City of Flint FY 2014 Audit
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CITY OF FLINT MICHIGAN COMPREHENSIVE ANNUAL FINANCIAL REPORT Fiscal Year Ended June 30, 2014 City of Flint, Michigan Comprehensive Annual Financial Report June 30, 2014 Prepared by: Department of Finance and Administration Gerald Ambrose, Director of Finance Antonio Brown, Deputy Director of Finance Table of Contents Section Page Introductory Section Letter of Transmittal i GFOA Certificate of Achievement vi Organization Chart vii List of Elected, Civil Service, and Appointed Officials viii Financial Section 1 Independent Auditors’ Report 1 – 1 2 Management’s Discussion and Analysis 2 – 1 3 Basic Financial Statements Government-wide Financial Statements Statement of Net Position 3 – 1 Statement of Activities 3 – 3 Fund Financial Statements Governmental Funds Balance Sheet 3 – 4 Reconciliation of Fund Balances of Governmental Funds to Net Position of Governmental Activities 3 – 6 Statement of Revenues, Expenditures and Changes in Fund Balances 3 – 7 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 3 – 9 Section Page 3 Basic Financial Statements Proprietary Funds Statement of Net Position 3 – 10 Statement of Revenues, Expenses and Changes in Fund Net Position 3 – 12 Statement of Cash Flows 3 – 14 Fiduciary Funds Statement of Fiduciary Net Position 3 – 16 Statement of Changes in Fiduciary Net Position 3 – 17 Component Units Combining Statement of Net Position 3 – 18 Combining Statement of Activities 3 – 20 Notes to Financial Statements 3 – 21 4 Required Supplemental Information Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund 4 – 1 Federal Grants 4 – 3 Municipal Employees Retirement System of Michigan 4 – 4 Other Postemployment Benefits 4 – 6 5 Other Supplemental Information Nonmajor Governmental Funds Combining Balance Sheet 5 – 1 Combining Statement of Revenue, Expenditures and Changes in Fund Balance Fund Balance 5 – 3 Section Page 5 Other Supplemental Information Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget to Actual Major Streets 5 – 5 Local Streets 5 – 6 Neighborhood Policing 5 – 7 State Act 251 – Forfeitures 5 – 8 EDA Revolving Loan 5 – 9 Public Improvement 5 – 10 Parks and Recreation 5 – 11 Senior Citizen Centers 5 – 12 Building Department 5 – 13 Garbage Collection 5 – 14 Public Safety 5 – 15 Street Light 5 – 16 Internal Service Funds Combining Statement of Net Position 5 – 17 Combining Statement of Revenues, Expenses, and Changes in Fund Balance 5 – 18 Combining Statement of Cash Flows 5 – 19 Fiduciary Funds Combining Statement of Assets and Liabilities – Pension Trust and Agency Funds 5 – 21 Combining Statement of Changes in Fiduciary Net Position 5 – 22 Combining Statement of Changes in Assets and Liabilities – Agency Funds 5 – 23 6 Statistical Section (Unaudited) Financial Trend Information Net Position by Component 6 – 1 Changes in Governmental Net Position 6 – 2 Changes in Business-type Net Position 6 – 3 Fund Balances, Governmental Funds 6 – 4 Changes in Fund Balances, Governmental Funds 6 – 5 Section Page 6 Statistical Section (Unaudited) Revenue Capacity Information: Taxable Value and Actual Value of Taxable Property 6 – 6 Direct and Overlapping Property Tax Rates 6 – 7 Principal Property Taxpayers 6 – 9 Property Tax Levies and Collections 6 – 10 Debt Capacity Information: Ratios of Outstanding Debt 6 – 11 Ratios of General Bonded Debt Outstanding 6 – 12 Direct and Overlapping Governmental Activities Debt 6 – 13 Legal Debt Margin 6 – 14 Pledged-revenue Coverage 6 – 15 Demographic and Economic Information: Demographic and Economic Statistics 6 – 16 Principal Employers 6 – 17 Operating Information: Full-time Equivalent Government Employees 6 – 18 Operating Indicators 6 – 20 Capital Asset Statistics 6 – 21 Employees' Retirement System – Comparative Schedule – Actuarial Valuations 6 – 22 CITY OF FLINT, MICHIGAN Darnell Earley Department of Finance Emergency Manager Gerald Ambrose Finance Director Dayne Walling Mayor December 23, 2014 To the Emergency Manager, Mayor, Members of City Council, and Citizens of the City of Flint: State law requires that all general-purpose local governments publish, within six months of the close of each fiscal year, a complete set of financial statements presented in conformity with generally accepted accounting principles (GAAP) and audited in accordance with generally accepted auditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, we hereby issue the Comprehensive Annual Financial Report of the City of Flint for the fiscal year ended June 30, 2014. This report consists of management’s representations concerning the finances of the City of Flint. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report. To provide a reasonable basis for making these representations, management of the City of Flint has established a comprehensive internal control framework that is designed both to protect the government’s assets from loss, theft, or misuse and to compile sufficient reliable information for the preparation of the City of Flint’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Flint’s comprehensive framework of internal controls has been designed to provide reasonable, rather than absolute, assurance that the financial statements will be free from material misstatement. As management, we assert that, to the best of our knowledge and belief, this financial report is complete and reliable in all material respects. Yeo & Yeo, P.C., a firm of licensed certified public accountants, has audited the City of Flint’s financial statements. The goal of the independent audit was to provide reasonable assurance that the financial statements of the City of Flint for the fiscal year ended June 30, 2014, are free of material misstatement. The independent audit involved examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unqualified opinion that the City of Flint’s financial statements for the fiscal year ended June 30, 2014, are fairly presented in conformity with GAAP. The independent auditor’s report is presented as the first component of the financial section of this report. i The independent audit of the financial statements of the City of Flint was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements, but also on the audited government’s internal controls and compliance with legal requirements, with special emphasis on internal controls and legal requirements involving the administration of federal awards. These reports are available in the City of Flint’s separately issued Single Audit Report. GAAP require that management provide a narrative introduction, overview, and analysis to accompany the basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letter of transmittal is designed to complement the MD&A and should be read in conjunction with it. The City of Flint’s MD&A can be found immediately following the report of the independent auditors. Profile of the Government The City of Flint, incorporated in 1855, is located in the eastern part of the State of Michigan. The City currently occupies a land area of 32.8 square miles and serves a population of 102,434 (2010 Census). The City is empowered to levy a property tax on both real and personal properties located within its boundaries, as well as a 1% income tax for those who live within the City limits (or .5% for those who only work within the City limits). The City of Flint has operated under the strong mayor – council form of government since November 4, 1975, when the present charter was adopted. According to the Charter, legislative authority is vested in a City Council consisting of nine members elected from each of the nine wards in the City and serving a four-year term. The City Council is responsible for, among other things, passing ordinances, adopting the budget, approving resolutions and appointing committees. The Mayor is an elected official who serves as the chief executive officer of the City for a four-year term of office (he may be reelected for additional terms). The Mayor appoints a City Administrator to be the chief administrative officer of the City, overseeing the day-to-day operations of the government. The Mayor also appoints the principal officials responsible for budget, personnel, planning, legal counsel, and administrative services, appointing up to ten principal staff officials who serve at the pleasure of the Mayor. In addition, the Mayor may appoint up to ten executive department heads over such departments as may be necessary to administer the responsibilities of the City for public safety, public works, utilities, parks and recreation, transportation, finance, community development, and environmental protection. The City Council must approve these appointments. The City Council and