HomeMy WebLinkAbout2024 - Board of Water and Light Audit July 2023 June 2024 Lansing Board of Water and Light
MNM
P.O.Box 13007
1201 S.Washington Ave.
Hometown People. Hometown Power: Lansing,MI 48912
Electronic Delivery
November 26, 2024
Chris Swope, City Clerk
City of Lansing
124 W. Michigan Avenue, 9th Floor
Lansing, MI 48933
RE: Annual Audit for Fiscal Year Ending June 30, 2024
Dear Mr. Swope:
Attached please find the Board of Water and Light's electronic consolidated Audited
Financial Statements for the fiscal year ending June 30, 2024.
Respectfully submitted,
.Ca`UeUa.1.J add
Corporate Secretary
PDF Attachment
Electronic Copy:
Andy Schor, Mayor City of Lansing
Dick Peffley,General Manager
Heather Shawa,Assistant General Manager
LBWL Commissioners
Lansing City Council President,Jeremy Garza, and Councilmembers
Charles Randall, City of Lansing Internal Auditor
Hometown People. Hometown Power.
Lansing Board of Water & Light - City of
Lansing, Michigan
Financial Report
With Additional Information
June 30, 2024 and 2023
Board of Water & Light - City of Lansing, Michigan
Table of Contents
June 30, 2024 and 2023
Page
Independent Auditors' Report 1
Required Supplementary Information (Unaudited)
Management's Discussion and Analysis 4
Basic Financial Statements
Statements of Net Position 7
Statements of Revenues, Expenses and Changes in Net Position 9
Statements of Cash Flows 10
Statements of Fiduciary Net Position - Pension and OPEB Trust Funds 12
Statements of Changes in Fiduciary Net Position - Pension and OPEB Trust Funds 13
Notes to Financial Statements 14
Required Supplementary Information (Unaudited)
Schedule of Changes in the BWL's Net Pension Asset and Related Ratios 51
Schedule of Employer Contributions to the Net Pension Asset 52
Schedule of Changes in BWL's Net OPEB Liability(Asset) and Related Ratios 53
Schedule of Employer Contributions to the Net OPEB Liability (Asset) 54
Notes to Required Supplementary Information 55
Supplementary Information
Income Available for Revenue Bond Debt Retirement 61
Detail of Statements of Revenues and Expenses 62
Detail of Statements of Changes in Net Position 63
Detail of Statements of Fiduciary Net Position - Pension and OPEB Trust Funds 64
Detail of Statement of Changes in Fiduciary Net Position - Pension Trust and OPEB Funds 65
`@9
bakertitty
Independent Auditors' Report
To the Honorable Mayor, Members of the City Council, and Commissioners of
Lansing Board of Water and Light
Report on the Audit of the Financial Statements
Opinions
We have audited the financial statements of the business-type activities and fiduciary activities of the Lansing
Board of Water and Light(BWL), as of and for the years ended June 30, 2024 and 2023, and the related
notes to the financial statements, which collectively comprise the BWL's basic financial statements as listed in
the table of contents.
In our opinion, the accompanying financial statements referred to above present fairly, in all material respects,
the financial position of the business-type activities and fiduciary activities of the BWL as of June 30, 2024
and 2023, and the changes in financial position and, where applicable, cash flows for the years 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 (GAAS) and the standards applicable to financial audits contained in Government Auditing
Standards issued by the Comptroller General of the United States (Government Auditing Standards). The
June 30, 2023 audit was not conducted in accordance with the standards applicable to financial audits
contained in Government Auditing Standards issued by the Comptroller General of the United States (GAS).
Our responsibilities under those standards are further described in the Auditors' Responsibilities for the Audit
of the Financial Statements section of our report. We are required to be independent of the BWL and to meet
our other ethical responsibilities, in accordance with the relevant ethical requirements relating to our audits.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our
audit opinions. The financial statements of the fiduciary activities were not audited in accordance with
Government Auditing Standards.
Responsibilities of Management for 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 BWL'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.
Baker Tilly Advisory Group, LP and Baker Tilly US, LLP,trading as Baker Tilly,are members of the global network of Baker Tilly
International Ltd.,the members of which are separate and independent legal entities. Baker Tilly US, LLP is a licensed CPA firm that
provides assurance services to its clients. Baker Tilly Advisory Group, LP and its subsidiary entities provide tax and consulting services
to their clients and are not licensed CPA firms.
1
Auditors'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 auditors' 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 GAAS 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 GAAS 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 BWL'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 BWL'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.
Required Supplementary Information
Accounting principles generally accepted in the United States of America require that the required
supplementary information, as listed in the table of contents be presented to supplement the basic financial
statements. Such information is the responsibility of management and, 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.
2
Supplementary Information
Our audits were conducted for the purpose of forming opinions on the basic financial statements as a whole.
The supplementary information as listed in the table of contents is presented for purposes of additional
analysis and is not a required 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 States of America. In our opinion, the
supplementary information is fairly stated in all material respects, in relation to the basic financial statements
as a whole.
Other Reporting Required by Government Auditing Standards
In accordance with Government Auditing Standards, we have also issued our report dated October 7, 2024
on our consideration of the BWL'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 solely to describe the scope of our testing of internal control over financial reporting and
compliance and the results of that testing, and not to provide an opinion on the effectiveness of the BWL's
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 BWL's internal control over financial
reporting and compliance.
Madison, Wisconsin
October 7, 2024
3
Board of Water & Light — City of Lansing, Michigan
Management's Discussion and Analysis
June 30, 2024 and 2023
This section explains the general financial condition and results of operations for the Lansing Board of
Water& Light(BWL). The BWL includes the consolidated operations of the electric, water, steam and
chilled water utilities. The notes to financial statements following this section are essential reading for a
complete understanding of the financial and operational results for the years ended June 30, 2023 and
2024.
Overview of Business
The BWL owns and operates an electric system which generates, purchases and distributes electric
energy to approximately 99,300 retail customers in the greater Lansing area, and wholesale customers
through participation in the Midcontinent Independent System Operator, Inc. (MISO), which is BWL's
regional electric grid. The BWL generated 53% of its retail and wholesale sales from existing generation
assets. Additional electric generation was supplied through BWL's membership in the Michigan Public
Power Agency, which includes BWL's partial ownership of Detroit Edison's Belle River Plant, through
MISO, and renewable energy purchase power agreements. The BWL maintains a diversified generation
portfolio which includes wind and solar. The combination of current and existing renewable energy
generation puts BWL on a path to meet state legislative requirements of 50% renewable energy by 2030
as well as move towards its own internal goal of carbon neutrality by 2040.
The BWL owns and operates water wells, a raw water transmission system, water conditioning facilities
and an extensive water distribution system serving potable water to approximately 57,800 residential,
commercial and industrial customers in the greater Lansing area.
The BWL owns and operates steam generation boilers, a steam transmission and distribution system
serving 146 customers. BWL's chilled water facility and distribution system serves 19 customers in the
City of Lansing.
Capital Expenditures
Capital expenditures are driven by the need to replace, expand, or maintain the generation, transmission
and distribution systems of the BWL to meet customer utility needs and to maintain a high level of service
reliability. The BWL invests essentially all revenues not paid out for operations and maintenance
expense, nonoperating expenses, or debt service back into capital improvements for its water, electric,
steam and chilled water systems. Gross capital expenditures were$191.3 million in fiscal year 2024,
$112.2 million in fiscal year 2023 and $121.7 million in fiscal year 2022.
The BWL generally pays the cost of its capital improvements from internally generated funds; however,
revenue bonds are issued from time to time to support large projects or special needs such as
construction of generation facilities.
Detailed financial information for the separate utilities of water, electric, steam and chilled water can be
found in the Supplementary Information section of this financial report.
4
Board of Water & Light - City of Lansing, Michigan
Management's Discussion and Analysis
June 30, 2024 and 2023
Condensed Financial Information (Dollars in Millions)
As of June 30 %Change %Change
2024 2023 2022 2023 to 2024 2022 to 2023
Assets
Utility plant $ 1,273.9 $ 1,183.3 $ 1,165.7 % 7.7 % 1.5
Current assets 340.3 306.2 348.2 11.1 (12.1)
Other assets 426.7 167.0 132.2 155.5 26.3
Total assets 2,040.9 1,656.5 1,646.1 23.2 0.6
Deferred outflow of resources 11.8 26.8 36.2 (56.0) (26.0)
Liabilities
Long-term liabilities 1,167.3 824.4 843.2 41.6 (2.2)
Other liabilities 141.5 113.9 93.4 24.2 21.9
Total liabilities 1,308.9 938.3 936.6 39.5 0.2
Deferred inflow of resources 21.0 32.1 48.9 (34.6) (34.4)
Net position
Net investment in capital assets 389.6 381.4 347.0 2.1 9.9
Restricted for debt service 80.0 48.1 42.9 66.3 12.1
Restricted for pension 6.5 5.0 2.8 30.0 78.6
Restricted for OPEB 85.0 74.6 71.7 13.9 4.0
Unrestricted 161.7 203.7 232.5 (20.6) (12.4)
Net position $ 722.8 $ 712.9 $ 696.9 % 1.4 % 2.3
Capital expenditures in FY2024 exceeded depreciation, impairments and retirements thereby increasing
Utility plant assets by$90.6 million. Current Assets increased by$34.1 million primarily due to funding of
2024A bonds capitalized interest and cash recovery associated with fuel and environmental remediation
costs. Other Assets increased by$259.7 million primarily due to issuance of 2024A bonds. Deferred
Outflows decreased by$15.0 million primarily due to higher investment returns on OPEB retirement plan.
Total liabilities increased by$370 million driven by the 2024A series bond issuance. Deferred Inflows
decreased by$11.1 million primarily due to amortization of prior changes within the OPEB retirement
plan.
Capital expenditures in FY2023 exceeded depreciation, impairments and retirements thereby increasing
Utility plant assets by$17.6 million. Current Assets decreased by$42 million primarily due to higher cash
outflows associated with fuel and environmental remediation costs. Other Assets increased by$34.8
million primarily due to increases in recoverable energy and environmental remediation assets. Deferred
Outflows decreased by$9.4 million primarily due to higher investment returns on OPEB retirement plan.
Total liabilities increased by$1.7 million driven by higher current liabilities related to capital projects.
Deferred Inflows decreased by$16.8 million primarily due to amortization of prior changes within the
OPEB retirement plan.
For the Year Ended June 30 %Change %Change
2024 2023 2022 2023 to 2024 2022 to 2023
Result of operations
Operating revenue $ 417.4 $ 448.9 $ 397.2 % (7.0) % 13.0
Operating expense 387.9 406.2 348.4 (4.5) 16.6
Nonoperating expense-net (19.6) (26.6) (37.2) (26.3) (28.5)
Changes in net position $ 9.9 $ 16.1 $ 11.6 % (38.5) % 38.8
5
Board of Water & Light — City of Lansing, Michigan
Management's Discussion and Analysis
June 30, 2024 and 2023
The $31.5 million decrease in FY2024 operating revenue is primarily driven by decreases in electric
wholesale as a result of decreased market prices and sales volume. The $18.3 million decrease in
FY2024 operating expense is attributable primarily to the net result of decreased fuel costs of$33.9
million, increased administrative and general costs of$9.7 million and increased transmission and
distribution costs of$5.9 million.
The $51.7 million increase in FY2023 operating revenue is primarily driven by increases in electric
wholesale as a result of increased market prices and recovery of increased fuel costs. The$57.8 million
increase in FY2023 operating expense is attributable primarily to increased fuel costs of$23.6 million,
increased administrative and general costs of$11.6 million and increased depreciation costs of$13.9
million.
Budget
The BWL Commissioners approved a $314.7 million operating expense budget(excluding depreciation
and Return on Equity)for FY2024. Actual expenses (excluding depreciation and Return on Equity)were
$297.3 million. The capital improvement budget, net of customer contributions in aid of construction, was
$84.1 million for FY2024, and actual net capital expenditures were $84.5 million.
Financing Activities
In January of 2024, $364,625,000 of Utility System Revenue and Revenue Refunding Bonds, Series
2024A, were issued for the purposes of paying costs for system improvements, capitalized interest,
tendering a portion of 2019B bonds, and refunding a portion of 2013A bonds.
Contacting the Plan's Management
The financial report is intended to provide a general overview of the Plan's finances and to demonstrate
accountability for the funds it administers. Questions about this report should be submitted to Lansing
Board of Water and Light, P.O. Box 13007, Lansing, Michigan 48901-3007.
6
Board of Water& Light-City of Lansing, Michigan
Statements of Net Position
June 30,2024 and 2023
2024 2023
Assets
Current Assets
Restricted cash and investments(Notes 2 and 3) $ 101,353,712 $ 62,772,401
Cash and investments(Notes 1 and 2) 50,954,526 67,108,994
Designated cash and investments(Notes 1 and 2) 89,256,997 85,227,457
Accounts receivable,net(Note 1) 50,807,763 43,111,657
Estimated unbilled accounts receivable(Note 1) 23,567,761 22,368,141
Inventories(Note 1) 18,423,558 19,725,090
Prepayments(Note 1) 5,963,382 5,929,758
Total current assets 340,327,699 306,243,498
Other Assets
Restricted assets:
Net pension asset(Note 8) 6,479,599 5,009,098
Net OPEB asset(Note 8) 84,992,538 74,641,660
Restricted cash and investments(Notes 2 and 3) 259,946,436 -
Recoverable environmental remediation(Note 6) 20,853,276 19,939,958
Recoverable energy asset(Note 6) 26,154,048 33,810,383
Special deposit(Note 1) 25,230,262 31,334,023
Other(Note 1) 3,080,515 2,261,914
Total other assets 426,736,674 166,997,036
Utility Plant(Notes 1 and 4)
Water 380,759,488 367,082,687
Electric 1,278,077,851 1,246,833,576
Steam 100,366,159 96,662,683
Chilled water 34,105,305 34,105,305
Common facilities 131,931,308 123,933,055
Total 1,925,240,111 1,868,617,306
Less accumulated depreciation 793,981,863 731,121,625
Net 1,131,258,248 1,137,495,681
Construction in progress 142,601,832 45,813,286
Total utility plant 1,273,860,080 1,183,308,967
Total assets 2,040,924,453 1,656,549,501
Deferred Outflows of Resources
Bond refunding loss being amortized(Note 1) 1,703,891 7,256,405
Pension deferred outflows(Note 8) 204,912 1,636,061
OPEB deferred outflows(Note 8) 9,881,923 17,913,026
Total deferred outflows of resources 11,790,726 26,805,492
See notes to financial statements
7
Board of Water& Light-City of Lansing, Michigan
Statements of Net Position
June 30,2024 and 2023
2024 2023
Liabilities and Net Position
Current Liabilities
Accounts payable $ 88,906,185 $ 69,132,076
Accrued payroll and related taxes 6,514,032 4,434,300
Customer deposits 3,521,026 5,623,094
Accrued compensated absences(Note 1) 6,581,232 5,786,414
Accrued interest 57,774 63,276
Current portion of long-term debt(Note 5) 777,438 819,635
Current liabilities payable from restricted assets:
Current portion of long-term debt(Note 5) 13,890,000 13,410,000
Accrued interest 21,298,139 14,637,798
Total current liabilities 141,545,826 113,906,593
Compensated Absences,Net of Current Portion(Note 1) 7,730,937 7,644,878
Other Long-Term Liabilities
Workers'compensation(Note 12) 2,200,000 2,200,000
Environmental remediation liability(Note 9) 16,098,612 15,192,215
Other 9,320,770 4,423,149
Total other long-term liabilities 27,619,382 21,815,364
Long-Term Debt,Net,Less Current Portion(Note 5) 1,131,994,669 794,911,441
Total liabilities 1,308,890,814 938,278,276
Deferred Inflows of Resources
Revenue intended to cover future costs(Note 6) 6,343,647 8,014,598
OPEB deferred inflows(Note 8) 14,634,723 24,108,346
Total deferred inflows of resources 20,978,370 32,122,944
Net Position(Note 1)
Net investment in capital assets 389,625,738 382,243,931
Restricted for debt service 80,055,573 48,134,603
Restricted for pension 6,479,599 5,009,098
Restricted for OPEB 84,992,538 74,641,660
Unrestricted 161,692,547 202,924,481
Total net position $ 722,845,995 $ 712,953,773
See notes to financial statements
8
Board of Water& Light-City of Lansing, Michigan
Statements of Revenues, Expenses and Changes in Net Position
Years Ended June 30,2024 and 2023
2024 2023
Operating Revenues(Note 1)
Water $ 55,757,309 $ 50,683,766
Electric 341,976,263 378,791,716
Steam 12,785,927 12,661,267
Chilled water 6,915,341 6,740,010
Total operating revenues 417,434,840 448,876,759
Operating Expenses
Production:
Fuel,purchased power and other operating expenses 138,777,452 172,700,755
Maintenance 22,732,499 18,044,058
Transmission and distribution:
Operating expenses 14,757,338 8,872,835
Maintenance 23,933,835 22,386,918
Administrative and general 93,398,015 86,060,107
Return on equity(Note 7) 26,028,591 26,428,992
Depreciation(Note 1) 68,302,725 71,759,716
Total operating expenses 387,930,455 406,253,381
Operating income 29,504,385 42,623,378
Nonoperating Income(Expenses)
Investment income 14,264,806 3,682,036
Other expense (1,480,080) (3,840,612)
Bonded debt interest expense (32,361,141) (26,376,856)
Other interest expense (35,748) (39,109)
Total nonoperating income(expenses),net (19,612,163) (26,574,541)
Net income(changes in net position) 9,892,222 16,048,837
Net Position,Beginning 712,953,773 696,904,936
Net Position,Ending $ 722,845,995 $ 712,953,773
See notes to financial statements
9
Board of Water& Light-City of Lansing, Michigan
Statements of Cash Flows
Years Ended June 30,2024 and 2023
2024 2023
Cash Flows From Operating Activities
Cash received from customers $ 413,044,418 $ 406,233,630
Cash paid to suppliers (206,579,720) (232,958,122)
Cash paid to employees (77,075,359) (73,760,320)
Return on equity(Note 7) (26,028,591) (26,428,992)
Cash from customer deposits (2,102,068) 1,208,412
Interest on customer deposits (35,748) (39,109)
Net cash flows from operating activities 101,222,932 74,255,499
Cash Flows From Capital and Related Financing Activities
Planned, bonded,and annual construction (142,913,213) (84,370,376)
Principal payments on debt (14,004,724) (13,758,538)
Proceeds from new borrowings net of premium received 360,835,763
Principal payments on subscription-based IT arrangements (3,538,950)
Interest on debt (29,463,795) (29,727,324)
Net cash flows from capital and related financing activities 170,915,081 (127,856,238)
Cash Flows From Investing Activities
Proceeds from the sale and maturity of investments 99,919,225 56,702,619
Interest received 10,315,739 3,816,534
Purchase of investments (270,547,587) (51,589,605)
Net cash flows from investing activities (160,312,623) 8,929,548
Net change in cash and cash equivalents 111,825,390 (44,671,191)
Cash and Cash Equivalents,Beginning 93,143,233 137,814,424
Cash and Cash Equivalents,Ending $ 204,968,623 $ 93,143,233
See notes to financial statements
10
Board of Water& Light-City of Lansing, Michigan
Statements of Cash Flows
Years Ended June 30,2024 and 2023
2024 2023
Reconciliation of Cash and Cash Equivalents to
Statement of Net Position
Restricted cash and investments $ 101,353,712 $ 62,772,401
Cash and investments 50,954,526 67,108,994
Designated cash and investments 89,256,997 85,227,457
Noncurrent restricted cash and investments 259,946,436
Total cash and investments 501,511,671 215,108,852
Less noncash investments (296,543,048) (121,965,619)
Cash and cash equivalents,ending $ 204,968,623 $ 93,143,233
Reconciliation of Operating Income to Net Cash
From Operating Activities
Operating income $ 29,504,385 $ 42,623,378
Adjustments to reconcile operating income to net cash from
operating activities:
Other nonoperating (2,813,134) (5,854,826)
Depreciation 68,302,725 71,759,716
Sewerage collection fees 1,333,054 1,182,244
Interest on customer deposits (35,748) (39,109)
Decrease(increase)in assets:
Accounts receivable(Note 1) (7,696,106) (8,564,418)
Unbilled accounts receivable(Note 1) (1,199,620) (3,966,342)
Inventories 1,301,532 4,838,323
Other postemployment benefits asset and deferrals (11,793,398) (10,795,699)
Special deposit 6,103,761 3,987,142
Net pension asset (1,470,501) (2,237,018)
Other (1,765,543) (9,199,869)
(Decrease)increase in liabilities and deferred
outflows/inflows of resources:
Accounts payable and other accrued expenses 13,570,246 13,287,481
Customer deposits (2,102,068) 1,208,412
Net pension asset deferrals 1,431,149 1,583,717
Other 8,552,198 (25,557,633)
Total adjustments 71,718,547 31,632,121
Net cash provided by operating activities $ 101,222,932 $ 74,255,499
Noncash Capital and Financing Activities
Increase(decrease)in noncash investment valuations $ 3,949,067 $ (134,498)
Amortization of bond premium $ 3,757,493 $ 3,115,745
Bond proceeds placed directly to escrow in refunding $ 45,634,991 $ -
See notes to financial statements
11
Board of Water & Light - City of Lansing, Michigan
Statements of Fiduciary Net Position -
Pension and OPEB Trust Funds
June 30, 2024 and 2023
2024 2023
Assets
Receivable, investment interest receivable $ 14,641 $ 14,872
Participant notes receivable 3,532,182 3,439,525
Cash and cash equivalents 28,368,369 29,312,142
Investments at fair value:
Mutual funds, bonds 96,482,199 89,794,532
Mutual funds, equity 333,580,797 301,565,237
Real estate trust investment 42,233,893 46,403,500
Self-directed brokerage account:
Equity securities/stocks 12,507,716 9,997,083
Certificates of deposit(negotiable) 100,039 349,683
Mutual funds, equity 598,099 454,285
Total assets 517,417,935 481,330,859
Liabilities
Trade payable, due to broker/other 2,765,666 2,380,543
Net position, held in trust for pension
and other employee benefits $ 514,652,269 $ 478,950,316
See notes to financial statements
12
Board of Water & Light - City of Lansing, Michigan
Statements of Changes in Fiduciary Net Position -
Pension and OPEB Trust Funds
Years Ended June 30, 2024 and 2023
2024 2023
Increases
Investment income:
Net appreciation in fair value of investments $ 44,546,231 $ 32,812,234
Interest and dividend income 9,769,087 10,601,969
Net investment income 54,315,318 43,414,203
Employer contributions 9,500,292 11,716,780
Interest from participant notes receivable 189,210 131,862
Other 269,948 84,494
Total increases 64,274,768 55,347,339
Decreases
Retiree benefits paid 27,701,902 37,670,444
Loan defaults 331,152 396,895
Participants' note and administrative fees 539,761 612,089
Total decreases 28,572,815 38,679,428
Change in net position held in trust 35,701,953 16,667,911
Net Position Held in Trust for Pension
and Other Employee Benefits
Beginning 478,950,316 462,282,405
Ending $ 514,652,269 $ 478,950,316
See notes to financial statements
13
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
1. Significant Accounting Policies
The following is a summary of the significant accounting policies used by the Lansing Board of Water&
Light(BWL):
Reporting Entity
The BWL, a related organization of the City of Lansing, Michigan (City), is an administrative board
established by the City Charter. The City Charter grants the BWL full and exclusive management of
the electric, water, steam and chilled water services of the City. The commissioners of the governing
board are appointed by the mayor with approval of the City Council. The BWL provides water, steam,
chilled water and electric services to the City and surrounding townships. The governing board (Board
of Commissioners) has the exclusive authority to set rates for the services provided. The financial
statements include the financial activities of the electric, water, steam and chilled water operations of
the BWL. The financial statements also include the financial activities of the BWL Pension and OPEB
Trust Funds. The BWL is exempt from taxes on income because it is a municipal entity.
Fund Accounting
The BWL accounts for its activities in two different fund types. In order to demonstrate accountability
for how it has spent certain resources, separate funds allow the BWL to show the particular
expenditures that specific revenues were used for. The funds are aggregated into two fund types:
Enterprise funds provide goods or services to users in exchange for charges or fees.
Fiduciary funds:
1. The Lansing Board of Water and Light Defined Contribution Plan and Trust 1 and Lansing
Board of Water and Light Defined Benefit Plan and Trust for Employees' Pensions, which
accumulate resources for benefit payments to participants.
2. The Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of
Water and Light, a Voluntary Employees' Beneficiary Association (VEBA), which accumulates
funds for future payment of retiree benefits.
Basis of Accounting
Enterprise funds and fiduciary funds use the economic resources measurement focus and the full
accrual basis of accounting. Revenue is recorded when earned and expenses are recorded when a
liability is incurred, regardless of the timing of related cash flows. In addition, the utilities meet the
criteria and, accordingly, on July 1, 2012, the BWL adopted the accounting and reporting
requirements of GASB 62, paragraphs 476-500.
The BWL continues to follow the accounting and reporting requirements of GASB 62, paragraphs
476-500, which require that the effects of the ratemaking process be recorded in the financial
statements. Such effects primarily concern the time at which various items enter into the
determination of net income in order to follow the principle of matching costs and revenues.
Accordingly, the BWL records various regulatory assets and deferred inflows and outflows of
resources to reflect the regulator's actions (see Note 6). Management believes that the BWL meets
the criteria for continued application of GASB 62 paragraphs 476-500 but will continue to evaluate its
applicability based on changes in the regulatory and competitive environment.
14
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
System of Accounts
The BWL's accounts are maintained substantially in accordance with the Uniform Systems of
Accounts of the Federal Energy Regulatory Commission for its electric and steam systems and in
accordance with the Uniform Systems of Accounts of the National Association of Regulatory Utility
Commissioners for the water and chilled water systems. The chart of accounts dictates how the BWL
classifies revenue and expense items in the statement of revenues, expenses and changes in net
position as operating and nonoperating.
Rate Matters
Rates charged to customers are established solely by the governing board. The BWL has agreed to
set rates sufficient to meet certain requirements of the bond resolutions for the outstanding revenue
bonds.
Operating Classification
Operating revenues and expenses generally result from providing services and producing and
delivering goods in connection with the principal ongoing operations. The principal operating
revenues are charges to customers for sales and services. Operating expenses include the cost of
sales and services, administrative expenses, return on equity and depreciation on capital assets. All
revenues and expenses not meeting this definition are reported as nonoperating revenues and
expenses.
Report Presentation
This report includes the fund-based statements of the BWL. In accordance with government
accounting principles, a government-wide presentation with program and general revenues is not
applicable to special purpose governments engaged only in business-type activities.
Specific Balances and Transactions
Cash and Cash Equivalents
The BWL considers demand deposits and current restricted funds, which consist of cash and
highly liquid investments with an original maturity of 90 days or less, as cash and cash
equivalents for financial statement purposes.
Investments are stated at fair value, which is the amount at which an investment could be
exchanged in a current transaction between two willing parties. Fair values are based on methods
and inputs as discussed in Note 2. Adjustments necessary to record investments at fair value are
recorded in the operating statement as increases or decreases in investment income. Fair values
may have changed significantly after year end.
15
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Designated Cash and Investments
The BWL has established special purpose funds designated to meet anticipated operating
requirements. In addition, BWL management has established a future construction fund
designated to meet future construction requirements. These funds consist principally of securities
issued or backed by the government of the United States or its agencies, including but not limited
to treasury notes and bonds, and are segregated as follows:
Carrying Value
2024 2023
Designated purpose:
Litigation, environmental and uninsured losses $ 20,876,509 $ 19,939,802
Future water facilities 4,211,679 4,019,823
Subtotal 25,088,188 23,959,625
Special purpose, future construction 64,168,809 61,267,832
Total $ 89,256,997 $ 85,227,457
Accounts Receivable
Accounts receivable are stated at net invoice amounts. A general valuation allowance is
established based on an analysis of the aged receivables and historical loss experience. All
amounts deemed to be uncollectible are charged to expense in the period that determination is
made. Accounts receivables are not deemed uncollectible until they are approximately 425 days
past due and have remained completely unpaid throughout the BWL's collection policy. The
components of accounts receivable for 2024 and 2023 are as follows:
2024 2023
Customer receivables $ 29,571,916 $ 26,598,190
Sewerage collections 2,728,219 2,879,959
Wholesale sales receivables 4,613,189 2,778,199
Grant receivables 6,197,388 7,171,247
Refundable deposit 6,103,762 -
Miscellaneous 4,593,289 6,684,062
Less allowance for doubtful accounts (3,000,000) (3,000,000)
Net $ 50,807,763 $ 43,111,657
Unbilled Accounts Receivable and Revenue
Unbilled accounts receivable at June 30, 2024 and 2023 represent the estimated amount of
accounts receivable for services that have not been billed as of the statement of net position date.
The amounts are a result of a timing difference between the end of the financial statement cycle
(month end)and the billing cycle (various dates within the month for each billing period).
Accordingly, the current year revenue from customers whose billing period ends after June 30 for
services rendered prior to July 1 will be recognized in the current period.
16
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Special Deposit
In 2018, the BWL contracted with Consumer's Energy to install a new gas pipeline. Under the
terms of the contract, the BWL was expected to make installment payments totaling up to
$52,000,000 throughout the construction period. Based on usage of the new pipeline, the BWL is
eligible to recover all but$10,000 of the installment payments. The BWL has made installment
payments totaling $46,280,000. During 2024 and 2023, the BWL recovered $6,103,762 and
$3,987,142, respectively, back due to pipeline usage. The BWL estimates it will recover the
remaining installment payments based on expected usage. The long-term other asset for the
Consumer's Energy deposit recorded was $25,189,097 in 2024 and $31,292,858 in 2023. The
BWL has $41,165 of miscellaneous other deposits as of June 30, 2024 and 2023.
Inventories
Inventories are stated at weighted average cost and consist of the following at June 30:
2024 2023
Gas $ 1,225,790 $ 2,233,398
Materials and supplies 17,197,768 17,358,060
Emissions allowances - 133,632
Total $ 18,423,558 $ 19,725,090
Prepayments
Prepayments relate to advanced payments on goods or services that will be consumed in future
periods.
Utility Plant
The utility plant is stated on the basis of cost, which includes expenditures for new facilities and
those which extend the useful lives of existing facilities and equipment. Expenditures for normal
repairs and maintenance are charged to maintenance expense as incurred. Capital assets are
generally defined as assets with an initial, individual cost of more than $5,000 and an estimated
life in excess of one year.
Depreciation
Depreciation of the utility plant is computed using the straight-line method based on estimated
useful lives. The resulting provisions for depreciation in 2024 and 2023, expressed as a
percentage of the average depreciable cost of the related assets, are as follows:
Average Rate (Percent)
Life
(Years) 2024 2023
Classification of utility plant:
Water 4-100 2.0 1.9
Electric 4-50 3.6 4.1
Steam 5-50 2.8 3.5
Chilled water 5-50 3.4 3.4
Common facilities 2-50 6.9 8.0
17
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
When units of property are retired, their costs are removed from the utility plant and charged to
accumulated depreciation.
Accrued Compensated Absences
The BWL records a liability for estimated compensated absences that are attributable to services
already rendered and that are not contingent on a specific event that is outside the control of the
BWL and its employees. This liability is accrued as employees earn the rights to such benefits.
The BWL estimates the total current and noncurrent portions of the liability to be $14,312,169 and
$13,431,292 as of June 30, 2024 and 2023, respectively.
Capital Contributions
Capital contributions represent nonrefundable amounts received for the purpose of construction
for the utility plant. These contributions are from third parties, including amounts from customers,
grant programs and insurance proceeds from damage. Electric, water and steam contributions
are credited against the related assets or recorded as a separate regulatory deferred inflow of
resources and will offset the depreciation of the related assets over the estimated useful lives.
This treatment is consistent with the BWL's ratemaking policy and is thus permitted under
GASB 62 paragraphs 476-500.
Deferred Outflows/Inflows of Resources
In addition to assets, the statement of net position reports a separate section for deferred
outflows of resources. This separate financial statement element, deferred outflows of resources,
represents a consumption of net position that applies to a future period and so will not be
recognized as an outflow of resources (expense/expenditure) until then. The BWL has three
items that qualify for reporting in this category. The deferred outflows of resources relate to
deferred losses on refunding, pension related deferrals under GASB 68, OPEB related deferrals
under GASB 75.
In addition to liabilities, the statement of net position reports a separate section for deferred
inflows of resources. This separate financial statement element, deferred inflows of resources,
represents an acquisition of net position that applies to a future period and so will not be
recognized as an inflow of resources (revenue) until that time. The BWL has the following items
that qualify for reporting in this category: the deferred inflows of resources related to costs that
have been recovered from customers and will be applied to customers in the future related to the
renewable energy plan and energy optimization, chiller plant and Wise Road items described in
Note 6, pension related deferrals under GASB 68 and OPEB related deferrals under GASB 75.
Net Position
Equity is classified as net position and displayed in four components:
• Net Investment in Capital Assets - Consists of capital assets, net of accumulated
depreciation and reduced by the outstanding balances of any bonds that are attributable
to the acquisition, construction or improvement of those assets.
• Restricted for Debt Service - Consists of net position with constraints placed on their
use by revenue bond resolution.
• Restricted for Pension and OPEB - Consists of net position with constraints placed on
their use as this balance must be used to fund employee benefits.
• Unrestricted -All other net position that does not meet the definition of"restricted" or
"net investment in capital assets."
18
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Net Position Flow Assumption
Sometimes the BWL will fund outlays for a particular purpose from both restricted (e.g., restricted
bond)and unrestricted resources. In order to calculate the amounts to report as restricted net
position and unrestricted net position in the enterprise fund financial statements, a flow
assumption must be made about the order in which the resources are considered to be applied. It
is the BWL's policy to consider restricted net position to have been depleted before unrestricted
net position is applied.
Net Pension Asset
A net pension asset is recorded in accordance with GASB Statement No. 68. The asset is the
difference between the actuarial total pension liability and the Plan's fiduciary net position as of
the measurement date. See Note 8 for additional information.
Other Assets
Other assets consists of a deposit held with the Michigan Public Power Agency(MPPA) related to
the Belle River project.
Long-Term Obligations
Long-term debt and other obligations are reported as liabilities. Bond premiums and discounts are
amortized over the life of the bonds using the straight-line method. Gains or losses on prior
refundings are amortized over the remaining life of the old debt or the life of the new debt,
whichever is shorter. The balance at year end for premiums and discounts is shown as an
increase or decrease in the liability section of the statement of net position. The balance at year
end for the loss on refunding is shown as a deferred outflow on the statements of net position.
Postemployment Benefits Other Than Pensions (OPEB)
For purposes of measuring the net OPEB asset, deferred outflows of resources and deferred
inflows of resources related to OPEB and OPEB expense, information about the fiduciary net
position of the Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of
Water and Light (Plan), a fiduciary fund of the BWL, and additions to/deductions from the Plan
fiduciary net position have been determined on the same basis as they are reported by the Plan.
For this purpose, the Plan recognizes benefit payments when due and payable in accordance
with the benefit terms. Investments are reported at fair value, except for money market
investments and participating interest-earning investment contracts that have a maturity at the
time of purchase of one year or less, which are reported at cost.
Inter-Utility Transactions
The water, electric, steam and chilled water operations of the BWL bill each other for services
provided and these services are reported as revenue to the generating operation and expense to
the consuming operation. Such internal billings aggregated $6,281,268 and $8,045,764 in 2024
and 2023, respectively, and are not eliminated in the statement of revenues, expenses and
changes in net position.
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally
accepted in the United States of America requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and the reported amounts of revenue
and expenses during the reporting period. Actual results could differ from those estimates.
19
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Reclassifications
Certain amounts presented in the prior year data may have been reclassified in order to be
consistent with the current year's presentation.
2. Cash, Investments and Fair Value Disclosure
Michigan Compiled Laws Section 129.91 (Public Act 20 of 1943, as amended)authorizes local
governmental units to make deposits and invest in the accounts of federally insured banks, credit unions
and savings and loan associations that have offices in Michigan. A local unit is allowed to invest in bonds,
securities, and other direct obligations of the United States or any agency or instrumentality of the United
States; certificates of deposit, savings accounts, deposit accounts or depository receipts of an eligible
financial institution; repurchase agreements; bankers' acceptances of United States banks; commercial
paper rated within the two highest classifications, which matures not more than 270 days after the date of
purchase; obligations of the State of Michigan or its political subdivisions, which are rated as investment
grade; and mutual funds composed of investment vehicles that are legal for direct investment by local
units of government in Michigan.
The operating cash investment policy adopted by the BWL in accordance with Public Act 20, as
amended, and the Lansing City Charter has authorized investment in bonds and securities of the United
States government, certificates of deposit, time deposits and bankers' acceptances of qualified financial
institutions, commercial paper rated Al by Standard & Poor's and P1 by Moody's, repurchase
agreements using bonds, securities and other obligations of the United States or an agency or
instrumentality of the United States and liquid asset accounts managed by a qualified financial institution
using any of these securities. The BWL's deposits and investment policies are in accordance with
statutory authority.
Michigan Cooperative Liquid Assets Securities System (MI CLASS) reports the fair value of its underlying
assets annually. Participants in the MI CLASS have the right to withdraw their funds in total on one day's
notice. At June 30, 2024 and 2023, the fair value of the MI CLASS' assets were substantially equal to the
BWL's share. MI CLASS is rated AAAm by Standard and Poor's. The BWL also has cash and
investments with Governments of Michigan Investing Cooperatively (GovMIC). The GovMIC cash and
investments are recorded at amortized cost which approximates fair value.
The BWL's cash and investments are subject to several types of risk, which are examined in more detail
below:
The BWL's Cash and Investments (Exclusive of Fiduciary Funds)
Custodial Credit Risk of Bank Deposits
Custodial credit risk is the risk that in the event of a bank failure, the BWL's deposits may not be
returned to it. The BWL requires that financial institutions must meet minimum criteria to offer
adequate safety to the BWL. At June 30, 2024 and 2023, the BWL had $20,225,479 and
$16,123,652, respectively, of bank deposits that were uninsured and uncollateralized. The BWL
evaluates each financial institution with which it deposits funds and only those institutions meeting
minimum established criteria are used as depositories.
Custodial Credit Risk of Investments
Custodial credit risk is the risk that, in the event of the failure of the counterparty, the BWL will not
be able to recover the value of its investments or collateral securities that are in the possession of
an outside party. The BWL does not have a policy for custodial credit risk.
20
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
At June 30, 2024, the following investment securities were uninsured and unregistered, with
securities held by the counterparty or by its trust department or agent, but not in the BWL's name:
Type of Investment Fair Value How Held
U.S. agency bond or notes $ 45,719,291 Counterparty
U.S. treasury bonds 277,330,789 Counterparty
State and local bonds 553,117 Counterparty
At June 30, 2023, the following investment securities were uninsured and unregistered, with
securities held by the counterparty or by its trust department or agent, but not in the BWL's name:
Type of Investment Fair Value How Held
U.S. agency bond or notes $ 45,871,269 Counterparty
U.S. treasury bonds 68,762,729 Counterparty
State and local bonds 1,896,278 Counterparty
Interest Rate Risk
Interest rate risk is the risk that changes in interest rates will adversely affect the fair value of
investments. The BWL's investment policy restricts investments to a maximum weighted average
life of five years unless matched to a specific cash flow.
At June 30, 2024, the average maturities of investments are as follows:
Less Than
Investment Fair Value 1 Year 1-5 Years 6+Years
Pooled investment funds $ 108,854,651 $ 108,854,651 $ - $ -
U.S. treasury bonds 277,330,789 129,439,631 147,891,158 -
State and local bonds 553,117 553,117 - -
U.S. agency bonds/notes 45,719,291 6,030,413 31,421,905 8,266,972
Supra national agency bonds 247,122 247,122 - -
Mutual funds, bonds 51,134,416 - 51,134,416 -
Total $ 483,839,386 $ 245,124,934 $ 230,447,480 $ 8,266,972
At June 30, 2023, the average maturities of investments are as follows:
Less Than
Investment Fair Value 1 Year 1-5 Years 6+Years
Pooled investment funds $ 41,984,644 $ 41,984,644 $ - $ -
U.S. treasury bonds 68,762,729 9,214,874 59,547,855 -
State and local bonds 1,896,278 1,364,428 531,850 -
U.S. agency bonds/notes 45,871,269 3,706,722 27,646,909 14,517,638
Supra national agency bonds 5,435,343 3,401,512 2,033,831 -
Commercial paper 3,872,539 3,872,539 - -
Total $ 167,822,802 $ 63,544,719 $ 89,760,445 $ 14,517,638
Credit Risk
State law limits investments in commercial paper to the top two ratings issued by nationally
recognized statistical rating organizations.
21
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
As of June 30, 2024, the credit quality ratings of debt securities are as follows:
Rating
Investment Fair Value Rating Organization
Pooled investment funds $ 108,854,651 AAAm S&P
U.S. treasury bonds 277,330,789 AA+ (Aaa) S&P (Moody's)
U.S. agency bonds/notes 45,719,291 AA+ (Aaa) S&P (Moody's)
Supra national agency bonds 247,122 AAA+ (Aaa) S&P (Moody's)
State and local bonds 553,117 AA/AA1 S&P (Moody's)
Mutual funds, bonds 51,134,416 AAAm S&P
As of June 30, 2023, the credit quality ratings of debt securities are as follows:
Rating
Investment Fair Value Rating Organization
Pooled investment funds $ 41,984,644 AAAm S&P
U.S. treasury bonds 68,762,729 AA+ (Aaa) S&P (Moody's)
U.S. agency bonds/notes 45,871,269 AA+ (Aaa) S&P (Moody's)
Supra national agency bonds 5,435,343 AA+ (Aaa) S&P (Moody's)
State and local bonds 1,896,278 AA+ (Aaa) S&P (Moody's)
Money markets 2,270,803 AAAm S&P
Commercial paper 3,872,539 A-1/P-1 S&P
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributable to the magnitude of a government's
investment in a single issuer. The Board's policy limits the amount of investments with an
individual issuer, with the exception of the U.S. government. As of June 30, 2024 and 2023, the
BWL's investment portfolio was concentrated as follows:
Investment 2024 2023
Fannie Mae 2 % 7 %
Freddie Mac 7 21
FHLB 1 7
Fair Value
The BWL 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. 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.
22
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The following investments are recorded at fair value using the Matrix Pricing Technique.
June 30, 2024
Level Level Level Total
U.S. treasury bonds $ - $ 277,330,789 $ - $ 277,330,789
Supra national agency bonds - 247,122 - 247,122
Federal agency mortgage-
backed security - 30,142,641 - 30,142,641
Federal agency collateralized
mortgage obligation - 2,302,719 - 2,302,719
State and local bonds - 553,117 - 553,117
Federal agency bond/note - 13,273,931 - 13,273,931
Mutual funds, bonds - 51,134,416 - 51,134,416
Total investments at
fair value level $ - $ 374,984,735 $ - $ 374,984,735
June 30, 2023
Level Level Level Total
U.S. treasury bonds $ - $ 68,762,729 $ - $ 68,762,729
Supra national agency bonds - 5,435,343 - 5,435,343
Federal agency mortgage-
backed security - 23,679,729 - 23,679,729
Federal agency collateralized
mortgage obligation - 2,880,483 - 2,880,483
State and local bonds - 1,896,278 - 1,896,278
Federal agency bond/note - 19,311,057 - 19,311,057
Commercial paper - 3,872,539 - 3,872,539
Total investments at
fair value level $ - $ 125,838,158 $ - $ 125,838,158
Fiduciary Fund Investments
Interest Rate Risk - Pension and OPEB Trust Funds
Interest rate risk is the risk that the value of investments will decrease as a result of a rise in
interest rates. The Plans investment policy does not restrict investment maturities.
At June 30, 2024, the average maturities of investments subject to interest rate risk are as
follows:
Weighted
Average
Maturity
Investment Fair Value (in Years)
Mutual fund, bonds $ 96,482,199 8.8
Certificates of deposit(negotiable) 100,039 0.6
23
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
At June 30, 2023, the average maturities of investments subject to interest rate risk are as
follows:
Weighted
Average
Maturity
Investment Fair Value (in Years)
Mutual fund, bonds $ 89,794,532 9.0
Certificates of deposit(negotiable) 349,683 0.6
Credit Risk-Pension and OPEB Trust Funds
State law limits investments in commercial paper to the top two ratings issued by nationally
recognized statistical rating organizations. The Plans have no investment policy that would further
limit its investment choices. As of June 30, 2024, the credit quality ratings of debt securities (other
than the U.S. government) subject to credit risk are as follows:
Rating
Investment Fair Value Rating Organization
Mutual funds, bonds $ 96,482,199 Not rated Not rated
Certificates of deposit(negotiable) 100,039 Not rated Not rated
As of June 30, 2023, the credit quality ratings of debt securities (other than the U.S. government)
are as follows:
Rating
Investment Fair Value Rating Organization
Mutual funds, bonds $ 89,794,532 Not rated Not rated
Certificates of deposit(negotiable) 349,683 Not rated Not rated
Concentration of Credit Risk
Concentration of credit risk is the risk of loss attributed to the magnitude of a government's
investment in a single issuer. The Plans have no investments subject to concentration of credit
risk as of June 30, 2024 and June 30, 2023.
Fair Value - Pension Trust Funds
The framework for measuring fair value provides a fair value hierarchy that prioritizes the inputs
to valuation techniques used to measure fair value. The hierarchy gives the highest priority to
unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the
lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under
authoritative guidance are described as follows:
Level 1 - Inputs to the valuation methodology are unadjusted quoted market prices for
identical assets in active markets that the Plan has the ability to access.
Level 2 - Inputs to the valuation methodology include:
• quoted prices for similar assets or liabilities in active markets;
• quoted prices for identical or similar assets or liabilities in inactive markets;
24
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
• inputs other than quoted prices that are observable for the asset or liability; and
• inputs that are derived principally from or corroborated by observable market data by
correlation or other means.
If the asset or liability has a specified (contractual)term, the Level 2 input must be observable
for substantially the full term of the asset or liability.
Level 3 - Inputs to the valuation methodology are unobservable and significant to the fair
value measurement.
The asset's or liability's fair value measurement level within the fair value hierarchy is based on
the lowest level of any input that is significant to the fair value measurement. Valuation
techniques maximize the use of relevant observables and minimize the use of unobservable
inputs.
The following is a description of the valuation methodologies used for assets measured at fair
value. There have been no changes in the methodologies used at June 30, 2024 and 2023:
Common Stock, Corporate Bonds and Notes, U.S. Government Obligations and Fixed
Income Securities -Valued at the most recent closing price reported on the market on which
individual securities are traded.
Mutual Funds -Valued at the daily closing price as reported by the fund. Mutual funds held
by the Plan are open-end mutual funds that are registered with the Securities and Exchange
Commission. These funds are required to publish their daily NAV and to transact at that price.
The mutual funds held by the Plan are deemed to be actively traded.
Stable Value Fund - Seeks safety of principal, adequate liquidity and returns superior to
shorter maturity alternatives by actively managing a diversified portfolio of assets issued by
highly rated financial institutions and corporations as well as obligations of the U.S.
government or its agencies.
Self-Directed Brokerage Account- Participants meeting minimum balance and transaction
requirements may transfer funds to a self-directed brokerage account providing access to
additional investment options including a large selection of mutual funds.
Real estate fund investment-Valued by a certified independent appraiser and an internal
expert group. There is also another level of verification by an independent valuation advisor
to audit and review both the external and internal valuations performed.
The preceding methods may produce a fair value calculation that may not be indicative of net
realizable value or reflective of future fair values. Furthermore, while the Plan believes its
valuation methods are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date.
25
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The following table sets forth by level, within the fair value hierarchy, the Plan's assets at fair
value as of June 30, 2024 and 2023:
June 30, 2024
Investment Type Level 1 Level 2 Level 3 Total
Mutual funds, bonds $ 17,497,649 $ 78,984,550 $ - $ 96,482,199
Mutual funds, equities 279,521,028 54,059,769 - 333,580,797
Self-directed brokerage
account, equities 12,507,716 - - 12,507,716
Self-directed brokerage
account, bonds 598,099 - - 598,099
Certificates of deposit - 100,039 - 100,039
Real estate investment trust 42,233,893 - - 42,233,893
Total investments by
fair value level $ 352,358,385 $ 133,144,358 $ - $ 485,502,743
June 30, 2023
Investment Type Level 1 Level 2 Level 3 Total
Mutual funds, bonds $ 17,745,597 $ 72,048,935 $ - $ 89,794,532
Mutual funds, equities 218,475,290 83,089,947 - 301,565,237
Self-directed brokerage
account, equities 9,997,083 - - 9,997,083
Self-directed brokerage
account, bonds 454,285 - - 454,285
Certificates of deposit - 349,683 - 349,683
Real estate investment trust 46,403,500 - - 46,403,500
Total investments by
fair value level $ 293,075,755 $ 155,488,565 $ - $ 448,564,320
26
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
3. Restricted Assets
Restricted assets are required under the 2013A, 2017A, 2019A, 2019B, 2021A, 2021 B and 2024A
Revenue Bond resolutions and the related Nonarbitrage and Tax Compliance Certificates. These assets
are segregated into the following funds:
Carrying Value
2024 2023
Operations and maintenance fund $ 39,896,170 $ 30,537,525
Bond and interest redemption fund 61,457,542 32,234,876
Construction Fund 259,946,436 -
Total $ 361,300,148 $ 62,772,401
The carrying value in excess of the required value for the current portion is reported as cash and cash
equivalents or investments for the years ended 2024 and 2023.
The restrictions of the various funds required per the bond resolutions are as follows:
Operations and Maintenance Fund - By the end of each month, this fund shall include sufficient
funds to provide for payment of the succeeding month's expenses.
Bond and Interest Redemption Fund - Restricted for payment of the current portion of bond
principal and interest on the 2013A, 2017A, 2019A, 2019B, 2021A, 2021B and 2024A Revenue
Bonds.
Construction Fund — Restricted for utility system upgrades as required by the 2024A Revenue
Bonds.
In addition, restricted assets have been reported in connection with the net pension and OPEB asset
balances since this balance must be used to fund employee benefits.
4. Utility Plant
The tables below reflect the capital asset activity of the utility plant categories for the years ended
June 30, 2024 and 2023:
Capital Asset Activity for Year Ended June 30, 2024
Capital Assets Capital Assets
FY Start Transfers Acquisition Retirement FY End
Water $ 367,082,687 $ 15,216,703 $ - $ (1,539,902) $ 380,759,488
Electric 1,246,833,576 34,269,839 - (3,025,564) 1,278,077,851
Steam 96,662,683 3,708,614 - (5,138) 100,366,159
Chilled 34,105,305 - - - 34,105,305
Common 123,933,055 2,206,851 8,055,371 (2,263,969) 131,931,308
AUC 45,813,286 (55,402,008) 154,272,797 (2,082,243) 142,601,832
Total $ 1,914,430,592 $ - $ 162,328,168 $ (8,916,816) $ 2,067,841,943
27
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Accumulated Depreciation for Year Ended June 30, 2024
Depreciation/
Amortization
Accumulated and Accumulated
Depreciation Depreciation Impairment for Depreciation Depreciation
FY Start Transfers Year Retirement FY End
Water $ (135,995,162) $ (9,230) $ (8,301,141) $ 845,842 $ (143,459,691)
Electric (471,205,697) - (44,860,132) 1,830,016 (514,235,813)
Steam (31,341,987) - (2,767,415) 5,138 (34,104,264)
Chilled (18,451,534) - (1,165,051) - (19,616,585)
Common (74,127,245) 9,230 (10,710,340) 2,262,845 (82,565,510)
Total $ (731,121,625) $ - $ (67,804,079) $ 4,943,841 $ (793,981,863)
Nondepreciable Assets - Included in the table above are nondepreciable assets of$2,204,045 for
water, $17,449,965 for electric, $124,099 for steam, $412,339 for common facilities and
$142,601,834 for AUC.
Capital Asset Activity for Year Ended June 30, 2023
Capital Assets Capital Assets
FY Start Transfers Acquisition Retirement FY End
Water $ 352,112,157 $ 15,768,003 $ - $ (797,473) $ 367,082,687
Electric 1,221,755,100 42,209,597 - (17,131,121) 1,246,833,576
Steam 95,083,252 5,022,080 - (3,442,649) 96,662,683
Chilled 34,099,039 6,266 - - 34,105,305
Common 123,793,139 4,277,454 1,672,935 (5,810,473) 123,933,055
AUC 23,067,588 (67,283,400) 90,029,098 45,813,286
Total $ 1,849,910,275 $ - $ 91,702,033 $ (27,181,716) $ 1,914,430,592
Accumulated Depreciation for Year Ended June 30, 2023
Depreciation/
Amortization
Accumulated and Accumulated
Depreciation Depreciation Impairment for Depreciation Depreciation
FY Start Transfers Year Retirement FY End
Water $ (128,799,223) $ 157,406 $ (7,845,441) $ 492,096 $ (135,995,162)
Electric (438,098,343) (65,428) (50,595,965) 17,554,039 (471,205,697)
Steam (31,087,552) - (3,364,815) 3,110,380 (31,341,987)
Chilled (17,287,736) - (1,163,798) - (18,451,534)
Common (68,896,851) (91,978) (10,396,764) 5,258,348 (74,127,245)
Total $ (684,169,705) $ - $ (73,366,783) $ 26,414,863 $ (731,121,625)
Nondepreciable Assets - Included in the table above are nondepreciable assets of$1,194,869 for
water, $17,571,123 for electric, $124,098 for steam, $412,339 for common facilities and $45,813,286
for AUC
28
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Erickson Power Station Impairment
In 2017, the BWL agreed to close the Erickson Power Station by 2025 as a result of a settlement with
the Sierra Club in support of BWL's strategic plan. As a result, BWL recorded an impairment of
$9,337,129 in 2017 using the service units approach to measure the impairment. In 2021, the
estimated date of closure was re-examined and determined to be May 2023. Asset cost and
accelerated depreciation were adjusted from the initial impairment and an additional impairment loss
of$4,304,965 was recognized in 2021. In 2022, the estimated date of closure was re-examined and
determined to be November 2022. Accelerated depreciation was adjusted from the previous
impairment adjustment and additional impairment loss of$1,456,410 was recognized in fiscal year
2022. The plant was retired in fiscal year 2023.
5. Long-Term Debt
Long-term debt as of June 30 consists of the following:
2024 2023
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue and revenue refunding Bonds, Series 2024A, due in
annual principal installments beginning July 1, 2025, and continuing
through July 1, 2054, plus interest at a rate of 5.00%. Original
amount of issue$364,625,000.
$ 364,625,000 $ -
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Taxable Bonds, Series 2021 A, due in annual principal
installments beginning July 1, 2025 and continuing through July 1,
2051, plus interest at a rate of 5.00%. Original amount of issue
$56,020,000. 56,020,000 56,020,000
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Taxable Bonds, Series 2021 B, due in annual principal
installments beginning July 1, 2026 and continuing through July 1,
2051, initial term rate is 2%,with an assumed interest rate of 3.5%
following the mandatory tender in 2026. Original amount of issue
$70,875,000 70,875,000 70,875,000
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Refunding Taxable Bonds, Series 2019B, due in annual
principal installments beginning July 1, 2022 and continuing through
July 1, 2041, plus interest at rates ranging from 1.95%to 3.53%.
Original amount of issue$251,995,000. During fiscal year 2024
$45,625,000 of the 2019B original issuance was tendered as part of
the 2024A issuance. 193,605,000 245,680,000
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Refunding Bonds, Series 2019A, due in annual principal
installments beginning July 1, 2022 and continuing through July 1,
2048, plus interest at rates ranging from 4.00%to 5.00%. Original
amount of issue$319,875,000. 313,730,000 316,880,000
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Refunding Bonds, Series 2017A, due in annual principal
installments beginning July 1, 2019 and continuing through July 1,
2032, plus interest at a rate of 5.00%. Original amount of issue
$30,365,000. 21,625,000 23,525,000
29
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
2024 2023
Water Supply, Steam, Chilled Water and Electric Utility System
Revenue Refunding Bonds, Series 2013A, due in annual principal
installments beginning July 1, 2014 through July 1, 2026, plus
interest at rates ranging from 2.00%to 5.00%. Original amount of
issue$21,085,000. During fiscal year 2024, $4,330,000 of the
2013A original issuance was refunded as part of the 2024A
issuance. $ 2,000,000 $ 8,240,000
Promissory note, due to the City of Lansing in semi-annual
installments through October 1, 2024, plus interest at a rate of
2.50%. Original amount of issue$13,225,385. 3,368,762* 4,062,093*
Charter Township of Lansing Special Assessment pertaining to the
Groesbeck II Park Drain. Due in annual installments ranging from
$132,000 to$291,000 with final payment in 2044. 2,652,412* 2,778,718*
Total 1,028,501,175 728,060,811
Less current portion (14,667,438) (14,229,635)
Plus unamortized premium 118,160,932 81,080,265
Total $ 1,131,994,669 $ 794,911,441
The unamortized premium and deferral on refunded bonds is being amortized over the life of the bonds,
using the straight-line method.
*The debt noted is directly placed with a third party.
Aggregate principal and interest payments applicable to revenue debt are as follows:
Years Ending
June 30: Principal Interest Total
2025 $ 13,890,000 $ 43,827,532 $ 57,717,532
2026 13,495,000 44,790,523 58,285,523
2027 14,025,000 44,772,718 58,797,718
2028 18,665,000 44,636,718 63,301,718
2029 19,435,000 43,877,996 63,312,996
2030-2034 109,420,000 206,767,638 316,187,638
2035-2039 134,265,000 181,283,008 315,548,008
2040-2044 165,550,000 149,166,897 314,716,897
2045-2049 209,280,000 103,923,063 313,203,063
2050-2055 324,455,000 49,990,113 374,445,113
Total $ 1,022,480,000 $ 913,036,206 $ 1,935,516,206
30
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Aggregate principal and interest payments applicable to direct placement debt are as follows:
Years Ending
June 30: Principal Interest Total
2025 $ 777,438 $ 184,669 $ 962,107
2026 766,153 165,789 931,942
2027 712,205 147,609 859,814
2028 658,250 130,396 788,646
2029 575,934 114,230 690,164
2030-2034 1,141,835 411,942 1,553,777
2035-2039 631,527 255,567 887,094
2040-2044 631,527 113,585 745,112
2045 and later 126,305 5,679 131,984
Total $ 6,021,174 $ 1,529,466 $ 7,550,640
All Water Supply and Electric Utility System Revenue Bonds were issued by the authority of the BWL. All
bonds were issued on a parity basis and are payable solely from the net revenue of the combined water,
electric, chilled water and steam operations of the BWL.
The Series 2024A Bonds maturing in the years 2025 through 2034, inclusive, shall not be subject to
optional redemption prior to maturity. The Series 2024A Bonds, or portions of the Series 2024A Bonds in
multiples of$5,000 maturing or subject to mandatory redemption in the years 2035 and thereafter shall be
subject to redemption at the option of the Board in such order of maturity as the Board shall determine,
and within a single maturity by lot, on any date on or after July 1, 2034 at par plus accrued interest to the
date fixed for redemption. The Term Bonds maturing on July 1, 2049, the 5.00% Term Bonds maturing on
July 1, 2054, and the 5.25% Term Bonds July 1, 2054 are subject to mandatory redemption prior to
maturity in part by lot on July 1 in the years and in the principal amounts set forth below at a redemption
price equal to the principal amount to be redeemed plus accrued interest, if any, without premium.
The 2021A Bonds are payable in annual installments in the years 2025 through 2051, inclusive, and shall
not be subject to optional redemption prior to maturity. The bonds maturing on or after July 1, 2031 shall
be subject to redemption at the option of the BWL in such order of maturity as the BWL shall determine,
and within a single maturity by lot, on any date on or after July 1, 2031 at par plus accrued interest to the
fixed date for redemption.
The 2021 B Bonds are payable in annual installments in the years 2026 through 2051, inclusive, and are
subject to optional and mandatory redemption prior to maturity. The put bonds maturing on or after
January 1, 2026 shall be subject to redemption at the option of the BWL in such order of maturity as the
BWL shall determine, and within a single maturity by lot, on any date on or after January 1, 2026 at par
plus accrued interest to the fixed date for redemption. The mandatory tender for purchase date of the
Bonds is July 1, 2026—the first business day following the last day of the Initial Term Interest Rate
Period. In the event not all the Bonds are purchased on or before the Purchase Date, a Delayed
Remarketing Period shall commence during which the Bonds will bear interest at a Stepped Interest Rate.
Additional information is available in the Official Statement for the Series 2021 B Bonds.
The 2019B Bonds are payable in annual installments in the years 2022 through 2041, inclusive, and shall
not be subject to optional redemption prior to maturity. The bonds maturing on or after July 1, 2030 shall
be subject to redemption at the option of the BWL in such order of maturity as the BWL shall determine,
and within a single maturity by lot, on any date on or after July 1, 2029 at par plus accrued interest to the
fixed date for redemption. During fiscal year 2024 $45,625,000 of the 2019B original issuance was
tendered as part of the 2024A issuance.
31
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The 2019A Bonds are payable in annual installments in the years 2022 through 2048, inclusive, and shall
not be subject to optional redemption prior to maturity. The bonds maturing on or after July 1, 2028 shall
be subject to redemption at the option of the BWL in such order of maturity as the BWL shall determine,
and within a single maturity by lot, on any date on or after July 1, 2028 at par plus accrued interest to the
fixed date for redemption.
The 2017A Bonds are payable in annual installments in the years 2019 through 2027, inclusive, and shall
not be subject to optional redemption prior to maturity. The bonds, or portions of the bonds in multiples of
$5,000 maturing or subject to mandatory redemption in the years 2028 and thereafter, shall be subject to
redemption at the option of the BWL in such order of maturity as the BWL shall determine, and within a
single maturity by lot, on any date on or after July 1, 2027 at par plus accrued interest to the fixed date for
redemption.
The 2013A Bonds are payable in annual installments in the years 2014 to 2024, inclusive, and shall not
be subject to optional redemption prior to maturity. The bonds maturing on or after July 1, 2024 shall be
subject to redemption at the option of the BWL on or after July 1, 2023 as a whole or in part at any time
and by lot within a maturity at par plus accrued interest to the redemption date. During fiscal year 2024,
$4,330,000 of the 2013A original issuance was refunded as part of the 2024A issuance.
The Series 2011A Bonds are payable in annual installments in the years 2015 to 2022, inclusive, and
shall not be subject to optional redemption prior to maturity. The bonds maturing on or after July 1, 2022
shall be subject to redemption at the option of the BWL on or after July 1, 2021 as a whole or in part at
any time and by lot within a maturity at par plus interest accrued to the redemption date. These bonds
were part of an advanced refunding with the issuance of the 2019B Revenue bonds. The final maturity for
these bonds was on July 1, 2022.
Current Refunding
On January 31, 2024, BWL issued $364,625,000 in bonds (new bonds), which included a premium of
$41,845,754, at a rate of 5.00%to refund $4,364,100 (Principal & Interest) in outstanding 2013A
Bonds and $41,597,960 (Principal & Interest) in outstanding 2019B Bonds with an average rate of
4.3% and 3.25%, respectively. Of the principal amount issued, $39,625,000 went to refund the
aforementioned bonds and $325,000,000 was new money.
The cash flow requirements on the old bonds prior to the current refunding were$45,962,060 through
July 1, 2037. The cash flow requirements for the new bonds are $58,314,774 through July 1, 2054.
The current refunding resulted in an economic gain of$4,987,279.
The net proceeds were used to purchase U.S. government securities. Those securities were
deposited in an irrevocable trust with an escrow agent to provide for all future debt service payments
on the 2013A Bonds and a portion of the 2019B Bonds. As a result, the 2013A Bonds and a portion of
the 2019B Bonds are considered defeased and the liability for these bonds has been removed from
the Statement of Net Position.
32
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The long-term debt activity for the year ended June 30, 2024 is as follows:
Revenue Bonds
(Net of
Unamortized
Premiums) Other Notes Total
Beginning balance $ 802,300,266 $ 6,840,810 $ 809,141,076
Additions 406,470,754 - 406,470,754
Reductions (68,130,088) (819,635) (68,949,723)
Ending balance $ 1,140,640,932 $ 6,021,175 $ 1,146,662,107
Due with-in one year $ 13,890,000 $ 777,438 $ 14,667,438
The BWL has pledged substantially all revenue, net of operating expenses, to repay the revenue
bonds. Proceeds from the bonds provided financing for the construction of the utility plant. The bonds
are payable solely from the net revenues of the BWL. In fiscal year 2024, the remaining principal and
interest to be paid on the bonds total $1,935,516,206. During fiscal year 2024, net revenues of the
BWL were $106,854,384 compared to the annual debt requirements of$41,859,344. In fiscal year
2023, the remaining principal and interest to be paid on the bonds total $1,284,584,899. During fiscal
year 2023, net revenues of the BWL were$112,994,683 compared to the annual debt requirements
of$42,589,615.
The long-term debt activity for the year ended June 30, 2023 is as follows:
Revenue Bonds
(Net of
Unamortized
Premiums) Other Notes Total
Beginning balance $ 818,870,786 $ 7,649,348 $ 826,520,134
Additions - - -
Reductions (16,570,520) (808,538) (17,379,058)
Ending balance $ 802,300,266 $ 6,840,810 $ 809,141,076
Due with-in one year $ 13,410,000 $ 819,635 $ 14,229,635
6. Costs/Credits Recoverable in Future Years
Environmental Remediation
During the fiscal year ended June 30, 2006, the GASB 49 environmental remediation liability related
to a second landfill was approved for regulated entity accounting under GASB 62. The balance of the
regulatory asset at June 30, 2024 and 2023 was $0 and $4,069, respectively. The BWL reviews the
adequacy of its rates to recover its cost of service on an annual basis. During the year ended
June 30, 2009, regulatory accounting as per GASB 62 was authorized by the Board of
Commissioners to collect rates for all environmental remediation sites. The balance as of June 30,
2024 and 2023 for additional sites was $20,853,276 and $19,935,889 respectively.
33
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Recoverable Cost Adjustments
During the year ended June 30, 2005, the Board of Commissioners approved the use of regulatory
accounting as per GASB 62 in accounting for the BWL's power supply cost recovery (PSCR)
adjustment, power chemical adjustment(PCA), fuel cost adjustment(FCA)and chilled water fuel cost
adjustment (CWFCA). These affect the amount to be billed to retail electric, water, steam and chilled
water customers to reflect the difference between the BWL's actual material costs and the amounts
incorporated into rates. This resulted in recoverable assets of$26,154,048 and $33,810,383 at June
30, 2024 and 2023, respectively. This amount represents costs to be billed (credited)to customers in
future years because actual costs of providing utilities were higher(lower)than the costs incorporated
into the BWL's rates.
Renewable Energy Plan (REP) and Energy Optimization (EO)
During the year ended June 30, 2010, the Board of Commissioners approved the implementation of
regulatory accounting as per GASB 62 to account for Public Act 295 of 2008 (PA. 295). PA. 295 set
forth requirements for all Michigan utilities to meet the new renewable energy standards and
undertake energy optimization programs. As a municipally owned electric utility, the BWL was
required to file a proposed energy plan with the Michigan Public Service Commission (MPSC)and
this plan was approved on July 1, 2009. These changes will affect the amount to be billed to electric
customers. This resulted in deferred inflow of resources of$1,292,134 and $1,760,188 as of June 30,
2024 and 2023, respectively.
Chiller Plant
During the year ended June 30, 2010, the BWL chose to use regulatory accounting as per GASB 62
to recognize the contribution in aid of construction (CIAC)for the development of a new chilled water
plant. The remaining recoverable inflow of resources of$220,271 and $440,543 as of June 30, 2024
and 2023, respectively. The BWL will recognize this as revenue monthly over the life of the new
chilled water plant to offset depreciation expense.
Wise Road
During the year ended June 30, 2012, the BWL chose to use regulatory accounting as per GASB 62
to recognize the insurance proceeds for the damaged equipment at the Wise Road Water
Conditioning Plant (see Note 13). The remaining recoverable inflow of resources as of June 30, 2024
and 2023 was $4,831,242 and $5,813,867, respectively.
7. Transactions with the City of Lansing, Michigan
Operations
The BWL recognized revenue of$10,547,324 and $9,806,375 in 2024 and 2023, respectively, for
water, electric and steam services provided to the City. The BWL incurred expenses for sewerage
services purchased from the City of$2,213,195 and $764,394 in 2024 and 2023, respectively.
Additionally, the BWL bills and collects sewerage fees for the City. In connection with these services,
the BWL received sewerage collection fees of$1,333,054 and $1,182,244 in 2024 and 2023,
respectively, included in other income.
34
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Return on Equity
Effective July 1, 1992, the BWL entered into an agreement with the City to provide payment of a
return on equity in accordance with a formula based on net billed retail sales from its water, steam
heat and electric utilities for the preceding 12-month period ending May 31 of each year. Effective
March 1, 2002, the formula to calculate the amount owed to the City was modified to include
wholesale revenue generated from the BWL's electric, water, steam and chilled water utilities for the
preceding 12-month period ending May 31 of each year. Subject to the provisions of Act 94 Public
Acts of 1933, as amended, and the BWL's various bond covenants, this amount is payable to the City
in semi-annual installments. Effective July 1, 2020, the BWL and the City agreed to pay a flat amount
for fiscal years 2021 through 2022. In fiscal year 2023, a flat percentage of 6%was applied to
reported operating revenues, excluding inter-utility sales from providing retail water, electric, steam
and chilled water services. In fiscal year 2024, a flat percentage of 6% was applied to budgeted
operating revenues, excluding inter-utility sales from providing retail water, electric, steam and chilled
water services. Under terms of these agreements, the BWL paid to the City$26,028,591 and
$26,428,992 for 2024 and 2023, respectively, of operational cash flow in excess of debt service
requirements.
8. Retirement Plans
The BWL has three retirement plans. The BWL administers a tax-qualified, single-employer,
noncontributory, defined benefit public employee retirement pension plan (Defined Benefit Plan)and the
BWL has a tax-qualified, single-employer, noncontributory, defined contribution public employee
retirement plan (Defined Contribution Plan). The BWL also has a tax-qualified, single-employer, retiree
benefit plan to administer and fund retiree benefits (Retiree Benefit Plan).
Defined Benefit Plan
Plan Description -The BWL administers the Lansing Board of Water and Light Defined Benefit Plan
and Trust for Employees' Pensions (Defined Benefit Plan), a noncontributory single-employer defined
benefit pension plan for employees of the BWL. The benefit terms were established by the BWL and
may be amended by future BWL actions.
The Defined Benefit Plan issues a publicly available financial report that includes financial statements
and required supplementary information. That report may be obtained by writing to the Lansing Board
of Water and Light Defined Benefit Plan and Trust for Employees' Pensions, Attn: Retirement Plan
Committee, P.O. Box 13007, Lansing, Michigan 48901-3007.
Effective July 1, 1999, the Defined Benefit Plan was amended to include a medical benefit
component, in addition to the normal retirement benefits, to fund a portion of the postretirement
obligations for certain retirees and their beneficiaries. The funding of the medical benefit component
is limited to the amount of excess pension plan assets available for transfer, as determined by the
actuary. No medical benefits were paid by the Defined Benefit Plan during the years ended June 30,
2024 and 2023.
35
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Employees Covered by Benefit Terms-At February 29, 2024 and February 28, 2023 (the most
recent actuarial valuation for funding purposes), Defined Benefit Plan membership consisted of the
following:
2024 2023
Inactive plan members or beneficiaries currently receiving
benefits 255 265
Inactive plan members entitled to but not yet receiving benefits 1 1
Active plan members 3 3
Total 259 269
The Defined Benefit Plan, by resolution of the Board of Commissioners, was closed to employees
hired subsequent to December 31, 1996, and a defined contribution retirement savings plan was
established for employees hired after December 31, 1996. Effective December 1, 1997, all active
participants in this plan were required to make an irrevocable choice to either remain in this plan
(defined benefit)or move to the newly established defined contribution plan. Those participants who
elected to move to the defined contribution plan received lump-sum distributions from this plan that
were rolled into their accounts in the newly established defined contribution plan. Of the 760
employees who were required to make this election, 602 elected to convert their retirement benefits
to the newly established defined contribution plan. As a result of this action, effective December 1,
1997, the Board of Commissioners transferred $75,116,470 to the newly established defined
contribution plan, reflecting the plan participants' accumulated benefits as of said date.
Benefits Provided -The Defined Benefit Plan provides retirement, early retirement, disability,
termination and death benefits. The Plan provides for an annual benefit upon normal retirement age
equal to the product of the total number of years of credited service multiplied by a percentage equal
to 1.80% of the highest annual pay during the last 10 years of service, paid in equal monthly
installments.
Payments will either be nonincreasing or increase only as follows: (a) By an annual percentage
increase that does not exceed the annual percentage increase in a cost-of-living index that is based
on prices of all items and issued by the Bureau of Labor Statistics; (b)To the extent of the reduction
in the amount of the employee's payments to provide for a survivor benefit upon death, but only if the
beneficiary whose life was being used to determine the distribution period described in Subsection 8
dies or is no longer the employee's beneficiary pursuant to a qualified domestic relations order within
the meaning of Internal Revenue Code Section 414(p); (c)To provide cash refunds of employee
contributions upon the employee's death; or(d)To pay increased benefits that result from a plan
amendment.
Contributions -Article 9, Section 24 of the State of Michigan constitution requires that financial
benefits arising on account of employee service rendered in each year be funded during that year.
Accordingly, the BWL retains an independent, external actuary to determine the annual contribution.
The actuarially determined contribution is the estimated amount necessary to finance the costs of
benefits earned by plan members during the year, with an additional amount to finance any unfunded
accrued liability. There was no contribution required for the years ended June 30, 2023 and 2024.
Plan documents do not require participant contributions.
36
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Net Pension Asset-The components of the net pension asset of the BWL at June 30, 2024 and
June 30, 2023 were as follows (in thousands):
2024 2023
Total pension liability $ 42,054 $ 44,514
Plan fiduciary net pension 48,534 49,523
Total $ (6,480) $ (5,009)
Plan fiduciary net position, as a percentage of the total pension
liability 115.41 % 111.25 %
The BWL has chosen to use June 30, 2024 as its measurement date for fiscal year 2024. The
June 30, 2024 reported net pension asset was determined using a measure of the total pension
liability and the pension net position as of June 30, 2024. The June 30, 2024 total pension liability
was determined by an actuarial valuation as of February 29, 2024, which used update procedures to
roll forward the estimated liability to June 30, 2024.
The BWL has chosen to use June 30, 2023 as its measurement date for fiscal year 2023. The
June 30, 2023 reported net pension asset was determined using a measure of the total pension
liability and the pension net position as of June 30, 2023. The June 30, 2023 total pension liability
was determined by an actuarial valuation as of February 28, 2023, which used update procedures to
roll forward the estimated liability to June 30, 2023.
37
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Changes in the net pension asset during the measurement years were as follows:
In Thousands
Total Pension Plan Fiduciary Net Pension
Liability Net Position Liability(Asset)
Balance, June 30, 2022 $ 47,887 $ 50,659 $ (2,772)
Changes for the year:
Service cost 29 - 29
Interest 2,721 - 2,721
Differences between expected and actual
experience (981) - (981)
Changes in assumptions - - -
Net investment income - 4,134 (4,134)
Benefit payments, including refunds (5,142) (5,142) -
Administrative expenses - (127) 127
Miscellaneous other charges - - -
Net changes (3,373) (1,136) (2,237)
Balances, June 30, 2023 44,514 49,523 (5,009)
Changes for the year:
Service cost 31 - 31
Interest 2,523 - 2,523
Differences between expected and actual
experience (18) - (18)
Changes in assumptions - - -
Net investment income - 4,134 (4,134)
Benefit payments, including refunds (4,996) (4,996) -
Administrative expenses - (127) 127
Miscellaneous other charges - - -
Net changes (2,460) (989) (1,471)
Balance, June 30, 2024 $ 42,054 $ 48,534 $ (6,480)
Pension Expense and Deferred Outflows of Resources and Deferred Inflows of Resources
Related to Pensions - For the year ended June 30, 2024, the BWL recognized pension expense of
($39,352). At 2024, the BWL reported deferred outflows of resources and deferred inflows of
resources related to pensions from the following sources:
Deferred
Outflows of Deferred Inflows
Resources of Resources
Net difference between projected and actual earnings on
pension plan investments $ 204,912 $ -
38
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
For the year ended June 30, 2023, the BWL recognized pension expense of($653,301). At June 30,
2023, the BWL reported deferred outflows of resources and deferred inflows of resources related to
pensions from the following sources:
Deferred
Outflows of Deferred Inflows
Resources of Resources
Net difference between projected and actual earnings on
pension plan investments $ 1,636,061 $ -
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
pensions will be recognized in pension expense as follows:
Years Ending
June 30:
2025 $ (352,237)
2026 1,332,666
2027 512,769
2028 262,749
Total $ 204,912
Actuarial Assumptions-The total pension liability in the June 30, 2024 and June 30, 2023 actuarial
valuation was determined using the following actuarial assumptions, applied to all periods included in
the measurement:
2024 2023
Inflation 2.25 % 2.25 %
Salary increases 3.50 3.50
Investment rate of return 6.00 6.00
Mortality rates were based on the PUB-2010 General Mortality Table with MP-2021 Improvement
Scale for the June 30, 2024 valuation. The June 30, 2023 valuation used the PUB-2010 General
Employees Mortality Table and projected using the MP-2021 scale.
The most recent experience review was completed in 2014. Since the Defined Benefit Plan covered 3
active participants in fiscal year 2024 and fiscal year 2023, assumptions like termination, retirement
and disability have an immaterial impact on the results and have not been changed.
Discount Rate -The discount rate used to measure the total pension liability was 6.0% in 2024 and
2023. The projection of cash flows used to determine the discount rate assumed that BWL
contributions will be made at rates equal to the actuarially determined contribution rates.
Projected Cash Flows
Based on those assumptions, the Defined Benefit Plan's fiduciary net position was projected to be
available to make all projected future benefit payments of current active and inactive employees.
Therefore, the long-term expected rate of return on the Defined Benefit Plan investments was applied
to all periods of projected benefit payments to determine the total pension asset.
39
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The long-term expected rate of return on Defined Benefit Plan investments was determined using a
building-block method in which best-estimate ranges of expected future real rates of return (expected
returns, net of pension plan investment expense and inflation) are developed for each major 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. Best estimates of arithmetic real rates of return as of June 30, 2024 and 2023 for each major
asset class included in the Defined Benefit Plan's target asset allocation, as disclosed in the Defined
Benefit Plan's financial statements, are summarized in the following table:
2024 Long- 2023 Long-
Term Term
Expected Expected
Real Rate of Real Rate of
Asset Class Return Return
Core bonds 2.56 % 2.58 %
Multi-sector 3.50 3.54
Liquid absolute return 3.25 3.25
U.S. large cap equity 7.15 7.17
U.S. small cap equity 8.58 8.61
Non-U.S. equity 8.26 8.29
Core real estate 6.49 6.54
Sensitivity of the Net Pension Asset to Changes in the Discount Rate -The following presents
the net pension asset of the BWL at June 30, 2024, calculated using the discount rate of 6.00%, as
well as what the BWL's net pension asset would be if it were calculated using a discount rate that is
1-percentage point lower(5.00%) or 1-percentage-point higher(7.00%)than the current rate:
Current
1% Decrease Discount Rate 1% Increase
(5.00%) (6.00%) (7.00%)
Net pension liability (asset)of the BWL $ (2,557,349) $ (6,479,599) $ (8,368,884)
The following presents the net pension asset of the BWL at June 30, 2023, calculated using the
discount rate of 6.00%, as well as what the BWL's net pension asset would be if it were calculated
using a discount rate that is 1-percentage-point lower(5.00%) or 1-percentage-point higher(7.5%)
than the current rate:
Current
1% Decrease Discount Rate 1% Increase
(5.00%) (6.00%) (7.00%)
Net pension liability (asset)of the BWL $ (836,993) $ (5,009,098) $ (7,108,925)
Defined Benefit Plan Fiduciary Net Position - Detailed information about the Defined Benefit Plan's
fiduciary net position is available in the separately issued financial report. For the purpose of
measuring the net pension asset, deferred outflows of resources and deferred inflows or resources
related to pension and pension expense, information about the Defined Benefit Plan's fiduciary net
position and addition to/deduction from fiduciary net position have been determined on the same
basis as they are reported by the Defined Benefit Plan. The Defined Benefit Plan uses the economic
resources measurement focus and the full accrual basis of accounting. Investments are stated at fair
value. Contribution revenue is recorded as contributions are due, pursuant to legal requirements.
Benefit payments and refunds of employee contributions are recognized as expense when due and
payable in accordance with the benefit terms.
40
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Defined Contribution Plan
The Lansing Board of Water and Light Defined Contribution Plan and Trust 1 (Defined Contribution
Plan)was established by the BWL in 1997 under Section 5-203.10 of the City Charter. The Defined
Contribution Plan covers substantially all full-time employees hired after December 31, 1996. In
addition, 602 employees hired before January 1, 1997 elected to convert their retirement benefits
from the Defined Benefit Plan effective December 1, 1997.
The Defined Contribution Plan issues a publicly available financial report. That report may be
obtained by writing to the Lansing Board of Water and Light Defined Contribution Plan and Trust 1,
Attn: Retirement Plan Committee, P.O. Box 13007, Lansing, Michigan 48901-3007.
The Defined Contribution Plan operates as a money purchase pension plan and meets the
requirements of Sections 401(a) and 501(a)of the IRC of 1986, as amended from time to time.
For employees hired before January 1, 1997, the BWL is required to contribute 15.0% of the
employees' compensation. For employees hired after January 1, 1997, the BWL is required to
contribute 9.5% of the employees' compensation. In addition, the BWL is required to contribute 3.0%
of the employees'compensation for all employees who are not eligible to receive overtime pay and
0.5% of the employees' compensation for all nonbargaining employees. No participant contributions
are required.
During the years ended June 30, 2024 and 2023, the BWL contributed $9,435,006 and $11,648,704,
respectively. The BWL's contributions are recognized in the period that the contributions are due.
Basis of Accounting -The Defined Contribution Plan's financial statements are prepared using the
accrual method of accounting in accordance with Governmental Accounting Standards Board (GASB)
Statement No. 67, Financial Reporting for Pension Plans.
Valuation of Investments and Income Recognition -The Defined Contribution Plan investments
are stated at fair market value based on closing sales prices reported on recognized securities
exchanges on the last business day of the year, or, for listed securities having no sales reported and
for unlisted securities, upon the last reported bid prices on that date. The mutual funds are valued at
quoted market prices, which represent the net asset values of shares held by the Defined
Contribution Plan at year end.
Purchases and sales of investments are recorded on a trade-date basis. Interest income is accrued
when earned. Dividend income is recorded on the ex-dividend date.
Regulatory Status -The Defined Contribution Plan is not subject to the reporting requirements of the
Employee Retirement Income Security Act of 1974 (ERISA)as it has been established for the benefit
of a governmental unit.
Retiree Benefit Plan (OPEB)
Plan Description -The Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing
Board of Water and Light (Retiree Benefit Plan) is a single-employer retiree benefit plan. The Plan
provides medical, dental and life insurance benefits in accordance with Section 5-203 of the City
Charter. Substantially all of the BWL's employees may become eligible for healthcare benefits and life
insurance benefits if they reach normal retirement age while actively employed full-time by working for
the BWL. There were 755 participants eligible to receive benefits at June 30, 2024 and 753
participants eligible at June 30, 2023.
41
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
In October 1999, the BWL formed a Voluntary Employee Benefit Administration (VEBA)trust for the
purpose of accumulating assets sufficient to fund retiree healthcare insurance costs in future years.
During the years ended June 30, 2024 and 2023, the cost to BWL of maintaining the Retiree Benefit
Plan and Trust was$65,286 and $68,076, of which respectively, was incurred as direct costs of
benefits.
The Retiree Benefit Plan issues a publicly available financial report. That report may be obtained by
writing to the Post-Retirement Benefit Plan and Trust for Eligible Employees of Lansing Board of
Water and Light, Attn: Retirement Plan Committee, P.O. Box 13007, Lansing, Michigan 48901-3007.
Benefits Provided -The Plan provides medical, dental and life insurance benefits in accordance with
Section 5-203 of the City Charter. Benefits are provided through third-party insurers carriers. The plan
coverage includes payment of deductibles and co-pays for health services to all employees hired
before January 1, 2009. All employees hired after that date must pay a percentage of their health
premium.
Employees covered by benefit terms. At June 30, 2024, the following employees were covered by the
benefit terms:
Active plan members (not eligible to receive benefits) 778
Disabled participants 67
Retired participants 532
Surviving spouses 156
Total 1,533
At June 30, 2023, the following employees were covered by the benefit terms:
Active plan members (not eligible to receive benefits) 731
Disabled participants 69
Retired participants 534
Surviving spouses 150
Total 1,484
Contributions - Section 5-203 of the City Charter grants the authority to establish and amend the
contribution requirement to the BWL. The BWL establishes its minimum contribution based on an
actuarially determined rate. For the years ended June 30, 2024 and 2023, the actual contribution
rates of the BWL were 0.08% and 0.1% of covered-employee payroll, respectively.
Net OPEB Liability(Asset) -The BWL has chosen to use June 30, 2024 as its measurement date
for fiscal year 2024. The June 30, 2024 reported net OPEB liability(asset)was determined using a
measure of the total OPEB liability and the OPEB net position as of June 30, 2024. The June 30,
2024 total OPEB liability was determined by an actuarial valuation as of February 29, 2024, which
used update procedures to roll forward the estimated liability to June 30, 2024.
The BWL has chosen to use June 30, 2023 as its measurement date for fiscal year 2023. The
June 30, 2023 reported net OPEB liability (asset)was determined using a measure of the total OPEB
liability and the OPEB net position as of June 30, 2023. The June 30, 2023 total OPEB liability was
determined by an actuarial valuation as of February 28, 2023, which used update procedures to roll
forward the estimated liability to June 30, 2023.
42
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Actuarial Assumptions-The total OPEB liability in the June 30, 2024 and 2023 actuarial valuations
were determined using the following actuarial assumptions, applied to all periods included in the
measurements, unless otherwise specified:
Inflation: 2.25%
Payroll Growth: 9.0%growth at age 25 and decreases to 5.3%for ages
60+. This percentage includes general wage inflation
and merit/productivity increases.
Investment rate of return: 6.5%, net of OPEB plan investment expense, including
inflation
Healthcare cost trend rates: Medical/RX
FYE Pre-65 Post-65 Part B Dental
2024 7.25% 5.50% 3.75% 4.25%
2025 7.00 5.25 4.00 4.00
2026 6.75 5.00 4.25 4.00
2027 6.50 4.75 4.50 4.00
2028 6.25 4.50 4.75 4.00
2029 6.00 4.50 5.00 4.00
2030 5.75 4.50 5.00 4.00
2031 5.50 4.50 5.00 4.00
2032 5.25 4.50 5.00 4.00
2033 5.00 4.50 5.00 4.00
2034 4.75 4.50 5.00 4.00
2035+ 4.50 4.50 5.00 4.00
2024 and 2023 Mortality rates were based on the PUBH-2010 General Employee Mortality Table fully
generational using Scale MP-2021.
Best actuarial practices call for a periodic assumption review and BWL completed an experience
study in 2022.
BWL's policy in regard to the allocation of invested assets is established and may be amended by the
BWL by a majority vote of the Board of Commissioners. It is the policy of the BWL to pursue an
investment strategy that reduces risk through the prudent diversification of the portfolio across a
broad selection of distinct asset classes. The following was the adopted asset allocation policy as of
June 30, 2024 and 2023:
2024 Target 2023 Target
Asset Class Allocation Allocation
Core bonds 15.00 % 15.00 %
Multi-sector 5.00 5.00
Liquid absolute return 5.00 5.00
U.S. large cap equity 25.00 30.00
U.S. small cap equity 15.00 10.00
Non-U.S. equity 20.00 20.00
Core real estate 8.00 8.00
Value add real estate 7.00 7.00
43
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The long-term expected rate of return on OPEB plan investments was determined using a building-
block method in which best-estimate ranges of expected future real rates of return (expected returns,
net of OPEB plan investment expense and inflation) are developed for each major 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.
The best estimates of arithmetic real rates of return for each major asset class as of June 30, 2024
and June 30, 2023 are summarized in the following table:
2024 Long- 2023 Long-
Term Term
Expected Expected
Real Rate of Real Rate of
Asset Class Return Return
Core bonds 2.56 % 2.58 %
Multi-sector 3.50 3.54
Liquid absolute return 3.25 3.25
U.S. large cap equity 7.15 7.17
U.S. small cap equity 8.58 8.61
Non-U.S. equity 8.26 8.29
Core real estate 6.49 6.54
Value add real estate 7.99 8.04
For the June 30, 2024 valuation, the long-term expected rate of return was 6.50%. The discount rate
used when the OPEB plan investments are insufficient to pay for future benefit payments was
selected from the range of indices as shown in the table below, where the range is given as the
spread between the lowest and highest rate shown. The final equivalent single discount rate used for
the June 30, 2024 valuation was 6.50% with the expectation that BWL will continue contributing the
actuarially determined contribution and/or paying for the pay-go cost.
Long-Term
Expected
Real Rate of
Asset Class Return
Fidelity 20-year GO Municipal Bond Index 3.97 %
Actual Discount Rate Used 6.50
44
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Discount Rate -The discount rate used to measure the total OPEB liability was 6.50%for June 30,
2024 and 2023. The projection of cash flows used to determine the discount rate assumed that BWL
contributions will be made at rates equal to the actuarially determined contribution rates. Based on
those assumptions, the OPEB plan's fiduciary net position was projected to be available to make all
projected OPEB payments for current active and inactive employees. Therefore, the long-term
expected rate of return on OPEB plan investments was applied to all periods of projected benefit
payments to determine the total OPEB liability.
In Thousands
Total Pension Plan Fiduciary Net OPEB
Liability Net Position Liability(Asset)
(a) (b) (a)-(b)
Balance, June 30, 2023 $ 163,829 $ 238,471 $ (74,642)
Changes for the year:
Service cost 4,201 - 4,201
Interest 10,355 - 10,355
Change in benefit terms - - -
Differences between expected and actual
experience (801) - (801)
Changes in assumptions - - -
Contributions, employer - 65 (65)
Contributions, employee - - -
Net investment income - 24,300 (24,300)
Benefit payments (9,181) (9,181) -
Administrative expenses - (259) 259
Net changes 4,575 14,925 (10,350)
Balance, June 30, 2024 $ 168,403 $ 253,396 $ (84,993)
In Thousands
Total Pension Plan Fiduciary Net OPEB
Liability Net Position Liability(Asset)
(a) (b) (a)-(b)
Balance, June 30, 2022 $ 156,408 $ 228,141 $ (71,733)
Changes for the year:
Service cost 3,452 - 3,452
Interest 9,827 - 9,827
Change in benefit terms - - -
Differences between expected and actual
experience 4,770 - 4,770
Changes in assumptions - - -
Contributions, employer - 68 (68)
Contributions, employee - - -
Net investment income - 21,226 (21,226)
Benefit payments (10,628) (10,628) -
Administrative expenses - (336) 336
Net changes 7,421 10,330 (2,909)
Balance, June 30, 2023 $ 163,829 $ 238,471 $ (74,642)
45
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate-The following
presents the net OPEB liability (asset)of BWL, as well as what BWL's net OPEB liability (asset)
would be if it were calculated using a discount rate that is 1 percentage point lower(5.5%)or
1-percentage-point higher(7.5%)than the current discount rate (6.5%) as of June 30, 2024:
June 30, 2024
Current
1% Decrease Discount Rate 1% Increase
NET OPEB liability (asset) $ (65,718,636) $ (84,992,538) $ (101,207,086)
Sensitivity of the Net OPEB Liability (Asset) to Changes in the Discount Rate-The following
presents the net OPEB liability (asset)of BWL, as well as what BWL's net OPEB liability (asset)
would be if it were calculated using a discount rate that is 1 percentage point lower(5.5%)or
1-percentage-point higher(7.5%)than the current discount rate (6.5%) as of June 30, 2023:
June 30, 2023
Current
1% Decrease Discount Rate 1% Increase
NET OPEB liability (asset) $ (56,244,193) $ (74,641,660) $ (90,173,785)
Sensitivity of the Net OPEB Liability(Asset) to Changes in the Healthcare Cost Trend Rates -
The following presents the net OPEB liability (asset)of BWL, as well as what BWL's net OPEB
liability (asset)would be if it were calculated using healthcare cost trend rates that are 1-percentage-
point lower or 1-percentage-point higher than the current healthcare cost trend rates as of June 30,
2024:
June 30, 2024
Healthcare Cost
1% Decrease Trend Rates 1% Increase
Net OPEB liability (asset) $ (102,871,148) $ (84,992,538) $ (63,323,723)
Sensitivity of the Net OPEB Liability(Asset) to Changes in the Healthcare Cost Trent Rates -
The following presents the net OPEB liability (asset)of BWL, as well as what BWL's net OPEB
liability (asset)would be if it were calculated using healthcare cost trend rates that are 1-percentage-
point lower or 1-percentage-point higher than the current healthcare cost trend rates as of June 30,
2023:
June 30, 2023
Healthcare Cost
1% Decrease Trend Rates 1% Increase
Net OPEB liability (asset) $ (91,718,544) $ (74,641,660) $ (53,961,790)
46
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
OPEB Plan Fiduciary Net Position - Detailed information about the OPEB plan's fiduciary net
position is available in the separately issued Post-Retirement Benefit Plan and Trust for Eligible
Employees of Lansing Board of Water and Light June 30, 2024 GASB 74/75 Report, issued August 2,
2024.
For the year ended June 30, 2024, the Plan recognized OPEB expense of($11,728,112). At June 30,
2024, the Plan reported deferred outflows of resources and deferred inflows of resources related to
OPEB from the following sources:
Deferred
Outflows of Deferred Inflows
Resources of Resources
Differences between expected and actual experience $ 3,256,591 $ 6,079,101
Changes of assumptions 6,625,332 4,762,702
Net difference between projected and actual earnings on
OPEB plan investments - 3,792,920
Total $ 9,881,923 $ 14,634,723
Amounts reported as deferred outflows of resources and deferred inflows of resources related to
OPEB will be recognized in OPEB expense as follows:
Years ending June 30:
2025 $ (6,222,418)
2026 4,370,313
2027 (1,906,255)
2028 (1,028,662)
2029 109,512
Thereafter (75,290)
For the year ended June 30, 2023, the Plan recognized OPEB expense of$(10,727,623). At June 30,
2023, the Plan reported deferred outflows of resources and deferred inflows of resources related to
OPEB from the following sources:
Deferred
Outflows of Deferred Inflows
Resources of Resources
Differences between expected and actual experience $ 4,013,128 $ 9,327,630
Changes of assumptions 9,452,248 14,780,716
Net difference between projected and actual earnings on
OPEB plan investments 4,447,650 -
Total $ 17,913,026 $ 24,108,346
Other Post-Retirement Benefits
The BWL offers its employees a deferred compensation plan, created in accordance with IRC 457.
The BWL makes contributions of$1,000 annually for the employees as of January 1 of each year,
during the month of January. The BWL also will match employee contributions at one dollar for every
one dollar up to $1,500 in a calendar year.
47
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
9. Commitments and Contingencies
At June 30, 2024 and 2023, the BWL has two letters of credit in the amounts of$817,000 issued to the
Michigan Department of Natural Resources. The letters of credit were issued to satisfy requirements of
the Michigan Department of Natural Resources to provide financial assurance to the State of Michigan for
the cost of closure and post closure monitoring and maintenance of a landfill site operated by the BWL.
Through monitoring tests performed on the landfill sites operated by the BWL, it has been discovered that
the sites are contaminating the groundwater. The contamination does not pose a significant health risk
but does lower the quality of the groundwater. The BWL received landfill closure approval as well as
interim remediation approval. The BWL has estimated the total cost for remediation, including closure and
post closure cost of the landfills, and has recorded a liability of$5,389,412 and $5,578,615 for the years
ended June 30, 2024 and 2023, respectively. Certain remediation activities have commenced and are in
progress. The landfill sites are no longer receiving waste products. Landfill closure and post closure
requirements are associated with the Michigan Department of Environmental Quality. Annual post closure
costs of these landfill sites are not expected to exceed $380,000 annually and are included in the liability
above. Estimates will be revised as approvals are received from the State. In accordance with the
regulatory basis of accounting as per GASB 62 (see Note 1), the BWL recorded a corresponding
regulatory asset (see Note 6).
The BWL is subject to various laws and regulations with respect to environmental matters such as air and
water quality, soil contamination, solid waste disposal, handling of hazardous materials and other similar
matters. Compliance with these various laws and regulations could result in substantial expenditures. The
BWL has established a Designated Purpose Fund (see Note 1), of which one of the purposes of the fund
is to meet extraordinary expenditures resulting from responsibilities under environmental laws and
regulations. Management believes that all known or expected responsibilities to these various laws and
regulations by the BWL will be sufficiently covered by the Designated Purpose Fund and the
environmental remediation liability.
The BWL is involved in various other legal actions which have arisen in the normal course of business.
Such actions are usually brought for claims in excess of possible settlement or awards, if any, that may
result. After taking into consideration legal counsel's evaluation of pending actions, management has
recorded an adequate reserve as of June 30, 2024 and 2023 in regard to specific pending legal cases.
Construction in progress consists of projects for expansion or additions to the utility plant. The estimated
additional cost to complete various projects is approximately$382,841,704 and $213,216,141 at June 30,
2024 and 2023, respectively. These projects will be funded through operational cash flow, revenue bonds
and grant funding, including the project funds reported as other assets.
10. Power Supply Purchase
In 1983, the BWL entered into power supply and project support contracts with MPPA, of which the BWL
is a member. Under the agreement, the BWL has the ability to purchase power from MPPA, will sell
power to MPPA at an agreed-upon rate, and will purchase 64.29% of the energy generated by MPPA's
37.22% ownership in Detroit Edison's Belle River Plant(Belle River), which became operational in August
1984.
48
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
Under the terms of its contract, the BWL must make minimum annual payments equal to its share of
capital and its share of the fixed operating costs of Belle River. The estimated required payments
presented below assume no early calls or refinancing of existing revenue bonds and a 3.0% annual
inflation of fixed operating costs, which include expected major maintenance projects.
Estimated Fixed Total
Years Capital Operating Costs Required
2025 $ 20,849,247 $ 19,142,455 $ 39,991,702
2026 6,017,544 15,981,377 21,998,921
2027 3,420,228 13,045,844 16,466,072
2028 2,725,896 14,235,195 16,961,091
2029 642,900 14,991,454 15,634,354
In addition to the above required payments, the BWL must pay for fuel, other operating costs and
transmission costs related to any kilowatt hours (KWHs) purchased under these contracts.
The BWL recognized expenses for 2024 and 2023 of$41,402,193 and $53,183,185, respectively, to
purchase power under the terms of this contract. The price of this power was calculated on a basis, as
specified in the contracts, to enable MPPA to recover its production, transmission and capital costs.
11. Estimated Liability for Excess Earnings on Water Supply and Electric Utility System Revenue
Bonds
In accordance with Section 148(f)(2) of the IRC of 1986, as amended, the BWL is required on each
anniversary date (July 1)of the Water Supply, Electric Utility and Steam Utility System Revenue Bonds,
Series 2013A, 2017A, 2019A, 2021A, 2021 B and 2024A to compute amounts representing the
cumulative excess earnings on such bonds. That amount essentially represents a defined portion of any
excess of interest earned on funds borrowed over the interest cost of the tax-exempt borrowings.
Expense is charged (credited)annually in an amount equal to the estimated increase (decrease) in the
cumulative excess earnings for the year. On every fifth anniversary date and upon final maturity of the
bonds, the BWL is required to remit to the Internal Revenue Service the amount of any cumulative excess
earnings computed on the date of such maturity plus an amount equal to estimated interest earned on
previous years' segregated funds. The estimated liability for excess earnings was$0 at 2024 and 2023. In
accordance with the requirements of the bond indenture, the BWL is required to set aside any current
year additions to this estimated liability in a rebate fund within 60 days of the anniversary date of the
bonds.
12. Risk Management and Insurance
The BWL is exposed to various risks of loss related to property loss, torts, errors and omissions and
employee injuries (workers' compensation), as well as medical benefits provided to employees. The BWL
has purchased commercial insurance for certain general liability, business auto, excess liability, property
and boiler and machinery, public officials and employee liability claims, specific excess health insurance
claims and specific excess workers' compensation claims, subject to policy terms, limits, limitations and
deductibles. The BWL is self-insured for most workers' compensation and health insurance claims.
Settled claims relating to the commercial insurance have not exceeded the amount of insurance coverage
in any of the past three fiscal years.
49
Board of Water & Light - City of Lansing, Michigan
Notes to Financial Statements
June 30, 2024 and 2023
The BWL estimates the liability for self-insured workers' compensation and health insurance claims that
have been incurred through the end of the fiscal year, including claims that have been reported as well as
those that have not yet been reported. Changes in the estimated liability for the past three fiscal years
were as follows:
Workers'Compensation Health Insurance
2024 2023 2022 2024 2023 2022
Unpaid claims,beginning $ 2,200,000 $ 2,200,000 $ 2,200,000 $ 1,686,723 $ 1,773,595 $ 1,334,297
Incurred claims,including
claims incurred but not
reported 49,474 24,127 75,737 23,176,317 20,178,663 16,793,719
Claim payments (49,474) (24,127) (75,737) (22,969,689) (20,265,535) (16,354,421)
Unpaid claims,
ending $ 2,200,000 $ 2,200,000 $ 2,200,000 $ 1,893,351 $ 1,686,723 $ 1,773,595
The liability for health insurance is included with accounts payable on the statement of net position.
13. Upcoming Pronouncements
GASB has approved Statement No. 101, Compensated Absences, Statement No. 102, Certain Risk
Disclosures and Statement No. 103, Financial Reporting Model Improvements. When they become
effective, application of these standards may restate portions of these financial statements.
14. Subsequent Events
The Board evaluated subsequent events through October 7, 2024, the date that the financial statements
were available to be issued, for events requiring recording or disclosure in the financial statements.
50
REQUIRED SUPPLEMENTARY INFORMATION
Lansing Board of Water and Light
Defined Benefit Plan and Trust for Employees'Pensions
Required Supplementary Information(Unaudited)
Schedule of Changes in the BWL's
Net Pension Asset and Related Ratios
Last Ten Fiscal Years
(In Thousands)
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Total Pension Liability
Service cost $ 31 $ 29 $ 26 $ 26 $ 42 $ 60 $ 50 $ 113 $ 223 $ 274
Interest 2,523 2,721 2,974 3,212 3,566 3,691 4,031 4,317 4,625 4,919
Changes in benefit terms - - - - - - - - - -
Differences between expected and actual experience (18) (981) 179 (968) (919) (743) (230) (383) 299 (1,093)
Changes in assumptions - - 1,730 (366) 1,555 1,210 1,419 (857) (1,468)
Benefit payments,including refunds (4,996) (5,142) (5,466) (5,658) (5,872) (6,143) (6,414) (7,473) (7,896) (8,046)
Net Change in Total Pension Liability (2,460) (3,373) (557) (3,754) (1,628) (1,925) (1,144) (4,283) (4,217) (3,946)
Total Pension Liability,Beginning 44,514 47,887 48,444 52,198 53,826 55,751 56,895 61,178 65,395 69,341
Total Pension Liability,Ending 42,054 44,514 47,887 48,444 52,198 53,826 55,751 56,895 61,178 65,395
Plan Net Position
Contributions,employer - - - - - - - - - -
Contributions,member - - - - - - - - -
Net investment income 4,134 4,134 (5,399) 11,853 1,658 4,381 3,112 8,272 47 1,771
Administrative expenses (128) (127) (134) (123) (145) (183) (255) (317) (388) (576)
Benefit payments,including refunds (4,996) (5,142) (5,466) (5,658) (5,872) (6,143) (6,414) (7,473) (7,896) (8,045)
Other (477) -
Net change in Net Position Held in Trust (989) (1,136) (10,999) 6,072 (4,836) (1,945) (3,557) 482 (8,237) (6,850)
Net Position Restricted for Pensions,Beginning 49,523 50,659 61,658 55,586 60,422 62,367 65,924 65,442 73,679 80,529
Net Position Restricted for Pensions,Ending 48,534 49,523 50,659 61,658 55,586 60,422 62,367 65,924 65,442 73,679
BWL Net Pension Asset,Ending $ (6,480) $ (5,009) $ (2,772) $ (13,214) $ (3,388) $ (6,596) $ (6,616) $ (9,029) $ (4,264) $ (8,284)
Plan Net Position as a%of Total Pension Liability 115% 111% 106% 127% 106% 112% 112% 116% 107% 113%
Covered Employee Payroll $ 262 $ 248 $ 238 $ 237 $ 240 $ 406 $ 603 $ 586 $ 772 $ 1,018
BWL's Net Pension Asset as a%of Covered Employee Payroll (2,473%) (2,020%) (1,165%) (5,576%) (1,412%) (1,625%) (1,097%) (1,541%) (552%) (814%)
See notes to required supplementary information
51
Lansing Board of Water and Light
Defined Benefit Plan and Trust for Employees'Pensions
Required Supplementary Information(Unaudited)
Schedule of Employer Contributions
Last Ten Fiscal Years
(In Thousands)
2024 2023 2022 2021 2020 2019 2018 2017 2016 2015
Actuarially determined contribution $ $ $ $ $ $ $ $ $ $
Contributions in relation to the actuarially determined contribution
Contribution Deficiency(Excess)
Covered Employee Payroll $ 262 $ 248 $ 238 $ 237 $ 240 $ 406 $ 603 $ 586 $ 772 $ 1,018
Contributions as a Percentage of Covered Employee Payroll 0% 0% 0% 0% 0% 0% 0% 0% 0% 0%
See notes to required supplementary information
52
Post-Retirement Benefit Plan and Trust for
Eligible Employees of Lansing Board of Water and Light
Required Supplemental Information(Unaudited)
Schedule of Changes in BWL's
Net OPEB Liability(Asset)and Related Ratios
Last Ten Fiscal Years*
(In Thousands)
2024 2023 2022 2021 2020 2019 2018 2017
Total OPEB Liability
Service cost $ 4,201 $ 3,452 $ 3,299 $ 3,396 $ 3,245 $ 4,403 $ 4,827 $ 3,130
Interest 10,355 9,827 9,871 10,535 10,804 14,920 15,039 14,226
Changes in benefit terms - - - - - (415) - -
Differences between expected and actual experience (801) 4,770 (1,084) (8,794) (6,093) (5,231) (9,880) 5,281
Changes in assumptions - - 10,173 (3,752) 7,254 (59,336) (1,728) (2,027)
Benefit payments,including refunds (9,181) (10,628) (13,493) (8,344) (9,157) (9,278) (10,395) (9,574)
Net Change in Total OPEB Liability 4,574 7,421 8,766 (6,959) 6,053 (54,937) (2,137) 11,036
Total OPEB Liability,Beginning 163,829 156,410 147,644 154,603 148,550 203,487 205,624 194,588
Total OPEB Liability,Ending 168,403 163,831 156,410 147,644 154,603 148,550 203,487 205,624
Trust Net Position
Contributions,employer 65 68 13,493 8,344 9,157 9,278 10,395 9,574
Contributions,member - - - - - - - -
Net investment income 24,300 21,226 (19,247) 49,387 4,158 11,688 11,039 18,040
Administrative expenses (259) (336) (354) (449) (512) (569) (634) (705)
Benefit payments,including refunds (9,181) (10,628) (13,493) (8,344) (9,157) (9,278) (10,395) (9,574)
Other - - - -
Net change in Net Position Held in Trust 14,925 10,330 (19,601) 48,938 3,646 11,119 10,405 17,335
Trust Fiduciary Net Position,Beginning 238,471 228,142 247,743 198,805 195,159 184,040 173,635 156,300
Trust Fiduciary Net Position,Ending 253,396 238,472 228,142 247,743 198,805 195,159 184,040 173,635
BWL Net OPEB Liability(Asset),Ending $ (84,993) $ (74,641) $ (71,732) $ (100,099) $ (44,202) $ (46,609) $ 19,447 $ 31,989
Trust Fiduciary Net Position as a%of Total OPEB Liability(Asset) 150.47% 145.56% 145.86% 167.80% 128.59% 131.38% 90.44% 84.44%
Covered Employee Payroll $ 77,109 $ 69,744 $ 62,976 $ 60,269 $ 58,198 $ 56,785 $ 55,650 $ 54,383
BWL's Net OPEB Liability(Asset)as a%of Covered Employee Payroll (110.22%) (107.02%) (113.90%) (166.09%) (75.95%) (82.08%) 34.95% 58.82%
`GASB Statement No.74 was implemented as of June 30,2017. Information from 2015-2016 is not available and this schedule will be presented on a prospective basis.
See notes to required supplementary information
53
Post-Retirement Benefit Plan and Trust for
Eligible Employees of Lansing Board of Water and Light
Required Supplemental Information (Unaudited)
Schedule of Employer Contributions
Last Ten Fiscal Years
(In Thousands)
Employer Contributions Difference of Percentage of
Required to Covered Actual
Fiscal Year Actual Employee Contributions to
Ended Required Actual Contributions Payroll Covered Payroll
6/30/2015 $ 5,762 $ 9,671 $ 3,909 $ 50,885 19%
6/30/2016 5,788 9,423 3,635 53,893 17%
6/30/2017 7,508 9,574 2,066 54,383 18%
6/30/2018 7,535 10,395 2,860 55,650 19%
6/30/2019 7,031 9,278 2,247 56,785 16%
6/30/2020 - 9,157 9,157 58,198 16%
6/30/2021 220 8,344 8,124 60,269 14%
6/30/2022 - 13,493 13,493 62,976 21%
6/30/2023 - 68 68 69,744 0%
6/30/2024 - 65 65 77,109 0%
See notes to required supplementary information
54
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
1. Defined Benefit Plan
Actuarial valuation information relative to the determination of contributions:
Valuation date June 30, 2024, based on roll-forward of February 29, 2024
valuation
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age method
Amortization method Level dollar over a 15-year period
Remaining amortization period 15 years
Asset valuation method Market value of the assets
Inflation 2.25%
Salary increases 3.5% per year
Investment rate of return 6.0% per year compounded annually
Mortality PUB-2010 General Mortality Table with MP-2021
Improvement Scale
Changes to assumptions: No changes in assumptions.
Actuarial valuation information relative to the determination of contributions:
Valuation date June 30, 2023, based on roll-forward of February 28, 2023
valuation
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age method
Amortization method Level dollar over a 15-year period
Remaining amortization period 15 years
Asset valuation method Market value of the assets
Inflation 2.25%
Salary increases 3.5% per year
Investment rate of return 6.0% per year compounded annually
Mortality PUB-2010 General Mortality Table with MP-2021
Improvement Scale
Changes to assumptions: No changes in assumptions.
55
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
Significant Changes
June 30, 2024
• Difference between actual and expected experience-The$18.1 K actuarial gain on the Total
Pension Liability for the fiscal year ending June 30, 2024 is primarily attributable to favorable
demographic experience.
• Assumption change— None.
June 30, 2023
• Difference between actual and expected experience-The$981 K actuarial gain on the Total
Pension Liability for the fiscal year ending June 30, 2023 is primarily attributable to participant
deaths.
• Assumption change— None.
June 30, 2022
• Difference between actual and expected experience-The $179K actuarial gain on the Total
Pension Liability for the fiscal year ending June 30, 2022 is primarily attributable to the
difference between actual experience and demographic assumptions.
• Assumption change-The plan experienced a $1.73MM actuarial loss due to the change in
the mortality improvement scale and the decrease in the discount rate from 6.50% to 6.00%.
Updating the mortality improvement scale to the MP-2021 scale resulted in a $120K actuarial
loss and decreasing the discount rate resulted in a $1.61 MM actuarial loss. The combination
of these two changes resulted in an overall actuarial loss of$1.73MM.
June 30, 2021
• Difference between actual and expected experience-The $968K actuarial gain on the Total
Pension Liability for the fiscal year ending June 30, 2021 is primarily attributable to participant
deaths.
• Assumption change-The plan experienced a $366K actuarial gain due to the change in the
mortality improvement scale.
June 30, 2020
• Difference between actual and expected experience-The $.92MM actuarial gain on the Total
Pension Liability for the fiscal year ending June 30, 2020 is primarily attributable to participant
deaths.
• Assumption change-The plan experienced a $1.55MM actuarial loss due to the change in
the mortality improvement scale and the decrease the discount rate from 7.00%to 6.50%.
Updating the mortality improvement scale to the MP-2019 scale resulted in a $.22MM
actuarial gain and decreasing the discount rate resulted in a $1.77MM actuarial loss. The
combination of these two changes resulted in an overall actuarial loss of$1.55MM.
56
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
June 30, 2019
• Difference between actual and expected experience-The$.74MM gain on the Total Pension
Liability for the fiscal year ending June 30, 2019 is primarily attributable to participant deaths.
• Assumption change -The plan experienced a $1.21 MM loss due to the change of the
mortality assumption from the RP-2014 Total Dataset Mortality adjusted to 2006 and
projected generationally using the MP-2017 improvement scale to the PUB-2010 General
Employees Mortality, projected generationally using the MP-2018 improvement scale.
June 30, 2018
• Difference between actual and expected experience-The $230,000 gain on the Total
Pension Liability for the fiscal year ending June 30, 2018 is primarily attributable to participant
deaths.
• Assumption change-Assumptions for the discount rate and expected return on assets were
decreased from 7.50% to 7.00% to reflect the expected long term rate of return on the trust.
June 30, 2017
• Difference between actual and expected experience-The$383,000 gain on the Total
Pension Liability for the fiscal year ending June 30, 2017 is primarily attributable to participant
deaths.
• Assumption change -The plan experienced a $.86MM gain due to the change of the mortality
assumption from the RP-2014 table projected generationally with Scale MP-2014 with MP-
2016 Improvement Scale.
June 30, 2016
• Difference between actual and expected experience-The $299,000 loss on the Total
Pension Liability for the fiscal year ending June 30, 2016 is primarily attributable to participant
deaths.
• Assumption change-The plan experienced a $1.47MM gain due to the change of the
mortality assumption from the RP-2014 table projected generationally with Scale MP-2014
with MP-2015 Improvement Scale.
June 30, 2015
• Difference between actual and expected experience-The $1.01 MM gain on the Total
Pension Liability for the fiscal year ending June 30, 2015 is primarily attributable to participant
deaths.
• Assumption change-There were no impacts associated with assumption changes.
57
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
2. Post-Retirement Benefit Plan
Actuarial valuation information relative to the determination of contributions:
Valuation date June 30, 2024, based on roll-forward of February 29, 2024
valuation
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal level % of salary method
Amortization method Level dollar over a 30-year closed period
Remaining amortization period 25 years
Inflation 2.25%
Salary increases 9.0% growth at age 25 and decreases to 5.3%for ages 60+.
This percentage includes general wage inflation and merit/
productivity increases.
Investment rate of return 6.5% per year compounded annually
Mortality PUBH-2010 General Employees Mortality Table projected
generationally using MP-2021 scale
Actuarial valuation information relative to the determination of contributions:
Valuation date June 30, 2023, based on roll-forward of February 28, 2023
valuation
Methods and assumptions used to determine contribution rates:
Actuarial cost method Entry age normal level % of salary method
Amortization method Level dollar over a 30-year closed period
Remaining amortization period 26 years
Inflation 2.25%
Salary increases 9.0% growth at age 25 and decreases to 5.3%for ages 60+.
This percentage includes general wage inflation and merit/
productivity increases.
Investment rate of return 6.5% per year compounded annually
Mortality PUBH-2010 General Employees Mortality Table projected
generationally using MP-2021 scale
58
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
Significant Changes:
June 30, 2024
• Difference between actual and expected experience-The$800.91K actuarial gain on the
Total OPEB Liability for the fiscal year ending June 30, 2024 is attributable to the combination
of favorable demographic experience and lower than expected per capita claims cost.
• Assumption change— None.
June 30, 2023
• Difference between actual and expected experience-The$4.77M actuarial loss on the Total
OPEB Liability for the fiscal year ending June 30, 2023 is attributable to the combination of
unfavorable demographic experience and unfavorable claims experience for the pre-
Medicare retirees. $1.86M of the actuarial loss is associated with demographic experience.
The remaining $2.91 M of the actuarial loss is due to higher than expected 2023 per capita
claims cost.
• Assumption change— None.
• Investment gain -The $6.75M investment gain during the fiscal year ending June 30, 2023 is
attributable an actual return on assets of 9.52% vs. an expected return of 6.50%.
June 30, 2022
• Difference between actual and expected experience-The $1.08MM actuarial gain on the
Total OPEB Liability for the fiscal year ending June 30, 2022 is attributable to favorable
demographic experience. The favorable demographic experience is mainly attributable to
deaths (25 participants), termination of active participants and changes in coverage elections.
• Assumption change-The $10.17MM actuarial loss on the Total OPEB liability for the fiscal
year ending June 30, 2022 is attributable to updating the mortality improvement scale to the
MP-2021 scale, updating the demographic assumptions to reflect the results of the 2022
experience analysis and decreasing the discount rate from 7.0% to 6.5%. Updating the
mortality improvement scale resulted in a $.38MM actuarial loss. Updating the demographic
assumptions resulted in a $1.73MM actuarial loss. The remaining $8.06MM of actuarial loss
is attributable to decreasing the discount rate from 7.0% to 6.5%.
June 30, 2021
• Difference between actual and expected experience-The $8.79MM actuarial gain on the
Total OPEB Liability for the fiscal year ending June 30, 2021 is attributable to the combination
of favorable demographic experience and lower than expected 2021 per capita claims cost.
$3.94MM of the actuarial gain is associated with demographic experience and is mainly
attributable to deaths (37 participants), termination of active participants and changes in
coverage elections. The remaining $4.85MM of the actuarial gain is due to less than
expected 2021 per capita claims cost. The 2021 Humana premiums are slightly lower than
what was expected for 2021 ($321.92 per month vs. $347.80 per month)
• Assumption change-The$3.75MM actuarial gain on the Total OPEB liability for the fiscal
year ending June 30, 2021 is attributable to updating the mortality improvement scale to the
MP-2020 scale and reflecting the updated healthcare trend assumptions set forth in the
Michigan Uniform Assumptions memo for the 2021 fiscal year. Updating the mortality
improvement scale resulted in a $1.18MM actuarial gain. The remaining $2.57MM of the
actuarial gain is attributable to reflecting the updated trend assumptions.
59
Board of Water & Light — City of Lansing, Michigan
Notes to Required Supplementary Information (Unaudited)
Years Ended June 30, 2024 and 2023
June 30, 2020
• Difference between actual and expected experience-The $6.09MM gain on the Total OPEB
Liability for the fiscal year ending June 30, 2020 is attributable to the combination of
unfavorable demographic experience and a reduction in the per capita claims cost used in
the June 30, 2020 valuation. The $1.13MM loss associated with demographic experience is
mainly attributable to active participant retirements. The$7.22MM gain due to a reduction in
per capita claims cost is attributable a decrease in the Pre-65 medical and prescription drug
premiums for 2021. The 2020 Pre-65 medical and Rx monthly premium for a retiree was
$1,073.13. For 2020, the Pre-65 medical and Rx monthly premium for a retiree is$957.99.
An 11% reduction in monthly premium. The combination of the demographic loss and the
reduction in monthly premiums resulted in the overall $6.09MM actuarial gain.
• Assumption change -The$7.25MM loss on the Total OPEB liability for the fiscal year ending
June30, 2020 is attributable to updating the mortality improvement scale to the MP-2019
scale and decreasing the discount rate from 7.50% to 7.00%. Updating the mortality
improvement scale resulted in a $.53MM actuarial gain. Whereas, decreasing the discount
rate resulted in a $7.78MM actuarial loss. The combination of these changes resulted in the
overall $7.25MM actuarial loss.
June 30, 2019
• Difference between actual and expected experience-The $5.2 million gain on the Total
OPEB Liability for the fiscal year ending June 30, 2019 is primarily due to favorable
demographic experience. The favorable experience is mainly attributable to terminations of
active participants and deaths of participants with and without beneficiaries.
• Assumption changes - (1)The plan experienced a $54.4 million gain on the Total OPEB
Liability due to a change of the assumed per capita claims cost. The Board changed the
Plan's insurance provider for Medicare eligible participants from The Hartford and Envision
Insurance to Humana. Doing so resulted in a dramatic decrease in both the medical and
prescription drug monthly premiums from the prior fiscal year($98.99 per month vs. $219.54
per month for medical coverage and $213.47 per month vs. $305.00 per month for
prescription drug coverage); (2)The Plan experienced a $3.8 million loss on the mortality
assumption change. The mortality assumption was updated from the RPH-2014 Total
Dataset mortality, adjusted to2006 and projected generationally using the MP-2017
improvement scale to the PUBH-2010 General Employees mortality, projected generationally
using the MP-2018 improvement scale; and (3)The Plan experienced a $8.7 million gain on a
change to the medical and prescription drug trend assumptions. The trend assumptions were
changed to those prescribed under the Michigan Uniform Assumptions for the 2019 fiscal
year.
• Change in benefit terms -The Plan experienced a $.4 million gain due to an expected
increase in the retiree contribution percentage for employees hired on or after January 1,
2009. The expected contribution percentage was increased from 14%to 20% of the premium
charged to active employees.
June 30, 2018
• Difference between actual and expected experience-The $9.9 million gain on the Total
OPEB Liability for the fiscal year ending June 30, 2018, is attributable to a reduction in the
per capita claims cost used in the June 30, 2018 valuation. Better than expected claims
experience during the fiscal year resulted in a decrease in the projected claims when
compared to those used in the June 30, 2017, valuation.
• Assumption change -The mortality improvement scale was updated to the MP-2017 scale.
60
SUPPLEMENTARY INFORMATION
Board of Water & Light - City of Lansing, Michigan
Income Available for Revenue Bond Debt Retirement
Years Ended June 30, 2024 and 2023
2024 2023
Income, Before Capital Contributions Per Statement
of Revenues, Expenses and Changes in Net Position $ 9,892,222 $ 16,048,837
Adjustments to Income
Depreciation 68,302,725 71,759,716
Interest on long-term debt:
Notes 35,748 39,109
Revenue bonds 32,361,141 26,376,856
Total additional income 100,699,614 98,175,681
Income Available for Revenue Bonds
and Interest Redemption 110,591,836 114,224,518
Debt Retirement Pertaining to Revenue Bonds
Principal 14,040,000 13,410,000
Interest 31,791,164 29,113,395
Total $ 45,831,164 $ 42,523,395
Percent Coverage of Revenue Bonds
and Interest Requirements 241% 269%
61
Board of Water&Light-City of Lansing,Michigan
Detail of Statements of Revenues and Expenses
Years Ended June 30,2024 and 2023
Combined Water Electric Steam Chilled Water
2024 2023 2024 2023 2024 2023 2024 2023 2024 2023
Operating Revenues
Water $ 55,757,309 $ 50,683,766 $ 55,757,309 $ 50,683,766 $ - $ - $ $ $ $
Electric:
Retail 320,953,423 315,840,115 - - 320,953,423 315,840,115
Sales for resale 21,022,840 62,951,601 21,022,840 62,951,601
Steam 12,785,927 12,661,267 - - - - 12,785,927 12,661,267 - -
Chilled water 6,915,341 6,740,010 - - 6,915,341 6,740,010
Total operating revenues 417,434,840 448,876,759 55,757,309 50,683,766 341,976,263 378,791,716 12,785,927 12,661,267 6,915,341 6,740,010
Operating Expenses
Production:
Fuel,purchased power and
other operating expenses 138,777,452 172,700,755 11,937,645 11,198,644 120,777,854 154,698,656 3,748,279 4,644,100 2,313,674 2,159,355
Maintenance 22,732,499 18,044,058 4,829,509 4,198,230 16,417,358 12,565,644 847,694 688,443 637,938 591,741
Transmission and distribution:
Operating expenses 14,757,338 8,872,835 1,723,667 1,658,536 12,824,290 7,042,845 209,381 171,454 - -
Maintenance 23,933,835 22,386,918 4,318,783 3,551,034 18,930,788 18,364,613 684,264 471,271 - -
Administrative and general 93,398,015 86,060,107 20,268,440 19,254,288 67,809,873 62,383,567 3,331,409 3,048,315 1,988,293 1,373,937
Return on equity 26,028,591 26,428,992 3,052,498 2,858,495 21,813,339 22,419,987 793,022 746,109 369,732 404,401
Depreciation 68,302,725 71,759,716 9,296,051 9,127,075 54,230,343 57,233,821 3,400,940 3,988,030 1,375,391 1,410,790
Total operating expenses 387,930,455 406,253,381 55,426,593 51,846,302 312,803,845 334,709,133 13,014,989 13,757,722 6,685,028 5,940,224
Operating income 29,504,385 42,623,378 330,716 (1,162,536) 29,172,418 44,082,583 (229,062) (1,096,455) 230,313 799,786
Nonoperating Income(Expenses)
Investment income(loss) 14,264,806 3,682,036 1,155,936 547,979 12,267,458 2,480,644 619,445 496,610 221,967 156,803
Other(expense)income (1,480,080) (3,840,612) 736,040 862,904 (2,470,239) (4,820,837) 28,970 (330,534) 225,149 447,855
Bonded debt interest expense (32,361,141) (26,376,856) (1,383,139) (1,512,107) (28,982,836) (22,648,357) (1,818,781) (1,941,266) (176,385) (275,126)
Other interest expense (35,748) (39,109) (3,682) (4,015) (32,026) (35,051) (40) (43) -
Total nonoperating expense (19,612,163) (26,574,541) 505,155 (105,239) (19,217,643) (25,023,601) (1,170,406) (1,775,233) 270,731 329,532
Net income(loss) $ 9,892,222 $ 16,048,837 $ 835,871 $ (1,267,775) $ 9,954,775 $ 19,058,982 $ (1,399,468) $ (2,871,688) $ 501,044 $ 1,129,318
62
Board of Water & Light - City of Lansing, Michigan
Detail of Statements of Changes in Net Position
Years Ended June 30, 2024 and 2023
Combined Water Electric Steam Chilled Water
Net Position, June 30, 2022 $ 696,904,936 $ 104,452,546 $ 593,493,329 $ (11,622,978) $ 10,582,039
Income (loss) before contributions 16,048,837 (1,267,775) 19,058,982 (2,871,688) 1,129,318
Net Position, June 30, 2023 712,953,773 103,184,771 612,552,311 (14,494,666) 11,711,357
Income (loss) before contributions 9,892,222 835,871 9,954,775 (1,399,468) 501,044
Net Position, June 30, 2024 $ 722,845,995 $ 104,020,642 $ 622,507,086 $ (15,894,134) $ 12,212,401
63
Board of Water& Light-City of Lansing, Michigan
Detail of Fiduciary Statements of Net Position-
Pension and OPEB Trust Funds
Years Ended June 30,2024 and 2023
2024
Defined
Contribution Defined Benefit
Plan Plan VEBA Total
Assets
Receivable, investment interest receivable $ $ $ 14,641 $ 14,641
Trade receivable,due from broker - -
Cash and cash equivalents 26,073,272 437,821 1,857,276 28,368,369
Investments at fair value:
Mutual funds,bonds 17,497,649 23,149,441 55,835,109 96,482,199
Mutual funds,equity 152,413,555 21,335,946 159,831,296 333,580,797
Real estate fund investment - 3,668,689 38,565,204 42,233,893
Self-directed brokerage account
Equity securities/stocks 12,507,716 - - 12,507,716
Certificates of deposit(negotiable) 100,039 100,039
Mutual funds,equity 598,099 598,099
Participants note receivable 3,532,182 - 3,532,182
Total assets 212,722,512 48,591,897 256,103,526 517,417,935
Liabilities
Trade payable,due to broker/other - 58,122 2,707,544 2,765,666
Net Position,Held in Trust for Pension
and Other Employee Benefits $ 212,722,512 $ 48,533,775 $ 253,395,982 $ 514,652,269
2023
Defined
Contribution Defined Benefit
Plan Plan VEBA Total
Assets
Receivable, investment interest receivable $ $ 1,100 $ 13,772 $ 14,872
Trade receivable,due from broker - - -
Cash and cash equivalents 28,195,849 778,163 338,130 29,312,142
Investments at fair value:
Mutual funds,bonds 17,745,597 18,695,086 53,353,849 89,794,532
Mutual funds,equity 130,774,490 26,132,357 144,658,390 301,565,237
Real estate fund investment - 3,932,003 42,471,497 46,403,500
Self-directed brokerage account
Equity securities/stocks 9,997,083 - - 9,997,083
Certificates of deposit(negotiable) 349,683 349,683
Mutual funds,equity 454,285 454,285
Participants note receivable 3,439,525 3,439,525
Total assets 190,956,512 49,538,709 240,835,638 481,330,859
Liabilities
Trade payable,due to broker/other - 15,476 2,365,067 2,380,543
Net Position,Held in Trust for Pension
and Other Employee Benefits $ 190,956,512 $ 49,523,233 $ 238,470,571 $ 478,950,316
64
Board of Water$ Light -City of Lansing, Michigan
Detail of Statement of Changes in Fiduciary Net Position-
Pension and OPEB Trust Funds
Years Ended June 30,2024 and 2023
2024
Defined
Contribution Defined
Plan Benefit Plan VEBA Total
Increases
Investment income:
Net appreciation in
fair value of investments $ 22,518,517 $ 2,980,011 $ 19,047,703 $ 44,546,231
Interest and dividend income 3,363,114 1,153,670 5,252,303 9,769,087
Net investment income 25,881,631 4,133,681 24,300,006 54,315,318
Employer contributions 9,435,006 - 65,286 9,500,292
Interest from participant notes receivable 189,210 - - 189,210
Other 269,948 - - 269,948
Total increases 35,775,795 4,133,681 24,365,292 64,274,768
Decreases
Retiree benefits paid 13,525,681 4,995,541 9,180,680 27,701,902
Loan defaults 331,152 - - 331,152
Participants'note and administrative fees 152,962 127,599 259,201 539,762
Total decreases 14,009,795 5,123,140 9,439,881 28,572,816
Change in net position held in trust 21,766,000 (989,459) 14,925,411 35,701,952
Net Position Held in Trust for Pension
and Other Employee Benefits
Beginning 190,956,512 49,523,233 238,470,571 478,950,316
Ending $ 212,722,512 $ 48,533,774 $ 253,395,982 $ 514,652,268
65
Board of Water$ Light -City of Lansing, Michigan
Detail of Statement of Changes in Fiduciary Net Position-
Pension and OPEB Trust Funds
Years Ended June 30,2024 and 2023
2023
Defined
Contribution Defined
Plan Benefit Plan VEBA Total
Increases
Investment income:
Net appreciation in
fair value of investments $ 14,923,330 $ 2,662,472 $ 15,226,432 $ 32,812,234
Interest and dividend income 3,131,258 1,471,375 5,999,336 10,601,969
Net investment income 18,054,588 4,133,847 21,225,768 43,414,203
Employer contributions 11,648,704 - 68,076 11,716,780
Interest from participant notes receivable 131,862 - 131,862
Other 84,494 - - 84,494
Total increases 29,919,648 4,133,847 21,293,844 55,347,339
Decreases
Retiree benefits paid 21,900,248 5,142,408 10,627,788 37,670,444
Loan defaults 396,895 - - 396,895
Participants'note and administrative fees 149,530 126,980 335,579 612,089
Total decreases 22,446,673 5,269,388 10,963,367 38,679,428
Change in net position held in trust 7,472,975 (1,135,541) 10,330,477 16,667,911
Net Position Held in Trust for Pension
and Other Employee Benefits
Beginning of year 183,483,537 50,658,774 228,140,094 462,282,405
End of year $ 190,956,512 $ 49,523,233 $ 238,470,571 $ 478,950,316
66