COMPREHENSIVE ANNUAL FINANCIAL REPORT City of Indianapolis, Indiana (Component Unit of the Consolidated City of Indianapolis – Marion County) Year Ended December 31, 2012 Office of Finance and Management (This page intentionally left blank) TABLE OF CONTENTS Page(s) I. INTRODUCTORY SECTION (UNAUDITED) Letter of Transmittal I – VI Certificate of Achievement for Excellence in Financial Reporting VII Organization of Local Government and Taxing Districts Introduction VIII Form of Government VIII Other Governmental Units IX – X Maps X – XI Unigov Organizational Chart – Consolidated Government for Indianapolis – Marion County XII City of Indianapolis Organizational Chart XIII Schedule of Elected and Appointed Officials XIV – XV Consolidated City Operations XVI – XXV II. FINANCIAL SECTION INDEPENDENT AUDITOR’S REPORT 1 – 3 MANAGEMENT’S DISCUSSION AND ANALYSIS – REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) 4 – 13 BASIC FINANCIAL STATEMENTS: Government-wide Financial Statements: Statement of Net Position 14 – 15 Statement of Activities 16 TABLE OF CONTENTS (continued) Page(s) Fund Financial Statements: Balance Sheet – Governmental Funds 17 Reconciliation of the Balance Sheet for Governmental Funds to the Statement of Net Position 18 Statement of Revenues, Expenditures, and Changes in Fund Balances – Governmental Funds 19 – 20 Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balances of Governmental Funds to the Statement of Activities 21 Statement of Net Position – Proprietary Funds 22 Statement of Revenues, Expenses, and Changes in Fund Net Position – Proprietary Funds 23 Statement of Cash Flows – Proprietary Funds 24 Statement of Fiduciary Net Position – Fiduciary Funds 25 Statement of Changes in Fiduciary Net Position – Fiduciary Funds 26 Notes to Financial Statements 27 – 71 REQUIRED SUPPLEMENTARY INFORMATION (UNAUDITED) Budgetary Comparison Information: Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual –Budgetary Basis – General Fund 72 Schedule of Revenues, Expenditures, and Changes in Fund Balance – Budget and Actual –Budgetary Basis – Federal Grants Fund 73 Schedules of Funding Progress 74 Schedules of Employer Contributions 75 Schedule of Funding Progress (Postemployment Benefit Obligation) 76 Notes to Required Supplementary Information 77 – 79 COMBINING AND INDIVIDUAL FUND FINANCIAL STATEMENTS AND SCHEDULES – OTHER SUPPLEMENTARY INFORMATION Combining Balance Sheet – Nonmajor Governmental Funds by Fund Type 80 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Governmental Funds by Fund Type 81 Schedule of Sub-Fund Assets, Liabilities, and Fund Balance – General Fund 82 – 83 Schedule of Sub-Fund Revenues, Expenditures, and Changes in Fund Balance – General Fund 84 – 85 Schedule of Sub-Fund Revenues, Expenditures, and Changes in Fund Balance – General Fund – Budget and Actual – Budgetary Basis 86 – 88 Schedule of Expenditures by Character – General Fund – Budget and Actual – Budgetary Basis 89 – 93 Combining Balance Sheet – Nonmajor Special Revenue Funds 94 TABLE OF CONTENTS (continued) Page(s) Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Special Revenue Funds 95 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Special Revenue Funds – Budget and Actual – Budgetary Basis 96 Schedule of Expenditures by Character – Special Revenue Funds – Budget and Actual – Budgetary Basis 97 – 98 Combining Balance Sheet – Nonmajor Debt Service Funds 99 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Debt Service Funds 100 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Debt Service Funds – Budget and Actual – Budgetary Basis 101 – 103 Schedule of Expenditures by Character – Debt Service Funds – Budget and Actual – Budgetary Basis 104 Combining Balance Sheet – Nonmajor Capital Projects Funds 105 – 106 Combining Statement of Revenues, Expenditures, and Changes in Fund Balances – Nonmajor Capital Projects Funds 107 – 108 Combining Schedule of Revenues, Expenditures, and Changes in Fund Balances – Annually Budgeted Capital Projects Funds – Budget and Actual – Budgetary Basis 109 Schedule of Expenditures by Character – Annually Budgeted Capital Projects Funds – Budget and Actual – Budgetary Basis 110 Combining Statement of Net Position – Internal Service Funds 111 Combining Statement of Revenues, Expenses, and Changes in Fund Net Position – Internal Service Funds 112 Combining Statement of Cash Flows – Internal Service Funds 113 Combining Statement of Pension Trust Funds Net Position – Fiduciary Funds 114 Combining Statement of Changes in Fiduciary Net Position – Fiduciary Funds – Police and Firefighters Pension Trust Funds 115 Schedule of Revenues and Expenditures – Fiduciary Funds – Police and Firefighters Pension Trust Funds – Budget and Actual – Budgetary Basis 116 Combining Statement of Agency Funds Net Position – Fiduciary Funds 117 Combining Statement of Changes in Assets and Liabilities – Fiduciary Funds – Agency Funds 118 – 119 III. STATISTICAL SECTION (UNAUDITED) Net Position by Component 1 120 Changes in Net Position 2 121 Program Revenues by Function/Program 3 122 Fund Balances, Governmental Funds 4 123 Changes in Fund Balances, Governmental Funds 5 124 – 125 Tax Revenues by Source, Governmental Funds 6 126 TABLE OF CONTENTS (continued) Page(s) Assessed Value and Estimated Actual Value of Taxable Property 7 127 Direct and Overlapping Governments – Property Tax Rates 8 128 Principal Property Tax Payers 9 129 Property Tax Levies and Collections 10 130 Ratios of Outstanding Debt by Type 11 131 Ratios of Net General Bonded Debt Outstanding 12 132 Schedule of Direct and Overlapping Debt and Bonded Debt Limit 13 133 – 135 Computation of Legal Debt Margin 14 136 Pledged Revenue Coverage 15 137 Demographic and Economic Statistics 16 138 Principal Employers 17 139 Full-Time Equivalent City Government Employees by Function/Program 18 140 Operating Indicators by Function/Program 19 141 Capital Asset Statistics by Function/Program 20 142 July 2, 2013 To the Honorable Mayor Greg Ballard, Members of the City-County Council, and Citizens of Indianapolis, Indiana: I submit to you the Comprehensive Annual Financial Report (“CAFR”) of the City of Indianapolis (“City”) for the fiscal year ended December 31, 2012. The City is a component unit of the Consolidated City of Indianapolis – Marion County Reporting Entity. This report was prepared by the Office of Finance and Management (“OFM”). Responsibility for both the accuracy of the data presented and the completeness and fairness of the presentation, including all disclosures, rests with the Controller of the City of Indianapolis. The data, as presented, is accurate in all material respects. It is presented in a manner designed to set forth the financial position and results of operations of the City. Disclosures necessary to enable the reader to gain the maximum understanding of the City’s financial affairs are included. The CAFR conforms to the standards for financial reporting of the Governmental Accounting Standards Board (“GASB”) and the Government Finance Officers Association of the United States and Canada (“GFOA”). There are three main sections to this report. The Introductory Section includes this letter, the Certificate of Achievement for Excellence in Financial Reporting, a description of the government and related taxing districts, a list of elected officials, and the City’s organizational charts. The Financial Section includes the independent auditors’ report, management’s discussion and analysis (“MD&A”), the basic financial statements for the City, and supplementary information. The Statistical Section includes selected financial and demographic information presented on a multiyear basis. The City is required to undergo an annual single audit in conformity with the provisions of the U.S. Office of Management and Budget Circular A- 133, Audits of States, Local Governments, and Non-Profit Organizations. Information related to this single audit, including the schedule of federal financial assistance, findings and recommendations, and auditors’ reports on internal control and compliance with applicable laws and regulations, is included in a separate report. This report contains all funds of the City. The City operates under an elected Mayor and City-County Council (29 members) form of government. The City provides services in public safety, public works, health and welfare, cultural and recreation, urban redevelopment, housing, and economic development. ECONOMIC CONDITION AND OUTLOOK In 2012, the main economic development goal for the City of Indianapolis was to attract businesses in targeted high-growth industries that would bring high-wage jobs for Indianapolis residents while further developing support programs for small business. This has resulted in 11,368 job commitments (3,328 new jobs/8,040 current and retained jobs) and over $599 million in capital investment from 57 companies. These results were realized due to the partnership between the Mayor’s Office and Develop Indy, a business unit of the Indy Chamber. I II Targeted industries for the City of Indianapolis complement the natural progression of industry in Indianapolis: life sciences, advanced manufacturing, digital technology, motorsports, logistics, and clean energy. Companies in these industries accounted for more than 75% of the new job commitments in 2012. The digital technology industry