Comprehensive Annual Financial Report CIT Y of FLINT MICHIGAN
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Comprehensive Annual Financial Report for the fiscal year ended June 30, 2018 MICHIGAN CITY OF FLINT OF FLINT CITY City of Flint, Michigan Comprehensive Annual Financial Report For the Year Ended June 30, 2018 Prepared by: Department of Finance and Administration Dawn Steele, Deputy Director of Finance Table of Contents Section Page Introductory Section Letter of Transmittal i GFOA Certificate of Achievement vii Organizational Chart viii List of Elected, Civil Service, and Appointed Officials ix 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 the Financial Statements 3 – 21 4 Required Supplementary Information Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual General Fund 4 – 1 Grant Fund 4 – 3 Major Streets 4 – 4 Municipal Employees Retirement System of Michigan Schedule of Employer Contributions 4 – 5 Schedule of Changes in Net Pension Liability and Related Ratios 4 – 6 Municipal Employees Retirement System of Michigan – Hurley Medical Center Schedule of Employer Contributions 4 – 7 Schedule of Changes in Net Pension Liability and Related Ratios 4 – 8 Other Post-employment Benefits (OPEB) Schedule of Employer Contributions 4 – 9 Schedule of Changes in Total OPEB Liability and Related Ratios 4 – 10 Other Post-employment Benefits (OPEB) – Hurley Medical Center Schedule of Employers Contributions 4 – 11 Schedule of Changes in Net OPEB Liability and Related Ratios 4 – 12 Schedule of OPEB Investment Returns 4 – 13 Section Page 5 Other Supplementary Information Nonmajor Governmental Funds Combining Balance Sheet 5 – 1 Combining Statement of Revenue, Expenditures and Changes in Fund Balance Fund Balance 5 – 3 Schedule of Revenues, Expenditures and Changes in Fund Balance – Budget to Actual Local Streets 5 – 5 Neighborhood Policing 5 – 6 State Act 251 – Forfeitures 5 – 7 EDA Revolving Loan 5 – 8 Parks and Recreation 5 – 9 Building Department 5 – 10 Garbage Collection 5 – 11 Street Light 5 – 12 Public Safety 5 – 13 Internal Service Funds Combining Statement of Net Position 5 – 14 Combining Statement of Revenues, Expenses and Changes in Fund Balance 5 – 15 Combining Statement of Cash Flows 5 – 16 Fiduciary Funds Combining Statement of Fiduciary Net Position 5 – 18 Combining Statement of Assets and Liabilities 5 – 19 Combining Statement of Changes in Fiduciary Net Position 5 – 20 Combining Statement of Changes in Assets and Liabilities – Agency Funds 5 – 21 Section Page 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 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 INTRODUCTORY SECTION CITY OF FLINT, MICHIGAN Department of Finance Dawn Steele Hughey Newsome Deputy Finance Director Chief Financial Officer December 20, 2018 To the Mayor, Members of City Council, City Administrator, and Citizens of the City of Flint: Michigan Public Act 2 of 1968 as amended, requires that all 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, 2018. 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 is to provide reasonable assurance that the financial statements of the City of Flint for the fiscal year ended June 30, 2018, 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 unmodified opinion that the City of Flint’s financial statements for the fiscal year ended June 30, 2018, 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 requires 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 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 96,448 (2017 census.gov estimate). 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 previous charter was adopted. The new charter, adopted August 7, 2017 and in effect since January 1, 2018, re-established this form of government. 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 (the Mayor may be re-elected for additional terms and the newly adopted Charter mandates a three-year term to align the