ANNUAL FINANCIAL REPORT Including Auditor's Report For the fiscal year ending December 31, 2012 CITY OF OSHKOSH OSHKOSH, WISCONSIN December 31, 2012 Table of Contents INTRODUCTORY SECTION Page No. Letter of Transmittal 1-3 Council Members and Principal Officers 4 The City 5-8 Oshkosh Unified School District 9 FINANCIAL SECTION Independent Auditors' Report 10-11 Management's Discussion and Analysis 12 - 21 BASIC FINANCIAL STATEMENTS Government-wide Financial Statements Statement of Net Position 22 Statement of Activities 23-24 Fund Financial Statements Balance Sheet - Governmental Funds 25 - 26 Statement of Revenues, Expenditures and Changes in Fund Balances - Governmental Funds 27-28 Statement of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - General Fund 29 Statement of Net Position - Proprietary Funds 30 - 31 Statement of Revenues, Expenses and Changes in Net Position - Proprietary Funds 32 - 33 Statement of Cash Flows-Proprietary Funds 34-35 Statement of Net Position-Fiduciary Funds 36 Notes to Basic Financial Statements 37-60 CITY OF OSHKOSH OSHKOSH, WISCONSIN December 31, 2012 Table of Contents (Continued) Page No. REQUIRED SUPPLEMENTAL INFORMATION Schedule of other Post Employment Benefit Information 61 SUPPLEMENTARY INFORMATION Combining Balance Sheet - Nonmajor Governmental Funds 62 Combining Balance Sheet - Nonmajor Special Revenue Funds 63 - 66 Combining Balance Sheet - Nonmajor Capital Project Funds 67 - 71 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Governmental Funds 72 Combining Statement of Revenues, Expenditures and Changes in Fund Balances Nonmajor Special Revenue Funds 73 - 76 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Nonmajor Capital Projects Funds 77-81 Combining Statement of Net Position-Nonmajor Other Proprietary Funds 82 Combining Statement of Revenues, Expenses and Changes in Fund Net Position - Nonmajor Other Proprietary Funds 83 Combining Statement of Cash Flows-Nonmaj or Other Proprietary Funds 84 - 85 Combining Statement of Net Position - Internal Service Funds 86 Combining Statement of Revenues, Expenses and Changes in Net Position- Internal Service Funds 87 Combining Statement of Cash Flows - Internal Service Funds 88 CITY OF OSHKOSH OSHKOSH, WISCONSIN December 31, 2012 Table of Contents (Continued) Page No. STATISTICAL SECTION This part of the City of Oshkosh, Wisconsin's comprehensive annual financial report presents detailed information as a context for understanding what the information in the financial statements, note disclosures, and required supplementary information says about the city's overall financial health. General Information Financial Trends These reports and schedules contain trend information to help the reader understand how the city's financial performance and well-being have changed over time. Net Position by Component 89 Changes in Net Position 90 - 91 Fund Balances, Governmental Funds 92 Changes in Fund Balance, Governmental Funds 93 Revenue Capacity These schedules contain information to help the reader assess the city's most significant local revenue source, the property tax. Historical Valuations and Tax Records 94 Principal Taxpayers 95 Property Tax Levies and Collections 96 Debt Capacity These schedules present information to help the reader assess the affordability of the city's current levels of outstanding debt and the city's ability to issue additional debt in the future. Ratios of Net General Bonded Debt Outstanding 97 Legal Debt Margin Information 98 Statement of Indebtedness - Bonds and Notes 99 - 100 Annual Principal and Interest Requirement for Outstanding Bonds and Notes 101 Annual Principal Requirement for Outstanding Bonds and Notes 102 Annual Interest Requirement for Outstanding Bonds and Notes 103 Demographic and Economic Information These schedules present information to help the reader understand the environment within which the city's financial activities take place. Demographic and Economic Statistics 104 Principal Employers 105 CITY OF OSHKOSH OSHKOSH, WISCONSIN December 31, 2012 Table of Contents (Continued) Page No. Operating Information These schedules contain information to help the reader understand how the city's financial report relates to the services the city provides and the activities it performs. Full-time Equivalent City Government Employees by Function / Program 106 Expenditures by Function 107 Revenues by Source 108 Miscellaneous General Data Cash and Investments 109 - 110 Recommended Full Value Assessments 111 Tax Roll Collections 112 Expenditures Ratio of Annual Debt 113 Economics - Population, Building Permits, and Utility Customers 114 New Dwelling Units Constructed 115 Utility Information 116 - 118 Operating Budget by Function 119 - 120 Budgeted Revenues 121-122 Pie Charts - Levy Rate 123 Source of Funds (Where the Money Comes From) 124 Use of Funds (Where the Money Goes) 125 Use of Funds by Function (How the Money Goes) 126 CITY HALL 215 Church Avenue P.O. Box 1130 Oshkosh, Wisconsin City of Oshkosh OJHKO/H* August 14, 2013 Honorable Mayor and Council Members, City of Oshkosh: The Annual Financial Report of the City of Oshkosh, Wisconsin, for the fiscal year ended December 31, 2012, is submitted herewith. This report was prepared by the City's Department of Finance. Responsibility for both the accuracy of the presented data and the completeness and fairness of the presentation, including all disclosures, rests with the City. We believe the data as presented is accurate in all material respects; that it is presented in a manner designed to fairly set forth the financial activities of the City and its various funds and account groups; and that all of the disclosures necessary to enable the reader to gain the maximum understanding of the City's financial activities have been included. ACCOUNTING SYSTEM AND BUDGETARY CONTROL The City's accounting records for general government operations are maintained on a modified accrual basis, with the revenues being recorded when available and measurable and expenditures being recorded when the services or goods are received and the liabilities are incurred. Accounting records for the City's utilities and other enterprise funds are maintained on an accrual basis. In developing and modifying the City's accounting system, consideration is given to the adequacy of internal accounting controls. Internal accounting controls are designed to provide reasonable, but not absolute, assurance regarding: 1) the safeguarding of assets against loss from unauthorized use or disposition and 2) the reliability of financial records for preparing financial statements and maintaining accountability for assets. The concept of reasonable assurance recognizes that: 1) the cost of a control should not exceed the benefits likely to be derived and 2) the evaluation of costs and benefits requires estimates and judgment by management. a' Budgetary control is maintained at the department level by the encumbrance of estimated purchase amounts prior to the release of purchase orders to vendors. Purchase orders which result in an overrun of the departmental balances are not released until additional appropriations are made available. Authorized open purchase orders are reported as reservations of fund balance as of December 31, 2012. THE REPORTING ENTITY AND ITS SERVICES The City provides a full range of municipal services contemplated by Statute or character. This includes police, fire, streets and sanitation, health and social services, parks, public improvements, library and museum, mass transit, planning and zoning, and general administrative services. The accompanying financial statements include all significant operations of the City. A summary of this year's revenues and expenditures/expenses are included in the Management's Discussion and Analysis section, which is in the financial section of this audit report. DEBT ADMINISTRATION The rates of net bonded debt to assessed valuation and the amount of bonded debt per capita are useful indicators of the City's debt position to municipal management, citizens, and investors. This data for the City of Oshkosh at the end of 2012 was: RATIO OF DEBT TO DEBT AMOUNT EQUALIZED VALUE PER CAPITA Direct Bonded Debt $137,859,256 3.66% $2,086.15 Outstanding general obligation bonds at December 31, 2012 totaled $137,859,256 of which $153,889 were issued for Parking Utility, $12,465,374 for Sewer Utility, $9,806,574 for Water Utility, $2,880,000 for Industrial Park Fund, $504,956 for Transit System, $24,271 for Golf Course, $1,550,000 for Oshkosh Center, and $9,643,533 for Storm Water Utility. On June 28, 2012, $5,595,000 of General Obligation Refunding Bonds was sold at a net true interest rate of 2.0180%. On November 1. 2012, $12,480,000 of Taxable General Obligation Corporate Purpose Bonds, and $3,660,000 General Obligation Promissory Notes were sold at a net true interest rate of 2.4156%, and 1.3428% respectively. Assessed valuation of $3,738,959,600 represented an increase of 0.27% from the preceding year. The City's bonds have an Aa2 rating from Moody's Investors Service, Inc. CAPITAL PROJECTS FUNDS The proceeds of general obligation bond issues are accounted for in Capital Projects Funds until improvement projects are completed. At the end of the fiscal year, completed projects are accumulated in the capital asset category for Governmental Activity Funds. INDEPENDENT AUDIT The City is required to have an annual audit of its financial statements by