COMPREHENSIVE ANNUAL FINANCIAL REPORT for the year ended December 31, 2018 m Michael E. Lamb, City Controller CITY OF PITTSBURGH PENNSYLVANIA CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS INTRODUCTORY SECTION Letter of Transmittal 1-1 GFOA Certificate of Achievement 1-10 Organizational Chart 1-11 Elected City Officials 1-12 FINANCIAL SECTION Independent Auditor's Report Management's Discussion and Analysis i Basic Financial Statements: Government-wide Financial Statements: Statement of Net Position 1 Statement of Activities 3 Fund Financial Statements: Balance Sheet-Governmental Funds 4 Reconciliation of the Balance Sheet of Governmental Funds to the Statement of Net Position 6 Statement of Revenues, Expenditures, and Changes in Fund Balance -Governmental Funds 7 CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS (Continued) Reconciliation of the Statement of Revenues, Expenditures, and Changes in Fund Balance of Governmental Funds to the Statement of Activities 8 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual(Non-GAAP Budgetary Basis)- General Fund 9 Statement of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual (Non-GAAP Budgetary Basis) - Community Development Fund 14 Fiduciary Fund Statements: Statement of Net Position - Fiduciary Funds 16 Statement of Changes in Net Position - Fiduciary Funds 17 Combining Statements of Discrete Component Units: Combining Statement of Net Position - Component Units 18 Statement of Activities - Component Units 20 Notes to Financial Statements 21 Required Supplementary Information: Pension Trust Fund Disclosures: Schedule of Changes in the City's Net Pension Liability and Related Ratios - Pension Plan 126 Schedule of the City's Contributions and Investment Returns 127 CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS {Continued) Notes to Required Supplementary Schedules 128 OPEB Plan Disclosures: Schedule of Changes in the City's Net OPEB Liability and Related Ratios 131 Schedule of the City's Contributions and Investment Returns 132 Notes to Required Supplementary Schedules 133 Supplementary Information: Combining and Individual Other Fund Statements and Schedules: Combining Balance Sheet- Nonmajor Governmental Funds 135 Combining Statement of Revenues, Expenditures, and Changes in Fund Balance - Nonmajor Governmental Funds 136 Combining Statement of Net Position - Pension and OPEB Trust Funds 137 Combining Statement of Changes in Net Position - Pension and OPEB Trust Funds 138 Agency Funds: Statement of Changes in Assets and Liabilities 139 CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS (Continued) Capital Projects Fund: Combining Schedule of Revenues, Expenditures, and Changes in Fund Balance - Budget and Actual(Non-GAAP Budgetary Basis) 140 Budgetary Comparison Schedule 141 STATISTICAL SECTION Net Position by Component- Last Ten Years 142 Changes in Net Position - Last Ten Years 143 Program Revenues by Function/Program - Last Ten Years 144 Fund Balances, Governmental Funds - Last Ten Years 145 Changes in Fund Balances, Governmental Funds - Last Ten Years 146 Governmental Fund Tax Revenues by Sources - Last Ten Years 148 Assessed Valuation and Estimated Actual Values of Taxable Property - Last Ten Years 149 Property Tax Rates - Direct and Overlapping Governments - Last Ten Years 150 Principal Property Taxpayers - Current Year and Nine Years Ago 151 Assessed Value, Tax Rate, Levy, and Collections - Last Ten Years 152 Ratios of Outstanding Debt by Type - Last Ten Years 153 CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS (Continued) Ratio of Net General Obligation Bonded Debt to Assessed Value and Net General Obligation Bonded Debt Per Capita - Last Ten Years 154 Ratio of Annual Debt Service Expenditures for General Obligation Bonded Debt to Total General Governmental Expenditures - Last Ten Years 155 Computation of Direct and Overlapping Debt 156 Net Debt and Remaining Debt Incurring Margin in Accordance with Act No. 52, Approved April 28,1978 - Local Government Unit Debt Act 157 Legal Debt Margin Information - Last Ten Years 159 Revenue Bond Coverage - Pittsburgh Water and Sewer Authority - Last Ten Years 160 Revenue Bond Coverage - The Stadium Authority of the City of Pittsburgh - Last Ten Years 161 Demographic and Economic Statistics - Last Ten Years 162 Principal Employers - Current Year and Ten Years Ago 163 Property Value, Construction, and Bank Deposits - Last Ten Years 164 City Employment - Last Ten Years 165 Full-Time Equivalent Municipal Employees by Function/Program - Last Ten Years 166 Operating Indicators - Last Five Fiscal Years 167 Capital Assets Statistics by Function/Program 168 CITY OF PITTSBURGH, PENNSYLVANIA COMPREHENSIVE ANNUAL FINANCIAL REPORT YEAR ENDED DECEMBER 31, 2018 TABLE OF CONTENTS {Continued) OTHER INFORMATION Salaries and Surety Bonds of Principal Officials 169 Schedule of Bonds and Notes Payable 170 INTRODUCTORY SECTION LETTER OF TRANSMITTAL CVTVCo MICHAEL E. LAMB CITY CONTROLLER First Floor Cit\'-County Building 414 Grant Street Pittsburgh. Penn.sylvania 15219 April 29, 2019 To The Honorable Mayor, Members of City CounciL and the Citizens ol The City of Pittsburgh, Pennsylvania: I am pleased to present The Comprehensive Annual Financial Report (hereinafter, CAFR)of the City of Pittsburgh (hereinafter, City) for the year ended December 31, 2018. The City's charter mandates that only a general purpose financial statement be issued by MayC. This does not include component units, statements mandated under GASB 34, footnotes and the statistical section. This year we are issuing a full CAFR by April 29''\ which meets the Government Finance Officers Association (GFOA) standards and allows the City to get an unmodified opinion from the City's independent auditors. We believe that the enclosed data is accurate in all material respects and is reported in a manner designed to fairly present both the financial position and the results of operations of the various funds of the City. This statement will enable the reader to gain an understanding of the City's financial activities. Responsibility for both the accuracy of data, and the completeness and fairness of the presentation, rests with the management of the City. This report contains all the funds of the City. Maher Duessel. Certified Public Accountants, has issued an unmodified ('clean') opinion on the City of Pittsburgh's financial statements for the year ended December 31. 2018. The independent auditor's report is located in front of the Management's Discussion and Analysis (hereinafter, MD&A). MD&A immediately follows the independent auditor's report and provides a narrative introduction, overview, and analysis of the basic financial statements. The MD&A complements this letter of transmittal and should be read in conjunction with it. Profile of the Government The City of Pittsburgh, incorporated in 1816, is located in the southwestern part of the Commonwealth of Pennsylvania occupying 58.3 square miles with a current population of 302,407. The City government is comprised of a strong elected mayor, a nine-member council elected by district and an elected controller. The mayor is the chief executive of the City who appoints the heads of various departments and the council has the legislative 412-255-2055 'rix; 412-255-8990 [email protected] authority. The controller audits City government-related expenditures and conducts audits of all City departments and authorities. The mayor is elected to a four-year term and the coimcil members are elected to a staggered four-year term. The even num^red districts are elected in one year and the odd numbered districts are elected two years later. Like the mayor, the controller is elected to a four-year term. The City is empowered to levy a variety of taxes including: property taxes on real estate, earned income taxes on residents that live within the boundaries of the City, and other usage taxes are charged when using certain facilities within the City. In addition, the City levies taxes on employees that work within the City and on businesses that operate within the City. Please see the Revenue section, (page 7-5^ for a more detailed explanation of the taxes collected. The City provides a fiill range of services, including police, fire, and emergency medical services, construction and maintenance of City property and infrastructure, sanitation services, and recreation and cultural activities. The Water and Sewer Authority, Urban Redevelopment Authority, Stadium Authority, and Parking Authority are component units of the City and are shown as such in the financial statements and the footnotes to the CAFR. Council is required to adopt a final operating and capital budget for the next year by the last day of the fiscal year, which is December 31. The annual budget is the basis of the City's financial planning and control. The operating budget is prepared on a departmental basis. The department heads may spend within a budget classification (e.g., s^aiies, supplies, rentals, miscellaneous) as they see fit. However, any transfers between classifications or departments have to be approved by Council. The Mayor's Office also prepares a five-year plan annually.