Comprehensive Annual Financial Report of the City of Chesapeake, Virginia for Fiscal Year Ended June 30, 2017 Prepared by the Chesapeake Department of Finance Nancy C. Tracy, Director City of Chesapeake, Virginia Mission The employees of the City of Chesapeake are committed to providing quality service to all Citizens equitably, in a responsive and caring manner. Code of Ethics We, the employees of the City of Chesapeake, are committed to the highest standards of ethical conduct that reflect: Responsibility, Honesty, Respect, Fairness, Compassion, Integrity and Loyalty Acknowledgments… The preparation of this report has been accomplished by the efficient and dedicated services of the staff of the Department of Finance and various departments who have been assisted by the independent auditors, Cherry Bekaert LLP. The contributions of all are invaluable and sincerely appreciated and clearly reflect the high standards which have been set by the City of Chesapeake. The following Finance employees were instrumental in the preparation of this report: Kristen Bailey Pamela Hardesty Nancy Tracy Faith Baker Linda Mathis Subhashree Venkatasubramanian Lorra Calvert Lisa Morris Tamara Walters Megan Craig Kelley Peroe Katherine Williams Jennifer Cummins Nancy Randall It is also appropriate to thank the City Manager, Mayor and Members of City Council for making possible the excellent financial position of the City through their interest and support in planning and conducting the financial affairs of the City. Please visit us at: www.cityofchesapeake.net CITY OF CHESAPEAKE, VIRGINIA Table of Contents June 30, 2017 Page Schedule Number INTRODUCTORY SECTION: Letter of Transmittal ..................................................................................................................................................................... I Organization Chart ........................................................................................................................................................................ VIII City Officials.................................................................................................................................................................................. IX GFOA Certificate of Achievement ............................................................................................................................................... XI FINANCIAL SECTION: Report of Independent Auditor...................................................................................................................................................... 1 Management’s Discussion and Analysis (MD&A)....................................................................................................................... 7 Basic Financial Statements: Government-Wide Financial Statements: Statement of Net Position.......................................................................................................... A2................. 6 Statement of Activities............................................................................................................... B2................. 7 Fund Financial Statements: Governmental Fund Financial Statements: Balance Sheet ...................................................................................................................C3 ................. 2 Statement of Revenues, Expenditures and Changes in Fund Balances............................ D3................. 4 Proprietary Fund Financial Statements: Statement of Net Position.................................................................................................. E3................. 8 Statement of Revenues, Expenses and Changes in Net Position...................................... F3................. 9 Statement of Cash Flows................................................................................................... G4................. 0 Fiduciary Fund Financial Statements: Statement of Fiduciary Net Position................................................................................. H4................. 2 Statement of Changes in Fiduciary Net Position.............................................................. I4................. 3 Other Discretely Presented Component Units: Combining Statement of Net Position....................................................................................... J-1 ................. 46 Combining Statement of Activities............................................................................................ J-2 ................. 47 Notes to Basic Financial Statements:................................................................................................. K5................. 0 1. Summary of Significant Accounting Policies...................................................................................................... 50 2. Deposits and Investments..................................................................................................................................... 60 3. Accounts Receivable and Payable........................................................................................................................ 65 4. Capital Assets....................................................................................................................................................... 68 5. Deferred Outflows and Inflows of Resources...................................................................................................... 75 6. Long-Term Obligations........................................................................................................................................ 77 7. Advances and On Behalf Of Payments................................................................................................................ 87 8. Interfund Balances and Transfers......................................................................................................................... 88 9. Leases.................................................................................................................................................................... 90 10. Retirement Plans................................................................................................................................................... 90 11. Other Postemployment Benefits........................................................................................................................... 109 12. Fund Balances ...................................................................................................................................................... 118 13. Deferred Compensation Plan................................................................................................................................ 121 14. Commitments........................................................................................................................................................ 121 15. Joint Venture......................................................................................................................................................... 122 i CITY OF CHESAPEAKE, VIRGINIA Table of Contents, Continued June 30, 2017 Page Schedule Number FINANCIAL SECTION (Continued): Notes to Basic Financial Statements (Continued): 16. Contingent Liabilities........................................................................................................................................... 123 17. Fund Deficits........................................................................................................................................................ 129 18. New Pronouncements........................................................................................................................................... 129 Required Supplementary Information Other Than MD&A: Schedule of Revenues, Expenditures and Changes in Fund Balances – Budget and Actual – General Fund........................................................................ L-1 ................. 132 Schedule of Employer Contributions – Virginia Retirement System................................................ L-2 ................. 133 Schedules of Changes in the Net Pension Liability and Related Ratios – City................................. L-3 ................. 134 Schedules of Changes in the Net Pension Liability and Related Ratios – Schools........................... L-4 ................. 135 Schedule of Employer’s Share of Net Pension Liability................................................................... L-5 ................. 136 Schedules of Funding Progress – Other Postemployment Benefits................................................... L-6 ................. 137 Schedules of Employer Contributions – Other Postemployment Benefits........................................ L-7 ................. 138 Schedule of Changes in the Net OPEB Liability and Related Ratios – City.................................... L-8 ................. 139 Schedule of Changes in the Net OPEB Liability and Related Ratios – Schools............................... L-9 ................. 140 Notes to Required Supplementary Information................................................................................. L-10 ................. 141 Other Supplementary Information: Combining and Individual Fund Schedules: Governmental Funds: Major Governmental Funds: General Fund: Schedule of Revenues and Other Financing Sources – Budget and Actual