CITY OF HIALEAH, FLORIDA COMPREHENSIVE ANNUAL FINANCIAL REPORT FISCAL YEAR ENDED SEPTEMBER 30, 2018 Prepared by: Finance Department CITY OF HIALEAH, FLORIDA TABLE OF CONTENTS PAGE I. INTRODUCTORY SECTION (UNAUDITED) Letter of Transmittal i-iv Certificate of Achievement v List of Elected City Officials vi Organizational Chart vii II. FINANCIAL SECTION Independent Auditors’ Report 1-2 Management’s Discussion and Analysis (Required Supplementary Information) 3-18 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position 19 Statement of Activities 20 Fund Financial Statements: Balance Sheet – Governmental Funds 21 Statement of Revenues, Expenditures and Changes in Fund Balances – Governmental Funds 22 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 23 Statement of Net Position – Proprietary Funds 24-25 Statement of Revenues, Expenses and Changes in Net Position – Proprietary Funds 26 Statement of Cash Flows – Proprietary Funds 27-28 Statement of Fiduciary Net Position – Fiduciary Funds 29 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 30 Notes to Basic Financial Statements 31-89 Required Supplementary Information: Budgetary Comparison Schedule – General Fund 90 Notes to Budgetary Comparison Schedule 91 Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Employees’ Retirement System 92 Schedule of Contributions – Employees’ Retirement System 93 Schedule of Investment Returns – Employees’ Retirement System 94 Schedule of Changes in the City’s Net Pension Liability and Related Ratios – Elected Officials’ Retirement System 95 Schedule of Contributions – Elected Officials’ Retirement System 96 Schedule of Investment Returns – Elected Officials’ Retirement System 97 Schedule of Changes in the City’s Total OPEB Liability and Related Ratios 98 Supplementary Information: Combining and Individual Fund Statements: Comparative Balance Sheets – General Fund 99 Combining Balance Sheet – Nonmajor Governmental Funds 100-103 Combining Statement of Revenues, Expenditures and Changes in Fund Balances – Nonmajor Governmental Funds 104-107 Schedules of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – Nonmajor Governmental Funds 108-126 Combining Statement of Fiduciary Net Position 127 Combining Statement of Changes in Fiduciary Net Position 128 CITY OF HIALEAH, FLORIDA TABLE OF CONTENTS PAGE III. STATISTICAL SECTION (UNAUDITED) Net Position by Component – Last Ten Fiscal Years (Accrual Basis of Accounting) 129 Changes in Net Position – Last Ten Fiscal Years (Accrual Basis of Accounting) 130 Fund Balances of Governmental Funds – Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 131 Changes in Fund Balances of Governmental Funds – Last Ten Fiscal Years (Modified Accrual Basis of Accounting) 132 Net Assessed Value of Taxable Property – Last Ten Fiscal Years 133 Property Tax Rates – Direct and Overlapping Governments – Last Ten Fiscal Years 134 Principal Property Taxpayers 135 Property Tax Levies and Collections – Last Ten Fiscal Years 136 Ratios of Outstanding Debt by Type – Last Ten Fiscal Years 137 Direct and Overlapping Governmental Activities Debt 138 Pledged Revenue Coverage – Last Ten Fiscal Years 139 Demographic and Economic Statistics – Last Ten Fiscal Years 140 Principal Employers – Current Year and Nine Years Ago 141 Full-Time Equivalent City Government Employees by Function – Last Ten Fiscal Years 142 Operating Indicators by Function/Program – Last Ten Fiscal Years 143 Capital Asset Statistics by Function/Program – Last Ten Fiscal Years 144 IV. COMPLIANCE SECTION 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 145-146 Independent Auditors’ Report on Compliance for Each Major Federal Program and State Project; Report on Internal Control Over Compliance required by Uniform Guidance and Chapter 10.550, Rules of the Auditor General 147-148 Schedule of Expenditures of Federal Awards and State Financial Assistance 149-151 Notes to Schedule of Expenditures of Federal Awards and State Financial Assistance 152 Schedule of Findings and Questioned Costs 153-155 Summary Schedule of Prior Audit Findings and Recommendations 156 Management Letter In Accordance with the Rules of the Auditor General of the State of Florida 157-158 Independent Accountants’ Report on Compliance with the Requirements of Section 218.415 Florida Statutes 159 INTRODUCTORY SECTION Council Members Carlos Hernandez Jose F. Caragol Mayor Katharine E. Cue-Fuente Paul B. Hernandez Vivian Casáls-Muñoz Lourdes Lozano Council President Carl Zogby Isis Garcia-Martinez Council Vice President City of Hialeah June 27, 2019 To the Members of the City Council and Residents of the City of Hialeah: It is our pleasure to submit the Comprehensive Annual Financial Report (CAFR) for the City of Hialeah, Florida, for the fiscal year ending September 30, 2018. The financial statements included in this report conform to generally accepted accounting principles in the United States of America (GAAP) as prescribed by the Governmental Accounting Standards Board (GASB). The City of Hialeah’s financial statements have been audited by Caballero Fierman Llerena & Garcia, LLP Certified Public Accountants. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that the City of Hialeah’s financial statements for the fiscal year ended September 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. This report consists of management’s representation concerning the finances of the City of Hialeah. 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 Hialeah 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 Hialeah’s financial statements in conformity with GAAP. Because the cost of internal controls should not outweigh their benefits, the City of Hialeah’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. 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 the MD&A and should be read in conjunction with it. The City of Hialeah’s MD&A can be found immediately following the report of the independent auditors. PROFILE OF THE GOVERNMENT The City of Hialeah was incorporated in 1925 by the laws of the State of Florida contained in Chapter 11516 Special Acts of 1925. The City of Hialeah occupies a land area of 23 square miles and serves a population of approximately 237,000 residents. i 501 Palm Avenue, Hialeah, Florida · 33010-4719 www.hialeahfl.gov The City of Hialeah has operated under a strong mayor form of government since its inception. Policy making and legislative authority are vested in a governing council consisting of a seven member council. The council is responsible for, among other things, passing ordinances and adopting the budget. The Mayor is responsible for carrying out the policies and ordinances of the council, overseeing the day-to-day operations of the government, and appointing the heads of various departments. The City of Hialeah offers a wide range of services, including, public safety (police and fire), public works, streets, water and wastewater, sanitation, social services, cultural activities, public improvements, planning and zoning, building, libraries and educational services, and general administrative services. ECONOMIC CONDITION AND OUTLOOK Each fiscal year provides the City an opportunity to identify, address and resolve issues facing our community and our citizens. The City’s major challenges are to provide the infrastructure and services needed to maintain the quality of life, which has attracted considerable growth to our economy. The City continues to emphasize the support of systems such as transit, public safety (police and fire), storm water management, potable (drinking) water, waste treatment and solid waste collection which must be balanced carefully with the quality of life amenities which include parks and recreation, entertainment and cultural opportunities to maintain the beauty and attractiveness of our community. In the past year, taxable values in the City of Hialeah have increased approximately 11.3% based on the Miami Dade County Property Appraiser’s Office assessments. The City continues to honor our commitment to the residents and has not increased the millage rate above the levels that have been set by the Administration for the last five (6) years. The following discussion is intended to demonstrate the growth