CITY OF WESTMINSTER, MARYLAND 1 2016 COMPREHENSIVE ANNUAL FINANCIAL REPORT for the FISCAL YEAR ENDED JUNE 30, 2016 CITY OF WESTMINSTER, MARYLAND Comprehensive Annual Financial Report For the Fiscal Year Ended June 30, 2016 Prepared by the Department of Finance City of Westminster, Maryland CITY OF WESTMINSTER, MARYLAND TABLE OF CONTENTS Introductory Section Page Letter of Transmittal ................................................................................................................. 1 Government’s Principal Officials .............................................................................................. 14 Organizational Chart ................................................................................................................ 15 Financial Section Independent Auditor’s Report ................................................................................................... 17 Management’s Discussion and Analysis .................................................................................. 20 Basic Financial Statements Government-Wide Financial Statements Statement of Net Position ................................................................................. 36 Statement of Activities ...................................................................................... 38 Fund Financial Statements Balance Sheet of Governmental Funds ............................................................ 39 Reconciliation of Balance Sheet of Governmental Funds to the Statement of Net Position ....................................................................... 40 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds ............................................................. 41 Reconciliation of Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds to the Statement of Activities ............................................................................ 42 Statement of Net Position - Proprietary Funds ............................................... 43 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds ............................................................................. 45 Statement of Cash Flows - Proprietary Funds ................................................. 46 Notes to Basic Financial Statements ............................................................................ 49 Required Supplementary Information Schedule 1 - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - General Fund (GAAP Basis) ..................................................................................................................... 95 Schedule 2 - Schedule of Expenditures - Budget to Actual - General Fund (Legal Level of Control) ................................................................ 96 CITY OF WESTMINSTER, MARYLAND TABLE OF CONTENTS - CONTINUED Page Schedule 3 - Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget to Actual - Public Housing Agency Fund (GAAP Basis) .................................................................................. 97 Schedule 4 - Schedule of Expenditures - Budget to Actual - Public Housing Agency Fund (Legal Level of Control) ....................................... 98 Schedule 5 - Schedules of Funding Progress and Employer Contributions - Other Postemployment Benefits (OPEB) Plan ........................................................................................................................ 99 Schedule 6 - Schedule of the City’s Proportionate Share of the Net Pension Liability (NPL) .............................................................................. 100 Schedule 7 - Schedule of the City’s Pension Plan Contributions .............................. 101 Statistical Section Statistical Section Narrative .................................................................................................. 103 Net Position by Component .................................................................................................... 104 Changes in Net Position .......................................................................................................... 105 Fund Balances, Governmental Funds .................................................................................... 107 Changes in Fund Balance, Governmental Funds .................................................................. 108 Assessed Valuation and Estimated Actual Value of Taxable Property ................................ 109 Real Property Tax Rates - Direct and Overlapping Governments ....................................... 110 Principal Taxpayers ................................................................................................................ 111 Property Tax Levies and Collections ...................................................................................... 112 Ratios of Outstanding Debt by Type ...................................................................................... 113 Ratios of Bonded Debt Outstanding ....................................................................................... 114 Computation of Legal Debt Margin ........................................................................................ 115 Computation of Direct and Overlapping Debt ....................................................................... 116 Demographic Statistics ........................................................................................................... 117 Major Employers ..................................................................................................................... 118 Full-Time City Employees by Function/Program .................................................................. 119 Operating Indicators by Function/Program .......................................................................... 120 Capital Asset Statistics by Function/Program ....................................................................... 121 CITY OF WESTMINSTER, MARYLAND TABLE OF CONTENTS - CONTINUED Page Other Supplementary Information Independent Auditor’s 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 ....................................................... 123 Independent Auditor’s Report on Compliance for Each Major Program and on Internal Control over Compliance Required by the Uniform Guidance ........................................... 125 Schedule of Expenditures of Federal Awards ........................................................................ 127 Notes to Schedule of Expenditures of Federal Awards ......................................................... 128 Schedule of Findings and Questioned Costs. ......................................................................... 129 Summary Schedule of Prior Audit Findings. ......................................................................... 132 Program Balance Sheet Summary ......................................................................................... 133 Program Revenue and Expense Summary ............................................................................ 136 HAP and Admin Equity Calculations.. .................................................................................. 140 Introductory Section October 26, 2016 To the Mayor and Common Council To the Citizens of the City of Westminster, State law requires that all general-purpose local governments publish a complete set of audited financial statements within six months of the close of each fiscal year. Pursuant to that requirement, we hereby issue the comprehensive annual financial report of Westminster, Maryland for the fiscal year ended June 30, 2016. This report consists of management’s representations concerning the finances of City of Westminster. Consequently, management assumes full responsibility for the completeness and reliability of all of the information presented in this report, based upon a comprehensive framework of internal control that it has established for this purpose. Because the cost of internal controls should not outweigh their benefits, City of Westminster’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. City of Westminster’s financial statements have been audited by CohnReznick LLP, a firm of licensed certified public accountants. The independent auditor concluded, based upon the audit, that there was a reasonable basis for rendering an unmodified opinion that City of Westminster’s financial statements for the fiscal year ended June 30, 2016, are fairly presented in conformity with Generally Accepted Accounting Principles (GAAP). The independent auditor’s report is presented as the first component of the financial section of this report. The independent audit of the financial statements of City of Westminster was part of a broader, federally mandated “Single Audit” designed to meet the special needs of federal grantor agencies. The standards governing Single Audit engagements require the independent auditor to report not only on the fair presentation of the financial statements,