2018 COUNTY OF ALLEGHENY PENNSYLVANIA Comprehensive Annual Financial Report For the Fiscal Year Ended December 31, 2018 PREPARED BY CHELSA WAGNER, CONTROLLER 2018 County of Allegheny Comprehensive Annual Financial Report Contents INTRODUCTORY SECTION Controller's Letter of Transmittal 1 GFOA Certificate of Achievement 19 Organizational Chart 21 Officials of Allegheny County 23 FINANCIAL SECTION Independent Auditor's Report 25 Management's Discussion and Analysis 31 Basic Financial Statements 53 Government-wide Financial Statements 55 Statement of Net Position 55 Statement of Activities 58 Governmental Fund Financial Statements 60 Balance Sheet 60 Reconciliation of the Governmental Funds - Balance Sheet to the Statement of Net Position 65 Statement of Revenues, Expenditures and Changes in Fund Balances 66 Reconciliation of the Statement of Revenues, Expenditures and Changes in Fund Balances of Governmental Funds to the Statement of Activities 70 Proprietary Fund Financial Statements 71 Statement of Net Position 71 Statement of Revenues, Expenses and Changes in Net Position 72 Statement of Cash Flows 73 Fiduciary Fund Financial Statements 74 Statement of Fiduciary Net Position 74 Statement of Changes in Fiduciary Net Position 75 Component Unit Financial Statements 76 Statement of Net Position 76 Statement of Activities 82 2018 County of Allegheny Comprehensive Annual Financial Report Contents Notes to Financial Statements 85 (1) Summary of Significant Accounting Policies 85 (2) Legal Compliance 113 (3) Cash and Investments 113 (4) Property and Sales Tax Revenue and Receivables 128 (5) Capital Assets 131 (6) Risk Management 137 (7) Short-Term Debt 140 (8) Long-Term Debt 141 (9) Interfund Receivables, Payables and Transfers 158 (10) Retirement Benefits 159 (11) Postemployment Benefits Other Than Pension Benefits 179 (12) Contingencies 190 (13) Related Party Transactions (see Note 1) 194 (14) Derivative Financial Instruments 195 (15) Tax Abatements 198 Required Supplementary Information 201 Budgetary Comparison Schedule - General Fund 203 Notes to Required Supplementary Information 204 Schedule of Changes in the County's Net Pension Liability and Related Ratios 205 Schedule of County Contributions 206 Schedule of Changes in PAT's Net Pension Liability and Related Ratios - ATU 209 Schedule of Changes in PAT's Net Pension Liability and Related Ratios - IBEW 210 Schedule of Changes in PAT's Net Pension Liability and Related Ratios - NonRep 211 Schedule of PAT Contributions 212 Schedule of Changes in CCAC's Net Pension Liability and Related Ratios 214 Schedule of Changes in the Total OPEB Liability and Related Ratios 215 Schedule of Changes in ACAA's OPEB Liability and Related Ratios 216 Schedule of Changes in CCAC's OPEB Liability and Related Ratios 217 Schedule of Changes in PAT's OPEB Liability and Related Ratios - ATU 218 2018 County of Allegheny Comprehensive Annual Financial Report Contents Schedule of Changes in PAT's OPEB Liability and Related Ratios - IBEW 219 Schedule of Changes in PAT's OPEB Liability and Related Ratios - NonRep 220 Supplementary Information 221 Combining Other Governmental Funds Financial Statements: 222 Combining Balance Sheet - Other Governmental Funds 225 Combining Statement of Revenues, Expenditures and Changes in Fund Balances - Other Governmental Funds 226 General Fund: 227 A-1 Balance Sheet 229 A-2 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 231 A-3 Schedule of Operating Expenditures - Budget and Actual 234 Special Revenue Funds: 252 B-1 Balance Sheet Schedule 255 B-2 Schedule of Revenues, Expenditures and Changes in Fund Balances 257 B-3 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Transportation Fund 258 B-4 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Liquid Fuel Tax Fund 259 B-5 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual - Infrastructure Support Fund 260 B-6 Schedule of Resources and Uses of Federal and State Grant Programs - County Grants Fund 261 B-7 Schedule of Resources and Uses of Federal and State Grant Programs - Human Service Grants Fund 263 Debt Service Fund: 265 C-1 Balance Sheet 267 C-2 Schedule of Revenues, Expenditures and Changes in Fund Balance - Budget and Actual 268 Capital Projects Fund: 269 D-1 Balance Sheet 271 D-2 Statement of Revenues, Expenditures and Changes in Fund Balance 272 Internal Service Fund: 273 E-1 Statement of Net Position 275 2018 County of Allegheny Comprehensive Annual Financial Report Contents E-2 Statement of Revenues, Expenses and Changes in Net Position 276 E-3 Statement of Cash Flows 277 Trust and Agency Funds: 279 F-1 Statement of Net Position - Pension Trust Fund 281 F-2 Statement of Changes in Net Position - Pension Trust Fund 282 F-3 Statement of Assets and Liabilities - Combined Agency Funds 283 F-4 Statement of Changes in Assets and Liabilities - All Agency Funds - By Level of Fiduciary Responsibility 284 Capital Assets Used in the Operation of Governmental Funds: 295 G-1 Schedule of Capital Assets by Function and Activity 297 G-2 Schedule of Changes in Capital Assets by Function and Activity 299 G-3 Schedule of Capital Assets by Source 300 Budgetary Comparison: 301 H Budgetary Comparison Schedule for Operating Budget 302 Nonmajor Component Units: 307 I-1 Combining Statement of Net Position 309 I-2 Combining Statement of Changes in Net Position 310 Supporting Schedules for Long-Term Debt: 313 J-1 Schedule of Long-Term Debt 314 J-2 Debt Issued and Retired 319 J-3 Statement of Indebtedness, Borrowing Power and Legal Debt Margin 320 STATISTICAL SECTION Contents 321 Revenue and Expenditure Overview 323 Financial Trends 335 I - Net Position by Component - Last Seven Years 335 II - Net Assets by Component - Last Three Years 336 III - Changes in Net Position - Last Seven Years 338 IV - Changes in Net Assets - Last Three Years 340 V - Fund Balances, Governmental Funds - Last Nine Years 342 2018 County of Allegheny Comprehensive Annual Financial Report Contents VI - Fund Balances, Governmental Funds - One Year 343 VII - Changes in Fund Balances, Governmental Funds - Last Ten Years 344 VIII - Program Revenues by Function/Program - Last Ten Years 346 Revenue Capacity 347 IX - Tax Revenues by Source, Governmental Funds - Last Ten Years 347 X - Property Tax Levies and Collections - Last Ten Years 348 XI - Principal Taxpayers 349 XII - Assessed Valuation of Taxable Property - Last Ten Years 350 XIII - Property Tax Rates - Direct and Overlapping Governments - Last Ten Years 351 Debt Capacity 370 XIV - Ratios of General Obligation Bonds Outstanding and Legal Debt Margin - Last Ten Years 370 XV - Computation of Direct and Overlapping Debt 372 Demographic & Economic Information 373 XVI - Demographic and Economic Statistics - Last Ten Years 374 XVII - Principal Employers - Current Year and Nine Years Ago 376 Operating Information 377 XVIII - Full-Time Equivalent County Government Employees by Function/Program - Last Ten Years 377 XIX - Operating Indicators by Function/Program - Last Ten Years 378 XX - Capital Asset Statistics by Function/Program - Last Ten Years 380 Component Unit (ACAA) Information 381 XXI - Revenue Bond Coverage Airport Authority Revenue Bonds and Notes - Last Ten Years 381 XXII - Pittsburgh International Airport Passenger Volume Trend - Last Ten Years 382 Miscellaneous Information 383 XXIII - Salaries of Principal Officials 383 XXIV - County Council Members' Expenditure Reimbursements 384 XXV - Primary Government Functions 385 Acronyms 390 Allegheny County CAFR Acronyms 391 2018 County of Allegheny Comprehensive Annual Financial Report Contents 2018 County of Allegheny Comprehensive Annual Financial Report 1 Controller's Letter of Transmittal April 29, 2019 TO THE CITIZENS OF ALLEGHENY COUNTY: I am pleased to present the 2019 Comprehensive Annual Financial Report (CAFR) for the County of Allegheny County (the County). The financial information presented herein is accurate in all material respects and is reported in a manner designed to fairly set forth the County’s financial position and the results of its operations for the year ended December 31, 2018. This report contains the government-wide financial statements and fund financial statements of the County, as well as the financial data of the discretely presented component units that are included as part of the County’s reporting entity. Management is responsible for the contents of this report. This report is intended to provide information to various users, stakeholders and persons interested in the fiscal health of the County, including: the taxpayers of the County, investors, creditors, government officials and the general public. The intent of the CAFR is to describe an accurate portrayal of the County’s financial position and the financial results of its operations as of and for the year ended December 31, 2018. This CAFR also includes a narrative introduction and an analytical overview of the government’s financial activities in the form of “Management’s Discussion and Analysis” (MD&A). This analysis is similar to the types of information provided in the private sector in an annual report, and information regarding the County’s results of operations, formerly included in this transmittal letter, can now be found in the MD&A. PROFILE OF THE GOVERNMENT COUNTY OF ALLEGHENY, PENNSYLVANIA Founded in 1788, the County of Allegheny is the second most populous county in Pennsylvania and the 28th most populous county in the United