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Home My WebLink About2009 City of Lansing Comprehensive Annual Financial Report CAFRCITY OF LANSING 2009 Comprehensive Annual Financial Report FOR FISCAL YEAR ENDED JUNE 30, 2009 VIRG BERNERO, Mayor Gerald Ambrose, Director of Finance Prepared by: Department of Finance LANSING CITY GOVERNMENT 2009 MAYOR VIRG BERNERO CLERK CHRIS SWOPE DISTRICT COURT JUDGES PATRICK F. CHERRY CHARLES F. FILICE AMY KRAUSE FRANK J. DELUCA LOUISE ALDERSON AT LARGE CITY COUNCIL BY WARDS DERRICK QUINNEY ERIC HEWITT – 1st Ward KATHIE DUNBAR SANDRA ALLEN – 2nd Ward BRIAN JEFFRIES A’LYNNE ROBINSON – 3rd Ward CAROL WOOD TIM KALTENBACH – 4th Ward OFFICERS City Assessor ............................................................................................................... Maria Irish City Attorney ......................................................................................................... Brigham Smith City Treasurer ........................................................................................................ Antonia Kraus Executive Assistant to the Mayor ........................................................................ Gerald Ambrose Finance, Director of ............................................................................................ Gerald Ambrose Fire Chief ............................................................................................................ William Cochran Human Relations & Community Services, Director of ............................. Joan Jackson Johnson Internal Auditor .......................................................................................................... Arnie Yerxa Parks & Recreation, Director of ..................................................................... Murdock Jemerson Human Resources, Director of ............................................................................. Terri Singleton Planning & Neighborhood Development, Director of .......................................... Robert Johnson Police Chief ................................................................................................................. Mark Alley Public Service, Director of ...................................................................................... Chad Gamble -i- City of Lansing, Michigan Table of Contents Page INTRODUCTORY SECTION Table of Contents ............................................................................................................................................. i-iii Letter of Transmittal ........................................................................................................................................ iv-x Certificate of Achievement .................................................................................................................................. xi City Organizational Structure ............................................................................................................................ xii FINANCIAL SECTION Independent Auditors’ Report .......................................................................................................................... 1-2 Management’s Discussion and Analysis ........................................................................................................ 3-12 Basic Financial Statements Government-wide Financial Statements Statement of Net Assets .......................................................................................................................... 13 Statement of Activities ..................................................................................................................... 14-15 Governmental Fund Financial Statements Balance Sheet ......................................................................................................................................... 16 Reconciliation of Fund Balances on the Balance Sheet for Governmental Funds to Net Assets of Governmental Activities on the Statement of Net Assets ............................................. 17 Statement of Revenues, Expenditures and Changes in Fund Balances .................................................. 18 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities ........................................................ 19 Statement of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund ................................................................................................................................. 20-21 Proprietary Fund Financial Statements Statement of Net Assets ...................................................................................................................... 22 Statement of Revenues, Expenses and Changes in Fund Net Assets ................................................. 23 Statement of Cash Flows .............................................................................................................. 24-25 Fiduciary Fund Financial Statements Statement of Fiduciary Net Assets ..................................................................................................... 26 Statement of Changes in Fiduciary Net Assets ................................................................................... 27 Component Unit Financial Statements Combining Statement of Net Assets ................................................................................................... 28 Combining Statement of Activities .................................................................................................... 29 Index for Notes to Financial Statements ..................................................................................................... 30 Notes to Financial Statements ............................................................................................................... 31-65 Required Supplementary Information Schedule of Funding Progress and Employer Contributions: Employees’ Retirement System .............................................................................................................. 66 Police and Fire Retirement System ........................................................................................................ 67 Other Postemployment Benefits ............................................................................................................. 68 -ii- City of Lansing, Michigan Table of Contents Page Combining and Individual Fund Statements and Schedules Nonmajor Governmental Funds Combining Balance Sheet ...................................................................................................................... 69 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................... 70 Nonmajor Special Revenue Funds Combining Balance Sheet ................................................................................................................ 71-73 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 74-76 Schedules of Revenues, Expenditures, and Changes in Fund Balances – Budget and Actual ....................................................................................................... 77-85 Nonmajor Debt Service Funds Combining Balance Sheet ................................................................................................................ 86-87 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 88-89 Nonmajor Capital Projects Funds Combining Balance Sheet ................................................................................................................ 90-91 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ......................... 92-93 Nonmajor Permanent Funds Combining Balance Sheet ...................................................................................................................... 94 Combining Statement of Revenues, Expenditures and Changes in Fund Balances ............................... 95 Nonmajor Enterprise Funds Combining Statement of Net Assets ................................................................................................. 96-97 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ............................ 98-99 Combining Statement of Cash Flows ........................................................................................... 100-103 Internal Service Funds Combining Statement of Net Assets ..................................................................................................... 104 Combining Statement of Revenues, Expenses and Changes in Fund Net Assets ................................ 105 Combining Statement of Cash Flows ................................................................................................... 106 Agency Funds Combining Statement of Fiduciary Assets and Liabilities .................................................................. 107 Combining Statement of Changes in Fiduciary Assets and Liabilities ................................................ 108 STATISTICAL SECTION ....................................................................................................................109 Financial Trends: Net Assets by Component ................................................................................................................... 110 Changes in Net Assets – Governmental Activities ............................................................................. 111 Fund Balances – Governmental Funds ............................................................................................... 112 Changes in Fund Balances – Governmental Funds ............................................................................ 113 Revenue Capacity: Assessed and Actual Value of Taxable Property ................................................................................ 114 Direct and Overlapping Property Tax Rate ......................................................................................... 115 Principal Property Taxpayers ...................................................................................................... 116-117 Property Tax Levies and Collections .................................................................................................. 118 -iii- City of Lansing, Michigan Table of Contents (Concluded) Debt Capacity: Ratios of Outstanding Debt by type .................................................................................................... 119 Ratios of General Bonded Debt Outstanding ...................................................................................... 120 Computation of Net Direct and Overlapping Debt ............................................................................. 121 Legal Debt Margin .............................................................................................................................. 122 Pledged Revenue Coverage ................................................................................................................ 123 Demographic and Economic Statistics: Demographic and Economic Statistics ............................................................................................... 124 Principal Employers ............................................................................................................................ 125 Operating Information: Full-Time Equivalent City Government Employees by Function/Program........................................ 126 Operating Indicators by Function/Program ......................................................................................... 127 Capital Asset Statistics by Function/Program ..................................................................................... 128 Council President Derrick Quinney December 17, 2009 and Council Members 10th Floor City Hall Lansing, Michigan 48933-1694 Dear President Quinney and Council Members: We are pleased to submit the comprehensive annual financial report of the City of Lansing, Michigan for the fiscal year ended June 30, 2009. Responsibility for both the accuracy of the data, and the completeness and fairness of the presentation, including all disclosures, rests with the City. To the best of our knowledge and belief, the enclosed data are accurate in all material respects and are reported in a manner designed to present fairly the financial position and results of operations government wide and of the various funds of the City.This management assurance is supported by a comprehensive system of internal controls designed to reasonably ensure that assets of the City are protected from loss, theft or misuse and to ensure that adequate accounting data are compiled to allow for the preparation of these financial statements in conformity with generally accepted accounting principles. Such controls include appropriate policies and procedures, ongoing risk assessment, and monitoring and review processes which are communicated throughout City operations. Disclosures necessary to enable the reader to gain an understanding of the City's financial activities have been included. This letter of transmittal is designed to complement the Management Discussion and Analysis and should be read in conjunction with it. The Management Discussion and Analysis can be found immediately following the Independent Auditor Report The financial reporting entity (the City) includes all of the funds of the primary government (i.e., the City as legally defined), as well as its blended component units. Blended component units,although legally separate entities,are, in substance, part of the SULPDU\JRYHUQPHQW¶VRSHUDWLRQVDQGDUHLQFOXGHGDVSDUWRIWKHSULPDU\JRYHUQPHQW The Lansing Building Authority is a blended component unit. Discretely presented component units are reported in a separate column in the combined financial statements to emphasize that they are legally separate from the primary government and to differentiate their financial position and results of operations from those of the primary government. The Lansing Entertainment & Public Facilities Authority, Tax Increment Finance Authority, the Brownfield Redevelopment Authority and the Lansing Regional SmartZone are reported as discretely presented component units. -iv- -v- The City of Lansing provides a full range of services, including police and fire protection; sanitation services; the construction and maintenance of highways, streets, sewers, and infrastructure; recreational activities and support for human services and cultural events. Serving as Michigan's capital since 1848, Lansing was incorporated in 1859 and operates under provisions of Public Act 279 of 1909, as amended (the "Home Rule City Act"). The City is located in the lower middle of Michigan's Lower Peninsula and operates under a strong Mayor form of government established by 1978 Charter revision. It is a mature core City with a population of 119,286 according to revised 2000 Census figures. ECONOMIC CONDITION AND OUTLOOK ECONOMIC ANALYSIS OF THE CITY OF LANSING 2008/2009 The year 2008/2009 year will certainly go down in history as one of the most tumultuous in American history, with a near total collapse of the global financial system in the fall of 2008 and the beginning of the Great Recession. The stock market fell some 50%. Nationally, unemployment soared to near 10% and the state of Michigan’s unemployment spiked to near 18% before leveling off at just above 15%, still the nation’s highest level for four straight years. Of course, in addition to federal bailouts of the financial system, General Motors (GM) also slipped into bankruptcy and was bailed out by the federal government as was Chrysler. Finally, state government continued to hemorrhage revenue both from an income and sales tax perspective, requiring additional mid-year budget cuts that included further cuts to municipal revenue sharing as well as the institution of six state employee unpaid furlough days. But as they say on the stock exchange, even in a bad market, there are great buys. And a great buy is the city of Lansing. This year, Richard Florida, considered the international guru of urban development and author of “Rise of the Creative Class” was quoted on NPR radio as saying (to paraphrase), “…in Michigan, two nice towns are leading the way- Ann Arbor and Lansing.” In Forbes magazine, they listed the top 50 worst cities in America for job creation. Unfortunately, over ten of those cities in the nation were from Michigan, but Lansing was NOT on that list. FACTS: 1) In four years of economic development, our current records show that 77 incentivized projects in Lansing have created or will create approximately 4000 jobs and nearly $600 million in private investment. The remarkable points of this historic record are: -vi- a. The projects range from high-tech development to biotech to corporate headquarters to traditional manufacturing. b. So many of these projects have involved the rehabilitation of abandoned and distressed buildings and properties in the city- scores of them. 2) Greater Lansing’s unemployment level rose several points but remained stable at 13%, well below the state average. 3) Between 2005 and 2008, Lansing’s GDP grew by 9.2%, second highest in the state of Michigan, only behind Kalamazoo’s increase of 11.2%. As a comparison, Grand Rapids’ growth was 5.5% and Ann Arbor was at 3.2%. 4) The city of Lansing’s credit rating remained at AA+, tied with several other cities as the best in the state. 5) Jackson National announced moving 150 positions from Colorado to the city of Lansing’s southside. These positions were previously going to be re-assigned to Nashville. This is in addition to Jackson National’s approximately 27% increase in employment over just the last several years, adding hundreds of new employees to the city. 6) Blue Cross will be announcing that their Delta Township campus will close and move to downtown Lansing, bringing 250 jobs with them to the city. 7) The $182 million privately funded Accident Fund national headquarters construction project remains in progress, promising to create 500 new jobs in the downtown. 8) The new $45 million state-funded Michigan State Trooper building construction is near completion and is set to accommodate 510 employees to the city who are currently located outside of the city. In addition, 110 troopers are now moved in to the city in other downtown buildings and an additional 170 will also move in. These jobs are all downtown. 9) The new $1.6 million city market construction project, paid for by developer Pat Gillespie, is underway as well as a $3.2 million CMI grant improvement to the downtown riverfront. 10)Altogether, the Accident Fund project, the riverfront, the new city market, the new water chiller plant downtown, the new Troppo building soon to be under construction represent $188 million of new construction under way- now. $187 million of this is covered by Project Labor Agreements (PLA), so that local, union work is 100% performed, providing for higher living wages and taxes paid to the city. Literally, nearly a thousand construction workers are working on these sites. 11)The Lansing Delta Township car assembly plant, the world’s newest and most advanced car assembly plant for GM, is again ramping up to three full shifts as are the surrounding auto supplier plants that, for the most part, are located in the city as well as the assembly plant. In part, this is because this plant will become the new home to the Chevy Traverse, moved from Tennessee. The Lansing Grand River assembly plant, a five year old state-of-the-art car assembly plant in the city, has only one shift operating, but it is making the highly popular Cadillac brand with new models coming out for next year. -vii- 12)Many state employees, in the tens of thousands, work in the city. It is expected that the state’s 09/10 state budget, to be adopted Oct 1, will NOT include substantial employee furlough days or significant layoffs. This is very significant in that this issue could have greatly impacted city income tax revenue and the small business community in downtown. 13)We are completing the successful re-financing of the TIFA bonds, which should save the city a potential $15 million cost of covering the bond debt of the TIFA. It is also important to note that the city serves as a downtown home to the nation’s largest law school, Cooley Law School, which reports continued steady enrollment at 3,200, while Michigan State University, whose enrollment has increased from 40,0000 to 47,000 over the last ten years, is located just two miles away in East Lansing. IBM also opened the first phase of a new software development facility, promising 1500 direct and indirect jobs, on MSU’s campus and MSU continues to proceed with planning for the world’s leading $550 million Facility for Rare Isotope Beam (F-RIB) particle cyclotron research facility, scheduled to begin construction in 2010. Auto Owners Insurance, located two miles to the west of the city in Delta Township, also will soon be announcing an expansion of their national headquarters. This $103 million project, set to begin construction in 2011, will create 800 new jobs. During the year, Demmer manufacturing experienced a modest roller coaster in manufacturing and employment levels, but topped out at 1500 more employees than what it maintained four years ago. We find through research, typically, whether the company is located in the city or not, city resident employment of those individual firms, like Auto Owners (out of city) or Jackson National (in city), makes up 40%+ of the total employment of a business. Of course, this is a major point because the city collects a local income tax. OBSTACLES: 1) Credit crisis. The banking industry, as a whole, is not making real estate loans and the prognosis is not favorable for this situation to ease over the next two years. Credit has been impossibly tightened on small businesses allowing for very limited if any growth. But hardest hit are the manufacturers of Michigan, auto related or not, who cannot receive loans from the banking industry. This critical situation has not been relieved or effectively addressed by government programs or stimulus activities. One local bank has been taken over by FDIC, Irwin Union. But with $50 billion of bad commercial loans coming due in 2010 across the national banking industry, no doubt, a secondary, severe crisis looms. 2) Retail remains very flat with 25% vacancy rates common along commercial strips, especially in south Lansing and the commercial corridors of the surrounding townships while 50% vacancy rates are reported at one major mall in a surrounding township. The other major mall, owned by General Growth Properties, seems to be fairing better from a vacancy rate perspective, but it is in bankruptcy. A third, newer mall appears to be holding its own with relatively low vacancy rates. The city’s size and diversity in overall economic -viii- sectors will, ironically, help it buck economic trends, while some surrounding townships are almost solely dependent upon retail and housing markets making them very susceptible to future, poor performing economic trends. 3) State of Michigan. It appears, at this time, that there will be limited state furlough days or employee layoffs at the state level as part of their 09/10 budget to be adopted October 1. This is a critical factor in that many of these employees work in the city, thus having an impact on both city income tax revenue and on the small business community downtown. However, the city should anticipate significant reduction in state revenue sharing for local municipalities. Finally, while many studies seem to indicate that government is a growth industry, I do not believe in this analysis. I anticipate a stagnant to shrinking job market in state and local government over the next five years at least, stimulus or not. 4) Manufacturing/General Motors. While the federal bailout and bankruptcy of GM and Chrysler are national disasters and nothing short, Lansing stands to be a winner out of the situation. GM’s two and newest car assembly plants are located in the city and, no doubt, are seen as consolidation points for the current and next generation of car making and supplier activity. 5) The city itself is at approximately 24% poverty level and the Lansing schools continue to struggle in a variety of measurements, though there are slight improvements in some testing areas. Regardless, it is imperative that economic development continue to not focus on one particular industry, but to attempt to assist all sectors of the economy, so that all people are afforded job opportunities. But it is equally imperative that Lansing citizens take it upon themselves to seek out job re-training programs and to re-emphasize the highest educational aspirations as possible for themselves and, their children. Truly, a person without a high school degree and additional higher education will experience an accelerating disadvantage as far as competition for jobs. 6) Census. I believe that there is a mass exodus of people leaving the state of Michigan due to job losses. This will drive a continued decline in retail development. I also believe that the city of Lansing and the Lansing region will fair relatively well within the context of this exodus, but because other cities and regions will drop more dramatically than our own plateau. Regardless, it is imperative that the region seek a comprehensive solution to economic development. That solution must be focused on urban core/downtown development of Lansing and East Lansing while more tangibly encouraging and connecting Michigan State University to these two centers. The only way for regional townships to truly grow in population and business activity is if the two cities, particularly the downtowns, rapidly grow into a national cosmopolitan environment. If that singular, regional economic goal is established and embraced by the private sector, as has been recently demonstrated for the first time in fifty years, all other successful economic development for townships and counties will automatically fall right into line- a line of growth. -ix- CONCLUSION: 98% of cities across the Midwest would do anything to be the city of Lansing and the Lansing region, right now. Our assets include: 1) One of the world’s largest universities in MSU- two miles away from Lansing. 2) The nation’s largest and most diverse law school in Cooley- in downtown Lansing. 3) The state’s fourth largest community college- in downtown. 4) Multiple, growing national headquarters for insurance companies- in the city. 5) GM’s finest and most technologically advanced car assembly plants in the world- in the city. 6) The capitol and state government. 7) An international port at the airport. 8) IBM, F-RIB, Auto Owners, Jackson National, Accident Fund all building and expanding on a national scale. 9) Home to one of the nation’s most successful Class A professional ball teams- in downtown. 10)Multiple professional and amateur theaters and its own symphony- downtown. 11)A globally successful Broadway venue in the Wharton Center along with Big Ten sporting events and national championship caliber games. Any city would kill to have one or two of these assets. With a new generation of people and business now demanding an urban environment for living and working, the fifty year tide has turned for urban revitalization. Tough times remain and people and business are hurting, but the city of Lansing is truly poised for a remarkable and historic period of economic diversity and growth. The sleeping giant is awakening. OTHER INFORMATION Budgeting Controls. The objective of the City's budgetary controls is to ensure compliance with legal provisions embodied in the annual appropriated budget approved by City Council. The City also maintains an encumbrance accounting system, whereby purchase orders amounts are deducted from the available budget, as one technique of accomplishing budgetary control. Encumbered amounts lapse at year end and require Council approval to be carried forward to the ensuing fiscal year for amounts greater than $5,000 or greater than eight months old. The budget is adopted at the activity level within each department. Risk Management. The City carries all-risk coverage on all real and business personal property. The total coverage is $485 million with a $25,000 self insured retention. Workers Compensation is self insured with excess reinsurance coverage for claims exceeding $500,000 from the State Accident Fund. The City carries liability coverage in the amount of $16 million per occurrence. -x- Independent Audit. State statutes require an annual audit by independent certified public accountants. The accounting firm of Rehmann Robson, was selected by the City's Audit Committee. In addition to meeting requirements set forth in State statutes, the audit also was designed to meet the requirements of the Federal Single Audit Act of 1984 and related OMB Circular A-133. The auditor's report on the general-purpose financial statements and schedules is included in the financial section of this report. Awards. The Government Finance Officers Association (GFOA) awarded a Certificate of Achievement for Excellence in Financial Reporting to the City for its Comprehensive Annual Financial Report for the fiscal year ended June 30, 2008. This was the 31st consecutive year that the City has received this prestigious award. In order to be awarded a Certificate of Achievement, the City must publish an easily readable and efficiently organized comprehensive annual financial report. This report satisfied both generally accepted accounting principles and applicable legal requirements. The Certificate of Achievement is valid for a period of one year only. We believe that our current Comprehensive Annual Financial Report continues to meet the Certificate of Achievement Program's requirements and we are submitting it to the GFOA to determine its eligibility for another certificate. Acknowledgments. The preparation of this comprehensive annual financial report, on a timely basis, was made possible by the dedicated service of the entire staff of the Finance Department. Each member of the department has our sincere appreciation for their contributions made in the preparation of this report and in the financial management of the City. The 31st consecutive GFOA award, recognizing their efforts, is well deserved indeed. -xi- Pa t r o l S u p p r e s s i o n P l a n n i n g E c o n o m i c D e v . C o r p . R o a d s / S i d e w a l k s P a r k s / Fo r e s t r y Gr a n t W r i t i n g A s s i s t . Cr i m e I n v e s t i g a t i o n P r e v e n t i on Z o n i n g L E P F A S e w e r s / T r e a t m e n t R e c r e a t i o n P r o g a m s H u m a n S e r v . G r a n t s Co m m u n i t y P o l i c i n g E m e r g e n c y M g m t C o d e C o m p l i a n c e P r i n c i p a l S h o p p i n g D i s t . T r a s h / R e c y l i ng C o m m u n i t y C e n t e r s P o l i c e I n t e r n a l I n v . De t e n t i o n H o u s i n g / N e i g h b o r h o o d s T I F A C e m e t er i e s Bu i l d i n g S a f e t y Pa r k i n g Tr a n s p o r t a t i o n Ta x S e r v i c e s R e c r u i t m e n t A c c o u n t i n g / B u d g e t / P a y r ol l T r a i n i n g P u r c h a s i n g L a b o r R e l a t i o n s P r o p e r t y M a na g e m e n t B e n e f i t s I n f o r m a t i o n T e c h n o l o g y E q u a l O p p o r t u n i t y Ma y o r Ci t y C o u n c i l Ci t y C l e r k 54 - A D i s t r i c t C o u r t In t e r n a l Au d i t &L W \ $ W W R U Q H \ ¶ V Of f i c e Po l i c e Fi r e Pl a n n i n g & Ne i g h b o r h o o d De v e l o p m e n t Ec o n o m i c De v e l o p m e n t Pu b l i c Se r v i c e s Pa r k s & Re c r e a t i o n Ci t i z e n s o f L a n s i n g Fi n a n c e Hu m a n R e s o u r c e s Hu m a n R e l a t i o n s an d C o m m u n i t y Se r v i c e s -x i i - Rehmann Robson 675 Robinson Rd. Jackson, MI 49203 Ph: 517.787.6503 Fx: 517.788.8111 www.rehmann.com -1- ,1'(3(1'(17$8',7256¶5(3257 December 17, 2009 Honorable Mayor and Members of the City Council City of Lansing, Michigan We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund and the aggregate remaining fund information of the City of Lansing, Michigan, as of and for the year ended June 30, 2009ZKLFKFROOHFWLYHO\FRPSULVHWKH&LW\¶VEDVLFILQDQFLDOVWDWHPHQWVDVOLVWHGLQ the table of contents. These financial statements are the responsibility of the City of Lansing¶V management. Our responsibility is to express opinions on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards,issued by the Comptroller General of the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinions. In our opinion, the financial statements referred to above present fairly, in all material respects, the respective financial position of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan, as of June 30, 2009, and the respective changes in financial position and cash flows, where applicable, thereof and the budgetary comparisons for the General Fund for the year then ended in conformity with accounting principles generally accepted in the United States of America. -2- In accordance with Government Auditing Standards, we have also issued our report dated December 17, 2009RQRXUFRQVLGHUDWLRQRIWKH&LW\RI/DQVLQJ0LFKLJDQ¶VLQWHUQDOFRQWURORYer financial reporting and our tests of its compliance with certain provisions of laws, regulations, contracts and grant agreements and other matters, in a separately issued single audit report. The purpose of that report is to describe the scope of our testing of internal control over financial reporting and compliance and the results of that testing, and not to provide an opinion on the internal control over financial reporting or on compliance. That report is an integral part of an audit performed in accordance with Government Auditing Standards and should be read in conjunction with this report in considering the results of our audit. 7KH 0DQDJHPHQW¶V 'LVFXVVLRQ DQG $QDO\VLV RQ SDJHV3-12 and the historical supplementary information for the Employees¶ and Police and Fire Retirement Systems and other postemployment benefits listed in the table of contents are not a required part of the basic financial statements but are supplementary information required by the Governmental Accounting Standards Board. We have applied certain limited procedures, which consisted principally of inquiries of management regarding the methods of measurement and presentation of the required supplementary information. However, we did not audit this information and do not express an opinion on it. Our audit was performed for the purpose of forming opinions on the financial statements that FROOHFWLYHO\ FRPSULVH WKH &LW\ RI /DQVLQJ¶V EDVLF ILQDQFLDO VWDWHPHQWV 7KH LQWURGXFWRU\ VHFWLRQ combining and individual fund financial statements and schedules, and statistical section are presented for purposes of additional analysis and are not a required part of the basic financial statements. The combining and individual fund financial statements and schedules have been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, are fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. The introductory and statistical sections have not been subjected to the auditing procedures applied in the audit of the basic financial statements and, accordingly, we express no opinion on them. As discussed in Note 3-J to the financial statements, the beginning net assets of the governmental activities were increased by $1,345,564 to properly capitalize costs for construction in progress that had been expensed in prior years. -3- MANAGEMENT'S DISCUSSION AND ANALYSIS The management of the City of Lansing, Michigan (“the City”) provides this narrative overview and analysis of the financial activities of the City for the fiscal year ended June 30, 2009 for the benefit of the readers of these financial statements. This management’s discussion and analysis (“MD&A”) is intended to assist the reader in focusing on significant financial issues and provide an overview of the City’s financial activity. The City encourages the readers to consider the following information here in conjunction with the financial statements taken as a whole, which follow this section. HIGHLIGHTS x The assets of the City exceeded its liabilities at the close of the fiscal year by $443.8 million (reported as net assets). Component units of the City reported a deficit of net assets of $36.0 million, a decrease of $2.6 million from the previous year. This deficit is planned to be covered by future tax revenue captures in the TIFA and Brownfield Component Units. x As of the close of the fiscal year, the City’s governmental funds reported combined ending fund balances of $32.6 million. Of this, $31.0 million is reported as unreserved fund balance. While reported as “unreserved” on the face of the Government-Wide Governmental fund Balance Sheet, $17.6 million of the $31.0 million is designated for use in FY 2009/2010, and $4.1 is restricted in accordance with State laws, local ordinances, and trust restrictions, leaving $9.3 million as undesignated. x At the end of the fiscal year, unreserved fund balance for the General Fund was $3.6 million, a decrease of $1.2 million. General Fund expenditures came in $2,154,215 more than revenues. Unreserved/undesignated fund balance decreased by $1,267,020, or 26.2%. x The business-type activities reported net assets at year-end of $228.6 million, an increase of $1.9 million during the year. x The City’s total debt was $268.2 million at June 30, 2009, an increase of $4.3 million (or 1.6%), which represents the net difference between new issuances, and payments and refunding of outstanding debt. During the year, the City issued debt of $24.6 million of limited tax general obligation bonds for its Combined Sewer Overflow (CSO) abatement project. More detailed information regarding these activities and funds can be found in footnote 3-G, Long Term Debt which begins on page 50. OVERVIEW OF THE FINANCIAL STATEMENTS This MD&A is an introduction to the City’s basic financial statements, which comprise three components: 1) government-wide financial statements, 2) fund financial statements, and 3) notes to the financial statements. This report also contains other required supplementary information in addition to the basic financial statements. Government-wide Statements (Reporting the City as a Whole) These statements include all non-fiduciary assets and liabilities, but exclude assets and liabilities related to pensions. The Statement of Net Assets and the Statement of Activities are two financial statements that report information about the City, as a whole, and about its activities, which provide measurements of long term trends that should help answer this question: Is the City, as a whole, better off or worse off as a result of this year’s activities? Unlike the governmental funds, the current year’s revenues and expenses are taken into account regardless of when cash is received or paid, known as “full accrual accounting”. -4- The Statement of Net Assets (page 13) presents all of the City’s assets and liabilities, with the difference between the two reported as “net assets”. Over time, increases and decreases in net assets are an indicator of whether the City’s long term financial position is improving or deteriorating. The Statement of Activities (pages 14 and 15) presents information showing how the City’s net assets changed during the most recent fiscal year. All changes in net assets are reported as soon as the underlying events giving rise to the change occur, regardless of the timing of related cash flows. Therefore, revenues and expenses are reported in these statements for some items that will only result in cash flows in future fiscal periods (e.g. uncollected taxes and earned but unused vacation leave). The Statement of Net Assets and the Statement of Activities report three activities, as follows: x Governmental Activities – Most of the City’s basic services are reported under this category. Property taxes, income taxes, and intergovernmental revenues generally fund these services. The Council (legislative branch), the District Court (judicial branch), and general operations of the executive branch departments, such as police, fire, parks, public works, and staff departments fall within the governmental activities. x Business-type Activities – The City charges fees to customers to help cover all or most of the cost of certain services it provides. Sewage collection and treatment and commercial area parking are examples of business-type activities. x Discretely Presented Component Units – Component units are legally separate organizations for which the elected officials of the primary government are financially accountable. The City has four such discretely presented units; the Lansing Entertainment and Public Facilities Authority, the Tax Increment Finance Authority, the Brownfield Redevelopment, and the Lansing Regional SmartZone. These financial statements include two schedules (pages 17 and 18) that reconcile the amounts reported on the governmental fund financial statements (modified accrual accounting) with governmental activities (full accrual accounting) on the appropriate government-wide statements. The following summarizes the impact of transitioning from modified accrual to full accrual accounting: x Capital assets used in governmental activities are not reported on governmental fund statements. x Certain revenues that are earned, but not available for use within the reporting period, are reported as revenues for governmental activities, but are reported as deferred revenue on the governmental fund statements. x Other long-term assets that are not available to pay for current period expenditures are deferred in governmental fund statements, but not deferred on the government-wide statements. x Internal service funds are reported as governmental activities, but reported as proprietary funds in the fund financial statements. -5- x Bond issuance costs, discounts and premiums in the issuance of long term debt, are reported as expenditures in governmental fund statements, but are capitalized and amortized in the government-wide statements. x Unless due and payable, long-term liabilities, such as capital lease obligations, compensated absences, litigation, and others only appear as liabilities in the government-wide statements. x Capital outlay spending in excess of capitalization thresholds are recorded as capital assets on the government-wide statements, but are reported as expenditures on the governmental fund statements. x Bond and note proceeds result in liabilities on the government-wide statements, but are recorded as other financing sources on the governmental fund statements. x Certain other outflows, such as debt service principal payments, represent decreases in liabilities on the government-wide statements, but are reported as expenditures on the governmental fund statements. The Notes to the Basic Financial Statements provide additional information that is essential to a full understanding of the data provided in the government-wide and fund financial statements. The notes can be found beginning on page 31 of this report. Fund Financial Statements (Reporting the City's Major Funds) The City’s Major Funds are identified as its Sewage Disposal Fund, and it’s Parking System Fund, along with its General Fund. The major fund financial statements begin on page 16. In addition to major funds, individual fund data for the nonmajor funds begins on page 69. A fund is a fiscal and accounting entity with a self-balancing set of accounts that the City uses to keep track of specific sources of funding and spending for a particular purpose. x Governmental funds -- Most of the City's basic services are reported in the governmental funds, which focus on how money flows into and out of those funds and the balances left at year-end that are available for future spending. The governmental fund financial statements provide a detailed short-term view of the City's general government operations and the basic services it provides. Governmental fund information helps determine whether there are greater or fewer financial resources that can be spent in the near future to finance the City's programs. These funds are reported using modified accrual accounting, which measures cash and all other financial assets that can readily be converted to cash. Governmental funds include the General Fund and special revenue, capital project, debt service, and permanent funds. x Proprietary funds -- When the City charges customers for the services it provides, whether to outside customers or to other agencies within the City, these services are generally reported in proprietary funds. Proprietary funds (enterprise and internal service) utilize full accrual accounting; the same method used by private sector businesses. Enterprise funds report activities that provide supplies and services to the general public. Examples are the Sewage Disposal Fund and the Parking Fund. Internal service funds are reported as governmental activities on the government-wide statements. -6- x Fiduciary Funds -- The City acts as a trustee or fiduciary, for its employee pension plans. It is also responsible for other assets that, because of a trust arrangement, can be used only for the trust beneficiaries. The City's fiduciary activities are reported in separate Statements of Fiduciary Net Assets and Changes in Fiduciary Net Assets beginning on page 26. These funds, which include pension and other employee benefit funds, are reported using full accrual accounting. The government-wide statements exclude fiduciary fund activities and balances because these assets are restricted in purpose and do not represent spendable assets of the City to finance its operations. Additional Required Supplementary Information Following the basic financial statements is additional Required Supplementary Information that further explains and supports the information in the financial statements. The Required Supplementary Information includes required pension and other postemployment benefit supplementary information. Other Supplementary Information Other supplementary information includes combining financial statements for nonmajor governmental, proprietary, and fiduciary funds. These funds are added together, by fund type, and presented in single columns in the basic financial statements, but are not reported individually, as with major funds, on the governmental fund financial statements. FINANCIAL ANALYSIS OF THE GOVERNMENT AS A WHOLE The City’s combined net assets decreased $.4 million over the course of this fiscal year’s operations to a total of $443.8 million. The net assets of the governmental activities decreased $3.3 million or 1.5% and business-type activities increased $2.9 million or 1.3%. Net Assets as of June 30, (in millions of dollars) Governmental Business-type Total Primary Activities Activities Government 2009 2008 2009 2008 2009 2008 Assets Current and other non-current assets 64.4$ 77.2$ 82.1$ 78.1$ 146.5$ 155.3$ Capital assets 221.4 223.5 383.8 375.4 605.2 598.9 Total assets 285.8$ 300.7$ 465.9$ 453.5$ 751.7$ 754.2$ Liabilities Long-term liabilities 54.9$ 56.7$ 230.8$ 219.7$ 285.7$ 276.4$ Other liabilities 15.7 25.5 6.5 8.0 22.2 33.5 Total liabilities 70.6$ 82.2$ 237.3$ 227.7$ 307.9$ 309.9$ Net assets Invested in capital assets, net of related debt 191.5 187.1 185.4 178.5 376.9 365.6 Restricted 17.1 34.5 19.5 30.8 36.6 65.3 Unrestricted 6.6 (3.1) 23.7 16.4 30.3 13.3 Total net assets 215.2$ 218.5$ 228.6$ 225.7$ 443.8$ 444.2$ -7- The largest component (84.9%) of the City’s net assets reflects its investment in capital assets (e.g. land, buildings, equipment, infrastructure, and others), less any related debt outstanding that was needed to acquire or construct the assets. Restricted net assets are the next largest component, comprising 8.2%, is subject to external restrictions such as bond covenants, City Charter, State legislation or Constitutional provision. The remaining portion, unrestricted net assets are resources that may be used at the City’s discretion, but often have limitations based on policy action. The following condensed financial information was derived from the government-wide Statement of Activities and reflects how the City’s net assets changed during the fiscal year: Governmental Business-type Total Primary Activities Activities Government 2009 2008 2009 2008 2009 2008 Revenues Program revenues Charges for services 20.8$ 24.6$ 40.1$ 43.5$ 60.9$ 68.1$ Operating grants 26.4 20.4 1.6 28.0 20.4 Capital grants 2.6 2.5 .1 .2 2.7 2.7 General revenues Taxes 68.5 69.8 68.5 69.8 State shared revenue 16.0 16.5 16.0 16.5 Unrestricted Grants and Contributions 11.3 11.7 11.3 11.7 Unrestricted Investment Earnings 1.0 1.7 .4 1.9 1.4 3.6 Other - - - - - - Total revenues 146.6 147.2 42.2 45.6 188.8 192.8 Expenses General government, administrative 26.4 28.9 26.4 28.9 Public Safety 71.2 76.2 71.2 76.2 Public Works 37.6 40.0 37.6 40.0 Recreation and Culture 7.3 7.7 7.3 7.7 Community Development 6.4 6.4 6.4 6.4 Interest on Long Term Debt 1.8 1.5 1.8 1.5 Sewage Disposal System 26.3 27.4 26.3 27.4 Municipal Parking System 8.4 10.2 8.4 10.2 Cemetery .7 .7 .7 .7 Golf .9 1.1 .9 1.1 Garbage and Refuse Collection 1.5 1.4 1.5 1.4 Recycling 3.0 2.9 3.0 2.9 Potter Park Zoo - (.2) - (.2) Total expenses 150.7 160.7 40.8 43.5 191.5 204.2 Excess before transfers (4.1) (13.5) 1.4 2.1 (2.7) (11.4) Transfers in (out) (.5) 7.4 .5 (7.4) - - Changes in net assets (4.6) (6.1) 1.9 (5.3) (2.7) (11.4) Beginning net assets as restated 219.8 224.6 226.7 231.0 446.5 455.6 Ending net assets 215.2$ 218.5$ 228.6$ 225.7$ 443.8$ 444.2$ -8- Governmental Activities: The following chart depicts revenues of the governmental activities for the fiscal year: Property taxes comprised 26.4% of Governmental Activities revenue, with $2,030,071 representing debt service on voted unlimited tax- general obligation debt. The City’s operating millage is currently 15.01 mills. In accordance with Charter and State Constitutional provisions, the City may levy up to 19.1692 mills for operations in FY 2010. Income taxes comprised 19.8% of Governmental Activities revenue which fully appears within the General Fund. Local income tax rates are prescribed by State law, and limited in Lansing’s case to 1% of resident income and 0.5% of the income of persons working in the City, but living outside of its corporate boundaries. Income tax revenue decreased $1.85 million, due to economic conditions. State shared revenue is collected by the State of Michigan and distributed to local governments by formula allocation of portions of the State sales tax and motor fuel and weight taxes. General government operating grants increased $2.4 million, while public safety operating grants increased $3.9 million. -9- The following chart depicts expenses of the governmental activities for the fiscal year: Business-type Activities Net assets of the business-type activities increased by $1.9 million during the fiscal year. The Sewage Disposal System Fund net assets increased by $1.3 million. This is primarily a result of funding for capital costs of the combined sewer separation project. Sewage system revenues are expected to increase by 4% per year over the next five years to continue this 30 year project. Within nonmajor funds, Cemeteries and Golf remain subsidized by the General Fund. The City of Lansing is continuing its five year plan to eliminate the unrestricted net asset deficit in the Golf Fund. FINANCIAL ANALYSIS OF THE CITY’S FUNDS As the City completed the fiscal year, its governmental funds reported fund balances of $32.6 million. Of this total amount, $25.4 million constitutes unreserved unrestricted fund balance, which is available for appropriation for the general purposes of the City. This includes $5.7 million in the City’s Budget Stabilization Fund and $3.6 million in the General Fund. Further of the total amount of $32.6 million, $4.1 million constitutes unreserved fund balances but are restricted for the purposes of the funds they were set up for. The remainder of fund balance is reserved and is not available for new spending because it has already been reserved for specific purposes, including advances, inventory and encumbrances. -10- General Fund The General Fund is the chief operating fund of the City. At the end of fiscal year 2009, the General Fund fund balance was $5.1 million, including an unreserved/undesignated fund balance of $3.6 million. General Fund expenditures came in $2,154,215 more than revenues. Unreserved/undesignated fund balance decreased by $1,267,020. General Fund Budgetary Highlights: In light of budgetary challenges caused by expenditure pressures outpacing revenue growth, the FY 2009 budget was adopted with the goal of obtaining $3.35 million in union concessions. As soon as it became apparent that concessions would not be achievable, in conformity with the State Uniform Budget and Accounting Act, the Administration proposed a deficit elimination plan to the City Council. As in many other communities, the sudden downturn in the national economy and the worsening of Michigan’s already-challenged economy resulted in a projected loss of revenues. Then, with less than two months of the City’s fiscal year remaining, the State reduced the City’s revenue sharing allocation by $600,000. Adjustments to the budget were adopted by the City Council during the course of the year to address the projected year-end deficit. In addition to the State revenue sharing loss, within the last three months of the City’s fiscal year-end, the City sustained sudden decreases in General Fund revenues, including the temporary idling of one of the City’s two General Motors resulting in a further reduction of income tax revenues; the rapid decline of interest rates; reductions in personal property tax revenues due to bankruptcies; and a significant reduction of the City’s equity payment from the Lansing Board of Water. Despite the adopted budget amendment and additional attempts to reduce General Fund expenditures through a hiring freeze on a large number of position vacancies, a reduction in the City’s retiree healthcare prefunding contribution, the continued closure of one of the City’s golf courses, and a reduction of certain budgeted capital projects, the General Fund sustained a $2.1 million deficit, resulting in a decrease of the City’s General Fund fund balance of $2.1 million, and a $1.2 million decrease of unreserved/undesignated fund balance. No amounts were drawn down from the City’s Budget Stabilization special revenue fund. The deficit resulted in a decrease of total unreserved/undesignated reserves, which includes the Budget Stabilization Fund, from 9.4% of General Fund revenues to 8.4%. Sewage Disposal Fund Net assets increased $1.3 million to $204.8 million in FY2009. This was attributable to an increase in capital assets, net of related debt increasing $7.0 million for the City’s continuing combined sewer overflow project. Parking Fund The Municipal Parking Fund had no change in capital assets net of related debt. Unrestricted net assets increased $1.0 million, through the sale of the South Grand Ramp. Total net assets increased $.8 million from this transaction. Budget Stabilization Fund Fund balance at June 30, 2009 remained at $5.7 million. The Fund is limited by Ordinance to 10% of year end General Fund appropriations. The City appropriated no amounts to be spent from the fund for the FY 2008/2009 and FY 2009/2010 budgets. -11- Capital Assets Capital Assets: At the end of the fiscal year 2009, the City had invested $605 million, net of accumulated depreciation, in a broad range of capital assets (see the table below). Total depreciation charges for the fiscal year were $24.6 million. Additional information regarding the City’s capital assets can be found in the notes to the basic financial statements. For more detailed information, please refer to footnote 3-D. Capital Assets as of June 30, (net of depreciation, in millions of dollars) Governmental Business-type Total Primary Activities Activities Government 2009 2008 2009 2008 2009 2008 Land 24.7$ 24.7$ 13.6$ 13.7$ 38.3$ 38.4$ Land improvements 5.5 3.9 13.6 14.1 19.1 18.0 Buildings and improvements 56.9 59.6 103.1 94.3 160.0 153.9 Equipment 6.6 7.3 .9 1.1 7.5 8.4 Sewers - - 184.9 200.8 184.9 200.8 Infrastructure 120.5 117.2 120.5 117.2 Subtotal 214.2 212.7 316.1 324.0 530.3 536.7 Construction in progress 7.2 12.1 67.7 51.4 74.9 63.5 Total 221.4$ 224.8$ 383.8$ 375.4$ 605.2$ 600.2$ Infrastructure capital assets in governmental activity funds of $10,794,508 were removed from service during the year. Debt Administration The City, along with the Lansing Building Authority (LBA), a blended component unit of the City, are empowered by law to authorize, issue, and sell debt obligations. Limited tax and unlimited tax general obligation bonds, are backed by the full faith and credit of the City. The City also issues revenue dedicated bonded debt, whose payment for principal and interest comes solely out of funds that receive legally restricted revenues. The Sewage Disposal fund has the only dedicated revenue bonds which are currently outstanding. LBA’s bonds financed the construction of parking, golf course, and firing range improvements. Revenues derived from user fees from persons using parking and golf facilities fund the debt service requirements for related improvements, but they are also backed by a limited tax pledge. The General Fund pays for firing range related debt service. More detailed information regarding the City’s long-term obligations is presented in Note 3-G (Long-Term Debt) to the financial statements.. -12- 2009 2008 Governmental: Special assessment bonds $0.00 $0.00 General obligation bonds (backed by the City) 17.64 20.62 Installment purchase contracts 12.39 14.04 Loans 1.29 1.53 Sub-total 31.32 36.19 Business Type: General obligation bonds (backed by the City) 194.43 182.42 Revenue bonds and notes (backed by specific fee revenue 38.29 41.12 Loans 4.18 4.18 Sub-total 236.90 227.72 Total $268.22 $263.91 Outstanding Debt as of June 30, (in millions of dollars) ECONOMIC CONDITION AND OUTLOOK The State of Michigan’s economic challenges, including the national recession, American automobile industry crisis, housing market and foreclosure impacts on property tax revenues, combined with rising labor force and healthcare costs, continues to place budgetary and fiscal constraints on the City of Lansing. A structural imbalance between revenue and expenditure growth exists, as is the case for the majority of cities, especially those that are urban centers, in Michigan. To address these budgetary challenges, and to protect vital services to the public, since his inauguration in January, 2006, Mayor Bernero has implemented a budgetary strategy of maximizing revenues; reducing expenses; improving operational and technological efficiencies; collaborating with neighboring municipalities, counties, and non-profit entities to provide funding for City-owned assets that benefit the entire region, as demonstrated by the transfer of Potter Park Zoo operations this fiscal year to Ingham County. The Mayor also continues to work aggressively with the unions to contain the rising cost of healthcare and other compensation issues. The FY 2009/2010 budget does not include any use of reserves, and the Mayor has pledged to direct the City in a fiscally responsible manner -- living within the City’s means and not using General Fund reserves or increasing the City’s property tax rate. CONTACTING THE CITY FINANCE DEPARTMENT This financial report is designed to provide our citizens, taxpayers, customers, investors, and creditors with a general overview of the City’s finances and to demonstrate the City’s accountability for the money it receives. If you have any questions about this report or need additional financial information, contact the Finance Department at (517) 483-4500. City of Lansing Statement of Net Assets June 30, 2009 Primary Government Governmental Business-type Component Activities Activities Totals Units Assets Cash and investments 28,869,723$ 21,951,050$ 50,820,773$ 2,162,025$ Receivables, net 33,330,717 34,396,579 67,727,296 1,134,871 Internal balances (4,263,352) 4,263,352 - - Inventories, prepaids and other assets 2,569,675 994,973 3,564,648 199,621 Restricted assets: Cash and investments - 20,202,946 20,202,946 528,325 Receivables, net - 286,776 286,776 - Net other postemployment benefit asset 3,085,900 - 3,085,900 - Net pension asset 817,083 - 817,083 - Capital assets not being depreciated 31,888,092 81,275,929 113,164,021 - Capital assets being depreciated, net 189,539,977 302,534,326 492,074,303 77,655 Total assets 285,837,815 465,905,931 751,743,746 4,102,497 Liabilities Accounts payable and accrued liabilities 15,027,698 5,177,537 20,205,235 1,012,484 Accrued interest payable 341,460 1,195,615 1,537,075 11,744,975 Unearned revenues 349,401 144,684 494,085 597,618 Long-term liabilities: Due within one year 12,559,196 17,467,821 30,027,017 3,450,587 Due in more than one year 36,354,217 213,304,099 249,658,316 23,320,818 Net other postemployment benefit obligation 5,960,488 - 5,960,488 - Total liabilities 70,592,460 237,289,756 307,882,216 40,126,482 Net assets Invested in capital assets, net of related debt 191,516,475 185,430,669 376,947,144 39,520 Restricted for: Public safety 927,994 - 927,994 - Public works 6,372,442 - 6,372,442 - State mandated programs 6,337,884 - 6,337,884 - Debt service - 19,166,484 19,166,484 - Capital projects 1,870,672 288,328 2,159,000 - Endowments (non-expendable) 1,630,098 - 1,630,098 - Unrestricted (deficit) 6,589,790 23,730,694 30,320,484 (36,063,505) Total net assets (deficit)215,245,355$ 228,616,175$ 443,861,530$ (36,023,985)$ The accompanying notes are an integral part of the financial statements. -13- City of Lansing Statement of Activities For the Year Ended June 30, 2009 Program Revenues Operating Capital Charges Grants and Grants and Net (Expense) Functions/Programs Expenses for Services Contributions Contributions Revenue Primary government Governmental activities: General government 26,426,242$ 5,188,510$ 2,445,997$ -$ (18,791,735)$ Public safety 71,236,947 9,817,421 5,043,750 - (56,375,776) Public works 37,588,680 4,565,013 18,904,876 76,357 (14,042,434) Recreation and culture 7,298,385 1,217,445 23,488 44,000 (6,013,452) Community development 6,378,286 50,132 - 2,451,384 (3,876,770) Interest on long-term debt 1,803,125 - 44,100 - (1,759,025) Total governmental activities 150,731,665 20,838,521 26,462,211 2,571,741 (100,859,192) Business-type activities: Sewage disposal system 26,247,188 27,446,304 108,073 - 1,307,189 Municipal parking system 8,353,063 7,539,611 1,433,840 - 620,388 Cemetery 689,979 248,314 - 60,318 (381,347) Golf 927,200 448,067 - - (479,133) Garbage and rubbish collection 1,547,372 1,486,531 - - (60,841) Recycling 3,008,750 2,945,061 - - (63,689) Total business-type activities 40,773,552 40,113,888 1,541,913 60,318 942,567 Total primary government 191,505,217$ 60,952,409$ 28,004,124$ 2,632,059$ (99,916,625)$ Component units Brownfield redevelopment 1,365,063$ -$ 641,040$ -$ (724,023)$ Community development 3,575,930 - - - (3,575,930) Recreation and culture 6,133,499 4,993,965 1,116,822 - (22,712) Smart zone 1,304 - - - (1,304) Total component units 11,075,796$ 4,993,965$ 1,757,862$ -$ (4,323,969)$ &RQWLQXHG« -14--14- City of Lansing Statement of Activities (concluded) For the Year Ended June 30, 2009 Primary Government Governmental Business-typeComponent Activities Activities Totals Units Changes in net assets Net (expense) revenue (100,859,192)$ 942,567$ (99,916,625)$ (4,323,969)$ General revenues Property taxes 39,141,928 - 39,141,928 6,824,714 Income taxes 29,312,762 - 29,312,762 - Grants and contributions not restricted to specific programs 27,318,313 - 27,318,313 - Unrestricted investment earnings 978,034 413,850 1,391,884 60,161 Gain on sale of capital assets 32,310 725 33,035 - Transfers - internal activities (509,728)509,728 - - Total general revenues and transfers 96,273,619 924,303 97,197,922 6,884,875 Change in net assets (4,585,573)1,866,870 (2,718,703)2,560,906 Net assets (deficit), beginning of year, as restated 219,830,928 226,749,305 446,580,233 (38,584,891) Net assets (deficit), end of year 215,245,355$ 228,616,175$ 443,861,530$ (36,023,985)$ The accompanying notes are an integral part of the financial statements. -15- Governmental Fund Financial Statements Major Funds General Fund ±The General Fund is the general operating fund of the City. It is used to account for all financial resources except those required to be accounted for in another fund. Nonmajor Funds Non-major governmental funds are presented, by fund type, beginning on the pages listed below: Special Revenue funds, page 71. Debt Service funds, page 86. Capital Projects funds, page 90. Permanent funds, page 94. City of Lansing Balance Sheet - Governmental Funds June 30, 2009 Other Governmental General Funds Totals Assets Cash and cash equivalents 2,173,352$ 1,913,014$ 4,086,366$ Equity in pooled cash - 20,165,164 20,165,164 Accounts receivable, net 20,781,205 1,755,879 22,537,084 Taxes receivable 763,814 - 763,814 Special assessments receivable -810,753 810,753 Loans receivable - 1,401,087 1,401,087 Accrued interest receivable - 1,801,617 1,801,617 Due from other funds 459,473 436 459,909 Interfund receivable - 5,728,059 5,728,059 Advances to other funds 222,213 80,531 302,744 Due from other governments 53,552 5,486,925 5,540,477 Due from component units 201,180 - 201,180 Prepaids 52,032 - 52,032 Inventories 1,046,130 - 1,046,130 Total assets 25,752,951$ 39,143,465$ 64,896,416$ Liabilities and fund balances Liabilities Accounts payable 3,300,386$ 1,880,279$ 5,180,665$ Deposits payable - 136,817 136,817 Accrued payroll 2,245,082 192,568 2,437,650 Retainage payable 2,102,646 - 2,102,646 Indemnity bonds - 14,000 14,000 Due to other funds 4,602,130 201,662 4,803,792 Interfund payable 4,558,107 4,637,639 9,195,746 Advance from other funds - 222,213 222,213 Due to other governments 1,473,224 259,982 1,733,206 Deferred revenue 1,981,513 4,052,501 6,034,014 Other 413,626 - 413,626 Total liabilities 20,676,714 11,597,661 32,274,375 Fund balances Reserved for advances 222,213 80,531 302,744 Reserved for prepaids 52,032 - 52,032 Reserved for inventories 1,046,130 - 1,046,130 Reserved for encumbrances - 243,835 243,835 Unreserved, designated for subsequent years' expenditures: General fund 192,723 - 192,723 Special revenue funds - 5,393,327 5,393,327 Unreserved, undesignated reported in: General fund 3,563,139 - 3,563,139 Special revenue funds - 8,001,158 8,001,158 Debt service funds - 186,636 186,636 Capital projects funds - 12,010,219 12,010,219 Permanent funds - 1,630,098 1,630,098 Total fund balances 5,076,237 27,545,804 32,622,041 Total liabilities and fund balances 25,752,951$ 39,143,465$ 64,896,416$ The accompanying notes are an integral part of the financial statements. -16- City of Lansing Reconciliation of Fund Balances on the Balance Sheet for Governmental Funds to Net Assets of Governmental Activities on the Statement of Net Assets June 30, 2009 Fund balances - total governmental funds 32,622,041$ Amounts reported for governmental activities in the statement of net assets are different because: Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds. Add - capital assets 473,792,294 Deduct - accumulated depreciation (257,914,356) Because the focus of governmental funds is on short-term financing, some assets will not be available to pay for current expenditures. Those assets (i.e., receivables) are offset by deferred revenues in the governmental funds and, therefore, not included in fund balance. Add - deferred ambulance fees 1,124,824 Add - deferred nuisance fees 856,689 Add - deferred loans receivable 1,185,000 Add - deferred long-term interest receivable 1,801,617 Add - deferred long-term special assessments 716,483 Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The assets and liabilities of the internal service funds are included in governmental activities in the statement of net assets.10,708,878 Prepaid costs related to other postemployment benefits are not available for current period expenditures and, therefore, are not reported in the funds. Add: other postemployment benefit plan asset 3,085,900 Add: net pension asset 817,083 Long-term liabilities are not due and payable in the current period and therefore are not reported in the funds. Deduct - bonds, loans and leases payable (30,474,455) Deduct - accrued interest on bonds, loans and leases payable (322,913) Add - deferred bond issuance costs 55,864 Deduct - other postemployment benefit obligation (5,960,488) Deduct - compensated absences and other long-term liabilities (16,849,106) Net assets of governmental activities 215,245,355$ The accompanying notes are an integral part of the financial statements. -17- City of Lansing Statement of Revenues, Expenditures and Changes in Fund Balances Governmental Funds For the Year Ended June 30, 2009 Other Governmental General Funds Totals Revenues Taxes and special assessments 36,703,522$ 2,555,371$ 39,258,893$ Income taxes 29,312,762 - 29,312,762 Licenses and permits 1,325,119 - 1,325,119 Intergovernmental 17,018,146 21,979,893 38,998,039 Charges for services 11,124,945 9,230,697 20,355,642 Fines and forfeits 3,562,028 580,972 4,143,000 Interest and rents 820,934 375,625 1,196,559 Contributions 10,338,020 34,036 10,372,056 Donations from private sources - 44,000 44,000 Other revenues 794,905 259,304 1,054,209 Total revenues 111,000,381 35,059,898 146,060,279 Expenditures Current expenditures: General government 26,529,134 2,422,671 28,951,805 Public safety 63,557,003 6,525,459 70,082,462 Public works 5,626,945 - 5,626,945 Highways and streets - 9,096,366 9,096,366 Recreation and culture 8,315,385 137,383 8,452,768 Other functions 2,336,379 10,262,693 12,599,072 Debt service: Principal 725,804 4,017,342 4,743,146 Interest 715,601 1,085,793 1,801,394 Capital outlay - 14,855,863 14,855,863 Total expenditures 107,806,251 48,403,570 156,209,821 Revenues over (under) expenditures 3,194,130 (13,343,672) (10,149,542) Other financing sources (uses) Transfers in 546,179 11,055,692 11,601,871 Transfers out (6,015,484) (6,564,115) (12,579,599) Insurance proceeds 120,960 - 120,960 Proceeds on sale of capital assets - 1,587,216 1,587,216 Total other financing sources (uses) (5,348,345) 6,078,793 730,448 Net change in fund balances (2,154,215) (7,264,879) (9,419,094) Fund balances, beginning of year 7,230,452 34,810,683 42,041,135 Fund balances, end of year 5,076,237$ 27,545,804$ 32,622,041$ The accompanying notes are an integral part of the financial statements. -18- City of Lansing Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities For the Year Ended June 30, 2009 Net change in fund balances - total governmental funds (9,419,094)$ Amounts reported for governmental activities in the statement of activities are different because: Governmental funds report capital outlay as expenditures. However, in the statement of activities, the cost of those assets is allocated over their estimated useful lives as depreciation expense. Add - capital outlay 11,882,554 Deduct - depreciation expense (12,888,406) Deduct - loss on disposal of capital assets (1,904,687) Revenues in the statement of activities that do not provide current financial resources are not reported as revenues in the funds, but rather are deferred to subsequent fiscal years. Add - change in ambulance fees 406,934 Add - change in nuisance fees 25,813 Deduct - change in loans receivable (19,118) Add - change in long-term interest receivable 69,250 Deduct - change in deferred special assessments (40,608) Internal service funds are used by management to charge the costs of certain equipment maintenance to individual funds. The net increase (decrease) in the net assets of the internal service funds is reported with governmental activities. Add - net operating income from governmental activities in internal service funds (944,739) Add - gain on sale of capital assets from governmental internal service funds 32,310 Deduct - interest expense from governmental internal service funds (60,931) Add - transfers in governmental internal service funds 1,726,941 Deduct - transfers out governmental internal service funds (1,258,941) Debt proceeds provide current financial resources to governmental funds in the period issued, but issuing debt increases long-term liabilities in the statement of net assets. Repayment of debt principal is an expenditure in the funds, but the repayment reduces long-term liabilities in the statement of net assets. Add - principal payments on long-term liabilities 4,743,146 Certain expenditures are reported in governmental funds that reduce long-term liabilities for purposes of the statement of net assets. Add - decrease in liability for workers' compensation 2,894,155 Some expenses reported in the statement of activites do not require the use of current financial resources and therefore are not reported as expenditures in the funds. Add - decrease in accrued interest payable on long-term liabilities 40,830 Add - amortization of debt-related costs 18,370 Deduct - decrease in other postemployment benefit obligation (750,445) Add - increase in other net pension asset 817,083 Add - decrease in the accrual for compensated absences 44,010 Change in net assets of governmental activities (4,585,573)$ The accompanying notes are an integral part of the financial statements. -19- City of Lansing Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual General Fund For the Year Ended June 30, 2009 Budget Variance with Original Final Actual Final Budget Revenues Property taxes 36,971,767$ 36,971,767$ 36,703,522$ (268,245)$ Income taxes 29,400,000 29,400,000 29,312,762 (87,238) Licenses and permits 1,446,624 1,446,624 1,325,119 (121,505) Intergovernmental 17,623,484 17,053,484 17,018,146 (35,338) Charges for services 11,471,730 11,471,730 11,124,945 (346,785) Fines and forfeits 3,910,975 3,910,975 3,562,028 (348,947) Interest and rents 1,238,120 1,008,120 820,934 (187,186) Contributions 10,582,052 10,647,095 10,338,020 (309,075) Other revenues 184,248 184,248 794,905 610,657 Total revenues 112,829,000 112,094,043 111,000,381 (1,093,662) Expenditures General government: Attorney's office 1,343,277 1,377,766 1,376,824 942 City TV 276,318 285,624 176,420 109,204 City clerk 989,853 944,401 927,295 17,106 Council 692,651 683,908 619,000 64,908 Courts 5,630,323 5,235,071 5,213,178 21,893 Internal audit 153,101 152,617 145,178 7,439 Finance 11,359,067 10,827,524 10,739,687 87,837 Library rental 150,000 156,500 155,060 1,440 LEPFA support 1,116,821 1,116,821 1,116,821 - Human resources 2,025,107 1,916,601 1,849,505 67,096 Mayor 730,498 731,128 730,803 325 Planning / neighborhood development 3,710,014 3,498,679 3,479,363 19,316 Budgeted cost reduction measures (3,350,000) - - - Budgetary savings from attrition (1,400,000) - - - Total general government 23,427,030 26,926,640 26,529,134 397,506 Public safety: Police 34,542,203 33,902,483 34,027,251 (124,768) Fire 29,633,908 29,141,868 29,529,752 (387,884) Total public safety 64,176,111 63,044,351 63,557,003 (512,652) Public works: Environmental 5,358,736 5,697,042 5,423,154 273,888 Sidewalks and alleys 225,134 225,134 203,791 21,343 Total public works 5,583,870 5,922,176 5,626,945 295,231 Parks and recreation 9,434,848 8,371,644 8,315,385 56,259 Other functions: Human relations / community services 983,505 763,243 746,210 17,033 Human services / community support 1,685,000 1,741,048 1,590,169 150,879 Total other functions 2,668,505 2,504,291 2,336,379 167,912 &RQWLQXHG« -20- City of Lansing Statement of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual (Concluded) General Fund For the Year Ended June 30, 2009 Budget Variance with Original Final Actual Final Budget Expenditures (concluded) Debt service: Principal 725,805$ 725,805$ 725,804$ 1$ Interest and fees 715,650 715,650 715,601 49 Total debt service 1,441,455 1,441,455 1,441,405 50 Total expenditures 106,731,819 108,210,557 107,806,251 404,306 Revenues over expenditures 6,097,181 3,883,486 3,194,130 (689,356) Other financing sources (uses) Transfers in 862,000 737,000 546,179 (190,821) Transfers out (7,005,181) (6,254,019) (6,015,484) 238,535 Insurance proceeds - - 120,960 120,960 Proceeds on sale of capital assets 46,000 46,000 - (46,000) Total other financing sources (uses) (6,097,181) (5,471,019) (5,348,345) 122,674 Net change in fund balance - (1,587,533) (2,154,215) (566,682) Fund balance, beginning of year 7,230,452 7,230,452 7,230,452 - Fund balance, end of year 7,230,452$ 5,642,919$ 5,076,237$ (566,682)$ The accompanying notes are an integral part of the financial statements. -21- Proprietary Fund Financial Statements Major Funds Sewage Disposal System Fund ±This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund ±This fund accounts for the operation of City-owned parking facilities. Nonmajor Funds and Internal Service Funds Nonmajor enterprise funds and internal service funds are presented, by fund type, beginning on the pages listed below: Enterprise funds, page 96. Internal Service funds, page 104. City of Lansing Statement of Fund Net Assets Proprietary Funds June 30, 2009 Governmental Business-type Activities - Enterprise Funds Activities - Sewage Municipal Other Disposal Parking Enterprise Internal System System Funds Totals Service Funds Assets Current assets: Cash and cash equivalents 7,942,129$ 356,543$ 9,646$ 8,308,318$ -$ Equity in pooled cash - 13,351,858 1,445,130 14,796,988 3,463,937 Receivables: Accounts, net 2,951,850 48,880 437,645 3,438,375 274,705 Accrued interest 931 267,923 - 268,854 - Lease receivable, current 570,057 2,853,971 - 3,424,028 - Inventories 85,529 - 72,175 157,704 819,001 Prepaids - - - - 592,289 Due from other funds 4,601,694 - - 4,601,694 - Interfund receivable - - - - 4,621,943 Restricted assets: Cash and cash equivalents 20,192,311 10,635 - 20,202,946 - Accounts receivable -277,693 - 277,693 - Accrued interest receivable 9,083 - - 9,083 - Total current assets 36,353,584 17,167,503 1,964,596 55,485,683 9,771,875 Noncurrent assets: Lease receivable 11,747,453 15,517,869 - 27,265,322 - Bond issue costs 432,933 404,336 - 837,269 4,359 Net pension asset - - - - - Net other postemployment benefit asset - - - - - Capital assets not being depreciated 68,065,688 12,686,588 523,653 81,275,929 55,297 Capital assets being depreciated, net 272,098,495 26,858,944 3,576,887 302,534,326 5,494,834 Total non-current assets 352,344,569 55,467,737 4,100,540 411,912,846 5,554,490 Total assets 388,698,153 72,635,240 6,065,136 467,398,529 15,326,365 Liabilities Current liabilities: Accounts payable 4,486,518 203,977 72,533 4,763,028 891,862 Deposits payable - 47,910 - 47,910 - Accrued interest payable 1,034,910 150,940 9,765 1,195,615 18,547 Accrued payroll 118,741 79,940 42,829 241,510 253,810 Claims incurred but not reported - - - - 1,863,416 Due to other funds 256,783 1,028 - 257,811 - Interfund payable 979,992 - 174,264 1,154,256 - Advances from other funds - 80,531 - 80,531 - Due to other governments 125,089 - - 125,089 - Unearned revenues - - 144,684 144,684 - Current portion of: Long-term debt 11,135,000 5,769,007 70,000 16,974,007 135,000 Compensated absences 302,785 154,442 36,587 493,814 420,042 Total current liabilities 18,439,818 6,487,775 550,662 25,478,255 3,582,677 Noncurrent liabilities: Long-term debt 165,392,203 47,180,603 627,315 213,200,121 905,000 Compensated absences 63,755 32,519 7,704 103,978 129,810 Total non-current liabilities 165,455,958 47,213,122 635,019 213,304,099 1,034,810 Total liabilities 183,895,776 53,700,897 1,185,681 238,782,354 4,617,487 Net assets Invested in capital assets, net of related debt 176,387,423 5,640,021 3,403,225 185,430,669 4,510,131 Restricted for debt retirement 19,166,484 - - 19,166,484 - Restricted for capital projects - 288,328 - 288,328 - Unrestricted 9,248,470 13,005,994 1,476,230 23,730,694 6,198,747 Total net assets 204,802,377$ 18,934,343$ 4,879,455$ 228,616,175$ 10,708,878$ The accompanying notes are an integral part of the financial statements. -22- City of Lansing Statement of Revenues, Expenses and Changes in Fund Net Assets Proprietary Funds For the Year Ended June 30, 2009 Governmental Business-type Activities - Enterprise Funds Activities - Sewage Municipal Other Disposal Parking Enterprise Internal System System Funds Totals Service Funds Operating revenues Charges for services 27,446,304$ 7,539,611$ 5,127,973$ 40,113,888$ 59,392,910$ Operating expenses Personal services 6,053,752 2,538,636 3,454,304 12,046,692 5,400,176 Purchase of goods and services 8,153,209 1,840,570 2,514,094 12,507,873 53,528,717 Depreciation 8,229,981 1,918,625 161,308 10,309,914 1,408,756 Total operating expenses 22,436,942 6,297,831 6,129,706 34,864,479 60,337,649 Operating income (loss)5,009,362 1,241,780 (1,001,733)5,249,409 (944,739) Nonoperating revenues (expenses) Interest revenue 205,307 192,464 16,079 413,850 - Gain on sale of capital assets - 1,352,746 725 1,353,471 32,310 Interest expense and fees (3,810,246)(3,407,978)(43,595)(7,261,819)(60,931) Other revenue 108,073 1,433,840 - 1,541,913 - Total nonoperating expenses (3,496,866)(428,928)(26,791)(3,952,585)(28,621) Income (loss) before contributions and transfers 1,512,496 812,852 (1,028,524)1,296,824 (973,360) Capital contributions - - 60,318 60,318 - Transfers in 79,000 - 750,808 829,808 1,726,941 Transfers out (300,000)-(20,080)(320,080)(1,258,941) Change in net assets 1,291,496 812,852 (237,478)1,866,870 (505,360) Net assets, beginning of year, as restated 203,510,881 18,121,491 5,116,933 226,749,305 11,214,238 Net assets, end of year 204,802,377$ 18,934,343$ 4,879,455$ 228,616,175$ 10,708,878$ The accompanying notes are an integral part of the financial statements. -23- City of Lansing Statement of Cash Flows Proprietary Funds For the Year Ended June 30, 2009 Governmental Business-type Activities - Enterprise Funds Activities - Sewage Municipal Other Disposal Parking Enterprise Internal System System Funds Totals Service Funds Cash flows from operating activities Cash received from customers 27,480,234$ 9,280,499$ 5,113,224$ 41,873,957$ -$ Cash received from interfund services - - - - 55,670,028 Cash payments for goods and services (8,529,453)(1,797,412)(2,419,320)(12,746,185)(53,995,523) Cash payments to employees (6,005,784)(2,508,821)(3,442,295)(11,956,900)(5,295,669) Other receipts 108,073 1,433,840 - 1,541,913 - Net cash provided by (used for) operating activities 13,053,070 6,408,106 (748,391)18,712,785 (3,621,164) Cash flows from noncapital financing activities Transfers in 79,000 - 750,808 829,808 938,169 Transfers out (300,000)-(20,080)(320,080)(470,169) Net cash provided by (used for) noncapital financing activities (221,000)- 730,728 509,728 468,000 Cash flows from capital and related financing activities Proceeds from sale of capital assets - 1,410,402 725 1,411,127 32,310 Acquisition and construction of capital assets (29,886,987)(1,160,504)(60,319)(31,107,810)(935,237) Capital contributions received - - 60,318 60,318 - Principal paid on revenue and general obligation bonds (9,935,000)(5,385,000)(70,000)(15,390,000)(130,000) Interest paid on revenue and general obligation bonds (3,740,861)(1,518,666)(42,926)(5,302,453)(60,277) Proceeds from issuance of long-term debt 24,560,093 - - 24,560,093 - Payments received on capital lease - 2,667,263 - 2,667,263 - Net cash used for capital and related financing activities (19,002,755)(3,986,505)(112,202)(23,101,462)(1,093,204) Cash flows from investing activities Interest and dividends 205,307 192,464 16,079 413,850 - Net increase (decrease) in cash and cash equivalents (5,965,378)2,614,065 (113,786)(3,465,099)(4,246,368) Cash and cash equivalents, beginning of year, as restated 34,099,818 11,104,971 1,568,562 46,773,351 7,710,305 Cash and cash equivalents, end of year 28,134,440$ 13,719,036$ 1,454,776$ 43,308,252$ 3,463,937$ &RQWLQXHG« -24- City of Lansing Statement of Cash Flows Proprietary Funds (Concluded) For the Year Ended June 30, 2009 Governmental Business-type Activities - Enterprise Funds Activities - Sewage Municipal Other Disposal Parking Enterprise Internal System System Funds Totals Service Funds Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Operating income (loss)5,009,362$ 1,241,780$ (1,001,733)$ 5,249,409$ (944,739)$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation expense 8,229,981 1,918,625 161,308 10,309,914 1,408,756 Other receipts 108,073 1,433,840 - 1,541,913 - Change in: Accounts receivable 34,162 1,701,530 (14,749)1,720,943 899,061 Accrued interest receivable 77,863 39,358 - 117,221 - Inventories 15,008 - 5,480 20,488 (98,653) Prepaids - - - -(3,986) Due from other funds 372,472 - - 372,472 - Accounts payable (1,845,887)126,322 (658)(1,720,223)(203,123) Deposits payable - 4,575 - 4,575 - Accrued interest payable 90,502 (3,878)(910)85,714 (2,318) Accrued payroll 47,968 29,815 12,009 89,792 104,507 Claims incurred but not reported - - - -(198,972) Due to other funds (78,095)203 -(77,892)- Interfund payable 979,992 - 77,991 1,057,983 - Advances from other funds -(111,908)-(111,908)- Unearned revenues - - 11,356 11,356 - Compensated absences 11,669 27,844 1,515 41,028 40,246 Total adjustments 8,043,708 5,166,326 253,342 13,463,376 (2,676,425) Net cash provided by (used for) operating activities 13,053,070$ 6,408,106$ (748,391)$ 18,712,785$ (3,621,164)$ Non-cash transactions The accompanying notes are an integral part of the financial statements. The City transferred capital assets net of related debt and bond issuance costs in the amount amount $788,772 from the fleet maintenance fund to the engineering fund. This transaction did not involve cash. -25- Fiduciary Fund Financial Statements Pension and Other Post Employment Benefit Trust Funds ±Employee Pension Trust funds accept payments made by the City, invest fund resources, and calculate and pay pensions to beneficiaries. Combining schedules for fiduciary funds are presented in the notes to the financial statements. Agency Funds ±These funds account for resources held in a trustee or agent capacity for the 54-A District Court. Combining statements for agency funds are presented, by fund type, beginning on page 107. City of Lansing Statement of Fiduciary Net Assets Fiduciary Funds June 30, 2009 Pension and Other Postemployment Benefit Agency Trust Funds Funds Assets Cash and cash equivalents 14,225,999$ -$ Equity in pooled cash - 118,781 Investments: U. S. Government obligations 44,212,726 - Corporate bonds 197,253 - Common stocks 83,921,220 - Mutual funds 246,830,478 - Contribution receivable 997,677 - Dividends and interest receivable 467,421 - Total assets 390,852,774 118,781$ Liabilities Accounts payable 5,000,794 -$ Negative equity in pooled cash 25,480 - Undistributed receipts - 118,781 Total liabilities 5,026,274 118,781$ Net assets held in trust for Pension benefits 347,731,401 Other postemployment benefits 38,095,099 Total net assets 385,826,500$ The accompanying notes are an integral part of the financial statements. -26- City of Lansing Statement of Changes in Fiduciary Net Assets Pension and Other Postemployment Benefit Trust Funds For the Year Ended June 30, 2009 Additions Investment income: Net depreciation in fair value of investments (76,612,148)$ Interest income 4,441,276 Dividend income 472,488 Less investment expenses (1,535,583) Net investment loss (73,233,967) Contributions: Employer 32,508,966 Plan members 3,145,458 Total contributions 35,654,424 Total additions (net of investment loss) (37,579,543) Deductions Participant benefits 57,065,957 Administrative expense 37,375 Total deductions 57,103,332 Net deductions to net assets held in trust (94,682,875) Net assets held in trust for pension and other postemployment benefits Beginning of year 480,509,375 End of year 385,826,500$ The accompanying notes are an integral part of the financial statements. -27- Discretely Presented Component Units Discretely presented component units are entities that are legally separate from the City but for which the City is ILQDQFLDOO\DFFRXQWDEOHRUWKHLUUHODWLRQVKLSZLWKWKH&LW\LVVXFKWKDWH[FOXVLRQZRXOGFDXVHWKH&LW\¶VILQDQFLDO statements to be misleading or incomplete. The City has four discretely presented component units: Brownfield Redevelopment Authority Tax Increment Finance Authority Lansing Entertainment and Public Facilities Authority Smart Zone Complete financial statements for each of the individual component units may be obtained from the entity's administrative offices. City of Lansing Combining Statement of Net Assets Component Units June 30, 2009 Lansing Tax Entertainment Brownfield Increment & Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Assets Cash and cash equivalents 509,103$ 1,084,837$ 568,085$ -$ 2,162,025$ Receivables, net 754,762 22,052 333,279 24,778 1,134,871 Inventories, prepaids and other assets 40,758 34,514 124,349 - 199,621 Restricted cash and cash equivalents - - 528,325 - 528,325 Capital assets being depreciated, net - - 77,655 - 77,655 Total assets 1,304,623 1,141,403 1,631,693 24,778 4,102,497 Liabilities Accounts payable and accrued liabilities 612,903 - 399,581 - 1,012,484 Accrued interest payable 26,555 11,718,420 - - 11,744,975 Unearned revenues - - 597,618 - 597,618 Long-term debt: Due within one year 425,000 3,011,495 14,092 - 3,450,587 Due in more than one year 1,270,000 22,026,775 24,043 - 23,320,818 Total liabilities 2,334,458 36,756,690 1,035,334 - 40,126,482 Net assets Invested in capital assets, net of related debt - - 39,520 - 39,520 Unrestricted (deficit) (1,029,835) (35,615,287) 556,839 24,778 (36,063,505) Total net assets (deficit)(1,029,835)$ (35,615,287)$ 596,359$ 24,778$ (36,023,985)$ The accompanying notes are an integral part of the financial statements. -28- City of Lansing Combining Statement of Activities Component Units For the Year Ended June 30, 2009 Lansing Tax Entertainment Brownfield Increment & Public Redevelopment Finance Facilities Smart Authority Authority Authority Zone Totals Expenses Brownfield redevelopment 1,365,063$ -$ -$ -$ 1,365,063$ Community development - 3,575,930 - 1,304 3,577,234 Recreation and culture - - 6,133,499 - 6,133,499 Total expenses 1,365,063 3,575,930 6,133,499 1,304 11,075,796 Program revenues Charges for services - - 4,993,965 - 4,993,965 Operating grants and contributions 641,040 - 1,116,822 - 1,757,862 Total program revenues 641,040 - 6,110,787 - 6,751,827 Net program expense (724,023) (3,575,930) (22,712) (1,304) (4,323,969) General revenues Property taxes 985,868 5,812,764 - 26,082 6,824,714 Unrestricted investment earnings 2,715 52,262 5,184 - 60,161 Total general revenues 988,583 5,865,026 5,184 26,082 6,884,875 Change in net assets 264,560 2,289,096 (17,528) 24,778 2,560,906 Net assets (deficit), beginning of year (1,294,395) (37,904,383) 613,887 - (38,584,891) Net assets (deficit), end of year (1,029,835)$ (35,615,287)$ 596,359$ 24,778$ (36,023,985)$ The accompanying notes are an integral part of the financial statements. -29- -30- City of Lansing, Michigan Index Notes to the Financial Statements Page 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES A. Reporting Entity.................................................................................................... 31 B. Basis of Presentation............................................................................................. 33 C. Measurement Focus / Basis of Accounting .......................................................... 35 D. Assets, Liabilities and Equity ............................................................................... 36 E. Subsequent EvenWV«««««««««««««««««««««««.38 2. STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY A. Budgetary Information.......................................................................................... 38 B. Deficit Fund Balance/Net Assets.......................................................................... 39 3. DETAILED NOTES ON ALL FUNDS A. Deposits and Investments ..................................................................................... 40 B. Deposits, Investments and Securities Lending ±Pension Trust Fund.................. 42 C. Receivables........................................................................................................... 45 D. Capital Assets ....................................................................................................... 46 E. Payables................................................................................................................ 48 F. Interfund Receivables, Payables and Transfers.................................................... 48 G. Long-term Debt..................................................................................................... 50 H. Segment Information ±Enterprise Funds ............................................................ 53 I. Endowments ......................................................................................................... 53 J. Restatement........................................................................................................... 54 K. Subsequent Event.................................................................................................. 54 4. OTHER INFORMATION A. Risk Management................................................................................................. 54 B. Property Taxes...................................................................................................... 55 C. Contingent Liabilities .......................................................................................... 55 D. Defined Benefit Pension Plans ............................................................................. 56 E. Postemployment Benefits..................................................................................... 63 CITY OF LANSING, MICHIGAN Notes To Financial Statements -31- NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 1-A. Reporting Entity The City of Lansing (the “City”) was incorporated in 1859. In 1909, the City came under the provisions of Act 279, P.A. 1909, as amended (“Home Rule City Act”). The City operates under a strong Mayor form of government in which the Mayor is responsible for implementation and administration of City policy as established by City Council. The accounting and reporting policies of the City conform in all material respects to generally accepted accounting principles (GAAP) as applicable to governments. The Governmental Accounting Standards Board (GASB) is the standard setting body for establishing governmental accounting and financial reporting principles, which are primarily set forth in the GASB’s Codification of Governmental Accounting and Financial Reporting Standards (GASB Codification). Following is a summary of the significant policies: As required by generally accepted accounting principles, these financial statements present the City and its component units, entities for which the City is considered to be financially accountable. The financial data of the component units are included in the City’s reporting entity because of the significance of their operational or financial relationships with the City. (1)Blended Component Units: A blended component unit is a legally separate entity from the City but is so intertwined with the City that it is, in substance, the same as the City. It is reported as part of the City and its financial data is combined with data of the appropriate funds. The City has one blended component unit, the Building Authority with a fiscal June 30 year-end. This component unit provides services primarily to benefit the City. The blended unit is described as follows: (a)Building Authority (the “Authority”): The Authority was established by the City under Act 31, Michigan Public Acts of 1948. The Mayor, with the advice and consent of City Council, appoints the Authority's governing body and designates management. The Authority uses the proceeds of its tax-exempt bonds to finance the construction or acquisition of capital assets for the City only. The bonds are secured by lease agreements with the City and will be retired through lease payments from the City. The financial activity, assets, liabilities and equity of the Authority are incorporated within the City’s Municipal Parking System and Golf enterprise funds, and the 1998 Building Authority Debt Service Fund. (2)Discretely Presented Component Units: Discretely presented component units are entities that are legally separate from the City but for which the City is financially accountable, or their relationship with the City is such that exclusion would cause the City’s financial statements to be misleading or incomplete. The City has four discretely presented component units, the Brownfield Redevelopment Authority, the Tax Increment Financing Authority, the Lansing Entertainment and Public Facilities Authority, and the Smart Zone, each with a fiscal June 30 year-end. The discretely presented component units are as follows: CITY OF LANSING, MICHIGAN Notes To Financial Statements -32- (a)Brownfield Redevelopment Authority: The Authority was established by the City on August 17, 1997, under the authority contained in Act 381, Michigan Public Acts of 1996 (the Act). The Act authorizes the City to establish and to designate the boundaries of a Brownfield redevelopment zone. The Authority is appointed by City Council to preside over such a zone, and it is authorized to promote the revitalization of environmentally distressed areas within the City of Lansing. The Act allows the Authority to participate in a broad range of improvement activities intended to encourage the reuse of industrial and commercial property by offering economic incentives for redevelopment to prevent property value deterioration. Tax increment financing plans must be approved by the City. Tax increment financing permits the Authority to capture tax revenues which are attributable to increases in the value of real and personal property located within an approved project area. Current activities of the Authority include collections of property tax revenues on project areas for the Rite Aid Pharmacy and the former Motor Wheel Site Plant. (b)Tax Increment Finance Authority (“TIFA”): The TIFA was established by the City under the authority contained in Act 450, Michigan Public Acts of 1981. The Act authorizes the City to designate specific districts within its corporate limits as TIFA districts. The TIFA presides over such districts, formulating plans for public improvements, economic development, neighborhood revitalization, and historic preservation within the districts. The Act allows the TIFA to participate in a broad range of improvement activities intended to contribute to economic growth and prevent property value deterioration. The TIFA’s governing body is appointed by the Mayor with the advice and consent of the City Council. Bond issuances, to fund the above activities, are approved by the City Council and the legal liability for the debt remains with the City. (c)Lansing Entertainment and Public Facilities Authority (“LEPFA”): LEPFA was established under the charter of the City of Lansing in February 1996, replacing the former Greater Lansing Convention/Exhibition Authority, which had been responsible for operating and managing the Lansing Center and the Lansing Civic Arena (the latter through the fiscal year ended June 30, 1995). LEPFA was established to oversee the management and operations of the Lansing Center, the City Market and the Oldsmobile Park stadium. The Authority is chartered as a building authority under the provisions of Act 31, Public Acts of Michigan, 1948. In the event of dissolution or termination of the Authority, all assets and rights of the Authority shall revert to the City. The Authority's Board of Commissioners consists of thirteen members appointed by the Mayor of the City of Lansing and approved by the City Council. (d)Lansing Regional SmartZone (“Smart Zone”):The Smart Zone was established by the City of Lansing and the City of East Lansing under the authority contained in Act 281, Public Act of Michigan of 1986. The Act authorizes the Cities to create a multi- jurisdictional local development finance authority. The Smart Zone shall be known and CITY OF LANSING, MICHIGAN Notes To Financial Statements -33- exercise its powers under title of the Local Development Finance Authority of the Cities of Lansing and East Lansing. The Smart Zone was created in order to eliminate the conditions of unemployment, underemployment and joblessness, and to promote economic growth in the City.The Smart Zone's Board of Commissioners consists of seven members, three of which are appointed by the City of Lansing, three are appointed by the City of East Lansing, and one is appointed by the Ingham County Board of Commissioners.. Component Unit Financial Statements: Complete financial statements for each of the individual component units may be obtained from the entity's administrative offices. City of Lansing Building Authority 8th Floor 124 West Michigan Avenue Lansing, Michigan 48933 Brownfield Redevelopment Authority 401 S. Washington Square, Suite 100 Lansing, Michigan 48933 Tax Increment Finance Authority 401 S. Washington Square, Suite 100 Lansing, Michigan 48933 Lansing Entertainment and Public Facility Authority 333 East Michigan Avenue Lansing, Michigan 48933 1-B. Basis of Presentation Government-wide Financial Statements. The statements of net assets and activities display information about the primary government (the City) and its component units. These statements include the financial activities of the overall government, except for fiduciary activities. Eliminations have been made to minimize the double-counting of internal activities. These statements distinguish between the City’s governmental and business-type activities. Governmental activities generally are financed through taxes, intergovernmental revenues and other nonexchange transactions. Business-type activities are financed in whole or in part by fees charged to external parties. The statement of activities presents a comparison between direct expenses and program revenues for the different business-type activities of the City and for each function of the City’s governmental activities. Direct expenses are those that are specifically associated with a program or function and, therefore, are clearly identifiable to a particular function. Indirect expense allocations that have been made in the funds have been reversed for the statement of activities. Program revenues include (a) fees, fines and charges paid by the recipients of goods or services offered by the programs and (b) grants and contributions that are restricted to meeting the operational or capital requirements of a particular program. Revenues that are not classified as program revenues, including all taxes, are presented as general revenues. CITY OF LANSING, MICHIGAN Notes To Financial Statements -34- Fund Financial Statements. The fund financial statements provide information about the City’s funds, including its fiduciary funds and blended component unit. Separate statements for each fund category – governmental, proprietary and fiduciary – are presented. The emphasis of fund financial statements is on major governmental and enterprise funds, each displayed in a separate column. All remaining governmental and enterprise funds are aggregated and reported as nonmajor funds. The City reports the following major governmental fund: General fund. This fund is the City’s primary operating fund. It accounts for all financial resources of the general government, except those required to be accounted for in another fund. The City reports the following major enterprise funds: Sewage Disposal System Fund. This fund accounts for the provision of sewage disposal services to the residents of the City. Municipal Parking System Fund. This fund accounts for the operating of City-owned parking facilities. Additionally, the City reports the following fund types: Special revenue funds. These funds account for revenue sources that are legally restricted to expenditures for specific purposes not including major capital projects. Debt service funds. These funds account for the resources accumulated and payments made for principal and interest on long-term general obligation debt of governmental funds. Capital projects funds. These funds account for the acquisition of capital assets or construction of major capital projects not being financed by proprietary funds. Permanent funds. These funds account for resources that are legally restricted to the extent that only earnings, and not principal, may be used for purposes that support the government’s programs. Enterprise funds. These funds account for those operations that are financed and operated in a manner similar to private business or where the City has decided that the determination of revenues earned, costs incurred and/or net income is necessary for management accountability. Internal service funds. These funds account for operations that provide services to other departments or agencies of the City, or to other governments, on a cost-reimbursement basis. This includes operating a maintenance facility for trucks and equipment used by the Public Service Department, and health care self-insurance services. CITY OF LANSING, MICHIGAN Notes To Financial Statements -35- Pension and other postemployment benefit trust funds. These funds account for the accumulation of resources to be used for retirement annuity payments to eligible full-time employees of the City, certain healthcare costs, and other retirement distributions. Agency Funds. These funds account for resources held in a trustee or agent capacity for the 54- A District Court. 1-C. Measurement Focus / Basis of Accounting Government-wide, Proprietary and Fiduciary Fund Financial Statements. The government-wide, proprietary and fiduciary fund financial statements are reported using the economic resources measurement focus and the accrual basis of accounting, except for agency funds, which do not have a measurement focus. Revenues are recorded when earned and expenses are recorded at the time liabilities are incurred, regardless of when the related cash flows take place. Proprietary fund operating revenues, such as charges for services, result from exchange transactions associated with the principal activity of the fund. Exchange transactions are those in which each party receives and gives up essentially equal values. Nonoperating revenues, such as subsidies and investment earnings, result from nonexchange transactions or ancillary activities. Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operating revenues and expenses generally result from providing services and producing and delivering goods in connection with a proprietary fund’s principal ongoing operations. The principal operating revenues of the City’s enterprise and internal service funds are charges to customers for sales and services. Operating expenses for enterprise funds and internal service funds include the cost of sales and services, administrative expenses, and depreciation on capital assets. All revenues and expenses not meeting this definition are reported as nonoperating revenues and expenses. Nonexchange transactions, in which the City gives (or receives) value without directly receiving (or giving) equal value in exchange, include property taxes, grants, entitlements and donations. On an accrual basis, revenue from property taxes is recognized in the fiscal year for which the taxes are levied. Revenue from grants, entitlements and donations is recognized in the fiscal year in which all eligibility requirements have been satisfied. Governmental Fund Financial Statements. Governmental funds are reported using the current financial resources measurement focus and the modified accrual basis of accounting. Under this method, revenues are recognized when measurable and available. The City considers all revenues reported in the governmental funds to be available if they are collected within three months after year-end, except for income taxes that use a 45-day collection period, property taxes that use a 60- day collection period, and reimbursement-based grants that use one year. Property taxes, income taxes, franchise taxes, licenses and interest are considered to be susceptible to accrual. Expenditures are recorded when the related fund liability is incurred, except for principal and interest on general long-term debt, compensated absences, and claims and judgments, which are recognized as expenditures to the extent they have matured. General capital asset acquisitions are reported as expenditures in governmental funds. Proceeds of general long-term debt and acquisitions under capital leases, if any, are reported as other financing sources. CITY OF LANSING, MICHIGAN Notes To Financial Statements -36- Under the terms of grant agreements, the City funds certain programs by a combination of specific cost-reimbursement grants, categorical block grants, and general revenues. Thus, when program expenses are incurred, there are both restricted and unrestricted net assets available to finance the program. It is the City’s policy to first apply cost-reimbursement grant resources to such programs, followed by categorical block grants, and then by general revenues, subject to satisfying any grant program matching provisions. All governmental and business-type activities and enterprise funds of the City follow private-sector standards of accounting and financial reported issued prior to December 1, 1989, unless those standards conflict with guidance of the Governmental Accounting Standards Board. Governments also have the option of following subsequent private-sector guidance for their business-type activities and enterprise funds, subject to this same limitation. The City has elected not to follow subsequent private-sector guidance. As a general rule the effect of interfund activity has been eliminated from the government-wide financial statements. Exceptions to this general rule are payments in lieu of taxes and various other functions of the government. Elimination of these charges would distort the direct costs and program revenues reported for the various functions concerned. 1-D. Assets, Liabilities and Equity Deposits and Investments The City maintains an investment pool for all City funds. Each fund’s portion of the investment pool is displayed on the statement of net assets/balance sheet as “equity in pooled cash.” The City’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. State statutes authorize the government to deposit in the accounts of federally insured banks, credit unions, and savings and loan associations, and to invest in obligations of the U.S. Treasury, certain commercial paper, repurchase agreements, bankers acceptances, and mutual funds composed of otherwise legal investments. Investments are stated at fair value. Short-term investments are reported at cost, which approximates fair value. Securities traded on a national or international exchange are valued at the last reported sales price at current exchange rates. Mortgages are valued on the basis of future principal and interest payments, and are discounted at prevailing interest rates for similar instruments. Investments that do not have established market values are reported at estimated fair value. Cash deposits are reported at carrying amounts, which reasonably approximates fair value. Unrealized appreciation or depreciation on pension trust fund investments due to changes in fair value are recognized each year. Receivables and Payables All trade and delinquent property tax receivables are shown net of an allowance for uncollectibles, as applicable. Certain notes receivable in governmental funds consist of rehabilitation and redevelopment loans that are generally not expected or scheduled to be collected in the subsequent year. CITY OF LANSING, MICHIGAN Notes To Financial Statements -37- Activity between funds that are representative of lending/borrowing arrangements outstanding at the end of the fiscal year are referred to as either interfund receivables/payables (i.e., the current portion of interfund loans) or advances to/from other funds (i.e., the non-current portion of interfund loans). All other outstanding balances between funds are reported as due to/from other funds. Any residual balances outstanding between the governmental and business-type activities are reported in the government-wide financial statements as internal balances. Inventories, Prepaid Items and Other Assets All inventories are valued at cost using the first-in/first-out method. Inventories of governmental funds are recorded as expenditures when consumed. Certain payments to vendors reflect costs applicable to future accounting periods and are recorded as prepaid items in both government-wide and fund financial statements. Capital Assets Capital assets, which include property, plant, equipment, and infrastructure assets (e.g., roads, bridges, sidewalks, and similar items acquired or constructed since June 30, 1980), are reported in the applicable governmental or business-type activities columns in the government-wide financial statements. Capital assets that are used for governmental activities are only reported in the government-wide statements. Infrastructure (“public domain”) assets, including roads, bridges, sanitary sewers, drains, curbs, and gutters are capitalized. With this measurement focus, all assets and liabilities (whether current or noncurrent) associated with the operations of these funds are included on the government-wide statement of net assets. All land and non-depreciable land improvements are capitalized, regardless of cost. Equipment and vehicles are capitalized when the cost of individual items exceed $5,000. The road and sewer networks are all capitalized regardless of cost. Buildings are capitalized over $100,000, and the recreational facilities’ thresholds range from $25,000 to $50,000. Capital assets of the primary government are depreciated using the straight-line method over the following estimated useful lives: Assets Years Buildings 20-50 Improvements 8-50 Equipment 3-15 Sanitary sewers 50 Infrastructure 10-75 CITY OF LANSING, MICHIGAN Notes To Financial Statements -38- Compensated Absences It is the government’s policy to permit employees to accumulate earned but unused vacation and compensatory time benefits, subject to certain limitations. Certain bargaining unit employees are also permitted to accumulate earned but unused sick leave. All vacation and compensatory time pay and 50 percent of sick leave are accrued when incurred in the government-wide and proprietary fund financial statements. A liability for these amounts is reported in governmental funds only if they have matured, for example, as a result of employee resignations or retirements. Long-term Obligations In the government-wide financial statements, and proprietary fund types in the fund financial statements, long-term debt and other long-term obligations are reported as liabilities in the applicable governmental activities, business-type activities, or proprietary fund type statement of net assets. Bond premiums and discounts, as well as issuance costs, are deferred and amortized over the life of the bonds using the effective interest method. Bonds payable are reported net of the applicable bond premium or discount. Bond issuance costs are reported as deferred charges and amortized over the term of the related debt. In the fund financial statements, governmental fund types recognize bond premiums and discounts, as well as bond issuance costs, during the current period. The face amount of debt issued is reported as other financing sources. Premiums received on debt issuances are reported as other financing sources while discounts on debt issuances are reported as other financing uses. Issuance costs, whether or not withheld from the actual debt proceeds received, are reported as debt service expenditures. Fund Equity In the fund financial statements, governmental funds report reservations of fund balance for amounts that are not available for appropriation or are legally restricted by outside parties for a specific purpose. Fund balance designations represent tentative management plans that are subject to change. 1-E. Subsequent Events In preparing these financial statements, management has evaluated, for potential recognition or disclosure, significant events or transactions that occurred during the period subsequent to June 30, 2009, the most recent statement of net assets presented herein, through the auditors’ report date, the date these financial statements were available to be issued. No significant such events or transactions were identified, other than the matter disclosed in Note 3-K, entitled "Subsequent Event". CITY OF LANSING, MICHIGAN Notes To Financial Statements -39- NOTE 2 – STEWARDSHIP, COMPLIANCE AND ACCOUNTABILITY 2-A. Budgetary Information The City follows these procedures in establishing the budgetary data reflected in the financial statements: On or before the fourth Monday in March, the Mayor submits to the City Council a proposed operating budget for the fiscal year commencing the following July 1. The operating budget includes proposed expenditures and the means of financing them. A public hearing on the proposed use of funds is held by the Mayor, and a public hearing on the annual appropriations as proposed by the City Council is held no later than one week prior to adoption of the annual appropriation measure. Not later than the third Monday in May, the Council adopts a budget for the ensuing fiscal year, makes an appropriation of the money needed therefore, and sets the property tax rate necessary to support the appropriations measure. The appropriated budget is prepared by fund, department and the mandatory expenditure accounts as established by the State of Michigan’s Uniform Chart of Accounts. The legal level of budgetary control is the mandatory expenditure accounts level. The mandatory accounts are personal services, supplies and operating expense, capital outlay, debt service, transfers and contingency. Transfers of appropriations between the mandatory accounts require the approval of the City Council. However, the Mayor may authorize budget transfers between mandatory accounts in a department, but the additional amount may not exceed fifteen (15%) of the Council's appropriation being added to, or five thousand dollars ($5,000), whichever is less. Budget-to-actual schedules that demonstrate compliance at the legal level of budgetary control are not included herein as it would be impractical due to the high level of detail that would be needed. Such schedules are included in the City's separately issued Budget Report. Copies of the report may be obtained from the Finance Department, 124 West Michigan Avenue, Lansing, Michigan 48933. The City formally adopts operating budgets for the General Fund and all Special Revenue Funds. Budgetary integration is employed as a management control device during the year for all budgeted funds. Except for the General Fund, these budgets are adopted on a basis consistent with generally accepted accounting principles ("GAAP"). In the General Fund, capital lease payments / installment payments are budgeted, but capital lease acquisitions are not. Appropriations lapse at year-end for all annual budgets. Appropriations are automatically carried forward for project-type budgets. Encumbrance accounting is employed in governmental funds. Encumbrances (e.g., purchase orders or contracts) outstanding at year end are reported as reservations of fund balances and do not constitute expenditures or liabilities because the commitments will be reappropriated and honored during the subsequent year. CITY OF LANSING, MICHIGAN Notes To Financial Statements -40- 2-B. Deficit Fund Balance/Net Assets The Special Assessments capital projects fund has a deficit fund balance of $169,200. This deficit is the result of a long-term advance from the general fund that was used to provide the working capital for the fund in prior years. As special assessments are collected, this deficit will be eliminated, and the advance repaid. The Golf enterprise fund also has a deficit in unrestricted net assets in the amount of $55,382 at June 30, 2009. The Brownfield Redevelopment Authority component unit has a deficit fund balance of $1,029,835 which is due to the full accrual accounting of all long-term debt, without reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). Total fund balance (before taking into consideration long-term debt) amounts to a positive balance of $400,962. The Tax Increment Finance Authority has a deficit fund balance of $35,615,287, which is due to the full accrual accounting of all long-term debt, without reflecting a corresponding receivable for tax captures to be received in future periods (which cannot be accrued in accordance with generally accepted accounting principles). Total fund balance (before taking into consideration long-term debt) amounts to a positive balance of $1,106,889. NOTE 3 – DETAILED NOTES ON ALL FUNDS 3-A. Deposits and Investments Following is a reconciliation of deposit and investment balances (including both pooled cash and investments as well as pension trust fund balances; see Note 3-B) as of June 30, 2009: Statement of Net Assets Cash and investments $ 50,820,773 Restricted cash and investments 20,202,946 Statement of Fiduciary Net Assets Pension trust funds: Cash and cash equivalents 14,225,999 Negative equity in pooled cash (25,480) Investments 375,161,677 Agency fund: Equity in pooled cash 118,781 Total $ 460,504,696 CITY OF LANSING, MICHIGAN Notes To Financial Statements -41- Deposits and Investments: Bank deposits: Checking/savings accounts $ 10,655,656 Certificates of deposit (due within one year) 3,583,528 Investments in securities and mutual funds: Pooled investments 56,723,153 Pension investments 389,387,676 Cash on hand 154,683 Total $ 460,504,696 The City chooses to disclose its pooled investments by specifically identifying each. As of year end, the City had the following pooled investments. Carrying Amount (Fair Value) Credit Rating Mutual and cash management funds (uncategorized as to risk) $ 56,723,153 -n/a- Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowable investments as identified in the summary of significant accounting policies. The City’s investment policy does not have specific limits in excess of state law on investment maturities as a means of managing its exposure to fair value losses arising from increasing interest rates. Credit Risk. State law limits investments to specific government securities, certificates of deposit and bank accounts with qualified financial institutions, commercial paper with specific maximum maturities and ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual funds and qualified external investment pools as identified in the list of authorized investments in the summary of significant accounting policies. The City’s investment policy does not have specific limits in excess of state law on investment credit risk. Credit risk ratings, where applicable, have been identified above for the City’s investments. Custodial Credit Risk – Deposits. Custodial credit risk is the risk that in the event of a bank failure, the City’s deposits may not be returned. State law does not require and the City does not have a policy for deposit custodial credit risk. As of year-end, $13,389,049 of the City’s bank balance of $14,700,469 was exposed to custodial credit risk because it was uninsured and uncollateralized. The City’s investment policy does not specifically address this risk, although the City believes that due to the dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bank deposits. As a result, the City evaluates each financial institution with which it deposits City funds and assesses the level of risk of each institution; only those institutions with an acceptable estimated risk level are used as depositories. CITY OF LANSING, MICHIGAN Notes To Financial Statements -42- Custodial Credit Risk – Investments. For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. State law does not require and the City does not have a policy for investment custodial credit risk. On the investments listed above, there is no custodial credit risk, as these investments are uncategorized as to credit risk. Concentration of Credit Risk. State law limits allowable investments but does not limit concentration of credit risk as identified in the list of authorized investments in the summary of significant accounting policies. The City’s investment policy does not have specific limits in excess of state law on concentration of credit risk. All investments held at year end are reported above. 3-B. Deposits, Investments and Securities Lending – Pension Trust Funds The deposits and investments of the City’s pension trust funds are maintained separately from the City’s pooled cash and investments, and are subject to separate investment policies and state statutes. Accordingly, the required disclosures for the pension deposits and investments are presented separately. Deposits - The pension trust funds do not maintain any checking or other demand/time deposit accounts. Amounts reported as cash and cash equivalents in the statement of plan net assets are composed entirely of short-term investments in money market accounts. Investments - The Michigan Public Employees Retirement Systems’ Investment Act, Public Act 314 of 1965, as amended, authorizes the pension trust funds to invest in stocks, government and corporate securities, mortgages, real estate, and various other investment instruments, subject to certain limitations. The retirement boards have the responsibility and authority to oversee the investment portfolio. Various professional investment managers are contracted to assist in managing the pension trust funds’ assets. All investment decisions are subject to Michigan law and the investment policy established by the retirement boards. CITY OF LANSING, MICHIGAN Notes To Financial Statements -43- The investments of each pension trust fund are held in a bank administered trust fund. Following is a summary of pension investments as of June 30, 2009: Employees' Police Money Employees' and Fire Purchase Retiree Retirement Retirement Pension Health Care System System Plan VEBA Totals Investments at fair value, as determined by quoted market price: U.S. treasuries: Not on securities loan 350,115$ 998,130$ -$ -$ 1,348,245$ On securities loan 2,665,306 2,953,324 - - 5,618,630 U.S. agencies: Not on securities loan 24,643,862 32,921,855 - - 57,565,717 On securities loan 1,676,441 1,016,398 - - 2,692,839 Domestic corporate securities: Not on securities loan - 183,728 - - 183,728 Domestic equities: Not on securities loan 26,742,292 38,103,687 - - 64,845,979 On securities loan 5,818,318 7,297,464 - - 13,115,782 Real estate investment funds 7,276,000 10,363,000 - - 17,639,000 International equity mutual funds 13,693,000 19,673,000 - - 33,366,000 Domestic equity mutual funds 30,676,000 54,648,000 1,520,093 4,542,841 91,386,934 Domestic debt securities mutual funds 39,023,867 44,345,843 - 4,533,429 87,903,139 Money market funds 6,809,290 6,911,934 - 459 13,721,683 Total investments 159,374,491$ 219,416,363$ 1,520,093$ 9,076,729$ 389,387,676$ Credit Risk. The City’s pension investment policies provide that at least 90% of its investments in fixed income securities be rated BBB- or better by a nationally recognized statistical rating organization and the remaining 10% be rated at least B- or better. The City’s pension investments were rated by Standard & Poor’s as follows: Employees' Police Money Employees' and Fire Purchase Retiree Retirement Retirement Pension Health Care System System Plan VEBA Totals AAA 29,331,338$ 38,068,154$ -$ -$ 67,399,492$ Not rated 40,803,780 46,981,331 - 4,533,429 92,318,540 Assets not subject to credit risk 89,239,373 134,366,878 1,520,093 4,543,300 229,669,644 159,374,491$ 219,416,363$ 1,520,093$ 9,076,729$ 389,387,676$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -44- Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure of the counterparty, the City will not be able to recover the value of its investments or collateral securities that are in the possession of an outside party. The City’s pension investment policies require that investment securities be held in trust by a third-party institution in the name of the pension trust fund. As such, although uninsured and unregistered, the City’s pension investments are not exposed to custodial credit risk since the securities are held by the counterparty’s trust department in the name of the pension trust fund. Short-term investments in money market funds are not subject to custodial credit risk. Concentration of Credit Risk. At June 30, 2009, the pension investment portfolio was concentrated as follows: Police Employees' and Fire Retirement Retirement Investment Type Issuer System System U.S. Agencies FHLMC 6.5% 6.6% U.S. Agencies FNMA 7.7% 7.0% The City’s pension investment policies require diversification of fixed income securities; however, they do not specify percentages of dollar amounts by industry or issuer. Interest Rate Risk. As of June 30, 2009, maturities of the City’s pension debt securities were as follows: Investment Maturities (Fair Value) Less than More than 1 year 1 - 5 years 6 - 10 years 10 years Total Employees' Retirement System: U.S. treasuries 4,387$ 571,176$ 627,818$ 1,812,040$ 3,015,421$ U.S. agencies 3,579 4,220,677 9,367,012 12,729,035 26,320,303 7,966$ 4,791,853$ 9,994,830$ 14,541,075$ 29,335,724$ Police and Fire Retirement System: U.S. treasuries 5,281$ 634,640$ 794,532$ 2,517,001$ 3,951,454$ U.S. agencies 14,914 5,054,104 12,835,184 16,034,051 33,938,253 Domestic corporate securities - - 183,728 - 183,728 20,195$ 5,688,744$ 13,813,444$ 18,551,052$ 38,073,435$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -45- The City’s pension investment policies provide that the average duration of fixed income securities shall not deviate from the Lehman Brothers Aggregate Index duration by +/-20%. Securities Lending. Under contracts approved by the City, the pension trust funds are permitted to lend their securities to broker-dealers and banks (borrowers) for collateral that will be returned for the same securities in the future. The pension trust funds’ custodial banks manage the securities lending programs and receive cash as collateral. The collateral securities cannot be pledged or sold by the City unless the borrower defaults. Collateral cash is initially pledged at 100 percent of the fair value of the securities lent, and may not fall below 95 percent of the market value of the loaned security during the term of the loan. At all times, collateral cannot be more than $100,000 less than the market value of the loaned security. There are no restrictions on the amount of securities that can be loaned. Securities on loan at year-end are classified in the preceding schedule of custodial credit risk according to the category for the collateral received on the securities lent. At year-end, the pension trust funds have no credit risk exposure to borrowers because the amounts the City owes the borrowers exceed the amounts the borrowers owe the City. The contract with the pension trust fund custodians require them to indemnify the City if the borrowers fail to return the securities (and if the collateral is inadequate to replace the securities lent) or fail to pay the City for income distributions by the securities’ issuers while the securities are on loan. 3-C. Receivables Receivables are comprised of the following: Business- Governmental Type Activities Activities Accounts receivable, net 22,811,789$ 3,438,375$ Taxes receivable 763,814 - Special assessments receivable 810,753 - Loans receivable 1,401,087 - Accrued interest receivable 1,801,617 268,854 Due from other governments 5,540,477 - Due from other component units 201,180 - Lease receivable - 30,689,350 33,330,717$ 34,396,579$ Amount not expected to be collected within one year 3,703,100$ 27,265,322$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -46- 3-D. Capital Assets Capital assets activity for the year ended June 30, 2009, was as follows: Primary government Beginning Ending Balance Increases Decreases Balance Governmental activities Capital assets, not being depreciated: Land 24,740,636$ 83,159$ (76,359)$ 24,747,436$ Construction in progress 12,140,279 2,958,730 (7,958,353) 7,140,656 Total capital assets not being depreciated 36,880,915 3,041,889 (8,034,712) 31,888,092 Capital assets, being depreciated: Land improvements 9,076,660 1,913,442 - 10,990,102 Equipment and vehicles 40,082,638 1,581,863 (413,801) 41,250,700 Buildings 111,424,591 381,390 - 111,805,981 Infrastructure 305,591,726 13,857,560 (10,794,508) 308,654,778 Total capital assets being depreciated 466,175,615 17,734,255 (11,208,309) 472,701,561 Less accumulated depreciation for: Land improvements (5,233,442) (223,472) - (5,456,914) Equipment and vehicles (32,766,628) (2,260,850) 413,801 (34,613,677) Buildings (51,797,978) (3,137,725) - (54,935,703) Infrastructure (188,446,355) (8,675,115) 8,966,180 (188,155,290) Total accumulated depreciation (278,244,403) (14,297,162) 9,379,981 (283,161,584) Total capital assets, being depreciated, net 187,931,212 3,437,093 (1,828,328) 189,539,977 Governmental activities capital assets, net 224,812,127$ 6,478,982$ (9,863,040)$ 221,428,069$ As discussed in Note 3-J, beginning capital assets were increased by $1,345,564 to capitalize the costs of construction in progress that had been expensed in prior years. CITY OF LANSING, MICHIGAN Notes To Financial Statements -47- Beginning Ending Balance Increases Decreases Balance Business-type activities Capital assets, not being depreciated: Land 13,686,963$ -$ (88,255)$ 13,598,708$ Construction in progress 51,400,285 29,887,082 (13,610,146) 67,677,221 Total capital assets not being depreciated 65,087,248 29,887,082 (13,698,401) 81,275,929 Capital assets, being depreciated: Land improvements 23,322,165 73,833 (6,127) 23,389,871 Equipment and vehicles 5,647,916 79,651 (101,824) 5,625,743 Buildings 186,034,182 13,181,752 (4,205,780) 195,010,154 Sewers 246,962,321 1,583,892 (12,317,510) 236,228,703 Total capital assets being depreciated 461,966,584 14,919,128 (16,631,241) 460,254,471 Less accumulated depreciation for: Land improvements (9,233,101) (560,017) 6,127 (9,786,991) Equipment and vehicles (4,511,821) (278,555) 101,824 (4,688,552) Buildings (91,782,063) (4,276,276) 4,148,124 (91,910,215) Sewers (46,139,321) (5,195,066) - (51,334,387) Total accumulated depreciation (151,666,306) (10,309,914) 4,256,075 (157,720,145) Total capital assets, being depreciated, net 310,300,278 4,609,214 (12,375,166) 302,534,326 Business-type activities capital assets, net 375,387,526$ 34,496,296$ (26,073,567)$ 383,810,255$ Depreciation expense was charged to functions/programs of the primary government as follows: Governmental activities: General government 795,013$ Public safety 618,659 Public works 8,689,614 Recreation and culture 1,169,666 Community development 1,615,454 Internal service 1,408,756 Total depreciation expense - governmental activities 14,297,162$ Business-type activities: Sewage disposal system 8,229,981$ Municipal parking system 1,918,625 Golf 117,402 Other 43,906 Total depreciation expense - business-type activities 10,309,914$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -48- 3-E. Payables Accounts payable and accrued liabilities are comprised of the following: Business- Governmental Type Activities Activities Accounts payable 6,072,527$ 4,763,028$ Deposits payable 136,817 47,910 Accrued payroll 2,691,460 241,510 Contract retainage payable 2,102,646 - Indemnity bonds 14,000 - Due to other governments 1,733,206 125,089 Other 2,277,042 - 15,027,698$ 5,177,537$ 3-F. Interfund Receivables, Payables and Transfers At June 30, 2009, amounts due to/due from other funds were as follows: Due From Nonmajor Sewage Municipal General Governmental Disposal Parking Fund Funds System System Total Due to: General Fund -$ 201,662$ 256,783$ 1,028$ 459,473$ Nonmajor governmental funds 436 - - - 436 Sewage Disposal System 4,601,694 - - - 4,601,694 4,602,130$ 201,662$ 256,783$ 1,028$ 5,061,603$ The above balances generally resulted from a time lag between the dates that interfund goods and services are provided or reimbursable expenditures occur, transactions are recorded in the accounting system, and payments between funds are made. CITY OF LANSING, MICHIGAN Notes To Financial Statements -49- At June 30, 2009, advances to/due from other funds were as follows: Advances To Advances From Other Funds Other Funds General Fund 222,213$ -$ Nonmajor governmental funds 80,531 222,213 Municipal Parking System - 80,531 302,744$ 302,744$ In addition, at June 30, 2009, the following interfund receivables/payables were reported for funds with negative equity in pooled cash and investments: Interfund Interfund Receivable Payable General Fund -$ 4,558,107$ Nonmajor governmental funds 5,728,059 4,637,639 Sewage Disposal System - 979,992 Nonmajor enterprise funds - 174,264 Internal service funds 4,621,943 - 10,350,002$ 10,350,002$ For the year then ended June 30, 2009, interfund transfers consisted of the following: Transfers In Nonmajor Internal Sewage Nonmajor General Governmental Service Disposal Enterprise Fund Funds Funds System Funds Total Transfers Out: General Fund -$ 5,040,697$ 547,000$ -$ 427,787$ 6,015,484$ Nonmajor governmental funds 246,179 5,994,915 - - 323,021 6,564,115 Internal Service Funds - - 1,179,941 79,000 - 1,258,941 Sewage Disposal System 300,000 - - - - 300,000 Nonmajor enterprise funds - 20,080 - - - 20,080 546,179$ 11,055,692$ 1,726,941$ 79,000$ 750,808$ 14,158,620$ Transfers are used to: (1) move revenues from the fund that is required to collect them to the fund that is required or allowed to expend them; (2) move receipts restricted to or allowed for debt service from the funds collecting the receipts to the debt service fund as debt service payments become due; and (3) use unrestricted revenues collected in the general fund to finance various programs accounted for in other funds in accordance with budgetary authorizations. CITY OF LANSING, MICHIGAN Notes To Financial Statements -50- 3-G. Long-term Debt General obligation bonds. The government issues general obligation bonds to provide funds for the acquisition and construction of major capital facilities. General obligation bonds are direct obligations and pledge the full faith and credit of the government. These bonds are issued as 10 to 30-year serial bonds with varying amounts of principal maturing each year. General obligation bonds currently outstanding are as follows: Interest Original Rate Amount Amount General obligation bonds Governmental activities 1999 Fire Station Unlimited Tax Bond 5.00%-5.70% 3,000,000$ 175,000$ 2001 Fire Station Unlimited Tax Bond 4.00%-5.00% 4,000,000 3,000,000 2006 Lansing Center Limited Tax Bonds 3.50%-4.30% 4,000,000 3,440,000 2006 Michigan Transportation Fund Limited Tax Bonds 3.50%-3.60% 1,600,000 685,000 2005 Building Authority Refunding Bonds 3.50%-5.00% 1,470,000 1,245,000 2007 Michigan Transportation Fund Limited Tax Bonds 3.625%-5.00% 1,137,600 946,800 2007 Michigan Transportation Fund Limited Tax Bonds 3.625%-5.00% 3,602,400 2,998,200 2007 Fire Station Refunding Bonds 3.625%-5.00% 1,780,000 1,765,000 2008 Michigan Transportation Fund Limited Tax Bonds 3.00%-4.00% 3,500,000 3,385,000 24,090,000$ 17,640,000$ Business-type activities 1990 Building Authority Municipal Parking System Limited Tax Bond 0.00% 64,635,000$ 24,845,000$ 2003 Building Authority A Municipal Parking System Limited Tax Bond 3.00%-4.35% 10,340,000 1,975,000 2003 Building Authority B Municipal Parking System Taxable Bond 3.85%-6.25% 8,660,000 7,805,000 2005 Building Authority Refunding Bonds 3.50-5.00% 15,975,000 13,040,000 2007 Building Authority Refunding Bonds 3.625%-5.00% 7,965,000 7,920,000 1996 Building Authority Golf Course Limited Tax Bond 3.80%-5.70% 1,300,000 700,000 1992 Limited Tax Sewer Bond - 5005-01 2.50% 7,128,800 2,050,000 1993 Limited Tax Sewer Bond - 5005-02 2.50% 8,150,050 2,690,000 1994 Limited Tax Sewer Bond - 5005-03 2.50% 3,234,722 1,230,000 1994 Limited Tax Sewer Bond - 5005-04 2.00% 3,727,138 1,212,138 1994 Limited Tax Sewer Bond - 5005-05 2.25% 515,969 140,000 1994 Limited Tax Sewer Bond - 5005-06 2.25% 7,595,611 2,550,000 1996 Limited Tax Sewer Bond - 5005-07 2.25% 3,365,073 1,505,073 1996 Limited Tax Sewer Bond - 5005-08 2.25% 3,995,000 2,020,000 1997 Limited Tax Sewer Bond - 5005-09 2.25% 4,746,780 2,581,780 1998 Limited Tax Sewer Bond - 5005-10 2.25% 10,539,950 6,264,950 1999 Limited Tax Sewer Bond - 5005-11 2.50% 10,120,000 6,185,000 2000 Limited Tax Sewer Bond - 5005-12 2.50% 9,447,830 6,132,830 2001 Limited Tax Sewer Bond - 5005-13 2.50% 10,573,046 7,393,046 2002 Limited Tax Sewer Bond - 5005-14 2.50% 12,381,131 9,651,131 2003 Limited Tax Sewer Bond - 5005-15 2.50% 10,259,826 8,465,688 2004 Limited Tax Sewer Bond - 5005-16 2.13% 3,070,277 3,297,649 2005 Limited Tax Sewer Bond - 5005-17 2.13% 4,739,023 6,808,778 2005 Limited Tax Sewer Bond - 5005-18 1.63% 12,035,457 10,780,457 2006 Limited Tax Sewer Bond - 5005-19 1.63% 18,855,000 16,051,539 2007 Limited Tax Sewer Bond - 5005-20 1.63% 22,560,461 22,560,461 2008 Limited Tax Sewer Bond - 5005-21 2.50% 18,574,181 18,574,181 294,490,325$ 194,429,701$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -51- At year end, defeased bonds outstanding consisted of $1,725,000 of the 1999 Fire Station Unlimited Tax Bonds, which are scheduled to be repaid by the escrow agent on May 1, 2010, and $7,485,000 of the 2003 Building Authority A Municipal Parking System Limited Tax Bonds, which are scheduled to be paid by the escrow agent on June 1, 2013. Revenue bonds. The City also issues bonds where the income derived from the acquired or constructed assets is pledged to pay debt service. Revenue bonds outstanding at year-end are as follows: Interest Original Rate Amount Amount Revenue bonds Business-type activities 1998 Sewer Revenue & Refunding Bond 2.50% 26,415,000$ 4,390,000$ 2003 Sewer Revenue & Refunding Bond 2.50% 39,880,000 33,895,000 66,295,000$ 38,285,000$ Installment purchase agreements.The government enters into installment purchase agreements for equipment and related capital assets. Installment purchase agreements outstanding at year-end are as follows: Interest Original Rate Amount Amount Installment purchase agreements Governmental activities 2004 Lease Purchase Agreement - Roof and Fire Suppression 2.77% 570,000$ 228,574$ 1999 Lease Purchase Agreement - Stadium 5.20%-6.05% 11,000,000 860,000 2005 Lease Purchase Agreement - LEPFA Extractor and Wall 4.51% 392,046 173,004 2005 Lease Purchase Agreement - LEPFA Carpet 4.51% 126,418 82,795 2005 Lease Purchase Agreement - Income Tax Software 3.76% 430,000 137,548 2005 Lease Purchase Agreement - LEPFA Equipment 4.24% 81,500 56,841 2001 Lease Purchase Agreement - O&M Facility 5.35% 1,925,000 1,040,000 2006 Lease Purchase Agreement - Ambulances 4.23% 474,000 296,091 2006 Lease Purchase Agreement - Energy Efficiencies 4.20% 6,217,227 6,098,086 2006 Lease Purchase Agreement - Oldsmobile Park 6.86% 2,000,000 2,000,000 2007 Lease Purchase Agreement - Oldsmobile Park 5.72% 1,000,000 1,000,000 2007 Lease Purchase Agreement - Phone System 4.22% 518,000 421,143 24,734,191$ 12,394,082$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -52- Loans payable. The government has entered into loan agreements with the certain State agencies for program purposes. Loans payable at year-end are as follows: Interest Original Rate Amount Amount Loans payable Governmental activities 2004 Michigan Department of Transportation Loan 3.00% 1,266,000$ 981,658$ 2006 State Infrastructure Bank Loan 3.00% 500,000 308,821 1,766,000$ 1,290,479$ Business-type activities 2003 MEDC Loan 3.93% 4,180,000$ 4,180,000$ Debt service requirements to maturity for all installment debt of the City are as follows: Year Ended Governmental Activities Business-Type Activities June 30 Principal Interest Total Principal Interest Total 2010 3,405,069$ 1,394,602$ 4,799,671$ 16,974,007$ 6,150,439$ 23,124,446$ 2011 3,355,221 1,240,490 4,595,711 18,197,859 5,898,066 24,095,925 2012 3,318,080 1,093,448 4,411,528 18,421,314 5,484,187 23,905,501 2013 3,080,379 945,921 4,026,300 18,733,942 5,059,488 23,793,430 2014 3,213,354 797,637 4,010,991 19,025,566 4,622,774 23,648,340 2015-2019 11,225,405 2,134,543 13,359,948 68,042,516 17,194,552 85,237,068 2020-2024 3,727,053 302,090 4,029,143 54,394,013 8,260,020 62,654,033 2025-2029 - - - 21,664,537 2,303,466 23,968,003 2030-2034 - - - 988,840 208,517 1,197,357 2035-2039 - - - 452,107 26,836 478,943 31,324,561$ 7,908,731$ 39,233,292$ 236,894,701$ 55,208,345$ 292,103,046$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -53- Changes in Long-Term Debt. Long-term liability activity for the year ended June 30, 2009, was as follows: Beginning Ending Due Within Balance Additions Reductions Balance One Year Governmental activities General obligation bonds 20,625,000$ -$ 2,985,000$ 17,640,000$ 1,685,000$ Installment purchase agreements 14,037,885 - 1,643,803 12,394,082 1,468,395 Loans payable 1,534,822 - 244,343 1,290,479 251,674 Subtotal 36,197,707 - 4,873,146 31,324,561 3,405,069 Compensated absences 11,854,042 11,850,275 11,854,042 11,850,275 8,330,338 Accrued workers compensation 8,042,838 - 2,894,155 5,148,683 823,789 Accrued general liability claims 400,000 - - 400,000 - Add (deduct) deferred amounts: For issuance discounts (36,440) - (2,980) (33,460) - For issuance premiums 326,806 - 34,143 292,663 - On refunding (76,362) - (7,053) (69,309) - 56,708,591$ 11,850,275$ 19,645,453$ 48,913,413$ 12,559,196$ Business-type activities General obligation bonds 182,419,608$ 24,560,093$ 12,550,000$ 194,429,701$ 13,810,000$ Revenue bonds 41,125,000 - 2,840,000 38,285,000 2,840,000 Loans payable 4,180,000 - - 4,180,000 324,007 Subtotal 227,724,608 24,560,093 15,390,000 236,894,701 16,974,007 Compensated absences 556,764 597,792 556,764 597,792 493,814 Add (deduct) deferred amounts: For issuance discounts (6,885,275) - (1,628,947) (5,256,328) - For issuance premiums 840,498 - 43,102 797,396 - On refunding (2,579,082) - (317,441) (2,261,641) - 219,657,513$ 25,157,885$ 14,043,478$ 230,771,920$ 17,467,821$ For the governmental activities, compensated absences and other long-term debt are generally liquidated by the general fund. 3-H. Segment Information – Enterprise Funds The government issued revenue bonds to finance certain improvements to its sewage disposal system. Because the Sewage Disposal System, an individual fund that accounts entirely for the government’s sewage activities, is a segment and is reported as a major fund in the fund financial statements, separate segment disclosures herein are not required. 3-I. Endowments For the year ended June 30, 2009, the net appreciation on investments available for restricted endowments was $1,250. Under the terms of the endowments, and consistent with State statutes, the City is authorized to spend the net appreciation for the benefit of the cemetery and parks. The expendable portion of earnings has been transferred to other funds. The remaining non-expendable portion of the endowment is reported in restricted net assets. CITY OF LANSING, MICHIGAN Notes To Financial Statements -54- 3-J. Restatement Beginning net assets of governmental activities were increased by $1,345,564 to properly capitalize costs for construction in progress that had been expensed in prior years. Beginning net assets of the Sewage Disposal System enterprise fund and business-type activities were increased by $1,000,000 to recognize capital contributions received in a prior period, but previously carried as unearned revenue. In addition, beginning fund balances of the Drug Law Enforcement and State and Federal Programs special revenue funds were decreased by $409,852 and $11,082, respectively, to separately account for the operations of the Tri-County Metro Narcotics Squad as a separate special revenue fund. This reclassification did not change total the fund balance reported in the City’s governmental funds. 3-K. Subsequent Event On July 22, 2009, the City issued $20,000,000 in Limited Tax General Obligation Capital Improvement Bonds, Series 2009 (Build America Bonds). These bonds are due in annual installments of $270,000 to $785,000 through 2034 at an interest rate ranging from 3.15% to 7.05%. NOTE 4 – OTHER INFORMATION 4-A. Risk Management The City of Lansing is exposed to various risks of loss related to property loss, torts, errors and omissions and employee injuries. The City carries commercial insurance for claims relating to general liability, property, electronic data processing, boiler and machinery, police professional and errors and omissions. The City has not experienced settlements in excess of insurance coverage during the past three years. The City is uninsured for acts of nature and environmental clean-up costs. The City is self-insured for workers’ compensation costs. The City estimates the liability for workers’ compensation claims that have been incurred through the end of the fiscal year, including those claims that have been reported as well as those that have not yet been reported to the City. The current liability is accounted for in the General Fund, with long term liabilities accounted for in the Statement of Net Assets. The City has liability insurance coverage up to a maximum amount of $16,000,000 per occurrence with a $350,000 deductible. Changes in the estimated long-term liability as well as the total estimated cost of claims for the past two fiscal years were as follows: CITY OF LANSING, MICHIGAN Notes To Financial Statements -55- Fiscal Year Ended June 30, 2009 2008 Estimated liability, beginning of year $ 8,042,838 $ 4,636,107 Estimated claims incurred, including changes in estimates (1,742,337) 4,613,573 Claims payments (1,151,818) (1,206,842) Estimated liability, end of year $ 5,148,683 $ 8,042,838 4-B. Property Taxes Property taxes attach as an enforceable lien on property as of the date they are levied. City, community college, and 50% of school taxes are levied and due July 1 and become delinquent after August 31. County taxes and the balance of school taxes are levied and due December 1 and become delinquent after February 14. In March, taxes on real property still delinquent are purchased by the County's Tax Revolving Funds. Collections of community college, school, and county taxes and remittances are accounted for in the General Fund. City property tax revenues are recognized in the fiscal year for which the taxes are levied to the extent that they result in current receivables (i.e., are collected within 60 days after fiscal year-end). The City is permitted by charter and state law to levy taxes up to $19.198 per $1,000 of assessed valuation for general operations other than the payment of principal and interest on long-term debt. The tax rate to finance general governmental services other than the payment of principal and interest on long-term debt for the year ended June 30, 2009 was $15.01 per $1,000 of taxable value. 4-C. Contingent Liabilities Amounts received or receivable from grantor agencies are subject to audit and potential adjustment by grantor agencies, principally the federal government. Any disallowed claims, including amounts already collected, may constitute a liability of the applicable funds. The amount, if any, of expenditures which may be disallowed by the grantor cannot be determined at this time although the government expects such amounts, if any, to be immaterial. The government is a defendant in various lawsuits. Although the outcome of these lawsuits is not presently determinable, it is the opinion of the government’s counsel that resolution of these matters will not have a material adverse effect on the financial condition of the government. CITY OF LANSING, MICHIGAN Notes To Financial Statements -56- 4-D. Defined Benefit Pension Plans – Employees’ Retirement System The City sponsors and administers the Employees’ Retirement System (the “Plan”), a single- employer, defined-benefit pension plan. It is accounted for as a separate pension trust fund. No stand-alone financial reports are issued. It covers general full-time employees of the City of Lansing and employees of the 54-A District Court. It does not include elected officials, who are members of the Employees’ Money Purchase Pension Plan, nor does it include police officers and firefighters, who are members of a separate City pension plan. The payroll for employees covered by the plan for the year ended December 31, 2008, was $29,688,203; the City’s total payroll was $58,973,797. Administration of the plan is funded through the General Fund. As of December 31, 2008, employee membership data was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 856 Active members: Vested 273 Nonvested 301 574 Approximately 22.5% of the active membership may retire with a combination of age plus service equal to 65. All other members may retire at age 50 with 25 or more years of credited service or age 58 with 8 or more years of credited service. Members are vested after completing 8 years of credited service. For all members, annual regular retirement allowances are determined by multiplying total credited service times 1.6% to 2.8% times final average compensation. Final average compensation is the member's highest wages for two consecutive years during the last 10 years. Retirement options that provide for survivor benefits are available to members. The plan also provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferring retirement benefits until age 58 or withdrawing their contribution, thereby forfeiting any future benefits. Active members contribute between 1.7% and 7.25% of wages as determined by individual labor agreements. Chapter 292 of the City of Lansing's Code of Ordinances establishes benefit provisions and requires that the annuity and pension reserves (which are determined annually by the City’s actuary) not financed by member contributions shall be financed by annual appropriations. CITY OF LANSING, MICHIGAN Notes To Financial Statements -57- The City’s funding policy provides for periodic employer contributions at actuarially determined rates that expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and amortization payment for the year ended June 30, 2009, was determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over an open period of 30 years. Contributions are recognized when due pursuant to formal commitments, as well as statutory or contractual requirements. The fund is accounted for in essentially the same manner as the Proprietary Funds and uses the full accrual method of accounting. Plan valuation assets are equal to the reported market value of assets except that only 20% of the difference between the mark-to-market rate of return and the 8% actuarial rate of return is recognized each year. This five year smoothing method reduces the fluctuation in the City’s computed contribution rate which might otherwise be caused by market value fluctuations. The entry-age actuarial cost method is used to determine plan liabilities. Significant actuarial assumptions used in determining the entry-age actuarial accrued liability include (a) a rate of return on investments of 8% per year compounded annually (b) projected salary increases of 4% attributable to inflation and 0% to 7% per year depending on age attributable to seniority/merit (c) assumption that benefits generally will increase $200 annually after age 60. During the year ended June 30, 2009, total contributions of $7,831,433 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of December 31, 2007. The City contributed $6,476,000 (21.79% of projected valuation payroll), excluding contributions for health insurance; employees contributed $597,480 (4.56% of projected valuation payroll). The City’s contribution consisted of (a) $3,028,202 normal cost (10.19% of projected valuation payroll) and (b) $3,447,798 amortization of the unfunded actuarial accrued liability (11.60% of projected valuation payroll). At December 31, 2008, the unfunded actuarial accrued liability was determined as follows: Actuarial accrued liability for: Active participants (273 vested and 301 non-vested) $ 61,157,155 Retired participants and beneficiaries currently receiving benefits (793 recipients) 176,095,046 Vested terminated participants not yet receiving benefits (58) 4,249,733 Member benefit reserve 16,828,570 Total actuarial accrued liability 258,330,504 Actuarial value of assets (smoothed market value) * 200,599,513 Unfunded actuarial accrued liability $ 57,730,991 * Excluding reserve for health insurance CITY OF LANSING, MICHIGAN Notes To Financial Statements -58- The City has traditionally contributed the annual required contributions (“ARC”), and thus, has never previously had, or had need to report, a net pension obligation (“NPO”), as required under GASB Statement No. 27. For the fiscal year ending June 30, 2009, the City contribution ($6,476,000) exceeded the annual required contribution ($6,047,520) creating a net pension asset of $428,480. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. Three-Year Trend Information (amounts in thousands) Annual Years Ended Pension Percentage Net Pension June 30, Cost (APC) Contributed Asset 2007 $ 5,231 100% $ - 2008 6,022 100 - 2009 6,048 105 428 Police and Fire Retirement System The City sponsors and administers the Police and Fire Retirement System (the “Plan”), a single- employer defined-benefit pension plan. It is accounted for as a separate pension trust fund. No stand-alone financial reports are issued. It covers all police officers and firefighters who are full- time employees of the City. The City’s payroll for employees covered by the plan for the year ended December 31, 2008, was $30,161,471, the City’s total payroll was $58,973,797. Administration of the plan is funded through the General Fund. As of December 31, 2008, employee membership data related to the plan was as follows: Retirees and beneficiaries currently receiving benefits and terminated employees entitled to benefits but not yet receiving them 646 Active members: Vested 292 Nonvested 163 455 Members may retire at any age with 25 or more years of credited service, or age 55 with 10 or more years of credited service. Members are vested after completing 10 years of credited service. Members are required to retire at age 70. Annual retirement allowances are determined by multiplying final average compensation by 3.2% for the first 25 years of credited service. The maximum allowance is 80% of final average compensation. Final average compensation is the member's highest wages for 2 consecutive years. CITY OF LANSING, MICHIGAN Notes To Financial Statements -59- When an employee who had retired subsequent to August 31, 1966, dies, the plan provides for an automatic pension to the retiree's spouse. This automatic pension is equal to 50% of the regular retirement benefit the employee had been receiving at time of death. Effective July 30, 1990, members may elect a reduced benefit, either 93% or 86% of the regular benefit, thereby increasing the spouse pension to 75% or 86% of the regular benefit, respectively. Alternately, members may elect a non-spousal beneficiary option. The plan provides death and disability benefits. If a member leaves employment or dies before vesting, accumulated member contributions plus interest are refunded to the member or designated beneficiary. Members who are vested and terminate their employment have the option of deferred retirement benefits until age 55 or withdrawing their contribution, thereby forfeiting any future benefits. Fire members are required to contribute 7.58% of their annual wages to the plan. Police supervisors are required to contribute 9.52% and police non-supervisors, 8.50%. Chapter 294 of the City of Lansing's Ordinance establishes benefit provisions and requires that the portion of the annuity and pension reserves (which are determined annually by the City’s actuary) not financed by member contributions shall be financed by annual appropriations. In addition to the payments under this plan, the City made payments from the General Fund to provide benefits for the beneficiaries of a prior pension plan. This prior plan was superseded by the present plan as of January 1, 1944. There were no payments made to beneficiaries under that plan. The City’s funding policy provides for periodic employer contributions at actuarially determined rates that, expressed as percentages of annual covered payroll, are designed to accumulate sufficient assets to pay benefits when due. The normal cost and amortization payment for the year ended June 30, 2009, was determined using an entry age actuarial funding method. Unfunded actuarial accrued liabilities are being amortized as a level percent of payroll over an open period of 30 years. Plan valuation assets are equal to the reported market value of assets except that only 20% of the difference between the mark-to-market rate of return and the 8% actuarial rate of return is recognized each year. This five year smoothing method reduces the fluctuation in the City’s computed contribution rate which might otherwise be caused by market value fluctuations. The entry-age actuarial cost method is used to determine plan liabilities. Significant actuarial assumptions used in determining the entry-age actuarial accrued liability include (a) a rate of return on investments of 8% per year compounded annually (b) projected salary increases of 4% attributable to inflation and .51 to 11.5% per year depending on age attributable to seniority/merit (c) assumption that benefits generally will increase $525 annually after retirement. During the year ended June 30, 2009, total contributions of $8,988,820 were made in accordance with actuarially determined requirements computed through an actuarial valuation performed as of December 31, 2007. The City contributed $6,483,000 (20.79% of projected valuation payroll), excluding contributions for health insurance; employees contributed $2,547,978 (8.03% of projected valuation payroll). The City’s contribution consisted of (a) $4,824,991 normal cost (15.47% of projected valuation payroll) and (b) $1,658,009 amortization of the unfunded actuarial accrued liability (5.32% of projected valuation payroll). CITY OF LANSING, MICHIGAN Notes To Financial Statements -60- At December 31, 2008, the actuarial accrued liability in excess of assets was determined as follows: Active participants (292 vested and 163 non-vested) $ 115,894,282 Retired participants and beneficiaries currently receiving benefits (628 recipients) 207,866,496 Vested terminated participants not yet receiving benefits (18) 2,912,436 Total actuarial accrued liability 326,673,214 Actuarial value of assets (smoothed market value) * 287,394,481 Unfunded Actuarial accrued liability $ 39,278,733 * Excluding reserve for health insurance The City had traditionally contributed the annual required contributions (“ARC”), and thus, has never previously had, or had a need to report, a net pension obligation (“NPO”), as required under GASB Statement No. 27. For the fiscal year ending June 30, 2009 the City contribution ($6,483,000) exceeded the ARC ($6,094,397) creating a net pension asset of $388,603. Significant actuarial assumptions used to compute contribution requirements were the same as those used to compute the standardized measure of the actuarial accrual liability. The schedules of funding progress, presented as required supplementary information (RSI) following the notes to the financial statements, present multiyear trend information about whether the actuarial values of plan assets are increasing or decreasing over time relative to the AALs for benefits. Three-Year Trend Information (amounts in thousands) Annual Years Ended Pension Percentage Net Pension June 30, Cost (APC) Contributed Asset 2007 $ 5,386 100% $ - 2008 6,521 100 - 2009 6,094 106 389 CITY OF LANSING, MICHIGAN Notes To Financial Statements -61- Employees’ Money Purchase Pension Plan The City of Lansing sponsors and contributes to the Employees’ Money Purchase Pension Plan (the “Plan”), which is a single-employer defined - contribution pension plan. Administration of the plan is funded by the General Fund. A defined contribution pension plan provides pension benefits in return for services rendered, provides an individual account for each participant, and specifies how contributions to the individual's account are to be determined instead of specifying the amount of benefits the individual is to receive. Under a defined contribution pension plan, the benefits a participant will receive depend solely on the amount contributed to the participant's account and the returns earned on investments of those contributions. As established by Chapter 292.30 of the City of Lansing's Code of Ordinances, this plan includes all elected officials hired subsequent to September 30, 1990. As of June 30, 2009, there were 10 active members in this plan. Contributions made by employees vest immediately, and contributions made by the City vest after three years of full-time employment. When employees terminate employment, they are entitled to their contributions and the City’s contributions if vesting requirements are satisfied. Employees may contribute up to 8% of their wages in 1% increments. The City contributes an amount equal to 6.0% of the employees’ wages for retirement benefits. During the year, the City’s required and actual contributions amounted to $20,430, which was approximately 6% of covered payroll of $340,500. There were no employee contributions. No pension provision changes occurred during the year that affected the required contributions to be made by the City. In addition, the plan does not issue stand-alone financial statements. CITY OF LANSING, MICHIGAN Notes To Financial Statements -62- Financial statements for individual pension and employee benefit plans: Pension Net Assets Employees' Employees' Police Police Employees' Retirement Retirement and Fire and Fire Money Retiree System System Retirement Retirement Purchase Health Care Pension OPEB System System OPEB Pension Plan VEBA Totals Assets Cash and cash equivalents 6,472,567$ 565,766$ 6,658,559$ 529,107$ -$ -$ 14,225,999$ Investments: U. S. Government obligations 17,094,273 2,358,420 21,991,149 2,768,884 - - 44,212,726 Corporate bonds - - 183,728 13,525 - - 197,253 Common stocks 32,560,610 2,617,337 45,401,151 3,342,122 - - 83,921,220 Mutual funds 90,435,957 7,269,561 129,029,843 9,498,295 1,520,093 9,076,729 246,830,478 Contribution receivable 2,401 - 994,337 - 939 - 997,677 Dividends and interest receivable 163,325 14,275 208,788 16,591 39,955 24,487 467,421 Total assets 146,729,133 12,825,359 204,467,555 16,168,524 1,560,987 9,101,216 390,852,774 Liabilities Accounts payable 4,486,342 - 514,452 - - - 5,000,794 Negative equity in pooled cash 2,716 - 22,764 - - - 25,480 Total liabilities 4,489,058 537,216 - - 5,026,274 Net assets held in trust for: Pension benefits 142,240,075 - 203,930,339 - 1,560,987 - 347,731,401 Other postemployment benefits - 12,825,359 - 16,168,524 - 9,101,216 38,095,099 Total net assets 142,240,075$ 12,825,359$ 203,930,339$ 16,168,524$ 1,560,987$ 9,101,216$ 385,826,500$ Changes in Pension Net Assets Additions Investment income: Net appreciation in fair value of investments (30,102,091)$ -$ (45,513,458)$ -$ -$ (996,599)$ (76,612,148)$ Interest income 1,527,987 394,547 2,223,073 239,707 (223,852) 279,814 4,441,276 Dividend income 179,138 - 293,350 - - - 472,488 Less investment expenses (684,733) - (842,792) - (8,058) - (1,535,583) Net investment income (29,079,699) 394,547 (43,839,827) 239,707 (231,910) (716,785) (73,233,967) Contributions: Employer 6,476,000 7,691,287 6,483,000 9,673,825 20,430 2,164,424 32,508,966 Plan members 597,480 - 2,547,978 - - - 3,145,458 Total contributions 7,073,480 7,691,287 9,030,978 9,673,825 20,430 2,164,424 35,654,424 Total additions (22,006,219) 8,085,834 (34,808,849) 9,913,532 (211,480) 1,447,639 (37,579,543) Deductions Participant benefits 17,763,972 7,338,260 22,869,642 8,916,277 177,806 - 57,065,957 Administrative expense 18,047 - 19,328 - - - 37,375 Total deductions 17,782,019 7,338,260 22,888,970 8,916,277 177,806 - 57,103,332 Net additions (deductions) to net assets held in trust (39,788,238) 747,574 (57,697,819) 997,255 (389,286) 1,447,639 (94,682,875) Net assets held in trust for pension benefits: Beginning of year 182,028,313 12,077,785 261,628,158 15,171,269 1,950,273 7,653,577 480,509,375 End of year 142,240,075$ 12,825,359$ 203,930,339$ 16,168,524$ 1,560,987$ 9,101,216$ 385,826,500$ CITY OF LANSING, MICHIGAN Notes To Financial Statements -63- 4-E. Other Postemployment Benefits The City of Lansing contributes to the Employees’ Retirement System, the Police and Fire Retirement System, and the Voluntary Employees Beneficiary Association amounts to pre-fund postemployment healthcare. In the Employees’ Retirement System and the Police and Fire Retirement System, these other postemployment benefits (OPEB) are set up as reserves in the pension plans, and their investments are commingled with the investments of the pension. Portfolio makeup is reported as a percentage of total pension plan assets. Earnings are calculated based on a seven year smoothed rate of return of the retirement systems. Eligible participants include any retirees who receive pension benefits under the respective pension plans. OPEB plan provisions are established and may be amended by the City Council, subject to the City’s various collective bargaining agreements. Voluntary Employees Beneficiary Association (VEBA). The City of Lansing Voluntary Employees Beneficiary Association (the “Plan”) is a single-employer defined benefit post employment healthcare plan established by the City to provide medical and healthcare benefits for retirees and their beneficiaries. Eligible participants include any retirees who receive pension benefits under one of the City’s pension plans. The Plan is funded by a trust agreement established pursuant to Section 501(c)(9) of the Internal Revenue Code that allows for the formation of a VEBA. During the year, the City contributed $2,164,424 to the Plan. Employees’ Retirement System. The City provides postemployment health care benefits, in accordance with labor agreements, to full-time employees of the City and employees of the 54-A District Court (not including police officers and firefighters who are members of the Police and Fire Retirement System). Members eligible for pension benefits under the Employees’ Retirement System are also eligible to receive health care benefits. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $96.40 per month for each covered retiree and dependent(s). The payments are charged to the Fringe Benefit Internal Service Fund of the City and are recognized as expenses as payments are made. During the year, payments for health care benefits were approximately $8,338,260 and the City contributed $7,691,287 (direct benefit payments of $8,338,260 and City contributions of $353,027) to the Employees’ Retirement System. There were no significant changes in health benefits over the previous year. Police and Fire Retirement System. The City also provides postemployment health care benefits, in accordance with labor agreements, to members who are eligible to receive pension benefits under the Police and Fire Retirement System. The City provides the full cost of health benefits to retirees, payable to health care vendors, and also reimburses retirees eligible for Medicare benefits of $88.50 per month for each covered retiree and dependent(s). The payments are charged to the Fringe Benefit Internal Service Fund of the City and are recognized as expenses as payments are made. During the year, payments for health care benefits were approximately $8,916,277 and the City contributed $9,673,825 (direct benefit payments of $8,916,277 and City contributions of $757,548) to the Police and Fire Retirement System to fund retiree healthcare. CITY OF LANSING, MICHIGAN Notes To Financial Statements -64- There were no significant changes in health benefits over the previous year. Plan valuation assets for the OPEB plans are equal to the reported market value of assets except that only 20% of the difference between the mark-to-market rate of return and the 8% actuarial rate of return is recognized each year. The entry-age actuarial cost method, with a 30 year amortization of unfunded accrued liabilities was used to determine the liabilities. The entry-age method is a stable method that is consistent with a level percentage of payroll financing. The actuarial accrued liability assumes a healthcare cost trend rate of 10% to 4%. At December 31, 2006 (the date of the most recent actuarial valuation), the assets in excess of the actuarial accrued liability were determined as follows: Employees’ Police Retirement & Fire System Retirement & VEBA * System Actuarial accrued liability for: Active participants $ 35,789,417 $ 50,381,502 Retired participants and beneficiaries currently receiving benefits 104,900,203 103,411,503 Vested terminated participants not yet receiving benefits 6,698,762 1,765,837 Total actuarial accrued liability 147,388,382 155,558,842 Actuarial value of assets (smoothed market value) 14,336,700 13,063,900 Unfunded actuarial accrued liability $ 133,051,682 $ 142,494,942 Funded ratio 9.7% 8.4% Covered payroll $ 31,943,723 $ 29,582,427 UAAL as a % of covered payroll 416.5% 481.7% * - The Employees’ Retirement System and VEBA were combined on the actuarial valuation. Annual OPEB Cost and Net OPEB Obligation. The City’s annual other postemployment benefits cost or expense is calculated based on the annual required contribution (ARC) of the employer, an amount actuarially determined in accordance with the parameters of GASB Statement No. 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projected to cover normal cost each year and amortize any unfunded actuarial liabilities (or funding excess) over a period not to exceed 30 years. CITY OF LANSING, MICHIGAN Notes To Financial Statements -65- The following tables show the components of the City’s annual OPEB cost for the year, the amounts actually contributed to the plans, and changes in the net OPEB obligation (asset): Employees' Police Retirement & Fire System and Retirement VEBA System Annual required contribution 8,901,619$ 12,582,513$ Interest on net OPEB obligation (asset) (100,172) 270,104 Adjustment to annual required contribution 220,516 (594,599) Annual OPEB cost 9,021,963 12,258,018 Contributions made (10,855,711) (9,673,825) Change in net OPEB obligation (asset) (1,833,748) 2,584,193 Net OPEB obligation (asset): Beginning of year (1,252,152) 3,376,295 End of year (3,085,900)$ 5,960,488$ The City’s annual OPEB costs, the percentage of annual OPEB costs contributed to the plans, and the net OPEB obligation (asset) as of June 30, 2009, were as follows: Employees' Retirement System and VEBA Fiscal Percentage of Net Year Annual Annual OPEB OPEB Ended OPEB Cost Cost Contributed Asset 6/30/09 9,021,963$ 120.3% (3,085,900)$ Police and Fire Retirement System Fiscal Percentage of Net Year Annual Annual OPEB OPEB Ended OPEB Cost Cost Contributed Obligation 6/30/09 12,258,018$ 78.9% 5,960,488$ * * * * * * City of Lansing Employees' Retirement System Required Supplementary Information (amounts in thousands) Schedule of Funding Progress Actuarial Actuarial UAAL as a Actuarial Value of Accrued Underfunded Funded Covered % of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2003 199,329$ 221,088$ 21,759$ 90.2% 30,579$ 71.2% 12/31/2004 206,200 231,389 25,189 89.1% 32,383 77.8% 12/31/2005 207,881 245,242 37,361 84.8% 30,851 121.1% 12/31/2006 208,765 251,427 42,662 83.0% 31,944 133.6% 12/31/2007 208,572 254,356 45,784 82.0% 31,797 144.0% 12/31/2008 287,394 326,673 39,279 88.0% 30,161 130.2% Schedule of Employer Contributions Year Ended Annual Required Percentage June 30 Contributions Contributed 2004 3,466$ 100.0% 2005 4,675 100.0% 2006 4,900 100.0% 2007 5,231 100.0% 2008 6,022 100.0% 2009 6,048 105.0% -66- City of Lansing Police and Fire Retirement System Required Supplementary Information (amounts in thousands) Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered % of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2003 277,947$ 267,786$ (10,161)$ 103.8% 26,484$ -38.4% 12/31/2004 275,807 279,873 4,066 98.5% 27,754 14.7% 12/31/2005 273,421 290,299 16,878 94.2% 27,855 60.6% 12/31/2006 278,839 308,193 29,354 90.5% 29,582 99.2% 12/31/2007 293,571 315,635 22,064 93.0% 29,600 74.5% 12/31/2008 287,394 326,673 39,279 88.0% 30,161 130.2% Schedule of Employer Contributions Year Ended Annual Required Percentage June 30 Contributions Contributed 2004 3,287$ 99.6% 2005 3,334 100.3% 2006 4,659 100.0% 2007 5,386 100.0% 2008 6,521 100.0% 2009 6,094 106.0% -67- City of Lansing Other Postemployment Benefit Plans Required Supplementary Information (amounts in thousands) Employees' Retirement System and VEBA - Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered % of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 14,337$ 147,388$ 133,051$ 9.7% 31,944$ 416.5% Police and Fire Retirement System - Schedule of Funding Progress Actuarial Actuarial Underfunded UAAL as a Actuarial Value of Accrued (Overfunded) Funded Covered % of Covered Valuation Assets Liability AAL (UAAL) Ratio Payroll Payroll Date (A) (B) (B-A) (A/B) (C) ((B-A)/C) 12/31/2006 13,064$ 155,559$ 142,495$ 8.4% 29,582$ 481.7% -68- City of Lansing Combining Balance Sheet - Nonmajor Governmental Funds June 30, 2009 Special Debt Capital Revenue Service Projects Permanent Totals Assets Cash and cash equivalents 94,303$ -$ 1,818,711$ -$ 1,913,014$ Equity in pooled cash 7,696,783 186,200 10,652,083 1,630,098 20,165,164 Accounts receivable, net 1,610,679 - 145,200 - 1,755,879 Special assessments receivable - 159 810,594 - 810,753 Loans receivable 1,401,087 - - - 1,401,087 Accrued interest receivable 1,801,617 - - - 1,801,617 Due from other funds - 436 - - 436 Interfund receivable 5,728,059 - - - 5,728,059 Advances to other funds - - 80,531 - 80,531 Due from other governments 5,485,855 - 1,070 - 5,486,925 Total assets 23,818,383$ 186,795$ 13,508,189$ 1,630,098$ 39,143,465$ Liabilities and fund balances Liabilities Accounts payable 1,604,411$ -$ 275,868$ -$ 1,880,279$ Deposits payable 136,817 - - - 136,817 Accrued payroll 191,196 - 1,372 - 192,568 Indemnity bonds 14,000 - - - 14,000 Due to other funds - - 201,662 - 201,662 Interfund payable 4,637,639 - - - 4,637,639 Advances from other funds - - 222,213 - 222,213 Due to other governments 259,982 - - - 259,982 Deferred revenue 3,336,018 159 716,324 - 4,052,501 Total liabilities 10,180,063 159 1,417,439 - 11,597,661 Fund balances Reserved for advances - - 80,531 - 80,531 Reserved for encumbrances 243,835 - - - 243,835 Unreserved: Designated for subsequent years' expenditures 5,393,327 - - - 5,393,327 Undesignated 8,001,158 186,636 12,010,219 1,630,098 21,828,111 Total fund balances 13,638,320 186,636 12,090,750 1,630,098 27,545,804 Total liabilities and fund balances 23,818,383$ 186,795$ 13,508,189$ 1,630,098$ 39,143,465$ -69- City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds For the Year Ended June 30, 2009 Special Debt Capital Revenue Service Projects Permanent Totals Revenues Taxes and special assessments 408,176$ 2,030,230$ 116,965$ -$ 2,555,371$ Intergovernmental 21,979,893 - - - 21,979,893 Charges for services 8,430,417 - 800,280 - 9,230,697 Fines and forfeits 580,972 - - - 580,972 Interest 112,791 44,100 171,308 47,426 375,625 Contributions 34,036 - - - 34,036 Donations from private sources - - 44,000 - 44,000 Other revenues 259,304 - - - 259,304 Total revenues 31,805,589 2,074,330 1,132,553 47,426 35,059,898 Expenditures Current expenditures: General government 2,422,671 - - - 2,422,671 Public safety 6,525,459 - - - 6,525,459 Highways and streets 9,096,366 - - - 9,096,366 Recreation and culture 137,383 - - - 137,383 Other functions 10,262,693 - - - 10,262,693 Debt service: Principal 2,077,342 1,940,000 - - 4,017,342 Interest 705,579 380,214 - - 1,085,793 Capital outlay 8,594,313 - 6,261,550 - 14,855,863 Total expenditures 39,821,806 2,320,214 6,261,550 - 48,403,570 Revenues over (under) expenditures (8,016,217)(245,884)(5,128,997)47,426 (13,343,672) Other financing sources (uses) Transfers in 9,108,036 176,376 1,751,200 20,080 11,055,692 Transfers out (2,343,166)-(4,173,549)(47,400)(6,564,115) Proceeds on sale of capital assets - - 1,587,216 - 1,587,216 Total other financing sources (uses)6,764,870 176,376 (835,133)(27,320)6,078,793 Net change in fund balances (1,251,347)(69,508)(5,964,130)20,106 (7,264,879) Fund balances, beginning of year 14,889,667 256,144 18,054,880 1,609,992 34,810,683 Fund balances, end of year 13,638,320$ 186,636$ 12,090,750$ 1,630,098$ 27,545,804$ -70- Nonmajor Special Revenue Funds Major Streets Fund ±This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of major streets. Local Streets Fund ±This fund accounts for revenues received from the State of Michigan for the City's share of state gasoline and weight taxes, which is used for maintenance of local streets. Budget Stabilization Fund ±This fund is used to account for funds set aside under the provisions of Public Act 30 of 1978. Funds set aside are to be determined by the City Council on an annual basis in any year where actual General Fund revenues exceed actual expenditures. Drug Law Enforcement Fund ±This fund accounts for revenues set aside for drug law enforcement under the provisions of State of Michigan Public Act 135 of 1985, as amended. State and Federal Programs Fund ±This fund accounts for all revenues received from miscellaneous grants and local contributions. These revenues are used for projects as detailed in individual grant applications. Community Development Block Grant Program Fund ±This fund accounts for revenues received from the Department of Housing and Urban Development. These revenues are restricted to accomplishing the various objectives of Community Development Block Grant Programs, within specific target areas. Stadium Fund ±This fund accounts for the City's share of revenues received from events held at Oldsmobile Park, the City's baseball stadium. The revenues are used for stadium expenditures. Principal Shopping District Fund ±This fund accounts for assessments received from businesses located in the district. The revenues are used for special events and maintenance of the district. 911 Communications Center Fund ±This fund accounts for the operations of the county-wide 911 communications center. Revenues received are from the County for actual expenditures incurred. Building Department Fund ±This fund accounts for revenues and expenditures resulting from the enforcement of the State Construction Code Act of 1999 (PA 245 of 1999). Parks Department Fund ±This fund accounts for contributions and transfers which are restricted for park expenditures. Tri-County Metro ±This fund accounts for the operations of the Tri-County Metro Narcotics Squad. City of Lansing Combining Balance Sheet - Nonmajor Special Revenue Funds June 30, 2009 Major Local Budget Drug Law Streets Streets Stabilization Enforcement Assets Cash and cash equivalents -$ -$ -$ 38,991$ Equity in pooled cash 4,627,137 1,162,574 - 441,824 Accounts receivable - - - - Loans receivable - - - - Accrued interest receivable - - - - Due from other funds - - - - Interfund receivable - - 5,728,059 - Due from other governments 1,022,653 288,152 - - Total assets 5,649,790$ 1,450,726$ 5,728,059$ 480,815$ Liabilities and fund balances Liabilities Accounts payable 464,373$ 231,847$ -$ 125,468$ Deposits payable - - - - Accrued payroll 12,211 5,643 - - Indemnity bonds 14,000 - - - Interfund payable - - - - Due to other governments - - - - Deferred revenue - - - - Total liabilities 490,584 237,490 - 125,468 Fund balances Reserved for encumbrances 219,103 24,732 - - Unreserved: Designated for subsequent years' expenditures 4,789,012 519,315 - - Undesignated 151,091 669,189 5,728,059 355,347 Total fund balances 5,159,206 1,213,236 5,728,059 355,347 Total liabilities and fund balances 5,649,790$ 1,450,726$ 5,728,059$ 480,815$ -71- Community State and Development Principal 911 Federal Block Grant Shopping Communications Building Parks Programs Program Stadium District Center Department Department -$ -$ -$ -$ -$ -$ -$ - - - 78,983 - 43,414 488,669 5,131 - 114,729 989 1,482,209 7,621 - - 1,401,087 - - - - - - 1,801,617 - - - - - ------- ------- 3,818,389 328,877 - - - - - 3,823,520$ 3,531,581$ 114,729$ 79,972$ 1,482,209$ 51,035$ 488,669$ 530,379$ 160,127$ -$ 15,264$ 4,920$ 2,848$ -$ - - - - - 7,050 - 17,501 29,102 - 4,447 73,421 41,137 - ------- 2,905,041 339,648 91,119 - 1,301,831 - - ------- 333,314 3,002,704 - - - - - 3,786,235 3,531,581 91,119 19,711 1,380,172 51,035 - ------- - - - - 85,000 - - 37,285 - 23,610 60,261 17,037 - 488,669 37,285 - 23,610 60,261 102,037 - 488,669 3,823,520$ 3,531,581$ 114,729$ 79,972$ 1,482,209$ 51,035$ 488,669$ -72- Tri-County Metro Totals Assets Cash and cash equivalents 55,312$ 94,303$ Equity in pooled cash 854,182 7,696,783 Accounts receivable - 1,610,679 Loans receivable - 1,401,087 Accrued interest receivable - 1,801,617 Due from other funds -- Interfund receivable - 5,728,059 Due from other governments 27,784 5,485,855 Total assets 937,278$ 23,818,383$ Liabilities and fund balances Liabilities Accounts payable 69,185$ 1,604,411$ Deposits payable 129,767 136,817 Accrued payroll 7,734 191,196 Indemnity bonds - 14,000 Interfund payable - 4,637,639 Due to other governments 259,982 259,982 Deferred revenue - 3,336,018 Total liabilities 466,668 10,180,063 Fund balances Reserved for encumbrances - 243,835 Unreserved: Designated for subsequent years' expenditures - 5,393,327 Undesignated 470,610 8,001,158 Total fund balances 470,610 13,638,320 Total liabilities and fund balances 937,278$ 23,818,383$ City of Lansing Combining Balance Sheet - Nonmajor Special Revenue Funds (Concluded) June 30, 2009 -73- City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds For the Year Ended June 30, 2009 Major Local Budget Drug Law Streets Streets Stabilization Enforcement Revenues Taxes and special assessments -$ -$ -$ -$ Intergovernmental 7,101,207 1,784,376 - - Charges for services 412,497 746,779 - - Fines and forfeits - - - 445,825 Interest 80,924 - - 5,676 Contributions - - - - Other 137,246 157 - - Total revenues 7,731,874 2,531,312 - 451,501 Expenditures Current expenditures: General government - - - - Public safety - - - 383,307 Highways and streets 5,284,475 3,811,891 - - Recreation and culture - - - - Other functions - - - - Debt service: Principal 351,342 646,000 - - Interest 119,148 274,311 - - Capital outlay 3,813,040 2,232,874 - - Total expenditures 9,568,005 6,965,076 - 383,307 Revenues over (under) expenditures (1,836,131) (4,433,764) - 68,194 Other financing sources (uses) Transfers in 2,218,093 4,968,025 - - Transfers out (2,213,166) - - - Total other financing sources (uses) 4,927 4,968,025 - - Net change in fund balances (1,831,204) 534,261 - 68,194 Fund balances, beginning of year, as restated 6,990,410 678,975 5,728,059 287,153 Fund balances, end of year 5,159,206$ 1,213,236$ 5,728,059$ 355,347$ -74- Community State and Development Principal 911 Federal Block Grant Shopping Communications Building Parks Programs Program Stadium District Center Department Department -$ -$ -$ 408,176$ -$ -$ -$ 9,775,408 2,451,384 - - - - - - - 542,011 3,275 5,208,000 1,517,855 - ------- 3,025 532 652 872 - - 8,497 - - - 9,999 24,037 - - - 96,483 - 20,668 - 4,750 - 9,778,433 2,548,399 542,663 442,990 5,232,037 1,522,605 8,497 - - - 431,930 - 1,990,741 - - - - - 5,158,398 - - ------- - - 59,959 - - - 77,424 10,262,693 - - - - - - - - 1,080,000 - - - - - - 312,120 - - - - - 2,548,399 - - - - - 10,262,693 2,548,399 1,452,079 431,930 5,158,398 1,990,741 77,424 (484,260) - (909,416) 11,060 73,639 (468,136) (68,927) 516,381 - 875,000 42,075 - 444,209 19 - - - - (115,000) - - 516,381 - 875,000 42,075 (115,000) 444,209 19 32,121 - (34,416) 53,135 (41,361) (23,927) (68,908) 5,164 - 58,026 7,126 143,398 23,927 557,577 37,285$ -$ 23,610$ 60,261$ 102,037$ -$ 488,669$ -75- Tri-County Metro Totals Revenues Taxes and special assessments -$ 408,176$ Intergovernmental 867,518 21,979,893 Charges for services - 8,430,417 Fines and forfeits 135,147 580,972 Interest 12,613 112,791 Contributions - 34,036 Other - 259,304 Total revenues 1,015,278 31,805,589 Expenditures Current expenditures: General government - 2,422,671 Public safety 983,754 6,525,459 Highways and streets - 9,096,366 Recreation and culture - 137,383 Other functions - 10,262,693 Debt service: Principal - 2,077,342 Interest - 705,579 Capital outlay - 8,594,313 Total expenditures 983,754 39,821,806 Revenues over (under) expenditures 31,524 (8,016,217) Other financing sources (uses) Transfers in 44,234 9,108,036 Transfers out (15,000) (2,343,166) Total other financing sources (uses)29,234 6,764,870 Net change in fund balances 60,758 (1,251,347) Fund balances, beginning of year 409,852 14,889,667 Fund balances, end of year 470,610$ 13,638,320$ City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Special Revenue Funds (Concluded) For the Year Ended June 30, 2009 -76- City of Lansing Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds For the Year Ended June 30, 2009 Major Streets Final Variance with Budget Actual Budget Revenues Taxes and special assessments -$ -$ -$ Intergovernmental 7,466,525 7,101,207 365,318 Charges for services 660,000 412,497 247,503 Fines and forfeits - - - Interest 250,000 80,924 169,076 Contributions - - - Other 51,200 137,246 (86,046) Total revenues 8,427,725 7,731,874 695,851 Expenditures Current expenditures: General government - - - Public safety - - - Highways and streets 6,650,955 5,284,475 1,366,480 Recreation and culture - - - Other functions - - - Debt service: Principal 357,742 351,342 6,400 Interest 114,563 119,148 (4,585) Capital outlay 13,109,686 3,813,040 9,296,646 Total expenditures 20,232,946 9,568,005 10,664,941 Revenues over (under) expenditures (11,805,221) (1,836,131) (9,969,090) Other financing sources (uses) Transfers in 7,237,614 2,218,093 5,019,521 Transfers out (2,213,166) (2,213,166) - Total other financing sources (uses) 5,024,448 4,927 5,019,521 Net change in fund balances (6,780,773) (1,831,204) (4,949,569) Fund balances, beginning of year, as restated 6,990,410 6,990,410 - Fund balances, end of year 209,637$ 5,159,206$ (4,949,569)$ -77- Local Streets Budget Stabilization Final Variance with Final Variance with Budget Actual Budget Budget Actual Budget -$ -$ -$ -$ -$ -$ 1,857,056 1,784,376 72,680 - - - 675,000 746,779 (71,779) - - - ------ ------ ------ - 157 (157) - - - 2,532,056 2,531,312 744 - - - ------ ------ 3,870,608 3,811,891 58,717 - - - ------ ------ 662,600 646,000 16,600 - - - 230,529 274,311 (43,782) - - - 7,627,529 2,232,874 5,394,655 - - - 12,391,266 6,965,076 5,426,190 - - - (9,859,210) (4,433,764) (5,425,446) - - - 9,873,881 4,968,025 4,905,856 - - - ------ 9,873,881 4,968,025 4,905,856 - - - 14,670 534,261 (519,591) - - - 678,975 678,975 - 5,728,059 5,728,059 - 693,645$ 1,213,236$ (519,591)$ 5,728,059$ 5,728,059$ -$ -78- City of Lansing Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds (Continued) For the Year Ended June 30, 2009 Drug Law Enforcement Final Variance with Budget Actual Budget Revenues Taxes and special assessments -$ -$ -$ Intergovernmental - - - Charges for services - - - Fines and forfeits 250,000 445,825 (195,825) Interest 13,200 5,676 7,524 Contributions - - - Other - - - Total revenues 263,200 451,501 (188,301) Expenditures Current expenditures: General government - - - Public safety 534,573 383,307 151,266 Highways and streets - - - Recreation and culture - - - Other functions - - - Debt service: Principal - - - Interest - - - Capital outlay - - - Total expenditures 534,573 383,307 151,266 Revenues over (under) expenditures (271,373) 68,194 (339,567) Other financing sources (uses) Transfers in - - - Transfers out - - - Total other financing sources (uses) - - - Net change in fund balances (271,373) 68,194 (339,567) Fund balances, beginning of year, as restated 287,153 287,153 - Fund balances, end of year 15,780$ 355,347$ (339,567)$ -79- Community Development State and Federal Programs Block Grant Program Final Variance with Final Variance with Budget Actual Budget Budget Actual Budget -$ -$ -$ -$ -$ -$ 24,036,974 9,775,408 14,261,566 3,548,203 2,451,384 1,096,819 12,120 - 12,120 - - - ------ - 3,025 (3,025) - 532 (532) ------ - - - 641,651 96,483 545,168 24,049,094 9,778,433 14,270,661 4,189,854 2,548,399 1,641,455 ------ ------ ------ ------ 22,314,574 10,262,693 12,051,881 - - - ------ ------ - - - 4,189,854 2,548,399 1,641,455 22,314,574 10,262,693 12,051,881 4,189,854 2,548,399 1,641,455 1,734,520 (484,260) 2,218,780 - - - 596,274 516,381 79,893 - - - ------ 596,274 516,381 79,893 - - - 2,330,794 32,121 2,298,673 - - - 5,164 5,164 - - - - 2,335,958$ 37,285$ 2,298,673$ -$ -$ -$ -80- City of Lansing Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds (Continued) For the Year Ended June 30, 2009 Stadium Final Variance with Budget Actual Budget Revenues Taxes and special assessments -$ -$ -$ Intergovernmental - - - Charges for services 528,000 542,011 (14,011) Fines and forfeits - - - Interest - 652 (652) Contributions - - - Other - - - Total revenues 528,000 542,663 (14,663) Expenditures Current expenditures: General government - - - Public safety - - - Highways and streets - - - Recreation and culture 57,744 59,959 (2,215) Other functions - - - Debt service: Principal 1,080,000 1,080,000 - Interest 312,470 312,120 350 Capital outlay - - - Total expenditures 1,450,214 1,452,079 (1,865) Revenues over (under) expenditures (922,214) (909,416) (12,798) Other financing sources (uses) Transfers in 900,000 875,000 25,000 Transfers out - - - Total other financing sources (uses) 900,000 875,000 25,000 Net change in fund balances (22,214) (34,416) 12,202 Fund balances, beginning of year, as restated 58,026 58,026 - Fund balances (deficit), end of year 35,812$ 23,610$ 12,202$ -81- Principal Shopping District 911 Communications Center Final Variance with Final Variance with Budget Actual Budget Budget Actual Budget 417,380$ 408,176$ 9,204$ -$ -$ -$ ------ 2,500 3,275 (775) 5,208,000 5,208,000 - ------ 1,500 872 628 - - - 10,000 9,999 1 31,030 24,037 6,993 2,500 20,668 (18,168) - - - 433,880 442,990 (9,110) 5,239,030 5,232,037 6,993 475,955 431,930 44,025 - - - - - - 5,513,771 5,158,398 355,373 ------ ------ ------ ------ ------ ------ 475,955 431,930 44,025 5,513,771 5,158,398 355,373 (42,075) 11,060 (53,135) (274,741) 73,639 (348,380) 42,075 42,075 - - - - - - - 125,000 (115,000) 240,000 42,075 42,075 - 125,000 (115,000) 240,000 - 53,135 (53,135) (149,741) (41,361) (108,380) 7,126 7,126 - 143,398 143,398 - 7,126$ 60,261$ (53,135)$ (6,343)$ 102,037$ (108,380)$ -82- City of Lansing Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds (Continued) For the Year Ended June 30, 2009 Building Department Final Variance with Budget Actual Budget Revenues Taxes and special assessments -$ -$ -$ Intergovernmental - - - Charges for services 1,628,637 1,517,855 110,782 Fines and forfeits - - - Interest - - - Contributions - - - Other 4,750 4,750 - Total revenues 1,633,387 1,522,605 110,782 Expenditures Current expenditures: General government 2,060,838 1,990,741 70,097 Public safety - - - Highways and streets - - - Recreation and culture - - - Other functions - - - Debt service: Principal - - - Interest - - - Capital outlay - - - Total expenditures 2,060,838 1,990,741 70,097 Revenues over (under) expenditures (427,451) (468,136) 40,685 Other financing sources (uses) Transfers in 427,451 444,209 (16,758) Transfers out - - - Total other financing sources (uses) 427,451 444,209 (16,758) Net change in fund balances - (23,927) 23,927 Fund balances, beginning of year, as restated 23,927 23,927 - Fund balances, end of year 23,927$ -$ 23,927$ -83- Parks Department Tri-County Metro Final Variance with Final Variance with Budget Actual Budget Budget Actual Budget -$ -$ -$ -$ -$ -$ - - - 563,850 867,518 (303,668) ------ - - - 287,000 135,147 151,853 - 8,497 (8,497) 31,200 12,613 18,587 - - - 3,500 - 3,500 ------ - 8,497 (8,497) 885,550 1,015,278 (129,728) ------ - - - 777,388 983,754 (206,366) ------ 141,663 77,424 64,239 - - - ------ ------ ------ ------ 141,663 77,424 64,239 777,388 983,754 (206,366) (141,663) (68,927) (72,736) 108,162 31,524 76,638 - 19 (19) 60,047 44,234 15,813 - - - (15,000) (15,000) - - 19 (19) 45,047 29,234 15,813 (141,663) (68,908) (72,755) 153,209 60,758 92,451 557,577 557,577 - 409,852 409,852 - 415,914$ 488,669$ (72,755)$ 563,061$ 470,610$ 92,451$ -84- Totals Final Variance with Budget Actual Budget Revenues Taxes and special assessments 417,380$ 408,176$ 9,204$ Intergovernmental 37,472,608 21,979,893 15,492,715 Charges for services 8,714,257 8,430,417 283,840 Fines and forfeits 537,000 580,972 (43,972) Interest 295,900 112,791 183,109 Contributions 44,530 34,036 10,494 Other 700,101 259,304 440,797 Total revenues 48,181,776 31,805,589 (16,376,187) Expenditures Current expenditures: General government 2,536,793 2,422,671 114,122 Public safety 6,825,732 6,525,459 300,273 Highways and streets 10,521,564 9,096,366 1,425,198 Recreation and culture 199,407 137,383 62,024 Other functions 22,314,574 10,262,693 12,051,881 Debt service: Principal 2,100,342 2,077,342 23,000 Interest 657,562 705,579 (48,017) Capital outlay 24,927,069 8,594,313 16,332,756 Total expenditures 70,083,042 39,821,806 30,261,236 Revenues over (under) expenditures (21,901,267) (8,016,217) 13,885,050 Other financing sources (uses) Transfers in 19,137,342 9,108,036 10,029,306 Transfers out (2,103,166) (2,343,166) 240,000 Total other financing sources (uses) 17,034,176 6,764,870 10,269,306 Net change in fund balances (4,867,091) (1,251,347) 3,615,744 Fund balances, beginning of year, as restated 14,889,667 14,889,667 - Fund balances, end of year 10,022,576$ 13,638,320$ 3,615,744$ City of Lansing Schedule of Revenues, Expenditures and Changes in Fund Balances - Budget and Actual - Nonmajor Special Revenue Funds (Concluded) For the Year Ended June 30, 2009 -85- Nonmajor Debt Service Funds 1990 Special Assessments Fund ±This fund accounts for the accumulation of resources for payment of the 1990 $800,000 Special Assessment Bonds. 1996 Refunding Bonds Fund ±This fund accounts for the accumulation of resources for payment of the 1996 $10,800,000 Refunding Bonds. 1998 Building Authority Fund ±This fund accounts for the accumulation of resources for payment of the 1998 $2,175,000 Building Authority Bonds. 1999 Fire Station Fund ±This fund accounts for the accumulation of resources for payment of the 1999 $3,000,000 Unlimited Tax General Obligation Bonds. 2001 Fire Station Fund ±This fund accounts for the accumulation of resources for the payment of the 2001 $4,000,000 Unlimited Tax General Obligation Bonds. City of Lansing Combining Balance Sheet - Nonmajor Debt Service Funds June 30, 2009 1990 1996 1998 1999 Special Refunding Building Fire Assessments Bonds Authority Station Assets Equity in pooled cash -$ 85,611$ -$ 52,656$ Special assessments receivable 159 - - - Due from other funds - - 436 - Total assets 159$ 85,611$ 436$ 52,656$ Liabilities and fund balances Liabilities Deferred revenues 159$ -$ -$ -$ Fund balances Unreserved, undesignated - 85,611 436 52,656 Total liabilities and fund balances 159$ 85,611$ 436$ 52,656$ -86- 2001 Fire Station Totals 47,933$ 186,200$ - 159 - 436 47,933$ 186,795$ -$ 159$ 47,933 186,636 47,933$ 186,795$ -87- City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Debt Service Funds For the Year Ended June 30, 2009 1990 1996 1998 1999 Special Refunding Building Fire Assessments Bonds Authority Station Revenues Taxes and special assessments 159$ 1,429,862$ -$ 281,944$ Interest 216 30,357 - 6,473 Total revenues 375 1,460,219 - 288,417 Expenditures Debt service: Principal payments - 1,470,000 115,000 185,000 Interest 375 73,799 61,131 96,644 Total expenditures 375 1,543,799 176,131 281,644 Revenues over (under) expenditures - (83,580) (176,131) 6,773 Other financing sources Transfers in - - 176,376 - Net change in fund balances - (83,580) 245 6,773 Fund balances, beginning of year - 169,191 191 45,883 Fund balances, end of year -$ 85,611$ 436$ 52,656$ -88- 2001 Fire Station Totals 318,265$ 2,030,230$ 7,054 44,100 325,319 2,074,330 170,000 1,940,000 148,265 380,214 318,265 2,320,214 7,054 (245,884) - 176,376 7,054 (69,508) 40,879 256,144 47,933$ 186,636$ -89- Nonmajor Capital Projects Funds 1990 Environmental I Fund ±This fund accounts for the proceeds of the 1990 $7,000,000 Environmental bonds. 1990 Environmental II Fund ±This fund accounts for the proceeds of the 1990 $6,300,000 Environmental bonds. Combined Sewer Overflow Fund ±This fund accounts for the storm sewer portion of the combined sewer overflow bonds. Special Assessments Fund ±This fund is used to account for the financing of public improvements deemed to benefit the properties against which special assessments are levied. Lansing Center Improvements Fund ±This fund accounts for the proceeds of the 2006 $4,000,000 Lansing Center Limited Tax Bonds. MTF Bonds Fund ±This fund accounts for the proceeds of the $1,600,000 Michigan Transportation Fund Limited Tax Bonds. Other Capital Projects Fund ±This fund accounts for miscellaneous capital projects. City of Lansing Combining Balance Sheet - Nonmajor Capital Projects Funds June 30, 2009 1990 1990 Combined Special Environ- Environ- Sewer Assess- mental I mental II Overflow ments Assets Cash and cash equivalents -$ -$ -$ -$ Equity in pooled cash 85,971 223,544 1,049,865 - Accounts receivable - - - - Special assessments receivable: Current - - - 94,270 Deferred - - - 716,324 Advances to other funds - - - - Due from other governments - - - 1,070 Total assets 85,971$ 223,544$ 1,049,865$ 811,664$ Liabilities and fund balances Liabilities Accounts payable -$ 7,295$ -$ 42,327$ Accrued payroll - - - - Due to other funds - - - - Advances from other funds - - - 222,213 Deferred revenue - - - 716,324 Total liabilities - 7,295 - 980,864 Fund balances Reserved for advances - - - - Unreserved, undesignated (deficit) 85,971 216,249 1,049,865 (169,200) Total fund balances (deficit) 85,971 216,249 1,049,865 (169,200) Total liabilities and fund balances 85,971$ 223,544$ 1,049,865$ 811,664$ -90- Lansing Center MTF Improvements Bonds Other Totals -$ 1,818,711$ -$ 1,818,711$ 687,787 - 8,604,916 10,652,083 - - 145,200 145,200 - - - 94,270 - - - 716,324 - - 80,531 80,531 - - - 1,070 687,787$ 1,818,711$ 8,830,647$ 13,508,189$ -$ -$ 226,246$ 275,868$ - - 1,372 1,372 - 201,662 - 201,662 - - - 222,213 - - - 716,324 - 201,662 227,618 1,417,439 - - 80,531 80,531 687,787 1,617,049 8,522,498 12,010,219 687,787 1,617,049 8,603,029 12,090,750 687,787$ 1,818,711$ 8,830,647$ 13,508,189$ -91- City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds For the Year Ended June 30, 2009 1990 1990 Combined Special Environ- Environ- Sewer Assess- mental I mental II Overflow ments Revenues Special assessments -$ -$ -$ 116,965$ Charges for services - - - - Interest 1,312 4,291 - - Donations from private sources - - - - Total revenues 1,312 4,291 - 116,965 Expenditures Capital outlay - 73,859 - 125,989 Revenues over (under) expenditures 1,312 (69,568) - (9,024) Other financing sources (uses) Transfers in - - - - Transfers out - - - - Proceeds on sale of capital assets - - - - Total other financing sources (uses) - - - - Net change in fund balances 1,312 (69,568) - (9,024) Fund balance (deficit), beginning of year 84,659 285,817 1,049,865 (160,176) Fund balance (deficit), end of year 85,971$ 216,249$ 1,049,865$ (169,200)$ -92- Lansing Center MTF Improvements Bonds Other Totals -$ -$ -$ 116,965$ - - 800,280 800,280 14,391 80,320 70,994 171,308 - - 44,000 44,000 14,391 80,320 915,274 1,132,553 370,440 - 5,691,262 6,261,550 (356,049) 80,320 (4,775,988) (5,128,997) - - 1,751,200 1,751,200 - (3,596,730) (576,819) (4,173,549) - - 1,587,216 1,587,216 - (3,596,730) 2,761,597 (835,133) (356,049) (3,516,410) (2,014,391) (5,964,130) 1,043,836 5,133,459 10,617,420 18,054,880 687,787$ 1,617,049$ 8,603,029$ 12,090,750$ -93- Permanent Funds Cemetery Perpetual Care Fund ±This fund accounts for transfers from the Cemetery Fund, representing 15% of lot sales. These funds are invested, and all investment earnings are transferred to the Cemetery Fund for lot maintenance. Parks Trust Fund ±This fund accounts for contributions made for City parks, the principal of which must be preserved in accordance with the trust indentures. Income derived from these contributions is transferred to the Parks Department special revenue fund. City of Lansing Combining Balance Sheet - Nonmajor Permanent Funds June 30, 2009 Cemetery Perpetual Parks Care Trust Totals Assets Equity in pooled cash 1,628,848$ 1,250$ 1,630,098$ Fund balances Unreserved, undesignated 1,628,848$ 1,250$ 1,630,098$ -94- City of Lansing Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Permanent Funds For the Year Ended June 30, 2009 Cemetery Perpetual Parks Care Trust Totals Revenues Interest 47,407$ 19$ 47,426$ Other financing sources (uses) Transfers in 20,080 - 20,080 Transfers out (47,381) (19) (47,400) Total other financing uses (27,301) (19) (27,320) Net change in fund balances 20,106 - 20,106 Fund balances, beginning of year 1,608,742 1,250 1,609,992 Fund balances, end of year 1,628,848$ 1,250$ 1,630,098$ -95- Nonmajor Enterprise Funds Cemetery Fund ±This fund accounts for the operation of City-owned cemeteries. Golf Fund ±This fund accounts for the operation of the City-owned golf courses. Garbage and Rubbish Collection Fund ±This fund accounts for the provision of household solid waste disposal services to participating residents of the City. Recycling Fund ±This fund accounts for the provision of recycling services to participating residents of the City. City of Lansing Combining Statement of Net Assets - Nonmajor Enterprise Funds June 30, 2009 Garbage and Rubbish Cemetery Golf Collection Assets Current assets: Cash and cash equivalents -$ 4,796$ 4,850$ Equity in pooled cash 88,631 20,450 - Accounts receivable, net - - 436,161 Inventories 49,649 15,024 7,502 Total current assets 138,280 40,270 448,513 Noncurrent assets : Capital assets not being depreciated 57,740 446,501 - Capital assets being depreciated, net 229,947 2,591,563 - Total noncurrent assets 287,687 3,038,064 - Total assets 425,967 3,078,334 448,513 Liabilities Current liabilities: Accounts payable 1,652 6,183 36,470 Accrued interest payable - 9,765 - Accrued payroll 21,464 21,365 - Interfund payable - - 174,264 Unearned revenues - 30,086 114,598 Current portion of: Long-term debt - 70,000 - Compensated absences 13,248 23,339 - Total current liabilities 36,364 160,738 325,332 Noncurrent liabilities: Long-term debt, net of current portion - 627,315 - Compensated absences 2,790 4,914 - Total noncurrent liabilities 2,790 632,229 - Total liabilities 39,154 792,967 325,332 Net Assets Invested in capital assets, net of related debt 287,687 2,340,749 - Unrestricted (deficit)99,126 (55,382) 123,181 Total net assets 386,813$ 2,285,367$ 123,181$ -96- Recycling Totals -$ 9,646$ 1,336,049 1,445,130 1,484 437,645 - 72,175 1,337,533 1,964,596 19,412 523,653 755,377 3,576,887 774,789 4,100,540 2,112,322 6,065,136 28,228 72,533 - 9,765 - 42,829 - 174,264 - 144,684 - 70,000 - 36,587 28,228 550,662 - 627,315 - 7,704 - 635,019 28,228 1,185,681 774,789 3,403,225 1,309,305 1,476,230 2,084,094$ 4,879,455$ -97- City of Lansing Combining Statement of Revenues, Expenses and Changes in Fund Net Assets - Nonmajor Enterprise Funds For the Year Ended June 30, 2009 Garbage and Rubbish Cemetery Golf Collection Operating revenues Charges for services 248,314$ 448,067$ 1,486,531$ Operating expenses Personal services 430,576 430,727 731,487 Contractual and materials 238,045 338,132 813,229 Depreciation 21,358 117,402 - Total operating expenses 689,979 886,261 1,544,716 Operating loss (441,665) (438,194) (58,185) Nonoperating revenues (expenses) Interest revenue - - - Gain on sale of capital assets 725 - - Interest expense and fees - (40,939) (2,656) Total nonoperating revenues (expenses) 725 (40,939) (2,656) Loss before contributions and transfers (440,940) (479,133) (60,841) Capital contributions 60,318 - - Transfers in 375,168 375,640 - Transfers out (20,080) - - Change in net assets (25,534) (103,493) (60,841) Net assets, beginning of year 412,347 2,388,860 184,022 Net assets, end of year 386,813$ 2,285,367$ 123,181$ -98- Recycling Totals 2,945,061$ 5,127,973$ 1,861,514 3,454,304 1,124,688 2,514,094 22,548 161,308 3,008,750 6,129,706 (63,689) (1,001,733) 16,079 16,079 - 725 - (43,595) 16,079 (26,791) (47,610) (1,028,524) - 60,318 - 750,808 - (20,080) (47,610) (237,478) 2,131,704 5,116,933 2,084,094$ 4,879,455$ -99- City of Lansing Combining Statement of Cash Flows Nonmajor Enterprise Funds For the Year Ended June 30, 2009 Garbage and Rubbish Cemetery Golf Collection Cash flows from operating activities Cash received from customers 248,314$ 448,307$ 1,458,987$ Cash payments for goods and services (235,240) (338,837) (721,701) Cash payments to employees (422,258) (427,036) (731,487) Net cash provided by (used for) operating activities (409,184) (317,566) 5,799 Cash flows from noncapital financing activities Transfers in 375,168 375,640 - Transfers out (20,080) - - Net cash provided by noncapital financing activities 355,088 375,640 - Cash flows from capital and related financing activities Proceeds from sale of capital assets 725 - - Acquisition of capital assets (60,319) - - Capital contributions received 60,318 - - Principal paid on bonds - (70,000) - Interest paid on bonds - (40,270) (2,656) Net cash provided by (used for) capital and related financing activities 724 (110,270) (2,656) Cash flows from investing activities Interest and dividends - - - Net increase (decrease) in cash and cash equivalents (53,372) (52,196) 3,143 Cash and cash equivalents: Beginning of year 142,003 77,442 1,707 End of year 88,631$ 25,246$ 4,850$ -100- Recycling Totals 2,957,616$ 5,113,224$ (1,123,542) (2,419,320) (1,861,514) (3,442,295) (27,440) (748,391) - 750,808 - (20,080) - 730,728 - 725 - (60,319) - 60,318 - (70,000) - (42,926) - (112,202) 16,079 16,079 (11,361) (113,786) 1,347,410 1,568,562 1,336,049$ 1,454,776$ FRQWLQXHG« -101- City of Lansing Combining Statement of Cash Flows (Concluded) Nonmajor Enterprise Funds For the Year Ended June 30, 2009 Garbage and Rubbish Cemetery Golf Collection Reconciliation of operating loss to net cash provided by (used for) operating activities Operating loss (441,665)$ (438,194)$ (58,185)$ Adjustments to reconcile operating loss to net cash from operating activities: Depreciation expense 21,358 117,402 - Changes in assets and liabilities: Accounts receivable - 240 (27,544) Inventories 2,539 3,602 (661) Accounts payable (129) 1,312 (2,987) Accrued interest payable - (910) - Accrued payroll 8,318 3,691 - Interfund payable - - 77,991 Unearned revenues - (5,829) 17,185 Compensated absences 395 1,120 - Net cash provided by (used for) operating activities (409,184)$ (317,566)$ 5,799$ -102- Recycling Totals (63,689)$ (1,001,733)$ 22,548 161,308 12,555 (14,749) - 5,480 1,146 (658) - (910) - 12,009 - 77,991 - 11,356 - 1,515 (27,440)$ (748,391)$ -103- Internal Service Funds Fleet Maintenance Fund ±This fund accounts for the costs of maintaininJWKH&LW\¶VIOHHWRIYHKLFOHVDQGKHDY\ equipment. Fringe Benefits Fund ± 7KLVIXQGDFFRXQWVIRUWKHFRVWVRIWKH&LW\¶Vfringe benefits. Engineering Fund ± 7KLVIXQGDFFRXQWVIRUWKHRSHUDWLRQVRIWKH&LW\¶VHQJLQHHULQJGHSDUWPHQW City of Lansing Combining Statement of Net Assets Internal Service Funds June 30, 2009 Fleet Fringe Maintenance Benefits Engineering Totals Assets Current assets: Equity in pooled cash 432,738$ 2,412,718 618,481$ 3,463,937$ Accounts receivable, net - 274,705 - 274,705 Inventories 819,001 - - 819,001 Prepaids - 592,289 - 592,289 Interfund receivable 4,621,943 - - 4,621,943 Total current assets 5,873,682 3,279,712 618,481 9,771,875 Noncurrent assets: Issuance costs - - 4,359 4,359 Capital assets not being depreciated 55,297 - - 55,297 Capital assets being depreciated, net 3,584,980 - 1,909,854 5,494,834 Total non-current assets 3,640,277 - 1,914,213 5,554,490 Total assets 9,513,959 3,279,712 2,532,694 15,326,365 Liabilities Current liabilities: Accounts payable 183,567 701,245 7,050 891,862 Accrued interest payable - - 18,547 18,547 Accrued payroll 87,691 118,605 47,514 253,810 Claims incurred but not reported - 1,863,416 - 1,863,416 Current portion of: Long-term debt - - 135,000 135,000 Compensated absences 199,457 - 220,585 420,042 Total current liabilities 470,715 2,683,266 428,696 3,582,677 Noncurrent liabilities: Long-term debt, net of current portions - - 905,000 905,000 Compensated absences 58,397 - 71,413 129,810 Total non-current liabilities 58,397 - 976,413 1,034,810 Total liabilities 529,112 2,683,266 1,405,109 4,617,487 Net assets Invested in capital assets, net of related debt 3,640,277 - 869,854 4,510,131 Unrestricted 5,344,570 596,446 257,731 6,198,747 Total net assets 8,984,847$ 596,446$ 1,127,585$ 10,708,878$ -104- City of Lansing Combining Statement of Revenues, Expenses and Changes in Fund Net Assets Internal Service Funds For the Year Ended June 30, 2009 Fleet Fringe Maintenance Benefits Engineering Totals Operating revenues Charges for services 7,078,616$ 49,879,352$ 2,434,942$ 59,392,910$ Operating expenses Personal services 3,162,803 326,550 1,910,823 5,400,176 Purchase of goods and services 3,030,534 50,102,100 396,083 53,528,717 Depreciation 1,364,851 - 43,905 1,408,756 Total operating expenses 7,558,188 50,428,650 2,350,811 60,337,649 Operating income (loss) (479,572) (549,298) 84,131 (944,739) Nonoperating revenues (expenses) Gain on sale of capital assets 32,310 - - 32,310 Interest expense and fees - - (60,931) (60,931) Total nonoperating revenues (expenses) 32,310 - (60,931) (28,621) Income (loss) before contributions and transfers (447,262) (549,298) 23,200 (973,360) Other financing sources (uses) Transfers in 622,556 - 1,104,385 1,726,941 Transfers out (1,258,941) - - (1,258,941) Total other financing sources (uses) (636,385) - 1,104,385 468,000 Change in net assets (1,083,647) (549,298) 1,127,585 (505,360) Net assets, beginning of year 10,068,494 1,145,744 - 11,214,238 Net assets, end of year 8,984,847$ 596,446$ 1,127,585$ 10,708,878$ -105- City of Lansing Combining Statement of Cash Flows Internal Service Funds For the Year Ended June 30, 2009 Fleet Fringe Maintenance Benefits Engineering Totals Cash flows from operating activities Cash received from interfund services 2,456,673$ 50,778,413$ 2,434,942$ 55,670,028$ Cash payments for goods and services (3,010,574)(50,630,163)(354,786)(53,995,523) Cash payments to employees (3,114,835)(281,611)(1,899,223)(5,295,669) Net cash provided by (used for) operating activities (3,668,736)(133,361)180,933 (3,621,164) Cash flows from noncapital financing activities Transfers in 622,556 - 315,613 938,169 Transfers out (470,169)--(470,169) Net cash provided by noncapital financing activities 152,387 -315,613 468,000 Cash flows from capital and related financing activities Proceeds from sale of capital assets 32,310 - - 32,310 Acquisition and construction of capital assets (935,237)--(935,237)yp Principal paid on revenue and general obligation bonds - -(130,000)(130,000) Interest paid on revenue and general obligation bonds - -(60,277)(60,277) Net cash used for capital and related financing activities (902,927)-(190,277)(1,093,204) Net increase (decrease) in cash and cash equivalents (4,419,276)(133,361)306,269 (4,246,368) Cash and cash equivalents, beginning of year 4,852,014 2,546,079 312,212 7,710,305 Cash and cash equivalents, end of year 432,738$ 2,412,718$ 618,481$ 3,463,937$ Reconciliation of operating income (loss) to net cash provided by (used for) operating activities Operating income (loss)(479,572)$ (549,298)$ 84,131$ (944,739)$ Adjustments to reconcile operating income (loss) to net cash provided by (used for) operating activities Depreciation expense 1,364,851 - 43,905 1,408,756 Change in: Accounts receivable - 899,061 - 899,061 Inventories (98,653)--(98,653) Prepaids -(3,986)-(3,986) Interfund receivable (4,621,943)--(4,621,943) Accounts payable 125,064 (325,105)(3,082)(203,123) Accrued interest payable (20,865)- 18,547 (2,318) Accrued payroll 47,968 44,939 11,600 104,507 Other -(198,972)-(198,972) Compensated absences 14,414 - 25,832 40,246 Total adjustments (3,189,164)415,937 96,802 (2,676,425) Net cash provided by (used for) operating activities (3,668,736)$ (133,361)$ 180,933$ (3,621,164)$ Non-cash transactions The City transferred capital assets net of related debt and bond issuance costs in the amount amount $788,772 from the fleet maintenance fund to the engineering fund. This transaction did not involve cash. -106- Agency Funds Bail Bonds Fund ±This fund is used to hold cash received by the District Court for bail bonds. Garnishment, Indemnity Bond and Restitution Fund ±This fund is used to hold cash received by the District Court for garnishment payments until claimed, and to hold indemnity bonds deposited relating to civil disputes until the Court rules on the case. City of Lansing Combining Statement of Fiduciary Assets and Liabilities Agency Funds June 30, 2009 54-A District Court Garnishment, Bail Indemnity Bond Bonds and Restitution Totals Assets Equity in pooled cash 106,512$ 12,269$ 118,781$ Liabilities Undistributed receipts 106,512$ 12,269$ 118,781$ -107- City of Lansing Combining Statement of Changes in Fiduciary Assets and Liabilities Agency Funds For the Year Ended June 30, 2009 Beginning Ending Balance Additions Deletions Balance 54-A District Court - Bail Bonds Assets Equity in pooled cash 198,122$ 815,233$ 906,843$ 106,512$ Liabilities Undistributed receipts 198,122$ 815,233$ 906,843$ 106,512$ 54-A District Court - Garnishment, Indemnity Bond and Restitution Assets Equity in pooled cash 9,875$ 122,582$ 120,188$ 12,269$ Liabilities Undistributed receipts 9,875$ 122,582$ 120,188$ 12,269$ Total - All Agency Funds Assets Equity in pooled cash 207,997$ 937,815$ 1,027,031$ 118,781$ Liabilities Undistributed receipts 207,997$ 937,815$ 1,027,031$ 118,781$ -108- -109- STATISTICAL SECTION This part of the City of Lansing¶VFRPSUHhensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and requires supplementary information says about the FLW\¶VRYHUDOOILQDQFLDOKHDOWK Contents Pages Financial Trends 110-113 These schedules contain trend information to help the reader understand how the CLW\¶VILQDQFLDOSHUIRUPDQFHand well-being have changed over time. Revenue Capacity 114-118 These schedules contain information to help the reader assess the factors affecting the CLW\¶VDELOLW\WRJHQHUDWHLWVSURSHUW\ taxes. Debt Capacity 119-123 These schedules present information to help the reader assess the affordability of the CLW\¶VFXUUHQWOHYHOVRIRXWVWDQGLQJGHEW DQGWKHFLW\¶VDELOLW\WRLVVXHDGGLWLRQDOGHEWLQWKHIXWXUH Demographic and Economic Information 124-125 These schedules offer demographic and economic indicators to help the reader understand the environment within which the CLW\¶VILQDQFLDODFWLYLWLHVWDNHSODFHDQGWRKHOSPDNH comparisons over time and with other governments. Operating Information 126-128 These schedules contain information about the CLW\¶VRSHUDWLRQV and resources to help the reader understand how the CLW\¶V financial information relates to the services the City provides and the activities it performs. Sources: Unless otherwise noted, the information in these schedules is derived from the comprehensive annual financial reports for the relevant year. The City implemented Statement 34 in 2002; schedules presenting government-wide information include information beginning in that year. Schedule 1 City of Lansing Net Assets by Component Last Eight Fiscal Years (accrual basis of accounting)Fiscal Year 2009 2008 2007 2006 2005 2004 2003 2002 (2) Governmental activities Invested in capital assets, net of related debt $191,516,475 $187,054,852 $184,150,439 $190,243,447 $198,338,788 $197,530,605 $193,545,003 $176,742,875 Restricted 17,139,090 34,554,539 37,642,784 36,706,345 33,900,657 6,370 172,111 Unrestricted 6,589,790 (3,124,027) 2,776,006 514,601 1,632,040 15,331,622 20,363,235 39,491,342 Total governmental activities net assets 215,245,355 218,485,364 224,569,229 227,464,393 233,871,485 212,862,227 213,914,608 216,406,328 Business-type activities Invested in capital assets, net of related debt 185,430,669 178,526,049 166,320,408 161,324,071 163,834,290 138,830,169 163,715,373 154,922,603 Restricted 19,454,812 30,892,739 35,777,715 35,945,848 39,493,526 718,828 1,039,093 2,105,762 Unrestricted 23,730,694 16,330,517 28,929,677 28,208,193 22,701,430 64,268,351 35,649,876 36,078,930 Total business-type activities net assets 228,616,175 225,749,305 231,027,800 225,478,112 226,029,246 203,817,348 200,404,342 193,107,295 Primary government Invested in capital assets, net of related debt 376,947,144 365,580,901 350,470,847 351,567,518 362,173,078 336,360,774 357,260,376 331,665,478 Restricted 36,593,902 65,447,278 73,420,499 72,652,193 73,394,183 718,828 1,045,463 2,277,873 Unrestricted 30,320,484 13,206,490 31,705,683 28,722,794 24,333,470 79,599,973 56,013,111 75,570,272 Total primary government net assets $443,861,530 $444,234,669 $455,597,029 $452,942,505 $459,900,731 $416,679,575 $414,318,950 $409,513,623 (1) no discretely presented component units shown (2) in 2005 the City's definition of "restricted net assets" was changed to include assets in funds set up to account for activities outside of the General Fund, for Governmental Activities, and to include restricted cash for debt retirement for Business Type Activities. (3) eight years are reported back to the date of GASB 34 implementation -110- Schedule 2 City of Lansing Changes in Net Assets Last Eight Fiscal Years (accrual basis of accounting)Fiscal Year 2009 2008 2007 2006 2005 2004 2003 2002 Expenses Governmental activities: General government $26,426,242 $28,901,548 $22,043,283 $34,375,762 $53,533,838 $53,353,559 $54,386,814 $48,907,951 Public safety 71,236,947 76,211,756 62,570,888 60,047,271 38,668,349 41,292,750 36,998,022 37,442,294 Public works 37,588,680 40,032,746 40,517,063 31,790,944 30,670,483 22,118,173 23,740,767 22,332,626 Recreation and culture 7,298,385 7,677,083 6,198,462 7,881,212 5,464,143 7,979,953 8,055,078 6,790,347 Community development 6,378,286 6,382,336 6,232,406 7,124,491 6,996,000 8,387,559 9,647,696 8,960,204 Interest on long-term debt 1,803,125 1,481,658 1,658,708 1,197,851 1,033,078 2,041,758 2,333,691 2,705,290 Total governmental activities expenses 150,731,665 160,687,127 139,220,810 142,417,531 136,365,891 135,173,752 135,162,068 127,138,712 Business-type activities Sewage disposal system 26,247,188 27,382,736 24,725,229 21,706,537 20,631,611 20,864,079 19,350,186 17,218,878 Municipal parking system 8,353,063 10,188,065 10,275,379 18,403,163 10,151,018 9,196,910 8,840,334 8,322,193 Cemetery 689,979 675,672 692,510 753,151 802,949 828,073 688,571 570,291 Golf 927,200 1,072,505 1,358,008 1,398,963 1,446,615 1,620,669 1,583,711 1,222,525 Garbage and rubbish collection 1,547,372 1,436,642 1,372,266 1,412,620 1,421,617 1,321,760 1,288,178 1,229,951 Recycling 3,008,750 2,940,366 2,777,068 2,981,730 2,862,003 2,768,307 2,642,541 2,437,371 Potter Park Zoo 0 (156,270) 2,968,236 2,718,759 2,690,943 2,542,065 2,228,724 1,778,059 Total business-type activities expenses 40,773,552 43,539,716 44,168,696 49,374,923 40,006,756 39,141,863 36,622,245 32,779,268 Total primary government expenses 191,505,217 204,226,843 183,389,506 $191,792,454 $176,372,647 $174,315,615 $171,784,313 $159,917,980 Program Revenues Governmental activities: Charges for services: General government 5,188,510 5,938,911 6,251,032 6,416,850 6,264,142 4,686,901 4,611,471 1,908,603 Public safety 9,817,421 12,705,181 13,014,934 13,087,372 12,400,853 11,682,187 11,031,998 10,393,731 Public works 4,565,013 4,364,525 3,805,739 3,891,646 2,646,007 2,713,258 2,627,959 2,345,220 Recreation and culture 1,217,445 1,556,260 1,259,373 1,405,584 1,598,968 1,581,607 1,472,203 1,509,159 Community development 50,132 66,308 66,161 66,486 66,788 Operating grants and contributions 26,462,211 20,356,292 16,524,178 16,158,496 16,673,481 15,746,181 15,968,081 17,980,993 Capital grants and contributions 2,571,741 2,531,974 2,179,870 3,659,169 3,479,536 3,033,891 1,734,008 2,822,477 Total governmental activities program revenues 49,872,473 47,519,451 43,101,287 44,685,603 43,129,775 39,444,025 37,445,720 36,960,183 Business-type activities: Charges for services: Sewage disposal system 27,446,304 28,023,322 26,926,202 26,867,610 26,890,756 26,529,842 26,045,574 25,414,112 Municipal parking system 7,539,611 10,090,566 10,838,270 10,289,830 9,628,690 7,510,354 7,642,684 7,763,065 Cemetery 248,314 218,688 264,255 237,564 230,716 226,631 199,760 231,304 Golf 448,067 607,922 754,995 890,190 929,266 951,923 997,177 1,014,675 Garbage and rubbish collection 1,486,531 1,617,717 1,378,562 1,295,053 1,322,111 1,315,413 1,189,489 801,418 Recycling 2,945,061 3,039,089 2,903,092 2,816,277 2,636,002 2,115,917 2,138,308 1,928,476 Potter Park Zoo 0 (115) 553,999 471,703 558,654 505,666 436,199 426,434 Operating grants and contributions 1,541,913 Capital grants and contributions 60,318 196,317 183,012 1,368,773 731,575 93,207 914,570 0 Total business-type activities program revenues 41,716,119 43,793,506 43,802,387 44,237,000 42,927,770 39,248,953 39,563,761 37,579,484 Total primary government program revenues $91,588,592 $91,312,957 $86,903,674 $88,922,603 $86,057,545 $78,692,978 $77,009,481 $74,539,667 Net(Expenses)/Revenues Governmental activities ($100,859,192) ($113,167,676) ($96,119,523) ($97,731,928) ($93,236,116) ($95,729,727) ($97,716,348) ($90,178,529) Business-type activities 942,567 253,790 (366,309) (5,137,923) 2,921,014 107,090 2,941,516 4,800,216 Total primary government net expense ($99,916,625) ($112,913,886) ($96,485,832) ($102,869,851) ($90,315,102) ($95,622,637) ($94,774,832) ($85,378,313) General Revenues and Other Changes in Net Assets Governmental activities: Taxes Property Taxes 39,141,928 38,607,761 38,371,105 37,506,017 36,181,408 40,354,088 39,571,155 39,158,867 Income taxes 29,312,762 31,168,012 28,209,913 27,032,176 27,435,047 27,437,494 29,099,955 27,596,270 Unrestricted grants and contributions 27,318,313 28,180,799 27,258,536 26,817,633 26,355,710 26,338,413 28,198,831 28,618,275 Investment earnings 978,034 1,706,572 2,483,162 1,634,608 715,608 312,069 725,936 972,802 Miscellaneous 32,310 774,822 104,563 2,903,792 1,838,895 1,946,818 Transfers (509,728) 7,420,667 (3,098,357) (3,132,465) (2,123,435) (2,668,510) (4,130,144) (1,925,790) Total governmental activities 96,273,619 107,083,811 93,224,359 90,632,791 88,668,901 94,677,346 95,304,628 96,367,242 Business-type activities: Investment earnings 413,850 1,883,034 2,815,480 1,453,076 1,298,407 249,855 294,425 628,797 Miscellaneous 725 5,348 2,160 1,248 23,736 387,551 343,174 1,438,488 Transfers 509,728 (7,420,667) 3,098,357 3,132,465 2,123,435 2,668,510 3,717,932 1,486,240 Total business-type activities 924,303 (5,532,285) 5,915,997 4,586,789 3,445,578 3,305,916 4,355,531 3,553,525 Total primary government $97,197,922 $101,551,526 $99,140,356 $95,219,580 $92,114,479 $97,983,262 $99,660,159 $99,920,767 Changes in Net Assets Governmental activities ($4,585,573) ($6,083,865) ($2,895,164) ($7,099,137) ($4,567,215) ($1,052,381) ($2,411,720) $6,188,713 Business-type activities 1,866,870 (5,278,495) 5,549,688 (551,134) 6,366,592 3,413,006 7,297,047 8,353,741 Total primary government ($2,718,703) ($11,362,360) $2,654,524 ($7,650,271) $1,799,377 $2,360,625 $4,885,327 $14,542,454 (1) no discretely presented component units shown (2) eight years are reported back to the date of GASB 34 implementation -111- Schedule 3 City of Lansing Fund Balances, Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) Fiscal Year 2009 2008 2007 2006 2005 2004 2003 2002 General Fund Reserved $1,320,375 $1,765,288 $1,848,021 $2,443,224 $2,482,589 $1,324,109 $945,386 $1,145,896 Unreserved 3,755,862 5,465,164 5,036,129 4,634,961 4,709,909 5,606,958 5,985,681 5,785,171 Total General Fund 5,076,237 7,230,452 6,884,150 $7,078,185 $7,192,498 $6,931,067 $6,931,067 $6,931,067 All Other Governmental Funds Reserved 324,366 365,351 2,544,339 613,533 2,139,438 3,688,795 4,541,303 4,898,039 Unreserved, reported in: Special revenue funds 13,394,485 14,716,755 14,523,146 18,798,291 17,635,170 17,950,570 17,933,354 19,123,737 Capital projects funds 12,010,219 17,862,441 18,978,360 15,717,371 12,563,759 15,293,862 16,967,327 19,447,491 Debt service funds 186,636 256,144 144,518 88,826 4,400 0 0 0 Permanent funds 1,630,098 1,609,992 1,596,939 1,577,150 1,557,890 0 0 0 Total all other governmental funds 27,545,804 34,810,683 37,787,302 $36,795,171 $33,900,657 $36,933,227 $39,441,984 $43,469,267 Total all governmental funds $32,622,041 $42,041,135 $44,671,452 $43,873,356 $41,093,155 $43,864,294 $46,373,051 $50,400,334 (1) in 2005 the City's definition for Permanent Funds fund balance changed to "Unreserved" due to the nature of the funds being set up as a reserved fund (2) eight years are reported back to the date of GASB 34 implementation -112- Schedule 4 City of Lansing Changes in Fund Balance, Governmental Funds Last Eight Fiscal Years (modified accrual basis of accounting) Fiscal Year 2009 2008 2007 2006 2005 2004 2003 2002 Revenues Property taxes 39,258,893$ 38,775,722$ 38,681,928$ 37,957,773$ 36,527,417$ 40,354,088$ 39,426,786$ 39,303,237$ Income taxes 29,312,762 31,168,012 28,209,913 27,032,176 27,497,542 27,413,270 29,159,482 27,577,803 Licenses and permits 1,325,119 1,429,075 1,101,550 860,647 791,655 814,989 925,455 976,332 Intergovernmental 38,998,039 38,556,616 34,699,908 34,964,225 35,624,372 36,312,111 36,183,631 41,155,183 Charges for services 20,355,642 19,116,593 18,415,612 19,436,267 17,931,572 16,745,202 15,522,204 15,057,729 Fines and forfeits 4,143,000 4,090,397 4,349,642 4,515,951 4,351,977 4,870,577 5,645,029 4,383,678 Interest and rents 1,196,559 1,836,485 2,607,388 1,710,674 720,707 357,382 823,308 1,096,086 Contributions 10,372,056 10,894,573 9,980,854 9,385,831 8,966,289 8,744,295 9,255,742 8,069,915 Donations from private sources 44,000 326,768 114,954 549,055 126,182 22,031 376,793 85,307 Other revenue 1,054,209 331,248 1,019,476 1,082,283 1,320,064 1,285,903 779,115 703,332 Total revenues 146,060,279 146,525,489 139,181,225 137,494,882 133,857,777 136,919,848 138,097,545 138,408,602 Expenditures General government 28,951,805 29,209,458 28,905,058 34,956,037 55,746,807 54,420,735 53,381,289 49,156,129 Public safety 70,082,462 67,715,160 65,218,515 59,143,629 38,121,596 40,145,137 39,321,853 39,290,562 Highways and streets 14,723,311 14,860,390 13,501,747 10,879,004 10,467,860 9,216,004 9,776,628 9,110,517 Recreation and culture 8,452,768 8,038,290 7,676,600 7,509,183 5,517,980 6,229,014 6,555,043 6,219,773 Other functions 12,599,072 11,805,843 9,847,925 8,259,415 8,520,848 6,971,380 5,725,184 8,255,056 Capital outlay 14,855,863 16,228,127 20,001,659 13,306,810 12,614,723 11,917,608 15,241,548 14,195,769 Debt service Interest 1,801,394 1,607,703 1,285,436 1,145,588 1,187,673 2,331,276 2,625,499 2,951,352 Principal 4,743,146 4,721,581 3,875,909 3,244,879 3,592,766 6,874,234 6,298,264 7,886,020 Total expenditures 156,209,821 154,186,552 150,312,849 138,444,545 135,770,253 138,105,388 138,925,308 137,065,178 Excess of revenues over (under) expenditures (10,149,542) (7,661,063) (11,131,624) (949,663) (1,912,476) (1,185,540) (827,763) 1,343,424 Other Financing Sources (Uses) Proceeds from borrowing - 4,052,979 15,190,077 6,087,507 1,784,465 570,000 1,500,000 3,914,787 Proceeds from sale of capital assets 1,587,216 - - 774,822 74,565 799,497 99,434 896,818 Insurance proceeds 120,960 - - - - - - - Transfers in 11,601,871 13,507,521 6,908,259 8,170,998 8,274,929 13,628,444 14,083,970 16,789,516 Transfers out (12,579,599) (12,529,754) (10,168,616) (11,303,463) (10,398,364) (16,321,156) (18,802,923) (18,715,306) Total other financing sources (uses) 730,448 5,030,746 11,929,720 3,729,864 (264,405) (1,323,215) (3,119,519) 2,885,815 Net change in fund balance (9,419,094)$ (2,630,317)$ 798,096$ 2,780,201$ (2,176,881)$ (2,508,755)$ (3,947,282)$ 4,229,239$ Debt service as a percentage of noncapital expenditures 4.6% 4.6% 4.0% 3.5% 3.9% 7.3% 7.2% 8.8% (1) eight years are reported back to the date of GASB 34 implementation -113- Schedule 5 City of Lansing Assessed Value and estimated Actual Value of Taxable Property Last Nine Fiscal Years Fiscal Total Assessed Year Personal Total Taxable Direct Estimated Value as a Ended Residential Commercial Industrial Property Assessed Tax Actual Percentage of June 30, Property Property Property Valuation Valuation Rate Value Actual Value 2001 $988,356,656 $560,554,545 $72,068,138 $305,623,290 $1,926,602,629 $16.96 $3,853,205,258 50.0% 2002 1,036,176,015 632,166,043 138,185,676 289,408,415 2,095,936,149 16.46 4,191,872,298 50.0% 2003 1,088,980,029 661,752,030 157,367,277 303,247,208 2,211,346,544 15.93 4,422,693,088 50.0% 2004 1,135,019,090 686,609,099 178,744,095 287,439,600 2,287,811,884 15.93 4,575,623,768 50.0% 2005 1,196,695,728 702,969,958 175,906,035 288,421,700 2,363,993,421 15.88 4,727,986,842 50.0% 2006 1,266,935,505 730,413,466 180,564,805 251,293,200 2,429,206,976 15.88 4,858,413,952 50.0% 2007 1,354,989,247 728,343,561 195,703,073 221,858,408 2,500,894,289 15.88 5,001,788,578 50.0% 2008 1,437,051,392 765,233,437 192,915,386 223,995,750 2,619,195,965 15.83 5,238,391,930 50.0% 2009 1,479,089,611 719,463,319 254,539,254 205,034,000 2,658,126,184 15.83 5,316,252,368 50.0% (1) tax rates are per $1,000 of assessed value (2) data available back nine years -114- Schedule 6 City of Lansing Direct and Overlapping Property tax Rates Last Ten Fiscal Years (rate per $1,000 of assessed value) Fiscal City Direct Rates Overlapping Rates Year Ended Tax Operating Service City County School State College Other June 30, Year Millage Millage Millage Millage Millage Education Millage Millage Total 2000 1999 14.90 2.06 16.96 7.61 19.52 6.00 2.92 7.36 60.37 2001 2000 14.90 2.06 16.96 7.61 19.04 6.00 2.92 7.62 60.15 2002 2001 14.40 2.06 16.46 7.61 19.10 6.00 3.89 7.59 60.65 2003 2002 14.90 1.03 15.93 8.11 19.01 6.00 3.87 8.34 61.26 2004 2003 14.90 1.03 15.93 8.11 19.06 5.00 3.85 8.89 60.84 2005 2004 14.90 .98 15.88 8.10 20.65 6.00 3.84 8.83 63.30 2006 2005 14.90 .98 15.88 8.18 20.40 6.00 3.81 8.78 63.04 2007 2006 14.95 .93 15.88 8.72 20.32 6.00 3.81 9.15 63.88 2008 2007 14.95 .88 15.83 9.41 20.18 6.00 3.81 8.15 63.38 2009 2008 15.01 .82 15.83 10.83 20.15 6.00 3.81 9.04 65.66 (1) rates for Ingham County and Lansing School District only (2) since 1995 this is the Non-homestead rate (3) includes Intermediate School, Airport Authority, Capital Area Transit Authority and Capital Area District Library (began in FY 98) -115- Sc h e d u l e 7 Cit y o f L a n s i n g Pr i n c i p a l P r o p e r t y T a x P a y e r s La s t N i n e F i s c a l Y e a r s 20 0 9 2 0 0 8 2 0 0 7 2 0 0 6 2 0 0 5 Pe r c e n t a g e P e r c e n t a g e P e r c e n t a g e P e r c e n t a g e P e r c e n t a g e Ta x a b l e o f T o t a l T a x a b l e o f T o t a l T a x a b l e o f T o t a l T a x a b l e o f T o t a l T a x a b l e o f T o t a l As s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d Ta x p a y e r V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n Ge n e r a l M o t o r s $ 1 3 0 , 2 4 3 , 5 6 3 1 4 . 9 0 % $ 1 3 4 , 7 0 2 , 1 0 1 1 5 . 1 4 % $ 1 3 3 , 8 9 7 , 6 4 8 1 5 . 1 1 % $ 1 6 1 , 9 1 7 , 7 7 4 1 6 . 8 5 % 2 0 5 , 3 1 6 , 0 3 5 $ 1 8 . 6 9 % Ja c k s o n N a t i o n a l L i f e I n s u r a n c e C o m p a n y 3 8 , 4 3 0 , 1 4 4 2 1 . 4 5 % 3 6 , 7 3 8 , 5 8 3 2 1 . 4 0 % 3 3 , 1 3 0 , 2 6 1 2 1 . 2 6 % 3 2 , 3 9 3 , 3 4 7 2 1 . 3 7 % 3 1 , 9 0 1 , 3 0 7 2 1 . 3 5 % Co n s u m e r s E n e r g y 2 2 , 2 4 9 , 5 0 3 3 0 . 8 4 % 2 2 , 1 6 8 , 9 4 8 4 0 . 8 5 % 2 1 , 6 2 8 , 2 8 1 4 0 . 8 3 % 2 1 , 2 2 7 , 5 7 0 3 0 . 9 0 % 2 1 , 8 4 0 , 3 3 6 5 0 . 9 2 % De l t a T o w n s h i p U t i l i t i e s 1 9 , 8 7 5 , 8 0 0 4 0 . 7 5 % 2 2 , 4 1 5 , 5 7 0 3 0 . 8 6 % 2 5 , 3 8 1 , 7 3 3 3 0 . 9 7 % 1 2 , 9 9 9 , 7 0 0 5 0 . 5 5 % Ac c i d e n t F u n d C o m p a n y 1 4 , 1 7 8 , 1 1 8 5 0 . 5 3 % 1 4 , 4 6 7 , 9 2 5 6 0 . 5 5 % 1 3 , 2 0 2 , 4 0 4 7 0 . 5 0 % 1 1 , 9 2 1 , 1 5 5 9 0 . 5 0 % 1 1 , 0 6 1 , 4 5 7 7 0 . 4 7 % La n s i n g R e t a i l C e n t e r L L C 1 4 , 0 3 2 , 7 2 8 6 0 . 5 3 % 1 3 , 4 4 1 , 4 5 3 7 0 . 5 1 % 1 3 , 1 3 9 , 3 7 5 8 0 . 5 0 % 1 2 , 6 7 0 , 7 0 7 7 0 . 5 4 % 1 2 , 2 6 6 , 1 7 3 6 0 . 5 2 % De m m e r C o r p o r a t i o n 1 3 , 8 2 9 , 4 0 0 7 0 . 5 2 % Tr a p p e r s C o v e L T D P a r t n e r s 1 2 , 9 5 2 , 4 4 9 8 0 . 4 9 % 1 2 , 8 5 4 , 4 6 3 8 0 . 4 9 % 1 2 , 5 6 5 , 4 5 9 9 0 . 4 8 % 1 2 , 1 1 7 , 1 2 7 8 0 . 5 1 % 1 1 , 7 3 0 , 0 3 7 9 0 . 5 0 % He a r t o f t h e C i t y A s s o c 1 0 , 3 4 1 , 6 0 0 9 0 . 3 9 % 1 0 , 5 2 7 , 4 7 4 1 0 0 . 4 0 % 1 0 , 2 9 0 , 7 8 6 1 0 0 . 3 9 % 9 , 9 2 3 , 6 1 3 1 0 0 . 4 2 % 9 , 6 0 6 , 5 9 6 1 0 0 . 4 1 % Sp r i n t S p e c t r u m L . P . 8 , 9 7 4 , 0 0 0 1 0 0 . 3 4 % 1 0 , 6 9 3 , 7 0 0 9 0 . 4 1 % 1 4 , 5 2 6 , 8 4 1 6 0 . 5 5 % 1 2 , 9 3 2 , 3 6 5 6 0 . 5 5 % 1 4 , 0 8 9 , 1 0 0 8 0 . 6 0 % Mi c h i g a n S t r a t e g i c F u n d ( 3 ) 1 9 , 1 1 5 , 5 7 7 5 0 . 7 3 % 1 8 , 7 6 4 , 9 3 6 5 0 . 7 2 % 1 8 , 0 9 5 , 4 0 7 4 0 . 7 7 % 1 7 , 5 1 7 , 3 3 6 4 0 . 7 4 % 52 5 R e d e v c o I n c 26 , 5 7 3 , 6 5 2 3 1 . 1 2 % Cr i c k e t C o m m u n i c a t i o n s Vi c t o r I V P a r t n e r s h i p St a t e o f M i c h i g a n (1 ) d a t a f u r n i s h e d f r o m C i t y o f L a n s i n g A s s e s s o r (2 ) d a t a a v a i l a b l e b a c k n i n e y e a r s (3 ) f o r m e r l y C a p i t a l O u t l o o k L L C -1 1 6 - Sc h e d u l e 7 Cit y o f L a n s i n g Pr i n c i p a l P r o p e r t y T a x P a y e r s La s t N i n e F i s c a l Y e a r s 20 0 4 2 0 0 3 2 0 0 2 2 0 0 1 Pe r c e n t a g e P e r c e n t a g e P e r c e n t a g e P e r c e n t a g e To t a l o f T o t a l T o t a l o f T o t a l T o t a l o f T o t a l T o t a l o f T o t a l As s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d A s s e s s e d Ta x p a y e r V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n V a l u a t i o n R a n k V a l u a t i o n Ge n e r a l M o t o r s $ 2 2 3 , 1 0 0 , 8 0 0 1 9 . 7 5 % $ 2 2 8 , 5 9 5 , 0 0 0 1 1 0 . 3 4 % $ 2 1 6 , 9 5 7 , 4 0 0 1 1 0 . 3 5 % 2 1 0 , 1 2 4 , 0 0 0 $ 1 1 0 . 9 1 % Ja c k s o n N a t i o n a l L i f e I n s u r a n c e C o m p a n y 3 1 , 7 8 6 , 4 0 0 2 1 . 3 9 % 2 7 , 6 5 3 , 5 0 0 2 1 . 2 5 % 3 3 , 3 9 8 , 5 0 0 2 1 . 5 9 % 4 1 , 2 3 8 , 0 0 0 2 2 . 1 4 % Co n s u m e r s E n e r g y 2 2 , 0 4 3 , 4 0 0 5 0 . 9 6 % 2 1 , 3 2 6 , 6 0 0 5 0 . 9 6 % 2 8 , 5 5 4 , 3 0 0 3 1 . 3 6 % 2 0 , 7 7 9 , 8 0 0 3 1 . 0 8 % De l t a T o w n s h i p U t i l i t i e s Ac c i d e n t F u n d C o m p a n y 1 3 , 7 2 4 , 2 0 0 7 0 . 6 0 % 1 3 , 1 0 8 , 1 0 0 7 0 . 5 9 % 1 2 , 8 1 5 , 2 0 0 7 0 . 6 1 % 1 1 , 1 8 1 , 3 0 0 8 0 . 5 8 % La n s i n g R e t a i l C e n t e r L L C 1 5 , 5 4 4 , 2 0 0 6 0 . 6 8 % 1 4 , 7 5 0 , 9 0 0 6 0 . 6 7 % 1 4 , 5 8 4 , 8 0 0 6 0 . 7 0 % 1 3 , 3 1 1 , 2 0 0 6 0 . 6 9 % De m m e r C o r p o r a t i o n Tr a p p e r s C o v e L T D P a r t n e r s 1 3 , 1 9 8 , 2 0 0 1 0 0 . 5 8 % 1 2 , 8 8 1 , 7 0 0 8 0 . 5 8 % 1 2 , 3 6 4 , 3 0 0 8 0 . 5 9 % 1 2 , 3 6 4 , 3 0 0 7 0 . 6 4 % He a r t o f t h e C i t y A s s o c 11 , 4 3 8 , 9 0 0 1 0 0 . 5 2 % 1 1 , 5 9 3 , 0 0 0 9 0 . 5 5 % 1 0 , 4 6 1 , 8 0 0 9 0 . 5 4 % Sp r i n t S p e c t r u m L . P . 1 3 , 4 5 4 , 6 0 0 8 0 . 5 9 % 1 1 , 8 7 7 , 0 0 0 9 0 . 5 4 % Mi c h i g a n S t r a t e g i c F u n d ( 3 ) 2 3 , 0 2 9 , 3 0 0 4 1 . 0 1 % 2 3 , 8 1 1 , 5 0 0 4 1 . 0 8 % 2 0 , 9 0 0 , 1 0 0 5 1 . 0 0 % 1 8 , 8 0 5 , 6 0 0 4 0 . 9 8 % 52 5 R e d e v c o I n c 2 5 , 9 7 6 , 2 0 0 3 1 . 1 4 % 2 6 , 8 5 4 , 7 0 0 3 1 . 2 1 % 2 4 , 5 8 6 , 4 0 0 4 1 . 1 7 % 1 0 , 0 0 0 , 0 0 0 1 0 0 . 5 2 % Cr i c k e t C o m m u n i c a t i o n s 1 3 , 3 9 1 , 6 0 0 9 0 . 5 9 % Vi c t o r I V P a r t n e r s h i p 9, 4 0 8 , 3 0 0 1 0 0 . 4 5 % St a t e o f M i c h i g a n 16 , 4 8 8 , 9 0 0 5 0 . 8 6 % -1 1 7 - Sc h e d u l e 8 Ci t y o f L a n s i n g Pr o p e r t y T a x L e v i e s a n d C o l l e c t i o n s La s t T e n F i s c a l Y e a r s C o l l e c t e d w i t h i n t h e Fi s c a l Y e a r o f t h e L e v y T o t a l C o l l e c t i o n s t o D a t e Ta x e s L e v i e d C u r r e n t P e r c e n t o f De l i n q u e n t T o t a l C o l l e c t i o n s Fi s c a l f o r t h e T a x L e v y T a x T a x a s a P e r c e n t Yea r Fi s c a l Y e a r Co l l e c t i o n C o l l e c t e d C o l l e c t i o n C o l l e c t i o n o f L e v y 20 0 0 3 5 , 0 2 7 , 9 0 7 $ 3 4 , 8 8 6 , 8 0 8 $ 9 9 . 6 0 % 4 8 , 0 7 4 $ 3 4 , 9 3 4 , 8 8 2 $ 9 9 . 7 3 % 20 0 1 3 5 , 5 4 7 , 4 9 7 3 5 , 3 3 0 , 2 8 8 9 9 . 3 9 % 1 8 , 5 2 2 3 5 , 3 4 8 , 8 1 0 9 9 . 4 4 % 20 0 2 3 6 , 3 5 7 , 7 4 8 3 6 , 2 0 8 , 9 8 5 9 9 . 5 9 % 5 9 , 6 2 5 3 6 , 2 6 8 , 6 1 0 9 9 . 7 5 % 20 0 3 3 7 , 3 1 0 , 6 5 6 3 7 , 0 4 1 , 6 6 2 9 9 . 2 8 % ( 9 7 , 8 4 2 ) 3 6 , 9 4 3 , 8 2 0 9 9 . 0 2 % 20 0 4 3 8 , 2 6 7 , 5 1 4 3 7 , 8 2 6 , 4 3 6 9 8 . 8 5 % 5 8 , 2 5 5 3 7 , 8 8 4 , 6 9 1 9 9 . 0 0 % 20 0 5 4 0 , 0 5 1 , 3 0 3 3 9 , 4 2 9 , 0 9 3 9 8 . 4 5 % 1 3 7 , 7 2 7 3 9 , 5 6 6 , 8 2 0 9 8 . 7 9 % 20 0 6 4 1 , 2 6 1 , 3 9 7 4 1 , 0 2 2 , 7 3 5 9 9 . 4 2 % 7 7 , 7 4 7 4 1 , 1 0 0 , 4 8 3 9 9 . 6 1 % 20 0 7 4 2 , 6 2 7 , 0 4 2 4 2 , 5 1 6 , 6 9 6 9 9 . 7 4 % 9 1 , 6 0 5 4 2 , 6 0 8 , 3 0 1 9 9 . 9 6 % 20 0 8 4 4 , 2 8 6 , 6 5 7 4 4 , 1 2 5 , 5 1 7 9 9 . 6 4 % 6 2 , 2 7 4 4 4 , 1 8 7 , 7 9 1 9 9 . 7 8 % 20 0 9 4 5 , 5 6 7 , 5 5 6 4 5 , 4 6 8 , 6 3 9 9 9 . 7 8 % 7 0 , 3 4 7 4 5 , 5 3 8 , 9 8 6 9 9 . 9 4 % (1 ) n e t o f c h a r g e b a c k s f r o m t h e C o u n t y T a x R e v o l v i n g F u n d s f o r t a x e s s t i l l d e l i n q u e n t a f t e r t h r e e y e a r s (2 ) d a t a f u r n i s h e d f r o m C i t y o f L a n s i n g T r e a s u r e r -1 1 8 - Sc h e d u l e 9 Ci t y o f L a n s i n g Ra t i o s o f O u t s t a n d i n g D e b t b y T y p e La s t T e n F i s c a l Y e a r s G o v e r n m e n t a l A c t i v i t i e s B u s i n e s s - T y p e A c t i v i t i e s Ge n e r a l S p e c i a l G e n e r a l T o t a l P e r c e n t a g e Fi s c a l O b l i g a t i o n A s s e s s m e n t Le a s e O b l i g a t i o n R e v e n u e L e a s e P r i m a r y of P e r s o n a l P e r Ye a r Bo n d s D e b t Pu r c h a s e s L o a n s B o n d s B o n d s P u r c h a s e s L o a n s G o v e r n m e n t I n c o m e C a p i t a P o p u l a t i o n 20 0 0 $ 2 1 , 0 9 0 , 0 0 0 $ 1 4 0 , 0 0 0 $ 1 1 , 5 0 1 , 0 0 0 $ 0 $ 4 9 , 3 3 0 , 0 0 0 $ 1 0 1 , 8 0 0 , 0 0 0 $ 0 $ 0 $ 1 8 3 , 8 6 1 , 0 0 0 8 . 6 1 % $ 1 , 5 4 4 1 1 9 , 1 0 0 20 0 1 1 7 , 3 1 0 , 0 0 0 1 1 5 , 0 0 0 1 2 , 1 3 5 , 0 0 0 6 5 0 , 0 0 0 5 5 , 0 6 9 , 0 0 0 9 7 , 8 4 5 , 0 0 0 0 0 1 8 3 , 1 2 4 , 0 0 0 8 . 5 8 % 1 , 5 3 8 1 1 9 , 1 0 0 20 0 2 3 3 , 6 6 8 , 0 0 0 9 0 , 0 0 0 1 1 , 2 6 6 , 0 0 0 6 5 0 , 0 0 0 1 2 3 , 0 2 2 , 0 0 0 3 2 , 7 0 5 , 0 0 0 0 0 2 0 1 , 4 0 1 , 0 0 0 9 . 4 4 % 1 , 6 9 1 1 1 9 , 1 0 0 20 0 3 2 9 , 5 5 3 , 1 3 3 6 5 , 0 0 0 1 1 , 0 4 3 , 8 4 7 5 3 4 , 3 2 9 1 2 9 , 3 0 2 , 0 4 8 2 9 , 2 3 0 , 0 0 0 0 0 1 9 9 , 7 2 8 , 3 5 7 9 . 3 7 % 1 , 6 7 7 1 1 9 , 1 0 0 20 0 4 2 5 , 0 7 8 , 1 3 3 4 5 , 0 0 0 9 , 8 5 8 , 7 5 2 4 0 8 , 2 8 3 1 5 8 , 3 0 3 , 2 2 5 5 5 , 3 7 5 , 0 0 0 0 4 , 1 7 9 , 6 4 9 2 5 3 , 2 4 8 , 0 4 2 1 1 . 8 8 % 2 , 1 2 6 1 1 9 , 1 0 0 20 0 5 1 3 , 3 2 0 , 0 0 0 3 5 , 0 0 0 8 , 3 9 6 , 1 5 4 1 , 5 4 3 , 1 9 5 1 6 5 , 0 2 9 , 7 8 5 5 1 , 7 1 0 , 0 0 0 0 4 , 1 8 0 , 0 0 0 2 4 4 , 2 1 4 , 1 3 4 1 1 . 4 6 % 2 , 0 5 0 1 1 9 , 1 0 0 20 0 6 1 7 , 2 4 5 , 0 0 0 2 5 , 0 0 0 7 , 3 5 1 , 1 2 6 1 , 4 0 9 , 8 4 4 1 6 8 , 8 2 4 , 0 0 4 4 7 , 9 0 5 , 0 0 0 0 4 , 1 8 0 , 0 0 0 2 4 6 , 9 3 9 , 9 7 4 1 1 . 5 9 % 2 , 0 7 3 1 1 9 , 1 0 0 20 0 7 1 9 , 8 4 5 , 0 0 0 1 0 , 0 0 0 1 5 , 7 2 1 , 8 4 4 1 , 7 7 2 , 0 4 9 1 6 5 , 1 7 3 , 3 8 6 4 3 , 9 5 5 , 0 0 0 0 4 , 1 8 0 , 0 0 0 2 5 0 , 6 5 7 , 2 8 0 1 1 . 7 7 % 2 , 1 0 5 1 1 9 , 1 0 0 20 0 8 2 0 , 6 2 4 , 1 0 0 0 1 4 , 0 3 7 , 8 8 5 1 , 5 3 4 , 8 2 2 1 8 2 , 4 1 9 , 6 0 8 4 1 , 1 2 5 , 0 0 0 0 4 , 1 8 0 , 0 0 0 2 6 3 , 9 2 1 , 4 1 5 1 2 . 4 0 % 2 , 2 1 6 1 1 9 , 1 0 0 20 0 9 1 7 , 6 4 0 , 0 0 0 0 1 2 , 3 9 4 , 0 8 2 1 , 2 9 0 , 4 7 9 1 9 4 , 4 2 9 , 7 0 1 3 8 , 2 8 5 , 0 0 0 0 4 , 1 8 0 , 0 0 0 2 6 8 , 2 1 9 , 2 6 2 1 2 . 6 0 % 2 , 2 5 2 1 1 9 , 1 0 0 (1 ) p o p u l a t i o n p e r d e c e n n i a l c e n s u s b y t h e U . S . C e n s u s B u r e a u (2 ) p e r s o n a l i n c o m e d a t a c o m e s f r o m U . S . C e n s u s B u r e a u , A m e r i c a n C o m m u n i t y S u r v e y 2 0 0 5 -1 1 9 - Schedule 10 City of Lansing Ratios of General Bonded Debt Outstanding Last Nine Fiscal Years Debt Payable From Ratio of Debt Enterprise Net Bonded Net Service Revenues Debt to Bonded Fiscal Taxable Gross Bonded Monies & Special Net Bonded Taxable Debt per Year Population(1) Value(3) Debt(2) Available Assessments Debt Value Capita 2001 119,128 $1,926,602,629 $128,819,227 $266,393 $93,171,094 $35,381,740 0.0184 $297 2002 119,128 2,095,936,149 135,999,133 28,496 102,232,751 33,737,886 0.0161 283 2003 119,128 2,211,346,544 140,043,000 7,524 110,419,899 29,615,577 0.0134 249 2004 119,128 2,287,811,884 166,581,000 42,852 145,505,724 21,032,424 0.0092 177 2005 119,128 2,363,993,421 178,349,785 4,400 165,029,785 13,315,600 0.0056 112 2006 119,128 2,429,206,976 186,094,004 88,826 168,849,004 17,156,174 0.0071 144 2007 119,128 2,500,894,289 185,028,386 309,363 165,183,386 19,535,637 0.0078 164 2008 119,128 2,619,195,965 203,043,708 256,144 182,419,608 20,367,956 0.0078 171 2009 119,128 2,658,126,184 212,069,701 186,636 194,429,701 17,453,364 0.0066 147 (1) population per decennial census by the U.S. Census Bureau (2) includes all general obligation debt and special assessment debt with governmental obligation (3) the tax assessment day is December 31 prior to beginning of fiscal year (4) data available back nine years -120- Schedule 11 City of Lansing Direct and Overlapping Governmental Activities Debt As of June 30, 2009 Net General Obligation Bonded Amount Name of Debt % Applicable Applicable Governmental Unit Outstanding to City to City Direct - City 24,119,796$ (1) 100.00% 24,119,796$ Overlapping Eaton Intermediate School District 1,520,000 1.43% 21,736$ Waverly School District 37,955,000 0.26% 98,683 Lansing School District 62,565,000 83.38% 52,166,697 East Lansing School District 71,759,180 4.04% 2,899,071 Holt School District 96,513,948 2.74% 2,644,482 Ingham Intermediate School District - 26.11% - Ingham County 31,601,928 30.10% 9,512,180 Eaton County 35,710,430 2.55% 910,616 Lansing Community College 63,775,000 21.87% 13,947,593 Okemos School District 34,467,000 3.42% 1,178,771 Grand Ledge 77,680,000 2.90% 2,252,720 Total Overlapping Debt 85,632,549 Total Direct and Overlapping Debt 109,752,346$ excluding general obligation bonds reported in the enterprise funds, special assessment debt with government commitment and amount available for repayment in the debt service fund -121- Sc h e d u l e 1 2 Le g a l D e b t M a r g i n C a l c u l a t i o n f o r F i s c a l Y e a r 2 0 0 9 Ci t y o f L a n s i n g Le g a l D e b t M a r g i n I n f o r m a t i o n As s e s s e d v a l u e , r e a l a n d p e r s o n a l p r o p e r t y $ 2 , 8 2 6 , 5 4 2 , 4 4 8 La s t T e n F i s c a l Y e a r s Ass e s s e d v a l u e e q u i v a l e n t s 1 5 9 , 2 7 5 , 5 4 4 To t a l v a l u a t i o n 2 , 9 8 5 , 8 1 7 , 9 9 2 Le g a l d e b t m a r g i n D e b t l i m i t a t i o n - 1 0 p e r c e n t o f t o t a l v a l u a t i o n 2 9 8 , 5 8 1 , 7 9 9 De b t a p p l i c a b l e t o l i m i t To t a l C i t y B o n d e d D e b t 2 5 0 , 3 5 4 , 7 0 1 A d d C i t y S h a r e : D r a i n C o m m i s s i o n - C o u n t y I s s u e d 1 6 1 , 9 4 0 J o i n t B u i l d i n g A u t h o r i t y - C o u n t y I s s u e d 5 , 0 8 0 , 3 8 5 B r o w n f i e l d R e d e v e l o p m e n t A u t h o r i t y 1 , 6 9 5 , 0 0 0 T I F S u p p o r t e d B o n d s 6 , 6 6 6 , 4 3 1 26 3 , 9 5 8 , 4 5 7 L e s s : S p e c i a l A s s e s s m e n t B o n d s - M i c h i g a n T r a n s p o r t a t i o n ( M T F ) B o n d s ( 8 , 0 1 5 , 0 0 0 ) S e w a g e D i s p o s a l R e v e n u e B o n d s ( 3 8 , 2 8 5 , 0 0 0 ) P o l l u t i o n A b a t e m e n t ( C S O P r o j e c t ) B o n d s ( 1 3 8 , 1 4 4 , 7 0 1 ) ( 1 8 4 , 4 4 4 , 7 0 1 ) T o t a l n e t d e b t a p p l i c a b l e t o l i m i t 7 9 , 5 1 3 , 7 5 6 Le g a l d e b t m a r g i n $ 2 1 9 , 0 6 8 , 0 4 3 F i s c a l Y e a r 20 0 0 2 0 0 1 2 0 0 2 2 0 0 3 2 0 0 4 2 0 0 5 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 De b t l i m i t $ 2 1 2 , 6 2 3 , 1 3 0 $ 2 3 7 , 2 1 6 , 2 0 5 $ 2 5 6 , 3 1 4 , 6 6 7 $ 2 7 3 , 3 4 0 , 1 1 0 $ 2 8 9 , 4 8 6 , 0 2 7 $ 3 0 2 , 8 1 1 , 1 0 5 $ 3 1 4 , 3 0 7 , 6 1 1 $ 3 2 4 , 9 8 7 , 5 3 1 $ 3 1 8 , 8 1 0 , 8 6 8 $ 2 9 8 , 5 8 1 , 79 9 To t a l n e t d e b t a p p l i c a b l e t o l i m i t 8 5 , 7 4 4 , 3 5 5 8 1 , 5 0 4 , 9 2 4 7 3 , 8 7 2 , 7 0 9 7 0 , 8 9 3 , 6 1 4 8 7 , 1 7 1 , 1 3 9 7 5 , 8 8 2 , 3 5 9 1 0 3 , 0 9 5 , 9 8 6 8 4 , 2 7 6 , 3 1 2 8 7 , 9 6 6 , 3 6 5 7 9 ,5 1 3 , 7 5 6 Le g a l d e b t m a r g i n $ 1 2 6 , 8 7 8 , 7 7 5 $ 1 5 5 , 7 1 1 , 2 8 1 $ 1 8 2 , 4 4 1 , 9 5 8 $ 2 0 2 , 4 4 6 , 4 9 6 $ 2 0 2 , 3 1 4 , 8 8 8 $ 2 2 6 , 9 2 8 , 7 4 6 $ 2 1 1 , 2 1 1 , 6 2 5 $ 2 4 0 , 7 1 1 , 2 1 9 $ 2 3 0 , 8 4 4 , 5 0 3 $ 2 19 , 0 6 8 , 0 4 3 To t a l n e t d e b t a p p l i c a b l e t o t h e l i m i t a s a p e r c e n t a g e o f d e b t l i m i t 4 0 . 3 3 % 3 4 . 3 6 % 2 8 . 8 2 % 2 5 . 9 4 % 3 0 . 1 1 % 2 5 . 0 6 % 3 2 . 8 0 % 2 5 . 9 3 % 2 7 . 5 9 % 2 6 . 6 3 % -1 2 2 - Schedule 13 City of Lansing Pledged-Revenue Coverage Last Ten Fiscal Years Sewage Disposal Bonds Direct Net Revenue Gross Operating Available for Debt Service Requirements Revenue Expenses(2) Debt Service Principal Interest Total Coverage(1) 2000 $21,623,804 $10,528,286 $11,095,518 $2,180,000 $1,656,475 $3,836,475 2.89 2001 24,193,795 10,574,104 13,619,691 3,065,000 1,976,600 5,041,600 2.70 2002 25,841,763 10,592,681 15,249,082 3,190,000 1,854,090 5,044,090 3.02 2003 26,963,775 11,209,711 15,754,064 3,320,000 1,723,253 5,043,253 3.12 2004 26,196,518 11,543,509 14,653,009 3,475,000 1,723,253 5,198,253 2.82 2005 26,601,646 12,775,001 13,826,645 3,715,000 1,786,328 5,501,328 2.51 2006 27,932,464 12,867,761 15,064,703 3,805,000 2,036,736 5,841,736 2.58 2007 29,292,698 13,494,658 15,798,040 3,950,000 2,152,990 6,102,990 2.59 2008 29,356,299 15,997,449 13,358,850 2,830,000 2,002,400 4,832,400 2.76 2009 27,759,684 14,206,961 13,552,723 2,840,000 1,900,000 4,740,000 2.86 (1) coverage is defined as net revenue available for debt service divided by debt service requirements (2) operating expenses less depreciation -123- Schedule 14 City of Lansing Demographic and Economic Statistics Last Ten Fiscal Years Per capita Personal Personal Median School Unemployment Labor Year Population(1) Income Income(5) Age(2) Enrollment(3) % Rate(4) Force(4) 2000 119,100 $2,134,748,400 $17,924 31.40 17,836 4.7 68,300 2001 119,100 2,134,036,817 17,918 31.56 17,586 4.5 67,725 2002 119,100 2,133,325,472 17,912 31.72 17,490 5.6 67,700 2003 119,100 2,132,614,363 17,906 31.88 17,600 6.7 65,325 2004 119,100 2,131,903,492 17,900 32.04 16,927 7.0 63,750 2005 119,100 2,131,192,857 17,894 32.20 16,201 9.0 68,041 2006 119,100 2,130,460,800 17,888 32.36 16,014 8.4 67,023 2007 119,100 2,129,750,646 17,882 32.52 15,178 8.9 66,224 2008 119,100 2,129,040,730 17,876 32.68 14,475 10.3 65,833 2009 119,100 2,128,331,049 17,870 32.84 14,482 17.3 66,822 (1) population per decennial census by the U.S. Census Bureau (2) 2000 data from U.S. Census Bureau. Data for other years estimated by City of Lansing Finance Department (3) annual school census from the Lansing School District (4) Michigan Department of Career Development: Employment Service Agency - Labor Market Information (5) personal income for 2000 and 2005 from the U.S.Census Bureau. The other years were extrapolated from 2000 and 2005 -124- Schedule 15 City of Lansing Principal Employers Last Four Fiscal Years 2009 2008 2007 2006 Percentage Percentage Percentage Percentage of Total City of Total City of Total City of Total City Employer Employees Rank Employment Employees Rank Employment Employees Rank Employment Employees Rank Employment (1) (2) (1) State of Michigan 14,355 1 6.72% 14,355 1 6.52% 14,355 1 6.24% 14,355 1 6.09% Michigan State University 10,500 2 4.91% 10,500 2 4.77% 10,500 2 4.56% 10,500 2 4.45% Sparrow Health System 5,500 3 2.57% 6,000 4 2.72% 6,000 4 2.61% 6,000 4 2.54% General Motors 5,000 4 2.34% 6,300 3 2.86% 6,300 3 2.74% 6,300 3 2.67% Lansing Community College 3,180 5 1.49% 3,180 5 1.44% 3,180 5 1.38% 3,180 5 1.35% Ingham Regional Medical Center 2,500 6 1.17% 2,500 6 1.13% 2,500 6 1.09% 2,500 6 1.06% Lansing School District 2,106 7 0.99% 2,106 7 0.96% 2,106 7 0.92% 2,106 7 0.89% Meijer 1,800 8 0.84% 2,000 8 0.91% 2,000 8 0.87% 2,000 8 0.85% Peckham, Inc. 1,540 9 0.72% 1,400 10 0.64% 1,400 10 0.61% 1,400 10 0.59% Auto Owners Insurance 1,400 10 0.66% 1,500 9 0.68% 1,500 9 0.65% 1,500 9 0.64% (1) data is representative of the Greater Lansing Region (2) based on a Greater Lansing Region employment of 213,650 (3) data available back four years only -125- Schedule 16 City of Lansing Full-time Equivalent City Governmental Employees by Function/Program Last Four Fiscal Years Function/Program 2009 2008 2007 2006 General Government City Council 11 11 11 11 Mayor's Office 5 5 5 7 City Clerk 7 7 7 7 54-A District Court 53 53 55 55 City Attorney's Office 12 12 12 11 City TV 2 2 2 2 Internal Auditor 1 1 1 2 Human Resources 13 14 14 (1)12 Finance Accounting/Budget/Purchasing 17 16 18 (1)21 Tax Services 25 26 29 30 Information Technology 17 18 18 18 Property Management 23 24 26 (3)28 Fleet Management 31 33 37 (2)20 113 117 128 117 Planning & Neighborhood Development Administration 2 2 2 2 Code Compliance 16 17 19 15 Building Safety 15 15 16 17 Planning 4 5 7 7 Development 10 10 10 11 Parking & Transportation 41 41 43 49 88 90 97 101 Pli 342 341 338 339Police 342 341 338 339 Fire 219 219 219 220 Public Services Administration & Engineering 18 18 18 19 Operations & Maintenance 113 113 119 122 Service Garage - - - (2)17 Wastewater 50 50 51 61 181 181 188 219 Human Relations & Community Services 6 8 9 9 Parks & Recreation Administration & Design 7 8 8 9 Grounds & Forestry 31 32 32 (2)32 Leisure & Special Recreation 19 17 19 (3)20 Cemeteries 4 4 5 5 Golf/Ice Arena 4 4 4 6 Zoo (4)- - 18 19 65 65 86 91 1,118 1,126 1,172 1,203 In FY 2007, the following restructuring of departments occurred: (1) A payroll position was transferred from Finance to Human Resources (2) Operations of the City's three fleet garages was consolidated in Finance (3) Four custodial positions were transferred from Parks & Recreation to Finance (4) On July 1, 2007, Potter Park Zoo employees were transferred to Ingham County Data available back four years only -126- Schedule 17 City of Lansing Operating Indicators by Function/Program Last Four Fiscal Years Function/Program 2009 2008 2007 2006 Public Safety Fire Department responses 15,852 15,780 15,267 14,869 EMS related 13,447 13,151 12,779 12,152 Fire related 2,405 2,629 2,488 2,117 Police Department responses 89,958 87,634 97,466 87,551 Arrests 11,559 12,810 13,260 7,479 Traffic violations 20,122 25,398 29,047 30,948 Public Works Potholes filled 43,601 40,790 28,122 36,522 Streets resurfaced (miles) 16.20 20.92 22.11 27.16 Recreation Recreation participation 39,060 37,783 41,069 38,878 Pavillion rentals 189 300 587 602 Sewage Disposal Average amount processed daily (gal) 18.15 million 16.73 million 16.00 million 15.00 million Parking System Average number of monthly permits 3,783 4,059 3,905 4,073 Parking tickets issued 66,183 57,153 75,637 82,221 Cemetery Lots sold 119 98 114 104 Golf Annual rounds played 41,588 43,605 b 59,244 57,256 Garbage and Rubbish Yards sent to landfill 29,322 29,869 30,402 30,517 Recycling Recycled goods sold (tons) 2,591 2,818 2,269 2,441 Yards composted 21,871 21,928 17,189 21,304 Potter Park Zoo Annual attendance N/A N/A a 99,364 96,659 data available back four years only a. Zoo operations were trasferred to Ingham County in FY2008 b. Two municipal golf courses were non-operational in 2008 -127- Schedule 18 City of Lansing Capital Asset Statistics by Function/Program Last Four Fiscal Years Function/Program 2009 2008 2007 2006 Public Safety Police Stations 3333 Police Patrol Units 61 58 55 55 Fire Stations 9999 Public Works Streets (miles) 410.15 410.15 410.15 409.89 Traffic signals 196 203 188 194 Recreation Park acreage 2,422.63 2,422.63 2,219.63 2,219.63 Playgrounds 82 82 80 76 Baseball/softball fields 61 61 61 61 Soccer/football fields 6666 Community centers 4444 Sewage Disposal Sanitary sewers (miles) 353.5 347.4 341.0 338.0 Storm sewers (miles) 229.9 225.1 220.0 217.0 Combined sewers (miles) 191.8 197.4 203.0 208.0 Parking System Ramps 4665 Lots 16 15 15 15 Meters 2,493 2,489 2489 2,489 Cemetery Number of cemeteries 3333 Golf Number of courses 1 1 b 3 3 Acreage 115 115 b 318 318 Garbage and Rubbish Refuse collection trucks 16 21 21 20 Recycling Recycling trucks 10 10 10 10 Potter Park Zoo Number of animals N/A N/A a 398 403 data available back four years only a. Zoo operations were trasferred to Ingham County in FY2008 b. Two municipal golf courses were non-operational in 2008 -128- CITY OF LANSING, MICHIGAN SINGLE AUDIT For the Year Ended June 30, 2009 CITY OF LANSING, MICHIGAN Single Audit Table of Contents For the Year Ended June 30, 2009 PAGE Schedule of Expenditures of Federal Awards ................................................................... 1-3 Notes to Schedule of Expenditures of Federal Awards .................................................... 4 Independent Auditors’ Report on Internal Control over Financial Reporting and on Compliance and Other Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards ............................................................................ 5-6 Independent Auditors’ Report on Compliance With Requirements Applicable to Each Major Program and Internal Control Over Compliance in Accordance With OMB Circular A-133 ............................................................................................. 7-9 Schedule of Findings and Questioned Costs ..................................................................... 10-15 * * * * * City of Lansing Schedule of Expenditures of Federal Awards For the June 30, 2009 audit Federal/ Pass-through Current Federal/Pass-through Grantor CFDA Grantor Year Program Title Number Number Expenditures U.S. Department of Housing and Urban Development Direct programs: Community Development Block Grant: 2005 Entitlement 14.218 B-05-MC-26-0025 244,193$ 2006 Entitlement 14.218 B-06-MC-26-0025 330,882 2007 Entitlement 14.218 B-07-MC-26-0025 446,908 2008 Entitlement 14.218 B-08-MC-26-0025 1,429,401 Total Community Development Block Grant 2,451,384 Emergency Shelter: 2007 Grant 14.231 S-07-MC-26-0025 45,565 2008 Grant 14.231 S-08-MC-26-0025 80,868 Total Emergency Shelter Grant 126,433 Supportive Housing Program: Advent House - 08/09 14.235 MI28B40-8008 172,899 Gateway Community Services - 07/08 14.235 MI28B60-8007 9,028 Gateway Community Services - 08/09 14.235 MI28B70-8009 62,842 Haven House - 08/09 14.235 MI28B70-8004 38,271 Haven House - 2008 14.235 MI28B70-8004 9,475 C.A.C.S - 07/08 14.235 MI28B20-8 399 C.A.C.S - HPP 07/08 14.235 MI28B50-8 816 C.A.C.S - SSO 08/09 14.235 MI28B70-8010 285,394 C.A.C.S - HPP 08/09 14.235 MI28B70-8011 100,432 Greater Lansing Housing Coalition - 08/09 14.235 MI28B10-8 91,177 Greater Lansing Housing Coalition - 2008 14.235 MI28B70-8005 8,259 National Council Alcoholism - 06/08 14.235 MI28B40-8005 215,161 Salvation Army (PSH III)- 06/08 14.235 MI28B40-8001 150,459 St. Vincent Catholic Charities (PSH II) 2008 14.235 MI28B60-8004 157,709 St. Vincent Catholic Charities (PSH II) 2009 14.235 MI28B70-8002 172,350 St. Vincent Catholic Charities (PSH III) 2009 14.235 MI28B70-8006 135,273 St. Vincent Catholic Charities SSO 2009 14.235 MI28B70-8012 61,347 H.M.I.S. - 07/08 14.235 MI28B60-8005 3,620 H.M.I.S. - 05/06 14.235 MI28B40-8004 10,235 H.M.I.S. - I 08/09 14.235 MI28B70-8007 9,348 Total Supportive Housing Program 1,694,494 Home Investment Partnerships Program: 2002 Grant Year 14.239 M-02-MC-26-0208 6,146 2003 Grant Year 14.239 M-03-MC-26-0208 110,607 2004 Grant Year 14.239 M-04-MC-26-0208 115,843 2005 Grant Year 14.239 M-05-MC-26-0208 204,489 2006 Grant Year 14.239 M-06-MC-26-0208 260,308 2007 Grant Year 14.239 M-07-MC-26-0208 83,671 2008 Grant Year 14.239 M-08-MC-26-0208 164,451 Total Home Investment Partnerships Program 945,515 Neighborhood Stabilization Program Plan 14.256 B-08-MN-26-0007 15,685 Lead Hazard Reduction Demonstration Grant Program 14.905 MILHD 0162-06 312,577 Total U.S. Department of Housing and Urban Development 5,546,088 -1- City of Lansing Schedule of Expenditures of Federal Awards For the June 30, 2009 audit Federal/ Pass-through Current Federal/Pass-through Grantor CFDA Grantor Year Program Title Number Number Expenditures U.S. Department of Justice Direct programs: Local Law Enforcement Block Grant: 2005 Grant Year 16.592 2005-DJ-BX-0303 45,925$ 2006 Grant Year 16.592 2006-DJ-BX-0655 337 2007 Grant Year 16.592 2007-DJ-BX-0851 22,600 Total Local Law Enforcement Block Grant 68,862 COPS: Criminal Intelligence Database 16.609 2006-PG-BX-0005 11,488 PSN 08/10 16.744 13,457 Bulletproof Vest 2009 16.607 2009-BO-BX-09049239 5,310 Gang Resistance Education and Training 16.737 2007-JV-FX-0156 97,633 Gang Resistance Education and Training (06/30/09) 16.737 2008-JV-FX-0044 83,227 Interoperable Communications 16.710 2005-IN-WX-0009 66,071 Total COPS 277,186 Passed-through the State of Michigan Department of Community Health: Capital Area Response Effort - Year Thirteen 16.575 20457-12V07 88,542 Capital Area Response Effort - Year Twelve 16.575 20457-11V05 10,558 Metro Conspiracy Investigations 16.579 70901-8-08-B 63,527 Metro Conspiracy Investigations 2008/2009 16.579 70901-9-09-B 141,248 Total passed-through the State of Michigan Department of Community Health 303,875 Total U.S. Department of Justice 649,923 U.S. Department of Transportation Passed-through the State of Michigan Department of Transportation: Pennsylvania Avenue Bridge (MDOT 03-5123) 20.205 BFR0333(315) 9,170 High Priority Projects Program (MDOT 99-5316) 20.205 HPP9933(022) 23,064 MDOT - Haag 20.205 STU33403 35,743 MDOT - Northrup St Reconstruction (08-5215) 20.205 STP0833(019) 790,187 MDOT 07-5244 Beech St Bridge 20.205 BRO0733(033) 4,007 MDOT Dunckel & Moores River Dr 20.205 STP0733(063) 1,167,373 IPACE (MDOT 77195) 20.205 136,473 Southwest Signal (MDOT 06-5570) 20.205 CMG 0633(026) 35,216 Penn. / Mich. Signal (MDOT 06-5571) 20.205 CMG 0633(034) 18,971 Downtown Signal (MDOT 06-5572) 20.205 CMG 0633(033) 15,782 Total U.S. Department of Transportation 2,235,986 Environmental Protection Agency Direct programs: Brownfield Assessment and Cleanup Brownfield Hazardous Substance Grant 66.818 BF96523401 14,601 Brownfield Petrol Grant 66.818 BF96523401 11,718 Brownfield BCRLF Grant 66.818 BL97566201 243,862 Total Brownfield Assessment and Cleanup 270,181 Passed-through the State of Michigan Department of Environmental Quality- State Revolving Loan Funds (SRF) 66.458 4,130,774 Total Environmental Protection Agency 4,400,955 -2- City of Lansing Schedule of Expenditures of Federal Awards For the June 30, 2009 audit Federal/ Pass-through Current Federal/Pass-through Grantor CFDA Grantor Year Program Title Number Number Expenditures U.S. Department of Health and Human Services Passed-through the State of Michigan- Help America to Vote Act 93.617 9,362$ U.S. Department of Homeland Security Direct programs- Firefighter Assistance Grant 97.044 568,282 Passed-through the State of Michigan Department of State Police: FEMA - Storm Damage June 2008 97.036 744,550 Emergency Management Performance Grant FY 2008 97.042 47,797 Buffer Zone Protection Program 2006 97.078 568,917 State Homeland Security Grant Program: 2006 State Homeland Security Program 97.067 550,732 2007 State Homeland Security Program 97.067 218,897 2006 Law Enforcement Terrorism Prevention Program 97.067 294,688 2007 Law Enforcement Terrorism Prevention Program 97.067 85,486 Total U.S. Department of Homeland Security 3,079,349 Total Expenditures of Federal Awards 15,921,663$ See accompanying notes to the Schedule of Expenditures of Federal Awards. -3- -4- CITY OF LANSING, MICHIGAN Notes to Schedule of Expenditures of Federal Awards 1. GENERAL The accompanying Schedule of Expenditures of Federal Awards presents the activity of all federal awards programs of the City of Lansing, Michigan (the “City”). Federal awards received directly from federal agencies, as well as federal awards passed through other government agencies, are included on this schedule. The information in this schedule is presented in accordance with the requirements of OMB Circular A-133, Audits of States, Local Governments, and Non-Profit Organizations. Therefore, some amounts presented in this schedule may differ from amounts presented in, or used in the preparation of, the basic financial statements. The City of Lansing reporting entity is defined in Note I of the City’s basic financial statements. 2. SUBRECIPIENTS The City administers certain federal awards programs through subrecipients. Those subrecipients are not considered part of the City of Lansing reporting entity. Of the federal expenditures presented in the schedule, the City of Lansing provided federal awards to subrecipients as follows: CFDA Amount Provided Program Title Number to Subrecipients Community Development Block Grant 14.218 $ 335,231 Emergency Shelter 14.231 126,433 Supportive Housing Program 14.235 1,671,291 Home Investment Partnerships Program 14.239 41,721 METRO Conspiracy Investigations 16.579 150,547 COPS Interoperable Communications 16.710 59,981 2006 State Homeland Security Grant 97.067 682,377 2007 State Homeland Security Grant 97.067 200,996 Total $ 3,268,577 * * * * * Rehmann Robson 2330 East Paris Ave., SE Grand Rapids, MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 www.rehmann.com ,1'(3(1'(17$8',7256¶5(325721,17(51$/&21752/ OVER FINANCIAL REPORTING AND ON COMPLIANCE AND OTHER MATTERS BASED ON AN AUDIT OF FINANCIAL STATEMENTS PERFORMED IN ACCORDANCE WITH GOVERNMENT AUDITING STANDARDS December 17, 2009 Honorable Mayor and Members of the City Council City of Lansing, Michigan We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan as of and for the year ended June 30, 2009, which colleFWLYHO\FRPSULVHWKH&LW\¶VEDVLFILQDQFLDOVWDWHPHQWVDVOLVWHGLQWKHWDEOHRIFRQWHQWV and have issued our report thereon dated December 17, 2009. We conducted our audit in accordance with auditing standards generally accepted in the United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Internal Control Over Financial Reporting In planning and performing our audit, we considered the City of Lansing, Michigan¶V LQWHUQDO control over financial reporting as a basis for designing our auditing procedures for the purpose of expressing our opinions on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City of Lansing, Michigan¶VLQWHUQDOFRQWURORYHUILQDQFLDOUHSRUWLQJ Accordingly, we do not express an opinion on the effectiveness of the City of Lansing, Michigan¶V internal control over financial reporting. Our consideration of internal control over financial reporting was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in internal control over financial reporting that might be significant deficiencies or material weaknesses. However, as discussed below, we identified a certain deficiency in internal control over financial reporting that we consider to be a significant deficiency. -5- -6- A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. We consider the deficiency described in the accompanying schedule of findings and questioned costs as item 2009-1 to be a significant deficiency in internal control over financial reporting. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control. Our consideration of the internal control over financial reporting was for the limited purpose described in the first paragraph of this section and would not necessarily identify all deficiencies in the internal control that might be significant deficiencies and, accordingly, would not necessarily disclose all significant deficiencies that are also considered to be material weaknesses. However we consider the significant deficiency described above to be a material weakness. Compliance and Other Matters As part of obtaining reasonable assurance about whether the City of Lansing, Michigan’s financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit, and accordingly, we do not express such an opinion. The results of our tests disclosed no instances of noncompliance or other matters that are required to be reported under Government Auditing Standards. We noted certain matters that we reported to management of the City of Lansing, Michigan, in a separate letter dated December 17, 2009. The City of Lansing, Michigan’s response to the finding identified in our audit is described in the accompanying schedule of findings and questioned costs. We did not audit the City of Lansing, Michigan’s response and, accordingly, we express no opinion on it. This report is intended solely for the information and use of the audit committee, the governing board, management, others within the organization, and federal awarding agencies and pass-through entities, and is not intended to be and should not be used by anyone other than these specified parties. Rehmann Robson 2330 East Paris Ave., SE Grand Rapids, MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 www.rehmann.com INDEPENDENT AUDITORS¶ REPORT ON COMPLIANCE WITH REQUIREMENTS APPLICABLE TO EACH MAJOR PROGRAM AND INTERNAL CONTROL OVER COMPLIANCE IN ACCORDANCE WITH OMB CIRCULAR A-133 March 26, 2010 Honorable Mayor and Members of the City Council City of Lansing, Michigan Compliance We have audited the compliance of the City of Lansing, Michigan with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement that are applicable to each of its major federal programs for the year ended June 30, 2009. The &LW\ RI /DQVLQJ 0LFKLJDQ¶V major federal programs are identified in the VXPPDU\RIDXGLWRUV¶UHVXOWVVHFWLRQRIWKHDFFRPSDQ\LQJ6FKHGXOHRI)LQGLQJVDQG4XHVWLRQHG Costs. Compliance with the requirements of laws, regulations, contracts and grants applicable to each of its major federal programs is the responsibility of the &LW\ RI /DQVLQJ 0LFKLJDQ¶V PDQDJHPHQW 2XU UHVSRQVLELOLW\ LV WR H[SUHVV DQ RSLQLRQ RQ WKH&LW\ RI /DQVLQJ 0LFKLJDQ¶V compliance based on our audit. We conducted our audit of compliance in accordance with auditing standards generally accepted in the United States of America; the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States; and OMB Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Those standards and OMB Circular A-133 require that we plan and perform the audit to obtain reasonable assurance about whether noncompliance with the types of compliance requirements referred to above that could have a direct and material effect on major federal programs occurred. An audit includes examining, on a test basis, evidence about the &LW\RI/DQVLQJ0LFKLJDQ¶V compliance with those requirements and performing such other procedures, as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion. Our audit does not provide a legal determination on the &LW\RI/DQVLQJ0LFKLJDQ¶V compliance with those requirements. In our opinion, the City of Lansing, Michigan complied, in all material respects, with the requirements referred to above that are applicable to each of its major federal programs for the year ended June 30, 2009. However, the results of our auditing procedures disclosed instances of noncompliance with those requirements, which are required to be reported in accordance with OMB Circular A-133 and which are described in the accompanying schedule of findings and questioned costs as items 2009-2 and 2009-3. -7- -8- Internal Control Over Compliance The management of the City of Lansing, Michigan is responsible for establishing and maintaining effective internal control over compliance with the requirements of laws, regulations, contracts and grants applicable to federal programs. In planning and performing our audit, we considered the City of Lansing, Michigan’s internal control over compliance with the requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance, but not for the purpose of expressing an opinion on the effectiveness of internal control over compliance. Accordingly, we do not express an opinion on the effectiveness of the entity’s internal control over compliance. Our consideration of internal control over compliance was for the limited purpose described in the preceding paragraph and would not necessarily identify all deficiencies in the entity’s internal control that might be significant deficiencies or material weaknesses as defined below. However, as discussed below, we identified certain deficiencies in internal control over compliance that we consider to be significant deficiencies. A control deficiency in an entity’s internal control over compliance exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect noncompliance with a type of compliance requirement of a federal program on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to administer a federal program such that there is more than a remote likelihood that noncompliance with a type of compliance requirement of a federal program that is more than inconsequential will not be prevented or detected by the entity’s internal control. We consider the deficiencies in internal control over compliance described in the accompanying schedule of findings and questioned costs as items 2009-2 and 2009-3 to be significant deficiencies. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that material noncompliance with a type of compliance requirement of a federal program will not be prevented or detected by the entity’s internal control. We did not consider any of the deficiencies noted above to be material weaknesses. The City of Lansing, Michigan’s responses to the findings identified in our audit are described in the accompanying schedule of findings and questioned costs. We did not audit the City of Lansing, Michigan’s responses and, accordingly, we express no opinion on them. -9- Schedule of Expenditures of Federal Awards We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing, Michigan as of and for the year ended June 30, 2009, and have issued our report thereon dated December 17, 2009. Our audit was performed for the purpose of forming opinions on the financial statements that collectively comprise the City’s basic financial statements. The accompanying schedule of expenditures of federal awards is presented for purposes of additional analysis as required by OMB Circular A-133 and is not a required part of the basic financial statements. Such information has been subjected to the auditing procedures applied in the audit of the basic financial statements and, in our opinion, is fairly stated, in all material respects, in relation to the basic financial statements taken as a whole. This report is intended solely for the information and use of the audit committee, management, others within the organization, the City Council, and federal awarding agencies and pass-through entities and is not intended to be and should not be used by anyone other than these specified parties. CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs For the Year Ended June 30, 2009 -10- SECTION I - SUMMARY OF AUDITORS’ RESULTS Financial Statements Type of auditors’ report issued: Unqualified Internal control over financial reporting: Material weakness(es) identified? X yes no Significant deficiency(s) identified not considered to be material weaknesses? yes X none reported Noncompliance material to financial statements noted? yes X no Federal Awards Internal Control over major programs: Material weakness(es) identified? yes X no Significant deficiency(s) identified not considered to be material weaknesses? X yes none reported Type of auditors’ report issued on compliance for major programs: Unqualified Any audit findings disclosed that are required to be reported in accordance with Circular A-133, Section 510(a)? X yes no CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2009 -11- SECTION I - SUMMARY OF AUDITORS’ RESULTS (Concluded) Identification of major programs: CFDA Number(s)Name of Federal Program or Cluster 16.710 COPS: Interoperable Communications 20.205 Highway Planning and Construction 66.458 State Revolving Loan Fund 97.036 FEMA 97.044 Assistance to Firefighters Grant 97.067 State Homeland Security Grant 97.078 Buffer Zone Protection Grant Dollar threshold used to distinguish between Type A and Type B programs: $477,650 Auditee qualified as low-risk auditee? yes X no SECTION II – FINANCIAL STATEMENT FINDINGS 2009-1 Material Audit Adjustments Criteria: The City is responsible for the reconciliation of all general ledger accounts to their proper underlying balances for the purpose of creating a reasonably adjusted trial balance, from which the basic financial statements are derived. Condition: Our auditing procedures identified the need for a material audit adjustment relative to the proper recording of pension contributions made during the year. In addition, management identified and recorded a prior period adjustment to the government-wide financial statements to capitalize certain construction costs expensed in prior years. Cause: Internal controls did not detect all necessary adjustments to properly record year-end balances. Effect: As a result of this condition, the City's internal books and records were initially misstated by amounts that were material to the financial statements. CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2009 -12- Recommendation: Management has already reviewed and approved the necessary adjustments, and their effect is included in the City's financial statements. Accordingly, no further corrective action is required. View of Responsible Officials: Management acknowledges its responsibility for the fair presentation of the City's financial statements, and will continue to carefully review all account balances in the future. As noted above, no further corrective action is required at this time. SECTION III – FEDERAL AWARD FINDINGS AND QUESTIONED COSTS Significant Deficiencies Finding 2009-2 Subrecipient Monitoring Program: CFDA #97.067 – State Homeland Security Grant Criteria: The Compliance Supplement to OMB Circular No. A-133 requires that pass- through entities ensure that subrecipients expending $500,000 or more in Federal awards have met the audit requirements of OMB Circular A-133. Condition: The City conducted subrecipient monitoring during the current year, as required. However, we identified one instance in which a subrecipient had reported findings in its single audit report related to the Homeland Security pass-through dollars and the City had not followed up on the finding or received a corrective action plan. Cause: Program management was not fully aware of the Federal Guidelines regarding subrecipient monitoring that were applicable to these programs. Effect: As a result of this condition, the City is exposed to an increased risk that unallowable costs and/or activities could continue to occur at the subrecipient level for which the City is indirectly responsible as the pass-through entity. Recommendation: We recommend that the City implement procedures to verify that all findings at the subrecipient level are monitored to ensure that appropriate corrective action is taken. CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2009 -13- View of Responsible Officials: A follow up on the subrecipient’s Single Audit has concluded that they have taken care of the circumstance regarding the finding. The City has since instructed all personnel associated with monitoring subrecipients to follow up on single audit findings and conditions. Finding 2009-3 Documentation of Payroll Expenditures in Accordance with Federal Cost Principles Program: CFDA# 97.036 – FEMA Criteria: Office of Management and Budget Circular No. A-87, Cost Principles for State, Local, and Indian Tribal Governments, requires charges to federal programs to be supported by personnel activity reports, or in the case of staff who spend 100% of their time on a single federal program, semi-annual certifications. Condition: There were 5 employees who had more time charged to the grant than could be substantiated by time cards/sheets, and there were two employees who had more time on their time cards/sheets than were charged to the grant. Cause: Due to the emergency nature of this grant, the documentation for charges was being prepared and gathered after the fact. Total hours were paid correctly, however, the documentation substantiating time spent on the storm cleanup did not always agree to the reimbursement request. Effect: As a result of this condition, the City charged certain personnel costs to this program without sufficient documentation as required by OMB Circular A-87. Questioned costs: The total amount of personnel costs charged to this program with sufficient documentation as required by OMB Circular A-87 was $1,294. Recommendation: We recommend that the City implement procedures to verify that all time spent on federal programs is adequately documented. CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs (Continued) For the Year Ended June 30, 2009 -14- View of Responsible Officials: We acknowledge that $1,294 in personnel costs was undocumented as to being grant eligible out of over $900,000 in total costs. The City is implementing a training program for its departments in grant administration. Documentation requirements will be a part of this program. SECTION IV – PRIOR YEAR FEDERAL AWARDS FINDINGS Finding 2008-2 Subrecipient Monitoring Program: CFDA #97.067 – State Homeland Security Grant See current year finding 2009-2. Finding 2008-3 Equipment and Real Property Management Program: CFDA #16.710 - COPS Interoperable Communications CFDA #97.067 – State Homeland Security Grant Steps were taken to correct the prior year finding as the City completed a physical inventory for equipment purchased with federal dollars during the current year. Finding 2008-4 Cash Management Program: CFDA #16.710 - COPS Interoperable Communications Steps were taken to correct the prior year finding as no advanced funds were requested during the current year. Finding 2008-5 Suspended and Debarred Parties Program: CFDA #16.710 - COPS Interoperable Communications CFDA #97.067 – 2006 State Homeland Security Grant Steps were taken to correct the prior year finding as there is language regarding suspension and debarment in the general conditions and specifications that are sent to the vendors. CITY OF LANSING, MICHIGAN Schedule of Findings and Questioned Costs (Concluded) For the Year Ended June 30, 2009 -15- Finding 2008-6 Payroll Certification Program: CFDA #97.067 – 2007 State Homeland Security Grant Steps were taken to correct the prior year finding as the employees charged to the Homeland Security grant are now documenting how their time is spent on their timesheets. Finding 2008-7 Procurement Program: CFDA #97.067 – State Homeland Security Grant This condition was not applicable in the current year. * * * * * Rehmann Robson 2330 East Paris Ave., SE Grand Rapids, MI 49546 Ph: 616.975.4100 Fx: 616.975.4400 www.rehmann.com December 17, 2009 To the City Council of the City of Lansing Lansing, Michigan We have audited the financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregate remaining fund information of the City of Lansing WKH³City´ for the year ended June 30, 2009, and have issued our report thereon dated December 17, 2009. Professional standards require that we provide you with the following information related to our audit. Our Responsibility Under Auditing Standards Generally Accepted in the United States of America and OMB Circular A-133 As stated in our engagement letter dated July 16, 2009, our responsibility, as described by professional standards, is to express opinions about whether the financial statements prepared by management with your oversight are fairly presented, in all material respects, in conformity with accounting principles generally accepted in the United States of America. Our audit of the financial statements does not relieve you or management of your responsibilities. In planning and performing our audit, we considered the City¶V internal control over financial reporting in order to determine our auditing procedures for the purpose of expressing our opinions on the financial statements and not to provide assurance on the internal control over financial reporting. We also considered internal control over compliance with requirements that could have a direct and material effect on a major federal program in order to determine our auditing procedures for the purpose of expressing our opinion on compliance and to test and report on internal control over compliance in accordance with OMB Circular A-133. As part of obtaining reasonable assurance about whether the City¶V financial statements are free of material misstatement, we performed tests of its compliance with certain provisions of laws, regulations, contracts and grants, noncompliance with which could have a direct and material effect on the determination of financial statement amounts. However, providing an opinion on compliance with those provisions was not an objective of our audit. Also, in accordance with OMB Circular A- 133, we examined, on a test basis, evidence about the City¶V compliance with the types of compliance requirements described in the U.S. Office of Management and Budget (OMB) Circular A-133 Compliance Supplement applicable to each of its major federal programs for the purpose of expressing an opinion on the City¶V compliance with those requirements. While our audit provides a reasonable basis for our opinion, it does not provide a legal determination on the City¶V compliance with those requirements. Page 2 Planned Scope and Timing of the Audit We performed the audit according to the planned scope and timing previously communicated to you in our engagement letter and our meeting about planning matters on September 21, 2009. Significant Audit Findings Qualitative Aspects of Accounting Practices Management is responsible for the selection and use of appropriate accounting policies. In accordance with the terms of our engagement letter, we will advise management about the appropriateness of accounting policies and their application. The significant accounting policies used by the City are described in Note 1 to the financial statements. No new accounting policies were adopted and the application of existing policies was not changed during the year. We noted no transactions entered into by the governmental unit during the year for which there is a lack of authoritative guidance or consensus. Other than the prior period adjustment disclosed in Note 3-J to the City’s financial statements, there are no significant transactions that have been recognized in the financial statements in a different period than when the transaction occurred. Accounting estimates are an integral part of the financial statements prepared by management and are based on management’s knowledge and experience about past and current events and assumptions about future events. Certain accounting estimates are particularly sensitive because of their significance to the financial statements and because of the possibility that future events affecting them may differ significantly from those expected. The most sensitive estimates affecting the financial statements were: Management’s estimate of the useful lives of depreciable capital assets is based on the length of time it is believed that those assets will provide some economic benefit in the future. Management’s estimate of the accrued compensated absences is based on current hourly rates and policies regarding payment of sick and vacation banks. Management’s estimate of the allowance for uncollectible receivable balances is based on past experience and future expectation for collection of various account balances. Management’s estimate of the insurance claims incurred but not reported is based on information provided by the entity’s third party administrators and subsequent claims activity. We evaluated the key factors and assumptions used to develop these estimates in determining that they are reasonable in relation to the financial statements taken as a whole. Difficulties Encountered in Performing the Audit Page 3 We encountered no significant difficulties in dealing with management in performing and completing our audit. Corrected and Uncorrected Misstatements Professional standards require us to accumulate all known and likely misstatements identified during the audit, other than those that are trivial, and communicate them to the appropriate level of management. The attached schedule summarizes uncorrected misstatements of the financial statements. Management has determined that their effects are immaterial, both individually and in the aggregate, to the financial statements taken as a whole. As described in finding 2009-1 of the City’s single audit, we proposed (and management approved) a material audit adjustment to the City’s financial statements. In our opinion, this adjustment had a material effect on the City’s financial reporting process. Disagreements with Management For purposes of this letter, professional standards define a disagreement with management as a financial accounting, reporting, or auditing matter, whether or not resolved to our satisfaction, that could be significant to the financial statements or the auditor’s report. We are pleased to report that no such disagreements arose during the course of our audit. Management Representations We have requested certain representations from management that are included in the attached management representation letter dated December 17, 2009. Management Consultations with Other Independent Accountants In some cases, management may decide to consult with other accountants about auditing and accounting matters, similar to obtaining a “second opinion” on certain situations. If a consultation involves application of an accounting principle to the entity’s financial statements or a determination of the type of auditor’s opinion that may be expressed on those statements, our professional standards require the consulting accountant to check with us to determine that the consultant has all the relevant facts. To our knowledge, there were no such consultations with other accountants. Other Audit Findings or Issues We generally discuss a variety of matters, including the application of accounting principles and auditing standards, with management each year prior to retention as the governmental unit’s auditors. However, these discussions occurred in the normal course of our professional relationship and our responses were not a condition to our retention. Page 4 This information is intended solely for the use of the governing body and management of the City of Lansing and is not intended to be and should not be used by anyone other than these specified parties. Very truly yours, City of Lansing Comments and Recommendations For the Year Ended June 30, 2009 -1- In planning and performing our audit of the financial statements of the City of Lansing as of and for the year ended June 30, 2009, in accordance with auditing standards generally accepted in the United States of America, we considered the City’s internal control over financial reporting (internal control) as a basis for designing our auditing procedures for the purpose of expressing our opinion on the financial statements, but not for the purpose of expressing an opinion on the effectiveness of the City’s internal control. Accordingly, we do not express an opinion on the effectiveness of the City’s internal control. Our consideration of internal control was for the limited purpose described in the first paragraph and would not necessarily identify all deficiencies in internal control that might be significant deficiencies or material weaknesses. A control deficiency exists when the design or operation of a control does not allow management or employees, in the normal course of performing their assigned functions, to prevent or detect misstatements on a timely basis. A significant deficiency is a control deficiency, or combination of control deficiencies, that adversely affects the entity’s ability to initiate, authorize, record, process, or report financial data reliably in accordance with generally accepted accounting principles such that there is more than a remote likelihood that a misstatement of the entity’s financial statements that is more than inconsequential will not be prevented or detected by the entity’s internal control. The deficiencies we noted that we consider to be significant deficiencies are described in the Schedule of Findings and Questioned Costs in the City’s Single Audit report. A material weakness is a significant deficiency, or combination of significant deficiencies, that results in more than a remote likelihood that a material misstatement of the financial statements will not be prevented or detected by the entity’s internal control. The deficiencies we noted that we consider to be material weaknesses are described in the Schedule of Findings and Questioned Costs in the City’s Single Audit report. Other Matters Fraud Monitoring Program – (repeat comment) Through our inquiry of various members of management, we noted that the City does not have in place a formal fraudmonitoring program outside of its basic internal controls. We recommend that the City consider adopting such asystem of policies and procedures (in addition to the City’s basic internal controls), specifically tomonitor fraud prevention and detection systems. Among these procedures might be the establishment of aconfidential employee fraud-tips hotline, and/or periodic surprise internal audit visits. City of Lansing Comments and Recommendations For the Year Ended June 30, 2009 -2- Bank Reconciliations As part of our audit, we examined the bank reconciliations of the City's various accounts throughout the fiscal year. We noted that while most bank reconciliations showed evidence of a formal review and approval process (as required by City policy), several did not. We recommend that the City carefully adhere to its policy that each bank reconciliation be reviewed and approved by an individual other than the preparer, and that such review be evidenced by initialing and dating the reconciliation. Grant Award Recording Procedures and SEFA Preparation The City does not have a specific process for separately identifying federal awards (as opposed to state or local awards) in its accounting records. In connection with the City's Single Audit, management is responsible for preparing a schedule of its expenditures of federal awards (the SEFA). We noted that certain grants initially included on this report were ultimately determined not to be federally funded, while at least one significant federal grant was initially overlooked. We recommend that the City develop a procedure for properly identifying and tracking federal awards separately from state and local awards. Payroll Controls The City does not currently require any formal review of changes made to the payroll system on a regular basis, nor is there a procedure to analytically review the payroll output after each payroll is processed. We recommend that the City put procedures in place to ensure that someone independent of the person fulfilling the payroll processing function in human resources review a report that summarizes all changes made to the payroll system during that payroll run, as well as document a review, at a minimum, of a gross pay comparison. Credit Memo Controls There is no formal review process related to credit memos or other account adjustments for income tax collections by a person independent of the preparation of the credit. To complete the control loop, an edit report should be produced periodically from the income tax software and reviewed by someone independent of the credit memo process in order to verify that all credit memos recorded are appropriate. City of Lansing Comments and Recommendations For the Year Ended June 30, 2009 -3- Stale Checks During our testing of the City’s cash and bank reconciliations, it came to our attention that there is a significant number of checks that have been outstanding for more than one year. Michigan Compiled Law (MCL) 567.234 states: “Property held for the owner by a court, state, or other government, governmental subdivision or agency, public corporation, or public authority that remains unclaimed by the owner for more than 1 year after becoming payable or distributable is presumed abandoned.” The law requires the person holding unclaimed property presumed abandoned and subject to the State’s custody, to send written notification (“due diligence letter”) to the owner at their last known address informing them that the property is subject to be turned over to the State of Michigan. The notice must be sent not less than 60 days before filing the report to the State of Michigan. MCL 567.238 requires the letter to the owner along with the unclaimed property to be filed with the State Treasurer on or before November 1 of each year for the twelve month period ending on the immediately preceding June 30. We recommend that the City examine old outstanding checks and follow the procedures detailed above. Homeland Security Reporting We reviewed all Reimbursement Cover Sheets related to the Homeland Security grant, noting that in two instances, there was no documented evidence of review. We recommend that the City maintain copies of the submitted requests that document the reviewer’s approval. * * * * * City of Lansing Schedule of Adjustments Passed (SOAP) For the June 30, 2009 Audit Effect of Passed Adjustment - Over(Under)Statement Beginning Expenses/ Assets Liabilities Fund Balance Revenue Expenditures Special Revenue Major Streets Valuation error in 2008 inventory balances -$ -$ 113,403$ -$ 113,403$ Local Streets Valuation error in 2008 inventory balances - - 22,182 - 22,182 -$ -$ 135,585$ -$ 135,585$ Governmental Activities Adjustment for assets depreciated in excess of historical cost -$ -$ (358,922)$ -$ (358,922)$ Total GASB 34 adj -$ -$ (358,922)$ -$ (358,922)$ Cummulative effect of items noted above -$ -$ (223,337)$ -$ (223,337)$ In accordance with the provisions of SAS 89,Audit Adjustments , we have prepared the following schedule of proposed audit adjustments, which we believe are immaterial both individually and in the aggregate. Also in accordance with SAS 89, we are providing this schedule to both management and the audit committee to receive their assurance that they agree that the amounts listed below are not material to the financial statements, either individually or in the aggregate, and do not need to be recorded.