CITY OF Winston-SalemNORTH CAROLINA Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020 I Winston-SalemNORTH CAROLINA CITY OF Winston-SalemNORTH CAROLINA II 2020 ANNUAL FINANCIAL REPORT Comprehensive Annual Financial Report for the Fiscal Year Ended June 30, 2020 The Comprehensive Annual Financial Report is prepared by Financial Management Services. III Winston-SalemNORTH CAROLINA creditsCREATIVE DIRECTION & COPYWRITING Rachel Barron, Next Level Communications DESIGN & ART DIRECTION LinTaylor Marketing Group, Inc. PRINTING Salem One PHOTOGRAPHY Novant Health Rachel Barron The City of Winston-Salem Marketing Department Peter J. Mueller, UNCSA UNC School of the Arts Traci Arney Photography Winston-Salem Symphony IV 2020 ANNUAL FINANCIAL REPORT City of Winston-Salem, North Carolina COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 Introductory Section Page Letter of Transmittal 2 Local Economy 4 Community Profile 16 GFOA Certificate of Achievement 33 Organizational Chart 34 City Officials 35 Financial Section Exhibit Page Report of Independent Auditor 36 Management’s Discussion & Analysis 38 Basic Financial Statements 47 Government-wide Financial Statements – Statement of Net Position 1 48 – Statement of Activities 2 50 Fund Financial Statements – Balance Sheet – Governmental Funds 3 52 – Reconciliation of the Governmental Funds Balance Sheet to the Statement of Net Position 3 1 53 – Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 4 54 – Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 4 1 55 – Statement of Revenues, Expenditures, and Changes in Fund Balance –Budget and Actual – General Fund 5 56 – Statement of Net Position – Proprietary Funds 6 61 – Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds 7 63 – Statement of Cash Flows – Proprietary Funds 8 64 – Statement of Fiduciary Net Position – Fiduciary Funds 9 66 – Statement of Changes in Fiduciary Net Position – Fiduciary Funds 10 67 Notes to the Financial Statements 68 Required Supplementary Information 109 – Schedule of Changes in Net Pension Liability and Related Ratios, Winston-Salem Police Officers’ Retirement System 11 110 – Schedule of Contributions, Winston-Salem Police Officers’ Retirement System 12 112 – Schedule of Investment Returns, Winston-Salem Police Officers’ Retirement System 13 114 – Schedule of Changes in Net Pension Liability and Related Ratios, Winston-Salem Police Officers’ Separation Allowance 14 116 – Schedule of Contributions, Winston-Salem Police Officers’ Separation Allowance 15 118 – Schedule of Investment Returns, Winston-Salem Police Officers’ Separation Allowance 16 120 – Schedule of Changes in Net OPEB Liability and Related Ratios, Post-employment Benefits 17 123 – Schedule of Contributions, Post-employment Benefits 18 124 – Schedule of Investment Returns, Post-employment Benefits 19 126 – City of Winston-Salem’s Proportionate Share of Net Pension Liability (Asset) Local Government Employees’ Retirement System 20 127 – City of Winston-Salem’s Contributions Local Government Employees’ Retirement System 21 128 V Winston-SalemNORTH CAROLINA Financial Section continued Exhibit Page Combining and Individual Fund Statements and Schedules: Major Funds: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Debt Service Fund 22 133 – Capital Projects Fund 23 134 Enterprise Funds – Schedule of Revenues, Expenditures, and Transfers – Budget (non-GAAP Basis) and Actual – Water and Sewer Utility Fund 24 135 – Solid Waste Disposal Fund 25 136 – Transit Authority Fund 26 137 Nonmajor Governmental Funds: – Combining Balance Sheet – Nonmajor Governmental Funds 27 140 – Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds 28 142 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual – Community Development Fund 29 144 – Grants Fund 30 145 – Economic and Housing Development Fund 31 146 – Gasoline Tax Fund 32 147 – Occupancy Tax Fund 33 148 – Emergency Telephone System Fund 34 149 – Downtown Winston-Salem Business Improvement District Fund 35 150 Nonmajor Enterprise Funds: – Combining Statement of Net Position – Nonmajor Enterprise Funds 36 152 – Combining Statement of Revenues, Expenses, and Changes in Net Position – Nonmajor Enterprise Funds 37 153 – Combining Statement of Cash Flows – Nonmajor Enterprise Funds 38 154 Schedule of Revenues, Expenditures, and Transfers – Budget (Non-GAAP Basis) and Actual – Parking Fund 39 156 – Stormwater Management Fund 40 157 – Public Assembly Facilities Management Fund 41 158 Internal Service Funds: – Combining Statement of Net Position – Internal Service Funds 42 160 – Combining Statement of Revenues, Expenses and Changes in Net Position – Internal Service Funds 43 162 – Combining Statement of Cash Flows – Internal Service Funds 44 164 Schedule of Revenues, Expenditures and Transfers – Budget (Non-GAAP Basis) and Actual – Central Warehouse Fund 45 168 – Fleet Services Fund 46 169 – Information Services Fund 47 170 – Workers’ Compensation Fund 48 171 – Health Benefits Fund 49 172 – Dental and Flex Benefits Fund 50 173 – Employee Benefits Fund 51 174 Fiduciary Funds: – Combining Statement of Fiduciary Net Position 52 176 – Combining Statement of Changes in Fiduciary Net Position 53 177 Schedule of General Obligation Bonded Debt 54 180 VI 2020 ANNUAL FINANCIAL REPORT Statistical Section Table Page Financial Trends: – Net Position by Component 1 184 – Changes in Net Position 2 186 – General Revenues and Total Changes in Net Position 3 190 – Program Revenues by Function/Program 4 192 – Fund Balances, Governmental Funds 5 194 – Changes in Fund Balances, Governmental Funds 6 196 Revenue Capacity: – Tax Revenues by Source, Governmental Funds 7 200 – Taxable Property Assessed Value 8 201 – Property Tax Rates 9 202 – Principal Property Tax Payers 10 203 – Property Tax Levies and Collections 11 204 – Analysis of Current Tax Levy 12 205 – Schedule of Ad Valorem Taxes Receivable 13 207 Debt Capacity: – Ratios of Outstanding Debt by Type 14 208 – Ratios of General Bonded Debt Outstanding 15 210 – Legal Debt Margin 16 211 – Direct and Overlapping Governmental Activities Debt 17 213 – Pledged – Revenue Coverage 18 214 Demographic and Economic Information: – Demographic and Economic Statistics 19 216 – Principal Employers 20 217 Operating Information: – Full-time-Equivalent City Government Employees by Function/Program 21 218 – Operating Indicators by Function/Program 22 220 – Capital Assets Statistics by Function/Program 23 224 Single Audit Section Page – Report of Independent Auditor 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 228 – Report of Independent Auditor on Compliance for Each Major Federal Program and on Internal Control over Compliance in Accordance with OMB Uniform Guidance and the State Single Audit Implementation Act 230 – Report of Independent Auditor on Compliance for Each Major State Program and on Internal Control over Compliance in Accordance with OMB Uniform Guidance and the State Single Audit Implementation Act 232 – Schedule of Findings and Questioned Costs 234 – Schedule of Prior Year Audit Findings 237 – Schedule of Expenditures of Federal and State Awards 238 – Notes to Schedule of Expenditures of Federal and State Awards 243 Certain pages in this report are intentionally blank. 1 Winston-SalemNORTH CAROLINA Letter of Transmittal October 23, 2020 To the Honorable Mayor and Members of City Council and Citizens of the City of Winston-Salem Ever since the merger of Winston and Salem in 1913, the twin City has prospered through the cooperation of its public and private institutions. This was true in the years following the incorporation of Winston-Salem, and it remains true today. The enduring veracity of our City motto was underscored again during the past year, as our community continues to see the tangible benefits of the past decade of efforts by City government and private institutions to diversify our economy, increase our tax base, bring new jobs to our City, and breathe new life into our downtown. Financial Report It is our pleasure to submit the Comprehensive Annual Financial Report for the City of Winston-Salem, North Carolina for the fiscal year ended June 30, 2020. Management of the City of Winston-Salem, North Carolina, is responsible for the integrity and objectivity of financial statements and other representations contained in this annual report. The City’s Comprehensive Annual Financial Report, prepared in accordance with generally accepted accounting principles for units of local government, consists of management’s representations concerning the financial position and results of operations for the fiscal year ended June 30, 2020. North Carolina general statutes require each unit of local government to publish within four months after the close of the 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 certified public accountants. The City engaged Cherry Bekaert LLP, independent auditors, to perform an audit of the City’s reported financial position and results of operations