2020 Comprehensive Annual FINANCIAL REPORT for the Fiscal Year Ended June 30, 2020
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2020 Comprehensive Annual FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 City of Norfolk, Virginia Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2020 Prepared by: The Department of Finance Christine Garczynski Director of Finance www.norfolk.gov This page left intentionally blank CITY OF NORFOLK, VIRGINIA Code of Ethics The City of Norfolk conducts its business fairly, impartially, ethically and in compliance with all laws and regulations. The City is committed to conducting its business with integrity underlying all relationships, including those with citizens, customers, suppliers, communities and among employees. The highest standards of ethical conduct are required of City employees in performing their responsibilities. Employees will not engage in conduct or activity that may raise questions as to the City's honesty, impartiality or reputation, or otherwise negatively reflect on the City. Values Accountability, Integrity, Innovation and Respect Acknowledgments This report has been accomplished through the efficient and dedicated services of the staff of the Department of Finance and contributing departments and our independent auditors, CliftonLarsonAllen LLP. The contributions of all are invaluable and clearly reflect the high standards set by the City of Norfolk. It is also appropriate to thank the City Manager, Deputy City Managers, Mayor and Members of the City Council for making possible the excellent financial position of the City through their interest and support in planning and conducting the financial affairs of the City. This page left intentionally blank CITY OF NORFOLK, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS Exhibit Page INTRODUCTORY SECTION: Municipal Officials 4-5 Organizational Chart 6 Transmittal Letter 7-30 Certificate of Achievement for Excellence in Financial Reporting 31 FINANCIAL SECTION: Independent Auditors’ Report 37 Management’s Discussion and Analysis (Unaudited) 43 Basic Financial Statements: Government-wide Financial Statements: 1 Statement of Net Position 61 2 Statement of Activities 62 Fund Financial Statements: Governmental Funds: A-1 Balance Sheet – Governmental Funds 63 A-2 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 64 A-3 Statement of Revenues, Expenditures and Changes in Fund Balances 65 A-4 Reconciliation of the Statement of Revenues, Expenditures and Change in Fund Balances to the Statement of 66 Activities Proprietary Funds: B-1 Statement of Fund Net Position 67 B-2 Statement of Revenues, Expenses and Changes in Net Position 68 B-3 Statement of Cash Flows 69 Fiduciary Funds: C-1 Statement of Fiduciary Net Position 70 C-2 Statement of Changes in Fiduciary Net Position – Pension Trust Fund – Employees’ Retirement System 71 Component Units: D-1 Statement of Net Position 72 D-2 Statement of Activities 73 Notes to the Basic Financial Statements 77-160 Required Supplementary Information (Unaudited): NERS Schedule of Changes in Net Pension Liability and Related Ratios 163 NERS Schedule of Employer Contributions 164 VRS State Constitutional Offices Schedule of Changes in Net Pension Liability and 165 Related Ratios 1 CITY OF NORFOLK, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS Exhibit Page Required Supplementary Information (Unaudited) - continued: VRS State Constitutional Offices Schedule of Employer Contributions 166 VRS Teachers Retirement Plan Schedule of the School Board’s Proportionate Share of the Net Pension 167 Liability VRS Teachers Retirement Plan Schedule of School Board Contributions 168 VRS School Board Political Subdivisions’ Schedule of Changes in the School Board’s Net Pension Liability 169 and Related Ratios VRS School Board Political Subdivisions’ Schedule of Contributions 170 City OPEB Liability Schedule of Changes in Total OPEB Liability and Related Ratios 171 City Line of Duty OPEB Liability Schedule of Changes in Total OPEB Liability and Related Ratios 172 School Board OPEB Liability Schedule of Changes in Total OPEB Liability and Related Ratios 173 VRS – HIC and GLI Programs Schedule of Changes in School Board’s Share of the Net OPEB Liability 174-176 VRS – HIC and GLI Programs Schedule of School Board Contributions 177-179 Notes to the Required Supplementary Information related to Pensions and OPEB 180-181 E-1 Schedule of Revenue, Budget and Actual – General Fund 182 E-2 Schedule of Expenditures, Budget and Actual – General Fund 183 Notes to Required Supplementary Information – Reconciliation of (non-GAAP) Budgetary Basis to GAAP 184 Other Supplementary Information: F-1 Combining Balance Sheet – Nonmajor Governmental Funds 189 F-2 Combining Statement of Revenues, Expenditures and Changes in Fund Balance – Nonmajor Governmental 190 Funds G-1 Combining Statement of Net Position – Internal Service Funds 193 G-2 Combining Statement of Revenues, Expenses and Changes in Fund Net Position – Internal Service Funds 194 G-3 Combining Statement of Cash Flows – Internal Service Funds 195 H-1 Combining Balance Sheet – Agency Funds 199 H-2 Combining Statement of Changes in Assets and Liabilities – Agency Funds 200 J-1 Schedule of Revenues and Expenditures – Budget and Actual – Special Revenue Funds 203-207 J-2 Schedule of Revenues and Expenditures – Budget and Actual – Internal Service Funds 208 J-3 Schedule of Expenditures – Budget and Actual - Capital Improvement Program 209-210 Table STATISTICAL SECTION (Unaudited): I Financial Trends Information Schedule 1 – Net Position by Category 215 Schedule 2, 2-1 – Changes in Net Position 216-217 Schedule 3 – Fund Balances – Governmental Funds 218 Schedule 4 – Changes in Fund Balances, Governmental Funds 219 Schedule 5 – Program Revenue by Function 220 Schedule 6 – Total Revenue by Source, Governmental Funds 221 2 CITY OF NORFOLK, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT For the Fiscal Year Ended June 30, 2020 TABLE OF CONTENTS Table Page STATISTICAL SECTION (Unaudited) - continued: II Revenue Capacity Information Schedule 1 – Assessed Valuations and Estimated Actual Values of Taxable Property 222 Schedule 2 – Direct Property Rates 223 Schedule 3 – Principal Property Taxpayers 224 Schedule 4 – Property Tax Levy and Collections by Tax Year 225 III Debt Capacity Information Schedule 1 – Ratios of Outstanding Debt by Type 226 Schedule 2 – Ratios of General Bonded Debt, Total Assessed Value and Bonded Debt Per Capita 227 Schedule 3 – Computation of Direct Bonded Debt 227 Schedule 4 – Legal Debt Margin 228 Schedule 5 – Revenue Bonds Debt Service Coverage, Water Utility Fund 229 Schedule 6 – Revenue Bonds Debt Service Coverage, Wastewater Utility Fund 230 Schedule 7 – Ratio of Annual Debt Service Expenditures for General Bonded Debt and Other Debt 231 IV Demographic and Economic Information Schedule 1 – Population Statistics 232 Schedule 2 – Ten Largest Employers 233 Schedule 3 – New Construction and Property Values 234 Schedule 4 – Annual Employment Average by Industry 235 V Operating Information Schedule 1 – Full-Time Equivalent (FTE) Positions by Function/Program 236 Schedule 2 – Operating Indicators by Function/Program 237 Schedule 3 – Capital Assets and Infrastructure Statistics by Function/Program 238 Schedule 4 – Water System Statistics 239-240 Schedule 5 – Wastewater System Statistics 241 Schedule 6 – Parking System Statistics 242 COMPLIANCE SECTION Schedule of Expenditures of Federal Awards 247-248 Notes to Schedule of Expenditures of Federal Awards 249-251 OTHER REPORTS OF INDEPENDENT AUDITORS Independent Auditors’ Report on Internal Control Over Financial Reporting and on Compliance and Other 255-256 Matters Based on an Audit of Financial Statements Performed in Accordance with Government Auditing Standards Independent Auditors’ Report on Compliance for Each Major Federal Program and Report on Internal 257-259 Control over Compliance Required by the Uniform Guidance Schedule of Findings and Questioned Costs 261-264 3 CITY OF NORFOLK, VIRGINIA COMPREHENSIVE ANNUAL FINANCIAL REPORT June 30, 2020 Municipal Officials Honorable City Council President and Mayor Kenneth Cooper Alexander Vice Mayor Martin A. Thomas, Jr. Member Courtney R. Doyle Member Mamie B. Johnson Member Andria P. McClellan Member Paul R. Riddick Member Thomas R. Smigiel, Jr. Member Angelia M. Williams Graves City Manager Dr. Larry “Chip” H. Filer II Chief Deputy City Manager Wynter Benda Deputy City Manager Michael Goldsmith Deputy City Manager James A. Rogers Deputy City Manager Catheryn R. Whitesell City Attorney Bernard A. Pishko, Esquire City Auditor Tammie Dantzler City Clerk Allan Bull City Real Estate Assessor W.A. (Pete) Rodda City Treasurer Daun Hester Commissioner of the Revenue C. Evans Poston, Jr. Registrar of Voters Stephanie Iles Director of Budget & Strategic Planning Gregory Patrick Director of Cultural Facilities, Arts & Entertainment John S. Rhamstine Acting Director of Economic Development Jared Chalk Director of Emergency Preparedness & Response James Redick Director of Finance Christine Garczynski Director of Fire & Rescue Services John DiBacco Director of General Services Nikki Riddick Director of Human Resources Marva Smith Acting Director of Human Services Denise Gallop Director of Information Technology Fraser Picard Director of Libraries Sonal Rastogi Director of Marketing & Communications Lori Crouch Director of National Maritime Center (Nauticus) Stephen Kirkland Director of Neighborhood Development Michelle Johnson Executive