental Activities 2023 Subscription-based IT arrangement 9/22/2022 1.85% $ 3,520,987 $ - $ 3,040,639 3,040,639 $ 463,057 2023 Subscription-based IT arrangement 7/8/2022 1.85% 899,659 - 594,259 594,259 294,406 2023 Subscription-based IT arrangement 2/21/2023 1.85% 304,453 - 262,766 262,766 100,230 2023 Subscription-based IT arrangement 7/1/2022 1.85% 114,393 76,846 76,846 38,068 2022 Subscription-based IT arrangement 11/16/2021 1.85% 916,306 726,265 (176,605) 549,660 179,872 $ 5,755,798 $ 726,265 $ 3,797,905 $ 4,524,170 $ 1,075,633 The City's outstanding notes from direct borrowings and direct placements related to governmental activities of $31,664,876 contains provisions that in an event of default, either by (1) unable to make principal or interest payments (2) false or misrepresentation is made to the lender(3)become insolvent or make an assignment for the benefit of its creditors(4)if the lender at any time in good faith believes that the prospect of payment of any indebtedness is impaired. Upon the occurrence of any default event,the outstanding amounts,including accrued interest become immediately due and payable. Current Year Defeasances of Debt On June 29,2023,the City defeased the 2023A Capital Improvement Bond,which were due and payable in 2025. This was accomplished by establishing irrevocable trust with an escrow agent composed of U.S. Government Securities sufficient to meet the applicable principal and interest payments. The City issued 2023B Capital Improvement Bonds. Accordingly,the trust account assets and liabilities for the defeased bonds are not included in the City's financial statements. As a result of the refunded bonds being issued and defeased in the same year with no premium or discount,there is not economic gain or loss. Prior Year Defeased Debt As of June 30, 2023, defeased bonds related to the prior year refunding of the 2009 Building Authority Capital Appreciation Bonds were still outstanding in the amount of$590,983. The defeased bonds are scheduled to be paid by the escrow agent in installments on June 1,2024. As of June 30,2023,defeased bonds related to the prior year refunding of the 2018 Building Authority Refunding Bonds were still outstanding in the amount of$3,660,000. The defeased bonds are scheduled to be paid by the escrow agent in installments through 2027. 79 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9 -LONG-TERM OBLIGATIONS (continued) Prior Year Defeased Debt(concluded) As of June 30, 2023, defeased bonds related to the prior year refunding of the 2014 TIFA and BA Refunding Bonds were still outstanding in the amount of$10,965,000. The defeased bonds are scheduled to be paid by the escrow agent in June 2024. The following is a summary of changes in long-term debt (including current portion) of the City for the year ended June 30, 2023. As Restated Amounts Balance Balance Due Within July 1,2022 Additions Deletions June 30,2023 One Year Governmental Activities General obligation bonds $ 29,629,300 $ 189,122,593 $ (4,207,907) $ 214,543,986 $ 3,079,250 Notes from direct borrowings and direct placements Installment purchase agreements 22,457,000 - (1,409,000) 21,048,000 1,436,000 Subscription-based IT arrangement payable 726,265 4,839,492 (1,041,587) 4,524,170 1,075,633 Loans payable 6,886,326 (793,620) 6,092,706 813,446 59,698,891 193,962,085 (7,452,114) 246,208,862 6,404,329 Deferred amounts for issuance premiums 586,222 10,989,553 (49,540) 11,526,235 - Compensated absences 10,962,758 1,350,861 (1,124,855) 11,188,764 1,124,854 Accrued workers compensation 3,082,191 892,632 (985,391) 2,989,432 582,515 $ 74,330,062 $ 207,195,131 $ (9,611,900) $ 271,913,293 $ 8,111,698 Business-type Activities General obligation bonds $ 103,495,891 $ 22,113,539 $ (10,604,780) $ 115,004,650 $ 10,547,534 Revenue bonds 9,425,000 (1,550,000) 7,875,000 1,575,000 112,920,891 22,113,539 (12,154,780) 122,879,650 12,122,534 Deferred amounts For issuance discounts (144,942) - 65,291 (79,651) - For issuance premiums 2,143,101 (170,517) 1,972,584 - Compensated absences 883,233 SS,371 (52,649) 885,955 52,649 $ 115,802,283 $ 22,168,910 $ (12,312,655) $ 125,658,538 $ 12,175,183 Component Units Brownfield Redevelopment Authority Revenue bonds $ 39,720,000 $ $ (62S,000) $ 39,095,000 $ 730,000 Direct borrowings and direct placements Loan payable 476,820 476,820 91,060 40,196,820 (625,000) 39,571,820 821,060 Less unamortized discount on general obligation bonds (739,022) 26,263 (712,759) - 39,457,798 (598,737) 38,859,061 821,060 Tax Increment Financing Authority General obligation bonds 28,265,000 (S0,000) 28,215,000 50,000 Direct borrowings and direct placements Contract payable 10,009,580 10,009,580 38,274,580 (50,000) 38,224,580 50,000 Add accreted interest on contract payable 4,115,881 435,795 (1,725,000) 2,826,676 1,508,137 42,390,461 435,795 (1,775,000) 41,051,256 1,558,137 Lansing Entertainment and Public Facilities Authority Direct borrowings and direct placements Lease payable 61,084 (40,519) 20,565 20,565 Total component units $ 81,909,343 $ 435,795 $ (2,414,256) $ 79,930,882 $ 2,399,762 80 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 9-LONG-TERM OBLIGATIONS(concluded) Details applicable to the Component Units long-term obligations are readily available in their separate issued financial statements and are not duplicated here in accordance with GASB 61. For the governmental activities,compensated absences and other long-term debt are generally liquidated by the General Fund. Debt service requirements to maturity for the general obligation and revenue bonds of the City are as follows: Year General Obligation Bonds Revenue Bonds Ending Governmental Activities Business-Type Activities Business-Type Activities June 30, Principal Interest Principal Interest Principal Interest 2024 $ 3,079,250 $ 8,806,619 $ 10,547,534 $ 3,166,917 $ 1,575,000 $ 303,188 2025 3,585,736 9,311,425 9,525,938 2,207,813 1,575,000 224,438 2026 3,935,250 9,168,326 9,546,177 2,012,406 1,575,000 145,688 2027 4,310,750 8,961,855 8,878,621 1,781,090 1,575,000 98,438 2028 4,708,800 8,544,652 8,217,546 1,566,762 1,575,000 49,218 2029-2033 28,146,450 39,510,194 27,407,333 5,233,604 - - 2034-2038 38,637,750 32,298,588 18,381,030 2,074,526 2039-2043 53,630,000 22,962,522 5,087,817 135,324 2044-2048 69,590,000 9,714,187 - - 2049-2051 4,920,000 200,628 - - $ 214,543,986 $ 149,478,996 $ 97,591,996 $ 18,178,442 $ 7,875,000 $ 820,970 Debt service requirements to maturity for the notes from direct borrowings and direct placements of the City are as follows: Direct Borrowings and Year Direct Placements Ending Governmental Activities June 30, Principal Interest 2024 $ 3,325,079 $ 316,518 2025 3,173,301 265,946 2026 2,852,260 220,716 2027 2,622,185 221,332 2028 2,678,585 410,842 2029-2033 11,672,466 1,223,776 2034-2036 5,341,000 185,179 $ 31,664,876 $ 2,844,309 81 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 10-FUND BALANCES-GOVERNMENTAL FUNDS 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: State and Nonmajor General Federal CERA- Public Safety Governmental Fund Grants MSHDA Capital Projects Funds Total Fund Balances Nonspendable Inventory $ - $ - $ - $ - $ 1,218,842 $ 1,218,842 Prepaids 951,644 - - - - 951,644 Corpus of permanent funds - 1,911,564 1,911,564 Restricted Major and local streets-public works 17,951,861 17,951,861 Drug law and narcotics enforcement-public safety - - - - 730,370 730,370 Downtown Lansing-community development-public safety - - - - 335,290 335,290 Debt service - - - - 11,018,914 11,018,914 Building department - - - - 4,583,754 4,583,754 Community development - - - - 1 1 Public safety - - - 171,157,405 368,245 171,525,650 Capital projects-public works - - - - 2,324,706 2,324,706 Stabilization arrangement 7,792,610 - - - - 7,792,610 Committed City parks - - - - 499,521 499,521 Capital improvements - 7,768,785 7,768,785 Unassigned 20,917,243 20,917,243 TOTAL FUND BALANCES $ 29,661,497 $ - $ - $ 171,157,405 $ 48,711,853 $ 249,530,755 NOTE 11 -NET INVESTMENT IN CAPITAL ASSETS The composition of net investment in capital assets as of June 30,2023,was as follows: Govermmntal Business-type Component Activities Activities Units Capital assets Capital assets not being depreciated/amortized $ 42,651,305 $ 48,394,383 $ - Capital assets being depreciated/amortized,net 195,642,674 300,697,636 62,509 Total capital assets 238,293,979 349,092,019 62,509 Related debt General obligation bonds 214,543,986 115,004,650 - Direct borrowing and direct placements - - 20,565 Revenue bonds - 7,875,000 - Installment purchase agreements(IPA) 21,048,000 - Loans payable 6,092,706 Subscription-based IT arrangement payable 4,524,170 Unamortized bond discounts - (79,651) Unamortized bond premiums 11,526,235 1,972,584 Deferred charge on bond refunding (209,679) (3,659,740) Unspent bond proceeds (171,157,405) Unspent IPA proceeds (1,007,928) - - Total related debt 85,360,085 121,112,843 20,565 Net investment in capital assets $ 152,933,894 $ 227,979,176 $ 41,944 82 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 12 -SEGMENT INFORMATION-ENTERPRISE FUNDS The government issued revenue bonds to finance certain improvements to its sewage disposal system. Because the Sewage Disposal System,an individual fund that accounts entirely for the government's sewage activities,is a segment and is reported as a major fund in the fund financial statements,separate segment disclosures herein are not required. NOTE 13 -RISK MANAGEMENT The City of Lansing is exposed to various risks of loss that are covered by the City's policies, including losses related to issues of cyber security, liability, errors and omissions, flood, boiler and machinery, property, employee bonding, auto, crime, ERISA considerations, and employee injuries. The City carries commercial insurance to cover these risks. Settled claims related to the commercial insurance have not exceeded the amount of insurance coverage during the past three years. The City is self-funded for Blue Cross Blue Shield healthcare coverage for employees and retirees. The City maintains stop/loss coverage that limits its per-case exposure to$250,000. The City estimates healthcare claims that are incurred but not reported as of year-end,which is accounted for in the City's Fringe Benefits Internal Service Fund. Changes in the estimated liability were as follows: Fiscal Year Ended June 30, 2023 2022 Estimated liability,beginning of year $ 1,500,000 $ 1,635,000 Estimated claims incurred, including changes in estimates 13,271,334 11,139,554 Claim payments (13,391,334) (11,274,554) Estimated liability,end of year $ 1,380,000 $ 1,500,000 The City is self-insured for workers' compensation costs. The City estimates the liability for workers' compensation claims that have been incurred through the end of the fiscal year,including those claims that have been reported as well as those that have not yet been reported to the City. When appliable,the current portion of this 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$17,500,000 per occurrence with a$100,000 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, 2023 2022 Estimated liability,beginning of year $ 3,082,191 $ 2,789,472 Estimated claims incurred, including changes in estimates 892,632 1,758,032 Claim payments (985,391) (1,465,313) Estimated liability, end of year $ 2,989,432 $ 3,082,191 83 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 14-PROPERTY TAXES Property taxes attach as an enforceable lien on property as of the date they are levied. City,community college, and 50%of school taxes are levied and due July land 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 2022 taxable value for all properties within the City is$2,541,061,751. 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, 2023 was$19.44 per$1,000 of taxable value. NOTE 15 -CONTINGENT LIABILITIES The City and its component units participate in a number of Federal and State assisted programs that are subject to compliance audits. The audit of the Federal programs and the periodic program compliance audits of many of the State programs have not yet been conducted, completed, or resolved. Accordingly, the City's and its component units' compliance with applicable grant requirements will be established at some future date. The amount,if any,of expenditures which may be disallowed by the granting agencies cannot be determined at this time although the City and its component units expect such amounts,if any,to be immaterial. There are various other legal actions pending against the City and its component units. Due to the inconclusive nature of many of the actions, it is not possible for the City's Counsel to determine the probable outcome or a reasonable estimate of the potential liability, if any. These actions, for which a reasonable estimate can be determined of the potential liability,if any,are considered by the City and/or component unit management and legal counsel to not have a material effect on the financial condition of the City. NOTE 16 -PENSION PLANS EMPLOYEES'RETIREMENT SYSTEM Plan Description The City sponsors and administers the Employees' Retirement System (the "Plan"), a single-employer, defined benefit pension plan that covers general full-time employees of the City of Lansing,Michigan,and employees of the 54-A District Court. It does not include elected officials,who are members of the Employees'Money Purchase Pension Plan, nor does it include police officers and firefighters, who are members of a separate City defined benefit pension plan. The Plan was established and may be amended by the City Council and is administered by a nine member Board of Trustees. The Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council,the City Treasurer,the City Human Resources Director,three members of the retirement system to be elected by the members of the system under rules adopted by the board, two residents of the State of Michigan appointed by the Mayor, by and with the consent of the City Council, one of which is a retiree of the retirement system. It is accounted for as a separate pension trust fund. Separate financial statements are not issued for the Plan. 84 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Plan Description (concluded) All members may retire at age 50 with 25 or more years of credited service, or age 58 with 8 or more years of credited service. Members are vested after completing 8 years of credited service. Retirement options that provide for survivor benefits are available to members. The plan also provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment prior to retirement will receive their benefit as a life annuity beginning at age 58. Summary of Significant Accounting Policies The financial statements of the Plan are prepared using the accrual basis of accounting. Plan member contributions are recognized in the period which the contributions are due. The City's contributions are recognized when due and a formal commitment to provide the contribution has been made. Benefits and refunds are recognized when due and payable in accordance with the terms of the Plan. Administration of the Plan is funded through the Plan's investment earnings. Method Used to Value Investments Plan investments are reported at fair value. Short-term investments are reported at cost,which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of the Plan Board of Trustees,with the assistance of a valuation service. Plan Membership At December 31, 2022,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 926 Inactive employees entitled to but not yet receiving benefits 206 Vested and non-vested active participants 411 Total employees covered by the Plan 1,543 Benefits Provided Employees who retire with minimum age and years of service requirements are entitled to annual retirement benefits, payable in monthly installments for life, in an amount equal to a percentage of their final average compensation times years of credited service. Final average compensation is defined as the average of the highest annual compensation paid over two consecutive years of credited service within the last 10 years of credited service immediately preceding a member's termination of employment. 85 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Benefits Provided (concluded The benefit payments for the current plan are calculated using the following rates for the various groups of general employees: Multiplier Bargaining Unit/Employee Group Percentage United Auto Workers(UAW) Hired after January 9,2017 1.50% Hired after October 21,2013 1.70% All others 2.75% Teamsters Local 214 Hired after September 2012 1.25% All others 1.80% Teamsters Local 580 Hired after May 19,2014 1.25% All others 1.80% Non-bargaining and all others Hired after April 1,2014 1.25% All others 1.60% District court exempt Hired after June 1,2014 1.25% All others 1.60% Contributions The contribution requirements of Plan members are established and may be amended by the City Council in accordance with City policies,union contracts,and Plan provisions. Employees are required to make contributions to the Plan in rates from 3.00 to 6.50% depending on bargaining unit and hire date. The City is required to contribute at actuarially determined rates expressed as a percentage of covered payroll. The City's contribution rate for the current plan for the year ended June 30,2023 was 42.70%of projected valuation payroll. Contribution Bargaining Unit/Employee Group Percentage United Auto Workers(UAW) 3.00% Teamsters Local 214 Hired after September 2012 5.00% All others 6.50% Teamsters Local 580 Hired after May 9,2014 5.00% All others 6.35% District court Teamsters Hired after April 2014 5.00% All others 5.50% District court exempt 5.50% All others 6.50% 86 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Investment Policy The Plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return For the year ended June 30, 2023,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was 2.29%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. Concentrations At June 30, 2023,the Plan held certain investments (other than those issued or explicitly guaranteed by the U.S. government,mutual funds,external investment pools,or other pooled investments) in certain organizations that represent 5%or more of the Plan's fiduciary net position. Please see Note 4 for the details of these concentrations. Reserves In accordance with the Plan policy,the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. The market value change from December 31, 2022 to June 30, 2023 has been included in the Pension accumulation fund amount as it has not been allocated to the other funds as of year-end. A summary of the Plan reserves at June 30,2023 is as follows: Reserve/Group Balance Employee savings fund $ 12,141,302 Retirement reserve fund 119,644,824 Pension accumulation fund 836,169 Members benefit fund 13,441,835 Health insurance fund 44,189,634 Net Pension Liability The components of the net pension liability for the employees'retirement system at June 30,2023 were as follows: Total Pension Liability $ 309,969,879 Plan Fiduciary Net Position 145,869,058 Net Pension Liability $ 164,100,821 Plan fiduciary net position as percentage of total Pension Liability 47.06% 87 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) EMPLOYEES' RETIREMENT SYSTEM (continued) Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31,2022,rolled forward to June 30,2023,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Salary increases: Inflation,plus service based increases. Investment rate of return: 7.00%,net of investment expense,including inflation. Mortality is based on the Pub2010S tables (below median), 50% for pre-retirement deaths. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected generationally with Scale SSA(2020). The actuarial assumptions used in the December 31, 2022 valuation were based on the 2015-2019 experience study. Assumption changes - there were no changes in actuarial assumptions during fiscal year 2023. More details regarding actuarial assumptions can be found in the December 31,2022 valuation reports for each system. Benefit changes-there were no changes to benefits in the current year. 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 December 31,2022,and the final investment return assumption,are summarized in the following table: Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 27.00% 6.25% 1.69% International Equity-Developed 12.00% 6.15% 0.74% International Equity-Emerging 4.00% 6.55% 0.26% Fixed Income-U.S. 25.00% 2.05% 0.51% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.50% 0.27% Global Equity Long/Short 10.00% 4.75% 0.48% Absolute Return 6.00% 4.65% 0.28% 100.00% 4.71% Inflation 2.50% Risk adjustment -0.21% Investment rate of return 7.00% 88 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Discount Rate The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, each plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore,the long-term expected rates of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2022 $ 312,157,774 $ 1S3,666,3S3 $ 158,491,421 Changes for the Year Service cost 2,889,649 - 2,889,649 Interest on total pension liability 21,220,221 - 21,220,221 Difference between expected and actual experience (2,085,433) - (2,085,433) Employer contributions - 11,675,068 (11,675,068) Employee contributions - 1,418,513 (1,418,513) Net investment income 3,436,309 (3,436,309) Benefit payments,including employee refunds (24,212,331) (24,212,331) - Administrative expense (114,853) 114,853 Net changes (2,187,894) (7,797,294) 5,609,400 Balances as of June 30,2023 $ 309,969,880 $ 145,869,059 $ 164,100,821 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 7.00%,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(6.00%) or 1-percentage-point higher(8.00%)than the current rate: 1%Decrease Current Rate 1%Increase 6.00% 7.00% 8.00% Net pension liability $ 192,551,094 $ 164,100,821 $ 137,950,474 89 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2023,the City recognized ERS pension expense of$16,787,901. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ - $ 2,881,458 Net difference between projected and actual earnings on pension plan investments 13,821,268 - Total $ 13,821,268 $ 2,881,458 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2024 $ 1,845,119 2025 933,976 2026 6,794,984 2027 1,365,731 $ 10,939,810 At June 30, 2023,the City did not have any outstanding contributions to the pension plan required for the year ended June 30,2023. 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. 90 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16-PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Plan Description (concluded). 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, 2022,plan membership consisted of the following: Inactive employees or beneficiaries receiving benefits 791 Inactive employees entitled to but not yet receiving benefits 68 Vested and non-vested active participants 362 Total employees covered by the Plan 1,221 91 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) 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. Pension benefit is capped at 110% of base wage for IAFF and CCLP-NS and 115% for CCLP-Supervisors. Benefit multiplier is changed to 2.5%and pension benefit is capped at 100%of base wage for hires on or after May 19,2014 for IAFF and August 1,2014 for CCLP-NS. Contributions The contribution requirements of plan members are established and may be amended by the City Council in accordance with City policies, union contracts, and Plan provisions. Fire members are required to contribute 10.0% of their annual wages to the plan, fire members hired after May 19, 2014 are required to contribute 7.00%. Police supervisors are required to contribute 9.52%,police non-supervisors are required to contribute 9.0%,and police non-supervisors hired after August 1, 2014 are required to contribute 7.00%. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City's actuary) not financed by member contributions shall be financed by annual appropriations. The City's contribution rate for the plan for the year ended June 30, 2023 was 54.80%of projected valuation payroll. Investment Policy The Plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy is shown on the following pages. Rate of Return For the year ended June 30, 2023,the annual money-weighted rate of return on pension plan investments,net of pension plan investment expense, was 4.84%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. Concentrations At June 30,2023,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. 92 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Reserves In accordance with the Plan policy,the City establishes reserves for various purposes. The reserves are adjusted annually based on recommendations from the City's actuaries. The policy for creating and adjusting reserves was established and can be amended by the Plan Board of Trustees. The market value change from December 31,2022 to June 30,2023 has been included in the Retirement reserve fund amount as it has not been allocated to the other funds as of year-end. A summary of the Plan reserves at June 30,2023 is as follows: Reserve/Group Balance Retirement reserve fund $ 262,710,730 Employee savings fund 25,098,064 Health insurance fund 53,941,846 Net Pension Liability The components of the net pension liability for the police and fire retirement system at June 30, 2023,were as follows: Total Pension Liability $ 525,035,189 Plan Fiduciary Net Position 286,638,408 Net Pension Liability $ 238,396,781 Plan fiduciary net position as percentage of total Pension Liability 54.59% Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31,2022,rolled forward to June 30,2023,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Salary increases: Inflation,plus service based increases. Investment rate of return: 7.00%,net of investment expense,including inflation. Mortality is based on the Pub2010S(below median),50%for pre-retirement deaths. For Disabled members, the disabled version of these tables is used. Each of these tables is projected generationally with Scale SSA (2020). The actuarial assumptions used in the December 31, 2022 valuation were based on the 2015-2019 experience study. 93 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded). Assumption changes - there were no changes in actuarial assumptions during fiscal year 2023. More details regarding actuarial assumptions can be found in the December 31,2022 valuation reports for each system. Benefit changes-there were changes made to the compensation and benefit multiplier for the police and non- supervisory hires after August 1,2014 and firefighters hired after May 1,2014 based on the collective bargaining agreements. 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 December 31,2020,and the final investment return assumption,are summarized in the following table: Long-Term Expected Real Money-Weighted Asset Class Target Allocation Rate of Return Rate of Return Domestic Equity 27.00% 6.25% 1.69% International Equity-Developed 12.00% 6.15% 0.74% International Equity-Emerging 4.00% 6.55% 0.26% Fixed Income-U.S. 25.00% 2.05% 0.51% Real Estate 10.00% 4.85% 0.49% Global Opportunistic Fixed Income 6.00% 4.50% 0.27% Global Equity Long/Short 10.00% 4.75% 0.48% Absolute Return 6.00% 4.65% 0.28% 100.00% 4.71% Inflation 2.50% Risk adjustment -0.21% Investment rate of return 7.00% 94 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Discount Rate The discount rate used to measure the total pension liability was 7.00%. The projection of cash flows used to determine the discount rate assumed that plan member contributions will be made at the current contribution rate and that City contributions will be made at rates equal to the difference between actuarially determined contribution rates and the member rate. Based on those assumptions, each plan's fiduciary net position was projected to be available to make all projected future benefit payments of current plan members. Therefore,the long-term expected rates of return on pension plan investments was applied to all periods of projected benefit payments to determine the total pension liability. The components of the change in the net pension liability are summarized as follows: Increase(Decrease) Total Pension Plan Fiduciary Net Pension Liability Net Position Liability Changes in Net Pension Liability (a) (b) (a)-(b) Balances at June 30,2022 $ 502,879,789 $ 289,411,315 $ 213,468,474 Changes for the Year Service cost 7,853,786 - 7,853,786 Interest on total pension liability 34,431,238 - 34,431,238 Benefit changes 295,273 - 295,273 Difference between expected and actual experience 17,292,601 - 17,292,601 Employer contributions - 18,165,988 (18,165,988) Employee contributions 2,967,886 (2,967,886) Net investment income 13,936,766 (13,936,766) Benefit payments,including employee refunds (37,717,498) (37,717,498) - Administrative expense - (126,049) 126,049 Net changes 22,155,400 (2,772,907) 24,928,307 Balances as of June 30,2023 $ 525,035,189 $ 286,638,408 $ 238,396,781 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 7.00%,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(6.00%) or 1-percentage-point higher(8.00%)than the current rate: 1%Decrease Current Rate 1%Increase 6.00% 7.00% 8.00% Net pension liability $ 295,419,917 $ 238,396,781 $ 186,805,140 95 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (continued) POLICE AND FIRE RETIREMENT SYSTEM (concluded) Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to Pensions For the year ended June 30, 2023, the City recognized Police and Fire Retirement System pension expense of $37,762,904. At June 30, 2023, the City reported deferred outflows of resources and deferred inflows of resources related to pensions from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Differences between expected and actual experience $ 16,290,161 $ 736,112 Changes in assumptions 6,006,284 - Net difference between projected and actual earnings on pension plan investments 21,322,565 - Total $ 43,619,010 $ 736,112 Amounts reported as deferred outflows of resources and deferred inflows of resources related to pension will be recognized in pension expense as follows: Year Ending Pension June 30, Expense 2024 $ 17,270,932 2025 8,081,100 2026 16,414,216 2027 1,116,650 $ 42,882,898 At June 30,2023,the City did not have any outstanding amount of contributions to the pension plan required for the year ended June 30,2023. For governmental activities,pension liabilities are expected to be liquidated by the general fund. Detailed information about the pension plan's fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds presented in the other supplementary information section of this report and at the end of Note 17. 96 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 16 -PENSION PLANS (concluded) SUMMARY PENSION INFORMATION The table below summarizes the net pension liability and related deferrals for the Employees' Retirement System and the Police and Fire Retirement System as presented in the Statement of Net Position. Employees' Police and Fire Retirement Retirement System System Total Net pension liability $ 164,100,821 $ 238,396,781 $ 402,497,602 Deferred outflows-pension 13,821,268 43,619,010 57,440,278 Deferred inflows-pension 2,881,458 736,112 3,617,570 Pension expense 16,748,886 37,528,827 54,277,713 EMPLOYEES'MONEY PURCHASE PENSION PLAN Newly hired employees are eligible to participate in the City's defined contribution plan. Eligible employees include those normally scheduled to work at least 1,000 hours during a plan year. To receive benefits under the plan,the participant must have met the age and service requirements outline in his or her applicable bargaining unit agreement. Distributions are calculated based on the employee's vesting percentage and the individual's allocation of investment funds. In accordance with the Plan agreement,the City contributes 4% of employees' base pay to the plan. The defined contribution plan is administered by the Board of Trustees as designed in the City of Lansing Defined Contribution Plan which stipulates that the trustees have such authority. All amendments to the plan, including funding requirements, must be approved by the City Council subject to the terms of collective bargaining agreements. City contributions for the year ended June 30, 2023 were$484,836 for plan members. Employee contributions for the year ended June 30, 2023 were$485,559. All amendments to the Plan, including funding requirements, must be approved by the City Council. The assets of the plan are held in trust for the exclusive benefit of participants and their beneficiaries. NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS PRIMARY GOVERNMENT Plan Description The City of Lansing contributes to the Employees' Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees'Retirement System and the Police and Fire Retirement System,these other postemployment benefits (OPEB)are set up as reserves in the pension plans,and their investments are commingled with the investments of the pension plan. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under their respective pension plans,with the exception of Teamster 580 employees hired after May 2014. OPEB plan provisions are established and may be amended by the City Council, subject to the City's various collective bargaining agreements. Separate financial statements are not prepared for the plans. 97 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) PRIMARY GOVERNMENT (concluded) Method Used to Value Investments Plan investments are reported at fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Investments for which market quotations are not readily available are valued at their fair values as determined by the custodian under the direction of each plans' board of trustees,with the assistance of a valuation service. VOLUNTARY EMPLOYEES BENEFICIARY ASSOCIATION (VEBA) The City of Lansing Voluntary Employees Beneficiary Association (the "Plan") is a single-employer defined benefit postemployment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City's pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. It is accounted for as a separate OPEB trust fund. EMPLOYEES'RETIREMENT SYSTEM Plan Description The City provides postemployment health care benefits, in accordance with labor agreements, to full-time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees' Retirement System are also eligible to receive health care benefits,with the exception of Teamster 580 employees hired after May 2014. The Plan was established and may be amended by the City Council and is administered by a nine member Board of Trustees. The Board is comprised of the Mayor of the City,one member of the City Council appointed by the City Council,the City Treasurer,the City Human Resources Director,three members of the retirement system to be elected by the members of the system under rules adopted by the board, two residents of the State of Michigan appointed by the Mayor,by and with the consent of the City Council,one of which is a retiree of the retirement system. It is accounted for as a separate OPEB trust fund. Membership of the Plan consisted of the following at January 1, 2021, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 961 Terminated plan members entitled to but not yet receiving benefits 41 Active plan member 429 Total 1,431 98 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES' RETIREMENT SYSTEM (continued) Benefits Provided The City provides the full cost of health benefits to retirees,payable to health care vendors,and also reimburses retirees eligible for Medicare benefits of$134.00 per month for each covered retiree and eligible dependent(s) eligible for retiree healthcare. The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Contributions The contribution requirements of the Plan members and the City are established and may be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under the various contracts. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined through the bi-annual actuarial valuation. For the year ended June 30, 2023,the City contributed $12,126,259 (direct benefit payments of$10,707,746 and City contributions of $1,418,513)to the Plan. Rate of Return For the year ended June 30, 2023,the annual money-weighted rate of return on investments,net of investment expense,was 16.42%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. Net OPEB Liability of the CU The components of the net OPEB liability of the City at June 30,2023,were as follows: Total OPEB Liability $ 159,215,804 Plan Fiduciary Net Position 83,503,010 Net OPEB Liability $ 75,712,794 Plan fiduciary net position as percentage of total OPEB liability 52.45% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2021,rolled forward to June 30,2023,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. 99 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17-OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (continued) Actuarial Assumptions (concluded) Mortality rates are assumed to be in accordance with the Pub2010G tables, with below median and headcount weighted,projected generationally using MP-2020. The actuarial assumptions used in the January 1,2021 valuation were based on the 2015-2019 experience study. Assumption changes-there were no changes of assumptions in 2023. Benefit changes-there were no changes to benefits in 2023. Investment Policy The Plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy as of June 30,2023 is summarized in the table on the following page. The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns,net of OPEB plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte-Carlo simulation process, by which a(downward)risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan's target asset allocation as of June 30, 2023 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 32.00% 6.25% 2.00% International Equity-Developed 12.00% 6.40% 0.77% International Equity-Emerging 4.00% 7.00% 0.28% Fixed Income-U.S. 22.00% 2.25% 0.50% Real Assets 10.00% 4.55% 0.46% Global Opportunistic Fixed Income 5.00% 3.55% 0.18% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 4.25% 0.21% 100.00% 4.91% Inflation 2.50% Risk adjustment -0.41% Investment rate of return 7.00% 100 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES' RETIREMENT SYSTEM (continued) Discount Rate The discount rate used to measure the total OPEB liability was 7.00%. The City's funding expectations/policy is to contribute a percentage of payroll each year to their OPEB trust, in addition to paying the annual benefits directly. The City has also assumed that benefits will begin being paid from trust assets once the funding ratio exceeds 90%. Based on this information,the City projects that benefits will be available to make all projected future benefit payments of current plan members. The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2022 $ 157,216,430 $ 69,887,591 $ 87,328,839 Changes for the year Service cost 1,647,129 - 1,647,129 Interest on total OPEB liability 10,762,261 - 10,762,261 Employer contributions - 12,126,259 (12,126,259) Net investment income - 12,596,837 (12,596,837) Benefit payments (10,410,016) (10,410,016) - Administrative expense - (697,661) 697,661 Net changes 1,999,374 13,615,419 (11,616,045) Balances as of June 30,2023 $ 159,215,804 $ 83,503,010 $ 75,712,794 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, calculated using the discount rate of 7.00%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1%lower (6.00%) or 1%higher(8.00%)than the current rate: 1%Decrease Current 1%Increase 6.00% Discount Rate 8.00% Net OPEB liability $ 94,836,339 $ 75,712,794 $ 59,909,729 101 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) EMPLOYEES'RETIREMENT SYSTEM (concluded) Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption The following presents the net OPEB liability of the City, calculated using the healthcare cost trend rate of 4.5% as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1%lower(3.5%) or 1%higher(5.5%)than the current healthcare cost trend rates: Healthcare 1% Decrease Ultimate Cost 1% Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 59,311,067 $ 75,712,794 $ 95,418,873 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2023,the City recognized OPEB benefit of$26,333,129. At June 30, 2023,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Net difference between projected and actual earnings on plan investments $ 1,517,751 $ - Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2024 $ 613,562 2025 598,116 2026 1,843,189 2027 (1,537,116) $ 1,517,751 OPEB Plan Fiduciary Net Position Detailed information about the OPEB plan's fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds presented in the other supplementary information section of this report and at the end of this note disclosure. At June 30, 2023,the City reported no amount payable to the OPEB plan. 102 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM Plan Description The City also provides postemployment health care benefits, in accordance with labor agreements,to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The Plan was established and may be amended by the City Council and is administered by an eight member Board of Trustees. The Board is comprised of the Mayor of the City, one member of the City Council appointed by the City Council, the City Treasurer, a resident of the City who shall be appointed by the Mayor, by and with the consent of Council, two members each of the police and fire departments,to be elected by all the members of their respective departments. Membership of the Plan consisted of the following at January 1, 2021, the date of the most recent actuarial valuation: Retirees and beneficiaries receiving benefits 699 Terminated plan members entitled to but not yet receiving benefits 12 Active plan member 344 Total 1,055 Benefits Provided The City provides the full cost of health benefits to retirees,payable to health care vendors,and also reimburses retirees eligible for Medicare benefits of$121.90 per month for each covered retiree and dependent(s). The payments are charged to the fringe benefit internal service fund of the City and are recognized as expenses as payments are made. Contributions The contribution requirements of the Plan members and the City are established and may be amended by the City Council, in accordance with City policies, union contracts, and Plan provisions. Retirees and their beneficiaries are eligible for postemployment healthcare benefits if they qualify under the various contracts. The required contribution is based on projected pay-as-you-go financing requirements, with an additional amount to prefund benefits as determined through the bi-annual actuarial valuation. For the year ended June 30, 2023, the City contributed $11,304,220 (direct benefit payments of$9,954,220 and City contributions of $1,350,000)to the Plan. 103 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Rate of Return For the year ended June 30, 2023,the annual money-weighted rate of return on investments,net of investment expense,was 24.41%. The money-weighted rate of return expresses investment performance,net of investment expense,adjusted for the changing amounts actually invested. The components of the net OPEB liability of the City at June 30,2023,were as follows: Total OPEB Liability $ 211,745,553 Plan Fiduciary Net Position 55,112,232 Net OPEB Liability $ 156,633,321 Plan fiduciary net position as percentage of total OPEB liability 26.03% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2021,rolled forward to June 30,2023,using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. Mortality rates are assumed to be in accordance with the Pub2010G tables, with below median and headcount weighted,projected generationally using MP-2020. The actuarial assumptions used in the January 1,2021 valuation were based on the 2015-2019 experience study. Assumption changes-there were no changes of assumptions in 2023. Benefit changes-there were no changes to benefits in 2023. Investment Policy The Plan's policy in regard to the allocation of invested assets is established and may be amended by the Board of Trustees. The investment policy has been formulated based on consideration of a wide range of policies and describes the prudent investment process that the Board deems appropriate. The Plan's asset allocation policy as of June 30,2023 is summarized in the table below. 104 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Investment Policy(concluded) The long-term expected rate of return on OPEB plan investments was determined using a building-block method in which best-estimates of expected future real rates of return (expected returns,net of OPEB plan investment expense and inflation) are developed for each asset class. These ranges are combined to produce the long-term expected rate of return by weighting the expected future real rates of return by the target asset allocation percentage and by adding expected inflation. This is then modified through a Monte-Carlo simulation process, by which a(downward)risk adjustment is applied to the baseline expected return. Best estimates of arithmetic real rates of return for each major asset class included in the OPEB plan's target asset allocation as of June 30, 2023 are summarized in the following table: Long-Term Expected Money-Weighted Asset Class Target Allocation Real Rate of Return Rate of Return Domestic Equity 32.00% 6.25% 2.00% International Equity-Developed 12.00% 6.40% 0.77% International Equity-Emerging 4.00% 7.00% 0.28% Fixed Income-U.S. 22.00% 2.25% 0.50% Real Assets 10.00% 4.55% 0.46% Global Opportunistic Fixed Income 5.00% 3.55% 0.18% Global Equity Long/Short 10.00% 5.25% 0.53% Absolute Return 5.00% 4.25% 0.21% 100.00% 4.91% Inflation 2.50% Risk adjustment -0.41% Investment rate of return 7.00% Discount Rate The discount rate used to measure the total OPEB liability was 7.00%. The City's funding expectations/policy is to contribute a percentage of payroll each year to their OPEB trust, in addition to paying the annual benefits directly. The City has assumed that benefits will be paid from trust assets once the funding ratio exceeds 90%, and until the fund is depleted. Based on this information,the City projects that benefits will be available to make all projected future benefit payments of current plan members. 105 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Discount Rate (concluded) The components of the change in the net OPEB liability are summarized as follows: Calculating the Net OPEB Liability Increase (Decrease) Total OPEB Plan Fiduciary Net OPEB Liability Net Position Liability (a) (b) (a)-(b) Balances at June 30,2022 $ 202,871,379 $ 41,918,165 $ 160,953,214 Changes for the year Service cost 3,904,624 - 3,904,624 Interest on total OPEB liability 14,158,158 - 14,158,158 Employer contributions - 11,304,220 (11,304,220) Net investment income - 11,844,067 (11,844,067) Benefit payments (9,188,608) (9,188,608) - Administrative expense - (765,612) 765,612 Net changes 8,874,174 13,194,067 (4,319,893) Balances as of June 30, 2023 $ 211,745,553 $ 55,112,232 $ 156,633,321 Sensitivity of the Net OPEB Liability to Changes in the Discount Rate The following presents the net OPEB liability of the City, calculated using the discount rate of 7.00%,as well as what the City's net OPEB liability would be if it were calculated using a discount rate that is 1%lower (6.00%) or 1%higher(8.00%)than the current rate: 1% Decrease Current 1% Increase 6.00% Discount Rate 8.00% Net OPEB liability $ 184,494,856 $ 156,633,321 $ 134,038,149 106 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (continued) Sensitivity of the Net OPEB Liability to Changes in the Healthcare Cost Trend Rate Assumption The following presents the net OPEB liability of the City,calculated using the healthcare cost trend rate of 4.5% as well as what the City's net OPEB liability would be if it were calculated using healthcare cost trend rates that are 1%lower(3.5%) or 1%higher(5.5)than the current healthcare cost trend rates: Healthcare 1% Decrease Ultimate Cost 1% Increase 3.50% Trend Rate 5.50% Net OPEB liability $ 133,026,010 $ 156,633,321 $ 185,609,608 OPEB Expense and Deferred Outflows of Resources and Deferred Inflows of Resources Related to OPEB For the year ended June 30, 2023,the City recognized OPEB benefit of$14,067,610. At June 30, 2023,the City reported deferred outflows of resources and deferred inflows of resources related to OPEB from the following sources: Deferred Deferred Outflows of Inflows of Resources Resources Changes in assumptions $ - $ 40,599,944 Differences between expected and actual experience - 17,803,497 Net difference between projected and actual earnings on plan investments - 711,573 Total $ - $ 59,115,014 Amounts reported as deferred outflows of resources and deferred inflows of resources related to OPEB will be recognized in OPEB expense as follows: Year Ending OPEB June 30, Expense 2024 $ (58,104,720) 2025 349,521 2026 422,144 2027 (1,781,959) $ (59,115,014) 107 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (continued) POLICE AND FIRE RETIREMENT SYSTEM (concluded) OPEB Plan Fiduciary Net Position Detailed information about the OPEB plan's fiduciary net position is available in the combining statements for the pension and other postemployment benefit trust funds presented in the other supplementary information section of this report and at the end of this note disclosure. At June 30,2023,the City reported no amount payable to the OPEB plan. For governmental activities, other postemployment benefit liabilities are expected to be liquidated by the general fund. SUMMARY OPEB INFORMATION The table below summarizes the net OPEB liability and related deferrals for the Employees'Retirement System and the Police and Fire Retirement System as presented in the Statement of Net Position. Employees' Police and Fire Retirement Retirement System System Total Net OPEB liability $ 75,712,794 $ 156,633,321 $ 232,346,115 Deferred outflows-OPEB 1,517,751 - 1,517,751 Deferred inflows-OPEB - 59,115,014 59,115,014 OPEB expense(benefit) (26,333,129) (14,067,610) (40,400,739) Financial statements for individual pension and employee benefit plans: Pension and Other Postemployment Benefits Trust Funds Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 1,451,043 $ 367,608 $ 1,847,303 $ 316,676 $ - $ - $ 3,982,630 Equity in pooled cash and investments - - - - - 742 742 Investments Mutual funds 104,611,851 31,884,597 202,938,418 39,025,959 5,846,748 37,958,811 422,266,384 Domestic equities 29,291,510 8,927,746 64,365,209 12,378,853 - - 114,963,318 International equities 492,236 150,028 1,117,102 214,844 - - 1,974,210 Emerging market equities 6,729,144 2,050,973 12,977,460 2,495,853 1,086,437 25,339,867 Money market funds 3,339,943 1,017,979 3,428,851 663,027 50,791 8,500,591 Due from other governmental units - - - 4,653 - - 4,653 Prepaids 284 86 - - - 370 Dividends and interest receivable 37,152 11,324 140,583 12,367 21,523 222,949 Total assets 145,953,163 44,410,341 286,814,926 55,112,232 5,846,748 39,118,304 577,255,714 Liabilities Accounts payable 84,105 25,635 176,518 - - - 286,258 Due to other governmental units 4,653 4,653 Total liabilities 84,105 25,635 176,518 4,653 290,911 Net position restricted for: Pension benefits 145,869,058 286,638,408 - 5,842,095 438,349,561 Other postemployment benefits 44,384,706 55,112,232 39,118,304 138,615,242 Total net position $ 145,869,058 $ 44,384,706 $ 286,638,408 $ 55,112,232 $ 5,842,095 $ 39,118,304 $ 576,964,803 108 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 17 -OTHER POSTEMPLOYMENT BENEFITS (concluded) Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income Net appreciation(decrease)in fair value of investments $ 4,225,998 $ 8,993,061 $ 13,936,766 $ 11,844,067 $ 740,813 $ 2,486,252 $ 42,226,957 Interest income(loss) 15,723 - - - - 1,106,309 1,122,032 Investment expenses (805,413) (805,413) Net investment income 3,436,308 8,993,061 13,936,766 11,844,067 740,813 3,592,561 42,543,576 Contributions Employer 11,675,068 11,357,259 18,165,988 11,304,220 451,903 769,000 53,723,438 Plan members 1,418,513 2,967,886 333,163 4,719,562 Total contributions 13,093,581 11,357,259 21,133,874 11,304,220 785,066 769,000 58,443,000 Deductions Participant benefits 24,212,331 10,410,016 37,717,498 9,188,608 - - 81,528,453 Administrative expense 114,853 577,351 126,049 765,612 228,710 109,095 1,921,670 Total deductions 24,327,184 10,987,367 37,843,547 9,954,220 228,710 109,095 83,450,123 Change in net position (7,797,295) 9,362,953 (2,772,907) 13,194,067 1,297,169 4,252,466 17,536,453 Net position restricted for pension and other postemployment benefits Beginningofyear 153,666,353 35,021,753 289,411,315 41,918,165 4,544,926 34,865,838 559,428,350 End of year $ 145,869,058 $ 44,384,706 $ 286,638,408 $ 55,112,232 $ 5,842,095 $ 39,118,304 $ 576,964,803 NOTE 18 -TAX ABATEMENTS Because Lansing is an older city, vacant land, or "green space" for new buildings is scarce, the City offers tax abatements to make redevelopment and rehabilitation of existing buildings economically viable for developers, who must consider the cost of rehabilitating existing, often older, buildings which may involve environmental remediation,against the generally lesser cost of building on vacant land outside the City. These tax abatements are designed to level the"playing field"for urban communities to encourage redevelopment of vacant buildings, and to attract and retain private investment and jobs within the City. The City of Lansing provides tax abatements under several different programs: ➢ Industrial property tax abatements are granted in the State of Michigan under Public Act 198 to promote economic development, creation of jobs, and new or improved facilities. The Industrial Facilities Tax (IFT) Exemption must be approved by both the City (after a public hearing is held) and the State of Michigan. IFT exemptions can cover real and/or personal property. By State law,the exemption must be applied for no later than six months after commencement of the project and must be accompanied by a written agreement between the taxpayer and the local unit. An exemption allows for taxation on IFT property at 50% of the local property tax millage rate for up to 12 years. A certificate may be revoked, and taxes recaptured for noncompliance with the terms of the agreement. Property taxes abated by the City under this program for fiscal year 2023 amounted to$115,941. ➢ The State of Michigan allows for Commercial Rehabilitation Exemption under Public Act 210 if making substantial improvements to a business or multi-family residential facility. The City had no Commercial Rehabilitation Exemptions for fiscal year 2023. 109 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 18-TAX ABATEMENTS(concluded) ➢ To incentivize new or expanded businesses,Public Act 328 allows for Personal Property Tax Exemptions for qualified businesses located within eligible distressed communities. The exemption must be approved by the City Council and the State Treasurer. Once approved, the taxpayer is exempt from personal property tax on new investments after the date of the exemption. The City can recapture the taxes if the business defaults on the terms of the written agreement. Property taxes abated by the City under this program for fiscal year 2023 amounted to$3,572,195. ➢ The Brownfield Redevelopment Authority encourages environmental cleanup and economic development through its Brownfield Redevelopment Plan under Public Act 318. A developer performs redevelopment and cleanup activities at a site that is obsolete or blighted. The increased tax revenues resulting from the increase in taxable value are captured by the City and used to repay the developer for qualifying expenses. There is no provision for recovery of abated taxes because the developer is only paid for eligible expenses on a reimbursement-basis. In addition,there are reserve liabilities reported in the financial statements that represent tax captures set aside for future developer reimbursements. Property taxes abated by the Authority under this program for fiscal year 2023 amounted to$2,402,422. NOTE 19-ASSETS HELD BY FOUNDATION During 2020 the City contributed $1,296,395 from the sale of Waverly Park to the City of Lansing Parks and Recreation Endowment Fund,which is held by the Capital Region Community Foundation (CRCF) on behalf of the City,from which only a certain component is spendable. During 2022 the City contributed$29,835. The City did not make any contributions during fiscal year 2023. The expenditure related to the contribution is recorded within a nonmajor capital project fund. The CRCF has explicit variance power and therefore these amounts are not shown in the financial statements of the City. This variance power allows CRCF to modify any restrictions or considerations on the distributions of the funds. Distributions will be made to the City annually as requested, according to the spending guidelines. The City elected not to receive any distributions this year. At June 30, 2023,the fund has a value of$1,593,553. NOTE 20 -LEASE RECEIVABLE During the current fiscal year, the City began leasing one of its buildings to a third-party. The lease is for 20 years, and the City will receive annual payments of$24,000,increasing by 2.5%annually. The City recognized $11,541 in lease revenue and $0 in interest revenue during the current fiscal year related to this lease. As of June 30, 2023, the City's receivable for lease payments was $416,469. Also, the City has deferred inflow of resources associated with this lease that will be recognized as revenue over the lease term. As of June 30,2023, the balance of the deferred inflow of resources was$428,928. 110 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 21 -CHANGE IN ACCOUNTING PRINCIPLES For the year ended June 30,2023,the City implemented the following new pronouncement:GASB Statement No. 96,Subscription-based Information Technology Arrangements. Summary: Governmental Accounting Standards Board (GASB) Statement No. 96, Subscription-based Information Technology Arrangements was issued in May 2020. This Statement provides guidance on the accounting and financial reporting for subscription-based information technology arrangements (SBITAs) for government end users (governments). This Statement (1) defines a SBITA; (2) establishes that a SBITA results in a right-to-use subscription asset - an intangible asset - and a corresponding subscription liability; (3) provides the capitalization criteria for outlays other than subscription payments,including implementation costs of a SBITA; and (4) requires note disclosures regarding a SBITA. To the extent relevant,the standards for SBITAs are based on the standards established in Statement No.87,Leases,as amended. Governmental Activities Capital Assets, Long-term Net Obligations Balance as of July 1, 2022,as previously stated $ 207,842,733 $ 73,603,797 Adoption of GASB Statement No. 96 726,265 726,265 Balance as of July1,2022 as restated $ 208,568,998 $ 74,330,062 Internal Service Funds Capital Assets, Long-term Net Obligations Balance as of July 1, 2022,as previously stated $ 9,323,211 $ 1,165,929 Adoption of GASB Statement No. 96 726,265 726,265 Balance as of July1,2022 as restated $ 10,049,476 $ 1,892,194 NOTE 22 -UPCOMING ACCOUNTING PRONOUNCEMENTS In June 2022,the GASB issued Statement No. 100,Accounting Changes and Error Corrections-an amendment of GASB Statement No. 62. This Statement prescribes the accounting and financial reporting for (1) each type of accounting change and (2) error corrections. This Statement requires that(a) changes in accounting principles and error corrections be reported retroactively by restating prior periods, (b) changes to or within the financial reporting entity be reported by adjusting beginning balances of the current period,and(c)changes in accounting estimates be reported prospectively by recognizing the change in the current period. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2023-2024 fiscal year. 111 CITY OF LANSING NOTES TO FINANCIAL STATEMENTS NOTE 22 -UPCOMING ACCOUNTING PRONOUNCEMENTS (concluded) In June 2022,the GASB issued Statement No.101,Compensated Absences. This Statement requires that liabilities for compensated absences be recognized for (1) leave that has not been used and (2) leave that has been used but not yet paid in cash or settled through noncash means. A liability should be recognized for leave that has not been used if(a)the leave is attributable to services already rendered, (b)the leave accumulates,and(c)the leave is more likely than not to be used for time off or otherwise paid in cash or settled through noncash means. This Statement also establishes guidance for measuring a liability for leave that has not been used, generally using an employee's pay rate as of the date of the financial statements. The City is currently evaluating the impact this standard will have on the financial statements when adopted during the 2024-2025 fiscal year. NOTE 23 -SUBSEQUENT EVENTS Subsequent to year end, the City issued Capital Improvement Bonds Series 2023 on August 16, 2023 in the amount of$20,000,000. Subsequent to year end,the City received$11,552,892 from the State of Michigan for grant related to Protecting MI Pension Grant Funding. 112 REQUIRED SUPPLEMENTARY INFORMATION 113 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes $ 48,245,000 $ 48,245,000 $ 45,752,274 $ (2,492,726) Income taxes 37,510,000 37,510,000 40,957,011 3,447,011 Licenses and permits 1,769,300 1,769,300 2,000,219 230,919 Intergovernmental 31,232,000 31,232,000 33,244,473 2,012,473 Charges for services 9,256,001 9,256,001 11,817,041 2,561,040 Fines and forfeits 1,692,200 1,692,200 1,427,593 (264,607) Interest and rents 330,000 330,000 823,618 493,618 Other Donations and contributions 25,300,000 25,300,000 26,624,190 1,324,190 Miscellaneous 340,000 708,245 256,657 (451,588) TOTAL REVENUES 155,674,501 156,042,746 162,903,076 6,860,330 EXPENDITURES Current General government City clerk Personnel 1,103,136 1,103,136 1,051,603 51,533 Operating 439,055 439,055 451,050 (11,995) Total city clerk 1,542,191 1,542,191 1,502,653 39,538 Council Personnel 670,262 620,262 564,992 55,270 Operating 264,274 264,274 234,558 29,716 Total council 934,536 884,536 799,550 84,986 Finance Personnel 51071,369 4,871,369 4,492,541 378,828 Operating 1,397,873 1,397,873 1,704,150 (306,277) Total finance 6,469,242 6,269,242 6,196,691 72,551 Library rental Operating 136,150 137,150 447,584 (310,434) Human resources Personnel 1,609,829 1,459,829 1,668,046 (208,217) Operating 1,114,233 1,014,233 620,813 393,420 Total human resources 2,724,062 2,474,062 2,288,859 185,203 City supported agencies Operating 487,500 749,665 562,710 186,955 Mayor Personnel 2,056,165 2,056,165 2,231,655 (175,490) Operating 319,880 319,880 692,352 (372,472) Total mayor 2,376,045 2,376,045 2,924,007 (547,962) Contingency (700,000) - - Total general government 13,969,726 14,432,891 14,722,054 (289,163) CONTINUED 114 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL (continued) YEAR ENDED JUNE 30,2023 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) EXPENDITURES(continued) Current(continued) Judicial Personnel $ 7,040,331 $ 6,940,331 $ 1,894,003 $ 5,046,328 Operating 1,801,110 1,801,110 6,343,198 (4,542,088) Total judicial 8,841,441 8,741,441 8,237,201 504,240 Public safety Police Personnel 43,330,653 43,280,653 42,648,628 632,025 Operating 8,250,201 8,372,949 8,182,155 190,794 Total police 51,580,854 51,653,602 50,830,783 822,819 Fire Personnel 34,484,467 34,434,467 34,562,829 (128,362) Operating 5,788,205 5,910,953 5,650,425 260,528 Total fire 40,272,672 40,345,420 40,213,254 132,166 Total public safety 91,853,526 91,999,022 91,044,037 954,985 Public works Personnel 2,995,961 2,995,961 2,522,281 473,680 Operating 9,575,390 9,575,390 11,175,516 (1,600,126) Total public works 12,571,351 12,571,351 13,697,797 (1,126,446) Recreation and culture Personnel 5,759,154 5,759,154 4,846,732 912,422 Operating 4,369,790 4,369,790 5,145,795 (776,005) Total recreation and culture 10,128,944 10,128,944 9,992,527 136,417 Community and economic development Economic development&planning Personnel 3,364,071 3,364,071 3,229,040 135,031 Operating 3,408,228 3,408,228 3,437,122 (28,894) Total economic development&planning 6,772,299 6,772,299 6,666,162 106,137 Neighborhood&community engagement Personnel 790,097 790,097 495,307 294,790 Operating 536,199 536,199 139,268 396,931 Total neighborhood&community engagement 1,326,296 1,326,296 634,575 691,721 Human relations/community services Personnel 1,669,373 1,669,373 1,480,549 188,824 Operating 173,445 296,194 158,203 137,991 Total human relations/community services 11842,818 1,965,567 1,638,752 326,815 Human services/community support Operating 1,960,000 2,823,521 1,878,402 945,119 Total community and economic development 11,901,413 12,887,683 10,817,891 2,069,792 CONTINUED 115 CITY OF LANSING GENERALFUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL (concluded) YEAR ENDED JUNE 30,2023 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) EXPENDITURES(concluded) Debt service Principal $ 770,000 $ 770,000 $ 1,409,000 $ (639,000) Interest and fiscal charges 217,100 217,100 434,071 (216,971) Total debt service 987,100 987,100 1,843,071 (855,971) TOTAL EXPENDITURES 150,253,501 151,748,432 150,354,578 1,393,854 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 5,421,000 4,294,314 12,548,498 8,254,184 OTHER FINANCING SOURCES(USES) Transfers in 100,000 100,000 100,000 - Transfers out (5,521,000) (5,521,000) (6,438,803) (917,803) TOTAL OTHER FINANCING SOURCES(USES) (5,421,000) (5,421,000) (6,338,803) (917,803) NET CHANGE IN FUND BALANCE (1,126,686) 6,209,695 7,336,381 Fund balance,beginning of year 23,4S 1,802 23,451,802 23,451,802 - Fund balance,end of year $ 23,451,802 $ 22,325,116 $ 29,661,497 $ 7,336,381 116 CITY OF LANSING STATE AND FEDERAL GRANTS FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 1,065,800 $ 1,065,800 $ 19,575,851 $ 18,510,051 Interest and rents - - 1,307,228 1,307,228 Other revenues - 115,330 115,330 TOTAL REVENUES 1,065,800 1,065,800 20,998,409 19,932,609 EXPENDITURES Current General government Personnel 137,857 (137,857) Operations 3,433,804 (3,433,804) Total general government 3,571,661 (3,571,661) Public safety Personnel 874,886 (874,886) Operations 2,974,177 (2,974,177) Total public safety 3,849,063 (3,849,063) Public works Operations 2,653,109 (2,653,109) Judicial Operations 278,831 (278,831) Health and welfare Personnel 9,619 (9,619) Operations 884,344 (884,344) Total health and welfare 893,963 (893,963) Community and economic development Personnel 99,457 99,457 210,996 (111,539) Operations 966,343 966,343 5,730,177 (4,763,834) Total community and economic development 1,065,800 1,065,800 5,941,173 (4,875,373) Recreation and culture Personnel - - 17,062 (17,062) Operations 3,971,239 (3,971,239) Total recreation and culture 3,988,301 (3,988,301) TOTAL EXPENDITURES 1,065,800 1,065,800 21,176,101 (20,110,301) EXCESS OF REVENUES OVER (UNDER)EXPENDITURES - - (177,692) (177,692) OTHER FINANCING SOURCES Transfers in 177,692 177,692 NET CHANGE IN FUND BALANCE - - Fund balance,beginning of year Fund balance,end of year $ $ $ $ 117 CITY OF LANSING CERA-MSHDA FUND SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE- BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ $ $ 7,586,644 $ 7,586,644 EXPENDITURES Current Community and economic development Operations 7,586,644 (7,586,644) NET CHANGE IN FUND BALANCE - Fund balance,beginning Fund balance,ending $ $ $ $ 118 CITY OF LANSING DEFINED BENEFIT PENSION PLAN - EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET PENSION LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cast $ 2,889,649 $ 2,827,879 $ 2,943,847 $ 2,738,099 $ 2,719,559 $ 2,538,487 $ 2,711,461 $ 2,977,084 $ 2,857,948 $ 2,982,624 Interest 21,220,221 21,523,899 21,890,652 21,360,398 21,512,099 21,994,837 22,403,009 22,268,516 22,671,909 22,722,630 Difference between expected and actual experience (2,085,433) (4,473,505) (2,504,529) 7,219,344 (2,559,726) (6,451,827) (23,183,264) (4,937,823) (6,422,330) - Changes ofassumptions - - 7,666,292 - - 3,099,448 3,706,512 7,575,775 -Benefit payments,including employee refunds (24,212,331) (24,342,091) (24,316,255) (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,790,522) Net Change in Total Pension Liability (2,187,894) (4,463,818) 5,680,007 7,210,938 (1,798,108) (1,921,279) (17,275,496) 5,023,103 (3,355,060) 2,914,732 Total Pension Liability,beginning 312,157,774 316,621,592 310,941,585 303,730,647 305,528,755 307,450,034 324,725,530 319,702,427 323,057,487 320,142,755 Total Pension Liability,ending $ 309,969,880 $ 312,157,774 $ 316,621,592 $ 310,941,585 $ 303,730,647 $ 305,528,755 $ 307,450,034 $ 324,725,530 $ 319,702,427 $ 323,057,487 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 11,67S,068 $ 13,494,287 $ 12,649,529 $ 10,698,401 $ 10,880,932 $ 10,843,000 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 Contributions-employee 1,418,513 1,289,306 1,172,409 1,286,273 1,220,657 1,230,857 1,216,519 1,088,943 1,128,120 1,290,678 Net investment income(loss) 3,436,309 (15,129,738) 36,047,284 (540,861) 8,437,568 9,679,565 17,412,568 (2,790,190) 4,399,543 17,887,635 Benefit payments,including employee refunds (24,212,331) (24,342,091) (24,316,255) (24,106,903) (23,470,040) (23,102,224) (22,913,214) (22,860,449) (22,462,587) (22,957,379) Administrative expenses (114,853) (66,474) (20,367) (34,016) (42,364) (57,822) (47,217) (126,486) (174,818) (741,037) Net Change in Plan Fiduciary Net Position (7,797,294) (24,754,710) 25,532,600 (12,697,106) (2,973,247) (1,406,624) 5,915,528 (14,506,562) (6,562,186) 4,840,906 Plan Fiduciary Net Position,beginning 153,666,353 178,421,063 152,888,463 165,585,569 168,558,816 169,965,440 164,049,912 178,556,474 185,118,660 180,277,754 Plan Fiduciary Net Position,ending $ 145,869,059 $ 153,666,353 $ 178,421,063 $ 152,888,463 $ 165,585,569 $ 168,558,816 $ 169,965,440 $ 164,049,912 $ 178,556,474 $ 185,118,660 City's Net Pension Liability $ 164,100,821 $ 158,491,421 $ 138,200,529 $ 158,053,122 $ 138,14S,078 $ 136,969,939 $ 137,484,594 $ 160,675,618 $ 141,145,953 $ 137,938,827 Plan fiduciary net position as a percentage of the total pension liability 47.06% 49.23% 56.35% 49.17% 54.52% 55.17% 55.28% 50.52% 55.85% 57.30% Covered payroll $ 27,348,422 $ 24,509,599 $ 26,001,896 $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 City's net pension liability as a percentage of covered payroll 600.0% 646.7% 531.5% 650.3% 593.8% 604.1% 657.8% 696.0% 714.0% 640.9% Assumption changes - there were no changes in actuarial assumptions during fiscal year 2023. More details regarding actuarial assumptions can be found in the December 31,2022 valuation reports for each system. Benefit changes-there were no changes to benefits in the current year. 119 CITY OF LANSING DEFINED BENEFIT PENSION PLAN - EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contributions $ 12,194,686 $ 12,737,487 $ 12,349,529 $ 10,698,401 $ 10,880,932 $ 10,185,060 $ 10,246,872 $ 10,181,620 $ 10,547,556 $ 9,361,009 Contributions in relation to the actuarially determined contribution 11,675,068 12,737,487 12,349,529 10,698,401 10,880,932 10,843,000 10,246,872 10,181,620 10,547,556 9,361,009 Contribution deficiency(excess) $ 519,618 $ $ $ $ - $ (657,940) $ $ $ - $ Covered payroll $ 27,348,422 $ 24,509,899 $ 26,001,896 $ 24,304,971 $ 23,265,437 $ 22,672,891 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 Contributions as a percentage of covered payroll 42.69% 51.97% 47.49% 44.02% 46.77% 47.82% 49.02% 44.10% 53.35% 43.50% The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly,the actuarially determined contribution has been expressed above as a percentage of actual payroll. Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2022, rolled forward to June 30, 2023, using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Salary increases: Inflation,plus service based increases. Investment rate of return: 7.00%,net of investment expense,including inflation. Mortality is based on the Pub2010S tables (below median), 50% for pre-retirement deaths. For Disabled members, the disabled versions of these tables are used. Each of these tables is projected generationally with Scale SSA(2020). The actuarial assumptions used in the December 31,2022 valuation were based on the 2015-2019 experience study. 120 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 2.29% -8.82% 24.71% -0.34% 5.17% 5.87% 10.91% -1.60% 2.43% 13.67% 121 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN THE NET PENSION LIABILITY AND RELATED RATIOS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 CHANGE IN TOTAL PENSION LIABILITY Service cost $ 7,853,786 $ 7,269,988 $ 6,961,705 $ 6,526,273 $ 6,801,669 $ 6,533,877 $ 6,133,683 $ 6,371,845 $ 6,350,378 $ 6,614,784 Interest 34,431,238 33,647,916 32,984,834 32,689,419 31,573,535 30,641,722 30,519,676 30,197,513 29,159,382 27,896,927 Changes of benefit terms 295,273 - - - - 779 - - - - Difference between expected and actual experience 17,292,601 6,641,422 (2,944,445) (1,062,537) 10,590,030 8,263,623 (19,308,117) 7,884,167 3,159,996 - Changesofassumptions - - 24,025,142 - - 1,647,044 25,078,592 3,281,341 -Benefit payments,including employee refunds (37,717,498) (36,188,116) (35,040,363) (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,270,724) Net Change in Total Pension Liability 22,155,400 11,371,210 25,986,873 4,165,734 16,355,980 15,329,894 11,321,648 18,230,902 10,700,735 8,240,987 Total Pension Liability,beginning 502,879,789 491,508,579 465,521,706 461,355,972 444,999,992 429,670,098 418,348,450 400,117,548 389,416,813 381,175,826 Total Pension Liability,ending $ 525,035,189 $ 502,879,789 $ 491,508,579 $ 465,521,706 $ 461,355,972 $ 444,999,992 $ 429,670,098 $ 418,348,450 $ 400,117,548 $ 389,416,813 CHANGE IN PLAN FIDUCIARY NET POSITION Contributions-employer $ 18,165,988 $ 19,609,552 $ 18,250,155 $ 15,457,647 $ 13,554,239 $ 12,686,000 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 Contributions-employee 2,967,886 2,722,350 3,207,122 3,459,452 3,485,891 2,650,019 2,840,914 2,608,214 2,950,832 2,911,896 Net investment income(loss) 13,936,766 (32,083,115) 68,910,089 1,047,240 17,943,950 19,937,149 32,116,305 (6,040,910) 8,965,080 34,016,621 Benefit payments,including employee refunds (37,717,498) (36,188,116) (35,040,363) (33,987,421) (32,609,254) (31,757,151) (31,102,186) (29,503,964) (27,969,021) (26,852,038) Administrative expenses (126,049) (88,992) (24,177) (41,599) (53,318) (77,237) (50,996) (128,903) (173,849) (1,141,506) Net Change in Plan Fiduciary Net Position (2,772,907) (46,028,321) 55,302,826 (14,064,681) 2,321,508 3,438,780 15,325,805 (22,181,251) (5,176,867) 20,183,830 Plan Fiduciary Net Position,beginning 289,411,315 335,439,636 280,136,810 294,201,491 291,879,983 288,441,203 273,115,398 295,296,649 300,473,516 280,289,686 Plan Fiduciary Net Position,ending $ 286,638,408 $ 289,411,315 $ 335,439,636 $ 280,136,810 $ 294,201,491 $ 291,879,983 $ 288,441,203 $ 273,115,398 $ 295,296,649 $ 300,473,516 City's Net Pension Liability $ 238,396,781 $ 213,468,474 $ 156,068,943 $ 185,384,896 $ 167,154,481 $ 153,120,009 $ 141,228,895 $ 145,233,052 $ 104,820,899 $ 88,943,297 Plan fiduciary net position as a percentage of the total pension liability 54.59% 57.55% 68.25% 60.18% 63.77% 65.59% 67.13% 65.28% 73.80% 77.16% Covered payroll $ 33,120,012 $ 31,354,796 $ 29,636,017 $ 28,977,408 $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 25,611,974 City's net pension asset as a percentage of covered payroll 719.8% 680.8% 526.6% 639.8% 564.0% 538.5a/ 512.0% 536.3% 429.5% 347.3% Assumption changes - there were no changes in actuarial assumptions during fiscal year 2023. More details regarding actuarial assumptions can be found in the December 31,2022 valuation reports for each system. Benefit changes-there were changes made to the compensation and benefit multiplier for the police and non-supervisory hires after August 1,2014 and firefighters hired after May 1,2014 based on the collective bargaining agreements. 122 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contributions $ 18,165,988 $ 18,263,635 $ 16,950,155 $ 15,457,647 $ 13,554,239 $ 12,562,547 $ 11,521,768 $ 10,884,312 $ 11,050,091 $ 11,248,857 Contributions in relation to the actuarially determined contribution 18,165,988 18,263,635 16,950,155 15,457,647 13,554,239 12,686,000 11,521,768 10,884,312 11,050,091 11,248,857 Contribution deficiency(excess) $ $ - $ $ $ $ (123,453) $ $ $ $ Covered payroll $ 33,120,012 $ 31,354,796 $ 29,636,017 $ 28,977,408 $ 29,638,532 $ 28,435,952 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 26,405,725 Contributions as a percentage of covered payroll 54.85% 58.25% 57.19% 53.34% 45.73% 44.61% 41.77% 40.20% 45.27% 42.60% The actuarially determined contribution was based on projected covered payroll. Employer contributions were made in full based on actual covered payroll. Accordingly,the actuarially determined contribution has been expressed above as a percentage of actual payroll. Actuarial Assumptions The total pension liability was determined by an actuarial valuation as of December 31, 2022, rolled forward to June 30, 2023, using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Salary increases: Inflation,plus service based increases. Investment rate of return: 7.00%,net of investment expense,including inflation. Mortality is based on the Pub2010S (below median), 50%for pre-retirement deaths. For Disabled members,the disabled version of these tables is used. Each of these tables is projected generationally with Scale SSA(2020). The actuarial assumptions used in the December 31,2022 valuation were based on the 2015-2019 experience study. 123 CITY OF LANSING DEFINED BENEFIT PENSION PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Annual money-weighted rate of return, net of investment expense 4.84% -9.86% 25.50% 0.37% 6.30% 7.10% 12.06% -2.09% 3.04% 17.28% 124 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST SEVEN MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2023 2022 2021 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 1,647,129 $ 1,603,045 $ 1,560,141 $ 1,518,385 $ 1,477,747 $ 1,438,197 $ 1,550,428 Interest 10,762,261 10,562,939 11,335,921 13,143,168 12,990,219 13,221,134 12,976,683 Difference between expected and actual experience - - (39,503,661) (19,498,451) - (9,321,837) - Changes of assumptions (66,716,444) 39,986,554 3,614,432 (2,727,829) Benefit payments,including refunds of member contributions (10,410,016) (8,350,052) (9,395,594) (10,444,878) (10,573,488) (10,286,249) (10,116,593) Net Change in Total OPEB Liability 1,999,374 3,815,932 (102,719,637) 24,704,778 7,508,910 (7,676,584) 4,410,518 Total OPEB Liability,beginning 157,216,430 153,400,498 256,120,135 231,415,357 223,906,447 231,583,031 227,172,513 Total OPEB Liability,ending $ 159,215,804 $ 157,216,430 $ 153,400,498 $ 256,120,135 $ 231,415,357 $ 223,906,447 $ 231,583,031 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 12,126,259 $ 10,643,555 $ 10,424,468 $ 11,461,488 $ 11,848,485 $ 11,436,222 $ 11,305,756 OPEB plan net investment income 12,596,837 (11,324,122) 11,001,355 4,366,514 3,040,683 4,329,577 5,209,669 Benefit payments,including refunds of member contributions (10,410,016) (8,350,052) (9,395,594) (10,444,878) (10,573,488) (10,286,249) (10,116,593) Administrative expenses (697,661) (611,703) (728,874) (636,610) (548,939) (444,973) (389,163) Net Change in Plan Fiduciary Net Position 13,615,419 (9,642,322) 11,301,355 4,746,514 3,766,741 5,034,577 6,009,669 Plan Fiduciary Net Position,beginning 69,887,591 79,529,913 68,228,558 63,482,044 59,715,303 54,680,726 48,671,057 Plan Fiduciary Net Position,ending $ 83,503,010 $ 69,887,591 $ 79,529,913 $ 68,228,558 $ 63,482,044 $ 59,715,303 $ 54,680,726 Plan's Net OPEB Liability $ 75,712,794 $ 87,328,839 $ 73,870,585 $ 187,891,577 $ 167,933,313 $ 164,191,144 $ 176,902,305 Plan fiduciary net position as a percentage of the total OPEB liability 52.45% 44.45% 51.84% 26.64% 27.43% 26.67% 23.61% Covered payroll $ 26,458,716 $ 26,747,483 $ 24,292,037 $ 25,453,989 $ 23,720,424 $ 21,251,418 $ 20,901,289 Plan's net OPEB liability as a percentage of covered payroll 286.15% 326.49% 304.09% 738.16% 707.97% 772.61% 846.37% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately,ten years of data will be presented. Assumption changes-there were no changes of assumptions in 2023. Benefit changes-there were no changes to benefits in 2023. 125 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contributions $ 7,313,859 $ 7,100,834 $ 7,100,834 $ 10,504,140 $ 10,198,194 $ 10,910,284 $ 10,582,235 $ 11,447,334 $ 13,270,701 $ 14,057,619 Contributions in relation to the actuarially determined contribution 12,126,259 10,643,555 10,424,468 11,461,488 11,848,485 11,436,222 11,305,756 8,814,471 9,212,322 11,048,992 Contribution deficiency(excess) $ [4,812,400) $ (3,542,721) $ [3,323,634) $ [957,348) $ (1,650,291) $ [525,938) $ (723,521) $ 2,632,863 $ 4,058,379 $ 3,008,627 Covered payroll $ 26,458,716 $ 26,747,483 $ 24,292,037 $ 25,435,989 $ 23,720,424 $ 21,251,418 $ 20,901,389 $ 23,085,894 $ 19,769,460 $ 21,521,242 Contributions as a percentage of covered payroll 45.8% 39.8% 42.9% 45.1% 50.0% 53.8% 54.1% 38.2% 46.6% 51.3% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2021, rolled forward to June 30, 2023, using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. Mortality rates are assumed to be in accordance with the Pub2010G tables,with below median and headcount weighted, projected generationally using MP-2020. The actuarial assumptions used in the January 1, 2021 valuation were based on the 2015-2019 experience study. 126 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-EMPLOYEES'RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2023 2022 2021 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 16.42% -15.16% 14.89% 6.63% 4.17% 7.10% 9.90% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately,ten years of data will be presented. 127 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN - POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF CHANGES IN NET OPEB LIABILITY AND RELATED RATIOS LAST SEVEN MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2023 2022 2021 2020 2019 2018 2017 CHANGE IN TOTAL OPEB LIABILITY Service cost $ 3,904,624 $ 3,800,121 $ 3,698,415 $ 3,599,431 $ 3,503,096 $ 3,409,339 $ 3,749,359 Interest 14,158,158 13,536,620 15,112,018 15,551,609 15,565,892 15,994,328 15,584,783 Difference between expected and actual experience - - (71,213,994) 18,584,560 - (17,811,401) - Changes of assumptions (162,399,773) 91,997,958 18,652,834 (7,445,354) Benefit payments,including refunds of member contributions (9,188,608) (7,956,471) (10,836,077) (13,132,398) (12,271,014) (11,960,557) (11,065,440) Net Change in Total OPEB Liability 8,874,174 9,380,270 (225,639,411) 116,601,160 25,450,808 (17,813,645) 8,268,702 Total OPEB Liability,beginning 202,871,379 193,491,109 419,130,520 302,529,360 277,078,552 294,892,197 286,623,495 Total OPEB Liability,ending $ 211,745,553 $ 202,871,379 $ 193,491,109 $ 419,130,520 $ 302,529,360 $ 277,078,552 $ 294,892,197 CHANGE IN PLAN FIDUCIARY NET POSITION Employer contributions $ 11,304,220 $ 9,974,904 $ 12,951,908 $ 14,971,737 $ 13,500,687 $ 13,163,201 $ 12,290,749 OPEB plan net investment income 11,844,067 (7,645,295) 3,408,741 2,998,056 290,543 3,572,965 3,487,200 Benefit payments,including refunds of member contributions (9,188,608) (7,956,471) (10,836,077) (13,132,398) (12,271,014) (11,960,557) (11,065,440) Administrative expenses (765,612) (672,516) (815,831) (529,339) (627,673) (600,644) (525,309) Net Change in Plan Fiduciary Net Position 13,194,067 (6,299,378) 4,708,741 4,308,056 892,543 4,174,965 4,187,200 Plan Fiduciary Net Position,beginning 41,918,165 48,217,543 43,508,802 39,200,746 38,308,203 34,133,238 29,946,038 Plan Fiduciary Net Position,ending $ 55,112,232 $ 41,918,165 $ 48,217,543 $ 43,508,802 $ 39,200,746 $ 38,308,203 $ 34,133,238 Plan's Net OPEB Liability $ 156,633,321 $ 160,953,214 $ 145,273,566 $ 375,621,718 $ 263,328,614 $ 238,770,349 $ 260,758,959 Plan fiduciary net position as a percentage of the total OPEB liability 26.03% 20.66% 24.92% 10.38% 12.96% 13.83% 11.57% Covered payroll $ 31,220,001 $ 27,116,594 $ 29,636,017 $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 Plan's net OPEB liability as a percentage of covered payroll 501.71% 593.56% 490.19% 1261.56% 926.04% 1155.32% 945.27% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately,ten years of data will be presented. Assumption changes-there were no changes of assumptions in 2023. Benefit changes-there were no changes to benefits in 2023. 128 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SERVICES SCHEDULE OF CONTRIBUTIONS LAST TEN FISCAL YEARS 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Actuarially determined contributions $ 13,573,857 $ 13,178,502 $ 13,178,502 $ 15,674,604 $ 15,218,062 $ 15,968,029 $ 19,759,521 $ 17,276,901 $ 17,923,366 $ 16,945,536 Contributions in relation to the actuarially determined contribution 11,304,220 9,974,904 12,951,908 14,971,737 13,500,687 13,163,201 12,290,749 12,879,016 11,561,406 11,198,663 Contribution deficiency(excess) $ 2,269,637 $ 3,203,598 $ 226,594 $ 702,867 $ 1,717,375 $ 2,804,828 $ 7,468,772 $ 4,397,885 $ 6,361,960 $ 5,746,873 Covered payroll $ 31,220,001 $ 27,116,594 $ 29,636,017 $ 29,774,287 $ 28,435,953 $ 20,667,007 $ 27,585,521 $ 27,078,405 $ 24,407,740 $ 26,405,725 Contributions as a percentage of covered payroll 36.2% 36.8% 43.7% 50.3% 47.5% 63.7% 44.6% 47.6% 47.4% 42.4% Actuarial Assumptions The total OPEB liability was determined by an actuarial valuation as of January 1, 2021, rolled forward to June 30, 2023, using the following actuarial assumptions,applied to all periods included in the measurement: Inflation: 2.50% Investment rate of return: 7.00%,net of OPEB plan investment expense,including inflation. Retirement age: Age-based table of rates that are specific to the type of eligibility condition. Mortality rates are assumed to be in accordance with the Pub2010G tables,with below median and headcount weighted, projected generationally using MP-2020. The actuarial assumptions used in the January 1,2021 valuation were based on the 2015-2019 experience study. 129 CITY OF LANSING OTHER POSTEMPLOYMENT BENEFITS PLAN-POLICE AND FIRE RETIREMENT SYSTEM SCHEDULE OF INVESTMENT RETURNS LAST SEVEN MEASUREMENT DATES (ULTIMATELY TEN YEARS WILL BE DISPLAYED) 2023 2022 2021 2020 2019 2018 2017 Annual money-weighted rate of return, net of investment expense 24.41% -16.96% 7.43% 7.25% -0.88% 8.71% 9.89% Note: GASB 74 was implemented in fiscal year 2017. This schedule is being built prospectively. Ultimately,ten years of data will be presented. 130 CITY OF LANSING NOTE TO REQUIRED SUPPLEMENTARY INFORMATION NOTE 1 -EXCESS OF EXPENDITURES OVER APPROPRIATIONS State statutes provide that a local government unit not incur expenditures in excess of the amounts appropriated. The City's budgeted expenditures for the General Fund have been shown at the activity level. Within the General Fund,the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service,transfers,and contingency) within each department. Within other funds, the legal level of budgetary control is the mandatory expenditure accounts (personal services, supplies and operating expenses, capital outlay, debt service, transfers, and contingency) within that fund. Transfers between appropriations (mandatory accounts) required City Council approval. An exception to City Council approval is allowed by City Charter for transfers between appropriations (mandatory accounts) for amounts less than five thousand dollars, but not in excess of 15% of the appropriation in cases where five thousand dollars exceeds 15%of the appropriation. During the year ended June 30, 2023, the City incurred expenditures in the General Fund and certain Special Revenue Funds as noted in excess of the amounts appropriated as follows: Amounts Amounts Appropriated Expended Variance General Fund Current General government City clerk-operating $ 439,055 $ 451,050 $ 11,995 Finance-operating 1,397,873 1,704,150 306,277 Library rental-operating 137,150 447,584 310,434 Human resources-personnel 1,459,829 1,668,046 208,217 Mayor-personnel 2,056,165 2,231,655 175,490 Mayor-operating 319,880 692,352 372,472 Judicial-operating 1,801,110 6,343,198 4,542,088 Public safety Fire-personnel 34,434,467 34,562,829 128,362 Public works-operating 9,575,390 11,175,516 1,600,126 Recreation and culture-operating 4,369,790 5,145,795 776,005 Community and economic development Economic development&planning-operating 3,408,228 3,437,122 28,894 Debt service 987,100 1,843,071 855,971 Transfer out 5,521,000 6,438,803 917,803 State and Federal Grants Fund Current General government-personnel - 137,857 137,857 General government-operations - 3,433,804 3,433,804 Public safety-personnel - 874,886 874,886 Public safety-operations - 2,974,177 2,974,177 Public works-operations - 2,653,109 2,653,109 Judicial-operations - 278,831 278,831 Health and welfare-personnel - 9,619 9,619 Health and welfare-operations - 884,344 884,344 Community and economic development-personnel 99,457 210,996 111,539 Community and economic development-operations 966,343 5,730,177 4,763,834 Recreation and culture-personnel - 17,062 17,062 Recreation and culture-operations - 3,971,239 3,971,239 131 CITY OF LANSING NOTE TO REQUIRED SUPPLEMENTARY INFORMATION NOTE 1 -EXCESS OF EXPENDITURES OVER APPROPRIATIONS(concluded) Amounts Amounts Appropriated Expended Variance CERA-MSHDA Current Community and economic development-operations $ - $ 7,586,644 $ 7,586,644 Major Streets Current Highways and streets-operations 3,915,683 4,270,677 354,994 Capital outlay 4,300,000 4,343,815 43,815 Local Streets Current Highways and streets-operations 3,099,215 4,080,954 981,739 Capital outlay 3,820,000 4,675,203 855,203 Drug Law Enforcement Federal Fund Current Public safety-operations - 329 329 Downtown Lansing Inc.Fund Current General government-personnel 100,000 295,560 195,560 General government-operations 1,209,889 3,661,003 2,451,114 Tri-County Metro Fund Current Public safety-personnel 85,000 107,851 22,851 132 OTHER SUPPLEMENTARY INFORMATION 133 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES 134 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING BALANCE SHEET JUNE 30, 2023 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total ASSETS Cash and cash equivalents $ 48,000 $ - $ 397,091 $ - $ 445,091 Cash and cash equivalents-restricted - 10,989,553 - 1,703,758 12,693,311 Equity in pooled cash and investments 22,572,021 29,361 9,386,983 207,806 32,196,171 Receivables Accounts,net 26,466 - 4,878,452 - 4,904,918 Loans 1,185,000 - 1,185,000 Accrued interest 2,409,446 - 2,409,446 Special assessments Current - 416,887 416,887 Noncurrent - 9,861,334 9,861,334 Due from other governmental units 5,243,312 - 5,243,312 Due from other funds 344,008 344,008 Inventories 1,218,842 1,218,842 TOTAL ASSETS $ 33,047,095 $ 11,018,914 $ 24,940,747 $ 1,911,564 $ 70,918,320 LIABILITIES Accounts payable $ 1,800,445 $ - $ 199,319 $ - $ 1,999,764 Accrued liabilities 35,754 - 35,754 Indemnity bonds 43,867 43,867 Due to other funds 344,008 344,008 Due to other governmental units 368,881 368,881 Undistributed forfeitures 30,668 - 30,668 Unearned revenue 2,915 60,000 62,915 TOTAL LIABILITIES 2,626,538 259,319 2,885,857 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-loans and accrued interest receivable 4,732,673 4,725,000 9,457,673 Unavailable revenue-special assessments - 9,862,937 9,862,937 TOTAL DEFERRED INFLOWS OF RESOURCES 4,732,673 14,587,937 19,320,610 FUND BALANCES Nonspendable 1,218,842 1,911,564 3,130,406 Restricted 23,969,521 11,018,914 2,324,706 37,313,141 Committed 499,521 7,768,785 8,268,306 TOTAL FUND BALANCES 25,687,884 11,018,914 10,093,491 1,911,564 48,711,853 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES,AND FUND BALANCES $ 33,047,095 $ 11,018,914 $ 24,940,747 $ 1,911,564 $ 70,918,320 135 CITY OF LANSING NONMAJOR GOVERNMENTAL FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2023 Special Debt Capital Revenue Service Projects Permanent Funds Funds Funds Funds Total REVENUES Property taxes and special assessments $ 523,739 $ $ 1,171,192 $ $ 1,694,931 Intergovernmental 23,982,147 1,000,000 24,982,147 Charges for services 3,650,058 420,421 4,070,479 Fines and forfeits 227,255 - 227,255 Interest income(loss)and rents 292,717 925,963 78,537 1,297,217 Other 2,365,211 - - 2,365,211 TOTAL REVENUES 31,041,127 3,517,576 78,537 34,637,240 EXPENDITURES Current General government 3,956,563 3,956,563 Public safety 756,261 756,261 Highways and streets 13,687,366 13,687,366 Community and economic development 4,034,145 4,034,145 Debt service Principal 840,278 1,631,607 2,471,885 Interest and fiscal charges 251,255 1,607,480 1,858,735 Capital outlay 9,019,018 11,017,172 20,036,190 TOTAL EXPENDITURES 32,544,886 14,256,259 46,801,145 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (1,503,759) - (10,738,683) 78,537 (12,163,905) OTHER FINANCING SOURCES(USES) Bond premium - 10,989,553 - - 10,989,553 Proceeds from sale of capital assets 3,532 - 20,000 - 23,532 Transfers in 5,876,002 3,746,111 28,000 9,650,113 Transfers out (3,361,002) - (650,000) - (4,011,002) TOTAL OTHER FINANCING SOURCES(USES) 2,518,532 10,989,553 3,116,111 28,000 16,652,196 NET CHANGE IN FUND BALANCES 1,014,773 10,989,553 (7,622,572) 106,537 4,488,291 Fund balances,beginning of year 24,673,111 29,361 17,716,063 1,805,027 44,223,562 Fund balances,end of year $ 25,687,884 $ 11,018,914 $ 10,093,491 $ 1,911,564 $ 48,711,853 136 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS Major Streets Fund This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes,which is restricted for maintenance of major streets. Local Streets Fund This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes,which is restricted for maintenance of local streets. Drug Law Enforcement Federal Fund This fund accounts for federal revenues, from the Departments of Justice and Treasury, set aside for drug law enforcement under the provisions of Federal Grant Agreements. Drug Law Enforcement State and Local Fund This fund accounts for state and local revenues,from the Departments of Justice and Treasury,set aside for drug law enforcement under the provisions of State of Michigan Public Act 135 of 1985,as amended. Community Development Block Grant Program Fund This fund accounts for revenues received from the Department of Housing and Urban Development. These revenues are restricted to accomplishing the various objectives of Community Development Block Grant Programs,within specific target areas. Opioid Settlement Fund This fund accounts for revenues received from Opioid Settlement funds, and restricted for treatment, prevention,and remediation. 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. Tri-County Metro Fund This fund accounts for the operations of the Tri-County Metro Narcotics Squad. 137 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING BALANCE SHEET JUNE 30, 2023 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local ASSETS Cash and cash equivalents $ - $ - $ - $ 23,000 Equity in pooled cash and investments 11,805,014 3,609,529 209,720 319,221 Receivables Accounts,net - 1 - - Loans - -Accrued interest - - Due from other funds 344,008 - - Due from other governmental units 2,768,303 637,790 - Inventories 1,218,842 - - - TOTAL ASSETS $ 16,136,167 $ 4,247,320 $ 209,720 $ 342,221 LIABILITIES Accounts payable $ 744,778 $ 421,233 $ - $ 86,033 Accrued payroll and related - 2,906 - Indemnity bonds 43,867 - Due to other funds - Due to other governmental units Undistributed forfeitures Unearned revenue - - - TOTAL LIABILITIES 788,645 424,139 86,033 DEFERRED INFLOWS OF RESOURCES Unavailable revenue - - - FUND BALANCES Nonspendable 1,218,842 - - - Restricted 14,128,680 3,823,181 209,720 256,188 Committed - - - - TOTAL FUND BALANCES 15,347,522 3,823,181 209,720 256,188 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 16,136,167 $ 4,247,320 $ 209,720 $ 342,221 138 Community Development Block Grant Opioid Downtown Building Parks Tri-County Program Settlement Lansing,Inc. Department Department Metro Total $ - $ - $ - $ - $ - $ 25,000 $ 48,000 - 368,245 619,011 4,594,490 499,521 547,270 22,572,021 - - 26,465 - - 26,466 1,185,000 - - 1,185,000 2,409,446 - 2,409,446 - - - - 344,008 437,498 1,230,943 50,000 118,778 5,243,312 - - - - - - 1,218,842 $ 4,031,944 $ 1,599,188 $ 669,011 $ 4,620,955 $ 499,521 $ 691,048 $ 33,047,095 $ 172,478 $ - $ 327,614 $ 13,889 $ - $ 34,420 $ 1,800,445 3,512 - 6,107 20,397 2,832 35,754 - - - - - 43,867 344,008 - - 344,008 10,215 - 358,666 368,881 - - - 30,668 30,668 - - 2,915 - 2,915 530,213 - 333,721 37,201 426,586 2,626,538 3,501,730 1,230,943 - - - 4,732,673 - - - - - 1,218,842 1 368,245 335,290 4,583,754 - 264,462 23,969,521 - - - - 499,521 - 499,521 1 368,245 335,290 4,583,754 499,521 264,462 25,687,884 $ 4,031,944 $ 1,599,188 $ 669,011 $ 4,620,955 $ 499,521 $ 691,048 $ 33,047,095 139 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2023 Drug Law Drug Law Enforcement Enforcement State and Major Streets Local Streets Federal Local REVENUES Property taxes and special assessments $ 153,903 $ - $ - $ - Intergovernmental 15,504,270 3,758,355 - Charges for services 667,952 40,772 9,906 - Fines and forfeits - - - 49,806 Interest and rents 152,515 87,097 3,283 5,248 Other revenues - 1,490,181 - - TOTAL REVENUES 16,478,640 5,376,405 13,189 55,054 EXPENDITURES Current General government - - - - Public safety - - 329 97,855 Highways and streets 6,892,677 6,794,689 - - Community development - - - - Debt service Principal 399,578 440,700 - - Interest 72,947 178,308 - - Capital outlay 4,343,815 4,675,203 - - TOTAL EXPENDITURES 11,709,017 12,088,900 329 97,855 EXCESS OF REVENUES OVER (UNDER) EXPENDITURES 4,769,623 (6,712,495) 12,860 (42,801) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets - - - 3,532 Transfers in 5,791,002 - - Transfers out (3,361,002) - - - TOTAL OTHER FINANCING SOURCES(USES) (3,361,002) 5,791,002 - 3,532 NET CHANGE IN FUND BALANCES 1,408,621 (921,493) 12,860 (39,269) Fund balances,beginning of year 13,938,901 4,744,674 196,860 295,457 Fund balances,end of year $ 15,347,522 $ 3,823,181 $ 209,720 $ 256,188 140 Community Development Block Grant Opioid Downtown Building Parks Tri-County Program Settlement Lansing,Inc. Department Department Metro Total $ - $ - $ 369,836 $ - $ $ - $ 523,739 1,242,885 368,245 2,608,648 499,744 23,982,147 - - - 2,931,428 - 3,650,058 - - - 177,449 227,255 - - 28,482 7,932 8,160 292,717 77,012 - 798,018 - - - 2,365,211 1,319,897 368,245 3,804,984 2,931,428 7,932 685,353 31,041,127 - - 3,956,563 - - - 3,956,563 - 658,077 756,261 - - - - 13,687,366 1,319,897 2,714,248 - 4,034,145 - - - 840,278 251,255 - - - - 9,019,018 1,319,897 - 3,956,563 2,714,248 658,077 32,544,886 - 368,245 (151,579) 217,180 7,932 27,276 (1,503,759) - - - - - 3,532 - 85,000 5,876,002 - - (3,361,002) - 85,000 - - - 2,518,532 - 368,245 (66,579) 217,180 7,932 27,276 1,014,773 1 - 401,869 4,366,574 491,589 237,186 24,673,111 $ 1 $ 368,245 $ 335,290 $ 4,583,754 $ 499,521 $ 264,462 $ 25,687,884 141 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Major Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ - $ - $ 153,903 $ 153,903 Intergovernmental 11,797,425 11,797,425 15,504,270 3,706,845 Charges for services 525,000 525,000 667,952 142,952 Interest and rents 38,500 38,500 152,515 114,015 TOTAL REVENUES 12,360,925 12,360,925 16,478,640 4,117,715 EXPENDITURES Current Highways and streets Personnel 3,111,715 3,111,715 2,622,000 489,715 Operations 3,915,683 3,915,683 4,270,677 (354,994) Debt service Principal 399,578 399,578 399,578 Interest 72,947 72,947 72,947 Capital outlay 4,300,000 4,300,000 4,343,815 (43,815) TOTAL EXPENDITURES 11,799,923 11,799,923 11,709,017 90,906 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 561,002 561,002 4,769,623 4,208,621 OTHER FINANCING USES Transfers out (3,361,002) (3,361,002) (3,361,002) NET CHANGE IN FUND BALANCE (2,800,000) (2,800,000) 1,408,621 4,208,621 Fund balance,beginning of year 13,938,901 13,938,901 13,938,901 - Fund balance,end of year $ 11,138,901 $ 11,138,901 $ 15,347,522 $ 4,208,621 142 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Local Streets Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 3,759,160 $ 3,759,160 $ 3,758,355 $ (805) Miscellaneous revenue - - 40,772 40,772 Interest and rents 150,000 150,000 87,097 (62,903) Other revenues - - 1,490,181 1,490,181 TOTAL REVENUES 3,909,160 3,909,160 5,376,405 1,467,245 EXPENDITURES Current Highways and streets Personnel 3,239,939 3,239,939 2,713,735 526,204 Operations 3,099,215 3,099,215 4,080,954 (981,739) Debt service Principal 440,700 440,700 440,700 Interest 178,308 178,308 178,308 Capital outlay 3,820,000 3,820,000 4,675,203 (855,203) TOTAL EXPENDITURES 10,778,162 10,778,162 12,088,900 (1,310,738) EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (6,869,002) (6,869,002) (6,712,495) 156,507 OTHER FINANCING SOURCES Transfers in 5,669,002 5,669,002 5,791,002 122,000 NET CHANGE IN FUND BALANCE (1,200,000) (1,200,000) (921,493) 278,507 Fund balance,beginning of year 4,744,674 4,744,674 4,744,674 - Fund balance,end of year $ 3,544,674 $ 3,544,674 $ 3,823,181 $ 278,507 143 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Drug Law Enforcement Federal Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Charges for services $ $ $ 9,906 $ 9,906 Interest and rents 3,283 3,283 TOTAL REVENUES 13,189 13,189 EXPENDITURES Current Public safety-operations 329 (329) NET CHANGE IN FUND BALANCE 12,860 12,860 Fund balance,beginning of year 196,860 196,860 196,860 - Fund balance,end of year $ 196,860 $ 196,860 $ 209,720 $ 12,860 144 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Drug Law Enforcement State and Local Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Fines and forfeitures $ - $ - $ 49,806 $ 49,806 Interest and rents 7,500 7,500 5,248 (2,252) TOTAL REVENUES 7,500 7,500 55,054 47,554 EXPENDITURES Current Public safety-operating 168,000 168,000 97,855 70,145 Capital outlay 54,000 54,000 54,000 TOTAL EXPENDITURES 222,000 222,000 97,855 124,145 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (214,500) (214,500) (42,801) 171,699 OTHER FINANCING SOURCES Proceeds from sale of capital assets 3,532 3,532 NET CHANGE IN FUND BALANCE (214,500) (214,500) (39,269) 175,231 Fund balance,beginning of year 295,457 295,457 295,457 - Fund balance,end of year $ 80,957 $ 80,957 $ 256,188 $ 175,231 145 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 CDBG Program Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 2,202,537 $ 2,202,537 $ 1,242,885 $ (959,652) Other revenues 162,935 162,935 77,012 (85,923) TOTAL REVENUES 2,365,472 2,365,472 1,319,897 (1,045,575) EXPENDITURES Current Community development Personnel 1,146,062 1,146,062 534,471 611,591 Operations 1,219,410 1,219,410 785,426 433,984 TOTAL EXPENDITURES 2,365,472 2,365,472 1,319,897 1,045,575 NET CHANGE IN FUND BALANCE - - - - Fund balance,beginning of year 1 1 1 Fund balance,end of year $ 1 $ 1 $ 1 $ 146 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Ooioid Settlement Fund Variances with Budgeted Amounts Final Budget Positive Original Final Actual (Negative) REVENUES Intergovernmental $ $ $ 368,245 $ 368,245 EXPENDITURES Current Public safety-operations - - NET CHANGE IN FUND BALANCE 368,245 368,245 Fund balance,beginning - - Fund balance,ending $ $ $ 368,245 $ 368,245 147 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Downtown Lansing,Inc.Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Property taxes and special assessments $ 475,000 $ 475,000 $ 369,836 $ (105,164) Intergovernmental 20,000 2,520,000 2,608,648 88,648 Interest and rents - - 28,482 28,482 Other revenues 137,000 637,000 798,018 161,018 TOTAL REVENUES 632,000 3,632,000 3,804,984 172,984 EXPENDITURES Current General government Personnel - 100,000 295,560 (195,560) Operations 209,889 1,209,889 3,661,003 (2,451,114) Capital outlay 507,111 507,111 - 507,111 TOTAL EXPENDITURES 717,000 1,817,000 3,956,563 (2,139,563) EXCESS OF REVENUES OVER (UNDER)EXPENDITURES (85,000) 1,815,000 (151,579) (1,966,579) OTHER FINANCING SOURCES Transfers in 85,000 85,000 85,000 NET CHANGE IN FUND BALANCE - 1,900,000 (66,579) (1,966,579) Fund balance,beginning of year 401,869 401,869 401,869 Fund balance,end of year $ 401,869 $ 2,301,869 $ 335,290 $ (1,966,579) 148 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Building Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Charges for services $ 3,052,100 $ 3,052,100 $ 2,931,428 $ (120,672) EXPENDITURES Current Community development Personnel 2,197,384 2,197,384 1,991,976 205,408 Operations 669,716 724,716 722,272 2,444 TOTAL EXPENDITURES 2,867,100 2,922,100 2,714,248 207,852 NET CHANGE IN FUND BALANCE 185,000 130,000 217,180 87,180 Fund balance,beginning of year 4,366,574 4,366,574 4,366,574 - Fund balance,end of year $ 4,551,574 $ 4,496,574 $ 4,583,754 $ 87,180 149 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Parks Department Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Interest and rents $ $ $ 7,932 $ 7,932 NET CHANGE IN FUND BALANCE 7,932 7,932 Fund balance,beginning of year 491,589 491,589 491,589 - Fund balance,end of year $ 491,589 $ 491,589 $ 499,521 $ 7,932 150 CITY OF LANSING NONMAJOR SPECIAL REVENUE FUNDS SCHEDULE OF REVENUES,EXPENDITURES,AND CHANGES IN FUND BALANCE-BUDGET AND ACTUAL YEAR ENDED JUNE 30,2023 Tri County Metro Fund Variances with Final Final Budget Original Amended Positive Budget Budget Actual (Negative) REVENUES Intergovernmental $ 425,000 $ 425,000 $ 499,744 $ 74,744 Fines and forfeitures 268,000 268,000 177,449 (90,551) Interest and rents 8,000 8,000 8,160 160 TOTAL REVENUES 701,000 701,000 685,353 (15,647) EXPENDITURES Current Public safety Personnel 85,000 85,000 107,851 (22,851) Operations 616,000 616,000 550,226 65,774 TOTAL EXPENDITURES 701,000 701,000 658,077 42,923 NET CHANGE IN FUND BALANCE - - 27,276 27,276 Fund balance,beginning of year 237,186 237,186 237,186 - Fund balance,end of year $ 237,186 $ 237,186 $ 264,462 $ 27,276 151 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS 1999 Fire Station Fund This fund accounts for the accumulation of resources for payment of the 1999$3,000,000 Unlimited Tax General Obligation Bonds (which was refunding in 2007 in the amount of$1,780,000). Public Safety Fund This fund accounts for the premium related to the 2023B Capital Improvement Bond. 152 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS BALANCESHEET JUNE 30,2023 1999 Fire Public Safety Station Debt Service Total ASSETS Equity in pooled cash and investments $ 29,361 $ - $ 29,361 Cash and cash equivalents -restricted - 10,989,553 10,989,553 TOTAL ASSETS $ 29,361 $ 10,989,553 $ 11,018,914 FUND BALANCES Restricted $ 29,361 $ 10,989,553 $ 11,018,914 153 CITY OF LANSING NONMAJOR DEBT SERVICE FUNDS STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCE YEAR ENDED JUNE 30,2023 1999 Fire Public Safety Station Debt Service Total OTHER FINANCING SOURCES Bond premium $ - $ 10,989,553 $ 10,989,553 NET CHANGE IN FUND BALANCES - 10,989,553 10,989,553 Fund balances,beginning of year 29,361 - 29,361 Fund balances,end of year $ 29,361 $ 10,989,553 $ 11,018,914 154 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS Special Assessments Fund This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Montgomery Drain Fund This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied,specifically for the Montgomery Drain. Ovation Capital Projects Fund This fund is used to account for the financing and capital project activity related to the Ovation project. Other Capital Projects Fund This fund accounts for miscellaneous capital projects. 155 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING BALANCE SHEET JUNE 30, 2023 Special Montgomery Ovation Capital Other Capital Assessments Drain Project Fund Projects Total ASSETS Cash and cash equivalents $ - $ - $ $ 397,091 $ 397,091 Equity in pooled cash and investments 53,554 847,940 8,485,489 9,386,983 Receivables Accounts and loan receivable - - 4,878,452 4,878,452 Special assessments Current 17,797 399,090 - 416,887 Noncurrent 47,832 9,813,502 9,861,334 TOTAL ASSETS $ 119,183 $ 11,060,532 $ $ 13,761,032 $ 24,940,747 LIABILITIES Accounts payable $ - $ $ $ 199,319 $ 199,319 Unearned revenue 60,000 60,000 TOTAL LIABILITIES 259,319 259,319 DEFERRED INFLOWS OF RESOURCES Unavailable revenue-loans and accrued interest receivable - 4,725,000 4,725,000 Unavailable revenue-special assessments 49,435 9,813,502 9,862,937 TOTAL DEFERRED INFLOWS OF RESOURCES 49,435 9,813,502 4,725,000 14,587,937 FUND BALANCES Restricted 69,748 1,247,030 1,007,928 2,324,706 Committed - 7,768,785 7,768,785 TOTAL FUND BALANCES 69,748 1,247,030 8,776,713 10,093,491 TOTAL LIABILITIES,DEFERRED INFLOWS OF RESOURCES, AND FUND BALANCES $ 119,183 $ 11,060,532 $ $ 13,761,032 $ 24,940,747 156 CITY OF LANSING NONMAJOR CAPITAL PROJECTS FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2023 Special Montgomery Ovation Capital Other Capital Assessments Drain Project Fund Projects Total REVENUES Property taxes and special assessments $ $ 1,171,192 $ - $ $ 1,171,192 Intergovernmental - 1,000,000 1,000,000 Charges for services 23,296 - - 397,125 420,421 Interest and rents - 368,228 - 557,735 925,963 TOTAL REVENUES 23,296 1,539,420 1,000,000 954,860 3,517,576 EXPENDITURES Debt service Principal 971,607 660,000 1,631,607 Interest and fiscal charges 1,360,019 - 247,461 1,607,480 Capital outlay - 2,003,111 9,014,061 11,017,172 TOTAL EXPENDITURES 2,331,626 2,003,111 9,921,522 14,256,259 EXCESS OF REVENUES OVER (UNDER)EXPENDITURES 23,296 (792,206) (1,003,111) (8,966,662) (10,738,683) OTHER FINANCING SOURCES(USES) Proceeds from sale of capital assets - - 20,000 20,000 Transfers in 1,003,111 2,743,000 3,746,111 Transfers out - (650,000) (650,000) TOTAL OTHER FINANCING SOURCES(USES) - 1,003,111 2,113,000 3,116,111 NET CHANGE IN FUND BALANCES 23,296 (792,206) - (6,853,662) (7,622,572) Fund balances,beginning of year 46,452 2,039,236 15,630,375 17,716,063 Fund balances,end of year $ 69,748 $ 1,247,030 $ $ 8,776,713 $ 10,093,491 157 CITY OF LANSING NONMAJOR PERMANENT FUNDS Cemetery Perpetual Care Fund This fund accounts for transfers from the Cemetery Fund, representing 1S% 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. 158 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING BALANCE SHEET JUNE 30,2023 Cemetery Perpetual Care Parks Trust Total ASSETS Equity in pooled cash and investments $ 206,476 $ 1,330 $ 207,806 Cash and cash equivalents-restricted 1,703,758 - 1,703,758 TOTAL ASSETS $ 1,910,234 $ 1,330 $ 1,911,564 FUND BALANCES Nonspendable $ 1,910,234 $ 1,330 $ 1,911,564 159 CITY OF LANSING NONMAJOR PERMANENT FUNDS COMBINING STATEMENT OF REVENUES,EXPENDITURES, AND CHANGES IN FUND BALANCES YEAR ENDED JUNE 30,2023 Cemetery Perpetual Care Parks Trust Total REVENUES Interest income and rents $ 78,515 $ 22 $ 78,537 OTHER FINANCING SOURCES Transfers in 28,000 - 28,000 NET CHANGE IN FUND BALANCES 106,515 22 106,537 Fund balances,beginning of year 1,803,719 1,308 1,805,027 Fund balances,end of year $ 1,910,234 $ 1,330 $ 1,911,564 160 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS Cemetery Fund This fund accounts for the operation of City-owned cemeteries. Golf Fund This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund This fund accounts for the provision of recycling services to participating residents of the City. 161 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2023 Garbage and Rubbish Cemetery Golf Collection Recycling Total ASSETS Current assets Cash and cash equivalents $ 200 $ - $ - $ - $ 200 Equity in pooled cash and investments 1,042,557 116,516 2,493,592 2,256,304 5,908,969 Accounts receivable,net - - 103 - 103 Inventories 50,280 - - 50,280 Total current assets 1,093,037 116,516 2,493,695 2,256,304 5,959,552 Noncurrent assets Capital assets not being depreciated 57,740 345,647 - - 403,387 Capital assets being depreciated,net 47,915 1,528,757 10,733 1,587,405 Total noncurrent assets 105,655 1,874,404 - 10,733 1,990,792 TOTAL ASSETS 1,198,692 1,990,920 2,493,695 2,267,037 7,950,344 DEFERRED OUTFLOW OF RESOURCES Deferred outflows of resources related to pension 132,763 - 210,905 424,666 768,334 Deferred outflows of resources related to OPEB 14,579 23,160 46,634 84,373 TOTAL DEFERRED OUTFLOWS OF RESOURCES 147,342 234,065 471,300 852,707 LIABILITIES Current liabilities Accounts payable 35,891 65,951 536,261 638,103 Accrued payroll 1,370 1,173 2,534 5,077 Current portion of compensated absences 3,784 5,592 12,809 22,185 Total current liabilities 41,045 72,716 551,604 665,365 Noncurrent liabilities Compensated absences,net of current portion 33,815 49,772 114,003 197,590 Net pension liability 1,576,308 2,504,095 5,042,091 9,122,494 Net other postemployment benefit liability 727,276 1,155,339 2,326,319 4,208,934 Total noncurrent liabilities 2,337,399 3,709,206 7,482,413 13,529,018 TOTAL LIABILITIES 2,378,444 3,781,922 8,034,017 14,194,383 DEFERRED INFLOW OF RESOURCES Deferred inflows of resources related to pension 27,679 43,970 88,534 160,183 NET POSITION(DEFICIT) Net investment in capital assets 105,655 1,874,404 - 10,733 1,990,792 Unrestricted (1,165,744) 116,516 (1,098,132) (5,394,947) (7,542,307) TOTAL NET POSITION(DEFICIT) $ (1,060,089) $ 1,990,920 $ (1,098,132) $ (5,384,214) $ (5,551,515) 162 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION YEAR ENDED JUNE 30,2023 Garbage and Rubbish Cemetery Golf Collection Recycling Total OPERATING REVENUES Charges for services $ 487,209 $ $ 3,333,884 $ 4,553,007 $ 8,374,100 OPERATING EXPENSES Personnel services 342,182 953,333 1,972,345 3,267,860 Purchase of goods and services 351,922 102,579 1,472,162 2,027,409 3,954,072 Depreciation 9,827 62,951 - 5,366 78,144 TOTAL OPERATING EXPENSES 703,931 165,530 2,425,495 4,005,120 7,300,076 OPERATING INCOME(LOSS) (216,722) (165,530) 908,389 547,887 1,074,024 NONOPERATING REVENUES(EXPENSES) Interest revenue - (290,367) (290,367) NET INCOME(LOSS)BEFORE TRANSFERS (216,722) (165,530) 908,389 257,520 783,657 TRANSFERS Transfers in 450,000 100,000 - - 550,000 Transfers out (28,000) - (28,000) TOTAL TRANSFERS 422,000 100,000 - - 522,000 CHANGE IN NET POSITION 205,278 (65,530) 908,389 257,520 1,305,657 Net position(deficit),beginning of year (1,265,367) 2,056,450 (2,006,521) (5,641,734) (6,857,172) Net position(deficit),end of year $ (1,060,089) $ 1,990,920 $ (1,098,132) $ (5,384,214) $ (5,551,515) 163 CITY OF LANSING NONMAJOR ENTERPRISE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2023 Garbage and Rubbish Cemetery Golf Collection Recycling Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from customers $ 487,209 $ $ 3,333,001 $ 4,600,481 $ 8,420,691 Cash payments for good and services (336,522) (102,579) (1,474,638) (1,656,544) (3,570,283) Cash payments to employees (462,215) - (1,484,539) (2,697,127) (4,643,881) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES (311,528) (102,579) 373,824 246,810 206,527 CASH FLOWS FROM NONCAPITAL FINANCING ACTIVITIES Transfers in 450,000 100,000 - - 550,000 Transfers out (28,000) - (28,000) NET CASH PROVIDED(USED)BY NONCAPITAL FINANCING ACTIVITIES 422,000 100,000 522,000 CASH FLOWS FROM INVESTING ACTIVITIES Interest and dividends received(loss) - - (290,367) (290,367) NET CHANGE IN CASH AND CASH EQUIVALENTS 110,472 (2,579) 373,824 (43,557) 438,160 Cash and cash equivalents,beginning of year 932,285 119,095 2,119,768 2,299,861 5,471,009 Cash and cash equivalents,end of year $ 1,042,757 $ 116,516 $ 2,493,592 $ 2,256,304 $ 5,909,169 Reconciliation of operating income(loss)to net cash provided(used)by operating activities Operating income(loss) $ (216,722) $ (165,530) $ 908,389 $ 547,887 $ 1,074,024 Adjustments to reconcile operating income(loss)to net cash provided(used)by operating activities Depreciation 9,827 62,951 - 5,366 78,144 Changes in: Accounts receivable - - (883) 47,474 46,591 Inventory 2,241 - - 2,241 Deferred outflows-pension (7,271) 7,279 (3,984) (3,976) Deferred outflows-OPEB 74,153 131,113 250,820 456,086 Accounts payable 13,159 (2,476) 370,865 381,548 Accrued payroll (968) (2,432) (1,071) (4,471) Compensated absences (8,821) (9,394) (18,688) (36,903) Net pension liability 181,583 79,176 366,594 627,353 Deferred inflows-pension (5,912) (14,433) (24,073) (44,418) Net other postemployment benefit liability (41,218) (180,792) (249,882) (471,892) Deferred inflows-OPEB (311,579) - (541,723) (1,044,498) (1,897,800) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ (311,528) $ (102,579) $ 373,824 $ 246,810 $ 206,527 164 CITY OF LANSING INTERNAL SERVICE FUNDS Fleet Maintenance Fund This fund accounts for the costs of maintaining the City's fleet of vehicles and heavy equipment. Fringe Benefits Fund This fund accounts for the costs of the City's fringe benefits. Engineering Fund This fund accounts for the operations of the City's engineering department. Information Technology Fund This fund accounts for the operations of the City's information technology department. City 311 Fund This fund accounts for the operations of the City's 311 department. 165 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF NET POSITION JUNE 30, 2023 Fleet Information Maintenance Fringe Benefits Engineering Technology City 311 Total ASSETS Current assets Equity in pooled cash and investments $ 9,326,098 $ 7,403,356 $ 2,749,032 $ 3,454,384 $ 167,193 $ 23,100,063 Accounts receivable,net 1,678 3,333 - 168 - 5,179 Inventories 530,601 - - 530,601 Prepaids - 1,507,156 - 1,507,156 Total current assets 9,858,377 8,913,845 2,749,032 3,454,552 167,193 25,142,999 Noncurrent assets Capital assets not being depreciated/amortized 92,892 - - - - 92,892 Capital assets being depreciated/amortized,net 8,705,052 1,295,681 4,509,347 14,510,080 Total noncurrent assets 8,797,944 1,295,681 4,509,347 14,602,972 TOTAL ASSETS 18,656,321 8,913,845 4,044,713 7,963,899 167,193 39,745,971 LIABILITIES Current liabilities Accounts payable 145,963 1,671,789 - 347,993 - 2,165,745 Accrued payroll 43,445 145,082 28,256 23,466 6,975 247,224 Accrued interest payable 3,627 - - - - 3,627 Claims incurred but not reported - 1,380,000 - 1,380,000 Current portion of: Long-term obligations 131,463 - - 1,075,633 1,207,096 Compensated absences 12,193 - 30,447 - 42,640 Total current liabilities 336,691 3,196,871 58,703 1,447,092 6,975 5,046,332 Noncurrent liabilities Long-term obligations,net of current portion 904,824 - - 3,448,537 - 4,353,361 Compensated absences,net of current portion 194,210 67,792 381,080 294,655 16,181 953,918 Total noncurrent liabilities 1,099,034 67,792 381,080 3,743,192 16,181 5,307,279 TOTAL LIABILITIES 1,435,725 3,264,663 439,783 5,190,284 23,156 10,353,611 NET POSITION Net investment in capital assets 7,761,657 - 1,295,681 (14,823) - 9,042,515 Unrestricted 9,458,939 5,649,182 2,309,249 2,788,438 144,037 20,349,845 TOTAL NET POSITION $ 17,220,596 $ 5,649,182 $ 3,604,930 $ 2,773,615 $ 144,037 $ 29,392,360 166 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF REVENUES,EXPENSES, AND CHANGES IN FUND NET POSITION YEAR ENDED JUNE 30,2023 Fleet Information Maintenance Fringe Benefits Engineering Technology City 311 Total OPERATING REVENUES Charges for services $ 12,909,980 $ 68,604,187 $ 5,145,800 $ 7,615,775 $ 1,006,337 $ 95,282,079 Miscellaneous - 141,514 141,514 TOTAL OPERATING REVENUES 12,909,980 68,745,701 5,145,800 7,615,775 1,006,337 95,423,593 OPERATING EXPENSES Personnel services 2,991,111 252,062 2,978,655 2,258,857 699,952 9,180,637 Purchase of goods and services 2,906,193 70,517,198 1,468,024 3,876,057 166,583 78,934,055 Depreciation/amortization 2,025,117 - 44,887 1,056,410 3,126,414 TOTAL OPERATING EXPENSES 7,922,421 70,769,260 4,491,566 7,191,324 866,535 91,241,106 OPERATING INCOME 4,987,559 (2,023,559) 654,234 424,451 139,802 4,182,487 NONOPERATING REVENUES(EXPENSES) Interest revenue - 54,781 4,235 59,016 Gain on sale of capital assets 50,081 50,081 Interest expense and fees (15,416) (16,805) (32,221) TOTAL NONOPERATING REVENUES(EXPENSES) 34,665 37,976 4,235 76,876 INCOME(LOSS)BEFORE TRANSFERS 5,022,224 (2,023,559) 654,234 462,427 144,037 4,259,363 TRANSFERS Transfer out (221,251) (221,251) CHANGE IN NET POSITION 4,800,973 (2,023,559) 654,234 462,427 144,037 4,038,112 Net position,beginning of year 12,419,623 7,672,741 2,950,696 2,311,188 - 25,354,248 Net position,end of year $ 17,220,596 $ 5,649,182 $ 3,604,930 $ 2,773,615 $ 144,037 $ 29,392,360 167 CITY OF LANSING INTERNAL SERVICE FUNDS COMBINING STATEMENT OF CASH FLOWS YEAR ENDED JUNE 30,2023 Fleet Information Maintenance Fringe Benefits Engineering Technology City 311 Total CASH FLOWS FROM OPERATING ACTIVITIES Cash received from interfund services $ 12,916,386 $ 70,539,175 $ 5,145,800 $ 7,615,775 $ 1,006,337 $ 97,223,473 Cash payments for goods and services (2,964,280) (69,965,313) (1,474,668) (3,669,818) (166,583) (78,240,662) Cash payments to employees (3,046,569) (1,295,435) (3,047,418) (2,259,835) (676,796) (10,326,053) NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES 6,905,537 (721,573) 623,714 1,686,122 162,958 8,656,758 CASH FLOWS FROM CAPITAL AND RELATED FINANCING ACTIVITIES Proceeds from sale of capital assets 50,081 - - - 50,081 Purchase of capital assets (2,840,418) (2,840,418) Principal paid on long-term obligations (129,642) (1,041,587) (1,171,229) Interest paid on long-term obligations (15,870) (16,805) (32,675) Transfers out (221,251) (221,251) NET CASH(USED)BY CAPITAL AND RELATED FINANCING ACTIVITIES (3,157,100) (1,058,392) (4,215,492) CASH FLOWS FROM INVESTING ACTIVITIES Interest received 54,781 4,235 59,016 NET INCREASE(DECREASE)IN CASH AND CASH EQUIVALENTS 3,748,437 (721,573) 623,714 682,511 167,193 4,500,282 Cash and cash equivalents,beginning of year 5,577,661 8,124,929 2,125,318 2,771,873 18,599,781 Cash and cash equivalents,end of year $ 9,326,098 $ 7,403,356 $ 2,749,032 $ 3,454,384 $ 167,193 $ 23,100,063 Reconciliation of operating income to net cash provided by operating activities Operating income(loss) $ 4,987,559 $ (2,023,559) $ 654,234 $ 424,451 $ 139,802 $ 4,182,487 Adjustments to reconcile operating income to net cash provided by operating activities Depreciation/amortization 2,025,117 - 44,887 1,056,410 - 3,126,414 Changein: Accounts receivable 6,406 857,481 - (88) 863,799 Prepaids - 406 - 406 Inventories 184 - - 184 Accounts payable (58,271) 551,479 (6,644) 206,327 - 692,891 Accrued payroll (48,250) 7,665 (60,849) (38,338) 6,975 (132,797) Claims incurred but not reported - (120,000) - - (120,000) Compensated absences (7,208) 4,955 (7,914) 37,360 16,181 43,374 NET CASH PROVIDED(USED)BY OPERATING ACTIVITIES $ 6,905,537 $ (721,573) $ 623,714 $ 1,686,122 $ 162,958 $ 8,656,758 NONCASH FINANCING ACTIVITIES Subscription-based IT arrangement inflows $ - $ $ - $ 4,839,491 $ $ 4,839,491 Subscription-based IT arrangement outflows (4,839,491) (4,839,491) TOTAL NONCASH FINANCING ACTIVITIES $ $ $ $ $ $ 168 CITY OF LANSING FIDUCIARY FUNDS Fiduciary Funds are funds set up to account for assets held by the City in a fiduciary capacity, for individuals, organizations, other units of government or other funds. The City's fiduciary funds include pension and other postemployment benefits trust funds and custodial funds. PENSION AND OTHER POSTEMPLOYMENT BENEFITS TRUST FUNDS Employees'Retirement System Pension This fund accounts for all eligible employees (non-police and fire) activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Employees'Retirement System OPEB This fund accounts for all eligible employees (non-police and fire) activities related to postemployment healthcare coverage for applicable individuals. Police and Fire Retirement System Pension This fund accounts for all eligible employees' activity including investing fund resources and calculating and paying pension benefits to applicable retirees (or beneficiaries). Police and Fire Retirement System OPEB This fund accounts for all eligible employees' activities related to postemployment healthcare coverage for applicable individuals. Employees'Money Purchase Pension Plan This fund accounts for all newly hired eligible employees who participate in the City's defined contribution plan to account for paying pension benefits to eligible retirees (or beneficiaries). Retiree Healthcare VEBA This fund accounts for all eligible employee's activity related to the defined benefit of postemployment healthcare to provide medical and healthcare benefits for retirees and their beneficiaries. CUSTODIAL FUNDS Custodial funds account for resources received and held by the City, in a custodial capacity, for individuals, organizations and other governments. 54-A District Court Fund This fund is used to hold cash received by the District Court for bail bonds, for garnishment payments until claimed,and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. Current Tax Collection Fund This fund is used to account for property taxes collected and distributed to other governments. 169 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF FIDUCIARY NET POSITION JUNE 30, 2023 Pension and Other Postemployment Benefits Trust Funds Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents $ 1,451,043 $ 367,608 $ 1,847,303 $ 316,676 $ $ - $ 3,982,630 Equity in pooled cash and investments - - - - 742 742 Investments Mutual funds 104,611,851 31,884,597 202,938,418 39,025,959 5,846,748 37,958,811 422,266,384 Domestic equities 29,291,510 8,927,746 64,365,209 12,378,853 - 114,963,318 International equities 492,236 150,028 1,117,102 214,844 - 1,974,210 Emerging market equities 6,729,144 2,050,973 12,977,460 2,495,853 1,086,437 25,339,867 Money market funds 3,339,943 1,017,979 3,428,851 663,027 50,791 8,500,591 Due from other governmental units - - - 4,653 - 4,653 Prepaids 284 86 - - - 370 Dividends and interest receivable 37,152 11,324 140,583 12,367 - 21,523 222,949 Total assets 145,953,163 44,410,341 286,814,926 55,112,232 5,846,748 39,118,304 577,255,714 Liabilities Accounts payable 84,105 25,635 176,518 - - - 286,258 Due to other governmental units - - - 4,653 4,653 Total liabilities 84,105 25,635 176,518 4,653 290,911 Net position restricted for: Pension benefits 145,869,058 - 286,638,408 - 5,842,095 - 438,349,561 Other postemployment benefits - 44,384,706 - 55,112,232 39,118,304 138,615,242 Total net position $ 145,869,058 $ 44,384,706 $ 286,638,408 $ 55,112,232 $ 5,842,095 $ 39,118,304 $ 576,964,803 170 CITY OF LANSING FIDUCIARY FUNDS COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION FOR THE YEAR ENDED JUNE 30, 2023 Changes in Pension and Other Postemployment Benefits Net Position Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Healthcare Pension OPEB System System OPEB Pension Plan VEBA Totals Additions Investment income Net appreciation(decrease)in fair value of investments $ 4,225,998 $ 8,993,061 $ 13,936,766 $ 11,844,067 $ 740,813 $ 2,486,252 $ 42,226,957 Interest income(loss) 15,723 - - - - 1,106,309 1,122,032 Investment expenses (805,413) - - - - - (805,413) Net investment income 3,436,308 8,993,061 13,936,766 11,844,067 740,813 3,592,561 42,543,576 Contributions Employer 11,675,068 11,357,259 18,165,988 11,304,220 451,903 769,000 53,723,438 Plan members 1,418,513 - 2,967,886 333,163 - 4,719,562 Total contributions 13,093,581 11,357,259 21,133,874 11,304,220 785,066 769,000 58,443,000 Deductions Participant benefits 24,212,331 10,410,016 37,717,498 9,188,608 - - 81,528,453 Administrative expense 114,853 577,351 126,049 765,612 228,710 109,095 1,921,670 Total deductions 24,327,184 10,987,367 37,843,547 9,954,220 228,710 109,095 83,450,123 Change in net position (7,797,295) 9,362,953 (2,772,907) 13,194,067 1,297,169 4,252,466 17,536,453 Net position restricted for pension and other postemployment benefits Beginning of year 153,666,353 35,021,753 289,411,315 41,918,165 4,544,926 34,865,838 559,428,350 End of year $ 145,869,058 $ 44,384,706 $ 286,638,408 $ 55,112,232 $ 5,842,095 $ 39,118,304 $ 576,964,803 171 CITY OF LANSING CUSTODIAL FUNDS COMBINING STATEMENT OF FIDUCIARY NET POSITION JUNE 30,2023 54-A District Current Tax Court Collection Total ASSETS Equity in pooled cash and investments $ 24,009 $ 438,228 $ 462,237 LIABILITIES Due to individuals and agencies 24,009 438,228 462,237 NET POSITION Restricted for individuals and agencies $ - $ - $ - 172 CITY OF LANSING CUSTODIAL FUNDS COMBINING STATEMENT OF CHANGES IN FIDUCIARY NET POSITION YEAR ENDED JUNE 30,2023 54-A District Current Tax Court Collections Total ADDITIONS TO NET POSITION Collections from or on behalf of individuals $ 366,985 $ - $ 366,985 Collections of taxes for other governments - 131,650,983 131,650,983 TOTAL ADDITIONS 366,985 131,650,983 132,017,968 DEDUCTIONS FROM NET POSITION Payments to or on behalf of individuals 366,985 - 366,985 Payment of taxes collected for other governments - 131,650,983 131,650,983 TOTAL DEDUCTIONS 366,985 131,650,983 132,017,968 NET CHANGE IN NET POSITION - - - Net position,beginning of year Net position,end of year $ $ $ 173 STATISTICAL SECTION 174 STATISTICAL SECTION This part of the City of Lansing,Michigan's (the"City")annual comprehensive 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. Pa,e 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. 176 Revenue Capacity These schedules contain information to help the reader assess the (Tables 5-8) factors affecting the City's ability to generate its property taxes. 181 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. 185 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. 190 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. 192 Sources: Unless otherwise noted,the information in these schedules is derived from the annual comprehensive financial reports for the relevant year. 175 CITY OF LANSING Table 1 NET POSITION BY COMPONENT 2014-2023 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Governmental activities Net investment in capital assets $ 150,976,010 $ 151,785,916 $ 149,676,860 $ 149,533,948 $ 148,263,240 $ 146,153,309 $ 143,583,186 $ 153,733,211 $ 159,442,216 $ 152,933,894 Restricted 13,133,137 12,311,541 12,922,525 10,993,950 15,189,723 23,505,738 20,495,617 24,518,910 28,101,348 209,417,055 Unrestricted (46,344,555) (251,453,207) (265,678,371) (276,790,945) (606,529,375) (629,587,773) (674,087,826) (603,922,567) (578,995,034) (706,190,813) Total governmental activities net position $ 117,764,592 $ (87,355,750) $ (103,078,986) $ (116,263,047) $ (443,076,412) $ (459,928,726) $ (510,009,023) $ (425,670,446) $ (391,451,470) $ (343,839,864) Business-type activities Net investment in capital assets $ 214,458,841 $ 218,813,478 $ 220,436,882 $ 224,161,744 $ 227,127,434 $ 233,988,263 $ 234,126,397 $ 219,824,056 $ 232,446,124 $ 227,979,176 Restricted 8,746,096 2,889,096 2,764,963 1,818,671 1,886,620 1,953,175 2,432,963 2,437,390 2,441,780 2,486,846 Unrestricted 37,891,053 17,242,167 19,401,320 25,415,447 (13,854,833) (7,299,147) (13,397,777) 19,032,067 21,195,582 39,837,334 Total business-type activities net position $ 261,09S,990 $ 238,944,741 $ 242,603,165 $ 251,395,862 $ 215,159,221 $ 228,642,291 $ 223,161,583 $ 241,293,513 $ 256,083,486 $ 270,303,3S6 Primary government Net investment in capital assets $ 365,434,851 $ 370,599,394 $ 370,113,742 $ 373,695,692 $ 375,390,674 $ 380,141,572 $ 377,709,583 $ 373,557,267 $ 391,888,340 $ 380,913,070 Restricted 21,879,233 15,200,637 15,687,488 12,812,621 17,076,343 25,458,913 22,928,580 26,956,300 30,543,128 211,903,901 Unrestricted (8,453,502) (234,211,040) (246,277,051) (251,375,498) (620,384,208) (636,886,920) (687,485,603) (584,890,500) (557,799,452) (666,353,479) Total primary government net position $ 378,860,582 $ 151,588,991 $ 139,524,179 $ 135,132,815 $ (227,917,191) $ (231,286,435) $ (286,847,440] $ (184,376,933) $ (135,367,984) $ (73,536,508) Note: No discretely presented component units shown - GASB Statement No.68 was implemented for the fiscal year ended June 30,2015. This resulted in presentation of the City's net pension liability on the statement of net position. Prior years were not restated. - GASB Statement No. 75 was implemented for the fiscal year ended June 30,2018. This resulted in presentation of the City's net OPEB liability on the statement of net position. Prior years were not restated. 176 CITY OF LANSING Table 2 CHANGES IN NET POSITION 2014-2023 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Expenses Governmental activities General government $ 24,771,054 $ 25,22S,893 $ 27,993,414 $ 21,778,154 $ 16,995,976 $ 26,679,840 $30,400,643 $ 11,196,979 $ 19,628,516 $ 20,719,165 Judicial - - - - - - - - - Health and welfare - - - - - - - - - 6,658,603 Public safety 78,142,897 81,827,437 85,739,408 91,829,441 87,352,251 97,391,612 121,102,641 57,170,988 78,113,026 88,377,091 Public works 37,243,516 27,81S,970 28,212,049 28,983,891 26,485,877 29,644,398 35,288,254 32,334,504 27,316,002 16,436,242 Recreation and culture 8,670,918 6,515,590 10,336,168 9,441,519 8,302,243 7,650,889 11,238,934 4,125,852 6,707,099 13,784,687 Community and economic development 7,602,229 10,270,404 10,642,102 12,349,663 16,150,417 21,046,090 20,731,730 34,764,843 75,618,986 18,257,010 Interest on long-term debt 1,340,818 1,291,846 1,424,215 1,201,846 1,137,561 1,182,488 733,925 1,072,610 1,845,964 2,993,891 Total governmental activities expenses 157,771,432 152,947,140 164,347,356 165,584,514 156,424,325 183,595,317 219,496,127 140,665,776 209,229,593 171,664,063 Business-type activities Sewage disposal system 28,682,809 27,506,843 28,487,957 27,567,228 28,552,143 31,939,976 32,605,664 20,828,49S 22,239,978 30,964,460 Municipal parking system 7,851,702 7,605,461 7,651,077 6,866,747 9,868,246 7,081,998 12,716,606 3,183,09S 10,110,065 6,717,63S Cemetery 722,270 632,485 708,545 886,579 1,379,877 470,220 1,652,255 300,009 98,394 703,931 Golf 935,671 852,634 84S,575 802,564 (372,775) 278,501 229,467 198,889 164,878 165,530 Garbage and rubbish collection 1,722,843 1,712,671 2,085,728 1,543,380 3,101,893 1,035,262 2,431,066 1,753,713 1,509,140 2,425,495 Recycling 3,263,553 3,623,276 4,092,278 3,667,899 3,859,496 3,856,764 5,576,963 2,613,739 1,656,519 4,005,120 Total business-type activities expenses 43,178,848 41,933,370 43,871,160 41,334,397 46,408,880 44,662,721 55,212,021 28,877,940 35,778,974 44,982,171 Total primary government expenses $ 200,950,280 $ 194,880,510 $ 208,218,S16 $ 206,918,911 $ 202,833,205 $ 228,258,038 $ 274,708,148 $ 169,543,716 $ 24S,008,S67 $ 216,646,234 Program Revenues Governmental activities Charges for services General government $ 6,820,261 $ 6,815,975 $ 7,279,427 $ 7,295,556 $ 7,038,702 $ 7,567,720 $7,616,658 $ 10,158,500 $ 9,406,822 $ 13,093,046 Public safety 2,122,023 3,344,183 2,909,054 3,476,966 4,140,682 3,935,250 4,770,026 3,553,105 4,423,872 237,161 Public works 2,129,126 1,923,303 3,011,894 1,836,466 716,322 2,978,549 536,961 560,343 1,165,080 732,020 Recreation and culture 800,293 619,834 673,840 617,604 831,816 1,092,232 1,038,740 1,188,287 1,192,891 - Community and economic development 67,323 67,264 67,272 67,312 - - - - - 2,931,128 Operating grants and contributions 28,234,803 24,658,955 24,561,960 25,157,629 28,983,936 29,663,253 28,534,469 61,065,241 90,177,926 70,476,683 Capital grants and contributions 3,365,682 2,910,660 904,298 63,488 855,760 3,313,872 26S,075 15,693,491 S,283,332 1,490,181 Total governmental activities program revenues 43,539,511 40,340,174 39,407,745 38,S1S,021 42,567,218 48,S50,876 42,781,929 92,218,967 111,649,923 88,960,219 Business-type activities Charges for services Sewage disposal system 31,759,698 31,730,416 32,368,491 34,755,896 35,107,570 35,752,812 34,968,585 38,471,972 35,943,034 38,710,464 Municipal parking system 7,453,476 6,988,879 7,090,335 6,906,091 7,436,SS2 8,422,161 6,211,685 2,710,377 5,101,852 5,018,385 Cemetery 289,565 335,379 312,929 403,663 351,204 415,757 403,030 558,744 526,299 487,209 Golf 366,567 363,559 313,164 256,218 179,464 - 3,091 - - - Garbage and rubbish collection 1,664,201 1,744,999 1,871,665 1,952,897 2,072,454 2,243,627 2,278,024 2,796,524 3,246,590 3,333,884 Recycling 3,508,536 3,624,671 3,627,070 3,614,794 3,779,468 4,081,700 4,376,310 4,504,054 4,455,510 4,553,007 Operating grants and contributions 2,574,949 1,143,085 1,312,362 1,391,326 1,603,942 6,648,917 2,000,000 - - - Capital grants and contributions 100,000 5,000,000 Total business-type activities program revenues 47,616,992 45,930,988 46,896,016 49,380,885 50,530,654 57,564,974 50,240,725 49,041,671 49,273,285 57,102,949 Total primary government program revenues $ 91,156,503 $ 86,271,162 $ 86,303,761 $ 87,895,906 $ 93,097,872 $ 106,115,850 $93,022,654 $ 141,260,638 $ 160,923,208 $ 146,063,168 Net(Expense)Revenue Governmental activities $ (114,231,921) $ (112,606,966) $ (124,939,611) $ (127,069,493) $ (113,857,107) $ (135,044,441) $ (176,714,198) $ (48,446,809) $ (97,579,670) $ (82,703,844) Business-type activities 4,438,144 3,997,618 3,024,856 8,046,488 4,121,774 12,902,253 (4,971,296) 20,163,731 13,494,311 12,120,778 Total primary government net expense $ (109,793,777) $ (108,609,348) $ (121,914,755) $ (119,023,005) $ (109,735,333) $ (122,142,188) $ (181,685,494) $ (28,283,078] $ (64,085,359) $ (70,583,066) 177 CITY OF LANSING Table 2 CHANGES IN NET POSITION (concluded) 2014-2023 (UNAUDITED) (ACCRUAL BASIS OF ACCOUNTING) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General Revenues and Other Changes in Net Position Governmental activities General revenues Property taxes $ 38,079,548 $ 39,657,382 $ 38,578,548 $ 40,568,278 $ 39,573,468 $ 41,692,930 $41,675,711 $ 45,690,419 $ 47,620,607 $ 47,447,205 Income taxes 31,450,913 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 37,005,040 37,087,593 40,957,011 Unrestricted grants contributions 35,677,910 36,330,976 36,532,275 38,108,544 39,419,656 39,530,073 42,029,100 46,503,607 47,820,068 47,216,650 Unrestricted investment earnings 36,836 26,353 99,058 125,539 216,239 463,685 707,383 187,320 (94,154) 3,211,843 Miscellaneous - 280,280 63,079 135,270 - 64,820 91,088 177,521 (38,468) 18,602 Transfers-internal activities (705,637) (644,485) (629,715) (746,209) (912,186) (580,817) 4,691,895 3,221,479 (597,000) (743,251) Total governmental activities 104,539,570 107,311,429 109,216,375 113,885,432 116,752,475 118,192,127 126,633,901 132,785,386 131,798,646 138,108,060 Business-type activities Unrestricted investment earnings 246,616 17,874 - - - - 2,061,667 1,189,678 698,662 1,216,752 Miscellaneous 2,600 - 3,853 - - - - - - 15,498 Transfers-internal activities 705,637 644,485 629,715 746,209 912,186 580,817 (4,691,895) (3,221,479) 597,000 743,251 Gain on sale of assets 2,120,816 123,591 Total business-type activities 954,853 662,359 633,568 746,209 912,186 580,817 (509,412) (2,031,801) 1,295,662 2,099,092 Total primary government $ 10S,494,423 $ 107,973,788 $ 109,849,943 $ 114,631,641 $ 117,664,661 $ 118,772,944 $ 126,124,489 $ 130,753,S8S $ 133,094,308 $ 140,207,1S2 Change in Net Position Governmental activities $ (9,692,351) $ (5,295,537) $ (15,723,236) $ (13,184,061) $ 2,895,368 $ (16,852,314) $ (50,080,297) $ 84,338,577 $ 34,218,976 $ 55,404,216 Business-type activities 5,392,997 4,659,977 3,658,424 8,792,697 5,033,960 13,483,070 (5,480,708) 18,131,930 14,789,973 14,219,870 Total primary government $ (4,299,354] $ (635,560] $ (12,064,812) $ (4,391,364) $ 7,929,328 $ (3,369,244) $ (55,561,005) $ 102,470,507 $ 49,008,949 $ 69,624,086 178 CITY OF LANSING Table 3 FUND BALANCE GOVERNMENTAL FUNDS 2014-2023 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 General fund Nonspendable $ 79,770 $ 35,424 $ 492,549 $ 28,342 $ 39,437 $ 38,605 $ 185,369 $ 570,654 $ 759,490 $ 951,644 Restricted 36,854 10,044 - - - - - - - - Committed 2,038,608 837,761 428,106 385,067 283,815 - - 7,972,836 785,099 - Unassigned 7,052,830 9,783,911 12,407,748 15,283,857 17,003,260 9,992,885 9,935,641 21,229,263 21,907,213 20,917,243 Total general fund 9,208,062 10,667,140 13,328,403 15,697,266 17,326,512 10,031,490 10,121,010 29,772,753 23,451,802 21,868,887 All other governmental funds Nonspendable 2,551,975 2,619,065 2,578,331 2,618,884 2,842,489 2,952,027 3,169,987 3,283,816 3,153,577 3,130,406 Restricted 6,902,928 6,865,580 6,934,665 4,730,012 9,009,438 17,038,777 18,550,655 21,235,094 35,877,471 208,470,546 Committed 4,623,112 7,110,485 8,427,253 10,426,961 8,837,341 9,147,988 10,637,417 2,546,040 5,192,514 8,268,306 Unassigned(deficit) (522,157) (528,144) (410,252) (411,098) (155,261) (115,546) (82,237) Total all other governmental funds 13,555,858 16,066,986 17,529,997 17,364,759 20,534,007 29,023,246 32,275,822 27,064,950 44,223,562 219,869,258 Total all governmental funds $ 22,763,920 $ 26,734,126 $ 30,858,400 $ 33,062,025 $ 37,860,519 $ 39,054,736 $ 42,396,832 $ 56,837,703 $ 67,675,364 $ 241,738,145 Note: GASB Statement No.54,Fund Balance Reporting and Governmental Fund Type Definitions,was implemented in 2011. Further information on the fund balances are found in the footnotes to the financial statements. 179 CITY OF LANSING Table 4 CHANGES IN FUND BALANCES GOVERNMENTAL FUNDS 2014-2023 (UNAUDITED) (MODIFIED ACCRUAL BASIS OF ACCOUNTING) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Revenues Property taxes and special assessments $ 38,151,162 $ 39,470,249 $ 38,782,759 $ 40,691,325 $ 39,629,305 $ 41,732,645 $ 41,709,020 $ 45,712,919 $ 48,010,607 $ 47,447,205 Income taxes 31,450,913 31,660,923 34,573,130 35,694,010 38,455,296 37,021,436 37,438,724 37,005,040 37,087,593 40,957,011 Licenses and permits 1,508,133 1,551,125 1,559,638 1,494,298 2,113,824 1,399,881 2,427,866 1,930,169 1,932,281 2,000,219 Intergovernmental revenue 41,658,435 36,042,377 34,175,112 36,391,761 41,848,072 45,586,152 44,166,490 77,368,957 113,084,026 85,389,115 Charges for services 13,037,014 12,900,490 14,102,447 13,230,822 12,432,770 15,235,656 13,048,934 15,525,892 15,574,570 15,887,520 Fines and forfeits 2,738,392 3,075,427 3,455,541 2,510,945 2,601,063 2,306,990 1,589,733 1,491,641 1,576,283 1,654,848 Interest and rents 56,550 87,035 145,011 201,367 284,165 631,812 911,454 402,443 119,690 3,428,063 Other 21,379,388 23,162,946 22,854,314 22,952,587 22,101,917 22,391,478 23,371,306 26,397,782 25,760,762 29,361,388 Total revenues 149,979,987 147,950,572 149,647,952 153,167,115 159,466,412 166,306,050 164,663,527 205,834,843 243,145,812 226,125,369 Expenditures Current Expenditures General government 21,063,589 21,720,206 23,386,445 23,948,368 22,281,236 27,340,931 23,111,276 19,864,962 25,473,276 22,250,278 Public safety 72,068,298 75,510,743 72,264,468 73,683,246 75,859,065 78,659,682 80,863,159 76,213,091 90,331,314 95,649,361 Public works 13,456,773 13,273,332 11,715,510 11,201,515 11,087,884 11,632,895 12,368,707 11,010,619 12,955,334 16,350,906 Judicial - - - - - - - - - 8,516,032 Health and welfare - - - - - - - - - 893,963 Highway and streets 10,496,880 10,357,488 10,838,473 10,969,516 10,104,034 11,984,896 10,711,027 10,857,448 11,450,485 13,687,366 Recreation and culture 8,457,444 7,583,085 7,719,906 7,749,245 8,236,872 8,138,369 7,420,052 6,497,239 9,134,233 13,980,828 Community and economic development 3,646,035 3,910,924 3,442,110 4,142,612 15,947,504 19,435,277 18,699,058 43,174,711 76,784,433 28,379,853 Other 2,620,316 2,704,982 2,927,391 2,710,979 - - - - - - Debt service Principal 1,185,257 3,616,297 3,892,862 4,596,159 3,622,053 3,183,595 3,286,705 3,359,672 4,518,916 6,280,885 Interest and fiscal charges 3,485,104 931,079 1,275,957 1,120,518 949,318 1,000,307 823,907 798,387 2,003,677 3,941,234 Capital outlay 8,715,193 21,016,808 7,221,346 9,328,278 5,146,742 4,798,070 7,891,788 21,325,057 18,396,917 22,230,357 Total expenditures 145,194,889 160,624,944 144,684,468 149,450,436 153,234,708 166,174,022 165,175,679 193,101,186 251,048,585 232,161,063 Excess(deficiency)of revenues over expenditures 4,785,098 (12,674,372) 4,963,484 3,716,679 6,231,704 132,028 (512,152) 12,733,657 (7,902,773) (6,035,694) Other financing sources(uses) Transfers in 10,522,162 9,734,572 9,207,856 9,887,627 7,721,661 8,749,296 16,980,511 8,542,188 10,210,859 9,927,805 Transfers out (12,847,799) (10,002,772) (10,055,346) (11,497,936) (9,283,847) (9,330,113) (13,218,616) (7,325,709) (10,807,859) (10,449,805) Proceeds from borrowing 986,300 16,761,300 2,090,000 - - 8,603,699 - - 27,559,000 177,400,000 Proceeds from the sale of capital assets 167,737 110,533 268 97,255 128,976 - 92,353 490,735 400,000 23,532 Payments to advance refunding escrow agent - - (2,162,163) - - (7,741,363) - - (8,621,566) - Bond premium(discount) 40,945 80,175 780,670 10,989,553 Total other financing sources(uses) (1,171,600) 16,644,578 (839,210) (1,513,054) (1,433,210) 1,062,189 3,854,248 1,707,214 18,740,434 187,891,085 Net change in fund balances $ 3,613,498 $ 3,970,206 $ 4,124,274 $ 2,203,625 $ 4,798,494 $ 1,194,217 $ 3,342,096 $ 14,440,871 $ 10,837,661 $ 181,855,391 Debt service as a percentage of noncapital expenditures 3.4% 2.8% 3.6% 3.8% 3.0% 2.5% 2.5% 2.7% 2.8% 5.2% 180 CITY OF LANSING Table 5 ASSESSED VALUE AND ESTIMATED ACTUAL VALUE OF TAXABLE PROPERTY LAST TEN FISCAL YEARS (UNAUDITED) Taxable Assessed Value Ratio of Total Industrial and Assessed Commercial Total Taxable to Total Subject to Assessed Total Direct Estimated Estimated Year Real Personal Act 198 Agricultural Developmental Value Tax Rate Actual Value Actual Value 2014 $ 1,152,931,800 $ 182,024,000 $ 666,477,900 $ 151,900 $ 2,900 $ 2,001,588,500 19.70 $ 4,002,817,000 50.0% 2015 1,144,848,592 183,420,400 758,406,830 158,100 2,900 2,086,836,822 19.70 4,173,673,644 50.0% 2016 1,162,708,909 196,143,891 806,360,800 175,600 2,900 2,165,392,100 19.70 4,330,784,200 50.0% 2017 1,285,584,500 144,076,700 837,758,400 172,500 - 2,267,592,100 19.70 4,535,184,200 50.0% 2018 1,325,754,900 131,924,900 892,135,800 180,000 2,349,995,600 19.70 4,699,991,200 50.0% 2019 1,422,412,200 143,567,100 1,000,797,500 185,300 2,566,962,100 19.70 5,133,924,200 50.0% 2020 1,537,030,826 157,132,900 1,143,059,850 211,800 - 2,837,435,376 19.70 5,674,870,752 50.0% 2021 1,638,136,900 171,927,400 1,247,559,700 192,100 1 3,057,816,101 19.70 6,115,632,202 50.0% 2022 1,766,415,343 172,959,000 1,285,295,000 206,900 - 3,224,876,243 19.70 6,449,752,486 50.0% 2023 1,965,466,450 201,680,300 1,387,333,702 216,700 3,554,697,152 19.70 7,109,394,304 50.0% Source: Lansing City Assessor 181 CITY OF LANSING Table 6 DIRECT AND OVERLAPPING PROPERTY TAX RATES LAST TEN FISCAL YEARS (UNAUDITED) (RATE PER$1,000 OF ASSESSED VALUE) City of Lansing Overlapping Rates Totals Total State Year Ended Operating Service City Schools County Education Other(2) December 31, Tax Year Millage Millage Millage Millage(1) Millage Tax College Millage Millage Total 2014 2013 19.44 .26 19.70 21.91 9.50 6.00 3.81 9.96 70.88 2015 2014 19.44 .26 19.70 21.77 10.20 6.00 3.81 9.96 71.44 2016 2015 19.44 .26 19.70 21.83 9.83 6.00 3.81 9.96 71.13 2017 2016 19.44 .26 19.70 22.57 10.06 6.00 3.81 9.96 72.10 2018 2017 19.44 .26 19.70 22.60 10.07 6.00 3.81 11.25 73.43 2019 2018 19.44 .26 19.70 22.50 11.34 6.00 3.81 11.26 74.61 2020 2019 19.44 .26 19.70 25.38 11.34 6.00 3.81 9.97 76.20 2021 2020 19.44 .26 19.70 25.10 11.91 6.00 3.77 10.20 76.68 2022 2021 19.44 .26 19.70 24.51 11.98 6.00 3.77 10.18 76.14 2023 2022 19.44 .26 19.70 24.51 11.31 6.00 3.77 10.19 75.48 (1)rates for Lansing School District only,using non-principal residency rates (2)includes Intermediate School,Airport Authority,Capital Area Transit Authority and Capital Area District Library Source:Lansing City Treasurer 182 CITY OF LANSING Table 7 PRINCIPAL PROPERTY TAXPAYERS CURRENT YEAR AND NINE YEARS AGO (UNAUDITED) 2023 2014 Taxable Taxable Assessed Percent Assessed Percent Taxpayer Valuation Rank of Total Valuation Rank of Total General Motors LLC $ 79,627,130 1 2.60% $ 81,468,000 1 4.07% Jackson National Life Insurance Company 60,882,600 2 1.99% 32,771,500 2 1.64% Consumers Energy 59,903,100 3 1.96% 22,283,300 3 1.11% Accident Fund 25,824,100 4 0.84% Lansing Properties LLC 26,009,500 5 0.85% Red Cedar Housing 20,756,700 6 0.68% Lansing Retail Center 19,988,600 7 0.65% Emergent BioSolutions 14,551,000 8 0.48% 10,661,000 6 0.53% Lansing MI MultiFamily Dst 13,964,100 9 0.46% Hunter Towne Properties 11,373,700 10 0.37% Demmer Corporation 14,898,600 4 0.74% Comcast of Michigan LLC 11,644,000 5 0.58% Sprint Spectrum L.P. 9,496,000 7 0.47% Heart of the City Assoc 7,271,400 8 0.36% Emergent BioSolutions 6,881,400 9 0.34% Quality Dairy Co.#17 6,759,700 10 0.34% $ 332,880,530 10.88% $ 204,134,900 10.20% Source: Lansing City Assessor 183 CITY OF LANSING Table 8 PROPERTY TAX LEVIES AND COLLECTIONS LAST TEN FISCAL YEARS (UNAUDITED) Collection Percent (B) (A) of Current of Levy Collection Percent Total Year's Taxes Collected Subsequent of Total Tax Fiscal Adjusted During During to the Year of Total Collections Year Year Tax Levy Year Levied Year Levied Tax Levy Collections to Tax Levy 2013 2014 $ 39,336,952 $ 39,238,902 99.75% $ 20,866 $ 39,259,768 99.80% 2014 2015 38,329,032 38,258,272 99.82% 49,590 38,307,862 99.94% 2015 2016 38,538,226 38,461,152 99.80% 52,758 38,513,910 99.94% 2016 2017 38,431,072 38,370,929 99.84% 50,344 38,421,273 99.97% 2017 2018 39,234,692 39,232,925 100.00% 67,348 39,300,273 100.17% 2018 2019 40,231,255 40,203,313 99.93% 42,639 40,245,952 100.04% 2019 2020 42,128,760 42,123,931 99.99% 17,175 42,141,106 100.03% 2020 2021 43,098,838 43,051,670 99.89% 132,556 43,184,226 100.20% 2021 2022 47,200,360 47,196,707 99.99% 85,532 47,282,239 100.17% 2022 2023 49,459,123 49,456,656 100.00% 15,067 49,471,723 100.03% Note:Amounts are net of chargebacks from the County Tax Revolving Funds for taxes still delinquent after three years. Note: Delinquent Tax Collection represents amounts received in the indicated fiscal year. Source: City of Lansing Treasurer 184 CITY OF LANSING Table 9 RATIOS OF OUTSTANDING DEBT BY TYPE LAST TEN FISCAL YEARS (UNAUDITED) Governmental Activities Business-Type Activities General Installment Net Unamortized General Installment Net Unamortized Percentage Obligation Purchase Premiums/ Obligation Revenue Purchase Premiums/ Total Primary of Personal Per Year Bonds Contracts Discounts Loans Bonds Bonds Agreements/Loans Discounts Government Income Capita Population(1) 2014 $ 27,180,294 $ 3,100,563 $ 35,294 $ 7,062,234 $ 174,471,861 $ 24,055,438 $ 1,668,081 $ 1,729,013 $ 239,302,778 11.08% 2 2,097 114,113 2015 27,790,281 16,387,327 35,281 7,872,600 167,787,460 19,445,482 1,459,431 1,604,958 242,382,820 10.27% 2 2,133 113,659 2016 21,968,330 15,268,317 68,330 7,872,600 154,303,563 20,671,135 1,246,673 1,715,511 223,114,459 9.42% 2 1,955 114,110 2017 18,080,040 13,757,531 15,040 7,728,428 143,761,916 18,982,246 1,029,723 1,552,355 204,907,279 8.04% 2 1,745 117,400 2018 15,325,818 12,289,396 19,222 7,476,545 136,938,668 17,258,138 808,500 1,389,200 191,505,487 7.18% 2 1,637 116,986 2019 14,925,420 11,274,020 761,721 7,242,002 117,713,909 14,075,000 582,920 2,097,766 168,672,758 6.41% 2 1,437 117,388 2020 11,792,231 10,230,073 748,067 7,000,422 112,290,745 12,525,000 352,897 1,890,331 156,829,766 5.96% 2 1,327 118,210 2021 27,958,180 9,156,735 663,565 7,660,461 115,160,822 10,975,000 118,343 2,142,487 173,835,593 6.85% 2 1,543 112,664 2022 29,629,300 22,457,000 586,222 6,886,326 103,495,891 9,425,000 - 1,998,159 174,477,898 6.85% 2 1,548 114,297 2023 214,543,986 21,048,000 11,526,235 6,092,706 115,004,650 7,875,000 1,892,933 377,983,510 14.16% 2 3,361 112,460 (1)population per decennial census by the U.S.Census Bureau (2)personal income data comes from U.S.Census Bureau,American Community Survey 2009 185 CITY OF LANSING Table 10 RATIOS OF GENERAL BONDED DEBT OUTSTANDING LAST TEN FISCAL YEARS (UNAUDITED) Ratio of Fiscal Debt Debt Net Bonded Net Year Taxable Service Payable From Debt to Bonded Ended Assessed Gross Bonded Monies Restricted Net Bonded Taxable Debt per June 30, Population(1) Value(3) Debt(2) Available Revenues Debt Value Capita 2014 114,113 $ 2,001,588,500 $ 203,416,462 $ - $ 176,200,874 $ 27,215,588 0.0136 $ 207 2015 113,659 2,086,836,822 197,217,980 1,000 169,392,418 27,824,562 0.0133 222 2016 114,110 2,165,392,100 178,055,734 1,000 156,019,074 22,035,660 0.0102 179 2017 117,400 2,267,592,100 163,409,357 1,000 145,314,271 18,094,086 0.0080 150 2018 116,986 2,349,995,600 153,772,908 1,000 138,327,868 15,444,040 0.0066 131 2019 117,388 2,566,962,100 135,498,816 30,111 119,811,675 15,657,030 0.0061 127 2020 118,210 2,837,435,376 126,721,374 29,361 114,181,076 12,510,937 0.0044 100 2021 112,664 3,057,816,101 145,925,054 29,361 117,303,309 28,592,384 0.0094 254 2022 112,684 3,224,876,243 135,709,572 29,361 105,494,050 30,186,161 0.0094 268 2023 112,460 3,060,880,895 342,967,804 29,361 116,897,583 226,040,860 0.0738 2,010 (1)Source:2000 and 2020 Census by the U.S.Census Bureau(www.census.gov/quickfacts/lansingcitymichigan) (2) includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year 186 CITY OF LANSING Table 11 DIRECT AND OVERLAPPING GOVERNMENTAL ACTIVITIES DEBT AS OF JUNE 30,2023 (UNAUDITED) Overlapping Estimated Estimated Share of Debt Percentage Overlapping Outstanding Applicable Debt Net direct-City $ 226,040,860 100.00% $ 226,040,860 Share of County-issued bonds Drain Commission 31,670,588 100.00% 31,670,588 Other Overlapping Debt Eaton Intermediate School District 2,777,000 1.50% 41,550 Ingham Intermediate School District 12,496,000 24.94% 3,116,502 Waverly School District 55,580,000 0.28% 155,624 Lansing School District 146,885,000 82.59% 121,312,322 East Lansing School District 90,028,377 6.11% 5,500,734 Holt School District 47,868,286 2.31% 1,105,757 Ingham County 93,567,198 28.78% 26,928,639 Eaton County 14,033,006 2.40% 336,792 Clinton County 24,564,386 0.36% 88,432 Lansing Community College 66,875,000 20.48% 13,696,000 Okemos School District 22,866,460 5.07% 1,159,330 Mason School District 61,720,000 1.26% 777,672 Grand Ledge School District 123,860,000 2.84% 3,517,624 Total Overlapping $ 209,407,566 Total Direct and Overlapping $ 435,448,426 Sources: Municipal Advisory Council Note: Overlapping debt percentages are apportioned based upon relative assessed values. 187 CITY OF LANSING Table 12 LEGAL DEBT MARGIN INFORMATION LAST TEN FISCAL YEARS (UNAUDITED) Legal Debt Margin Calculation for Fiscal Year 2023 Assessed value,real and personal property $ 3,060,880,895 Legal debt margin Debt limitation-10 percent of total valuation 306,088,090 Debt applicable to limit Total City Bonded Debt 342,967,804 City Share: Drain Commission-County Issued 31,670,588 TIF Supported Bonds 28,215,000 402,853,392 Less: Brownfield Redevelopment Authority Bonds $ (39,095,000) Sewage Disposal Revenue Bonds (7,875,000) Pollution Abatement(CSO Project)Bonds (95,083,997) Share of County-issued bonds (31,670,588) (173,724,585) Total net debt applicable to limit 229,128,807 Legal debt margin $ 76,959,283 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 Debt limit $ 306,088,090 $ 322,487,624 $ 283,743,538 $ 256,696,210 $ 207,850,642 $ 233,606,400 $ 223,687,492 $ 216,539,210 $ 208,683,682 $ 205,138,999 Total net debt applicable to limit 229,128,807 48,804,421 81,956,344 81,532,491 72,669,623 87,295,949 81,398,300 86,432,459 91,352,614 93,062,835 Legal debt margin $ 76,959,283 $ 273,683,203 $ 201,787,194 $ 175,163,719 $ 135,181,019 $ 146,310,451 $ 142,289,192 $ 130,106,751 $ 117,331,068 $ 112,076,164 Total net debt applicable to the limit as a percentage of debt limit 74.86% 15.13% 28.88% 31.76% 34.96% 37.37% 36.39% 39.92% 43.78% 45.37% 188 CITY OF LANSING Table 13 PLEDGED-REVENUE COVERAGE LAST TEN FISCAL YEARS (UNAUDITED) Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(l) Debt Service Principal Interest Total Coverage (2) 2014 $ 31,996,794 $ 13,424,901 $ 18,571,893 $ 3,265,000 $ 1,054,878 $ 4,319,878 4.30 2015 31,945,082 13,295,574 18,649,508 1,490,000 920,788 2,410,788 7.74 2016 32,676,182 14,066,527 18,609,655 1,550,000 861,188 2,411,188 7.72 2017 35,053,701 13,843,649 21,210,052 1,550,000 799,188 2,349,188 9.03 2018 35,608,454 14,994,871 20,613,583 1,550,000 737,188 2,287,188 9.01 2019 36,696,367 18,587,607 18,108,760 1,550,000 690,688 2,240,688 8.08 2020 34,968,585 19,568,461 15,400,124 1,550,000 613,188 2,163,188 7.12 2021 38,635,421 28,902,815 9,732,606 1,550,000 535,688 2,085,688 4.67 2022 36,142,653 10,866,625 25,276,028 1,550,000 458,188 2,008,188 12.59 2023 38,710,464 17,775,903 20,934,561 1,550,000 380,688 1,930,688 10.84 (1) Operating expenses less depreciation (2) Coverage is defined as net revenue available for debt service divided by debt service requirements 189 CITY OF LANSING Table 14 DEMOGRAPHIC AND ECONOMIC STATISTICS LAST TEN FISCAL YEARS (UNAUDITED) Lansing Personal Per Capita Median School District Unemployment Labor Year Population (1) Income Income (1) Age 1 Enrollment(2) Rate (3) Force (3) 2014 114,113 $ 2,159,930,864 $ 18,928 32.00 11,936 9.1% 57,809 2015 113,659 2,359,106,204 20,756 32.10 11,525 7.4% 57,807 2016 114,110 2,368,467,160 20,756 32.10 11,014 6.0% 58,009 2017 117,400 2,548,754,000 21,710 32.00 10,873 6.5% 59,321 2018 116,986 2,666,695,870 22,795 32.30 10,641 5.8% 59,537 2019 117,388 2,629,725,976 22,402 32.70 10,462 5.0% 59,251 2020 118,210 2,536,936,212 22,196 31.90 10,661 16.0% 63,541 2021 112,664 2,616,734,064 23,226 35.50 10,031 5.5% 59,058 2022 112,684 2,674,442,056 23,734 34.50 10,173 4.7% 57,447 2023 112,460 2,669,125,640 23,734 32.80 10,173 6.4% 57,447 (1) Source: U.S. Census Bureau (2) Source: Lansing School District (3) Source: Michigan Bureau of Labor Market Information and Strategic Initiatives 190 CITY OF LANSING Table 15 PRINCIPAL EMPLOYERS CURRENT YEAR AND NINE YEARS PRIOR (UNAUDITED) 2023 2014 Percentage of Percentage of Company Employees (1) Rank Employment(2) Employees (1) Rank Employment(2) STATE OF MICHIGAN 13,880 1 5.78% 13,700 1 5.61% MICHIGAN STATE UNIVERSITY 10,253 2 4.27% 10,725 2 4.39% SPARROW HEALTH SYSTEM 9,000 3 3.75% 5,735 3 2.35% GENERAL MOTORS 4,274 4 1.78% 5,522 4 2.26% MCLAREN HEALTH (3) 3,000 5 1.25% 2,400 7 0.98% AUTO OWNERS INSURANCE GROUP 2,720 6 1.13% 1,500 10 JACKSON NATIONAL LIFE INS CO 2,439 7 1.02% 1,393 12 PECKHAM 2,200 8 0.92% 1,400 11 LANSING COMMUNITY COLLEGE 1,957 9 0.82% 2,990 6 LANSING SCHOOL DISTRICT 1,082 10 0.45% LIBERTY NATIONAL LIFE INSURANCE 5,000 5 2.05% MEIJER 1,800 8 0.74% LANSING SCHOOL DISTRICT 1,613 9 0.66% Greater Lansing metropolitan area employment 239,941 244,197 (1) Data is representative of the Greater Lansing Region (2) Source:www.purelansing.com/Workforce&Data>Top Employers for 2021 data (3) Formerly Ingham Regional Medical Center 191 CITY OF LANSING Table 16 FULL-TIME EQUIVALENT CITY GOVERNMENTAL EMPLOYEES BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Full-time Equivalent Employees 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Function/Program General government City council 10 10 10 10 10 10 10 10 10 11 Mayor's office 5 5 6 6 7 (G) 7 11 12 12 9 City clerk 5 5 5 5 5 6 6 6 6 8 54-A district court 43 46 45 45 45 45 45 45 45 41 City attorney's office 10 11 11 11 11 12 11 12 13 12 City TV 2 2 2 2 2 2 3 2 2 2 Internal auditor 1 1 1 1 1 1 1 1 1 1 Human resources 10 10 12 12 11 11 11 11 11 14 Information technology 11 11 11 11 16 16 15 15 14 13 Finance Accounting/budget/purchasing 10 9 8 (E) 8 8 8 7 8 14 14 Treasury/income tax 9 9 10 11 11 13 16 14 12 12 Assessing 11 11 11 11 11 11 11 11 11 6 Property management - - - - - - - - - - Fleet management 127 130 132 133 138 142 147 147 151 143 Planning&neighborhood development Administration 2 2 2 2 2 2 3 3 3 3 Code compliance - (D) - - - 14 (F) 15 19 19 19 17 Building safety 13 13 13 13 13 13 15 14 14 14 Planning 4 4 4 4 3 (G) 4 4 3 3 3 Development 11 10 10 9 9 9 7 8 8 8 Parking&transportation 15 14 14 14 14 14 19 19 19 23 45 43 43 42 55 57 67 66 66 68 Neighborhood&Citizen Engagement 1 (G) 5 5 5 5 Police 234 (D) 239 239 240 241 243 239 240 251 237 Fire 188 181 181 181 181 182 186 183 184 170 Code Compliance 14 (D) 14 14 14 - (F) 14 202 195 195 195 181 182 186 183 184 184 Public services Administration&engineering 19 19 20 20 20 21 22 23 23 22 Operations&maintenance 117 (D) 117 117 117 118 118 113 116 116 114 Service garage - - - - - - 1 1 1 1 Wastewater 41 41 41 41 42 42 42 42 42 42 Property Management 18 18 18 16 16 16 19 18 18 18 Fleet Management 27 27 26 30 30 30 29 29 29 29 222 222 222 224 226 227 226 229 229 226 Human relations&community services 6 7 7 8 9 10 11 10 10 8 Parks&recreation Administration&design 6 6 6 6 6 6 6 6 6 6 Leisure&special recreation 6 6 6 6 6 6 10 6 6 6 Cemeteries 1 1 1 1 1 1 1 1 1 1 Golf/ice arena 3 3 3 3 3 16 16 16 16 16 13 17 13 13 13 Total 852 852 854 858 867 879 898 893 909 879 Source:The City of Lansing The following restructuring of departments have occurred: (B)Fleet and Property Management were moved from the Finance Department to the Public Service Department. (C)On June 27,2012,911 Dispatch employees were transferred from the City to Ingham County. (D)Code Compliance(14 positions)were transferred from ED&P to Fire;four(4)positions to Police,and one(1)position to Public Service for FY 2014. (E)Purchasing operations were transferred to the Lansing Board of Water and Light for FY 2016. (F)Code Compliance was transferred from Fire to ED&P. (G)One(1)position was transferred from Human Resources to Mayor's Office and one(1)position was transferred from ED&P to N&CE in FY 2018. 192 CITY OF LANSING Table 17 OPERATING INDICATORS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Public safety Fire department responses 19,427 20,170 21,115 21,902 22,768 22,389 21,904 21,650 25,994 19,611 EMS related 16,235 17,376 18,275 18,827 19,264 19,655 18,975 18,381 21,511 15,543 Fire related 3,012 2,794 2,840 3,075 3,063 2,734 2,929 3,269 4,483 4,118 Police department responses 76,855 79,331 71,468 82,722 107,379 84,869 80,449 77,399 78,500 78,239 Arrests 5,656 4,510 3,880 5,710 4,507 4,418 3,524 2,446 2,601 2,871 Traffic violations 7,756 10,781 7,334 9,385 6,496 6,963 5,054 4,287 6,801 6,882 Public works Potholes filled 55,193 53,281 53,488 53,332 54,773 2,589 1,042 698 4,997 1,254 Streets resurfaced(miles) 4.6 4.0 8.8 8.7 6.0 4.6 11.0 13.6 1.9 7.0 Recreation Recreation participation 50,859 122,639 101,335 98,978 120,245 93,264 29,313 58,284 109,582 129,387 Pavilion rentals 185 206 242 180 202 222 78 140 142 105 Sewage disposal Average amount processed daily(gal) 14.49 million 13.28 million 15.46 million 16.32 million 14.45 million 16.60 million 14.18 million 10.61 million 12.1 million 13.3 million Parking system Average number of monthly permits 2,891 3,077 3,218 2,581 3,310 2,500 869 1,203 1,200 1,200 Parking tickets issued 34,373 30,888 32,990 33,492 32,587 37,105 16,481 19,876 30,306 34,881 Cemetery Lots sold 93 138 115 162 88 103 121 119 85 56 Golf Annual rounds played 22,786 22,998 13,325 14508 20,492 - - - - - Garbage and rubbish Yards sent to landfill 18,829 19,667 20,115 20,007 20,492 20,957 22,825 27,865 26,885 27,344 Recycling Recycled goods sold(tons) 5,075 5,691 5,940 5,834 5,593 5,407 5,322 6,258 6,310 5,840 Yards composted 25,260 21,685 24,413 24,223 20,031 21,198 14,262 19,888 13,864 14,340 Source: The City of Lansing,Michigan 193 CITY OF LANSING Table 18 CAPITAL ASSETS STATISTICS BY FUNCTION/PROGRAM LAST TEN FISCAL YEARS (UNAUDITED) Function/Program 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Public safety Police stations 2 2 2 2 2 2 2 2 2 2 Police patrol units 61 60 60 60 60 58 58 60 57 57 Fire stations 6 6 6 6 6 8 8 8 8 8 Emergency Vehicles 0 0 0 0 0 55 27 31 44 44 Public works Streets(miles) 411.00 414.00 414.00 414.00 414.00 413.00 413.23 413.23 412.00 412.00 Traffic signals 200 200 200 200 200 184 206 206 206 206 Recreation Park acreage 2,364.85 2,363.45 2,134.26 2,134.26 2,017.56 2,174 1,659 1,659 1,641 1,641 Playgrounds 72 72 74 74 74 76 77 76 76 76 Baseball/softball fields 61 47 25 25 25 22 22 22 22 22 Soccer/football fields 6 6 14 15 15 15 16 16 16 16 Community centers 4 4 4 4 4 4 4 4 4 4 Sewage disposal Sanitary sewers(miles) 359 361 361 361 363 364 365 365 367 369 Storm sewers(miles) 234 235 235 235 237 238 239 239 241 243 Combined sewers(miles) 188 188 188 188 187 185 185 184 183 181 Parking system Ramps 4 4 4 4 4 3 3 3 3 3 Lots 17 17 16 16 16 16 16 17 14 14 Meters 2,452 2,166 2,166 2,166 2,166 2166 500 200 200 200 On-street Pay Stations 134 128 128 128 Cemetery Number of cemeteries 3 3 3 3 3 3 3 3 3 3 Golf Number of courses 1 1 1 1 1 1 1 1 1 1 Acreage 115 115 115 115 115 115 115 115 115 115 Garbage and rubbish Refuse collection trucks 17 17 14 14 16 8 7 7 7 9 Recycling Recycling trucks 7 7 5 5 7 8 8 8 8 9 Compost trucks 0 0 0 0 0 8 7 7 7 5 Sources:The City of Lansing,Michigan 194